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As filed with the Securities and Exchange Commission on May 2, 1996
File No. 811-7417
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
RICHMOND HOUSE, 12 PAR-LA-VILLE ROAD,
HAMILTON 11, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(441) 296-1201
JOHN COLLIS
CLARENDON HOUSE, CHURCH STREET,
HAMILTON 11, BERMUDA
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM, DANA & GOULD LLP,
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
proportion to 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 proportion to 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,"
"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)
OFFERING OF
SHARES OF BENEFICIAL INTEREST
The Shares offered hereby have not been and will not be registered under
the Securities Act of 1933, as amended, or any state securities laws. The Fund
has registered as an investment company under the Investment Company Act of
1940, as amended. Neither the Securities and Exchange Commission nor any state
securities authority has reviewed this Private Placement Memorandum or passed
upon the merits of this offering.
The Shares are subject to restrictions on transfer. There is no public
market for the Shares, and none is expected to develop.
This Private Placement Memorandum does not constitute an offer to sell, or
the solicitation of an offer to purchase, the Shares in any jurisdiction in
which such offer or solicitation is not authorized or to or from any person
unless the name of such person and a control number appear above on this cover
page.
This Private Placement Memorandum is confidential and is not to be
reproduced or circulated, in whole or in part, without the prior written
approval of a Placement Agent.
The Placement Agents have not independently verified any of the information
contained in this Private Placement Memorandum (financial, legal, or otherwise),
and no representation or warranty, express or implied, is made by the Placement
Agents as to the accuracy or completeness of the information contained herein.
No person is authorized to give any information or make any representation not
contained in this Private Placement Memorandum in connection with the Offering
and, if given or made, such information or representation must not be relied on
as having been authorized by the Fund or the Placement Agents. The delivery of
this Private Placement Memorandum at any time does not imply that information in
this Private Placement Memorandum is correct as of any time subsequent to the
date of this Private Placement Memorandum.
FLEMING MARTIN RAND INTERNATIONAL SECURITIES S. G. WARBURG & CO. INC.
[LOGO] [LOGO]
PLACEMENT AGENTS
INTERNATIONAL FINANCE CORPORATION
STRUCTURING AGENT
December 1, 1995
(inclusive of certain updates)
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INVESTMENT HIGHLIGHTS
OLD MUTUAL HAS CREATED A UNIQUE FUND STRUCTURE OFFERING INSTITUTIONAL
INVESTORS INSTANT ACCESS TO THE SOUTH AFRICAN MARKET. ESTABLISHED WITH A
PORTFOLIO OF U.S.$1 BILLION, THE FUND COMBINES THE LIQUIDITY OF AN OPEN-END FUND
WITH THE PORTFOLIO STABILITY AND REDUCED TRADING COSTS ASSOCIATED WITH A
CLOSED-END FUND.
SOUTH AFRICA
- South Africa, with the largest economy in Africa, has exciting growth
potential no longer constrained by international sanctions.
- The earnings of companies included in The Johannesburg Stock Exchange
("JSE") Actuaries All Share Index are forecast to grow by approximately
27% during 1996 and 22% during 1997. Assuming constant share prices and
projected earnings growth, the price earnings multiple of the JSE
Actuaries All Share Index, which at October 31, 1995 was 16.4 times,
would fall to 12.5 times at December 31, 1996 and to 10.3 times at
December 31, 1997.*
OLD MUTUAL
- Old Mutual, the parent company of the Fund's Adviser, is South Africa's
largest financial institution with over U.S.$40 billion of assets under
management, which includes over U.S.$25 billion of equity securities.
- Old Mutual has actively managed South African equity portfolios for over
30 years and has a South Africa team of over 50 investment
professionals.
THE FUND
<TABLE>
<S> <C>
Size: Approximately U.S.$1 billion. Investors can establish
significant holdings.
Established Portfolio: Immediate exposure to the JSE without market impact
or initial acquisition costs for portfolio
securities.
Performance Record: Created from an equity portfolio 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.
Redemptions: Any amount on any Business Day.
Liquidity: Redemptions funded by a separate pool of securities
held by Old Mutual Bermuda rather than through sales
of portfolio securities. This substantially reduces
Fund trading costs.
Management Fee: 0.60% per annum of daily net assets (0.50% for
investments of at least U.S.$50 million).
</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 Smith Borkum Hare
(Pty) Ltd.; Ivor Jones, Roy & Co. Inc.; and Fleming Martin Securities Ltd.,
three South African brokerage firms that are not affiliated with Old Mutual.
Fleming Martin Securities Ltd. is affiliated with Fleming Martin Inc., one of
the Placement Agents.
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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 seeks
long-term total return in excess of that of The
Johannesburg Stock Exchange ("JSE") Actuaries
All Share Index from investment in equity
securities of South African issuers. Under
normal circumstances, at least 95% of the
Fund's total assets will be invested in equity
securities of South African issuers that are
listed on a securities exchange.
For purposes of the Fund's investment policies,
a South African issuer is an issuer that meets
one of the following tests: (i) its principal
offices or operations are located in South
Africa; or (ii) it derives at least 50% of its
revenues from operations or investments in
South Africa. See "INVESTMENT OBJECTIVE AND
POLICIES".
MASTER TRUST.................. Rather than directly acquire and manage its own
portfolio of securities, the OMEGA South Africa
Fund invests all of its investable assets in
Old Mutual South Africa Equity Trust (the
"Master Trust"), a Massachusetts trust with its
principal place of business in Bermuda that has
the same investment objective as the OMEGA
South Africa Fund.
ALL REFERENCES IN THIS MEMORANDUM TO THE "FUND"
APPLY TO BOTH THE OMEGA SOUTH AFRICA FUND AND
THE MASTER TRUST, EXCEPT AS OTHERWISE
INDICATED.
INVESTMENT ADVISER............ Old Mutual Asset Managers (Bermuda) Limited
(the "Adviser") is the investment adviser to
the Master Trust. The Adviser is a wholly-owned
subsidiary of the South African Mutual Life
Assurance Society ("Old Mutual"), which is the
largest (in terms of 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.$40 billion. The OMEGA
South Africa Fund does not have a separate
investment adviser, because it invests all of
its investable assets in the Master Trust.
The Master Trust pays the Adviser a management
fee of 0.60% per annum of the Master Trust's
daily net assets (the "Management Fee").
Investors who purchase shares of beneficial
interest in the OMEGA South Africa Fund
("Shares") in one or more transactions for an
aggregate price of at least U.S.$50 million
(net of redemptions) will receive a rebate from
the Adviser such that their accounts are
subject to a Management Fee of 0.50% per annum.
The
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Management Fee accrues daily on an annualized
basis and is paid monthly in arrears. See
"MANAGEMENT -- Adviser".
PORTFOLIO..................... Shortly before the launch of the OMEGA South
Africa Fund, Old Mutual transferred to the
Master Trust a portfolio of South African
securities (the "Portfolio") from Old Mutual's
main proprietary investment portfolio (the "Old
Mutual Main Fund") with a market value of
approximately U.S.$1 billion and holdings in 60
South African issuers. At the time of its
transfer, the Portfolio generally reflected the
equity holdings of the Old Mutual Main Fund.
Old Mutual has agreed to pay any stamp duty due
in respect of the transfer of the Portfolio.
See "THE PORTFOLIO".
As consideration for the acquisition of the
Portfolio and for an initial capital
contribution, the Master Trust issued
substantially all of its beneficial interest to
Old Mutual Fund Holdings (Bermuda) Limited
("Old Mutual Bermuda"), an indirect
wholly-owned subsidiary of Old Mutual.
FUND STRUCTURE................ The OMEGA South Africa Fund will invest the
proceeds of this offering of Shares (the
"Offering") in the Master Trust, which will
then apply the proceeds to redeem a
corresponding portion of the interest of Old
Mutual 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
invests in a portfolio of South African and
international securities (the "Global Fund").
Old Mutual initially capitalized the Global
Fund with approximately U.S.$500 million of
South African securities. 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
is the sole shareholder of the Global Fund. See
"LIQUIDITY FACILITY AND THE GLOBAL FUND".
VALUATION OF SHARES........... The net asset value per Share is determined as
of 10:00 a.m. (Eastern time) on each day on
which the New York Stock Exchange is open for
trading (a "Business Day"). The Fund generally
values JSE listed securities based on their
current JSE ruling price, and converts prices
from South African rand ("S.A. Rand") to U.S.
dollars using exchange rates prevailing as of
the time the net asset value is to be
determined. Trading may take place in
securities held by the Master Trust on days
that are not Business Days and on which it will
not be possible to purchase or redeem Shares.
See "VALUATION OF SHARES".
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OFFERING AND SUBSCRIPTION
PROCEDURE.................... The OMEGA South Africa Fund is offering Shares
on a continuous basis at a price equal to their
net asset value plus a sales charge of 0.35%.
Investors that wish to subscribe for Shares are
required to complete the subscription form
circulated by the Placement Agents. The office
of the Transfer Agent will be open to accept
subscription forms from 12:00 noon to 4:00 p.m.
(Eastern time) on every Business Day.
Subscription forms received by 4:00 p.m.
(Eastern time) on any Business Day will be
processed based on the net asset value as
determined on the next Business Day.
Subscription forms reaching the Transfer Agent
after 4:00 p.m. (Eastern time) on any Business
Day will be deemed to have been received at
12:00 noon (Eastern time) on the next Business
Day. Full payment for Shares is due in cash by
3:00 p.m. (Eastern time) on the second Business
Day following receipt (or deemed receipt) of
the subscription form by the Transfer Agent.
The minimum purchase for any investor is U.S.$5
million, provided the minimum purchase may, in
particular circumstances, be reduced for
certain investors to not less than U.S.$1
million. The termination date of the Offering
is expected to be May 10, 1996.
The Shares are being offered and sold only to
investors that are "accredited investors" as
defined in Regulation D under the Securities
Act of 1933, as amended (the "1933 Act"). See
"OFFERING OF SHARES".
PLACEMENT ARRANGEMENTS........ The OMEGA South Africa Fund has engaged Fleming
Martin Inc., Rand International Securities, and
S.G. Warburg & Co. Inc. to act as placement
agents for the Offering (the "Placement
Agents"). Each of the Placement Agents will
receive the 0.35% sales charge with respect to
Shares placed by it. Old Mutual Bermuda has
agreed to make additional payments to the
Placement Agents equal to 0.25% of the price of
Shares sold in the Offering. See "OFFERING OF
SHARES -- Offering".
FURTHER OFFERINGS............. Following completion of the Offering, the OMEGA
South Africa Fund may, from time to time, offer
any Shares, including Shares unsold in the
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 -- Further Offerings".
REDEMPTIONS AND LIQUIDITY
FACILITY..................... Investors may request redemption of Shares on
any Business Day. The office of the Transfer
Agent will be open to accept redemption
requests from 12:00 noon to 4:00 p.m. (Eastern
time) on every Business Day. Redemption
requests reaching the Transfer Agent after 4:00
p.m. (Eastern time) on any Business Day will be
deemed to have been received at 12:00 noon
(Eastern time) on the next Business Day.
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<PAGE> 12
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 registered holders of Shares
("Shareholders") for so long as the Adviser
serves as investment adviser to the Master
Trust. Any termination of the Liquidity
Facility would not affect Shareholder
redemption rights.
Shares will be redeemed at net asset value (as
next determined) subject to a redemption fee
charged by the OMEGA South Africa Fund of 1.65%
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 substantially reduce the trading costs of
the Fund. See "REDEMPTIONS" and "LIQUIDITY
FACILITY AND THE GLOBAL FUND".
TRANSFER OF SHARES............ There is no public market for the Shares, and
none is expected to develop. Transfers of
Shares are subject to restrictions for purposes
of complying with securities laws. One or more
broker-dealers, including the Placement Agents,
may on a private basis arrange purchases and
sales of Shares. However, no party is obligated
to arrange purchases and sales of Shares, and
there can be no assurance that any private
market for Shares will, if established, be
continued. See "GENERAL INFORMATION --
Transfers of Shares".
DIVIDENDS..................... Dividend income from the OMEGA South Africa
Fund is not expected to be a significant
portion of the long-term total return.
Substantially all of the Fund's net income from
dividends and interest will be distributed to
Shareholders semi-annually on or about the last
day of June and December of each year
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.
NON-U.S. FUND................. The Old Mutual SAGA Fund, a mutual fund
organized under the laws of Bermuda (the
"Non-U.S. Fund"), also invests in the Master
Trust. Shares of the Non-U.S. Fund are offered
outside of the U.S. to non-U.S. investors. The
operating expenses, distribution policies, and
sales charges of the OMEGA South Africa Fund
and the Non-U.S. Fund may not be identical,
although the sales charges for the
4
<PAGE> 13
OMEGA South Africa Fund and the Non-U.S. Fund
will be the same for the 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 has registered as an investment
company under the Investment Company Act of
1940, as amended (the "1940 Act"). Neither the
Securities and Exchange Commission nor any
state securities authority has reviewed this
Memorandum or passed upon the merits of the
Fund or the Shares.
ERISA......................... Assets of the Fund will not be considered "plan
assets" of Shareholders that are pension or
benefit plans subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"). The OMEGA South Africa Fund
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, provides 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 Fund's
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 serves as
custodian for the Master Trust and the OMEGA
South Africa Fund. Standard Bank of South
Africa serves as sub-custodian for the Master
Trust's South African registered assets.
TRANSFER AGENT................ State Street Bank and Trust Company serves as
transfer agent for the OMEGA South Africa Fund
(the "Transfer Agent").
VOTING RIGHTS................. Shareholders are entitled to vote on the
election of the trustees of the Fund and on
certain important matters, including (i)
certain amendments to the declarations of trust
of the OMEGA South Africa Fund and the Master
Trust, (ii) changes in the investment objective
and fundamental investment restrictions, and
(iii) material amendments to the investment
advisory agreement between the Master Trust and
the Adviser, or the adoption of a new
investment advisory agreement.
REPORTS TO SHAREHOLDERS....... The OMEGA South Africa Fund will furnish
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.
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<PAGE> 14
EXPENSES...................... The OMEGA South Africa Fund and the Master
Trust are responsible for the ongoing expenses
of conducting their affairs. 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 and certain amortized organizational
expenses, will not exceed 1.00% per annum of
the Fund's daily net assets (although it is
currently expected that annual operating
expenses will be substantially less than 1.00%
of daily net assets). See "GENERAL INFORMATION
-- Expenses". The OMEGA South Africa Fund will
reimburse the Adviser for certain marketing
expenses incurred (or advanced to the Placement
Agents or others) by the Adviser in the
placement of Shares, provided the amount of
such reimbursements in any year will not exceed
0.05% of the average daily net assets of the
OMEGA South Africa Fund for such year. See
"OFFERING OF SHARES -- Expense Reimbursement".
INVESTMENT CONSIDERATIONS..... The Fund invests primarily in securities of
South African issuers and is, as a result,
particularly subject to risks affecting South
Africa. Investment in South Africa is subject
to various risks, including political
uncertainties. South African securities markets
are less liquid than securities markets in more
developed countries. See "INVESTMENT
CONSIDERATIONS".
6
<PAGE> 15
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term total return in excess of that
of the JSE Actuaries All Share Index from investment in equity securities of
South African issuers. There can be no assurance that the Fund will achieve its
investment objective.
INVESTMENT POLICIES
The OMEGA South Africa Fund seeks to achieve its investment objective by
investing all of its investable assets in the Master Trust.
The Master Trust seeks to achieve its investment objective by investing in
equity securities of South African issuers. Under normal circumstances, at least
95% of the Master Trust's total assets will be invested in equity securities of
South African issuers that are listed on a securities exchange. The Master Trust
may invest up to 5% of its total assets in securities that are, at the time of
the investment, not listed on a securities exchange (although such investments
will generally be limited to securities that are expected to be listed on an
exchange within a reasonable period of time).
In managing the Master Trust's assets the Adviser will not speculate for
short-term gain but will focus on securities that, in the Adviser's opinion, are
likely to show long-term improvements in profits and cash flow. Less weight will
be accorded to short-term and cyclical factors. This approach is designed to
result in strong dividend growth and capital appreciation. Historically, South
African issuers have retained a high proportion of earnings and, if this policy
continues, it is likely that the long-term total return would largely be in the
form of capital appreciation.
For purposes of the Master Trust's investment policies, a South African
issuer is an issuer that meets one of the following tests: (i) its principal
offices or operations are located in South Africa; or (ii) it derives at least
50% of its revenues from operations or investments in South Africa. Equity
securities are defined as common stock, securities convertible into common
stock, and securities that participate in profits in a similar manner to common
stock. Equity securities may be purchased in the form of American Depositary
Receipts, European Depositary Receipts, Global Depositary Receipts, or other
similar securities representing equity securities.
CERTAIN RESTRICTIONS
Limitation on Investment in a Single Issuer. The Master Trust will not
purchase securities of any issuer if, upon completion of the purchase, (i) more
than 7.5% of the Master Trust's assets (taken at market value) would be invested
in securities of the issuer, or (ii) the Master Trust would own in excess of 10%
of the voting securities of the issuer.
Limitation on Investment in Old Mutual Group Controlled Issuers. The Fund
will not purchase securities of any issuer in which Old Mutual, its wholly-owned
subsidiaries, and investment vehicles managed by Old Mutual or its wholly-owned
subsidiaries (collectively, the "Old Mutual Group") own in the aggregate in
excess of 50% of the outstanding equity interest or where the acquisition would
result in the Old Mutual Group owning in the aggregate in excess of 50% of the
outstanding equity interest, provided this restriction (i) will not apply to the
OMEGA South Africa Fund's investment in the Master Trust and (ii) will not
prohibit the Fund from electing to receive dividends consisting of securities,
or exercising rights issued in a rights offering, upon the same terms generally
available to other investors. The initial acquisition of the Portfolio was not
subject to this limitation.
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
7
<PAGE> 16
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
Adviser believes that an issuer's long-term potential to increase its cash flow
and dividends has been reduced or if cash is needed to invest in issuers which
have better long-term growth potential, without regard to the length of time the
securities have been held. The Adviser does not intend to pursue short-term
trading opportunities. The turnover rate of the Master Trust is not expected to
exceed 25% annually.
ADDITIONAL RESTRICTIONS
Certain other restrictions are described under "GENERAL INFORMATION --
Certain Conflicts of Interest". The registration statements of the OMEGA South
Africa Fund and the Master Trust under the 1940 Act contain additional
restrictions on the investment policies of the Fund. A copy of the registration
statement of each of the OMEGA South Africa Fund and the Master Trust will be
provided to potential investors upon request. The registration statement of each
of the OMEGA South Africa Fund and the Master Trust can be inspected without
charge at the office of the Securities and Exchange Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be
obtained therefrom at prescribed rates.
GENERAL
The investment objective of the OMEGA South Africa Fund described under
"Investment Objective" above may not be changed materially except by a majority
vote of Shareholders.
The Master Trust has undertaken to the OMEGA South Africa Fund and the
Non-U.S. Fund that it will not make any material change to its investment
objective described under "Investment Objective" above or to its investment
policies described under "Investment Policies" above except in unforeseen
circumstances and with the approval of a majority vote of the Shareholders and a
majority vote of shareholders of the Non-U.S. Fund.
Except as otherwise indicated, the investment policy and restrictions of
the OMEGA South Africa Fund and the investment restrictions of the Master Trust
may be changed without Shareholder approval.
The percentage limitations set forth above, as well as those described
elsewhere in this Memorandum and in the registration statements of the OMEGA
South Africa Fund and the Master Trust under the 1940 Act, are measured and
applied only at the time an investment is made or another relevant action is
taken by the Fund.
8
<PAGE> 17
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 1.3% in 1993 and 2.7% 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.
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.
9
<PAGE> 18
The following table shows the current real GDP growth forecasts for 1995,
1996, and 1997 of four prominent South African institutions:
- - --------------------------------------------------------------------------------
REAL GDP GROWTH FORECASTS
% CHANGE
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Bureau for Economic Research........... 2.9 3.1 2.5
Smith Borkum Hare (Pty) Ltd. .......... 3.4 4.5 4.2
Ivor Jones, Roy & Co. Inc. ............ 3.2 3.5 3.0
Fleming Martin Securities Ltd.* ....... 3.4 3.5 2.5
* Fleming Martin Securities Ltd. is
affiliated with Fleming Martin
Inc., one of the Placement Agents.
</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.
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.
10
<PAGE> 19
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 October 1994 to October 1995 was 6.3%.
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 941 billion (U.S.$258 billion) as at October 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 6.4% on an annualized basis in the ten month
period ended October 31, 1995. Although as at October 31, 1995 there were 643
listed companies on the JSE, market capitalization and trading is concentrated
in a relatively small number of companies. As at that date the 15 largest
companies by market capitalization represented approximately 39% of the JSE
Actuaries All Share Index, and the average annual dividend yield for companies
listed on the JSE was approximately 2.4%.
Agreement in principle has been reached between the relevant parties for
fundamental changes to the rules of the JSE, including the abolition of single
capacity and the removal of restrictions on corporate membership and of the
present requirement for unlimited liability of members. Legislation to implement
these changes has been approved by South Africa's parliament. The change to
permit corporate membership became effective on November 8, 1995. Changes
relating to negotiated commissions, single capacity, and an automated trading
system should be implemented early in 1996.
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 12.1% in
MSCI's Emerging Markets Global Index, 14.1% in the IFC's Global Index, and 25.7%
in the IFC's Investable Index as of October 31, 1995. The IFC has announced that
South Africa's weighting in the IFC's Investable Index is to be reduced from
January 1996 to 18.7%.
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 October 31, 1995.
<TABLE>
<CAPTION>
PERIODS TO OCTOBER 31, 1995
-----------------------------
3 YEARS 5 YEARS 7 YEARS
------- ------- -------
<S> <C> <C> <C>
JSE Actuaries All Share Index*.................................. 32.1% 17.2% 18.3%
------- ------- -------
S&P 500 Index................................................... 11.6% 13.9% 11.1%
------- ------- -------
</TABLE>
- - ---------------
* Figures converted to U.S. dollars using the Financial S.A. Rand exchange rate
where applicable.
11
<PAGE> 20
THE PORTFOLIO
On November 3, 1995, shortly before the launch of the OMEGA South Africa
Fund, Old Mutual transferred to the Master Trust a portfolio of South African
securities (the "Portfolio") from the Old Mutual Main Fund with a market value
of approximately U.S.$1 billion and holdings in 60 South African issuers. The
holdings included in the Portfolio at the time of the transfer are listed on
Exhibit A to this Memorandum.
At the time the Portfolio was transferred to the Master Trust, it reflected
the equity holdings of the Old Mutual Main Fund, subject to adjustments to
exclude companies that were 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 represented more than 5% of
the Portfolio (at the time it was segregated), to exclude holdings that
represented 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. Old
Mutual has agreed to pay any stamp duty due in respect of the transfer of the
Portfolio.
The Master Trust's portfolio 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 November 29, 1995 it had an historic price
earnings ratio of 19.4 and an annual dividend yield of 2.0%.
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.
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.
12
<PAGE> 21
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 invests primarily in securities of South African issuers and, as a
result, is particularly subject to risks affecting South Africa and its economy
and securities markets. Investors in the Fund may therefore be subject to
greater risk and volatility than investors in investment vehicles with more
geographically diverse investment portfolios.
SOCIAL AND POLITICAL RISKS
South Africa is undergoing a period of unprecedented social and political
change. This has been accompanied by high levels of crime, violence, and social
unrest in some areas, which may continue. While some of the reasons for this
unrest have been addressed by the recent constitutional changes, others, such as
inadequate housing, education, health care, and employment opportunities, remain
to be addressed for large segments of the population. In some areas 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.
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
13
<PAGE> 22
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 below 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 October 1995 to only U.S.$3.2
billion or 5 weeks of imports of goods and services. If South Africa fails to
maintain a balance of payments surplus or is not able to access sources of
foreign capital, the government would probably have to raise interest rates and
deflate the economy.
Government Spending. A major 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
14
<PAGE> 23
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 are invested in securities denominated in S. A.
Rand, and income from these investments is received in S.A. Rand. As a result,
the Fund's net asset value and distributions, which are measured in U.S.
dollars, would be adversely affected if the value of the S. A. Rand declines
relative to the U.S. dollar. Historically, the S. A. Rand has tended to
depreciate against the U.S. dollar.
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".
15
<PAGE> 24
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, an
industrial holding company, and Nedcor Limited, a bank holding company. His
address is Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 73), 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 59), 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 48), 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, a company engaged in distribution and engineering, John Lusty plc, a food
distribution company, and Hudaco Industries Limited, a South African distributor
of industrial consumable goods, and was a director of South African Breweries
Limited from 1973 to 1994. His address is Hallams Court, Littleford Lane,
Blackheath, Guildford, Surrey, United Kingdom.
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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 Clarendon House, 2 Church Street, Hamilton, Bermuda.
William Langley, President of the Adviser, is 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, is 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.
Old Mutual provides 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.$40 billion.
Because the OMEGA South Africa Fund invests all of its investable assets in
the Master Trust, the OMEGA South Africa Fund does not have a separate
investment adviser.
The Master Trust pays the Adviser a Management Fee of 0.60% per annum of
the Master Trust's daily net assets. Investors who purchase Shares in one or
more transactions for an aggregate price of at least U.S.$50 million (net of
redemptions) will receive a rebate from the Adviser to the extent necessary such
that their accounts are subject to a Management Fee of 0.50% per annum. The
Management Fee accrues daily on an annualized basis and is paid monthly in
arrears. The Adviser is responsible for compensating Old Mutual for research and
information provided to the Adviser.
ADMINISTRATOR
State Street Bank and Trust Company (the "OMEGA Fund Administrator") 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"), provides certain administrative and fund
accounting services to the Master Trust pursuant to an administrative services
agreement.
The Master Trust Administrator receives an annual administration fee from
the Master Trust calculated as a percentage of the Master Trust's 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 pays the OMEGA Fund Administrator an
annual administration fee of U.S.$40,000.
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TRANSFER AGENT
State Street Bank and Trust Company (the "Transfer Agent") serves as
transfer agent and dividend disbursing agent for the OMEGA South Africa Fund.
The Transfer Agent may delegate certain of its functions to an affiliated
entity. The Transfer Agent receives an annual fee of U.S.$18,000 from the OMEGA
South Africa Fund. The principal business address of the Transfer Agent is 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") serves as custodian
for the Master Trust's and the OMEGA South Africa Fund's assets. Standard Bank
of South Africa serves as sub-custodian for the Master Trust's South African
registered assets. All assets of the Master Trust and the OMEGA South Africa
Fund will be held in a segregated account in the name of the relevant Fund. The
Custodian receives an annual custody fee of 0.03% of the Master Trust's average
daily net assets. The Custodian is responsible for the fees of the
sub-custodians.
VALUATION OF SHARES
The net asset value per Share is determined on each day on which the New
York Stock Exchange is open for trading (a "Business Day"). This determination
is made by the OMEGA Fund Administrator once each day as of 10:00 a.m. (Eastern
time), being after the close of business of the JSE for that day, by adding the
market value of all securities and other assets of the OMEGA South Africa Fund
(including the value of its interest in the Master Trust), then subtracting the
OMEGA South Africa Fund's liabilities, and then dividing the result by the
number of outstanding Shares. The Master Trust Administrator calculates the net
asset value of the Master Trust as of 10:00 a.m. (Eastern time) on each Business
Day by adding the market value of all securities and other assets of the Master
Trust and then subtracting the Master Trust's liabilities.
The Master Trust generally values JSE listed securities based on the
current JSE ruling price. The ruling price for a JSE listed security on any day
is the last sale price, adjusted upward to any current higher bid price or
downward to any current lower offer price. If the securities did not trade on
the JSE on the date of the valuation, they may be valued on a different basis
believed by the trustees of the Master Trust to reflect their fair value. Values
are converted from S.A. Rand to U.S. dollars using exchange rates prevailing as
of the time the net asset value is to be determined. Trading may take place in
securities held by the Master Trust on days that are not Business Days and on
which it will not be possible to purchase or redeem Shares.
The Fund may, from time to time, revise its procedures relating to the
calculation of net asset value to reflect changes in JSE trading periods and
practices.
OFFERING OF SHARES
OFFERING
The OMEGA South Africa Fund is offering Shares on a continuous basis at a
price equal to their net asset value plus a sales charge of 0.35%. The minimum
purchase for any investor is U.S.$5 million (exclusive of sales charge),
provided the minimum purchase may, in particular circumstances, be reduced for
certain investors to not less than U.S.$1 million (exclusive of sales charge).
The termination date of the Offering is expected to be May 10, 1996.
The OMEGA South Africa Fund has engaged Fleming Martin Inc., Rand
International Securities, and S.G. Warburg & Co. Inc. to act as placement agents
for the Offering (the "Placement Agents"). Each of the Placement Agents will
receive the 0.35% sales charge with respect to Shares placed by it. Old Mutual
Bermuda has agreed to make additional payments to the Placement Agents equal to
0.25% of the price of Shares sold in the Offering. The Fund has agreed to
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<PAGE> 27
indemnify the Placement Agents against certain liabilities, including
liabilities under applicable securities laws.
The OMEGA South Africa Fund will, on receipt thereof, invest the proceeds
of the Offering in the Master Trust, and its interest in the Master Trust will
be increased accordingly. The Non-U.S. Fund will similarly invest the proceeds
of its offering of shares in the Master Trust. The Master Trust will then apply
the proceeds received from the OMEGA South Africa Fund and the Non-U.S. Fund to
redeem a corresponding portion of the interest of Old Mutual Bermuda in the
Master Trust. Old Mutual Bermuda will invest the proceeds of these redemptions
in the Global Fund.
The OMEGA South Africa Fund is offering the Shares without registration
under the 1933 Act as a private placement pursuant to Regulation D under the
1933 Act. The OMEGA South Africa Fund is also relying upon appropriate
exemptions from the registration requirements of applicable state securities or
blue sky laws. The Shares are being offered and sold in the U.S. only to
investors that are "accredited investors" as defined in Regulation D.
The Offering may be terminated or modified by the OMEGA South Africa Fund.
In the event that the terms of the Offering are materially modified, the new
terms will be set forth in a supplement to this Memorandum.
SUBSCRIPTION PROCEDURE
Shares may be purchased on any Business Day. Investors that wish to
subscribe for Shares are required to complete the subscription form circulated
by the Placement Agents. Completed subscription forms should be returned to the
relevant Placement Agent, who, on behalf of the investors, will then forward
them to the Transfer Agent. All subscriptions are subject to acceptance by the
OMEGA South Africa Fund.
The office of the Transfer Agent will be open to accept subscription forms
from 12:00 noon to 4:00 p.m. (Eastern time) on every Business Day. Subscription
forms received by 4:00 p.m. (Eastern time) on any Business Day will be processed
based on the net asset value as determined on the next Business Day.
Subscription forms reaching the Transfer Agent after 4:00 p.m. (Eastern time) on
any Business Day will be deemed to have been received at 12:00 noon (Eastern
time) on the next Business Day. Full payment for Shares is due in cash by 3:00
p.m. (Eastern time) on the second Business Day following receipt (or deemed
receipt) of the subscription form by the Transfer Agent. The purchase price for
Shares subscribed for in the Offering will be payable by wire transfer to the
account of the Transfer Agent specified in the subscription form.
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 THIS OFFERING.
Separate offering and subscription materials will be circulated for any further
offerings of Shares.
Following completion of the Offering, the OMEGA South Africa Fund may, from
time to time, offer any Shares, including Shares unsold in the 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 any
further offering of Shares or as to the terms upon which any further offering
will be made. Investors that purchase Shares in the Offering will not have any
pre-emptive rights with respect to any further offerings.
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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 Agents or others) by
the Adviser in the placement of Shares, provided the amount of such
reimbursements in any year will not exceed 0.05% of the average daily net assets
of the OMEGA South Africa Fund for such year. This reimbursement is authorized
pursuant to a 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
1.65% of redemption proceeds. Redemption requests should be submitted in writing
to the Transfer Agent on a form available from the OMEGA South Africa Fund or
the Transfer Agent. The office of the Transfer Agent will be open to accept
redemption requests from 12:00 noon to 4:00 p.m. (Eastern time) on every
Business Day. Redemption requests reaching the Transfer Agent after 4:00 p.m.
(Eastern time) on any Business Day will be deemed to have been received at 12:00
noon (Eastern time) on the next Business Day. The Transfer Agent may require
evidence of the authority of persons submitting any redemption request.
Redemption proceeds will be paid in federal funds within seven days following
receipt of a redemption request in proper form.
In order to fund redemptions, the OMEGA South Africa Fund will redeem a
corresponding portion of its interest in the Master Trust. For so long as Old
Mutual 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 substantially 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 serves as investment adviser to Old Mutual Global Assets Fund
Limited, a mutual fund organized under the laws of Bermuda (the "Global Fund").
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO PURCHASE, ANY SECURITIES OF THE GLOBAL FUND. Old Mutual Bermuda is the
sole shareholder of the Global Fund. The Global Fund invests in broadly
diversified portfolios of South African equities and international equity, debt,
and money market securities with the goal of achieving a long-term total return.
The Global Fund may only borrow to a limited extent. The Global Fund is designed
to provide a pool of securities to fund redemptions of Shares and redemptions of
shares of the Non-U.S. Fund.
Old Mutual initially capitalized the Global Fund with approximately
U.S.$500 million of South African securities. Upon each issuance of Shares (or
shares in the Non-U.S. Fund) the Master Trust will redeem a portion of the
interest of Old Mutual 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
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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
disposing of 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 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.
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.,
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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.
The Fund's transactions in forward currency contracts will be subject to
special tax rules that may affect the amount, timing, and character of Fund
income. For example, certain positions held for the Fund on the last business
day of each taxable year will be marked to market (i.e., treated as if closed
out) on that day, and any gain or loss associated with the positions will be
treated as 60% long-term and 40% short-term capital gain or loss. Certain
positions held for the Fund that substantially diminish its risk of loss with
respect to other positions in its portfolio may constitute "straddles," and may
be subject to special tax rules that would cause deferral of Fund losses,
adjustments in the holding periods of Fund securities, and conversions of
short-term into long-term capital losses. Certain tax elections exist for
straddles that may alter the effects of these rules.
Foreign exchange gains and losses realized by the Fund will generally be
treated as ordinary income and losses. Use of foreign currencies for non-hedging
purposes may be limited in order to avoid a tax on the Fund. Certain uses of
foreign currency and foreign currency forward contracts and investment by the
OMEGA South Africa Fund in certain "passive foreign investment companies" may be
limited, or a tax election may be made, if available, in order to enable the
OMEGA South Africa Fund to preserve its qualification as a registered investment
company and to avoid imposition of a tax on the OMEGA South Africa Fund.
While, as discussed under "South African Taxation" below, there are
currently no South African taxes that would apply to the earnings of the Fund,
in the future the Fund may pay South African taxes on its investment income. The
OMEGA South Africa Fund expects to be able to elect to "pass through" to
Shareholders non-U.S. income taxes paid. If the OMEGA South Africa Fund so
elects, Shareholders will be required to treat their pro rata portion of the
non-U.S. income taxes paid by the OMEGA South Africa Fund as part of the amounts
distributed to them by the OMEGA South Africa Fund and thus includable in their
gross income for federal income tax purposes. Shareholders who itemize
deductions would then be allowed to claim a deduction or credit (but not both)
on their federal income tax returns for such amounts, subject to certain
limitations. Shareholders who do not itemize deductions would (subject to such
limitations) be able to claim a credit but not a deduction. No deduction for
such amounts will be permitted to individuals in computing their alternative
minimum tax liability. If the OMEGA South Africa Fund does not qualify or elect
to "pass through" to Shareholders non-U.S. income taxes paid by it, Shareholders
will not be able to claim any deduction or credit for any part of the non-U.S.
taxes paid by the OMEGA South Africa Fund.
Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at a rate of 30%. The OMEGA South
Africa Fund intends to withhold tax payments at the rate of 30% on taxable
dividends and other payments to Non-U.S. Persons that are subject to such
withholding, unless a lower rate is permitted under an applicable treaty. Any
amounts 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.
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SOUTH AFRICAN TAXATION
Income Tax. The Master Trust will be treated as a trust for South African
tax purposes with the result that income passing through the Master Trust will
retain its nature in investors' hands. South African income tax is source based
and therefore only income derived from a South African or deemed South African
source would be taxable. Dividends are exempt from tax. The withholding tax on
dividends was abolished during 1995. Interest from a source within or
deemed within South Africa accruing to non-residents or companies and other
associations which are managed and controlled outside South Africa is also
exempt from tax.
Gains realized by the Master Trust on the disposal of South African
securities would be taxable if they are of a revenue nature from a business of
trading in securities. The investment policy of the Master Trust should result
in the underlying securities being held as capital investments (gains in respect
of which would not be regarded as revenue profit).
Capital gains tax. South Africa has no capital gains tax and therefore
capital gains (as opposed to share-dealing gains) on the sale of shares are not
taxable.
Stamp duty or Marketable Securities Tax ("MST"). As of April 1, 1996
stamp duty or MST at a rate of 0.5% is payable by the transferee on the
transfer of equities. Prior to April 1, 1996 stamp duty or MST was payable at a
rate of 1%. 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. STC has been reduced
to 12.5% in respect of all dividends declared after March 13, 1996. 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.
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 is an investment company registered under the 1940 Act,
under applicable Department of Labor regulations regarding the identification of
"plan assets" for purposes of ERISA and the prohibited transaction provisions of
the Code, the investment in the Fund by an ERISA Plan will include the Shares
acquired but will not, solely by reason of the acquisition of such Shares,
include any of the underlying assets of the Fund.
The foregoing discussion is merely a summary of certain issues any
fiduciary acting on behalf of an ERISA Plan should evaluate when considering an
investment in Shares of the OMEGA South Africa Fund.
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GENERAL INFORMATION
ORGANIZATION
The OMEGA South Africa Fund is a Massachusetts business trust that was
organized in September 1995 and registered on November 8, 1995 as a
non-diversified open-end management investment company under the 1940 Act. The
Master Trust is a trust that was organized in September 1995 under the laws of
Massachusetts and registered on November 9, 1995 as a non-diversified open-end
management investment company under the 1940 Act. The declaration of trust of
the Master Trust provides that the OMEGA South Africa Fund and any other
entities investing in the Master Trust are each liable for all obligations of
the Master Trust. However, it is not expected that the liabilities of the Master
Trust would ever exceed its assets.
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. Under these requirements not more
than 25% of the Master Trust's total assets will be invested in securities of
any one issuer, and at least 50% of the total assets of the Master Trust will be
represented by cash, securities of other investment companies, and other
securities not exceeding with respect to any issuer 5% of the assets of the
Master Trust or 10% of the outstanding securities of any issuer.
INVESTMENT STRUCTURE
Rather than directly acquire and manage its own portfolio of securities,
the OMEGA South Africa Fund invests all of its investable assets in the Master
Trust, which has the same investment objective as the OMEGA South Africa Fund.
The Non-U.S. Fund also holds a beneficial interest in the Master Trust, and
other investment vehicles, if any, may acquire interests in the Master Trust
upon the same terms and conditions as the OMEGA South Africa Fund. The Non-U.S.
Fund and other investment vehicles that invest in the Master Trust may have
different operating expenses and sales charges than the OMEGA South Africa Fund,
although the sales charges for the OMEGA South Africa Fund and the Non-U.S. Fund
will be the same for the Offering.
TRANSFERS OF SHARES
The Offering has not been registered under the 1933 Act, and the Shares
will therefore be "restricted securities". The OMEGA South Africa Fund may
require as a condition of any transfer of Shares receipt of an opinion of
counsel, in form and substance satisfactory to the OMEGA South Africa Fund, to
the effect that a proposed transfer may be made without registration under the
1933 Act or applicable state securities laws.
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-
24
<PAGE> 33
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.
CERTIFICATES
The Transfer Agent maintains a share register for Shareholders. Share
certificates are not issued unless specifically requested by Shareholders.
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 October 31, 1995 the Old Mutual Group's JSE holdings
totaled S.A. Rand 78 billion, equal to approximately 8% of total JSE market
capitalization. At October 31, 1995 the Old Mutual Group held 5% or more of the
listed securities in 23% of the JSE traded companies, which companies
collectively represented 51% 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 (A) from unaffiliated brokers in open market transactions
or (B) in transactions effected pursuant to and in compliance with
Rule 17a-7 under the United States Investment Company Act of 1940, as
amended, and the procedures adopted by the Trust pursuant to Rule 17a-7.
This restriction shall not apply to (A) transactions approved by order of
the Securities and Exchange Commission, (B) the acquisition of the
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.
25
<PAGE> 34
(ii) The Fund will not participate in any effort to replace the
management of any issuer, or take legal or management control of any
issuer, provided this restriction will not prohibit the Fund from (A)
accepting a tender or takeover offer made generally to holders of a
particular security or (B) voting its securities, or granting a proxy to
vote its securities, in any proxy contest that is not, directly or
indirectly, organized by a member of the Old Mutual Group. This restriction
will not apply to the OMEGA South Africa Fund's investment in the Master
Trust.
(iii) The Fund will not engage in any purchases of securities of OM
Affiliated Companies, or defer its sales of such securities, for the
purpose of supporting the price thereof.
(iv) Fund purchases and sales of the securities of OM Affiliated
Companies, as well as purchases or sales of the same securities by other
members of the Old Mutual Group at similar times, will be reviewed by (A)
the Old Mutual Surveillance Team on a regular basis and (B) the Fund
trustees on at least a quarterly basis. Old Mutual will provide the Fund
trustees with such information as they may require for purposes of this
review.
(v) The Fund will not purchase securities of any issuer in which the
Old Mutual Group owns in the aggregate in excess of 50% of the outstanding
equity interest or where the acquisition would result in the Old Mutual
Group owning in the aggregate in excess of 50% of the outstanding equity
interest, provided this restriction (A) will not apply to the OMEGA South
Africa Fund's investment in the Master Trust and (B) will not prohibit the
Fund from electing to receive dividends consisting of securities, or
exercising rights issued in a rights offering, upon the same terms
generally available to other investors. The initial acquisition of the
Portfolio was not subject to this limitation.
Old Mutual and companies in the Old Mutual Group act as investment manager
and adviser to a number of funds, customers, and proprietary accounts (including
the Old Mutual Main Fund). The Adviser acts as investment adviser to the Master
Trust, and to the Global Fund which holds investments in South African equities.
The South African equity investments of the Master Trust, the Global Fund,
and the Old Mutual Main Fund will ordinarily be managed pursuant to
substantially similar investment objectives and policies. However, the
composition of their respective portfolios, and the purchase and sale
transactions entered into on behalf of the Master Trust, the Global Fund, and
the Old Mutual Main Fund will not be identical.
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 are responsible for the
ongoing expenses of conducting their affairs, including (i) investment advisory,
administration, custody, and transfer agency fees and expenses, (ii) legal,
audit, and accounting fees and expenses, (iii) costs of reports to and other
communications with investors, (iv) costs of preparing and filing tax returns
and reports and other governmental filings, (v) fees and expenses of trustees,
(vi) printing, copying, travel, and communication costs, and (vii) costs of
registering or qualifying Fund securities under the securities laws of various
jurisdictions. The OMEGA South Africa Fund and the Master Trust will amortize
certain organizational and offering expenses over a period of five years.
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 and amortized organizational and offering expenses, will not
exceed 1.00% per annum of the Fund's daily net assets (without regard to any
rebate of the Management Fee to investors who purchase at least U.S.$50 million
of Shares). This limitation does not apply to (i) extraordinary expenses (such
as the cost of
26
<PAGE> 35
litigation), (ii) the placement fee and the amount payable to Old Mutual Bermuda
in connection with the initial placement of Shares, (iii) sales charges on
Shares, (iv) brokerage expenses, or (v) the Redemption Fee. The Adviser may not
terminate its undertaking to so reduce or rebate a portion of the Management Fee
without giving at least 120 days notice to Shareholders, provided the Adviser
may terminate this undertaking at any time without prior notice if the Adviser
ceases to be investment adviser to the Master Trust. It is expected that annual
operating expenses will be substantially less than 1.00% of daily net assets.
ADDITIONAL INFORMATION
The registration statements under the 1940 Act of the OMEGA South Africa
Fund and the Master Trust contain more detailed information about the Fund. A
copy of the registration statement of each of the OMEGA South Africa Fund and
the Master Trust will be provided to potential investors upon request. The
registration statement of each of the OMEGA South Africa Fund and the Master
Trust can be inspected without charge at the office of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and copies may be obtained therefrom at prescribed rates.
The Fund will provide to a prospective investor upon request such
additional information concerning the Fund and its proposed investments as the
Fund possesses or can obtain without unreasonable effort or expense. Requests
for additional information should be directed to one of the Placement Agents.
27
<PAGE> 36
GLOSSARY
ADVISER means Old Mutual Asset Managers (Bermuda) Limited, the investment
adviser to the Master Trust.
ANC means the African National Congress.
BUSINESS DAY means each day on which the New York Stock Exchange is open for
trading.
CODE means the Internal Revenue Code of 1986, as amended.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA PLAN means an employee benefit plan subject to ERISA.
FUND means the OMEGA South Africa Fund and the Master Trust except as otherwise
indicated.
GLOBAL FUND means Old Mutual Global Assets Fund Limited, a mutual fund organized
under the laws of Bermuda.
GOVERNMENT means the South African Government of National Unity.
IFP means the Inkatha Freedom Party.
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 or shares of the Non-U.S. Fund.
MANAGEMENT FEE means the management fee payable to the Adviser of 0.60% per
annum of the Master Trust's daily net assets. Investors who purchase Shares in
one or more transactions for an aggregate price of at least U.S.$50 million (net
of redemptions) will receive a rebate from the Adviser such that their accounts
are subject to a Management Fee of 0.50% per annum.
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.
OFFERING means the offering of Shares on the terms and conditions of this
Memorandum.
OLD MUTUAL means the South African Mutual Life Assurance Society, a mutual
assurance society organized under the laws of South Africa.
OLD MUTUAL BERMUDA means Old Mutual Fund Holdings (Bermuda) Limited, a Bermuda
company that is a wholly-owned subsidiary of Old Mutual.
OLD MUTUAL GROUP means Old Mutual, its wholly-owned subsidiaries, and investment
vehicles managed by Old Mutual or its wholly-owned subsidiaries, collectively.
OLD MUTUAL MAIN FUND means Old Mutual's principal investment fund.
OMEGA FUND ADMINISTRATOR means State Street Bank and Trust Company, as
administrator of the OMEGA South Africa Fund.
28
<PAGE> 37
OMEGA SOUTH AFRICA FUND means Old Mutual Equity Growth Assets South Africa Fund,
a Massachusetts business trust.
PLACEMENT AGENTS means Fleming Martin Inc., Rand International Securities, and
S.G. Warburg & Co. Inc. as the placement agents for the Offering.
PORTFOLIO means a portfolio of South African securities transferred from the Old
Mutual Main Fund to the Master Trust on November 3, 1995.
REDEMPTION FEE means a redemption fee charged by the OMEGA South Africa Fund of
1.65% of redemption proceeds.
S.A. RAND means South African rand, the currency of South Africa.
SHAREHOLDERS means the registered holders of Shares.
SHARES means the shares of beneficial interest of the OMEGA South Africa Fund.
TRANSFER AGENT means State Street Bank and Trust Company, as transfer agent for
the OMEGA South Africa Fund.
29
<PAGE> 38
EXHIBIT A
Set forth below are the securities included in the Portfolio upon its
transfer to the Master Trust on November 3, 1995 and their weightings in the
Portfolio. Since its transfer to the Master Trust the portfolio has been managed
in accordance with the Fund's investment policies. Therefore, the holdings and
weightings listed below do not necessarily represent the current composition of
the portfolio. While at the time the Portfolio was segregated from the Old
Mutual Main Fund no holding represented more than 5% of the Portfolio, at the
time the Portfolio was transferred certain holdings represented more than 5% as
a result of market movements.
<TABLE>
<CAPTION>
COMPANY JSE SECTOR % OF HOLDINGS
- - ----------------------------------------------- ------------------------------- -------------
<S> <C> <C>
STANDARD BANK INVESTMENT CORP
LTD.......................................... Banks & Financial Services 5.11
ANGLO AMERICAN CORPORATION OF SA LTD........... Mining Houses 5.06
NEDCOR LTD..................................... Banks & Financial Services 5.01
BARLOW LTD..................................... Industrial Holding 4.95
DE BEERS CONSOLIDATED MINES LTD................ Diamonds 4.93
CG SMITH LTD................................... Industrial Holding 4.90
SOUTH AFRICAN BREWERIES LTD.................... Beverages, Hotels & Leisure 4.88
SAFMARINE AND RENNIES HOLDINGS LTD............. Industrial Holding 4.72
SASOL LTD...................................... Chemicals, Oils & Plastics 4.62
REMBRANDT GROUP LTD............................ Industrial Holding 4.37
ANGLOVAAL LTD*................................. Mining Houses 4.18
WOOLTRU LTD*................................... Stores 3.35
GENCOR LTD..................................... Mining Houses 2.96
ANGLOVAAL INDUSTRIES LTD....................... Industrial Holding 2.86
REUNERT LTD.................................... Electronics & Electrical 2.47
GOLD FIELDS OF SA LTD.......................... Mining Houses 2.27
LYDENBURG PLATINUM LTD......................... Platinum 1.97
SAPPI LTD...................................... Paper & Packaging 1.93
RAND MINES LTD................................. Mining Houses 1.84
TRENCOR LTD.................................... Transportation 1.79
ISCOR LTD...................................... Steel & Allied 1.74
ANGLO AMERICAN COAL CORP LTD................... Coal 1.62
JOHNNIES INDUSTRIAL CORPORATION LTD............ Industrial Holding 1.61
FOSCHINI LTD................................... Stores 1.60
AFRICAN OXYGEN LTD............................. Engineering 1.09
ANGLO AMERICAN PLATINUM CORPORATION LTD........ Mining Houses 1.06
JCI LTD........................................ Mining Houses 0.98
DRIEFONTEIN CONSOLIDATED LTD................... Gold 0.80
ENGEN LTD...................................... Chemicals, Oils & Plastics 0.78
GENBEL INVESTMENTS LTD......................... Investment Trusts 0.76
JD GROUP LTD................................... Furniture & Household 0.75
LIBERTY LIFE ASSOCIATION OF AFRICA LTD......... Insurance 0.73
MIDDLE WITWATERSRAND (WESTERN AREAS) LTD....... Mining Holding 0.73
SAMANCOR LTD................................... Manganese 0.70
CG SMITH FOODS LTD............................. Food 0.70
IMPALA PLATINUM HOLDINGS LTD................... Platinum 0.68
</TABLE>
30
<PAGE> 39
<TABLE>
<CAPTION>
COMPANY JSE SECTOR % OF HOLDINGS
- - ----------------------------------------------- ------------------------------- -------------
<S> <C> <C>
ANGLO ALPHA LTD................................ Building, Construction, Allied 0.63
BIDVEST GROUP LTD**............................ Industrial Holding 0.63
AECI LTD....................................... Chemicals, Oils & Plastics 0.61
ALLIED ELECTRONICS CORPORATION
LTD.......................................... Electronics & Electrical 0.59
MUTUAL & FEDERAL INSURANCE CO LTD.............. Insurance 0.59
MURRAY & ROBERTS HOLDINGS LTD.................. Industrial Holding 0.54
TIGER OATS LTD................................. Food 0.50
EVERITE HOLDINGS LTD........................... Building, Construction, Allied 0.49
INVESTEC HOLDINGS LTD.......................... Banks & Financial Services 0.48
NAMPAK LTD..................................... Paper & Packaging 0.45
OMNI MEDIA CORPORATION LTD..................... Printing & Publishing 0.43
MALBAK LTD..................................... Industrial Holding 0.37
IMPERIAL HOLDINGS LTD.......................... Industrial Holding 0.37
METROPOLITAN LIFE LTD.......................... Insurance 0.35
SENTRACHEM LTD................................. Chemicals, Oils & Plastics 0.34
AMALGAMATED BANKS OF SA LTD.................... Banks & Financial Services 0.34
ASSOCIATED ORE AND METAL CORP LTD.............. Mining Holding 0.32
IBM SOUTH AFRICA GROUP LTD..................... Electronics & Electrical 0.30
GRINTEK LTD.................................... Electronics & Electrical 0.27
SOUTHVAAL HOLDINGS LTD......................... Gold 0.25
VAAL REEFS EXPLORATION AND MINING CO LTD....... Gold 0.25
FIRST NATIONAL BANK HOLDINGS LTD............... Banks & Financial Services 0.19
FORWARD CORPORATION LTD........................ Industrial Holding 0.11
INDEPENDENT NEWSPAPERS HOLDINGS LTD............ Printing & Publishing 0.10
-------------
100.0
==========
</TABLE>
All holdings are of ordinary shares except for:
* "N" (restricted voting) ordinary shares
** Convertible Debenture Stock
31
<PAGE> 40
OMEGA SOUTH AFRICA FUND
INVESTMENT ADVISER
Old Mutual Asset Managers (Bermuda) Limited
Clarendon House, 2 Church Street
Hamilton Bermuda
PLACEMENT AGENTS
Fleming Martin Inc.
320 Park Avenue
New York, NY 10022
Rand International Securities
780 3rd Avenue
New York, NY 10017
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
One Boston Place, Boston, MA 02108
FOR THE MASTER TRUST:
KPMG Peat Marwick
Vallis Building, Hamilton HM 11 Bermuda
LEGAL COUNSEL
IN THE UNITED STATES:
Bingham, Dana & Gould LLP
150 Federal Street, Boston, MA 02110
IN THE UNITED KINGDOM:
Norton Rose
Kempson House, Camomile Street
London EC3A 7AN
IN BERMUDA:
Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, Bermuda
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of the Offering................. 1
Investment Objective and Policies....... 7
South Africa............................ 9
The Portfolio........................... 12
Old Mutual Main Fund.................... 12
Investment Considerations............... 13
Management.............................. 16
Valuation of Shares..................... 18
Offering of Shares...................... 18
Redemptions............................. 20
Liquidity Facility and the Global
Fund................................... 20
Tax Matters............................. 21
ERISA Matters........................... 23
General Information..................... 24
Additional Information.................. 27
Glossary................................ 28
</TABLE>
<PAGE> 41
PART B
Item 10. Cover Page.
Not applicable.
Item 11. Table of Contents.
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information and History.............................................................. B-1
Investment Objective and Policies............................................................ B-1
Management of the 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> 42
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> 43
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
B-3
<PAGE> 44
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
B-4
<PAGE> 45
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.
B-5
<PAGE> 46
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.
The Master Trust has established procedures consistent with policies of
the Securities and Exchange Commission (the "SEC") concerning forward contracts.
Since those policies currently recommend that an amount of the Master
B-6
<PAGE> 47
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
B-7
<PAGE> 48
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.
B-8
<PAGE> 49
(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,
B-9
<PAGE> 50
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;
B-10
<PAGE> 51
(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
B-11
<PAGE> 52
non-executive directorships, including South African Breweries Limited, Barlow
Limited, Nedcor Limited and Sasol Limited. His address is Mutualpark, Jan Smuts
Drive, Pinelands, South Africa.
*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 73), 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 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. 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 48), serves as a trustee of the
OMEGA South Africa Fund and the Master Trust and as a director of the Non-U.S.
Fund. Mr. Davis is President and Chief Executive Officer of Winchester Global
Trust Company Limited. He was President of Mid-Ocean Trust Company Limited from
1994 to 1995 and was Manager Corporate Trust at Bank of Bermuda from 1979 to
1993. His address is Williams House, 20 Reid Street, Hamilton, Bermuda.
MICHEL JOHN DREW, Bermudian (aged 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 President in 1991. He was elected as a director of Schroders in
1993 and remains a director. His address is c/o International Services Limited,
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
P.O. Box HM 3085, Hamilton HM NX, Bermuda.
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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<PAGE> 53
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 15 Lime Tree Walk,
Virginia Water, 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 Bermuda 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.
It is estimated that the Trustees of the Master Trust will receive the
following remuneration from the Trust during its fiscal year ending June 30,
1996:
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION BENEFITS ACCRUED ANNUAL AND FUND
NAME OF PERSON, FROM AS PART OF TRUST BENEFITS UPON COMPLEX PAID
POSITION REGISTRANT (1) EXPENSES RETIREMENT TO TRUSTEES (1)
- - -------------- ------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
MICHAEL JOHN LEVETT NONE None None NONE
TRUSTEE
WILLIAM FRANCOIS DE $16,667 None None $25,000
LA HARPE BECK
TRUSTEE
WILLIAM LESTER $16,667 None None $25,000
BOYAN
TRUSTEE
THOMAS HASKINS $ 8,333 None None $16,667
DAVIS
TRUSTEE
MICHEL JOHN DREW $12,500 None None $20,833
TRUSTEE
WILLIAM LANGLEY NONE None None NONE
TRUSTEE
KENNETH RIGBY $16,667 None None $25,000
WILLIAMS
TRUSTEE
<FN>
(1) Information is estimated as to future payments to be recieved by the
Trustees during the fiscal year ending June 30, 1996. Information relates to
the period from September 1, 1995 to June 30, 1996. Each of the above-named
Trustees serve as Trustees of the Master Trust and the OMEGA South Africa Fund
and as Directors of the Non-U.S. Fund.
</TABLE>
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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<PAGE> 54
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 was held on November 10,
1995, each of the OMEGA South Africa Fund and the Non-U.S. Fund invested the
proceeds of its respective Initial Offering in the Master Trust and was issued
a proportionate beneficial interest in the Master Trust. The Master Trust
applied 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. As of March 31, 1996, Old Mutual Bermuda
owned 93.6% of the beneficial interest in the Master Trust. The address of Old
Mutual Bermuda is Clarendon House, 2 Church Street, Hamilton, Bermuda. As of
March 31, 1996, the OMEGA South Africa Fund and the Non-U.S. Fund owned 1.3%
and 5.1%, respectively, 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 less than one
percent of the outstanding beneficial interests in the Master Trust.
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<PAGE> 55
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 Clarendon House, 2 Church Street, 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 0.60% per
annum of the Master Trust's daily net assets (the "Management Fee"). Investors
who purchase shares of the OMEGA South Africa Fund or the Non-U.S. Fund in one
or more transactions for an aggregate price of at least U.S.$50 million (net
of redemptions) will receive a rebate from the Adviser to the extent necessary
such that their accounts are subject to a Management Fee of 0.50% per annum. The
Management Fee will accrue daily on an annualized basis and be paid monthly in
arrears. For the period November 3, 1995 (commencement of operations) to
March 31, 1996 the fees payable to the Adviser under the Advisory Agreement
were U.S.$2,879,334.17 (of which amount U.S.$135,007 was voluntarily waived).
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 and certain amortized
organizational or offering expenses, 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 without regard to any rebate of the Management Fee to investors who
purchased at least U.S.$50 million of shares of the OMEGA South Africa Fund or
the Non-U.S. Fund. 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 in connection with the Initial Offering, (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 1.65% 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. It is expected that annual operating expenses will be
substantially less than 1.00% of daily net assets.
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.
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%.
For the period November 3, 1995 (commencement of operations) to
March 31, 1996, the fees paid and payable to the Master Trust Administrator
under the Administrative Services Agreement were U.S.$170,061.
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. The OMEGA South
Africa Fund has engaged Fleming Martin Inc., Rand International Securities and
S.G. Warburg & Co. Inc. (collectively, the "OMEGA Placement Agents") to act as
exclusive placement agents for the second offering of shares of the OMEGA
South Africa Fund (the "OMEGA Second Offering") on a best efforts basis
pursuant to a placing agreement (the "OMEGA Placing Agreement") with the
Master Trust, the OMEGA South Africa Fund, the Adviser and Old Mutual Bermuda.
The termination date of the OMEGA Second Offering is expected to be May 10,
1996, although the Boards of Trustees of the Master Trust and the OMEGA South
Africa Fund have authorized extension of these placing arrangements through
June 30, 1996.
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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 Second 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 as to any
OMEGA Placement Agent in the event of its assignment, as defined in the 1940
Act, by such OMEGA Placement Agent.
Pursuant to a placing agreement (collectively the "Non-U.S. Placing
Agreement") between the Master Trust, the Non-U.S. Fund, the Adviser, Old Mutual
Bermuda, and the following placement agents: Fleming Martin Limited, Rand
International Securities and Swiss Bank Corporation, through its division SBC
Warburg (collectively, the "Non-U.S. Placement Agents"), the Non-U.S. Placement
Agents have agreed (as exclusive agents for the Non-U.S. Fund) to use their
reasonable endeavors to procure placees for shares of the Non-U.S. Fund in the
second offering of shares in the Non-U.S. Fund (the "Non-U.S. Second Offering"),
but the Non-U.S. Placement Agents are not themselves under any obligation to
subscribe for any shares. In certain circumstances, the Non-U.S. Placement
Agents are 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 as to any Non-U.S. Placing Agent by
immediate written notice to each party to the Non-U.S. Placing Agreement in the
event that such Non-U.S. Placement Agent shall be in material breach of the
Non-U.S. Placing Agreement.
Each OMEGA Placement Agent shall be entitled to receive a 0.35% sales
charge for each share of the OMEGA South Africa Fund sold to a subscriber for
shares in the OMEGA South Africa Fund ("Subscriber"). Old Mutual Bermuda has
agreed to make additional payments to the OMEGA Placement Agents equal to 0.25%
of the price of shares of the OMEGA South Africa Fund sold in the OMEGA Second
Offering. Each Non-U.S. Placing Agent will be entitled to a corresponding fee
with respect to shares of the Non-U.S. Fund sold in the Non-U.S. Second
Offering. Each of the OMEGA South Africa Fund and the Non-U.S. Fund have agreed
to indemnify its respective Placement Agents 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 certain fees and amounts in connection with the placement of
shares. The Placement Plan also provides for the payment by the Master Trust of
a structuring fee 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) 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. As of the date of this Part B, there have been no
payments made under the Placement Plan.
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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. As of March 31, 1996, Old Mutual held 21.8% 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.
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. For the period November 3, 1995
(commencement of operations) to March 31, 1996, the Master Trust paid brokerage
commissions of approximately U.S.$78,811.
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 proportion to 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 proportion to 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> 67
Master Trust's ordinary income, expenses, capital gains, losses, credits, 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 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> 68
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 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> 69
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.
The financial statements for the Master Trust, contained in the
Semi-Annual Report of the OMEGA South Africa Fund, for the period ended
December 31, 1995, as filed with the Securities and Exchange Commission, via
the EDGAR system, on February 28, 1996 (Accession Number 0000950135-96-001191),
are incorporated by reference into this Part B.
A copy of the Semi-Annual Report of the OMEGA South Africa Fund
accompanies this Part B.
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<PAGE> 70
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:
Statement of Assets and Liabilities at December 31, 1995
Schedule of Investments - December 31, 1995
Notes to Financial Statements - December 31, 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
6(c) Placing Agreement among Fleming Martin Inc., Rand International
Securities, S.G. Warburg, the Registrant, the OMEGA Fund, the
Adviser and Old Mutual Bermuda
6(d) Placing Agreement among Fleming Martin Limited, Rand International
Securities, Swiss Bank Corporation, the Registrant, the SAGA Fund,
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> 71
<TABLE>
<S> <C>
*9(c) Subscription and Portfolio Transfer Agreement among Old Mutual, Old
Mutual Bermuda, 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
9(g) Form of Agreement regarding termination of an agreement by Old Mutual
Bermuda to pay a servicing fee to S.G. Warburg & Co. Inc.
11 Auditors' Consent
*15 Placement Plan of the Registrant
27 Financial Data Schedule
<FN>
- - -----------------
* Incorporated herein by reference to the Registrant's Registration Statement on Form N-1A (File No. 811-7417) as filed with the
Securities and Exchange Commission on November 9, 1995.
</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> 72
<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. 87.01 SOUTH AFRICA Short-term Insurance
Lydenburg Platinum Limited Old Mutual 79.39 SOUTH AFRICA Investment company
Safmarine & Rennies Holdings Old Mutual 54.99 SOUTH AFRICA Holding company
Anglo-Transvaal Collieries Old Mutual 56.67 SOUTH AFRICA Coal mining company
Nedcor Bank Limited Old Mutual 56.76 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.
Durban Hotels Limited Old Mutual 100 SOUTH AFRICA Operation of hotels
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 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 50 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> 73
<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.
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 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 (Ireland) Ltd. Fairbairn Ireland Limited 100 IRELAND Long-term life assurer
Old Mutual International Fund Managers Ltd. Fairbairn Ireland Limited 100 IRELAND Man authorized Unit Trusts
Fairbairn Actuaries and Consultants Ltd. Old Mutual 100 GUERNSEY Provider of Consulting
Services
Fairbairn Holdings Ltd. Old Mutual 100 GUERNSEY Holding company
OMIAM Services Ltd. Old Mutual 100 GUERNSEY Service co. to Group
OMIAM Properties Ltd. OMIAM (Bermuda) Ltd. 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 Life Assurance Company Ltd. Old Mutual Holdings Ltd. 60.9 KENYA Insurance company
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 74
<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> 75
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class As of April 22, 1996
-------------- ----------------------
<S> <C>
Beneficial Interests 3
</TABLE>
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's
Declaration of Trust, incorporated herein by reference; (b) Section 9 of the
Placing Agreement among the Registrant, Fleming Martin Inc., Rand International
Securities, S.G. Warburg & Co. Inc. and certain other parties filed herewith as
Exhibit 6(c) and (c) Section 9 of the Placing Agreement between the Registrant,
Fleming Martin Limited, Rand International Securities, Swiss Bank Corporation
and certain other parties, filed herewith as Exhibit 6(d).
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Old Mutual Asset Managers (Bermuda) Limited (the "Adviser"), a company
organized under the laws of Bermuda, serves as the investment adviser to
the 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 (Clarendon House, 2 Church
Street, Hamilton, Bermuda)
</TABLE>
-6-
<PAGE> 76
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 (Clarendon House,
2 Church Street, 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, Argenta European Hedge Fund plc
(2nd Floor, IFSC House, International
Financial Services Centre, Custom House
Docks, Dublin, Ireland)
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<PAGE> 77
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 (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
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 (Clarendon House,
2 Church Street, Hamilton, Bermuda)
Partner, Conyers Dill & Pearman (Clarendon
House, Church Street, Hamilton, Bermuda)
Garth Griffin Director of the Adviser
Director, Barlow Limited (Barlow Park,
Katherine Street, Sandton, South Africa)
Director, Fairbairn Investment Company
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Fairbairn Investment Holdings
SA (Pty) Limited (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Chairman, Old Mutual Actuaries and
Consultants (Pty) Limited (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Old Mutual Asset Managers (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Bermuda Holdings (SA)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Financial Services
Botswana (Pty) Limited (c/o Deloitte &
Touche, Barclays House, Khama Crescent,
Gaborone, Botswana)
Director, Old Mutual Group (UK) Limited
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Clarendon
House, 2 Church Street, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Namibia) (Pty) Limited (8th
Floor, CDM Centre, 10 Bulow St.,
Windhoek, Namibia)
Director, Old Mutual Investment Advisors,
Inc. (One Exeter Plaza, 699 Boylston Street,
Boston, MA, United States)
Director, Old Mutual Life Assurance Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United
Kingdom)
Director, OMLA Holdings Limited (Providence
House, 2 Bartley Way, Hook, Basingstoke,
Hampshire, United Kingdom)
General Manager and Member, South African
Mutual Life Assurance Society (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Member, South African Mutual Life Assurance
Society Pension Fund (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, Fairbairn Ireland Limited (9/11
Lower Mount Street, Dublin, Ireland)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Financial
Services Limited (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International
(Guernsey) Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International (Ireland)
Limited (9/11 Lower Mount Street, Dublin,
Ireland)
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 (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
-8-
<PAGE> 78
Director, Old Mutual Investment Advisers,
Inc. (1 Exeter Plaza, 699 Boylston Street,
Boston, Massachusetts)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Clarendon House,
2 Church Street, 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 (Clarendon House, 2 Church Street,
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 (Clarendon House,
2 Church Street, Hamilton, Bermuda)
-9-
<PAGE> 79
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 Actuaries and
Consultants Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Chairman, Fairbairn Holdings Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
-10-
<PAGE> 80
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 (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
Chairman, Old Mutual Group (UK) Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
-11-
<PAGE> 81
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 Life Assurance 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 (Clarendon House,
2 Church Street, 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> 82
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, 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> 83
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> 84
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 (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
Senior Associate, Conyers Dill & Pearman
(Clarendon House, Church Street, Hamilton,
Bermuda)
Susan Elizabeth Vice President and Alternate Director of
Rouse the Adviser
Alternate Director, Old Mutual Global
Assets Fund Limited (Clarendon House, 2
Church Street, Hamilton, Bermuda)
Alternate Director, Old Mutual Fund
Holdings (Bermuda) Limited (Clarendon
House, 2 Church Street, Hamilton, Bermuda)
Alternate Director, Old Mutual
International Asset Managers (Bermuda)
Limited (Clarendon House, 2 Church Street
Hamilton, Bermuda)
Gerhard Schalk Deputy Chairman and Director of the Adviser
Van Niekerk
Director, Old Mutual Global Assets Fund
Limited (Clarendon House, 2 Church Street,
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> 85
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 Actuaries and
Consultants Limited (Fairbairn House, The
Rohais, St. Peter Port Guernsey)
Director, Fairbairn Holdings Ltd. (P.O. Box
119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Ireland Limited (9/11
Lower Mount St., Dublin, Ireland)
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, Nedcor Limited (100 Main St.,
Johannesburg, South Africa)
Director, Nedcor Bank Limited (100 Main St.,
Johannesburg, South Africa)
Director, Old Mutual Asset Managers (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
-16-
<PAGE> 86
Director, Old Mutual Bermuda Holding (S.A.)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Clarendon House, 2 Church
Street, 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 Life Assurance 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. (Clarendon House, 2
Church Street, 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 International
Financial Services Ltd. (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International
(Guernsey) Limited (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International
(Ireland) Ltd. (9/11 Lower Mount St.,
Dublin, Ireland)
Director, Old Mutual Investment Corporation
(Pvt) Ltd. (Mutual Gardens, 100 The Chase
(West), Emerald Hill, Harare, Zimbabwe)
Director, Old Mutual Investment Services
Ltd. (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
-17-
<PAGE> 87
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)
-18-
<PAGE> 88
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 (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
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> 89
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> 90
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> 91
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. (Clarendon House, 2
Church Street, 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 Fund Holdings
(Bermuda) Ltd. (Clarendon House, 2 Church
Street, Hamilton, Bermuda)
-22-
<PAGE> 92
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 Holdings Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Actuaries and
Consultants Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
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> 93
<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 Clarendon House,
2 Church Street,
Hamilton, Bermuda
</TABLE>
Item 31. Management Services.
Not applicable.
-24-
<PAGE> 94
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
-25-
<PAGE> 95
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Amendment to its Registration Statement on
Form N-1A to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hamilton, Bermuda on the 29th day of April, 1996.
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
By: William Langley
--------------------------
William Langley
Treasurer of Old Mutual
South Africa Equity Trust
<PAGE> 96
EXHIBIT INDEX
6(c) Placing Agreement among Fleming Martin Inc., Rand
International Securities, S.G. Warburg & Co. Inc., the
Registrant, Old Mutual Equity Growth Assets South Africa
Fund, Old Mutual Asset Managers (Bermuda) Limited (the
"Adviser") and Old Mutual Fund Holdings (Bermuda)
Limited ("Old Mutual Bermuda")
6(d) Placing Agreement among Fleming Martin Limited, Rand
International Securities, Swiss Bank Corporation, the
Registrant, Old Mutual South Africa Growth Assets Fund
Limited, the Adviser and Old Mutual Bermuda
9(g) Form of Agreement regarding termination of an agreement
by Old Mutual Bermuda to pay a servicing fee to S.G.
Warburg & Co. Inc.
11 Auditors' Consent
27 Financial Data Schedule
<PAGE> 1
Exhibit 6(c)
PLACING AGREEMENT
RELATING TO SHARES OF
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
DATED AS OF DECEMBER 21, 1995
AMONG
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED
AND
FLEMING MARTIN INC.
RAND INTERNATIONAL SECURITIES
AND
S.G. WARBURG & CO. INC.
<PAGE> 2
THIS AGREEMENT is made as of December 21, 1995 by and among
OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts trust registered
under the Investment Company Act of 1940 as an open-end investment company (the
"MASTER TRUST"), OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND, a
Massachusetts business trust registered under the Investment Company Act of 1940
as an open-end investment company (the "OMEGA FUND"), OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED, a company incorporated under the laws of Bermuda ("OMAMB"),
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED, a company incorporated under the
laws of Bermuda ("OLD MUTUAL BERMUDA"), FLEMING MARTIN INC. ("FLEMING MARTIN"),
RAND INTERNATIONAL SECURITIES, a division of Noyes Partners Incorporated ("RAND
INTERNATIONAL"), and S.G. WARBURG & CO. INC. ("S.G. WARBURG").
WHEREAS, OMAMB is 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 is a
wholly owned subsidiary of Old Mutual Bermuda;
WHEREAS, the Master Trust invests in a portfolio of South
African securities;
WHEREAS, the OMEGA Fund has invested 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"),
has invested all of its investable assets in the Master Trust;
WHEREAS, the OMEGA Fund wishes to engage Fleming Martin, Rand
International and S.G. Warburg (each, a "PLACING AGENT") as its agents for the
purpose of soliciting offers to purchase Shares and each Placing Agent, 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
<PAGE> 3
"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
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
"FUND AGREEMENTS" means each of the agreements listed in Schedule I
hereto
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended
"ISSUE DOCUMENTS" means the Private Placement Memorandum and the
Subscription Form
"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
"OFFERING" means the offering of the Shares on the terms and conditions
of the Private Placement Memorandum which terminates on the Offering
Termination Date
"OFFERING TERMINATION DATE" means May 10, 1996 or such earlier date as
the OMEGA Fund may, in consultation with the Placing Agents, determine
"OMEGA FUND 12B-1 PLAN" means the placement plan adopted by the OMEGA
Fund pursuant to Rule 12b-1 under the Investment Company Act
"PRIVATE PLACEMENT MEMORANDUM" means the private placement memorandum
dated December 1, 1995 prepared by the OMEGA Fund in connection with
the offer and sale of the Shares and provided to the Placing Agents, as
the same may be amended and supplemented from time to time
"PRIVATE PLACEMENT PROCEDURES" means the "Placement Procedures for U.S.
Private Institutional Offering" prepared by Bingham, Dana & Gould and
furnished to the Placing Agents under cover of a memorandum dated
December 19, 1995
"REGULATION S" means Regulation S under the Securities Act
2
<PAGE> 4
"REGISTRATION STATEMENTS" means the registration statements filed by
the OMEGA Fund and the Master Trust under the Investment Company Act
on, respectively, November 8, 1995 and November 9, 1995
"RULES AND REGULATIONS" means the rules and regulations of the
Commission as then in effect
"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 Form, to purchase
Shares pursuant to the Offering
"SUBSCRIPTION FORM" means the subscription form for Shares prescribed
by the OMEGA Fund for purposes of the Offering
"TRANSFER AGENT" means State Street Bank and Trust Company in its
capacity as transfer agent for the OMEGA Fund
"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, OMAMB and
Old Mutual Bermuda
2. REPRESENTATIONS AND WARRANTIES. Each Warrantor, severally and not
jointly, represents and warrants to and agrees with each Placing Agent, for the
benefit of each Placing Agent, as set forth in Annex A hereto.
3. APPOINTMENT OF AGENTS.
---------------------
(a) The OMEGA Fund hereby irrevocably appoints each Placing Agent to
act as an agent of the OMEGA Fund for the purpose of soliciting offers to
purchase Shares pursuant to the Offering, and each Placing Agent hereby accepts
such appointment. The OMEGA Fund agrees that it will not, without the prior
consent of each Placing Agent, appoint any other person as an agent of the OMEGA
Fund for the purpose of soliciting offers to purchase Shares pursuant to the
Offering.
(b) 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, each Placing
3
<PAGE> 5
Agent 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. No Placing Agent shall have
any liability to the OMEGA Fund or any other party hereto in the event any such
purchase is not consummated for any reason.
(c) Nothing in this Agreement shall oblige any Placing Agent to
purchase any Shares pursuant to the Offering or otherwise or impose an absolute
obligation on any Placing Agent to procure Subscribers therefor pursuant to the
Offering or otherwise.
4. OFFERING BY AGENTS; OTHER WARRANTIES. Each Placing Agent represents
and warrants to and agrees with the OMEGA Fund and the Master Trust 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 its legal, valid, binding and enforceable
obligation, 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 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
Offering to be subject to registration under the Securities Act;
(iv) it has not offered and will not offer the Shares in the Offering
in contravention of any applicable state securities laws;
(v) it has not offered and will not offer the Shares in the Offering in
contravention of the restrictions set forth in the sections captioned
"OFFERING OF SHARES - 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 Offering that
contravene, in any material respect, the Private Placement Procedures.
5. FEES AND EXPENSES.
-----------------
(a) Each Placing Agent shall be entitled to receive selling
compensation in respect of each Share for which (x) a Subscriber shall have been
procured by such Placing Agent, (y)
4
<PAGE> 6
a properly completed Subscription Form shall have been received by the
Transfer Agent, and (z) full payment of the price specified in the Private
Placement Memorandum shall have been received by the Transfer Agent in federal
funds ("Eligible Shares") as follows:
(i) The Placing Agent shall be entitled to receive the
0.35% sales charge paid by the Subscriber as part of the price for the
Eligible Shares. The OMEGA Fund shall procure that the Transfer
Agent remit such sales charge to the appropriate Placing Agent as
soon as practicable after receipt by the Transfer Agent of the items
specified in clauses (y) and (z) above. It is understood and agreed
that the Transfer Agent, in determining amounts due to the Placing
Agents under this clause (A), may round such amounts down (but not up)
to the extent it is impracticable for the Transfer Agent to determine
such amounts precisely. Any difference between the amounts received by
a Placing Agent under this clause (A) and the amounts such Placing
Agent is entitled to receive under this clause (A) shall be payable by
OMAMB to such Placing Agent upon demand.
(ii) Old Mutual Bermuda shall, as soon as practicable after
notice by the Transfer Agent of its receipt of the items specified in
clauses (y) and (z) above, pay to the relevant Placing Agent an
additional sales charge equal to 0.25% of the net asset value of the
Eligible Shares (as determined for purposes of the price paid by the
Subscriber). The OMEGA Fund shall instruct the Transfer Agent to notify
Old Mutual Bermuda promptly of the Transfer Agent's receipt of the
items specified in clauses (y) and (z) above with respect to any
Eligible Shares.
The appropriate disposition of any sales charge shall be decided by OMAMB, which
determination shall be conclusive.
(b) OMAMB shall, upon demand, pay to or reimburse each Placing Agent
for (i) its reasonable legal costs and disbursements incurred in connection with
the preparation and negotiation of this Agreement, (ii) such marketing or other
costs as may be incurred by a Placing Agent in connection with the Offering not
exceeding $5,000 in any calendar quarter and (iii) such marketing or other costs
not specified in clause (i) or (ii) above as may be incurred by a Placing Agent
in connection with the Offering and which OMAMB may agree to pay or reimburse.
Each Placing Agent shall, no later than 30 days after the end of any calendar
quarter in which it has incurred any expense payable or reimbursable under this
Section 5(b), provide OMAMB and the OMEGA Fund with a statement itemizing such
expenses. The OMEGA Fund shall reimburse OMAMB for any payment made to a Placing
Agent under this Section 5(b) in accordance with, and subject to the limitations
of, the terms of the OMEGA Fund 12b-1 Plan.
(c) All sums payable to any Placing Agent 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 such Placing Agent
such additional amount as shall be required to ensure
5
<PAGE> 7
that the net amount retained by such Placing Agent 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 any
Placing Agent under this Agreement.
(d) OMAMB shall provide or cause to be provided to the board of
trustees of the OMEGA Fund such written reports regarding the amount and purpose
of any expenditures made pursuant to the OMEGA Fund 12b-1 Plan 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 each Placing Agent, which consent shall
not be unreasonably withheld or delayed, and which shall be deemed to have been
given by any Placing Agent that does not, within 10 Business Days of its
receipt thereof, submit to the OMEGA Fund a notice specifying its objections,
(ii) if , prior to the Offering Termination 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 each Placing
Agent as many copies as such Placing Agent 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
any Placing Agent of notice from the OMEGA Fund that the OMEGA Fund is
preparing an amended Private Placement Memorandum or a supplement thereto, such
Placing Agent 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, such Placing Agent will furnish copies thereof to each
investor to which it previously furnished a copy of the Private Placement
Memorandum.
(b) Each Warrantor agrees with each Placing Agent that it shall notify
such Placing Agent 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 Offering Termination Date, be
untrue or inaccurate in any material respect.
(c) Each of the OMEGA Fund and the Master Trust agrees with each
Placing Agent that (i) prior to termination of this Agreement, it shall not file
any amendment to its Registration Statement without prior notice to such Placing
Agent, it being understood that
6
<PAGE> 8
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 such Placing
Agent 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 such Placing Agent 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 such Placing Agent in advance of and forward to such Placing
Agent 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.
(d) The OMEGA Fund agrees with the Placing Agents 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 Offering or the Shares, whether in response to
inquiries or otherwise, without the prior consent of each Placing Agent, which
consent shall not be unreasonably withheld or delayed, and which shall be deemed
to have been given by any Placing Agent that does not, within 10 Business Days
of its receipt thereof, submit to the OMEGA Fund a notice specifiying its
objections.
(e) The OMEGA Fund agrees with each Placing Agent that it shall procure
the delivery to such Placing Agent, as soon as reasonably practicable following
the making of a request in writing therefor to the OMEGA Fund, of all such
further information and documents as such Placing Agent may reasonably require
in connection with the fulfillment by such Placing Agent of its obligations
under this Agreement to the extent the same may be obtained without unreasonable
expense or effort.
(f) The OMEGA Fund agrees that, through the Offering Termination Date,
no Shares will be offered for sale or subscription except as contemplated by
this Agreement.
7
<PAGE> 9
7. SUBSCRIPTION, SETTLEMENT AND ALLOTMENT.
--------------------------------------
(a) Each Placing Agent shall use its reasonable efforts to procure that
duly completed and signed Subscription Forms signed by one of its Subscribers
(i) that are received by it before 4:00 p.m. on any day on which it is open for
business are forwarded to the Transfer Agent as soon as practicable on such day
and (ii) that are received by it at any other time are forwarded to the Transfer
Agent as soon as practicable on the next day on which it is open for business.
In doing so, the Placing Agent shall be acting as agent of the Subscriber and
not of the OMEGA Fund. The OMEGA Fund shall have no liability in respect of any
failure by a Placing Agent to carry out its obligations under this Section 7(a).
(b) Each Placing Agent shall, when sending a signed Subscription Form
to the Transfer Agent, send a copy thereof to OMAMB.
(c) The OMEGA Fund shall have discretion to reject any proposed
subscription if, in its reasonable judgment, it determines that the acceptance
of such subscription would not be in the best interests of the OMEGA Fund.
(d) The OMEGA Fund shall instruct the Transfer Agent to promptly notify
each Placing Agent of the subscription price paid in respect of each Share for
which a Subscriber shall have been procured by such Placing Agent and of the
sales charge payable to such Placing Agent in respect thereof. The OMEGA Fund
shall, as soon as practicable after receipt by the Transfer Agent of the items
referred to in clauses (y) and (z) of Section 5(a), issue to the relevant
Subscriber the number of Shares such Subscriber has purchased pursuant to the
Offering in such proportions and such names as are specified by such Subscriber
in its Subscription Form.
8. CONDITIONS.
----------
(a) This Agreement shall not take effect until the Placing Agents shall
have received (i) the legal opinion of Bingham, Dana & Gould, United States
legal advisers to the Master Trust, the OMEGA Fund and the SAGA Fund, in form
and substance satisfactory to the Placing Agents and their counsel, to the
effect set forth in Annex C hereto, and (ii) the legal opinion of Conyers, Dill
and Pearman, legal advisers in Bermuda to the Master Trust, the OMEGA Fund and
the SAGA Fund, in form and substance satisfactory to the Placing Agents and
their counsel, to the effect set forth in Annex D hereto
(b) The obligations of each Placing Agent under this Agreement shall be
subject to (i) the accuracy in all material respects of the representations and
warranties of each Warrantor contained herein as of the dates when made or
deemed to have been made, (ii) the performance in all material respects by each
Warrantor of its obligations hereunder and (iii) no order suspending or revoking
the registration of the OMEGA Fund or the Master Trust under Section 8(e) of the
Investment Company Act being issued and no proceedings therefor being
8
<PAGE> 10
initiated or threatened by the Commission. At such time as any of these
conditions is not satisfied, unless expressly waived in writing by the
Placing Agents or varied by written agreement of the parties hereto, the
provisions of Section 10(g) shall apply.
9. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
(a) Each of the Warrantors, severally and not jointly, agrees to
indemnify and hold harmless each Placing Agent, the directors, officers,
employees and agents of each Placing Agent and each person who controls each
Placing Agent 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 Master
Trust or the OMEGA Fund) or by any Warrantor (in the case of OMAMB 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 by the
Placing Agents expressly for use therein. The parties agree that Annex E sets
forth all of the written information so furnished by the Placing Agents 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. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate
9
<PAGE> 11
counsel retained by the indemnified party or parties except as set forth
below); PROVIDED, HOWEVER, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, (i) the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (A) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (B) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (C) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (D) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party and (ii) if, after consultation with the indemnifying
party, the indemnified party concludes that it would be prejudicial to its
interests for the indemnifying party to continue to conduct the action on
its behalf, the indemnified party shall be entitled to reassume the conduct of
such action at any time by giving written notice to the indemnifying party. 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 any Placing Agent may be subject in such
proportion as is appropriate to reflect the relative benefits received by it (in
the case of the Master Trust or the OMEGA Fund) or by the Warrantors generally
(in the case of OMAMB and Old Mutual Bermuda), on the one hand, and by such
Placing Agent, on the other hand, from the 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 OMAMB and Old Mutual Bermuda), on the one hand, and of the relevant Placing
Agent, 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 Offering (before deducting
10
<PAGE> 12
expenses), and benefits received by any Placing Agent shall be deemed to be
equal to the amount received by it in connection with the 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 the relevant Placing Agent. The Warrantors and the
Placing Agents 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 any Placing Agent within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee and
agent of any Placing Agent shall have the same rights to contribution as such
Placing Agent.
(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 as to any
Placing Agent in the event of its assignment (as defined in the
Investment Company Act) by such Placing Agent.
(d) This Agreement shall automatically terminate on the
Offering Termination Date.
11
<PAGE> 13
(e) If at any time prior to the Offering Termination Date it
shall come to the knowledge of any Warrantor or any Placing Agent 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 Offering
Termination 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 Offering, the
relevant Warrantor or Placing Agent (as the case may be) shall
forthwith give notice thereof to the other parties to this Agreement
and each Placing Agent 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 Offering Termination Date by
notice in writing to the other parties to terminate its rights and
obligations under this Agreement.
(f) The rights and obligations of any Placing Agent under this
Agreement shall be immediately terminable by the OMEGA Fund by written
notice to such Placing Agent in the event that such Placing Agent shall
be in material breach of 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 each
Placing Agent hereunder (and accordingly all obligations of Subscribers
as to which a duly completed and signed Subscription Form has not been
received by the Transfer Agent prior to such termination) and any
outstanding obligations of any Warrantor shall terminate 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, except as provided in
Section 12 of this Agreement and except that:
12
<PAGE> 14
(i) OMAMB shall be liable for such costs 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); and
(iii) if so requested in writing by the Placing
Agents, the OMEGA Fund shall circulate such notice or other
communication as may be reasonably required by the Placing
Agents.
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 Fleming Martin, to 320 Park Avenue, New York, New York 10022,
fax no. 212 508 3833, to the attention of Lloyd Pengilly;
if to Rand International, to 780 Third Avenue - 31st Floor, New York,
New York 10017, fax no. 212 980 2224, to the attention of Kevin Jacobs;
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; and
if to the Master Trust, the OMEGA Fund, OMAMB 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.
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 each Placing Agent 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 such Placing Agent or any of the officers directors
or controlling persons referred to in Section 10 hereof and will survive the
offer of 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
<PAGE> 15
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 any Placing
Agent or by any officer or director of any Placing Agent or by any
Affiliate of a Placing Agent 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.
14
<PAGE> 16
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 W. Langley
for and on behalf of
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
W. Langley
Duly authorized signatory
SIGNED by W. Langley
for and on behalf of
OLD MUTUAL EQUITY GROWTH
ASSETS SOUTH AFRICA FUND
W. Langley
Duly authorized signatory
SIGNED by W. Langley
for and on behalf of
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED
W. Langley
Duly authorized signatory
SIGNED by W. Langley
for and on behalf of
OLD MUTUAL FUND HOLDINGS
(BERMUDA) LIMITED
W. Langley
15
<PAGE> 17
Duly authorized signatory
SIGNED by Eric von Glehn
for and on behalf of
FLEMING MARTIN INC.
Eric von Glehn
Duly authorized signatory
SIGNED by Kevin Jacobs
for and on behalf of
RAND INTERNATIONAL SECURITIES,
A DIVISION OF NOYES PARTNERS INCORPORATED
Kevin Jacobs
Duly authorized signatory
SIGNED by Bruce Watts
for and on behalf of
S.G. WARBURG & CO. INC.
Bruce Watts
Duly authorized signatory
16
<PAGE> 18
SCHEDULE I
The following constitute the "Fund Agreements" as defined in this Agreement:
1. the Investment Advisory Agreement between the Master Trust and OMAMB;
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> 19
ANNEX A
WARRANTIES
Each of OMAMB 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), each Placing
Agent as follows:
1. The notifications of registration on Form N-8A filed by each of the
OMEGA Fund and the Master Trust, at the time of such filing and on the
date hereof, complied and comply in all material respects with the
applicable requirements of the Investment Company Act and the Rules and
Regulations thereunder.
2. Each Registration Statement, at the time of its filing and on the date
hereof, conformed and conforms in all material respects with the
applicable requirements of the Investment Company Act and the Rules
and Regulations thereunder, and did not and does 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 (a) no representation or warranty is given with respect
to any statement contained in any such Registration Statement made in
reliance upon and in conformity with written information furnished to
the OMEGA Fund or the Master Trust by any Placing Agent expressly for
use therein and (b) the OMEGA Fund and the Master Trust will shortly
file amendments to their respective Registration Statements reflecting
the terms of this Agreement and a placing agreement in respect of
shares of the SAGA Fund and including the Private Placement
Memorandum..
3. No person is 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.
4. The Private Placement Memorandum does not, and at all times through the
Offering Termination 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.
5. 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; each of the OMEGA Fund and the
Master Trust is duly qualified to transact business in
<PAGE> 20
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 comply in all material
respects with all applicable requirements of the Investment Company
Act and the Rules and Regulations thereunder.
6. The issuance of 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.
7. 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.
8. 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 the Placing Agents
of offers to purchase Shares pursuant to the Initial Offering as
contemplated by this Agreement and the Private Placement Memorandum;
and the solicitation by the Placing Agents of offers to purchase Shares
pursuant to Initial Offering as contemplated by this purchase Share
Private Placement Memorandum will not result in a violation of the
provisions of the Investment Company Act or the Rules and Regulations
thereunder.
9. 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 such as
have already been obtained and are in full force and effect or such as
may be required under state securities laws.
10. 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,
- 2 -
<PAGE> 21
administrative agency, governmental body or arbitrator having
jurisdiction over such Warrantor or any of its properties.
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
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.
12. Since the date of the Private Placement Memorandum, 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).
13. 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.
14. 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.
15. 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.
In addition to the foregoing, each of OMAMB and Old Mutual Bermuda represents,
warrants and agrees as follows:
16. 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 the Placing Agents or any of their respective
Affiliates).
17. 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 SAGA Fund (except that
no representation is made as to the actions of the Placing Agents or
any of their respective Affiliates).
- 3 -
<PAGE> 22
ANNEX C
[Letterhead of Bingham, Dana & Gould]
Fleming Martin Inc.
320 Park Avenue
New York, New York 10022
Rand International Securities
780 3rd Avenue
New York, New York 10017
S.G. Warburg & Co. Inc.
277 Park Avenue
New York, New York 10172
Re: Offering of Shares of Beneficial Interest of Old Mutual Equity
Growth Assets South Africa Fund
Ladies and Gentlemen:
Please refer to that certain Placing Agreement dated as of
December 21, 1995 (the "PLACING AGREEMENT") among Old Mutual South Africa Equity
Trust, a Massachusetts trust, Old Mutual Equity Growth Assets South Africa Fund,
a Massachusetts voluntary association with transferable shares, Old Mutual Asset
Managers (Bermuda) Limited ("OMAMB"), Old Mutual Fund Holdings (Bermuda)
Limited, Fleming Martin Inc., Rand International Securities, and S.G. Warburg &
Co. Inc. Capitalized terms used herein without definition shall have the
respective meanings assigned to them in the Placing Agreement.
We have acted as counsel to the OMEGA Fund and the Master Trust
in connection with the transactions contemplated by the Placing Agreement. We
are providing this opinion to you pursuant to Section 8(a)(i) of the Placing
Agreement.
For purposes of this opinion we have examined and relied upon the
following documents:
(i) a certificate of recent date of the Secretary of State of
Massachusetts regarding the organization and existence of the
OMEGA Fund, a copy of which is attached hereto as EXHIBIT A;
<PAGE> 23
(ii) a certificate of recent date of the Secretary of State of
Massachusetts regarding the organization and existence of the
Master Trust, a copy of which is attached hereto as EXHIBIT B;
(iii) the Declaration of Trust of the OMEGA Fund dated as of September
1, 1995;
(iv) the Declaration of Trust of the Master Trust dated as of
September 1, 1995
(v) the By-Laws of each of the OMEGA Fund and the Master Trust, as
certified by the Secretary of, respectively, the OMEGA Fund and
the Master Trust;
(vi) the minutes of the meeting of the Board of Trustees of both the
OMEGA Fund and the Master Trust held on September 8, 1995, as
certified by the Secretary of, respectively, the OMEGA Fund and
the Master Trust;
(vii) the draft minutes of the meeting of the Board of Trustees of both
the OMEGA Fund and the Master Trust held on October 22 and
October 23, 1995 (the "OCTOBER MEETING");
(viii) the draft minutes of the meeting of the Board of Trustees of both
the OMEGA Fund and the Master Trust held on December 14, 1995
(the "DECEMBER MEETING");
(ix) the Confidential Private Placement Memorandum of the OMEGA Fund
dated as of December 1, 1995 as supplemented from time to time
(the "MEMORANDUM");
(x) the Investment Advisory Agreement dated as of October 23, 1995
between the Master Trust and OMAMB;
(xi) the Portfolio Transfer and Subscription Agreement dated October
23, 1995 among the South African Mutual Life Assurance Society
("OLD MUTUAL") Old Mutual Bermuda, the Master Trust, the OMEGA
Fund, the SAGA Fund, and the Global Fund;
(xii) the Administrative Services Agreement dated as of October 23,
1995 between State Street Bank and Trust Company and the OMEGA
Fund;
(xiii) the Administrative Services Agreement dated as of October 23,
1995 between State Street Cayman Trust Company and the Master
Trust;
(xiv) Custodian Agreements dated as of October 23, 1995 between State
Street Bank and Trust Company and each of the OMEGA Fund and the
Master Trust, respectively;
(xv) the Placing Agreement;
- 2 -
<PAGE> 24
(xvi) the Notification of Registration under the 1940 Act on form N-8A
of the OMEGA Fund filed with the United States Securities and
Exchange Commission (the "COMMISSION") on November 8, 1995;
(xvii) the Registration Statement under the 1940 Act on Form N-1A of the
OMEGA fund filed with the Commission on November 8, 1995;
(xviii) the Notification of Registration under the 1940 Act on Form N-8A
of the Master Trust filed with the Commission on November 9,
1995;
(xix) the Registration Statement under the 1940 Act on form N-1A of the
Master Trust filed with the Commission on November 9, 1995 (each
of such Registration Statement and the Registration Statement
referred to in item (xvii) above is referred to herein as a
"REGISTRATION STATEMENT"); and
(xx) the subscription form to be completed by each Subscriber (the
"SUBSCRIPTION FORM").
The agreements listed in items (x) through (xiv) above are referred to herein as
the "FUND AGREEMENTS". The opinions below are based entirely on our review of
the documents listed above in this paragraph, and we have made no other
documentary review or investigation of any kind whatsoever.
We have assumed the genuineness of all signatures, the conformity
to the originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form,
and the legal competence of each individual executing any document. We have
further assumed that the Board of Trustees of the Master Trust and the OMEGA
Fund, as appropriate, will approve the draft minutes referred to in items (vii)
and (viii) above.
As to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention, and other states of
mind), we have relied entirely upon the representations of the parties set forth
in the Fund Agreements and the Placing Agreement and the representations to be
made by subscribers as provided in the Subscription form, and we have assumed,
without any independent inquiry, the accuracy of those representations.
We have further assumed for purposes of this opinion that:
(i) offers and sales of Shares, and solicitations of offers to
purchase Shares, in the Offering will be made solely in
accordance with the Private Placement Procedures;
(ii) Shares will be offered and sold in the Offering solely upon the
terms and conditions of the Memorandum and the Subscription Form;
- 3 -
<PAGE> 25
(iii) the number of beneficial holders of the voting securities of
either the OMEGA Fund or the Master Trust did not at any time
through November 8, 1995 exceed 100 (calculated in accordance
with the requirements of the United States Investment Company Act
of 1940, as amended (the "1940 ACT");
(iv) at no time has there been conducted or proposed to be conducted,
and at no time during the term of the Offering will there be
conducted or proposed to be conducted, any offering of any
securities (including, without limitation, any preorganization
certificate of subscription) of the OMEGA Fund or the Master
Trust in the United States or to any U.S. Person within the
meaning of Regulation S under the United States Securities Act of
1933, as amended the "1933 ACT"), except for:
(A) the offer and sale of "seed money" Shares of the
OMEGA Fund to Old Mutual Investment Advisers, Inc., a
Massachusetts corporation that is an affiliate of
OMAMB,
(B) the offer and sale of beneficial interests of the
Master Trust to the OMEGA Fund,
(C) the Initial Offering of Shares under the Placing
Agreement dated October 27, 1995 (the "INITIAL
PLACING AGREEMENT") among the Master Trust, the OMEGA
Fund, Old Mutual, OMAMB, Old Mutual Bermuda, and S.G.
Warburg & Co. Inc., and
(D) the Offering; and
(v) the offers and sales referred to in sub-paragraphs (A), (B), and
(C) of paragraph (iv) above were exempt, pursuant to Section 4(2)
of the 1933 Act, from registration pursuant to Section 5 of the
1933 Act.
Our opinions below relating to the organization and existence of
the OMEGA Fund and the Master Trust rely entirely upon and are limited by the
respective certificates of the Secretary of State of Massachusetts attached
hereto as EXHIBITS A and B.
Each opinion herein relating to any agreement or instrument,
including, without limitation, the Placing Agreement and the Fund Agreements, is
subject to the following general qualifications:
(i) as to any agreements or instruments delivered by the OMEGA Fund
or the Master Trust, we assume that the OMEGA Fund or the
Master Trust, as the case may be, has received the agreed to
consideration therefor;
(ii) as to any agreements or instrument to which the OMEGA Fund or the
Master Trust is a party, we assume that such agreement or
instrument (A) has been duly
- 4 -
<PAGE> 26
authorized, executed, and delivered by each other party thereto,
and (B) constitutes the legal, valid, and binding agreement of
each such other party enforceable against such other party
according to its terms;
(iii) the enforceability of any agreement or instrument against any
party may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshaling, or other laws
and rules of law affecting the enforcement generally of
creditors' rights and remedies (including such as may deny giving
effect to waivers of debtors' rights);
(iv) no opinion is given herein as to the enforceability of any
particular provision of any agreement relating to remedies after
default or as to the availability of any specific or equitable
relief of any kind;
(v) the enforcement of any rights under any agreement may be subject
to any implied duty of good faith and general principles of
equity (regardless of whether such enforceability is considered
in a proceeding at law or in equity); and
(vi) the enforcement of any agreement providing for indemnification or
contribution is subject to applicable public policy
considerations, including, without limitation, those expressed in
the 1933 Act.
Subject to the limitations set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
This opinion is limited solely to the laws of The Commonwealth of Massachusetts
as applied by courts located in Massachusetts and the United States of America
(including the 1933 Act, the 1940 Act, and the rules and regulations promulgated
by the Commission under the 1933 Act and the 1940 Act (the "REGULATIONS")), to
the extent that the same may apply to or govern any of the matters addressed
below. No opinion is given herein as to the choice of law that any tribunal may
apply to the transactions referred to herein.
We note that the Placing Agreement and certain of the Fund
Agreements are, by their terms, said to be governed by the laws of jurisdictions
other than The Commonwealth of Massachusetts. However, for purposes of any
opinion below with respect to the Placing Agreement and any Fund Agreements, we
have, with your permission, assumed that such agreements are governed by the
laws of The Commonwealth of Massachusetts.
We note that certain trustees of the OMEGA Fund and the Master
Trust participated by telephone conference call in the December Meeting. Article
IV, Section 1 of the By-Laws of each of the OMEGA Fund and the Master Trust
authorizes the trustees to participate by telephone conference call in meetings
of the Board of Trustees. However, Section 15(c) of the 1940 Act requires that
the board of directors of a registered investment company approve the terms of
any contract or agreement by which a person undertakes to serve as principal
underwriter for such company by vote of a majority of certain disinterested
directors "cast in person at a meeting called for the purpose of voting on such
approval". In
- 5 -
<PAGE> 27
addition, Rule 12b-1(c) under the 1940 Act requires that any agreement related
to a plan of distribution adopted under Rule 12b-1 be approved by vote of the
directors, and of certain disinterested directors, "cast in person" at a
meeting called for the purpose of approving the agreement. We are not aware of
any judicial authority as to whether a vote at a meeting in which several
trustees participated by telephone conference call satisfies the requirements of
Section 15(c) of the 1940 Act and Rule 12b-1(c). As a result there is
uncertainty regarding this question, and our opinions below are accordingly
qualified. We note, however, that at the October Meeting, at which all of the
trustees except for Mr. Davis participated at the same location in Bermuda, the
trustees approved the Initial Placing Agreement, which obligated the OMEGA Fund
and the Master Trust to negotiate in good faith with a view to entering into the
Placing Agreement and made reference to the terms of the Offering. In
addition, we understand that the Board of Trustees of each of the OMEGA Fund and
the Master Trust will be asked to ratify the actions of the December Meeting at
the next scheduled meeting of the Board of Trustees to be held of February 12,
1996. If a majority of both the trustees and the disinterested trustees, as
specified in Section 15(c) of the 1940 Act and Rule 126-1(c), (a) participate in
the February 12, 1996 meeting in person at the same location in Bermuda, and (b)
vote during such meeting to ratify the actions of the December Meeting, the
uncertainty described in this paragraph with respect to the authorization of the
Placing Agreement would be resolved.
We understand that all of the foregoing assumptions and
limitations are acceptable to you.
Based upon the foregoing and subject to the limitations set forth
below, we are of the opinion as follows:
1. The OMEGA Fund has been duly created and is lawfully and validly
existing as a voluntary association with transferable shares
(commonly referred to 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 the
Placing Agreement and consummate the transactions contemplated
therein, and to own its properties and conduct its business as
described in its respective Registration Statement and in the
Memorandum.
2. The issuance and sale of the Shares as contemplated by the
Placing Agreement and by the Memorandum have been duly and
validly authorized by the OMEGA Fund, and the Shares, when issued
and paid for as contemplated therein, will be validly issued and
fully paid and non-assessable and will conform in all material
respects to the description thereof contained in the Memorandum
(except that, as set forth in the Registration Statement of the
OMEGA Fund, shareholders of the OMEGA Fund may be personally
responsible for its obligations); the issuance and sale of
beneficial interests in the Master Trust to the OMEGA Fund and
the SAGA Fund as contemplated by the Portfolio Transfer and
Subscription Agreement have been
- 6 -
<PAGE> 28
duly and validly authorized by the Master Trust, and such
beneficial interests have been validly issued and conform in all
material respects to the description thereof contained in the
Registration Statement of the Master Trust; and each of the OMEGA
Fund and the Master Trust is authorized under its Declaration of
Trust to issue an unlimited number of Shares or amount of
beneficial interests, as the case may be, as set forth in its
Registration Statement.
3. Each of the Placing Agreement and the several Fund Agreements has
been duly authorized, executed and delivered by each of the OMEGA
Fund and the Master Trust (if it is a party thereto), complies in
all material respects with all applicable provisions of the 1940
Act and the Regulations thereunder and, constitutes a legal,
valid, binding and enforceable obligation of each of them (if it
is a party thereto).
4. The execution and delivery of, compliance with and consummation
of the transactions contemplated in each of the Placing Agreement
and the several Fund Agreements by the OMEGA Fund and the Master
Trust will not result in a violation of the provisions of (i) the
Declaration of Trust or By-Laws of either of them, (ii) the 1940
Act and the Regulations thereunder, or (iii) any rule or
regulation of any United States federal or Massachusetts state
governmental agency or body having jurisdiction over either
of them or any of their respective properties; and no consent,
approval, authorization, order, registration, or qualification
under the 1940 Act and the Regulations thereunder or of or with
any such governmental agency or body is required for the
consummation by the OMEGA Fund or the Master Trust of the
transactions contemplated in the Placing Agreement or the several
Fund Agreements, except such as have already been obtained or
made and are in full force and effect or such as may be required
under state securities laws. Notwithstanding the foregoing, no
opinion is given with respect to the accuracy, completeness, or
fairness of any of the statements contained in the Memorandum,
nor is any advice given as to whether any facts have come to our
attention that have caused us to believe that any statements made
in the Memorandum contain an untrue statement of a material fact
or omit to state a material fact, except as set forth in
paragraph 7 below or in the unnumbered paragraph immediately
following paragraph 9 below.
5. Each of the OMEGA Fund and the Master Trust is lawfully and
validly registered with the Commission under the 1940 Act as an
open-end management investment company and, to the best
knowledge, (i) no order suspending or revoking the registration
of the OMEGA Fund or the Master Trust under Section 8(e) of the
1940 Act has been issued, and (ii) no proceedings therefor have
been initiated or threatened in writing by the Commission.
6. No consents, approvals, authorizations or orders are required to
be obtained under the 1940 Act or the Regulations thereunder in
order to permit solicitation by the Placement Agents of offers to
purchase Shares pursuant to the Offering as
- 7 -
<PAGE> 29
contemplated by the Placing Agreement and the Memorandum; and
the solicitation by the Placement Agents of offers to purchase
Shares pursuant to the Offering as contemplated by the
Placing Agreement and the Memorandum does not result in a
violation of the provisions of the Section 7 of the 1940 Act or
the Regulations thereunder.
7. The statements in the Memorandum under the caption "TAX MATTERS--
Certain U.S. Tax Matters", insofar as such statements purport to
summarize certain provisions of the income tax laws of the
United States, constitute a fair summary of such provisions; and
the statements in the Memorandum under the caption "ERISA
MATTERS", insofar as they relate to the laws of the United States
Employee Retirement Income Security Act of 1974, as amended, are
accurate in all material respects.
8. No registration of the Shares under Section 5 of the 1933 Act is
required for the offer and sale of the Shares in the manner
contemplated by the Placing Agreement and the Memorandum.
9. No provision of the Declaration of Trust or By-Laws of the Master
Trust or of the 1940 Act or the Regulations thereunder
disqualifies the Master Trust from maintaining its principal
office outside of the United States for tax purposes.
While the limitations inherent in the independent verification of
factual matters and the character of the determinations involved in preparing
the Memorandum are such that we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness, or fairness of the statements
contained in the memorandum (except to the extent expressly stated in paragraph
7 above), no facts have come to our attention that have caused us to believe
that the statements made in the memorandum under the captions "INVESTMENT
OBJECTIVE AND POLICIES", "MANAGEMENT", "VALUATION OF SHARES", "OFFERING OF
SHARES", "REDEMPTIONS", "LIQUIDITY FACILITY AND THE GLOBAL FUND", and "GENERAL
INFORMATION", but only insofar as they purport to summarize the Declaration of
Trust and By-Laws of the OMEGA Fund, the Declaration of Trust and By-Laws of the
Master Trust, votes of the Board of Trustees of the OMEGA Fund or the Master
Trust, votes of the Board of Trustees of the OMEGA Fund or the Master Trust, or
the Fund Agreements, contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. We express no view as to
any other portions of the Memorandum, including, without limitation, any
descriptions of political, social, economic, and business conditions in the
Republic of South Africa, Old Mutual, the Old Mutual Main Fund, the Portfolio,
the Johannesburg Stock Exchange, the past and projected performance of any South
African securities, and any matters governed by the laws of any jurisdiction
other than The Commonwealth of Massachusetts or the United States of America.
- 8 -
<PAGE> 30
This opinion is based on present law and given as of the date hereof.
We assume no responsibility to inform you of facts that subsequently come to our
attention or of changes in law.
This opinion has been delivered solely for your use in connection with
the Offering and may not be referred to or used for any other purpose or
circulated to, or relied upon by, any other person without our prior written
consent, except that you may circulate copies of this opinion to your legal
counsel.
Very truly yours,
BINGHAM, DANA & GOULD
- 9 -
<PAGE> 31
ANNEX D
[Letterhead of Conyers, Dill & Pearman]
- - -, 1995
Swiss Bank Corporation
SBC Warburg
1 Finsbury Avenue
London EC2M 2PP
Fleming Martin Limited
25 Copthall Avenue
London EC2R 7DR
Rand International Securities
780 3rd Avenue
New York, NY10017
Old Mutual South Africa Growth Assets Fund Limited
Richmond House
12 Par-la-Ville Road
Hamilton, Bermuda
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")
------------------------------
Second Offering of Shares of SAGA Fund
--------------------------------------
We have acted as special legal counsel in Bermuda to the Companies in
connection with the second offering of shares (the "Shares") of SAGA Fund.
For the purposes of giving this opinion, we have examined the following
documents:
(i) an agreement among Old Mutual South Africa Equity Trust (the
"Master Trust"), SAGA Fund, South African Mutual Life Assurance
Society ("Old Mutual"), OMAM, OMB, Fleming Martin Limited, Rand
International Securities and Swiss
<PAGE> 32
Bank Corporation dated 21 December, 1995 relating to the placing
of shares of US$1.00 each in SAGA Fund (the "Placing
Agreement");
(ii) an agreement among the Master Trust, Old Mutual Equity Growth
Assets South Africa Fund ("OMEGA Fund"), Old Mutual, OMAM, OMB,
Fleming Martin Limited, Rand International Securities and S.G.
Warburg & Co. Inc. dated December 21, 1995 relating to the
placing of shares of OMEGA Fund in a United States private
placement (the "US Placing Agreement");
(iii) the Advisory Agreement between OMAM and the Master Trust dated
October 23, 1995;
(iv) the Custodian Agreement between SAGA Fund and State Street Bank
and Trust Company dated October 23, 1995, 1995;
(v) the Administrative Services Agreement between SAGA Fund and
State Street Cayman Trust Company, Ltd., dated 23rd October,
1995; and
(vi) the Investment Restrictions undertaking among the Master Trust,
OMEGA Fund and SAGA Fund dated 23rd October, 1995.
The Placing Agreement, the U.S. Placing Agreement, the Advisory
Agreement, the Custodian Agreement, the Administrative Services 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 Companies, minutes of meetings of their 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, the State of New York or the Commonwealth of
Massachusetts, 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, the federal courts of the United States or the courts of the
Commonwealth of Massachusetts, as the case may be (the "Foreign Courts").
- 2 -
<PAGE> 33
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 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 and 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. 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 and 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.
- 3 -
<PAGE> 34
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.
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, 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.
9. With respect to the US Placing Agreement, the Advisory Agreement, the
Custodian Agreement and the Administrative Services Agreement,
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
- 4 -
<PAGE> 35
ANNEX E
None.
<PAGE> 1
Exhibit6(d)
CONFORMED COPY
DATED 21ST DECEMBER 1995
------------------------
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL SOUTH AFRICA GROWTH (2)
ASSETS FUND LIMITED
OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED (3)
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (4)
AND
FLEMING MARTIN LIMITED
RAND INTERNATIONAL SECURITIES AND
SWISS BANK CORPORATION (5)
-----------------------------------------------------
AGREEMENT
RELATING TO SHARES OF
OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED
-----------------------------------------------------
NORTON ROSE
London
<PAGE> 2
<TABLE>
CONTENTS
--------
<CAPTION>
CLAUSE HEADING PAGE
<S> <C> <C>
1 Definitions and interpretation................................. 2
2 Opinions and other documents................................... 5
3 Offering and subscription...................................... 5
4 Announcements.................................................. 7
5 Allotment and settlement....................................... 7
6 Registration................................................... 8
7 Remuneration and expenses...................................... 8
8 Representations, warranties and undertakings................... 11
9 Indemnity...................................................... 12
10 Termination.................................................... 15
11 Effect of termination.......................................... 17
12 Notices........................................................ 17
13 Miscellaneous.................................................. 18
14 Protection of trustees......................................... 18
15 Governing law and jurisdiction................................. 19
SCHEDULE
1 Warranties..................................................... 20
2 The Placing Agents............................................. 23
DOCUMENTS IN THE AGREED FORM
"A" Placement Memorandum
"B" Subscription Form
"C" US Placing Agreement
"D" US Private Placement Memorandum
"E" Bingham Dana & Gould legal opinion
"F" Conyers Dill & Pearman legal opinion
</TABLE>
<PAGE> 3
THIS AGREEMENT is made on 21st December 1995 BETWEEN:
(1) OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts trust
organised as an open-ended investment company of Richmond House, 12
Parla-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) OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED, a company incorporated
under the laws of Bermuda of Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda ("OMAMB");
(4) 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
(5) The persons whose names and addresses are set out in Schedule 2
(together the "PLACING AGENTS" and separately a "PLACING AGENT")
WHEREAS:
(A) OMAMB and Old Mutual Bermuda are respectively direct and indirect
wholly owned subsidiaries of South African Mutual Life Assurance
Society ("Old Mutual");
(B) OMAMB is 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 is a wholly owned
subsidiary of Old Mutual Bermuda;
(C) the Master Trust, which is duly organised as a Massachusetts trust
and is registered as an open-end management company under the
Investment Company Act, has acquired a portfolio of South African
investments from Old Mutual in exchange for Old Mutual Bermuda
acquiring beneficial interests in the Master Trust;
(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 registered
as an open-
1
<PAGE> 4
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 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) the shares of the SAGA Fund (other than the said manager's shares)
have been admitted to the Official List of the Irish Stock Exchange;
(H) SG Warburg & Co., Inc., Rand International Securities and Fleming
Martin Inc. (the "US PLACING AGENTS") have pursuant to an agreement
made with the OMEGA Fund and others agreed (as agent of the OMEGA
Fund) to use their respective best efforts to solicit offers to
purchase shares of the OMEGA Fund in the United States of America;
and
(I) on the terms and subject to the conditions set out herein, in
reliance on the various representations, warranties, undertakings and
indemnities contained herein the Placing Agents have agreed (as
agents for the SAGA Fund) to use their respective reasonable
endeavours to procure subscribers for Shares on and subject to the
terms set out in the Placement Memorandum.
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 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)
"AFFILIATE" means, in relation to each of the Placing Agents 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
"DIRECTORS" means the persons named as directors of the SAGA Fund
under the heading "MANAGEMENT - Directors and Trustees" in the
Placement Memorandum
"FSA" means the Financial Services Act 1986
2
<PAGE> 5
"HOLDING COMPANY" has the meaning ascribed thereto by sections 736
and 736A. of the Companies Act 1985
"INITIAL OFFERING" means the initial offering of up to 20,000,000
Shares which closed on 10th November 1995
"INITIAL OFFERING PLACEES" means (a) persons who acquired Shares in
the Initial Offering and (b) Kane & Company (account IBM London
Pension Fund) and National Australia Bank in respect of an aggregate
of 19,871.235 Shares acquired by them after the closing of the
Initial Offering but prior to the date hereof
"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
Subscription Form
"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
"OFFERING" means the offering of Shares on the terms and conditions
of the Placement Memorandum which terminates on the Offering
Termination Date
"OFFERING TERMINATION DATE" means 10th May 1996 or such earlier or
later date as the SAGA Fund may, in consultation with the Placing
Agents, determine
"PLACEES" means persons who agree (on the terms and subject to the
conditions set out or referred to in the Subscription Form) to
acquire Shares pursuant to the Offering and "PLACEE" shall be
construed accordingly
"PLACEMENT MEMORANDUM" means the document proposed to be issued in
connection with the Offering which is in the agreed form marked "A"
3
<PAGE> 6
"REGULATION S" means regulation S under the Securities Act
"SBC WARBURG" means Swiss Bank Corporation, acting through its
division SBC Warburg, one of the Placing Agents, whose address is set
out in Schedule 2
"SECURITIES ACT" means the United States Securities Act of 1933 (as
amended)
"SHARES" means shares of US$1.00 each in the capital of the SAGA
Fund;
"STATUTES" means the Act, the Irish Companies Act, the FSA and any
regulations made thereunder
"SUBSCRIPTION FORM" means the form in the agreed form marked "B";
"SUBSIDIARY" has the meaning ascribed thereto by sections 736 and
736A of the Companies Act 1985
"US DOLLARS", "US$" 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
"US PLACING AGREEMENT" means the final form of the agreement between
the OMEGA Fund and others and the US Placing Agents relating to the
offering of shares in the OMEGA Fund in the United States pursuant to
the US Private Placement Memorandum which is in the agreed form
marked "C"
"US PRIVATE PLACEMENT MEMORANDUM" means the document issued in
connection with the offering of shares in the OMEGA Fund which is in
the agreed form marked "D"
"VAT" means United Kingdom value added tax
"VATA" means the Value Added Tax Act 1983
"WARRANTIES" means the representations, warranties and undertakings
made and given pursuant to clause 8 and schedule 1
"WARRANTORS" means the Master Trust, the SAGA Fund, OMAMB 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 the SAGA Fund and the Placing
Agents prior to the exchange of this Agreement and signed by each of
them or on their behalf for
4
<PAGE> 7
the purpose of identification, with such amendments thereto (if any)
as may be agreed between the SAGA Fund and the Placing Agents.
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 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 OPINIONS AND OTHER DOCUMENTS
----------------------------
2.1 This Agreement shall not come into effect until the Placing Agents
have received legal opinions addressed to the Placing Agents, in form
and substance satisfactory to the Placing Agents, from (i) 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 "E" and (ii) 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 "F".
2.2 As soon as reasonably practicable following the making of a request
in writing therefor by a Placing Agent to the SAGA Fund, the SAGA
Fund shall procure
5
<PAGE> 8
the delivery to such Placing Agent (or as such Placing Agent may
reasonably direct) of all such further information and documents as
such Placing Agent may reasonably require and which shall reasonably
be necessary for the purpose of such Placing Agent fulfilling its
obligations pursuant to this Agreement and in connection with the
Offering.
3 OFFERING AND SUBSCRIPTION
3.1 The SAGA Fund hereby irrevocably appoints the Placing Agents to act
as its sole agents for the purpose of soliciting subscriptions of its
the Offering, which appointment the Placing Agents hereby accept. The
SAGA Fund agrees that it will not, without the approval of all the
Placing Agents, appoint any other person as its agent for the purpose
of soliciting subscriptions of its Shares and, after the date hereof,
no Warrantor will offer any Shares for sale or subscription except as
contemplated by this Agreement until the Offering Termination Date.
The SAGA Fund hereby confirms that the foregoing appointment confers
on each Placing Agent as agent as aforesaid all powers, 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 a Placing Agent shall
lawfully do in the exercise of its appointment, power, authority and
discretion hereunder and thereunder.
3.2 Pursuant to the appointment made by clause 3.1, 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 9, each Placing Agent hereby undertakes (as agent
for the SAGA Fund) to use its reasonable endeavours to procure
subscribers for Shares under the Offering 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 the Placing Agents of
the Subscription Form for such purpose.
3.3 For the avoidance of any doubt nothing in this Agreement or otherwise
shall oblige any Placing Agent to apply for or subscribe for any
Shares pursuant to the Offering or otherwise or impose an absolute
obligation on a Placing Agent to procure subscribers therefor
(whether pursuant to the Offering or otherwise), although the Placing
Agents and their respective affiliates shall not be debarred from
participating in the Offering.
3.4 Each Placing Agent represents and warrants and agrees with the SAGA
Fund and the Master Trust that (i) in marketing the Shares to
potential subscribers under the Offering, it will take all reasonable
care to obtain legal advice (at the expense of the SAGA Fund) on the
securities laws of each jurisdiction in which marketing or sales
activities are carried out by it and to comply with such advice (ii)
this Agreement has been duly authorised and executed on behalf of
such
6
<PAGE> 9
Placing Agent and constitutes the legal, valid, binding and
enforceable obligation of such Placing Agent 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 such Placing Agent 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
such Placing Agent 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.
3.5 Each of the SAGA Fund and the Master Trust agrees with each Placing
Agent that if at any time there is a material change affecting any
matter contained in the Placement Memorandum 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 issued, each of the SAGA
Fund and the Master Trust undertakes promptly to notify each Placing
Agent thereof (with full details) forthwith upon becoming aware of
the same (but if one of the SAGA Fund or the Master Trust 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 the Placing Agents under clause 10, a Placing Agent 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 the Placing Agents shall, after
consultation with the SAGA Fund, reasonably consider necessary and
the SAGA Fund and the Placing Agents shall promptly consult regarding
the form and contents, and method of publication, of any further
document which may be required. The SAGA Fund shall not publish any
such further document unless and until it is approved by the Placing
Agents (such approval not to be unreasonably withheld or delayed) but
a Placing Agent shall be deemed to have approved such further
document if it fails, within 10 business days in London and New York
City of receipt thereof, to submit to the SAGA Fund a notice
specifying its objection.
3.6 Each Placing Agent shall procure that duly completed Subscription
Forms signed by its Placees which are received by it at its office
specified in Schedule 2 during its normal business hours before 4
p.m. on any business day in the country in which such office is
located will be promptly forwarded to the Transfer Agent. If a
Subscription Form is received by a Placing Agent at any other time it
shall be forwarded to the Transfer Agent promptly on the business day
in the country in which such office of the Placing Agent is located
next following the day of receipt. In forwarding a Subscription Form,
the Placing Agent shall be acting as agent of the Placee and not of
the SAGA Fund. The SAGA Fund accepts no and shall have no liability
in respect of any failure by a Placing Agent to comply with this
clause 3.6.
7
<PAGE> 10
4 ANNOUNCEMENTS
-------------
4.1 Save as provided herein 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 Offering and its associated
transactions shall be in terms to be agreed between the SAGA Fund and
the Placing Agents such agreement not to be unreasonably withheld or
delayed.
5 ALLOTMENT AND SETTLEMENT
------------------------
5.1 The SAGA Fund shall procure that each Placing Agent is promptly
notified of the subscription price paid in respect of each Share
subscribed by a Placee whose subscription has been procured by such
Placing Agent and of the sales charge payable to such Placing Agent
in respect thereof. Subject to clause 5.3 the SAGA Fund shall, as
soon as practicable, allot fully paid to Placees the Shares which
they have agreed to subscribe under the Offering in the names
specified by such Placees in the Subscription Forms signed by them.
5.2 The Shares to be allotted pursuant to clause 5.1 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.
5.3 Each application for Shares shall be subject to acceptance by the
SAGA Fund which it may withhold at its discretion if it considers,
acting reasonably, that the acceptance of the application would not
be in the best interests of the SAGA Fund.
5.4 Each Placing Agent shall when sending a signed Subscription Form to
the Transfer Agent also send a copy to OMAMB.
6 REGISTRATION
------------
6.1 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 Offering in the names of the respective
allottees shall be prepared and despatched to such persons
as soon as practicable 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 allotment of Shares
pursuant to the Offering the register of members of the SAGA
Fund shall be made up to reflect such allotments.
8
<PAGE> 11
7 REMUNERATION AND EXPENSES
-------------------------
7.1 SBC Warburg and Old Mutual Bermuda agree that an additional placement
fee equal to 0.1 per cent of the price paid by each Initial Offering
Placee for the Shares subscribed by it shall be paid by Old Mutual
Bermuda to SBC Warburg as soon as practicable after execution of this
Agreement. For the purpose of this clause 7.1 the price paid by each
Initial Offering Placee under the Initial Offering shall be deemed to
be US$50 per Share and Old Mutual Bermuda shall pay an aggregate
amount of US$1,000 to SBC Warburg as additional placement fee in
respect of the subscriptions made by the Initial Offering Placees
mentioned in paragraph (b) of the definition of "Initial Offering
Placees".
7.2 SBC Warburg, Old Mutual Bermuda and OMAMB agree that the servicing
fee payable by OMAMB to SBC Warburg under clause 9.5 of the Placing
Agreement dated 27th October 1995 relating to the Initial Offering
shall not be paid but shall be replaced by the additional placement
fee to be paid by Old Mutual Bermuda to SBC Warburg under
clause 7.1. Except as amended by this clause 7.2, the said Placing
Agreement shall remain in full force and effect.
7.3 The SAGA Fund shall pay a sales charge equal to 0.35 per cent of the
subscription price of each Share (being the net asset value) for
which a Placee shall have been procured by a Placing Agent under the
Offering. Such sales charge shall be allocated for the account of
each Placing Agent to the extent that Placees have been procured by
it provided that, in the event of a dispute as to which Placing Agent
is entitled to such sales charge, OMAMB shall conclusively decide
which of the Placing Agents is entitled to the sales charge
concerned. The SAGA Fund shall procure that such sales charge shall
be paid to each Placing Agent entitled thereto as soon as practicable
after the subscription moneys concerned have been received by the
SAGA Fund. It is understood and agreed that the Transfer Agent, in
determining amounts due to the Placing Agents under this clause 7.3,
may round such amounts down (but not up) to the extent it is
impracticable for the Transfer Agent to determine such amounts
precisely. Any difference between the amounts received by a Placing
Agent under this clause 7.3 and the amounts such Placing Agent is
entitled to receive under this clause 7.3 shall be payable by OMAMB
to such Placing Agent upon demand.
7.4 In addition to the sales charge payable under clause 7.3, Old Mutual
Bermuda shall pay to each Placing Agent a further sales charge equal
to 0.25 per cent of the subscription price of each Share (being the
net asset value) for which a Placee shall have been procured by such
Placing Agent under the Offering. Such additional sales charge shall
be allocated among the Placing Agents in the same manner as the sales
charge payable under clause 7.3 and shall be payable at the same time
as the sales charge payable under clause 7.3.
9
<PAGE> 12
7.5 The SAGA Fund agrees to pay or reimburse each Placing Agent upon
demand (together with any VAT or equivalent tax thereon) (a) its
reasonable legal costs and disbursements incurred in connection with
the preparation and negotiation of this Agreement, (b) its legal
costs and disbursements incurred in obtaining advice on the marketing
of the Shares in any jurisdiction from legal advisers chosen by such
Placing Agent which costs and disbursements have been incurred with
the prior agreement of the SAGA Fund (such agreement not to be
unreasonably withheld or delayed), (c) such other marketing or other
costs as may be incurred by a Placing Agent in connection with the
Offering not exceeding US$5,000 for any one claim in respect of a
calendar quarter, and (d) such other marketing or other costs not
specified in (a), (b), or (c) above as may be incurred by a Placing
Agent in connection with the Offering and which the SAGA Fund may
agree to pay or reimburse. Each Placing Agent which has incurred
expenditure falling to be paid or reimbursed by the SAGA
Fund shall provide the SAGA Fund with a statement itemising all such
expenditure incurred during each calendar quarter, such statement to
be delivered to the SAGA Fund within 30 days of the expiry of the
relevant calendar quarter.
7.6 The SAGA Fund hereby agrees with and undertakes to each Placing Agent
that it shall be liable for, and shall promptly pay, all the costs,
charges, fees and expenses necessary to make the Offering available
including without limitation, all fees of the Irish Stock Exchange,
expenses of lawyers and accountants engaged by the SAGA Fund. the
costs of printing and circulating to the Placing Agents the Issue
Documents, transfer agents' fees and expenses together, in each case,
if appropriate, with any VAT thereon but not including costs,
charges, fees and expenses of the Placing Agent save to the extent
that the SAGA Fund has agreed to pay or reimburse them under clause
7.5. In the event that any such costs, charges, fees or expenses are
in the first instance incurred by a Placing Agent, the SAGA Fund
shall promptly upon demand reimburse such Placing Agent in respect of
the same.
7.7 All sums payable to a Placing Agent 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 the relevant Placing Agent
such additional amount as shall be required to ensure that the net
amount retained by such Placing Agent is equal to the full amount
which would have been received by it had no such deduction or
withholding been made.
7.8 Where the SAGA Fund reimburses a Placing Agent in respect of any
costs, charges or expenses, the SAGA Fund shall in addition pay to
such Placing Agent 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 such Placing Agent in
10
<PAGE> 13
respect of the said, costs charges or expenses which is not
recoverable by such Placing Agent 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 a Placing Agent as agent on behalf
of the SAGA Fund, any VAT charged thereon to such Placing
Agent.
7.9 Any VAT properly chargeable in respect of any amount payable to a
Placing Agent pursuant to this Agreement shall be paid in addition
to, and together with and at the same time as, such amount.
7.10 OMAMB 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.
8 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
--------------------------------------------
8.1 In consideration of each Placing Agent 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 (but only for or as to itself, as
the case may be) to each Placing Agent in the terms set out in
schedule 1.
8.2 (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 each Placing Agent 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.
8.3 Each of the Warrantors severally undertakes to each Placing Agent:
(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 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
11
<PAGE> 14
circumstances subsisting at any time during the continuance
of the Offering; and
(b) to notify each Placing Agent forthwith if it becomes aware
at any time during the continuance of the Offering 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 during
the continuance of the Offering, be untrue or inaccurate or
misleading in any material respect.
8.4 If at any time a Placing Agent shall receive notification pursuant to
clause 8.3(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, such Placing Agent may,
without prejudice to its right to terminate its obligations under
this Agreement pursuant to clause 10, require the SAGA Fund and/or
the Master Trust at its own expense to make or cause to be made
such announcement and/or despatch such communication as such Placing
Agent may reasonably require.
8.5 If 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
supplement to the Placement Memorandum and when so repeated shall
be read and construed as if the references therein to the Placement
Memorandum meant the Placement Memorandum when read together with
such supplement.
8.6 The Warranties shall remain in full force and effect notwithstanding
termination of the Offering.
8.7 Each of OMAMB and the Master Trust (subject to the provisions of the
Investment Company Act with respect to the procedures for amendments
to the Advisory Agreement) undertakes to each of the Placing Agents
that it will procure that the Advisory Agreement between OMAMB and
the Master Trust shall be amended and such other steps shall be taken
as may be necessary to ensure that the management fee payable by the
Master Trust shall be reduced for the benefit of investors in the
Master Trust and the SAGA Fund in the manner indicated in the
Placement Memorandum.
8.8 The Master Trust undertakes to each Placing Agent and the SAGA Fund
(i) that it will not, during the continuance of the Offering without
prior consultation with the Placing Agents and the SAGA Fund, issue
any shares of beneficial interest in the Master Trust to investors
other than OMAMB, 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
12
<PAGE> 15
interest if the result of such issue would be to prejudice the
interests of the SAGA Fund.
9 INDEMNITY
---------
9.1 No claim shall be made against a Placing Agent 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) a Placing Agent of its obligations and services under this
Agreement or otherwise in connection with the Offering and its
associated transactions or the proper exercise of its rights in
accordance with any provision hereof unless such loss, damage,
liability, cost, charge or expense shall have arisen by reason of the
negligence, fraud or wilful default of such Placing Agent or any of
its agents or affiliates or a breach by such Placing Agent of its
obligations representations or warranties under this Agreement.
9.2 The Warrantors (other than the Master Trust) hereby jointly and
severally undertake and the Master Trust severally undertakes to each
Placing Agent 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 9.7) 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 any jurisdiction whatsoever by a subscriber of Shares
pursuant to the Offering 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 , 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 8.1 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
13
<PAGE> 16
(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 such Placing Agent of its
obligations under this Agreement or otherwise in connection
with the Offering 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
Offering or the Shares authorised for issue by the SAGA Fund
or the allotment and issue of the Shares,
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 such
Placing Agent or any of its affiliates or any breach by any
Indemnified Person of any of its duties or obligations hereunder.
9.3 If any claim is made, or alleged, against any Indemnified Person, the
relevant Placing Agent shall, as soon as reasonably practicable after
such Placing Agent 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. The relevant
Placing Agent 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 9.2 relates and will keep
such Warrantor apprised as to the progress of any such action. If a
claim is made against an Indemnified Person which is covered by the
indemnity contained in clause 9.2, any Warrantor which accepts that
such claim is covered by such indemnity (an "Indemnifying Party")
shall be entitled to appoint legal advisers at the Indemnifying
Party's expense to represent the Indemnified Person in connection
with any such claim (in which case the Indemnifying Party shall not
be responsible for the fees and expenses of any separate legal
advisers retained by the Indemnified Person except as set forth
below) provided that such legal advisers shall be acceptable to the
Indemnified Person. Notwithstanding the
14
<PAGE> 17
Indemnifying Party's election to appoint legal advisers to
represent the Indemnified Person in connection with a claim, the
Indemnified Person shall have the right to employ separate legal
advisers (including local legal advisers) and the Indemnifying Party
shall bear the reasonable fees and expenses of such separate legal
advisers if (i) the use of legal advisers chosen by the Indemnifying
Party to represent the Indemnified Person would present such legal
advisers with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such claim include both the
Indemnified Person and the Indemnifying Party and the Indemnified
Person shall have reasonably concluded that there may be legal
defences available to it and/or other Indemnified Persons which are
different from or additional to those available to the Indemnifying
Party, (iii) the Indemnifying Party shall not have employed legal
advisers satisfactory to the Indemnified Person to represent the
Indemnified Person within a reasonable time after notice of the
commencement of such claim or (iv) the Indemnifying Party shall
authorise the Indemnified Person to employ separate legal advisers
at the expense of the Indemnifying Party. An Indemnifying Party
which has elected to appoint legal advisers to represent an
Indemnified Person shall keep such Indemnified Person fully informed
in writing upon request of the progress of the relevant claim and will
not, without prior the written consent of the Indemnified Person,
settle or compromise or consent to the entry of any judgement with
respect to any pending or threatened claim or action in respect of
which indemnification may be sought hereunder (whether or not the
Indemnified Person is an actual or potential party to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each relevant Indemnified Person from all
liability arising out of such claim or action. Notwithstanding the
foregoing if, after consultation with the Indemnifying Party, an
Indemnified Person concludes that it would be prejudicial to its
interests for the Indemnifying Party to continue conducting any
relevant claim on its behalf, such Indemnified Person shall be
entitled to reassume the conduct of such claim from the Indemnifying
Party at any time by giving written notice to the Indemnifying Party.
9.4 All sums payable under any indemnity contained in this clause 9 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 9, 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).
15
<PAGE> 18
9.5 Nothing in this clause 9 shall preclude a Placing Agent 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
is in addition to and not in substitution for any and all indemnities
to which a Placing Agent is entitled at law as agent of the SAGA
Fund, provided that nothing in this clause shall entitle a Placing
Agent to claim twice in respect of the same matter.
9.6 Any exclusion of liability on the part of a Placing Agent contained
herein shall take effect subject to any limitations imposed thereon
by the rules of any regulatory body by which such Placing Agent is
regulated.
9.7 In this clause 9, "Indemnified Persons" shall mean the Placing Agents
and each of their respective affiliates and "Indemnified Person"
shall be construed accordingly.
10 TERMINATION
-----------
10.1 If at any time after the date hereof it shall come to the knowledge
of any Warrantor or Placing Agent 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 during
the continuance of the Offering, 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 Offering, the
relevant Warrantor or Placing Agent (as the case may be) shall
forthwith give notice thereof to the other parties to this Agreement
and each Placing Agent shall have the right (exercisable in its
absolute discretion but after consultation the SAGA Fund) by notice
in writing to other parties to this Agreement to terminate the
obligations of such Placing Agent hereunder, in which event the
provisions of clause 11 shall apply.
16
<PAGE> 19
10.2 This Agreement shall be terminable as to any Placing Agent by the
SAGA Fund giving notice to all the other parties to this Agreement in
the event that such Placing Agent shall be in material breach of this
Agreement.
10.3 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 in Rule 12b-1(b)(2) under the
Investment Company Act, and if not so approved shall be deemed
terminated.
10.4 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.
10.5 This Agreement will automatically terminate as to any Placing Agent
in the event of its assignment (as defined in the Investment Company
Act) by such Placing Agent.
10.6 This Agreement shall automatically terminate on the Offering
Termination Date.
11 EFFECT OF TERMINATION
---------------------
If this Agreement terminates or is terminated pursuant to clause 10,
all the outstanding obligations of the relevant parties shall cease
and determine save that:
(a) clause 9 (and any provision hereof necessary for the purpose
of interpretation thereof) shall continue in full force and
effect for all purposes;
(b) 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 matter as gave
rise to a right to terminate this Agreement under clause
10).
12 NOTICES
-------
12.1 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 mail to the respective address set out or referred to below
or by fax to the relevant number set out or
17
<PAGE> 20
referred to 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, OMAMB and Old Mutual
Bermuda
Richmond House
12 Par-la-Ville Road
Hamilton, Bermuda
Fax no: 809 292 4720
Attention: J.C.R. Collis
(b) The Placing Agents
as set out in Schedule 2
12.2 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.
12.3 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.
13 MISCELLANEOUS
-------------
13.1 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.
18
<PAGE> 21
13.2 Any liability to a Placing Agent under this Agreement may in whole or
in part be released, compounded or compromised or time or indulgence
given by a Placing Agent 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. 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.
13.3 In exercising any right or power as trustee hereunder a Placing Agent
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.
13.4 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.
13.5 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.
19
<PAGE> 22
14 PROTECTION OF TRUSTEES
----------------------
14.1 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.
15 GOVERNING LAW AND JURISDICTION
------------------------------
15.1 This Agreement shall be governed by and construed in accordance with
the laws of England. Each of the parties hereto hereby submits to the
exclusive jurisdiction of the English Courts for all purposes
relating to this Agreement.
15.2 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 the
Placing Agents and, on request of any Placing Agent, appoint a new
agent for service of process in England and deliver to the Placing
Agents 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.
20
<PAGE> 23
SCHEDULE 1
----------
WARRANTIES
----------
1 Recitals (A) to (G) (both inclusive) are true and accurate in all
respects.
2 All factual information supplied in writing by any Warrantor to any
Placing Agent for the purposes of the Offering and the Placement
Memorandum (including without limitation all material supplied for
the purposes of any marketing activity or presentation relating
thereto) was, to the best of the knowledge, information and belief of
such party, when given, 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.
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 a Warrantor 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
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 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 or the Master
Trust, 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.
6 The Offering and the transactions referred to or provided for by the
Material Contracts and the creation, allotment and issue of the
Shares, to the 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
21
<PAGE> 24
Republic of Ireland. Any issue or distribution of the Placement
Memorandum or any marketing material relating to the SAGA Fund by
any 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 (except that no representation is made as to
the actions of any Placing Agent or any of its affiliates in making
any such issue or distribution).
7 The SAGA Fund has power under its Memorandum of Association and
ByeLaws, and the Directors are duly authorised and empowered, to
allot and issue the Shares subscribed for under the 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 Offering, the SAGA Fund's and the Master Trust's
statutory books and minute books have been or will be properly
written up and the SAGA Fund has not received any application or
request for rectification of its register of members.
9 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.
10 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.
11 The SAGA Fund does not have any subsidiaries nor does it own any
significant investment (other than interests in the Master Trust) and
the SAGA Fund has not entered into any binding commitment to acquire
any significant investment (other than interests in the Master Trust)
or to enter into any joint venture arrangement.
12 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 any Placing Agent or any
of its affiliates).
22
<PAGE> 25
13 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 any Placing Agent
or any of its affiliates).
14 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 Material Contract entered into by such Warrantor.
15 The warranties numbered 1 to 3 (inclusive) in Annex A to the US
Placing Agreement are true and accurate in all respects in so far as
they relate to the Master Trust.
23
<PAGE> 26
SCHEDULE 2
THE PLACING AGENTS
Fleming Martin
25 Copthall Avenue
London EC2R 7DR
Fax: 171 374 4815
For the attention of Eric von Glehn
Rand International Securities - a division of Noyes Partners Incorporated
780 Third Avenue - 31st floor
New York NY 10017
Fax: 001 212 980 2224
For the attention of Kevin Jacobs
Swiss Bank Corporation - acting through its division SBC Warburg
1 Finsbury Avenue
London EC2M 2PA
Fax no: 171 247 4984
Attention: Howard Myles
24
<PAGE> 27
SIGNED by )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ) W. LANGLEY
JONATHAN WESTWOOD Duly authorised signatory
KEMPSON HOUSE, CAMOMILE STREET
LONDON EC3A 7AN
J. WESTWOOD
SIGNED by )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: )
JONATHAN WESTWOOD W. LANGLEY
AS ABOVE Duly authorised signatory
J. WESTWOOD
SIGNED by )
for and on behalf of )
OLD MUTUAL ASSET MANAGERS )
(BERMUDA) LIMITED )
in the presence of: )
JONATHAN WESTWOOD W. LANGLEY
AS ABOVE Duly authorised signatory
J. WESTWOOD
SIGNED by )
for and on behalf of )
OLD MUTUAL FUND HOLDINGS )
(BERMUDA) LIMITED )
in the presence of: )
JONATHAN WESTWOOD W. LANGLEY
AS ABOVE Duly authorised signatory
J. WESTWOOD
SIGNED by )
for and on behalf of )
FLEMING MARTIN LIMITED )
in the presence of: )
JONATHAN WESTWOOD ERIC VON GLEHN
AS ABOVE Duly authorised signatory
25
<PAGE> 28
J. WESTWOOD
SIGNED by )
for and on behalf of )
RAND INTERNATIONAL SECURITIES )
- - - a division of NOYES PARTNERS )
INCORPORATED in the presence of: )
F. GEORGE WALTERS
F. GEORGE WALTERS KEVIN JACOBS
Duly authorised signatory
SIGNED by )
for and on behalf of ) WILLIAM ROGERS
SWISS BANK CORPORATION )
in the presence of: )
JONATHAN WESTWOOD HOWARD MYLES
AS ABOVE Duly authorised signatory
J. WESTWOOD
26
<PAGE> 1
Exhibit 9(b)
THIS AGREEMENT is made as of March 6, 1996 by and among OLD MUTUAL SOUTH
AFRICA EQUITY TRUST, a Massachusetts trust registered under the Investment
Company Act of 1940 as an open-end investment company, OLD MUTUAL EQUITY GROWTH
ASSETS SOUTH AFRICA FUND, a Massachusetts business trust registered under the
Investment Company Act of 1940 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 ASSET MANAGERS (BERMUDA) LIMITED, a company incorporated under the laws
of Bermuda, 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").
Reference is made to the agreement (the "Placing Agreement") dated
October 27, 1995 among the parties hereto relating to the initial offering of
shares of beneficial interest in the OMEGA Fund. The parties hereto agree that,
in consideration of the payment by Old Mutual Bermuda to S.G. Warburg of the sum
of $4,000, receipt of which is hereby acknowledged by S.G. Warburg, the
obligations of the parties under Sections 5(d) and 5(e) of the Placing Agreement
are hereby terminated.
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
for and on behalf of
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
---------------------------------
Duly authorized signatory
<PAGE> 2
-2-
SIGNED by
for and on behalf of
OLD MUTUAL EQUITY GROWTH
ASSETS SOUTH AFRICA FUND
---------------------------------
Duly authorized signatory
SIGNED by
for and on behalf of
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY
---------------------------------
Duly authorized signatory
SIGNED by
for and on behalf of
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED
---------------------------------
Duly authorized signatory
SIGNED by
for and on behalf of
OLD MUTUAL FUND HOLDINGS
(BERMUDA) LIMITED
---------------------------------
Duly authorized signatory
SIGNED by
for and on behalf of
S.G. WARBURG & CO. INC.
---------------------------------
Duly authorized signatory
<PAGE> 1
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Old Mutual South Africa Equity Trust:
We consent to the reference to our firm under the heading "Independent
Accountants" in Part B of the registration statement.
KPMG Peat Marwick
Hamilton, Bermuda
April 30, 1996
<TABLE> <S> <C>
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<CIK> 0001003162
<NAME> OLD MUTUAL SOUTH AFRICA EQUITY TRUST
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