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As filed with the Securities and Exchange Commission on September 27, 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. 2
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
CLARENDON HOUSE, 2 CHURCH STREET,
HAMILTON 11, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(441) 296-1201
JOHN COLLIS
CLARENDON HOUSE, 2 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," "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 and Adminstration," "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") serves
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 below
under "Item 8. Redemption or Repurchase," 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
This document is to be distributed only when accompanied by a copy of the
most recent annual or semi-annual report of the Fund. The most recent annual or
semi-annual report of the Fund forms part of, and is incorporated by reference
in, this Private Placement Memorandum.
The Shares offered hereby have not been and will not be registered under
the Securities Act of 1933, as amended, or any state securities laws. The Fund
has registered as an investment company under the Investment Company Act of
1940, as amended. Neither the Securities and Exchange Commission nor any state
securities authority has reviewed this Private Placement Memorandum or passed
upon the merits of this offering.
The Shares are subject to restrictions on transfer. There is no public
market for the Shares, and none is expected to develop.
This Private Placement Memorandum does not constitute an offer to sell, or
the solicitation of an offer to purchase, the Shares in any jurisdiction in
which such offer or solicitation is not authorized or to or from any person
unless the name of such person and a control number appear above on this cover
page.
This Private Placement Memorandum is confidential and is not to be
reproduced or circulated, in whole or in part, without the prior written
approval of 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.
RAND
INTERNATIONAL
FLEMING MARTIN SECURITIES SBC WARBURG INC.
LOGO LOGO LOGO
Placement Agents
August 1, 1996
(as updated)
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INVESTMENT HIGHLIGHTS
OLD MUTUAL HAS CREATED A UNIQUE FUND STRUCTURE OFFERING INSTITUTIONAL
INVESTORS INSTANT ACCESS TO THE SOUTH AFRICAN MARKET. THE FUND COMBINES THE
LIQUIDITY OF AN OPEN-END FUND WITH THE PORTFOLIO STABILITY AND REDUCED TRADING
COSTS ASSOCIATED WITH A CLOSED-END FUND.
SOUTH AFRICA
- South Africa, with the largest economy in Africa, has exciting growth
potential no longer constrained by international sanctions.
- The earnings of companies included in The Johannesburg Stock Exchange
("JSE") Actuaries All Share Index are forecast to grow by approximately
21% in each of 1996 and 1997. Assuming constant share prices and
projected earnings growth, the price earnings multiple of the JSE
Actuaries All Share Index, which at May 31, 1996 was 17.2 times, would
fall to 15.3 times at December 31, 1996 and to 12.6 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 60 investment
professionals.
THE FUND
<TABLE>
<S> <C>
Size: Approximately U.S.$1 billion at June 30, 1996.
Investors can establish significant holdings.
Established Portfolio: Immediate exposure to the JSE without market impact
or initial acquisition costs for portfolio
securities.
Redemptions: Any amount on any Business Day.
Liquidity: Redemptions funded by a separate pool of securities
held by Old Mutual Fund Holdings rather than through
sales of portfolio securities. This substantially
reduces Fund trading costs.
Management Fee: 0.60% per annum of daily net assets.
</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 1995 year-end total
assets) and oldest insurer in South Africa. At
June 30, 1996 Old Mutual had total assets under
management of over U.S.$40 billion. The OMEGA
South Africa Fund does not have a separate
investment adviser, because it invests all of
its investable assets in the Master Trust.
The Master Trust pays the Adviser a management
fee of 0.60% per annum of the Master Trust's
daily net assets (the "Management Fee"). The
Management Fee accrues daily
on an annualized basis and is paid monthly in
arrears. See "MANAGEMENT AND ADMINISTRATION --
Adviser".
INITIAL PORTFOLIO............. Shortly before the launch of the OMEGA South
Africa Fund, Old Mutual transferred to the
Master Trust a portfolio
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of South African securities (the "Initial
Portfolio") from Old Mutual's main proprietary
investment portfolio (the "Old Mutual Main
Fund") with a market value of approximately
U.S.$1 billion and holdings in 60 South African
issuers. At the time of its transfer, the
Initial Portfolio generally reflected the
equity holdings of the Old Mutual Main Fund.
As consideration for the acquisition of the
Initial Portfolio and for an initial capital
contribution, the Master Trust issued
substantially all of its beneficial interest to
Old Mutual Fund Holdings (Bermuda) Limited
("Old Mutual Fund Holdings"), a wholly-owned
subsidiary of Old Mutual.
FUND STRUCTURE................ The OMEGA South Africa Fund will invest the
proceeds of this offering of Shares (the
"Offering") in the Master Trust, which will
then apply the proceeds to redeem a
corresponding portion of the interest of Old
Mutual Fund Holdings in the Master Trust.
Old Mutual Fund Holdings will, in turn, invest
the proceeds received from the Master Trust in
Old Mutual Global Assets Fund Limited, a mutual
fund organized under the laws of Bermuda that
invests in a portfolio of South African and
international securities (the "Global Fund").
Old Mutual initially capitalized the Global
Fund with approximately U.S.$500 million of
South African securities. At June 30, 1996 the
net assets of the Global Fund were in excess of
U.S.$624 million. Investors in Shares will not
acquire any interest in the Global Fund.
Instead, the Global Fund is designed to provide
a pool of securities to fund redemptions of
Shares, as noted under "Redemptions and
Liquidity Facility" below. Old Mutual Fund
Holdings is the sole shareholder of the Global
Fund. See "LIQUIDITY FACILITY AND THE GLOBAL
FUND".
VALUATION OF SHARES........... The net asset value per Share is determined as
of 10:00 a.m. (Eastern time) on each day on
which the New York Stock Exchange is open for
trading (a "Business Day"). The Fund generally
values JSE listed securities based on their
current JSE ruling price, and converts prices
from South African rand ("S.A. Rand") to U.S.
dollars using exchange rates prevailing as of
the time the net asset value is to be
determined. Trading may take place in
securities held by the Master Trust on days
that are not Business Days and on which it will
not be possible to purchase or redeem Shares.
See "VALUATION OF SHARES".
OFFERING AND SUBSCRIPTION
PROCEDURE.................... The OMEGA South Africa Fund is offering Shares
on a continuous basis at a price equal to their
net asset value. A sales charge of up to 0.35%
of that price may be applied by the Placement
Agents. Investors that wish to subscribe for
Shares are required to complete the
subscription form circulated by the Placement
Agents. The office of the Transfer Agent will
be open to accept subscription forms from
2
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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 Shares are being offered and sold only to
investors that are "accredited investors" as
defined in Regulation D under the Securities
Act of 1933, as amended (the "1933 Act"). See
"OFFERING OF SHARES".
PLACEMENT ARRANGEMENTS........ The OMEGA South Africa Fund has engaged Fleming
Martin Inc., Rand International Securities LLC,
and SBC Warburg Inc. to act as placement agents
for the Offering (the "Placement Agents"). Each
of the Placement Agents will be entitled to
apply a sales charge of up to 0.35% of the net
asset value of the Shares placed by it. Old
Mutual Fund Holdings may make additional
payments to the Placement Agents or other
parties of 0.25% of the price of Shares sold in
the Offering. See "OFFERING OF SHARES --
Offering".
REDEMPTIONS AND LIQUIDITY
FACILITY..................... Investors may request redemption of Shares on
any Business Day. The office of the Transfer
Agent will be open to accept redemption
requests from 12:00 noon to 4:00 p.m. (Eastern
time) on every Business Day. Redemption
requests reaching the Transfer Agent after 4:00
p.m. (Eastern time) on any Business Day will be
deemed to have been received at 12:00 noon
(Eastern time) on the next Business Day.
In order to fund redemptions, the OMEGA South
Africa Fund will redeem a corresponding portion
of its interest in the Master Trust. To the
extent required to provide funds for redeeming
Shares, Old Mutual Fund Holdings will withdraw
monies from the Global Fund and invest those
monies in the Master Trust (the "Liquidity
Facility"). Old Mutual Fund Holdings may not
terminate the Liquidity Facility without giving
at least 120 days notice to registered holders
of Shares ("Shareholders") for so long as the
Adviser serves as investment adviser to the
Master Trust. Any termination of the
Liquidity Facility would not affect Shareholder
redemption rights.
Shares will be redeemed at net asset value (as
next determined) subject to a redemption fee
charged by the OMEGA South Africa Fund of 1.65%
of redemption proceeds (the "Redemption Fee").
For so long as Old Mutual Fund
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Holdings provides the Liquidity Facility, the
OMEGA South Africa Fund will pay to Old Mutual
Fund Holdings amounts collected in respect of
the Redemption Fee as compensation for the
Liquidity Facility.
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. The
Fund's net realized capital gains will be
distributed to the Shareholders at least
annually. Dividends may be automatically
reinvested at the written election of the
investor, provided the OMEGA South Africa Fund
reserves the right to suspend or terminate this
reinvestment privilege.
NON-U.S. FUND................. The Old Mutual SAGA Fund, a mutual fund
organized under the laws of Bermuda (the
"Non-U.S. Fund"), also invests in the Master
Trust. Shares of the Non-U.S. Fund are offered
outside of the U.S. to non-U.S. investors. The
operating expenses, distribution policies, and
sales charges of the OMEGA South Africa Fund
and the Non-U.S. Fund may not be the same.
CERTAIN TAX MATTERS........... For investors subject to U.S. federal income
tax, OMEGA South Africa Fund dividends and
capital gains distributions will be subject to
federal income tax and may be subject to state
and local taxes. Prior to purchasing Shares,
investors should consult with their tax
advisers concerning the consequences of an
investment in the OMEGA South Africa Fund. See
"TAX MATTERS".
INVESTMENT COMPANY ACT........ Each of the OMEGA South Africa Fund and the
Master Trust has registered as an investment
company under the Investment Company Act of
1940, as amended (the "1940 Act"). Neither the
Securities and Exchange Commission
nor any state securities authority has reviewed
this Memorandum or passed upon the merits of
the Fund or the Shares.
ERISA......................... Assets of the Fund will not be considered "plan
assets" of Shareholders that are pension or
benefit plans subject to the
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<PAGE> 13
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 AND
ADMINISTRATION................ The Fund is supervised by a board of trustees.
State Street Bank and Trust Company, either
directly or through an indirect wholly-owned
subsidiary, provides certain administrative
services to the Fund. See "MANAGEMENT AND
ADMINISTRATION".
CUSTODIAN AND SUB-CUSTODIAN... State Street Bank and Trust Company serves as
custodian for the Master Trust and the OMEGA
South Africa Fund. Standard Bank of South
Africa serves as sub-custodian for the Master
Trust's South African registered assets.
TRANSFER AGENT................ State Street Bank and Trust Company serves as
transfer agent for the OMEGA South Africa Fund
(the "Transfer Agent").
VOTING RIGHTS................. Shareholders are entitled to vote on the
election of the trustees of the Fund and on
certain important matters, including (i)
certain amendments to the declarations of trust
of the OMEGA South Africa Fund and the Master
Trust, (ii) changes in the investment objective
and fundamental investment restrictions, and
(iii) material amendments to the investment
advisory agreement between the Master Trust and
the Adviser, or the adoption of a new
investment advisory agreement.
REPORTS TO SHAREHOLDERS....... The OMEGA South Africa Fund will furnish to
Shareholders audited annual financial
statements for its fiscal years ending
June 30 and unaudited semi-annual financial
statements for the six month periods to
December 31. In addition, the OMEGA South
Africa Fund will provide annual tax information
to Shareholders.
EXPENSES...................... The OMEGA South Africa Fund and the Master
Trust are responsible for the ongoing expenses
of conducting their affairs. The Adviser will
reduce or rebate a portion of the Management
Fee as necessary so that ordinary operating
expenses of the OMEGA South Africa Fund,
including its share of the Management Fee and
the amortization of certain organizational
expenses, will not exceed 1.00% per annum of
its daily net assets. See "GENERAL INFORMATION
-- Expenses". The OMEGA South Africa Fund will
reimburse the Adviser for certain marketing
expenses incurred (or advanced to the Placement
Agents or others) by the Adviser in the
placement of Shares, provided the amount of
such reimbursements in any year will not exceed
0.05% of the average daily net assets of the
OMEGA South Africa Fund for such year. See
"OFFERING OF SHARES -- Expense Reimbursement".
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<PAGE> 14
INVESTMENT CONSIDERATIONS..... The Fund invests primarily in securities of
South African issuers and is, as a result,
particularly subject to risks affecting South
Africa. Investment in South Africa is subject
to various risks, including political
uncertainties. South African securities markets
are less liquid than securities markets in more
developed countries. See "INVESTMENT
CONSIDERATIONS".
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<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 acquisition of the Initial Portfolio was not
subject to this limitation. The Fund may, therefore, hold securities of certain
issuers in which the Old Mutual Group owns in excess of 50% of the outstanding
equity interest.
Limitation on Control or Participation in Takeovers. The Fund will not
participate in any effort to replace the management of any issuer or take legal
or management control of any 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
7
<PAGE> 16
vote its securities, in any proxy contest that is not, directly or indirectly,
organized by a member of the Old Mutual Group. This restriction will not apply
to the OMEGA South Africa Fund's investment in the Master Trust.
Borrowing. The Fund will not borrow money or purchase securities on
margin, except the Fund may, as a temporary measure for extraordinary or
emergency purposes, borrow from banks in an amount not to exceed 5% of the value
of the Fund's net assets.
Temporary Investments. For temporary defensive purposes, the Master Trust
may invest in high quality money market or short-term debt securities
denominated in U.S. dollars or another currency.
Short Positions. The Master Trust will not make short sales of securities
or maintain a short position.
Hedging and Derivative Securities. The Master Trust does not intend to
engage in currency hedging, although the Master Trust reserves the right to do
so. While the Master Trust is permitted to purchase derivative securities, it
does not expect that these will represent a significant portion of its
portfolio. Not more than 5% of the net assets of the Master Trust may be applied
to margin payments on futures contracts (other than hedging contracts).
Lending of Securities. The Master Trust may lend its securities to
approved institutional borrowers. Any such loan will be required to be secured
continuously by collateral, including cash or U.S. Treasury obligations,
maintained on a current basis at an amount at least equal to the market value of
the securities loaned. The value of the securities loaned will not exceed
33 1/3% of the value of the Master Trust's net assets.
Portfolio Turnover. The Master Trust will sell securities whenever the
Adviser believes that an issuer's long-term potential to increase its cash flow
and dividends has been reduced or if cash is needed to invest in issuers which
have better long-term growth potential, without regard to the length of time the
securities have been held. The Adviser does not intend to pursue short-term
trading opportunities. The turnover rate of the Master Trust is not expected to
exceed 25% annually.
ADDITIONAL RESTRICTIONS
Certain other restrictions are described under "GENERAL INFORMATION --
Certain Conflicts of Interest". The registration statements of the OMEGA South
Africa Fund and the Master Trust under the 1940 Act contain additional
restrictions on the investment policies of the Fund. A copy of the registration
statement of each of the OMEGA South Africa Fund and the Master Trust will be
provided to potential investors upon request. The registration statement of each
of the OMEGA South Africa Fund and the Master Trust can be inspected without
charge at the office of the Securities and Exchange Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be
obtained therefrom at prescribed rates.
GENERAL
The investment objective of the OMEGA South Africa Fund described under
"Investment Objective" above may not be changed materially except by a majority
vote of Shareholders.
The Master Trust has undertaken to the OMEGA South Africa Fund and the
Non-U.S. Fund that it will not make any material change to its investment
objective described under "Investment Objective" above or to its investment
policies described under "Investment Policies" 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.
8
<PAGE> 17
The percentage limitations set forth above, as well as those described
elsewhere in this Memorandum and in the registration statements of the OMEGA
South Africa Fund and the Master Trust under the 1940 Act, are measured and
applied only at the time an investment is made or another relevant action is
taken by the Fund.
SOUTH AFRICA
South Africa, with the largest economy in Africa in terms of GDP, has, in
the opinion of the Adviser, exciting growth potential no longer constrained by
international sanctions. The Adviser believes that South Africa combines the
potential of a developing economy with the infrastructure and corporate culture
more typical of an advanced industrialized country.
GENERAL
Until April 1994, political power in South Africa lay largely in the hands
of the white minority. The system of apartheid created considerable social and
political tensions and led to the progressive isolation of South Africa from the
world community. In April 1994, the Government of National Unity (the
"Government") was formed as a result of South Africa's first multi-racial, fully
democratic elections. The Government's majority party is the African National
Congress ("ANC"), which is led by President Nelson Mandela. The success of the
elections removed important obstacles to growth and created an environment that
is more conducive to both domestic and foreign investments. Negotiations on a
permanent constitution for South Africa were completed on schedule in May 1996.
Subject to ratification by the Constitutional Court, the permanent constitution
would then become effective in 1999.
Although generally smooth, the transition to democratic rule has been
accompanied by localized violence and social unrest which may continue in the
future. At the end of June 1996, the National Party, which was a minority party
in the Government, left the Government almost immediately after adoption of the
final constitution in early May 1996. The Inkatha Freedom Party ("IFP") is still
a minority partner in the Government.
THE STATE OF THE BUSINESS CYCLE
The South African economy has been in recovery from June 1993, following
the longest post-war recession from March 1989 to May 1993. 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 growth rates of 1.3% and 2.7% were registered in the years 1993
and 1994, respectively. The pace of the recovery slowed during 1995 under the
impact of lower agricultural and mining production and a more restrictive
economic policy, with year-on-year GDP growth receding from 3.7% in the first
quarter to 2.4% in the fourth quarter. Nevertheless, for the year as a whole GDP
registered 3.3% growth. With the turnaround in agricultural production after a
very good rainfall season, total GDP growth was maintained at 3.3% on an
annualized basis in the first quarter of 1996. However, the slower growth
momentum spilled over into the non-primary sectors in the first quarter of 1996,
when GDP growth in these sectors managed only 0.7% on an annualized basis.
Growth prospects for 1996 and 1997 were weakened further by a sudden slump in
the exchange rate of the S.A. Rand and a subsequent increase in interest rates.
Between February and early May 1996 the S.A. Rand per U.S. dollar exchange
rate weakened by more than 20%. This was due to a number of factors, including
initially a perceived overvaluation
9
<PAGE> 18
of the S.A. Rand, increasing pessimism regarding the longer term growth
potential and management of the economy, and worries about the health of
President Mandela. The draining of liquidity from the domestic economy through a
sudden bout of capital outflows forced the South African Reserve Bank to
increase its Bank rate by one percentage point. Commercial banks immediately
raised their prime lending rates by a similar amount, and soon thereafter by
another percentage point as liquidity in the money market remained extremely
tight.
The S.A. Rand per U.S. dollar exchange rate stabilized in late May 1996.
Stability also returned to the money market where liquidity conditions eased and
the major commercial banks announced a reduction in their prime interest rates
of one percentage point with effect from July 1, 1996.
Despite the short-term interruption caused by the currency depreciation,
the Adviser believes that the more competitive S.A. Rand exchange rate, the
expected stronger world economic recovery in 1997, and the Government's
long-term macro-economic strategy, should lead to increased domestic and
international confidence in the local economy. The Government's new macro-
economic strategy, released on June 14, 1996, includes measures aimed at
maintaining the competitive advantages of the recent weakening of the exchange
rate and achieving a faster reduction of the budget deficit (in effect a fiscal
policy designed to be more supportive of monetary policy), a further reduction
of inflation, and an acceleration of tariff reductions. A more flexible labor
market is also advocated. The Adviser is of the opinion that this package will
be good for stability and investor confidence.
Thus, although the currency crisis probably will lead to a faster than
expected slowdown in growth over the short-term, the Adviser believes that the
longer term prospects remain good.
The following table shows the current real GDP growth forecasts for 1996,
1997, and 1998 of four prominent South African institutions:
- --------------------------------------------------------------------------------
REAL GDP GROWTH FORECASTS
% CHANGE
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Bureau for Economic Research........... 3.5 4.2 3.0
Smith Borkum Hare (Pty) Ltd. .......... 3.3 1.3 2.8
Ivor Jones, Roy & Co. Inc. ............ 3.0 2.7 2.3
Fleming Martin Securities Ltd.* ....... 3.0 2.3 2.7
* 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.$130 billion, more than twice the size of any other African economy.
The Adviser believes that there are particular features that could enhance
the performance of the South African economy in the longer term.
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.
10
<PAGE> 19
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. By the end of 1994 total outstanding foreign
debt denominated in foreign currency amounted to U.S. $18.6 billion, or 15.4% of
GDP, down from U.S. $23.7 billion, or 42.2% 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 6.3%. The Adviser believes that these
lower levels of foreign debt, combined with South Africa's enhanced
international standing, should allow the country 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 5.4 billion in 1994 and a further S.A. Rand 21.7
billion in 1995. Capital inflows slowed to S.A. Rand 56 million during the first
quarter of 1996 due to outflows of short-term capital associated with
instability around the time of the depreciation of the S.A. Rand exchange rate.
However, in the view of the Adviser, evidence of improved net foreign purchases
of South African equities and bonds during June 1996 points to improved capital
inflows during the second quarter. The foreign exchange reserves figures for
June 1996 released by the South African Reserve Bank show an improvement of S.A.
Rand 800 million in the Bank's foreign currency holdings to a total of S.A. Rand
4.6 billion at June 30, 1996.
A Sophisticated Business Environment. South Africa's corporate environment
is, in the opinion of the Adviser, generally characterized by large, well
organized companies, of which a number are world class in their respective
industries. Many of these companies have considerable technical expertise and
entrepreneurial skills. Furthermore, a strong framework of commercial law
exists.
Mineral wealth. South Africa is a leading world producer of gold,
platinum, chromium, diamonds, and other strategic minerals in terms of volumes
produced.
ECONOMIC MANAGEMENT
The Adviser believes that the economic policies of the Government are
broadly market-oriented and that the maintenance of macro-economic stability
will remain a high priority. Evidence of this is to be found in the 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. These intentions
of the Government were reaffirmed in its macro-economic strategy document
released on June 14, 1996.
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 8.7% in 1995. The rate of Consumer Price Index inflation
from May 1995 to May 1996 was 5.9%. The Adviser expects inflation to rise over
the short-term due to the currency depreciation, although the Adviser does not
expect the annual rate of inflation to exceed 10% during the next 12 months.
Furthermore, South Africa's relations with the International Monetary Fund
and the World Bank have been normalized, and the Adviser expects that this will
have a stabilizing effect upon economic management.
THE JOHANNESBURG STOCK EXCHANGE
The aggregate market capitalization of South African equity securities
listed on the JSE was S.A. Rand 1,125 billion (U.S.$258 billion) as at May 31,
1996. 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
11
<PAGE> 20
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 7.0% in the year ended December 31, 1995. Although as at May 31, 1996
there were 634 listed companies on the JSE, market capitalization and trading is
concentrated in a relatively small number of companies. As at that date the 15
largest companies by market capitalization represented approximately 36% of the
JSE Actuaries All Share Index. The average annual dividend yield for companies
comprising the JSE Actuaries All Share Index as at May 31, 1996 was
approximately 2.1%.
Legislation implementing fundamental changes to the JSE was approved by the
South African parliament late in 1995. This has had a profound impact on the
JSE, including a move from floor based trading to screen trading, the abolition
of single capacity trading, removal of restrictions on corporate membership, the
introduction of limited liability of members, and a move from fixed to
negotiated commissions.
South Africa was included in both the Morgan Stanley Capital International
("MSCI") and the International Finance Corporation ("IFC") emerging market
indices in March and April 1995, respectively. South Africa has a significant
representation in these emerging markets indices with weightings of 10.3% in
MSCI's Emerging Markets Global Index, 8.3% in the IFC's Global Index, and 14.8%
in the IFC's Investable Index as of June 30, 1996.
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 June 30, 1996.
<TABLE>
<CAPTION>
PERIODS TO JUNE 30, 1996
-----------------------------
10
3 YEARS 5 YEARS YEARS
------- ------- -------
<S> <C> <C> <C>
JSE Actuaries All Share Index*.................................. 22.1% 9.8% 16.3%
------- ------- -------
S&P 500 Index................................................... 14.2% 12.6% 10.3%
------- ------- -------
</TABLE>
- ---------------
* Figures converted to U.S. dollars using the Financial S.A. Rand exchange rate
where applicable.
INVESTMENT CONSIDERATIONS
An investment in the Shares is subject to a number of risks. Certain of
these risks are set forth below.
CONCENTRATION IN SOUTH AFRICAN SECURITIES
The Fund invests primarily in securities of South African issuers and, as a
result, is particularly subject to risks affecting South Africa and its economy
and securities markets. Investors in the Fund may therefore be subject to
greater risk and volatility than investors in investment vehicles with more
geographically diverse investment portfolios.
SOCIAL AND POLITICAL RISKS
South Africa is undergoing a period of unprecedented social and political
change. This has been accompanied by high levels of crime, violence, and social
unrest in some areas, which may continue. While some of the reasons for this
unrest have been addressed by the recent constitutional changes, others, such as
inadequate housing, education, health care, and employment opportunities, remain
to be addressed for large segments of the population. In some areas inter-tribal
and inter-community antagonisms, channeled through political rivalries,
particularly between the ANC and the IFP, have been additional causes of
violence. There can be no assurance that the South African government
will be able to bring this violence and social unrest under control or create
sufficient wealth to satisfy the socio-economic needs of the less privileged
sections of the population.
The ANC, which comprises the majority party in the Government, has in the
past espoused a socialist economic program, including nationalization of South
African industry and mineral resources and high levels of taxation. In recent
years prominent figures in the ANC have distanced
12
<PAGE> 21
themselves from socialism and have supported more market-oriented policies.
Senior ANC officials have continued to confirm that privatization is official
ANC and Government policy. In the macro-economic strategy document released by
the Ministry of Finance on June 14, 1996, these market-oriented policies were
announced as official Government policy. However, there can be no assurance that
market-oriented policies will be pursued.
The ANC's national executive has indicated concern regarding the dominant
position of a number of conglomerates in the South African market. This may lead
to a tightening of antitrust rules, with uncertain results.
The Government is a coalition that includes the ANC and the IFP. The
National Party left the Government at the end of June 1996 to become the
official opposition. The present term of the Government will end in 1999, and
under the terms of the recently negotiated constitution, a constitutional
coalition Government will not be required after 1999. With the prospect of
single party rule after 1999, the run-up to the next election may be
characterized by intense political rivalry which could include a flare-up in
politically driven social unrest. Such unrest may continue into the new
government's term of office.
In terms of its social and political infrastructure, South Africa currently
has many of the characteristics of an emerging market. Investors should
recognize that investing in emerging market jurisdictions involves certain
considerations not usually associated with investing in securities in more
developed capital markets. Investors should carefully consider their ability to
assume such risks before making an investment in the Fund.
South Africa enjoys a developed legal and commercial infrastructure with a
strong and independent judiciary and central bank. While the Government has
indicated that it supports, and the recently completed constitution protects,
their continued independence, there remains the possibility that they will come
under greater political control. In particular, the South African Reserve Bank's
attempts to maintain a responsible monetary policy may conflict with the desire
of the South African government to effect substantial and expensive social
programs.
President Mandela currently plays an important role in the South African
political structure. It is not possible to predict the consequences of a change
in President.
ECONOMIC RISKS
Growth. Economic growth is an essential element in raising standards of
living for underprivileged sectors of the South African population, and there
are many potential problems that could either inhibit or extinguish that growth.
However, there remain a number of structural issues, such as balance of payments
vulnerability, the insufficiency of domestic savings in both the private and
public sectors, and uncompetitive production processes, which may inhibit
sustained economic growth in South Africa.
Inflation. Until 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%, although the Adviser expects
inflation to rise in the short-term due to the recent currency depreciation.
There can be no guarantee that the South African government will be able, or
will have as a primary objective the desire, to keep inflation under control.
Balance of Payments/Access to Foreign Capital. Although South Africa
currently has relatively low levels of foreign debt, its foreign exchange
reserves are depleted, amounting at the end of June 1996 to only U.S.$2.6
billion or just over 4 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
13
<PAGE> 22
scope for limited tax increases, the risk remains that, if taxes and/or
government borrowings increase significantly, there could be severe adverse
consequences for the South African economy.
Commodities. Although only approximately 10% of South Africa's GDP
directly involves mining and quarrying activities, the country remains exposed
to any steep fall in world commodity prices.
Agricultural Conditions. Rainfall patterns are variable in South Africa,
and droughts occur frequently in certain parts of the country, resulting in
major fluctuations in agricultural output. Fluctuations in agricultural output
can significantly influence economic and inflation trends.
Increased Competition/Lower Tariffs. Following the lifting of sanctions
and the election of a new government, foreign companies have begun to re-enter
the South African markets. The presence of foreign competition in South African
markets may affect the profitability and share price of some South African
listed companies. South Africa is also a signatory to the Marrakech Agreement on
tariff reduction. In future years the scaling back of tariff protection may
adversely impact the performance of certain South African companies.
Exchange Controls. South Africa has a system of strict exchange controls
applicable to residents, domestic institutions, and local companies. Foreign
investors are generally not subject to exchange controls. Currently foreign
investors can freely repatriate both capital and investment returns subject to
compliance with certain exchange control approval procedures. Although the
Government and the South African Reserve Bank are following a policy of
gradually easing exchange controls, there can be no assurance that exchange
controls will not be tightened or that non-South African residents (such as the
Master Trust) will not be made subject to restrictions on dealings in assets
located or realized in South Africa. In addition there can be no assurance that
a South African administration will not seek to reverse or modify exchange
control approvals granted in relation to the establishment of the Fund. In the
event exchange controls are lifted, the volatility of South African financial
markets may increase. In addition, South Africa has on prior occasions imposed a
dual currency system, and reimposition of such a system might reduce the value
of the Fund's assets.
MARKET CHARACTERISTICS
The securities markets of South Africa are comparatively small, with the
majority of market capitalization and trading volume concentrated in a
relatively small number of companies. In addition, there is a significant degree
of cross-ownership among companies and a concentration of ownership in a
relatively small number of persons, including the Old Mutual Group.
Consequently, the Fund's investments may experience greater price volatility and
lower liquidity than a portfolio invested in equity securities of U.S.
companies.
CURRENCY RISKS
The Master Trust's assets are invested in securities denominated in S. A.
Rand, and income from these investments is received in S.A. Rand. As a result,
the Fund's net asset value and distributions, which are measured in U.S.
dollars, would be adversely affected if the value of the S. A. Rand declines
relative to the U.S. dollar. Historically, the S. A. Rand has tended to
depreciate against the U.S. dollar and between February and early May 1996 the
S.A. Rand per U.S. dollar exchange rate weakened by more than 20%.
TAXATION RISKS
It is possible that the South African government will significantly raise
taxes. South Africa does not currently impose tax on capital gains. There can be
no assurance that a capital gains tax to which the Master Trust may be subject
will not be introduced in the future.
14
<PAGE> 23
REPORTING STANDARDS
Companies in South Africa are subject to accounting, auditing, and
financial standards and requirements that differ, in some cases significantly,
from those applicable to U.S. companies. There is less publicly available
information about South African companies than about U.S. companies. South
African companies are not subject to the same degree of regulation as are U.S.
issuers with respect to such matters as insider trading rules, restrictions on
market manipulation, shareholder proxy requirements, and timely disclosure of
information.
TRANSACTION COSTS
Transaction costs, including brokerage commissions for transactions both on
and off the securities exchanges in South Africa, are generally higher than in
the U.S.
UNLISTED SECURITIES
The Master Trust may invest up to 5% of its total assets in securities that
are not listed on a securities exchange. These securities may be subject to more
abrupt or erratic changes in value than listed securities, and it may be
difficult and expensive for the Master Trust to dispose of these securities.
NON-DIVERSIFIED FUND
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. See "GENERAL INFORMATION --
Organization".
PRIOR EXPERIENCE OF THE ADVISER
While Old Mutual has substantial experience in investment management,
neither Old Mutual nor the Adviser, prior to November 1995, advised an
investment company registered under the 1940 Act.
MANAGEMENT AND ADMINISTRATION
TRUSTEES
Each of the OMEGA South Africa Fund and the Master Trust is supervised by a
board of trustees, a majority of whom are not affiliated with the Adviser or Old
Mutual. The current trustees of the OMEGA South Africa Fund and the Master Trust
are the same and are listed below. Asterisks indicate those trustees that are
"interested persons" (as defined in the 1940 Act) of the Fund.
*MICHAEL JOHN LEVETT, South African (aged 57), 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 Barlow Limited, an industrial company, Nedcor Limited,
a bank holding company, SASOL Limited, a chemicals company, and South African
Breweries Limited. His address is Mutualpark, Jan Smuts Drive, Pinelands, South
Africa.
*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 73), acts as a
business consultant and a director of companies. 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.
15
<PAGE> 24
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, 200
Clarendon Street, 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 60), 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 1995, and
President in 1991. His address is 22 Church Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 53), is President of the Adviser and
has been a member of the general management of Old Mutual since 1981. His
address is P.O.Box HM3085, Hamilton HMNX, Bermuda.
KENNETH RIGBY WILLIAMS, British (aged 60), was executive Chairman of
Westgate Overseas Limited, an international investment company, from 1986 to his
retirement in 1994. He holds non-executive directorships with Charles Baynes
plc, a company engaged in distribution and engineering, John Lusty plc, a food
distribution company, and Hudaco Industries Limited, a South African distributor
of industrial consumable goods, and was a director of South African Breweries
Limited from 1973 to 1994. His address is 15 Lime Tree Walk, Virginia Water,
Virginia Park, GU2545W, Surrey, United Kingdom.
ADVISER
Old Mutual Asset Managers (Bermuda) Limited (the "Adviser"), a wholly-owned
subsidiary of Old Mutual, is the investment adviser to the Master Trust and the
Global Fund. The Adviser was organized in 1995 as a Bermuda company for the
purpose of advising the Master Trust and the Global Fund. The Adviser's address
is 61 Front Street, Hamilton, Bermuda.
William Langley, President of the Adviser, has been responsible for the day
to day management of the Master Trust's assets since the Master Trust commenced
operations in November 1995. He joined Old Mutual in 1963, and since 1985 has
been involved in the development of Old Mutual's international businesses. Prior
to 1985 he was a senior portfolio manager, and his responsibilities included the
Old Mutual Main Fund.
Roddy Sparks, the current manager of the equity portion of the Old Mutual
Main Fund, has been responsible for providing in depth research on South African
companies to the Adviser since the Master Trust commenced operations in November
1995. He joined Old Mutual in 1986 and has managed the equity portion of the Old
Mutual Main Fund since January 1989. He is based in Cape Town.
Old Mutual provides investment research and information to the Adviser. Old
Mutual's investment division in South Africa employs over 60 investment
professionals, including 20 portfolio managers, 21 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
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pioneer in developing a risk adjusted dividend discount model for equity
valuation that has since formed the foundation for its long-term fundamental
value approach to investment. At June 30, 1996 Old Mutual had total assets under
management of over U.S.$40 billion.
Because the OMEGA South Africa Fund invests all of its investable assets in
the Master Trust, the OMEGA South Africa Fund does not have a separate
investment adviser.
The Master Trust pays the Adviser a Management Fee of 0.60% per annum of
the Master Trust's daily net assets. The Management Fee accrues daily on an
annualized basis and is paid monthly in arrears. The Adviser is responsible for
compensating Old Mutual for research and information provided to the Adviser.
ADMINISTRATOR
State Street Bank and Trust Company (the "OMEGA Fund Administrator")
provides, either directly or through an affiliate, certain administrative and
fund accounting services (including calculation of the net asset value of the
OMEGA South Africa Fund) to the OMEGA South Africa Fund pursuant to an
administrative services agreement. State Street Cayman Trust Company, Ltd.,
either directly or through an affiliated entity (the "Master Trust
Administrator"), provides certain administrative and fund accounting services to
the Master Trust pursuant to an administrative services agreement.
The Master Trust Administrator receives an annual administration fee from
the Master Trust calculated as a percentage of the Master Trust's average daily
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.
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
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10:00 a.m. (Eastern time) on each Business Day by adding the market value of all
securities and other assets of the Master Trust and then subtracting the Master
Trust's liabilities.
The Master Trust generally values JSE listed securities based on the
current JSE ruling price. The ruling price for a JSE listed security on any day
is the last sale price, adjusted upward to any current higher bid price or
downward to any current lower offer price. If the securities did not trade on
the JSE on the date of the valuation, they may be valued on a different basis
believed by the trustees of the Master Trust to reflect their fair value. Values
are converted from S.A. Rand to U.S. dollars using exchange rates prevailing as
of the time the net asset value is to be determined. Trading may take place in
securities held by the Master Trust on days that are not Business Days and on
which it will not be possible to purchase or redeem Shares.
The Fund may, from time to time, revise its procedures relating to the
calculation of net asset value to reflect changes in JSE trading periods and
practices.
OFFERING OF SHARES
OFFERING
The OMEGA South Africa Fund is offering Shares on a continuous basis at a
price equal to their net asset value. A sales charge of up to 0.35% of that
price may be applied by the Placement Agents. The minimum purchase for any
investor is U.S.$5 million (exclusive of sales charge), provided the minimum
purchase may, in particular circumstances, be reduced for certain investors to
not less than U.S.$1 million (exclusive of sales charge).
The OMEGA South Africa Fund has engaged Fleming Martin Inc., Rand
International Securities LLC, and SBC Warburg Inc. to act as Placement Agents
for the Offering. Each of the Placement Agents will be entitled to charge a
sales charge of up to 0.35% of the net asset value of the Shares placed by it.
Old Mutual Fund Holdings may make additional payments to the Placement Agents or
other parties of 0.25% of the price of Shares sold in the Offering. The Fund has
agreed to indemnify the Placement Agents against certain liabilities, including
liabilities under applicable securities laws.
The OMEGA South Africa Fund will, on receipt thereof, invest the proceeds
of the Offering in the Master Trust, and its interest in the Master Trust will
be increased accordingly. The Non-U.S. Fund will similarly invest the proceeds
of its offering of shares in the Master Trust. The Master Trust will then apply
the proceeds received from the OMEGA South Africa Fund and the Non-U.S. Fund to
redeem a corresponding portion of the interest of Old Mutual Fund Holdings in
the Master Trust. Old Mutual Fund Holdings will invest the proceeds of these
redemptions in the Global Fund.
The OMEGA South Africa Fund is offering the Shares without registration
under the 1933 Act as a private placement pursuant to Regulation D under the
1933 Act. The OMEGA South Africa Fund is also relying upon appropriate
exemptions from the registration requirements of applicable state securities or
blue sky laws. The Shares are being offered and sold in the U.S. only to
investors that are "accredited investors" as defined in Regulation D.
The Offering may be terminated or modified by the OMEGA South Africa Fund.
In the event that the terms of the Offering are materially modified, the new
terms will be set forth in a supplement to this Memorandum. Investors that
purchase Shares in the Offering will not have any pre-emptive rights with
respect to any further offerings.
SUBSCRIPTION PROCEDURE
Shares may be purchased on any Business Day. Investors that wish to
subscribe for Shares are required to complete the subscription form circulated
by the Placement Agents. Completed subscription forms should be returned to the
relevant Placement Agent, who, on behalf of the
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investors, will then forward them to the Transfer Agent. All subscriptions are
subject to acceptance by the OMEGA South Africa Fund.
The office of the Transfer Agent will be open to accept subscription forms
from 12:00 noon to 4:00 p.m. (Eastern time) on every Business Day. Subscription
forms received by 4:00 p.m. (Eastern time) on any Business Day will be processed
based on the net asset value as determined on the next Business Day.
Subscription forms reaching the Transfer Agent after 4:00 p.m. (Eastern time) on
any Business Day will be deemed to have been received at 12:00 noon (Eastern
time) on the next Business Day. Full payment for Shares is due in cash by 3:00
p.m. (Eastern time) on the second Business Day following receipt (or deemed
receipt) of the subscription form by the Transfer Agent. The purchase price for
Shares subscribed for in the Offering will be payable by wire transfer to the
account of the Transfer Agent specified in the subscription form.
EXPENSE REIMBURSEMENT
The OMEGA South Africa Fund will reimburse the Adviser for certain
marketing expenses incurred (or advanced to the Placement Agents or others) by
the Adviser in the placement of Shares, provided the amount of such
reimbursements in any year will not exceed 0.05% of the average daily net assets
of the OMEGA South Africa Fund for such year. This reimbursement is authorized
pursuant to a 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 Fund Holdings provides the Liquidity Facility, the OMEGA South Africa
Fund will pay to Old Mutual Fund Holdings amounts collected in respect of the
Redemption Fee as compensation for the Liquidity Facility. Should the Liquidity
Facility be terminated, the OMEGA South Africa Fund will pay amounts collected
in respect of the Redemption Fee to the Master Trust.
The Fund believes that the Liquidity Facility 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
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FUND. Old Mutual Fund Holdings is the sole shareholder of the Global Fund. The
Global Fund invests in broadly diversified portfolios of South African equities
and international equity, debt, and money market securities with the goal of
achieving a long-term total return. The Global Fund may only borrow to a limited
extent. The Global Fund is designed to provide a pool of securities to fund
redemptions of Shares and redemptions of shares of the Non-U.S. Fund.
Old Mutual initially capitalized the Global Fund with approximately
U.S.$500 million of South African securities. At June 30, 1996 the net assets of
the Global Fund were in excess of U.S.$624 million. Upon each issuance of Shares
(or shares in the Non-U.S. Fund) the Master Trust will redeem a portion of the
interest of Old Mutual Fund Holdings in the Master Trust, and Old Mutual Fund
Holdings will invest the redemption proceeds in the Global Fund.
Old Mutual Fund Holdings has undertaken to the Master Trust and the OMEGA
South Africa Fund that it will, to the extent required to provide funds for
redeeming Shares, liquidate all or a portion of its interest in the Global Fund
to generate cash, which Old Mutual Fund Holdings will invest in the Master
Trust. Old Mutual Fund Holdings may not terminate the Liquidity Facility without
giving at least 120 days notice to Shareholders, provided that Old Mutual Fund
Holdings may terminate the Liquidity Facility at any time without prior notice
if the Adviser ceases to be investment adviser to the Master Trust (other than
by reason of the voluntary termination of the investment advisory agreement with
the Master Trust by the Adviser). Any termination of the Liquidity Facility
would not affect Shareholder redemption rights. If the Liquidity Facility is
terminated, the Master Trust may fund redemptions by disposing of its assets.
Following termination of the Liquidity Facility, Old Mutual Fund Holdings would
be free to redeem all or part of its interest in the Master Trust.
For so long as the Liquidity Facility is made available, Old Mutual Fund
Holdings will not withdraw monies from the Global Fund except as required for
the Liquidity Facility and except for dividends paid by the Global Fund. In
addition, for so long as the Liquidity Facility is made available, Old Mutual
Fund Holdings will not withdraw monies from the Master Trust except to withdraw
cash equivalent to amounts invested in the Master Trust by the OMEGA South
Africa Fund (or the Non-U.S. Fund) and except for its proportion of the income
and realized capital profits of the Master Trust.
It is possible that at some time the value of Old Mutual Fund Holding's
investment in the Global Fund might be insufficient to fund the redemption of
all Shares submitted for redemption.
Additional investments by the OMEGA South Africa Fund in the Master Trust
that are not offset by redemptions of Master Trust interests (either by Old
Mutual Fund Holdings or the Non-U.S. Fund) will be applied to acquire additional
securities in accordance with the Master Trust's investment policies.
Old Mutual established the Global Fund pursuant to the approval of the
South African Reserve Bank for the transfer of the Initial Portfolio out of
South Africa to the Master Trust. Under South African exchange control
regulations, South African residents are not, in general, permitted to transfer
cash and investment assets out of South Africa or to hold non-South African
investments. In late 1995 the South African Reserve Bank 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. These exchange control regulations were further relaxed in early 1996
to allow certain South African institutional investors to remit abroad during
1996 up to 3% of their net inflow of funds during the 1995 calendar year. The
Global Fund is intended as a means of providing liquidity and assuring that,
when Shareholders liquidate their interests in the Master Trust by redeeming
Shares, Old Mutual Fund Holdings will acquire equivalent interests in the Master
Trust.
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TAX MATTERS
This discussion is for general information only. Investors should consult
their own tax advisers about the tax consequences of an investment in the OMEGA
South Africa Fund before subscribing for Shares.
CERTAIN U.S. TAX MATTERS
The OMEGA South Africa Fund intends to meet the requirements of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), applicable to regulated
investment companies so that it will not be liable for any federal income or
excise taxes, although the OMEGA South Africa Fund's income may be subject to
non-U.S. taxes. The Master Trust intends to qualify as a "partnership" under the
Code, with the result that the OMEGA South Africa Fund will be required to take
into account its pro rata share of the Master Trust's income, gain, loss,
expense, credit, and other applicable items.
For investors subject to U.S. federal income tax, OMEGA South Africa Fund
dividends and capital gains distributions are subject to federal income tax and
may also be subject to state and local taxes. Generally, distributions from the
OMEGA South Africa Fund's net investment income and short-term capital gains
will be taxed as ordinary income. Distributions of net capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses) will
be taxed as such regardless of how long Shares have been held. The foregoing
rules apply without regard to whether the dividends and distributions are paid
in cash or reinvested in additional Shares. Certain Shareholders, including
individuals, trusts, estates, and certain pass-through entities, may not be
entitled to a deduction for their allocable share of certain expenses, including
management fees, incurred by the OMEGA South Africa Fund, to the extent those
expenses, together with other miscellaneous itemized deductions incurred by
those Shareholders, do not exceed 2% of their adjusted gross income.
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 certain forward currency contracts will be
subject to special tax rules that may affect the amount, timing, and character
of Fund income. For example, certain positions held for the Fund on the last
business day of each taxable year will be marked to market (i.e., treated as if
closed out) on that day, and any gain or loss associated with the positions will
be treated as 60% long-term and 40% short-term capital gain or loss. Certain
positions held for the Fund that substantially diminish its risk of loss with
respect to other positions in its portfolio may constitute "straddles," and
may be subject to special tax rules that would cause deferral of Fund losses,
adjustments in the holding periods of Fund securities, and conversions of
short-term into long-term capital losses. Certain tax elections exist for
straddles that may alter the effects of these rules.
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Foreign exchange gains and losses realized by the Fund or marked to market
will generally be treated as ordinary income and losses. Use of foreign
currencies for non-hedging purposes may be limited in order to avoid a tax on
the Fund.
Certain uses of foreign currency and foreign currency forward contracts and
investment by the OMEGA South Africa Fund in certain "passive foreign investment
companies" may be limited, or a tax election may be made, if available, in order
to enable the OMEGA South Africa Fund to preserve its qualification as a
regulated investment company and to avoid imposition of a tax on the OMEGA South
Africa Fund.
While, as discussed under "South African Taxation" below, there are
currently no South African taxes that would apply to the earnings of the Fund,
in the future the Fund may pay South African taxes on its investment income. The
OMEGA South Africa Fund may also pay taxes in countries other than the United
States and South Africa. The OMEGA South Africa Fund expects to be able to elect
to "pass through" to Shareholders non-U.S. income taxes paid. If the OMEGA South
Africa Fund so elects, Shareholders will be required to treat their pro rata
portion of the non-U.S. income taxes paid by the OMEGA South Africa Fund as part
of the amounts distributed to them by the OMEGA South Africa Fund and thus
includable in their gross income for federal income tax purposes. Shareholders
who itemize deductions would then be allowed to claim a deduction or credit (but
not both) on their federal income tax returns for such amounts, subject to
certain limitations. Shareholders who do not itemize deductions would (subject
to such limitations) be able to claim a credit but not a deduction. No deduction
for such amounts will be permitted to individuals in computing their alternative
minimum tax liability. If the OMEGA South Africa Fund does not qualify or elect
to "pass through" to Shareholders non-U.S. income taxes paid by it, Shareholders
will not be able to claim any deduction or credit for any part of the non-U.S.
taxes paid by the OMEGA South Africa Fund.
Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at a rate of 30%. The OMEGA South
Africa Fund intends to withhold tax payments at the rate of 30% on taxable
dividends and other payments to Non-U.S. Persons that are subject to such
withholding, unless a lower rate is permitted under an applicable treaty. Any
amounts overwithheld may be recovered by such persons by filing a claim for
refund with the Internal Revenue Service within the time period appropriate to
such claims. Distributions received from the OMEGA South Africa Fund by Non-U.S.
Persons also may be subject to tax under the laws of their own jurisdiction. The
OMEGA South Africa Fund is also required in certain circumstances to apply
backup withholding of 31% of taxable dividends and redemption proceeds paid to
any Shareholder (including a Non-U.S. Person) who does not furnish to the OMEGA
South Africa Fund certain information and certifications or who is otherwise
subject to backup withholding. Backup withholding will not, however, be applied
to payments that have been subject to 30% withholding.
SOUTH AFRICAN TAXATION
Income Tax. The Master Trust will be treated as a trust for South African
tax purposes with the result that income passing through the Master Trust will
retain its nature in investors' hands. South African income tax is source based
and therefore only income derived from a South African or deemed South African
source would be taxable. Dividends are exempt from tax. The withholding tax on
dividends paid to non-residents was abolished during 1995. Interest from a
source within or deemed within South Africa accruing to non-residents or
companies and other associations which are managed and controlled outside South
Africa is also exempt from tax.
Gains realized by the Master Trust on the disposal of South African
securities would be taxable if they are of a revenue nature from a business of
trading in securities. The investment policy of the Master Trust should result
in the underlying securities being held as capital investments (gains in respect
of which would not be regarded as revenue profit).
Capital gains tax. South Africa has no capital gains tax and therefore
capital gains (as opposed to share-dealing gains) on the sale of shares are not
taxable.
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Stamp duty or Marketable Securities Tax ("MST"). Stamp duty or MST at a
rate of 0.5% is payable by the transferee on the transfer of equities. Stamp
duty is not payable with respect to transactions effected through a brokerage
firm, which are subject to MST. Special exemptions from stamp duty and MST apply
in respect of the transfer of securities of South African issuers with a foreign
branch register. Prior to April 1, 1996 stamp duty or MST was payable at a rate
of 1.0%.
Secondary Tax on Companies ("STC"). To promote reinvestment of profits, a
system of STC payable by South African companies in respect of net dividends
distributed, was introduced during 1993. The level of dividends payable to the
Master Trust would therefore be influenced by STC. The current rate of STC is
12.5%. For dividends declared prior to March 13, 1996 the STC rate was 25%.
BERMUDA TAXATION
There is no Bermuda income, corporation, or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty, or inheritance tax payable
by the OMEGA South Africa Fund, the Master Trust, or the Shareholders, other
than Shareholders ordinarily resident in Bermuda.
ERISA MATTERS
Shares of the OMEGA South Africa Fund are available for purchase by
fiduciaries acting on behalf of employee benefit plans subject to ERISA (an
"ERISA Plan"), which otherwise meet all applicable investor criteria. See
"OFFERING OF SHARES" above. In considering an investment in the OMEGA South
Africa Fund, a fiduciary acting on behalf of an ERISA Plan should consider in
the context of the Plan's particular circumstances whether the investment will
be consistent with its responsibilities and the special constraints imposed by
ERISA and the Code.
Because the Fund is an investment company registered under the 1940 Act,
under applicable Department of Labor regulations regarding the identification of
"plan assets" for purposes of ERISA and the prohibited transaction provisions of
the Code, the investment in the Fund by an ERISA Plan will include the Shares
acquired but will not, solely by reason of the acquisition of such Shares,
include any of the underlying assets of the Fund.
The foregoing discussion is merely a summary of certain issues any
fiduciary acting on behalf of an ERISA Plan should evaluate when considering an
investment in Shares of the OMEGA South Africa Fund.
GENERAL INFORMATION
ORGANIZATION
The OMEGA South Africa Fund is a Massachusetts business trust that was
organized in September 1995 and registered on November 8, 1995 as a
non-diversified open-end management investment company under the 1940 Act. The
Master Trust is a trust that was organized in September 1995 under the laws of
Massachusetts and registered on November 9, 1995 as a non-diversified open-end
management investment company under the 1940 Act. The declaration of trust of
the Master Trust provides that the OMEGA South Africa Fund and any other
entities investing in the Master Trust are each liable for all obligations of
the Master Trust. However, it is not expected that the liabilities of the Master
Trust would ever exceed its assets.
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. Under these requirements not more
than 25% of the Master Trust's total assets will be invested in securities of
any one issuer, and at least 50% of the total assets of the Master Trust will be
represented by cash, securities of other investment companies, and other
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securities not exceeding with respect to any issuer 5% of the assets of the
Master Trust or 10% of the outstanding securities of any issuer.
INVESTMENT STRUCTURE
Rather than directly acquire and manage its own portfolio of securities,
the OMEGA South Africa Fund invests all of its investable assets in the Master
Trust, which has the same investment objective as the OMEGA South Africa Fund.
The Non-U.S. Fund also holds a beneficial interest in the Master Trust, and
other investment vehicles, if any, may acquire interests in the Master Trust
upon the same terms and conditions as the OMEGA South Africa Fund. The Non-U.S.
Fund and other investment vehicles that invest in the Master Trust may have
different operating expenses and sales charges than the OMEGA South Africa Fund.
In the event the Master Trust, by reason of a change in its investment
objective or otherwise, ceased to be a suitable investment for the OMEGA South
Africa Fund, the OMEGA South Africa Fund would withdraw its investment from the
Master Trust. In such a case the OMEGA South Africa Fund would have to consider
other means of achieving its investment objective, including engaging its own
investment adviser or investing its assets in another commingled fund with an
appropriate investment objective.
TRANSFERS OF SHARES
The Offering has not been registered under the 1933 Act, and the Shares
will therefore be "restricted securities". The OMEGA South Africa Fund may
require as a condition of any transfer of Shares receipt of an opinion of
counsel, in form and substance satisfactory to the OMEGA South Africa Fund, to
the effect that a proposed transfer may be made without registration under the
1933 Act or applicable state securities laws. The Transfer Agent maintains a
register for Shareholders.
VOTING AND OTHER RIGHTS
Each Share gives the Shareholder one vote in elections for trustees of the
OMEGA South Africa Fund and other matters submitted to Shareholders for vote.
All Shares have equal voting rights. The OMEGA South Africa Fund may issue an
unlimited number of shares and may divide Shares into series and classes.
The OMEGA South Africa Fund's activities are supervised by its board of
trustees. As a Massachusetts business trust, the OMEGA South Africa Fund is not
required to hold annual Shareholder meetings. Shareholders will be entitled to
vote on the election of the trustees of the OMEGA South Africa Fund and certain
important matters, including (i) certain amendments to the declaration of trust
of the OMEGA South Africa Fund, and (ii) changes in the investment objective and
the fundamental investment restrictions of the OMEGA South Africa Fund. Trustees
of the OMEGA South Africa Fund may be removed by a vote of the Shareholders
holding two-thirds of outstanding Shares. Each Share is entitled to participate
equally in dividends and other distributions and the proceeds of any liquidation
of the OMEGA South Africa Fund.
The Master Trust's activities are supervised by its board of trustees.
Holders of the beneficial interest in the Master Trust, including the OMEGA
South Africa Fund, will be entitled to vote on the election of the trustees of
the Master Trust and certain important matters, including (i) certain amendments
to the declaration of trust of the Master Trust, (ii) changes in the investment
objective and the fundamental investment restrictions of the Master Trust, (iii)
material amendments to the investment advisory agreement between the Master
Trust and the Adviser, or the adoption of a new investment advisory agreement,
and (iv) continuation of the Master Trust upon the withdrawal of a
holder of its beneficial interest. The trustees of the Master Trust may be
removed by a vote of the holders of two-thirds of the outstanding beneficial
interests in the Master Trust.
If the Master Trust seeks the vote of the OMEGA South Africa Fund on any
matter (other than a vote to continue the Master Trust upon the withdrawal of
another investor in the Master
24
<PAGE> 33
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 (which
may comprise Old Mutual Fund Holdings) will exercise their Master Trust voting
rights in a manner contrary to the vote of the Shareholders. The OMEGA South
Africa Fund will be entitled to participate in distributions and the proceeds of
any liquidation of the Master Trust in proportion to its interest in the Master
Trust.
PURCHASE RIGHT
In the event that either the OMEGA South Africa Fund or the Master Trust
votes to dissolve, Old Mutual will be entitled to acquire all of the outstanding
Shares at a price equal to their net asset value. No Redemption Fee will apply
in this case.
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 May 31, 1996 the Old Mutual Group's JSE holdings totaled
S.A. Rand 87 billion, equal to approximately 8% of total JSE market
capitalization. At May 31, 1996 the Old Mutual Group held 5% or more of the
listed securities in 27% 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 were included in the Initial Portfolio. The Fund has adopted the
following restrictions designed to address conflicts of interest arising from
the Old Mutual Group's position in the South African securities markets:
(i) The Fund will acquire securities of companies in which the Old
Mutual Group holds 5% or more of the equity interest ("OM Affiliated
Companies") only (A) from unaffiliated brokers in open market transactions,
or (B) in transactions effected pursuant to and in compliance with Rule
17a-7 under the 1940 Act and the procedures adopted by the Master Trust
pursuant to Rule 17a-7. This restriction shall not apply to (A)
transactions approved by order of the Securities and Exchange Commission,
(B) the acquisition of the Initial Portfolio, and (C) dividends consisting
of securities, rights issued in a rights offering to existing shareholders,
and securities received upon exercise of such rights. This restriction will
not apply to the OMEGA South Africa Fund's investment in the Master Trust.
(ii) The Fund will not participate in any effort to replace the
management of any issuer, or take legal or management control of any
issuer, provided this restriction will not prohibit the Fund from (A)
accepting a tender or takeover offer made generally to holders of a
particular security or (B) voting its securities, or granting a proxy to
vote its securities, in any proxy contest that is not, directly or
indirectly, organized by a member of the Old Mutual Group. This restriction
will not apply to the OMEGA South Africa Fund's investment in the Master
Trust.
(iii) The Fund will not engage in any purchases of securities of OM
Affiliated Companies, or defer its sales of such securities, for the
purpose of supporting the price thereof.
(iv) Fund purchases and sales of the securities of OM Affiliated
Companies, as well as purchases or sales of the same securities by other
members of the Old Mutual Group at similar times, will be reviewed by (A)
the Old Mutual Surveillance Team on a regular basis and (B) the Fund
trustees on at least a quarterly basis. Old Mutual will provide the Fund
trustees with such information as they may require for purposes of this
review.
25
<PAGE> 34
(v) The Fund will not purchase securities of any issuer in which the
Old Mutual Group owns in the aggregate in excess of 50% of the outstanding
equity interest or where the acquisition would result in the Old Mutual
Group owning in the aggregate in excess of 50% of the outstanding equity
interest, provided this restriction (A) will not apply to the OMEGA South
Africa Fund's investment in the Master Trust and (B) will not prohibit the
Fund from electing to receive dividends consisting of securities, or
exercising rights issued in a rights offering, upon the same terms
generally available to other investors. The acquisition of the Initial
Portfolio was not subject to this limitation. The Fund may, therefore, hold
securities of certain issuers in which the Old Mutual Group owns in excess
of 50% of the outstanding equity interest.
The Fund has applied to the Securities and Exchange Commission for an
exemptive order under Section 17 of the 1940 Act with respect to certain
purchases of securities from issuers in which the Old Mutual Group owns a
material equity interest.
Old Mutual and companies in the Old Mutual Group act as investment manager
and adviser to a number of funds, customers, and proprietary accounts (including
the Old Mutual Main Fund). The Adviser acts as investment adviser to the Master
Trust, and to the Global Fund which holds investments in South African equities.
The South African equity investments of the Master Trust, the Global Fund,
and the Old Mutual Main Fund will ordinarily be managed pursuant to
substantially similar investment objectives and policies. However, the
composition of their respective portfolios, and the purchase and sale
transactions entered into on behalf of the Master Trust, the Global Fund, and
the Old Mutual Main Fund will not be identical.
Old Mutual will use its best efforts to assure that the Master Trust has
the opportunity to participate in potential investments which fall within its
investment objective and policies such that the allocation of those investments
as between the Master Trust and the other funds, customers, and proprietary
accounts managed or advised by Old Mutual or one of its wholly-owned
subsidiaries is made on a fair and equitable basis.
EXPENSES
The OMEGA South Africa Fund and the Master Trust are responsible for the
ongoing expenses of conducting their affairs, including (i) investment advisory,
administration, custody, and transfer agency fees and expenses, (ii) legal,
audit, and accounting fees and expenses, (iii) costs of reports to and other
communications with investors, (iv) costs of preparing and filing tax returns
and reports and other governmental filings, (v) fees and expenses of trustees,
(vi) printing, copying, travel, and communication costs, and (vii) costs of
registering or qualifying Fund securities under the securities laws of various
jurisdictions. The OMEGA South Africa Fund and the Master Trust are amortizing
certain organizational and offering expenses over a period of five years from
inception.
Each of the OMEGA South Africa Fund and the Master Trust has adopted a
placement plan pursuant to Rule 12b-1 under the 1940 Act, and each of these
plans provides for the OMEGA South Africa Fund or the Master Trust, as the case
may be, to reimburse marketing expenses and pay placement fees, provided such
reimbursements and fees for any year do not exceed 0.05% of average daily net
assets of the OMEGA South Africa Fund or the Master Trust for such year.
The Adviser will reduce or rebate a portion of the Management Fee as
necessary so that ordinary operating expenses of the OMEGA South Africa Fund,
including its share of the Management Fee and the amortization of certain
organizational and offering expenses, will not exceed 1.00% per annum of its
daily net assets. This limitation does not apply to (i) extraordinary expenses
(such as the cost of litigation), (ii) the placement fee and the amount payable
to Old Mutual Fund Holdings in connection with the initial placement of Shares,
(iii) sales charges on Shares, (iv) brokerage expenses, or (v) the Redemption
Fee. The Adviser may not terminate its undertaking to so reduce or rebate a
portion of the Management Fee without giving at least 120 days notice to
Shareholders, provided the Adviser may terminate this undertaking at any time
without prior notice if the Adviser ceases to be investment adviser to the
Master Trust.
26
<PAGE> 35
ADDITIONAL INFORMATION
The most recent annual or semi-annual report of the Fund is distributed
with, and forms part of, this Memorandum. Requests for more recent annual or
semi-annual reports should be directed to the Placement Agents.
The registration statements under the 1940 Act of the OMEGA South Africa
Fund and the Master Trust contain more detailed information about the Fund. A
copy of the registration statement of each of the OMEGA South Africa Fund and
the Master Trust will be provided to potential investors upon request. The
registration statement of each of the OMEGA South Africa Fund and the Master
Trust can be inspected without charge at the office of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and copies may be obtained therefrom at prescribed rates.
The 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.
INITIAL PORTFOLIO means a portfolio of South African securities transferred from
the Old Mutual Main Fund to the Master Trust shortly before the launch of the
OMEGA South Africa Fund.
JSE means The Johannesburg Stock Exchange.
LIQUIDITY FACILITY means the undertaking of Old Mutual Fund Holdings to apply
the assets of the Global Fund to make such additional investments in the Master
Trust as may be required from time to time in order to provide funds for
redeeming Shares or shares of the Non-U.S. Fund.
MANAGEMENT FEE means the management fee payable to the Adviser of 0.60% per
annum of the Master Trust's daily net assets.
MASTER TRUST means Old Mutual South Africa Equity Trust, a Massachusetts trust.
MASTER TRUST ADMINISTRATOR means State Street Cayman Trust Company, Ltd., as
administrator of the Master Trust.
1940 ACT means the Investment Company Act of 1940, as amended.
1933 ACT means the Securities Act of 1933, as amended.
NON-U.S. FUND means Old Mutual SAGA Fund, a mutual fund organized under the laws
of Bermuda.
OM AFFILIATED COMPANIES means companies in which the Old Mutual Group holds 5%
or more of the equity interests.
OFFERING means the offering of Shares on the terms and conditions of this
Memorandum.
OLD MUTUAL means the South African Mutual Life Assurance Society, a mutual
assurance society organized under the laws of South Africa.
OLD MUTUAL FUND HOLDINGS means Old Mutual Fund Holdings (Bermuda) Limited, a
Bermuda company that is an indirect wholly-owned subsidiary of Old Mutual.
OLD MUTUAL GROUP means Old Mutual, its wholly-owned subsidiaries, and investment
vehicles managed by Old Mutual or its wholly-owned subsidiaries, collectively.
OLD MUTUAL MAIN FUND means Old Mutual's principal investment fund.
OMEGA FUND ADMINISTRATOR means State Street Bank and Trust Company, as
administrator of the OMEGA South Africa Fund.
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 LLC,
and SBC Warburg Inc. as the placement agents for the Offering.
REDEMPTION FEE means a redemption fee charged by the OMEGA South Africa Fund of
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
OMEGA SOUTH AFRICA FUND
INVESTMENT ADVISER
Old Mutual Asset Managers (Bermuda)
Limited
61 Front Street, Hamilton
Bermuda
PLACEMENT AGENTS
Fleming Martin Inc.
320 Park Avenue
New York, NY 10022
Rand International Securities LLC
780 3rd Avenue
New York, NY 10017
SBC Warburg Inc.
277 Park Avenue, New York, NY 10172
ADMINISTRATOR
FOR THE OMEGA SOUTH AFRICA FUND:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
FOR THE MASTER TRUST:
State Street Cayman Trust Company,
Ltd.
P.O. Box 2508
Elizabeth Square, George Town
Grand Cayman, British West Indies
TRANSFER AGENT
FOR THE OMEGA SOUTH AFRICA FUND:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
FOR THE OMEGA SOUTH AFRICA FUND:
KPMG Peat Marwick LLP
99 High Street, Boston, MA 02110
FOR THE MASTER TRUST:
KPMG Peat Marwick
Vallis Building, Hamilton HM 11
Bermuda
LEGAL COUNSEL
IN THE UNITED STATES:
Bingham, Dana & Gould 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
Investment Considerations............... 12
Management and Administration........... 15
Valuation of Shares..................... 17
Offering of Shares...................... 18
Redemptions............................. 19
Liquidity Facility and the Global
Fund.................................. 19
Tax Matters............................. 21
ERISA Matters........................... 23
General Information..................... 23
Additional Information.................. 27
Glossary................................ 28
</TABLE>
<PAGE> 39
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> 40
information contained in Part A concerning the investment objective, policies
and techniques of the Master Trust.
The Master Trust seeks to achieve its investment objective by
investing in equity securities of South African issuers. Under normal
circumstances, at least 95% of the Master Trust's total assets will be invested
in equity securities of South African issuers that are listed on a securities
exchange. The Master Trust may invest up to 5% of its total assets in securities
that are, at the time of the investment, not listed on a securities exchange
(although such investments will generally be limited to securities that are
expected to be listed on an exchange within a reasonable period of time).
In managing the Master Trust's assets, Old Mutual Asset Managers
(Bermuda) Limited, the adviser to the Master Trust (the "Adviser"), will not
speculate for short-term gain but will focus on securities that, in the
Adviser's opinion, are likely to show long-term improvements in profits and cash
flow. Less weight will be accorded to short-term and cyclical factors. This
approach is designed to result in strong dividend growth and capital
appreciation. Historically, South African issuers have retained a high
proportion of earnings and, if this policy continues, it is likely that any
long-term total return would largely be in the form of capital appreciation.
For purposes of the Master Trust's investment policies, a South African
issuer is an issuer that meets one of the following tests: (i) its principal
offices or operations are located in South Africa; or (ii) it derives at least
50% of its revenues from operations or investments in South Africa. Equity
securities are defined as common stock, securities convertible into common stock
and securities that participate in profits in a similar manner to common stock.
Equity securities may be purchased in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts, Global Depositary Receipts, or other
similar securities representing equity securities.
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, 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> 41
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> 42
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> 43
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> 44
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> 45
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. It is not intended that the value of the securities loaned
by the Master Trust would exceed 33 1/3% of the value of its net assets.
WHEN-ISSUED SECURITIES
The Master Trust may purchase securities on a "when-issued" or on a
"forward delivery" basis. It is expected that, under normal circumstances, the
Master Trust would take delivery of such securities. When the Master Trust
commits to purchase a security on a "when-issued" or on a "forward delivery"
basis, it sets up procedures consistent with SEC policies. Since those policies
currently require that an amount of the Master Trust's assets equal to the
amount of the purchase be held aside or segregated to be used to pay for the
commitment, the Master Trust will always have cash, cash equivalents or high
quality debt securities sufficient to cover any commitments or to limit any
potential risk. However, even though the Master Trust does not intend to make
such purchases for speculative purposes and intends to adhere to the provisions
of SEC policies, purchases of securities on such bases
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may involve more risk than other types of purchases. For example, the Master
Trust may have to sell assets which have been set aside in order to meet
redemptions. Also, if the Adviser determines it is advisable as a matter of
investment strategy to sell the "when-issued" or "forward delivery" securities,
the Master Trust would be required to meet its obligations from the then
available cash flow or the sale of securities, or, although it would not
normally expect to do so, from the sale of the "when-issued" or "forward
delivery" securities themselves (which may have a value greater or less than the
Master Trust's payment obligation).
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The Master Trust has adopted the following fundamental restrictions,
which may not be changed without approval by holders of a majority of the
outstanding voting securities of the Master Trust, which as used in this Part B
means the vote of the lesser of (i) 67% or more of the outstanding voting
securities of the Master Trust present at a meeting at which the holders of more
than 50% of the outstanding voting securities of the Master Trust are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Master Trust. The term "voting securities" as used in this paragraph has
the same meaning as in the 1940 Act. The fundamental restrictions are that:
(i) The Master Trust may not borrow money, except that as a temporary
measure for extraordinary or emergency purposes it may borrow from banks and
enter into reverse repurchase agreements in an amount not to exceed 33 1/3% of
the current value of its net assets, including the amount borrowed (and the
Master Trust may not purchase any securities at any time at which borrowings
exceed 5% of its total assets, taken at market value). It is intended that the
Master Trust will borrow money only from banks and only to accommodate requests
for the repurchase of shares or interests while effecting an orderly liquidation
of portfolio securities.
(ii) The Master Trust may not make short sales of securities or
purchase securities on margin, except that the Master Trust may purchase and
sell various types of futures contracts and may obtain short term credits as
necessary for the clearance of security transactions.
(iii) The Master Trust may not underwrite securities issued by other
persons, except to the extent that it may be considered an underwriter within
the meaning of the Securities Act of 1933, as amended (the "1933 Act"), in the
disposition of securities that are considered restricted under the 1933 Act.
B-8
<PAGE> 47
(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> 48
including debt securities for which there is no established market and fixed
time deposits and repurchase agreements maturing in more than seven days.
(iii) At least 50% of its total assets are represented by cash,
securities of other investment companies, and other securities not exceeding
with respect to any issuer 5% of the assets of the Master Trust or 10% of the
outstanding securities of such issuer.
(iv) Not more than 25% of its assets will be invested in securities of
any one issuer.
These restrictions may be changed by the Trustees of the Master Trust
without the approval of holders of beneficial interest in the Master Trust in
response to changes in applicable statutes and policies.
IRISH STOCK EXCHANGE RESTRICTIONS
The Master Trust has adopted investment restrictions in compliance with
the rules of the Irish Stock Exchange and has undertaken to the Non-U.S. Fund
and the OMEGA South Africa Fund not to change these restrictions for so long as
the shares of the Non-U.S. Fund are listed on the Irish Stock Exchange. These
restrictions are that:
(i) no more than 20% of the gross assets of the Master Trust may be
lent to or invested in the securities of any one issuer;
(ii) the Master Trust will not take legal or management control of
investments in its portfolio;
(iii) not more than 10% of the gross assets of the Master Trust will be
invested in physical commodities;
(iv) not more than 10% of the gross assets of the Master Trust will be
invested in real estate;
(v) the Master Trust will not engage in any property development
activity;
(vi) the Master Trust will adhere to the principle of diversification
in relation to any derivative investments;
(vii) the Master Trust will not make any investment which would expose
it to unlimited liability, including participation in an unlimited partnership;
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<PAGE> 49
(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 57), 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> 50
non-executive directorships, including Barlow Limited, an industrial company,
Nedcor Limited, a bank holding company, SASOL Limited, a chemicals company, and
South African Breweries Limited. His address is Mutualpark, Jan Smuts Drive,
Pinelands, South Africa.
*WILLIAM 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 and a director of companies. 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, 200 Clarendon Street, 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 60), serves as a trustee of the
OMEGA South Africa Fund and the Master Trust and as a director of the Non-U.S.
Fund. Mr. Drew has been President and Chief Executive Officer of International
Services Limited, a corporate services operation, since its inception in 1977.
In 1969 he established Schroders (Bermuda) Limited, the principal operating
subsidiary in Bermuda of Schroders plc, the London merchant banking house, and
acted as Chief Executive Officer until his retirement in 1994, having been
elected a director in 1995 and President in 1991. His address is c/o
International Services Limited, 22 Church Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 53), 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 HM3085, Hamilton HMNX, Bermuda.
KENNETH RIGBY WILLIAMS, British (aged 60), 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> 51
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, John Lusty plc, a food distribution company, and
was a director of South African Breweries Limited from 1973 to 1994. His
address is 15 Lime Tree Walk, Virginia Water, Virginia Park, GU2545W, 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 38), 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, 2 Church Street,
Hamilton, Bermuda.
<TABLE>
The Trustees of the Master Trust received the following remuneration
from the Trust during the period from September 1, 1995 to June 30, 1996:
<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 (1) REGISTRANT EXPENSES RETIREMENT TO TRUSTEES
- -------------- ------------- ---------------- ------------- ---------------
<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) 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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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
Fund Holdings"), 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 Fund Holdings in the Master Trust. Second offerings of shares of
benefical interest of the OMEGA South Africa Fund and shares of the Non-U.S.
Fund took place from December 31, 1995 to June 30, 1996. As of September 20,
1996, Old Mutual Fund Holdings owned 89.93% of the beneficial interest in the
Master Trust. The address of Old Mutual Fund Holdings is Clarendon House, 2
Church Street, Hamilton, Bermuda. As of September 20, 1996, the OMEGA South
Africa Fund and the Non-U.S. Fund owned 1.24% and 8.83%, respectively, of the
beneficial interest in the Master Trust. The address of the OMEGA South Africa
Fund and the Non-U.S. Fund is Clarendon House, 2 Church Street, 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> 53
Item 16. Investment Advisory and Other Services.
Adviser.
Old Mutual Asset Managers (Bermuda) Limited, a wholly-owned indirect
subsidiary of Old Mutual, is the investment adviser to the Master Trust and
manages the Master Trust's assets pursuant to an investment advisory agreement
(the "Advisory Agreement"). The Adviser was organized in 1995 as a Bermuda
company for the purpose of advising the Master Trust and the Global Fund. The
Adviser's address is 61 Front Street, Hamilton, Bermuda. Old Mutual provides
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
B-15
<PAGE> 54
or their duties or reckless disregard of its or their obligations and duties
under the Advisory Agreement.
The Master Trust pays the Adviser a management fee of 0.60% per
annum of the Master Trust's daily net assets (the "Management Fee"). The
Management Fee accrues daily on an annualized basis and is paid monthly in
arrears. For the period November 3, 1995 (commencement of operations) to June
30, 1996 the fees payable to the Adviser under the Advisory Agreement were U.S.
$4,337,443 (of which amount U.S.$142,651 was voluntarily waived).
The Adviser has access to and benefits from investment research and
information generated and used by Old Mutual. The Adviser is responsible for
compensating Old Mutual for research and information provided to the Adviser.
The 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 their respective shares of the Management
Fee and the amortization of certain 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. 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.
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, provides 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
B-16
<PAGE> 55
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 receives an annual administration fee
from the Master Trust calculated as a percentage of the Master Trust's average
daily assets. The percentage will range from 0.05% to 0.01% per annum according
to the assets of the Master Trust, as follows:
First U.S.$500 million 0.05%
Next U.S.$500 million 0.025%
Over U.S.$1 billion 0.01%
If the assets of the Master Trust total U.S.$1 billion during a year,
the administration fee percentage for that year will be 0.0375%.
For the period November 3, 1995 (commencement of operations) to June
30, 1996, the fee to the Master Trust Administrator under the Administrative
Services Agreement was U.S.$252,158.
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 LLC
and SBC Warburg Inc. (collectively, the "OMEGA Placement Agents") to act as
placement agents to offer and sell shares of the OMEGA South Africa Fund (the
"OMEGA 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 Fund Holdings.
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<PAGE> 56
The engagement of the OMEGA Placing Agents is non-exclusive, and the OMEGA
South Africa Fund may from time to time, subject to the 1940 Act and after
reasonable prior consultation with the existing OMEGA Placing Agents, appoint
one or more additional placing agents. The obligations of the OMEGA South
Africa Fund and the Master Trust under the OMEGA Placing Agreement continue in
effect for a period beyond one year from the date thereof only so long as such
continuance is approved at least annually as required under the 1940 Act. 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 respective placement plans adopted by the Master Trust or
the OMEGA South Africa Fund or in any agreements related to either 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 (the "Non-U.S. Placing Agreement")
between the Master Trust, the Non-U.S. Fund, the Adviser, Old Mutual Fund
Holdings, and the following placement agents: Fleming Martin Limited, Rand
International Securities LLC and Swiss Bank Corporation, through its division
SBC Warburg (collectively, the "Non-U.S. Placement Agents"), the Non-U.S.
Placement Agents have agreed to use their reasonable endeavors to procure
placees for shares of the Non-U.S. Fund (the "Non-U.S. Offering"), but the
Non-U.S. Placement Agents are not themselves under any obligation to subscribe
for any shares. The engagement of the Non-U.S. Placing Agents is non-exclusive,
and the Non-U.S. Fund may from time to time in its sole discretion but after
reasonable prior consultation with the existing Non-U.S. Placing Agents,
appoint one or more additional placing agents. The obligations of the Master
Trust under the Non-U.S. Placing Agreement continue in effect for a period
beyond one year from the date thereof only so long as such continuance is
approved at least annually as required under the 1940 Act. 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 and such breach
is specified in the notice.
A sales charge of up to 0.35% of the net asset value of each share of
the OMEGA South Africa Fund sold to a subscriber for shares in the OMEGA South
Africa Fund ("Subscriber") may be applied by the OMEGA Placement Agents. Old
Mutual Fund Holdings may make additional payments to the OMEGA Placement Agents
or other parties equal to 0.25% of the price of shares of the OMEGA South
Africa Fund sold in the OMEGA 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. 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. 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. For the period November 3, 1995
(commencement of operations) to June 30, 1996, there were U.S.$2,594,688 in
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 September 20, 1996, Old Mutual held 20.63% 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.
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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 June 30, 1996, the Master
Trust paid brokerage commissions of approximately U.S.$117,778.
Item 18. Capital Stock and Other Securities.
The beneficial interest in the Master Trust consists 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 of each investor in the
Master Trust ("Investor") 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 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 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
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Master Trust's ordinary income, capital gains, expenses, 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
Investor's investment in the Master Trust should be treated as an interest in a
separate entity rather than a direct interest in Master Trust assets.
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 with respect 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
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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 advisers 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
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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 Annual
Report of the OMEGA South Africa Fund, for the period from November 3, 1995
(commencemnt of operations) to June 30, 1996, as filed with the Securities and
Exchange Commission, via the EDGAR system, on August 28, 1996 (Accession
Number 0000912057-96-019073), are incorporated by reference into this Part B.
A copy of the Annual Report of the OMEGA South Africa Fund accompanies
this Part B.
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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:
Schedule of Investments - June 30, 1996*
Statement of Assets and Liabilities at June 30, 1996*
Statement of Operations for the period from November 3, 1995
(commencement of operations) to June 30, 1996*
Statement of Changes in Net Assets for the period from
November 3, 1995 (commencement of operations) to June 30,
1996*
Financial Highlights*
Notes to Financial Statements - June 30, 1996*
[FN]
-------------
* Financial information is incorporated by reference to the
OMEGA South Africa Fund's Annual Report for the fiscal year
ended June 30, 1996 (Accession Number 0000912057-96-019073).
<TABLE>
(b) Exhibits:
<S> <C>
*1(a) Declaration of Trust of the Registrant
1(b) Amendment to the Declaration of Trust of the Registrant
*2(a) By-Laws of Registrant
2(b) Amendment to the By-Laws of the 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., 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
Fund Holdings")
*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 Fund Holdings
**6(c) Placing Agreement among Fleming Martin Inc., Rand International
Securities, S.G. Warburg & Co. Inc., the Registrant, the OMEGA Fund, the
Adviser and Old Mutual Fund Holdings
**6(d) Placing Agreement among Fleming Martin Limited, Rand International
Securities, Swiss Bank Corporation, the Registrant, the SAGA Fund,
the Adviser and Old Mutual Fund Holdings
6(e) Placing Agreement among Fleming Martin Inc., Rand International
Securities LLC, SBC Warburg Inc., the Registrant, the OMEGA Fund,
the Adviser and Old Mutual Fund Holdings
6(f) Placing Agreement among Fleming Martin Limited, Rand International
Securities LLC, Swiss Bank Corporation, the Registrant, the SAGA
Fund, the Adviser and Old Mutual Fund Holdings
*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> 69
<TABLE>
<S> <C>
*9(c) Subscription and Portfolio Transfer Agreement among Old Mutual, Old
Mutual Fund Holdings, 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 Fund Holdings 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
Fund Holdings to pay a servicing fee to S.G. Warburg & Co. Inc.
9(h) Letter confirming final settlement of Structuring Agreement payments
owing to International Finance Corporation
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.
** Incorporated herein by reference to the Registrant's Amendment No. 1 to its Registration Statement on Form N-1A (File No.
811-7417) as filed with the Securities and Exchange Commission on May 2, 1996.
</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 Fund Holdings, 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> 70
<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 Insurance Company, Ltd. Old Mutual 47.86 SOUTH AFRICA Short-term Insurance
Safmarine & Rennies Holdings Ltd. Old Mutual 54.99 SOUTH AFRICA Holding company
Anglo-Transvaal Collieries Ltd. Old Mutual 56.76 SOUTH AFRICA Investment holding Co.
Nedcor Bank Limited Old Mutual 52.07 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 100 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 100 SOUTH AFRICA Administration of Estates
Old Mutual Bermuda Holdings (SA) Ltd. Old Mutual 100 SOUTH AFRICA Holding company
South African Mutual Unit Trust Management Old Mutual 100 SOUTH AFRICA Unit Trust management co.
Company Ltd.
OMGES Services (Pty) Limited Old Mutual 100 SOUTH AFRICA Administrative services
Pioneer International (South Africa)(Pty) Ltd. Pioneer
International
Limited 100 SOUTH AFRICA Administrative services
Old Mutual Bermuda Holdings (S.A) Limited Old Mutual 100 SOUTH AFRICA Holding company
Pioneer International (South Africa)(Pty) Ltd. Pioneer
International Ltd. 100 SOUTH AFRICA Provision of
administrative services
Old Mutual Health Insurance Limited (external) Old Mutual 100 NAMIBIA Short-term health insurer
Old Mutual International Asset Managers (Namibia) (Pty) Old Mutual Group 100 NAMIBIA Portfolio management co.
Ltd.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 71
<TABLE>
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<S> <C> <C> <C> <C>
Old Mutual Medical Administrators (Pty) Ltd. Old Mutual 100 NAMIBIA Admin. health benefit man.
Old Mutual Unit Trust Management Company Namibia Ltd. Old Mutual 100 NAMIBIA Unit Trust management co.
Old Mutual Investment Corporation (Pvt) Ltd. Old Mutual 100 ZIMBABWE Investment holding co.
Old Mutual Property Investment Corporation Old Mutual 100 ZIMBABWE Property holding
(Pvt) Ltd.
City Centre Properties (Pvt) Ltd. Old Mutual Property 92.5 ZIMBABWE Property holding
Investment Corporation
(Pvt) Ltd.
Cyvern Properties (Pvt) Ltd. Old Mutual Property 100 ZIMBABWE Property holding
Investment Corporation
(Pvt) Ltd.
R.M. Insurance Company (Pvt) Ltd. Old Mutual Property 60 ZIMBABWE Short-term Insurance
Investment Corporation
(Pvt) Ltd.
Rentogre Investments (Pvt) Ltd. Old Mutual Property 100 ZIMBABWE Property holding
Investment Corporation
(Pvt) Ltd.
Rutima Properties (Pvt) Ltd. Old Mutual Property 100 ZIMBABWE Property holding
Investment Corporation
(Pvt) Ltd.
Old Mutual International Asset Managers (UK) Old Mutual Group 100 UNITED KINGDOM Asset Managing Co.
Ltd.
OMLA Holdings Ltd. Old Mutual Group 100 UNITED KINGDOM Investment holding co.
Old Mutual Fund Managers Ltd. Old Mutual Group 100 UNITED KINGDOM Manages authorized Unit
Trusts
Fairbairn Investment Company Ltd. Fairbairn Inv. Holdings 100 UNITED KINGDOM Investment holding company
(SA) (Pty) Ltd.
Old Mutual Group (UK) Ltd. Fairbairn Investment 100 UNITED KINGDOM Investment holding company
Company Ltd.
Old Mutual Portfolio Managers Ltd. Fairbairn Investment 100 UNITED KINGDOM Investment services
Company Ltd.
Old Mutual Life Assurance Company Ltd. Old Mutual Life Assurance 100 UNITED KINGDOM Life assurance
Holdings Ltd.
Roseland Properties Ltd. Old Mutual Life Assurance 100 UNITED KINGDOM Property investment
Holdings Ltd.
PCAP Ltd. Old Mutual Life Assurance 100 UNITED KINGDOM Investment company
Holdings Ltd.
Providence Capitol Home Loans Ltd. Old Mutual Group (UK) Ltd. 100 UNITED KINGDOM Loans on residential
properties
Providence Capitol Mortgage Services (No. 1) Ltd. Providence Capitol Home 100 UNITED KINGDOM Loans on residential
Loans Ltd. properties
Providence Capitol Mortgage Services Ltd. Old Mutual Group (UK) Ltd. 100 UNITED KINGDOM Loans on residential
proprties
Collingwood (UK) Ltd. Collingwood Group Ltd. 100 UNITED KINGDOM Provision of administrative
services
Old Mutual International Marketing Services Ltd. Old Mutual International 100 UNITED KINGDOM Provision of marketing
(Guernsey) Ltd. services
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 Manages 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. Old Mutual Group 100 GUERNSEY Property Co.
Old Mutual International Asset Managers Old Mutual Group 100 GUERNSEY Asset managing company
(Guernsey) Ltd.
Old Mutual International Financial Services Ltd. Fairbairn International 100 GUERNSEY Holding company
SA
Old Mutual International (Guernsey) Ltd. Old Mutual International 100 GUERNSEY Life assurance
Financial Services Ltd.
Solomon Information Services Ltd. Old Mutual International 100 GUERNSEY Administrative services
Financial Services Ltd.
L & S Properties Ltd. Old Mutual International 100 GUERNSEY Property holding company
(Guernsey) Ltd.
Naftiaux Holdings Ltd. Old Mutual International 100 GUERNSEY Property holding company
(Guernsey) Ltd.
Providence Capitol Fund Managers Int. Ltd. Old Mutual International 100 GUERNSEY Management of unit trusts
(Guernsey) Ltd.
Fairbairn Reads Trust Company Ltd. Old Mutual International 50.1 GUERNSEY Trust and company formation
Financial Services Ltd.
Fairbairn Reads Trust Directors Ltd. Fairbairn Reads Trust 100 GUERNSEY Acts as director of
Company Ltd. companies
Fairbairn Reads Trust Company Secretarial Ltd. Fairbairn Reads Trust 100 GUERNSEY Company secretaries
Company Ltd.
Spectrum Nominees Ltd. Fairbairn Reads Trust 100 GUERNSEY Provision of nominee
Company Ltd. services
Finexco International Ltd. Old Mutual International 100 GUERNSEY Holding company
Financial Services Ltd.
Collingwood Group Ltd. Old Mutual International 99.99 GUERNSEY Holding company
Financial Services Ltd.
Fairbairn Marketing Services Ltd. Fairbairn International 100 GUERNSEY International consultancy
SA and marketing
Fairbairn Properties Ltd. Fairbairn International 100 GUERNSEY Property holding company
SA
Merriman Services Ltd. Fairbairn International 100 GUERNSEY International consultancy
SA and marketing
Pioneer International ltd. Old Mutual International 100 GUERNSEY Holding company
Financial Services 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> 72
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Old Mutual International Asset Managers Old Mutual Group 100 BAHAMAS Asset managing co.
(Bahamas) Ltd.
Poplar Services Inc. Old Mutual International (Guernsey) Ltd. 100 BAHAMAS Trading in European hedge
funds
Fairbairn Managed Futures Ltd. Old Mutual International (Guernsey) Ltd. 100 BAHAMAS Trading in managed futures
Rohais Managed Futures (Holding) Fairbairn Guarenteed Futures (Bermuda) 100 BAHAMAS Holding zero coupon stocks
(Bahamas) Ltd. Ltd.
Rohais Series Five Futures Trading Rohais Managed Futures (Holding) 100 BAHAMAS Dealing in currency futures
(Bahamas) Ltd. (Bahamas) Ltd.
Rohais Series Six Futures Trading Rohais Managed Futures (Holding) 100 BAHAMAS Futures trading
(Bahamas) Ltd. (Bahamas) Ltd.
Old Mutual International Asset Managers Old Mutual Group 100 BERMUDA Asset managing co.
(Bermuda) Ltd.
Old Mutual Fund Holdings (Bermuda) Ltd. Old Mutual Group 100 BERMUDA Holding 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 Group 100 BERMUDA Asset managing co.
Fairbairn Guarenteed Futures (Bermuda) Old Mutual International (Guernsey) Ltd. 100 BERMUDA Holding zero coupon stocks
Ltd.
Fairbairn Futures Trading (Bermuda) Ltd. Fairbairn Guarenteed Futures (Bermuda) 100 BERMUDA Dealing in non US futures
Ltd.
Fairbairn US Futures Trading (Bermuda) Fairbairn Futures Trading (Bermuda) Ltd. 100 BERMUDA Dealing in US futures
Ltd.
Fairbairn Futures Trading (1992) Fairbairn Guarenteed Futures (Bermuda) 100 BERMUDA Dealing in non US futures
(Bermuda) Ltd. Ltd.
Fairbairn US Futures Trading (1992) Fairbairn Futures Trading (1992) (Bermuda) 100 BERMUDA Dealing in US futures
(Bermuda) Ltd. Ltd.
Old Mutual Investment Advisers, Inc. Old Mutual Group 100 USA Investment Adviser
Finexco Hellas Company Ltd. Finexco Administrative Services (FAS) BV 100 GREECE Provision of administrative
services
Finexco Europe SA Finexco Administrative Services (FAS) BV 100 BELGIUM Provision of administrative
services
Finexco (HK) Ltd. Finexco Administrative Services (FAS) BV 100 HONG KONG Provision of administrative
services
Collingwood Investment Ltd. Collingwood Group Ltd. 100 HONG KONG Provision of administrative
services
Finexco (M) SDN BHD Finexco Administrative Services (FAS) BV 100 MALAYSIA Provision of administrative
services
Finexco Financial Expatriate Consultancy Finexco Administrative Services (FAS) BV 100 NETHERLANDS Administrative services
BV
Finexco Administrative Services (FAS) BV Finexco International ltd. 100 NETHERLANDS Administrative services
Finexco Financial Services (Cyprus) Ltd. Finexco Administrative Services (FAS) BV 100 CYPRUS Administrative services
Pioneer Financial Consultants Ltd. Pioneer International Ltd. 100 ISRAEL Provision of administrative
services
Pioneer Global Funds (92) Ltd. Pioneer International Ltd. 100 ISRAEL Provision of administrative
services
Pioneer Trust Fund Management (1993) Pioneer International Ltd. 100 ISRAEL Unit trust management
Ltd.
Collingwood Investment (Middle East) Collingwood Group Ltd. 100 GRAND Provision of administrative
Ltd. TURK services
Old Mutual Financial Services Botswana Fairbairn Holdings Ltd. 100 BOTSWANA Provision of financial
(Pty) Ltd. services
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE> 73
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class As of September 23, 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 8 of the
Placing Agreement among the Registrant, Fleming Martin Inc., Rand International
Securities LLC, SBC Warburg Inc. and certain other parties filed herewith as
Exhibit 6(e) and (c) Section 11 of the Placing Agreement between the
Registrant, Fleming Martin Limited, Rand International Securities LLC, Swiss
Bank Corporation and certain other parties, filed herewith as Exhibit 6(f).
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 and of Old Mutual
Asset Managers Holdings (Bermuda)
Limited ("OMAM Holdings")
Director, Old Mutual Global Assets Fund
Limited (Clarendon House, 2 Church
Street, Hamilton, Bermuda)
</TABLE>
-6-
<PAGE> 74
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, 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)
-7-
<PAGE> 75
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
Director of OMAM Holdings
Secretary of the Registrant and the OMEGA
Fund
Secretary of the SAGA Fund (2 Church
Street, Hamilton, Bermuda)
Secretary and Director, Old Mutual Global
Assets Fund Limited (Clarendon House,
2 Church Street, Hamilton, Bermuda)
Director, Old Mutual Fund Holdings
(Bermuda) Limited (Clarendon House 2 Church
Street, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Clarendon
House, 2 Church Street, Hamilton, Bermuda)
Partner, Conyers Dill & Pearman (Clarendon
House, 2 Church Street, Hamilton, Bermuda)
Garth Griffin Director of the Adviser and of OMAM
Holdings
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)
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 (Bank
Windhoek, Bldg. 262, Independence Ave.,
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 (50
Dawson Street, Dublin, Ireland)
Director, Old Mutual Fund Holdings (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 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 (50 Dawson Street, Dublin, Ireland)
William Langley President and Director of the Adviser
Director of OMAM Holdings
Treasurer and Trustee of the Registrant and
the OMEGA Fund
Treasurer and Director of the SAGA Fund
(Clarendon House, 2 Church Street,
Hamilton, Bermuda)
Director, Old Mutual Global Assets Fund
Limited (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
-8-
<PAGE> 76
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 and of OMAM Holdings
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 (Claredon House, 2 Church Street,
Hamilton, Bermuda)
Chairman and Director, Old Mutual Global
Assets Fund Limited (Clarendon House,
2 Church Street, Hamilton, Bermuda)
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<PAGE> 77
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)
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> 78
Chairman, Fairbairn International S.A. (35
Rue Glesener 10-11, Luxembourg)
Chairman, Fairbairn Ireland Limited (50
Dawson 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, 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)
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<PAGE> 79
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. (Bank
Windhoek Bldg, 262 Independence Ave.,
Windhoek, Namibia)
Chairman, Old Mutual International
(Guernsey) Limited (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Chairman, Old Mutual International (Ireland)
Limited (50 Dawson 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)
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<PAGE> 80
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> 81
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> 82
Chairman, South African Mutual Life
Assurance Society Staff Medical Aid Fund
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Donald Harrigan Director of the Adviser and of OMAM
Malcolm Holdings
Director, Old Mutual Global Assets Fund
Limited (Clarendon House, 2 Church Street,
Hamilton, Bermuda)
Director, Old Mutual Fund Holdings
(Bermuda) Limited (Clarendon House, 2
Church Street, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Clarendon House,
2 Church Street, Hamilton, Bermuda)
Senior Associate, Conyers Dill & Pearman
(Clarendon House, 2 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 of OMAM Holdings
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> 83
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 (50
Dawson Street, 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)
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> 84
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. (Bank
Windhoek Bldg, 262 Independence Ave.,
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. (50 Dawson Street, 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> 85
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> 86
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> 87
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, Novos Navegadores Limited
(Fairbairn House, The Rohais, St. Peter
Port, Guernsey)
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> 88
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 Five 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> 89
The Collingwood Group Limited (Genesis
Building, George Town, Grand Cayman, Cayman
Islands)
Fairbairn Ireland Limited (50 Dawson Street,
Dublin, Ireland)
Director, Old Mutual International (Ireland)
Limited (50 Dawson 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> 90
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> 91
<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 61 Front Street
Hamilton, Bermuda
</TABLE>
Item 31. Management Services.
Not applicable.
-24-
<PAGE> 92
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
-25-
<PAGE> 93
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 24th day of September, 1996.
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
By: William Langley
--------------------------
William Langley
Treasurer of Old Mutual
South Africa Equity Trust
<PAGE> 94
EXHIBIT INDEX
1(b) Amendment to the Declaration of Trust of the Registrant
2(b) Amendment to the By-Laws of the Registrant
6(e) Placing Agreement among Fleming Martin Inc., Rand
International Securities LLC, SBC Warburg Inc., the
Registrant, the OMEGA Fund, the Adviser and Old Mutual
Fund Holdings
6(f) Placing Agreement among Fleming Martin Limited, Rand
International Securities LLC, Swiss Bank Corporation, the
Registrant, the SAGA Fund, the Adviser and Old Mutual
Fund Holdings
9(h) Letter confirming final settlement of Structuring
Agreement payments owing to International Finance
Corporation
11 Auditors' Consent
27 Financial Data Schedule
<PAGE> 1
Exhibit 1(b)
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
First Amendment to the Declaration of Trust
The undersigned being a majority of the Trustees of Old Mutual South Africa
Equity Trust (the "TRUST"), a Massachusetts trust, acting pursuant to Section
11.7 of the Declaration of Trust, dated September 1, 1995 (the "DECLARATION"),
of the Trust, hereby amend the Declaration as follows:
1. AMENDMENT. That Section 11.7 of Article XI of the Declaration be, and
it hereby is, amended in its entirety to read as follows*:
SECTION 11.7. PRINCIPAL OFFICE AND REGISTERED AGENT. The name of
the registered agent of the Trust is John Collis, Clarendon House, 2
Church Street, Hamilton, Bermuda. The principal office of the Trust is
Clarendon House, 2 Church Street, Hamilton, Bermuda. The Trustees may,
without the approval of Holders, change the registered agent of the
Trust and the principal office of the Trust.
2. CONFIRMATION OF DECLARATION. The Declaration as amended hereby is
confirmed and reaffirmed in every particular.
3. PROTECTION OF TRUSTEES. This amendment to the Declaration is not made
by the Trustees of the Trust individually, but as Trustees under the
Declaration, and the obligations under this amendment to the Declaration are not
binding upon any of the Trustees of the Trust individually, but bind only the
trust estate.
- ---------------
* Because a Trustee of the Trust, William L. Boyan (John Hancock Mutual
Life Company Limited, John Hancock Place, 200 Clarendon Street, Boston,
Massachusetts 02116), is a resident of the Commonwealth of Massachusetts, the
Declaration does not name a resident agent in the Commonwealth.
<PAGE> 2
-2-
IN WITNESS WHEREOF, the undersigned have executed this amendment to the
Declaration in Hamilton, Bermuda as of the 27th day of May, 1996.
William Francois de la Harpe Beck
---------------------------------
William Francois de la Harpe Beck
as Trustee
and not individually
The Little House
3 Nahoon Avenue
Constantia 7800, South Africa
William L. Boyan
---------------------------------
William L. Boyan
as Trustee
and not individually
John Hancock Mutual Life Company
Limited
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02116
U.S.A.
Thomas Haskins Davis
---------------------------------
Thomas Haskins Davis
as Trustee
and not individually
Winchester Global Trust Company
Limited
Williams House
20 Reid Street
Hamilton, Bermuda
<PAGE> 3
-3-
Michel John Drew
---------------------------------
Michel John Drew
as Trustee
and not individually
International Services Limited
22 Church Street
Hamilton HM 11, Bermuda
William Langley
---------------------------------
William Langley
as Trustee
and not individually
Old Mutual Asset Managers
(Bermuda) Limited
61 Front Street
Hamilton, Bermuda
Michael John Levett
---------------------------------
Michael John Levett
as Trustee
and not individually
South African Mutual Life Assurance
Society
Mutualpark
Jan Smuts Drive
Pinelands, South Africa
<PAGE> 4
-4-
Kenneth Rigby Williams
--------------------------
Kenneth Rigby Williams
as Trustee
and not individually
15 Lime Tree Walk
Virginia Water
Surrey, United Kingdom
<PAGE> 1
Exhibit 2(b)
AMENDMENT TO THE BY-LAWS OF
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
As adopted May 27, 1996
The fourth sentence of Article III, Section 1 of the By-Laws of the Master Trust
shall be amended, with retroactive effect to the date of original adoption of
the By-Laws, to read as follows:
The holders of fifty percent (50%) of outstanding Interests entitled to
vote present in person or by proxy shall constitute a quorum at any
meeting of the Holders, provided that at any meeting of the Holders
called to continue the Trust or any series of the Trust under Section
9.2(a) of the Declaration the holders of eighty percent (80%) of
outstanding Interests entitled to vote present in person or by proxy
shall constitute a quorum.
<PAGE> 1
Exhibit 6(e)
PLACING AGREEMENT
RELATING TO SHARES OF
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
DATED AS OF AUGUST 1, 1996
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 LLC,
AND
SBC WARBURG INC.
<PAGE> 2
THIS PLACING AGREEMENT is made as of August 1, 1996 by and among OLD MUTUAL
SOUTH AFRICA EQUITY TRUST, a Massachusetts trust registered under the Investment
Company Act 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 as an open-end investment company
(the "OMEGA FUND"), OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED, a company
organized under the laws of Bermuda ("OMAMB"), OLD MUTUAL FUND HOLDINGS
(BERMUDA) LIMITED, a company organized under the laws of Bermuda ("FUND
HOLDINGS"), FLEMING MARTIN INC. ("FLEMING MARTIN"), RAND INTERNATIONAL
SECURITIES LLC ("RAND INTERNATIONAL"), and SBC WARBURG INC. ("WARBURG");
W I T N E S S E T H:
- - - - - - - - - -
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 mutual
fund organized under the laws of Bermuda (the "SAGA FUND"), has invested all of
its investable assets in the Master Trust; and
WHEREAS, the OMEGA Fund wishes to engage Fleming Martin, Rand
International, and Warburg, and may in the future wish to engage one or more
other registered broker-dealers, 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, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements set forth hereinbelow, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each party, the
parties hereto do hereby agree as follows:
1. DEFINITIONS. In this Agreement the following words and expressions
shall have the following meanings:
<PAGE> 3
"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.
"AGREEMENT" means this Placing Agreement.
"BUSINESS DAY" means any day on which the New York Stock Exchange is open
for trading.
"COMMISSION" means the Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FUND AGREEMENTS" means each of the agreements listed in SCHEDULE I.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940.
"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.
"OMEGA FUND 12b-1 PLAN" means the placement plan adopted by the OMEGA Fund
pursuant to Rule 12b-1 under the Investment Company Act.
"PLACING AGENTS" means Fleming Martin, Rand International, and Warburg,
together with any additional Placing Agents appointed by the OMEGA Fund as
provided in Section 3(d), PROVIDED, HOWEVER, that after the removal or
resignation of a Placing Agent as provided in Section 9 it shall, save as
otherwise specified herein, no longer be considered a "Placing Agent".
-2-
<PAGE> 4
"PRIVATE PLACEMENT MEMORANDUM" means the Confidential Private Placement
Memorandum of the OMEGA Fund for the offer and sale of the Shares.
"PRIVATE PLACEMENT PROCEDURES" means the "Placement Procedures for U.S.
Private Institutional Offering" prepared by Bingham, Dana & Gould LLP and
furnished to the Placing Agents concurrently with the execution and
delivery of this Agreement.
"REGULATION S" means Regulation S under the Securities Act.
"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.
"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, or such other transfer agent for the
Shares as the OMEGA Fund may from time to time appoint.
"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, and OMAMB.
-3-
<PAGE> 5
2. REPRESENTATIONS AND WARRANTIES OF WARRANTORS AND FUND HOLDINGS.
(a) 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.
(b) Fund Holdings represents and warrants to and agrees with each Placing
Agent, for the benefit of each Placing Agent, as set forth below:
(i) Fund Holdings has been duly organized and is validly existing as
a company under the laws of Bermuda with full power and authority to enter
into, and perform and observe its obligations under, this Agreement and the
Fund Agreements to which it is a party.
(ii) Each of this Agreement and the Fund Agreements to which Fund
Holdings is a party has been duly authorized, executed, and delivered by
Fund Holdings, and, assuming its due authorization, execution, and delivery
by each of the parties thereto other than Fund Holdings and each Warrantor,
constitutes the legal, valid, binding, and enforceable obligation of Fund
Holdings, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity.
3. APPOINTMENT OF AGENTS.
(a) The OMEGA Fund hereby 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, all upon the terms and conditions of this Agreement.
(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 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.
-4-
<PAGE> 6
(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.
(d) The engagement of the Placing Agents hereunder shall be non-exclusive,
and the OMEGA Fund may from time to time, in its sole discretion but subject to
the Investment Company Act and after reasonable prior consultation with each of
the Placing Agents, appoint one or more additional Placing Agents. If during
such prior consultation, any Placing Agent shall object to the appointment of a
particular additional Placing Agent and shall terminate this Agreement as to
such Placing Agent pursuant to Section 9(e)(vi), the OMEGA Fund shall not issue
any offering document for the Shares in which both such objecting Placing Agent
and the additional Placing Agent are listed as placing agents for the Shares.
Any such additional Placing Agents shall become a party to this Agreement upon
executing and delivering to each other party hereto a counterpart hereof. The
OMEGA Fund shall promptly notify each Placing Agent of the appointment of any
additional Placing Agents.
(e) The OMEGA Fund may, at any time after consultation with the Placing
Agents, terminate or modify the terms and conditions of the Offering and,
subject to Section 6(b), revise the Private Placement Memorandum accordingly.
(f) Nothing in this Agreement shall prohibit the OMEGA Fund from offering
or selling Shares to any investor on its own behalf in accordance with
applicable laws, provided that such investor shall not have already been
approached during the preceding twelve months by a Placing Agent with respect to
an investment in the Shares. Each Placing Agent shall, promptly upon request,
provide to the OMEGA Fund a list of all investors approached by such Placing
Agent during the preceding twelve months with respect to the Shares, and the
OMEGA Fund shall be entitled for purposes of this Section to rely upon any such
list. In the event any Placing Agent fails to provide any such list within 30
days of OMEGA Fund's written request therefor, the OMEGA Fund may assume for all
purposes of this Agreement, until its receipt of such a list from such Placing
Agent, that such Placing Agent has not approached any investors with respect to
an investment in the Shares during the preceding twelve months.
4. REPRESENTATIONS AND WARRANTIES OF PLACING AGENTS. Each Placing Agent
represents and warrants to and agrees with the OMEGA Fund, the Master Trust,
OMAMB, and Fund Holdings that:
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<PAGE> 7
(a) it is duly organized and existing in good standing under the laws of
its jurisdiction of organization with full power and authority to enter into,
and perform and observe the terms and conditions of, this Agreement;
(b) 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;
(c) 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;
(d) it is a member in good standing of the National Association of
Securities Dealers, Inc. and is in compliance with the Rules of Fair Practice
thereof to the extent material to its obligations under this Agreement as agent
for the solicitation of offers to purchase Shares in the Offering;
(e) it has not taken and will not take any action or actions that, without
more, would cause the Offering to be subject to registration under the
Securities Act;
(f) it has not offered and will not offer the Shares in contravention of
any applicable state securities laws;
(g) it has not offered and will not offer the Shares in contravention of
the restrictions set forth in the Private Placement Memorandum; and
(h) it has not taken and will not take any action or actions in connection
with the offering of the Shares 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) a properly completed Subscription Form shall have been
received by the Transfer Agent, and (z)
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<PAGE> 8
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 a sales charge of
up to 0.35% (as agreed between the relevant investor and Placing Agent and
specified in the relevant Subscription Form) of the net asset value of the
Eligible Shares (as determined for purposes of the price paid by the
Subscriber) as set forth in the Private Placement Memorandum, which shall
be 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 (i), 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 (i) and the amounts such
Placing Agent is entitled to receive under this clause (i) shall be payable
by OMAMB to such Placing Agent upon demand.
(ii) Fund Holdings 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 Fund Holdings promptly of the
Transfer Agent's receipt of the items specified in clauses (y) and (z)
above with respect to any Eligible Shares. If, prior to the time such an
additional sales charge becomes payable with respect to any investor's
subscription for Eligible Shares, Fund Holdings shall give the Placing
Agent entitled thereto a notice stating that, in the reasonable opinion of
Fund Holdings, the investor was persuaded to subscribe for the Eligible
Shares primarily by the efforts of the OMEGA Fund and not by the efforts of
such Placing Agent, then such Placing Agent shall negotiate in good faith
with Fund Holdings with a view to agreeing upon an appropriate reduction in
the additional sales charge (which may be reduced to zero) applicable to
the investor's subscription for Eligible Shares. No additional sales charge
shall be payable with respect to such subscription during such
negotiations.
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<PAGE> 9
In the event of any dispute between the Placing Agents or any of them as to the
allocation of any sales charge to a particular Placing Agent, such dispute 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 specifically agree in
writing 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 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 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 shall
(i) if, any event occurs 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
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<PAGE> 10
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, 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
(ii) 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.
(b) If the Private Placement Memorandum is to be amended or supplemented,
then:
(i) the OMEGA Fund shall as soon as practicable give written notice
to each Placing Agent stating that the OMEGA Fund is preparing an amended
Private Placement Memorandum or a supplement thereto,
(ii) from and after receipt by any Placing Agent of any such notice
under clause (i), such Placing Agent will distribute the Private Placement
Memorandum only as so amended or supplemented,
(iii) the OMEGA Fund shall forward to each Placing Agent for comment
a draft of such amendment or supplement in substantially final form,
(iv) the OMEGA Fund shall not issue any such amendment or supplement
containing the name of a Placing Agent without the approval of such Placing
Agent, which shall not be unreasonably withheld or delayed, provided any
Placing Agent shall be deemed to have approved any such amendment or
supplement if it fails, within ten Business Days from its receipt thereof,
to notify the OMEGA Fund in writing of its objection, and
(v) 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.
(c) Each of the OMEGA Fund and the Master Trust, severally and not
jointly, shall:
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(i) notify each Placing Agent of any amendment to its Registration
Statement promptly after filing the same, it being understood that nothing
contained in this Agreement shall in any way limit the right of the OMEGA
Fund or the Master Trust to file any such amendment to its Registration
Statement it may deem advisable,
(ii) promptly advise each Placing Agent of (A) 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 (B) 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) 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, and
(iv) as soon as practicable (giving effect to the normal periodic
reporting requirements under the Investment Company Act and the Rules and
Regulations thereunder), make generally available to each Placing Agent a
report containing the financial statements required under Section 30(d) of
the Investment Company Act and Rule 30d-1 thereunder.
(d) 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.
(e) Each Warrantor agrees, severally and not jointly, with each Placing
Agent that it shall notify such Placing Agent promptly after becoming aware that
any of its representations and 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 while this Agreement is in effect
as to such Placing Agent, be untrue or inaccurate in any material respect.
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<PAGE> 12
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 sole discretion, 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. 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
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<PAGE> 13
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 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 either (i) 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, or (ii) any breach by any Placing Agent of the terms and conditions of
this Agreement. The parties agree that ANNEX B 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 8 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 8, 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 materially prejudices the
defense of the action 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
counsel retained by the indemnified party or parties except as set forth below)
and to control the defense of such action; PROVIDED, HOWEVER, that such counsel
shall be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, 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
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<PAGE> 14
of such separate counsel if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest and the indemnifying party fails to appoint alternative
counsel within a reasonable period after notice of such conflict, (ii) 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 been advised in writing by outside counsel that there are legal defenses
available to it and/or other indemnified parties which are inconsistent with
those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after both notice of
the institution of such action and notice that any counsel employed is not
reasonably satisfactory (which notice shall set forth in detail the reasons for
such determination), or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party that has elected to appoint counsel to represent an
indemnified party shall, upon request, keep such indemnified party fully
informed in writing of the progress of the relevant claim and will not 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 Party is an actual or potential party to such claim or action)
without the prior consent of the indemnified parties subject thereto unless such
settlement, compromise, or consent includes an unconditional release of each
indemnified party subject thereto from all liability arising out of such claim,
action, suit, or proceeding other than amounts paid or reasonably provided for
by the indemnifying party. No indemnifying party shall be liable under this
Section 8 for any settlement or compromise entered into without its consent.
(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), 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
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<PAGE> 15
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),
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 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. 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 Section 8(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 8,
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.
9. 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
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<PAGE> 16
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 10 hereof and if the Master Trust and OMEGA Fund should terminate their
obligations pursuant to this Section 9(b) then this Agreement shall
automatically terminate.
(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) The OMEGA Fund may, in its sole discretion with or without cause,
terminate this Agreement as to any one or more Placing Agents, without penalty,
at any time upon not less than 30 days prior notice to each other party to this
Agreement, PROVIDED, HOWEVER, the OMEGA Fund may terminate this Agreement as to
any Placing Agent immediately upon notice to each other party if the OMEGA Fund
determines, and specifies in the notice, that such Placing Agent is in material
breach of this Agreement.
(e) Any Placing Agent may, in its sole discretion with or without cause,
terminate this Agreement as to such Placing Agent at any time upon not less than
30 days prior notice to each other party, PROVIDED, HOWEVER, any Placing Agent
may terminate this Agreement as to such Placing Agent immediately upon notice to
each other party if any of the following events has occurred, such event (in the
case of an event referred to in clause (i), clause (ii), clause (iii), or clause
(iv) below) is, of itself or taken together with any other such event, material
in the context of the Offering, and the Placing Agent describes such event in
reasonable detail in a notice of termination to the OMEGA Fund:
(i) any statement contained in the Private Placement Memorandum is
or has become untrue, inaccurate, or misleading;
(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;
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<PAGE> 17
(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 during the
term hereof, be untrue or inaccurate;
(iv) any Warrantor or Fund Holdings has not complied or cannot comply
with its obligations under this Agreement;
(v) the Commission has issued an order suspending or revoking the
registration of the OMEGA Fund or the Master Trust under Section 8(e) of
the Investment Company Act or has initiated or threatened in writing
proceedings for such an order; or
(vi) the OMEGA Fund has appointed an additional Placing Agent under
Section 3(d) to which the terminating Placing Agent objected in writing
either before, or within ten days following, its receipt of notice of the
appointment.
(f) In the event that this Agreement shall be terminated pursuant to this
Section 9 generally as to all parties 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 and Fund Holdings 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 11 of this Agreement and except that:
(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 any rights in
respect of a Subscription Form received by the Transfer Agent prior to the
termination, which shall remain effective notwithstanding any such
termination, and any right to make a claim for damages as a result of any
breach of this Agreement that resulted in the termination of this
Agreement); 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.
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<PAGE> 18
(g) In the event that this Agreement shall be terminated pursuant to this
Section 9 as to any particular Placing Agent (and not as to all Placing Agents
generally) all the outstanding obligations of such Placing Agent hereunder (and
accordingly all obligations of Subscribers procured by such Placing Agent 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 and Fund Holdings to or for the benefit of such Placing Agent shall
terminate and neither such Placing Agent, on the one hand, nor any of the
Warrantors or Fund Holdings, on the other hand, shall have any claim against the
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 11 of this Agreement and except that:
(i) OMAMB shall be liable for such costs and expenses owing to such
Placing Agent as are referred to in Section 5(b);
(ii) such termination shall not prejudice any accrued rights or
claims by any party against any other party hereto (including any rights in
respect of a Subscription Form received by the Transfer Agent from a
Subscriber procured by such Placing Agent prior to the termination, which
shall remain effective notwithstanding any such termination, and any right
to make a claim for damages as a result of any breach of this Agreement
that resulted in the termination of this Agreement as to such Placing
Agent); and
(iii) if so requested in writing by such Placing Agent, the OMEGA Fund
shall circulate a notice or other communication to the effect that such
Placing Agent is no longer acting as a placing agent of the OMEGA Fund.
10. 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 Alric Wiggill;
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;
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<PAGE> 19
if to 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 Fund Holdings, to 61 Front
Street, Hamilton, Bermuda, fax no. 441-296-1200, to the attention of
William Langley.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
11. SURVIVAL OF CERTAIN PROVISIONS.
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 8 hereof and will survive the
offer of the Shares. The provisions of Sections 4, 5, 8, and 9 hereof shall, to
the extent permitted by law, survive any termination or cancellation of this
Agreement either generally or as to any one or more Placing Agents.
12. GOVERNING LAW AND JURISDICTION.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to any choice of law rules that
would require the application of the laws of any other jurisdiction.
(b) Each party hereto irrevocably (i) agrees that any legal suit, action,
or proceeding 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 that 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.
(c) Each of the Warrantors agrees to maintain an authorized agent in the
United States 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,
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<PAGE> 20
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 LLP, 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 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.
13. 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 such trustees or 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. 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.
15. RULES OF INTERPRETATION.
The following rules shall apply in the construction and interpretation of
this Agreement:
(a) The singular includes the plural, and the plural includes the
singular.
(b) A reference to any gender includes each other gender.
(c) A reference to any person or entity includes its legal successors and
permitted assigns.
-19-
<PAGE> 21
(d) A reference to any contract, agreement, placement memorandum,
registration statement, or other document, shall include any written amendment,
supplement, or modification thereto and any replacement thereof.
(e) A reference to any statute, law, rule, or regulation shall include any
amendment or modification thereto and any replacement thereof.
(f) The words "include," "includes," and "including" are not limiting.
(h) The words "hereof," "herein," and "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular part
of this Agreement.
(i) The Section headings in this Agreement have been inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
16. SEVERABILITY.
The provisions of this Agreement are severable, and the invalidity or
unenforceability of any one provision hereof shall not render the remaining
provisions hereof invalid or unenforceable, except as otherwise required by
applicable law. In the event any provision hereof is determined by a court of
competent jurisdiction to be invalid or unenforceable, such court is authorized
to reform this Agreement by replacing such invalid or unenforceable provision
with a valid and enforceable provision that, to the fullest extent possible,
effects the purposes of the invalid and unenforceable provision.
-20-
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date and year first set forth above.
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
By: William Langley
------------------------------------
William Langley
Treasurer and Trustee
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH
AFRICA FUND
By: William Langley
------------------------------------
William Langley
Treasurer and Trustee
OLD MUTUAL ASSET MANAGERS (BERMUDA)
LIMITED
By: William Langley
------------------------------------
William Langley
President
OLD MUTUAL FUND HOLDINGS (BERMUDA)
LIMITED
By: William Langley
------------------------------------
William Langley
Director
FLEMING MARTIN INC.
By: Alric Wiggill
------------------------------------
Alric Wiggill
Duly Authorized Signatory
-21-
<PAGE> 23
RAND INTERNATIONAL SECURITIES LLC
By: Kevin Jacobs
------------------------------------
Kevin Jacobs
Duly Authorized Signatory
SBC WARBURG INC.
By: Bruce Watts
------------------------------------
Bruce Watts
Duly Authorized Signatory
-22-
<PAGE> 24
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 the South African
Mutual Life Assurance Society, Fund Holdings, the Master Trust, the OMEGA
Fund, the SAGA Fund, and Old Mutual Global Assets Fund Limited;
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; and
5. Custodian Agreements between State Street Bank and Trust Company and each
of the OMEGA Fund and the Master Trust, respectively.
<PAGE> 25
ANNEX A
WARRANTIES
OMAMB 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
may 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 while this
Agreement is in effect as to any Placing Agent 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
<PAGE> 26
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 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 the Fund Agreements to which it is a party has
been duly authorized, executed, and delivered by each of the Warrantors and
Fund Holdings, 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 and Fund Holdings,
constitutes the legal, valid, binding, and enforceable obligation of such
Warrantor and Fund Holdings, 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 Offering as contemplated by this
Agreement and the Private Placement Memorandum; and the solicitation by the
Placing Agents
-2-
<PAGE> 27
of offers to purchase Shares pursuant to Offering as contemplated by this
Agreement will not result in a violation 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 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 and Fund Holdings 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 and Fund Holdings 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
and Fund Holdings, will not conflict with, result in a breach of, or
constitute a default under, the constitutive documents of such Warrantor or
Fund Holdings or the terms of any other agreement or instrument to which
such Warrantor or Fund Holdings is a party or by which it is bound, or any
order or regulation applicable to such Warrantor or Fund Holdings of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Warrantor or Fund Holdings or any
of their properties.
11. The execution and delivery by each Warrantor and Fund Holdings 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
and Fund Holdings, 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).
-3-
<PAGE> 28
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 nor Fund Holdings 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, OMAMB 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).
-4-
<PAGE> 29
ANNEX B
INFORMATION SUPPLIED BY PLACING AGENTS
None
-5-
<PAGE> 1
Exhibit 6(f)
CONFORMED COPY
DATED 1ST AUGUST 1996
---------------------
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL SOUTH AFRICA GROWTH
ASSETS FUND LIMITED (2)
OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED (3)
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (4)
AND
FLEMING MARTIN LIMITED
RAND INTERNATIONAL SECURITIES LLC AND
SWISS BANK CORPORATION (5)
---------------------------------------
AGREEMENT
RELATING TO SHARES OF
OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED
---------------------------------------
NORTON ROSE
London
<PAGE> 2
CONTENTS
--------
CLAUSE HEADING PAGE
1 Definitions and interpretation................................ 2
2 Documents..................................................... 5
3 Offering and subscription..................................... 5
4 Announcements................................................. 8
5 Allotment and settlement...................................... 8
6 Registration.................................................. 8
7 Remuneration and expenses..................................... 9
8 Representations, warranties and undertakings.................. 11
9 Indemnity..................................................... 13
10 Termination................................................... 16
12 Notices....................................................... 19
13 Miscellaneous................................................. 20
14 Protection of trustees........................................ 21
15 Governing law and jurisdiction................................ 21
SCHEDULE
1 Warranties.................................................... 22
2 The Placing Agents............................................ 25
3 Form of Novation Certificate.................................. 26
DOCUMENTS IN THE AGREED FORM
"A" Placement Memorandum
"B" Subscription Form
<PAGE> 3
THIS AGREEMENT is made on 1st August 1996 BETWEEN:
(1)
OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts trust organised
as an open-ended investment company of Clarendon House, 2 Church
Street, Hamilton HM 11, 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 Clarendon
House, 2 Church Street, Hamilton HM 11, Bermuda (the "SAGA FUND");
(3) OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED, a company incorporated
under the laws of Bermuda of Clarendon House, 2 Church Street,
Hamilton HM 11, Bermuda ("OMAMB");
(4) OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED, a company incorporated
under the laws of Bermuda of Clarendon House, 2 Church Street,
Hamilton HM 11, Bermuda ("FUND HOLDINGS"); and
(5) The persons whose names and addresses are set out in Schedule 2.
WHEREAS:
(A) 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, which is duly organised as a Massachusetts trust
and is registered as an open-end management company under the
Investment Company Act;
(B) 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-end management company under the Investment Company Act
with the policy of investing exclusively in the Master Trust;
(C) 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 Fund
Holdings;
(D) 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;
(E) SBC Warburg Inc., Rand International Securities LLC 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
1
<PAGE> 4
(F) 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
"HOLDING COMPANY" has the meaning ascribed thereto by sections 736 and
736A. of the Companies Act 1985
"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
2
<PAGE> 5
"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
"NOVATION CERTIFICATE" a certificate in substantially the form set out
in schedule 3
"OFFERING" means the offering of Shares on the terms and conditions of
the Placement Memorandum
"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"
"PLACING AGENTS" means the persons whose names and addresses are set
out in schedule 2, together with any additional Placing Agents
appointed by the SAGA Fund as provided in clause 3.2, provided,
however, that after the removal or resignation of a Placing Agent as
provided in clause 10 it shall, save as otherwise specified herein, no
longer be considered a "Placing Agent"
"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$1.00 each in the capital of the SAGA Fund
"STATUTES" means the Act, the Irish Companies Act, the FSA and any
regulations made thereunder
"SUBSCRIPTION FORM" means the form in the agreed form marked "B"
"SUBSIDIARY" has the meaning ascribed thereto by sections 736 and 736A
of the Companies Act 1985
"TRANSFER AGENT" means State Street Cayman Trust Company, Ltd., in its
capacity as transfer agent for the SAGA Fund, or such other transfer
agent for the Shares as the SAGA Fund may from time to time appoint
3
<PAGE> 6
"US DOLLARS", "US$" 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
"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 and OMAMB.
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 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.
4
<PAGE> 7
1.8 Unless otherwise expressly provided, all references in this Agreement
to time are to the time in London.
2 DOCUMENTS
---------
2.1 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 the delivery to such Placing Agent (or as such Placing
Agent may reasonably direct) of all such 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 appoints the Placing Agents to act as its agents
for the purpose of soliciting subscriptions of its Shares pursuant to
the Offering, which appointment the Placing Agents hereby accept. 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 The engagement of the Placing Agents hereunder shall be non-exclusive
and the SAGA Fund may from time to time in its sole discretion but
after reasonable prior consultation with each of the Placing Agents
appoint one or more other persons (each an "ADDITIONAL AGENT") as its
agent(s) for the purpose of soliciting subscriptions of its Shares.
If, during such prior consultation, any Placing Agent shall object to
the appointment of a particular Additional Agent and shall terminate
under clause 10.5(f), thereafter no offering document may be issued in
connection with the offering of Shares in which such Placing Agent is
indicated as being a Placing Agent of the SAGA Fund. Any such
appointment shall be by way of novation (a "NOVATION") under which the
Additional Agent shall become party to this Agreement as a Placing
Agent and shall assume rights against the existing parties and be owed
obligations by the existing parties as a Placing Agent with effect
from the date of execution of the Novation Certificate by the SAGA
Fund. A Novation is effected if the Additional Agent executes and
delivers to the SAGA Fund a Novation Certificate and the SAGA Fund
executes it. Each party irrevocably authorises the SAGA Fund to
execute any duly completed Novation Certificate on its behalf. The
SAGA Fund shall promptly notify each Placing Agent of the appointment
of any Additional Agent.
3.3 Pursuant to the appointment made by clause 3.1 or 3.2, on the terms
and subject to the conditions set out herein and in the Placement
Memorandum and in reliance
5
<PAGE> 8
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.
3.4 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.
3.5 Each Placing Agent represents and warrants and agrees with the SAGA
Fund and the Master Trust that:
(a) 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;
(b) this Agreement (and, in the case of an Additional Agent, the
Novation Certificate executed by that Additional Agent) has been
duly authorised and executed on behalf of such 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;
(c) 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
(d) 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.
3.6 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:
(a) 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
6
<PAGE> 9
the Master Trust shall so notify, the others shall not be obliged
to make the same notification);
(b) to prepare at its expense an amended Placement Memorandum or
supplement to the Placement Memorandum to reflect such change or
new matter and to ensure compliance with applicable law;
(c) to forward to each Placing Agent for comment all drafts of any
amended Placement Memorandum or supplement thereto and not to
issue any such document containing the name of a Placing Agent
without the approval of such Placing Agent which shall not be
unreasonably withheld and a Placing Agent shall be deemed to have
approved such issue if it fails, within ten business days in
London and New York City, from receipt of the relevant draft, to
notify the SAGA Fund in writing of its objection.
(d) 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 Placement Memorandum or supplement thereto.
3.7 Each Placing Agent shall use its reasonable endeavours to procure that
duly completed Subscription Forms signed by its Placees which are
received by it at its office specified in schedule 2 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 3.7.
3.8 The SAGA Fund may, at any time after consultation with the Placing
Agents, terminate or modify the terms and conditions of the Offering
and, subject to compliance with clause 3.6(c), revise the Placement
Memorandum accordingly.
3.9 The SAGA Fund shall, as principal, be entitled to offer and sell
Shares directly to a Placee without involving a Placing Agent as agent
provided that such Placee shall not have already been approached by a
Placing Agent during the preceding 12 months with a view to such
Placee subscribing for Shares. Upon request, each Placing Agent will
provide the SAGA Fund with a complete list of all investors so
approached by such Placing Agent during the preceding twelve months
with respect to the Shares, and the SAGA Fund shall be entitled for
purposes of this clause to rely upon any such list. In the event any
Placing Agent fails to provide any such list within 30 days of SAGA
Fund's written request therefor, the SAGA Fund may assume for all
purposes of this Agreement, until its receipt of such a list from such
Placing Agent, that such Placing Agent has not approached any
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<PAGE> 10
investors with respect to an investment in the Shares during the
preceding twelve months.
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
each of the Placing Agents such agreement not to be unreasonably
withheld or delayed.
5 ALLOTMENT AND SETTLEMENT
------------------------
5.1 The SAGA Fund shall instruct the Transfer Agent to promptly notify
each Placing Agent 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 (as specified on the relevant Subscription
Form). Subject to clause 5.3 the SAGA Fund shall, as soon as
practicable after receipt of the items referred to in clause 7.1(y)
and 7.1(z), 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 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
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(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.
7 REMUNERATION AND EXPENSES
-------------------------
7.1 Each Placing Agent shall be entitled to receive selling compensation
in respect of each Share for which (x) a Placee shall have been
procured by such Placing Agent, (y) a properly completed Subscription
Form shall have been received by the Transfer Agent, and (z) full
payment of the price specified in the Placement Memorandum shall have
been received by the Transfer Agent in US dollars ("ELIGIBLE SHARES")
as follows:
(a) the Placing Agent shall be entitled to receive a sales charge of
up to 0.35% (as agreed between the relevant Placee and Placing
Agent and specified in the relevant Subscription Form) of the net
asset value of the Eligible Shares (as determined for the
purposes of the price paid by the Placee) as set forth in the
Placement Memorandum which shall be paid by the Placee as part of
the price for the Eligible Shares. The SAGA Fund shall procure
that the Transfer Agent remits 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
7.1(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 7.1(a) and the amounts such
Placing Agent is entitled to receive under this clause 7.1(a)
shall be payable by OMAMB to such Placing Agent upon demand;
(b) Fund Holdings 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 the purposes of the price
paid by the Placee). The SAGA Fund shall instruct the Transfer
Agent to notify Fund Holdings promptly of the Transfer Agent's
receipt of the items specified in clauses (y) and (z) above with
respect to any Eligible Shares. If, prior to the time such
additional sales charge becomes payable, Fund Holdings shall give
the Placing Agent entitled to a sales charge in respect of the
Eligible Shares concerned under clause 7.1(a) written
notification that, in its reasonable opinion, a specified Placee
has been persuaded to subscribe for such Eligible Shares
primarily by the efforts of the SAGA Fund and not by the efforts
of such Placing Agent, then such Placing Agent shall negotiate in
good faith with Fund Holdings with a view to agreeing an
appropriate reduction in the additional sales charge (which may
be reduced to zero) applicable to the subscription made by such
Placee.
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<PAGE> 12
If there is a dispute between the Placing Agents or any of them as to
the or allocation of any sales charge to a particular Placing Agent,
such dispute shall be decided by OMAMB, which determination shall be
conclusive.
7.2 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 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.
7.3 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, the Transfer Agent's 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.
7.4 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.
7.5 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:
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<PAGE> 13
(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 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.
7.6 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.
7.7 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 OMAMB (as a
Warrantor), it 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) OMAMB 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 OMAMB 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 an amended Placement Memorandum or a supplement to the Placement
Memorandum is 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
amended Placement Memorandum or supplement to the Placement Memorandum
and when so repeated shall be read and construed as if the references
therein and herein to the Placement Memorandum meant amended Placement
Memorandum or 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 The Master Trust undertakes to each Placing Agent and the SAGA Fund
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 if the result of
such issue would be to prejudice the interests of the SAGA Fund.
8.8 Fund Holdings represents and warrants to and agrees with each Placing
Agent, for the benefit of each Placing Agent, as set out forth below:
(a) Fund Holdings has been duly organised and is validly existing as
a company under the laws of Bermuda with full power and authority
to enter into, and perform and observe its obligations under,
this Agreement and the Material Contracts to which it is a party;
(b) each of this Agreement or Fund Holdings and the Material
Contracts to which Fund Holdings is a party has been duly
authorised, executed, and delivered by Fund Holdings, and,
assuming its due authorisation,
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<PAGE> 15
execution, and delivery by each of the parties thereto other than
Fund Holdings and each Warrantor, constitutes the legal, valid,
binding and enforceable obligation of Fund Holdings, subject to
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity.
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 ) 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 or Fund Holdings of any of its
obligations under this Agreement; and/or
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<PAGE> 16
(c) the creation, allotment and issue of the Shares; and/or
(d) the Placement Memorandum not containing, or being alleged not to
contain, all information required to be stated therein by any law
or regulation, or any statement therein (whether of fact,
opinion, expectation or intention, including any forecast or
estimate) being, or being alleged to be, untrue, inaccurate,
incomplete or misleading in a material respect or (in the case of
an opinion, expectation or intention) not based on reasonable
grounds or having been made negligently or otherwise without the
required standard of skill and care; and/or
(e) any misrepresentation or alleged misrepresentation (by whomsoever
made) being contained, or being alleged to be contained, in the
Placement Memorandum; and/or
(f) the performance by or on behalf of 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 the
Indemnified Person in respect of whom indemnification is being sought
under this clause 9.2 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) and to
control the defence of such claim provided that such legal advisers
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<PAGE> 17
shall be acceptable to the Indemnified Person. Notwithstanding the
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 and the Indemnifying Party fails to
appoint alternative legal advisers within a reasonable period of
notice of such conflict, (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 been
advised in writing by outside legal advisers that there are legal
defences available to it and/or other Indemnified Persons which are
inconsistent with 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 both notice of the commencement of such claim
and notice that any legal adviser is not reasonably satisfactory
(which notice shall set forth in detail the reasons for such
determination) 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 the prior 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 nor 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
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).
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<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 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.
10.2 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 and if the Master Trust should terminate its
obligations pursuant to this clause 10.2 then this Agreement shall
automatically terminate.
10.3 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.
10.4 The SAGA Fund may, in its sole discretion with or without cause,
terminate this Agreement as to any one or more Placing Agents, without
penalty, at any time upon not less than 30 days prior notice to each
other party to this Agreement provided, however, that the SAGA Fund
may terminate this Agreement as to any Placing Agent immediately upon
notice to each other party if such Placing Agent is in material breach
of this Agreement and such breach is specified in the notice.
10.5 Any Placing Agent may, in its sole discretion with or without cause,
terminate this Agreement as to such Placing Agent at any time upon not
less than 30 days prior
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notice to each other party, provided, however, any Placing Agent may
terminate this Agreement as to such Placing Agent immediately upon
notice to each other party if any of the following events has
occurred, and such event (other than an event referred to in clause
(e) or (f) below) is, of itself or taken together with any other such
event, material in the context of the Offering and the Placing Agent
describes such event in reasonable detail in a notice of termination
to the SAGA Fund:
(a) any statement contained in the Placement Memorandum is or has
become untrue, inaccurate or misleading;
(b) any matter has arisen which would, if the 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;
(c) any of the Warranties was untrue or inaccurate as at the date
hereof or would, if repeated by reference to the facts and
circumstances existing at any time during the term hereof, be
untrue or inaccurate;
(d) any Warrantor or Fund Holdings has not complied or cannot comply
with its obligations under this Agreement;
(e) the US Securities and Exchange Commission has issued an order
suspending or revoking the registration of the Master Trust under
section 8(e) of the Investment Company Act or has initiated or
threatened in writing proceedings for such an order; or
(f) an Additional Agent is appointed pursuant to clause 3.2 to which
the terminating Placing Agent objected in writing either before,
or within ten days following, its receipt of notice of the
appointment.
10.6 In the event that this Agreement shall be terminated pursuant to this
clause 10 generally as to all parties, all the outstanding obligations
of each Placing Agent hereunder (and accordingly all obligations of
Placees 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 and Fund Holdings 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 clause 11 and except that:
(a) the SAGA Fund shall be liable for such costs and expenses as are
referred to in clause 7.2;
(b) such termination shall not prejudice any accrued rights or claims
by any party against any other party hereto (including any rights
in respect of
17
<PAGE> 20
a Subscription Form received by the Transfer Agent prior to the
termination, which shall remain effective notwithstanding any
such termination, and any right to make a claim for damages as a
result of any breach of this Agreement that resulted in the
termination of this Agreement); and
(c) if so requested in writing by the Placing Agents, the SAGA Fund
shall circulate such notice or other communication as may be
reasonably required by the Placing Agents.
10.7 In the event that this Agreement shall be terminated pursuant to this
clause 10 as to any particular Placing Agent (and not as to all
Placing Agents generally) all the outstanding obligations of such
Placing Agent hereunder (and accordingly all obligations of Placees
procured by such Placing Agent 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 or
Fund Holdings to or for the benefit of such Placing Agent shall
terminate and neither such Placing Agent, on the one hand, nor any of
the Warrantors or Fund Holdings, on the other hand, shall have any
claim against the 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 clause 11 and except that:
(a) the SAGA Fund shall be liable for such costs and expenses owing
to such Placing Agent as are referred to in clause 7.2;
(b) such termination shall not prejudice any accrued rights or claims
by any party against any other party hereto (including any rights
in respect of a Subscription Form received by the Transfer Agent
from a Placee procured by such Placing Agent prior to the
termination, which shall remain effective notwithstanding any
such termination, and any right to make a claim for damages as a
result of any breach of this Agreement that resulted in the
termination of this Agreement as to such Placing Agent); and
(c) if so requested in writing by such Placing Agent, the SAGA Fund
shall circulate a notice or other communication to the effect
that such Placing Agent is no longer acting as a placing agent of
the SAGA Fund.
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;
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(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 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 Fund Holdings
61 Front Street
Hamilton HM11
Bermuda
Fax no: 1 441 296 1200
Attention: W. Langley/S. Rouse
(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
19
<PAGE> 22
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.
13.2 Any liability to a party under this Agreement may in whole or in part
be released, compounded or compromised or time or indulgence given by
that party 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.
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 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 and Fund Holdings hereby appoints Norose Notices
Limited at its registered office for the time being (being at the date
hereof Kempson House,
20
<PAGE> 23
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.
21
<PAGE> 24
SCHEDULE 1
WARRANTIES
1 Recitals (A) to (D) (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 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
22
<PAGE> 25
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
Bye-Laws, 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).
23
<PAGE> 26
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 notifications of registration on Form N-8A filed by 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.
16 The Registration Statement of the Master Trust filed on 9th November
1995 under the Investment Company Act, 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 Master Trust by any Placing Agent expressly for use therein and
(b) the Master Trust may shortly file amendments to its Registration
Statement reflecting the terms of this Agreement and a placing
agreement in respect of shares of the OMEGA Fund and including the
Placement Memorandum.
17 No person is serving or acting as an officer or director of or
investment adviser to 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.
24
<PAGE> 27
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 LLC
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
25
<PAGE> 28
SCHEDULE 3
FORM OF NOVATION CERTIFICATE
To: The SAGA Fund
From: the Additional Agent
Date:
Agreement relating to Shares of Old Mutual South Africa Growth
--------------------------------------------------------------
Assets Fund Limited dated o 1996 (the "AGREEMENT")
--------------------------------------------------
We refer to clause 3.2 of the Agreement.
1 We [ ] (the "ADDITIONAL AGENT") agree to become party to the
Agreement as a Placing Agent by way of novation as referred to in
clause 3.2.
2 Our address for the purpose of Schedule 2 to the Agreement is:
[ ]
3 This Novation Certificate is governed by English law.
SIGNED by )
for and on behalf of )
[Additional Agent] ) ............................
SIGNED by )
for and on behalf of )
Old Mutual South Africa )
Growth Assets Fund Limited ) ............................
26
<PAGE> 29
SIGNED by )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: SUSAN ROUSE ) WILLIAM LANGLEY
Duly authorised signatory
SIGNED by )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: SUSAN ROUSE ) WILLIAM LANGLEY
Duly authorised signatory
SIGNED by )
for and on behalf of )
OLD MUTUAL ASSET MANAGERS )
(BERMUDA) LIMITED )
in the presence of: SUSAN ROUSE ) WILLIAM LANGLEY
Duly authorised signatory
SIGNED by )
for and on behalf of )
OLD MUTUAL FUND HOLDINGS )
(BERMUDA) LIMITED )
in the presence of: SUSAN ROUSE ) WILLIAM LANGLEY
Duly authorised signatory
SIGNED by )
for and on behalf of )
FLEMING MARTIN LIMITED )
in the presence of: J.R. SAMPSON ) B.E. VON GLEHN
Duly authorised signatory
27
<PAGE> 30
SIGNED by )
for and on behalf of )
RAND INTERNATIONAL SECURITIES LLC )
in the presence of: ) KEVIN JACOBS
Duly authorised signatory
SIGNED by )
for and on behalf of )
SWISS BANK CORPORATION )
in the presence of: ) H.V.P MYLES
A.J. CORRIE
Duly authorised signatory
28
<PAGE> 1
EXHIBIT 9(h)
OLD
MUTUAL Old Mutual Asset Managers (Bermuda) Limited
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
A wholly owned subsidiary of the 61 Front Street P.O. Box HM 3085 Tel. +1-441-296-1201
South African Mutual Life Assurance Society Hamilton Hamilton HM NX Fax. +1-441-296-1200
Established 1845 Bermuda Bermuda
</TABLE>
August 15, 1996
Ms. Mariam Toulan
International Securities Group
International Finance Corporation
1818 H. Street, N.W.
Washington, DC 20433
USA
Re: STRUCTURING ENGAGEMENT AGREEMENT DATED OCTOBER 23, 1995
("THE AGREEMENT")
Dear Mariam:
I appreciate the time that you spent in the past few months talking with me
about the Agreement and your willingness to follow up with me after Jay's
departure from the IFC.
As discussed, under the Agreement the IFC was to provide consultation and
advisory services to the Old Mutual South Africa Equity Trust, the OMEGA South
Africa Fund, and the Old Mutual SAGA Fund. In return, the Trust agreed to pay a
$250,000 fee to the IFC. However as we have agreed, because the expected level
of service was not provided it would be neither fair nor reasonable for the
Trust to pay $250,000 to the IFC.
After discussing the issue with your colleagues you then proposed that the Trust
would, instead of paying the $250,000 fee, reimburse the IFC for its out of
pocket expenses relating to the Agreement. Therefore I enclose a check written
by the Trust for US $20,823.87, which is the amount you have invoiced for these
expenses. Your acceptance of this check confirms the Trust's final settlement of
all amounts due under the Agreement.
I want to thank you and your colleagues again for your support on this project
and would again wish to reaffirm that Old Mutual would wish to seek a future
opportunity where we could work together. Hopefully with more success the next
time!
Best regards,
Bill
William Langley
Enc.
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Old Mutual South Africa Equity Trust:
We consent to the use of our report, dated July 22, 1996, incorporated herein
by reference and to the reference to our firm under the heading "Independent
Accountants" in Part B of the registration statement.
KPMG Peat Marwick
Chartered Accountants
Hamilton, Bermuda
September 27, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001003162
<NAME> OLD MUTUAL SOUTH AFRICA EQUITY TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> NOV-03-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,014,551
<INVESTMENTS-AT-VALUE> 974,756
<RECEIVABLES> 26,754
<ASSETS-OTHER> 13,148
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,014,658
<PAYABLE-FOR-SECURITIES> 24,883
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 923
<TOTAL-LIABILITIES> 25,806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 988,852
<DIVIDEND-INCOME> 14,460
<INTEREST-INCOME> 448
<OTHER-INCOME> 0
<EXPENSES-NET> (5,631)
<NET-INVESTMENT-INCOME> 9,277
<REALIZED-GAINS-CURRENT> 6,446
<APPREC-INCREASE-CURRENT> (39,777)
<NET-CHANGE-FROM-OPS> (24,054)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,122,725
<NUMBER-OF-SHARES-REDEEMED> 109,819
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 988,852
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,337
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,631
<AVERAGE-NET-ASSETS> 1,047,891
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
