ASA LIMITED 36 WIERDA ROAD WEST
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA) WIERDA VALLEY, SANDTON
SOUTH AFRICA
TO THE SHAREHOLDERS:
At August 31, 1999 the Company's net assets were equivalent to R123.25
($20.27) per share. This compares with R108.18 ($19.01) per share at November
30, 1998 the end of the Company's previous fiscal year. Net asset values are
computed in terms of rand, the currency of the Republic of South Africa, and
then converted to United States dollars at the rand exchange rate as described
in Note (1)B, on page 7. The most recent net asset value similarly calculated
was R124.28 ($20.31) per share at September 16, 1999 at which date our shares
sold at a market price of $17.375 per share, a discount of 14.5% to the net
asset value.
Net investment income for the nine months ended August 31, 1999 was
equivalent to $.46 per share vs. $.63 for the same period last year. The Board
of Directors declared a dividend of $.15 per share on July 29, 1999 payable
August 27, 1999 to shareholders of record on August 20, 1999.
It now appears that the proposed sale of 310 tons of gold by the
International Monetary Fund (IMF) to finance debt reduction for poor countries
will not occur. Instead, IMF's governing interim committee is expected to meet
shortly to discuss a proposal to revalue 10 million ounces of its gold reserves
to market prices from its current book value of about $47.00 per ounce. This
will allow the IMFto release $1.1 billion to fund debt relief. Public Opinion
polls showed that the public in the U.K., the U.S., France, and Italy opposed
the IMFsales. The apparent withdrawal from the market of IMF tended to stabilize
the gold price. The second tranche of the Bank of England's gold sale came into
the market on September 21st. This sale was part of the Bank's plan to sell 415
tons of its 715 ton gold reserve. Unlike the July 6th sale, it was well received
and the gold price strengthened.
On Sunday, September 26th, fifteen European Central Banks, including the
European Central Bank and Britain's Central Bank, pledged to cap annual gold
sales at 400 tons for the next five years. Central Bank sales have been blamed
for gold's sluggish performance this past summer. The Central Banks have also
agreed to limits on future gold leasing. Leased gold is used for forward
selling. Forward selling has also been blamed for downward pressure on the gold
price. This positive news resulted in strong demand for gold, pushing the spot
price and price of gold shares sharply higher.
The lower gold price earlier in the year appears to have stimulated demand
for the metal. In August, the World Gold Council announced that in the second
quarter of 1999, the demand for gold rose to 809 tons, a gain of 16% from the
second quarter of 1998 and a record high for any three month period.
Significantly, investment demand over the same period rose 32% to 123.1 tons.
For the first half of 1999 gold demand totaled 1,598 tons a year, a year gain of
35% and also a record for the period.
During the Company's last fiscal quarter ending August 31st the dollar
price of gold fell from $268.60 to $254.80, a decline of 5.1%. However, the
Philadelphia Stock Exchange Gold Index (XAU) rose 10% and the Johannesburg Stock
Exchange All Gold Index rose 16%. The Company's net asset value during this
period rose 19.4% in dollars and 17.0% in rand, the difference reflecting a 2.4%
increase in the value of the rand against the U.S. dollar. Unfortunately, the
benefit of this increase in our net asset value was offset, in part by the
market price of our stock, which moved the premium/discount to NAV from a
premium on May 31st of 2.4% to a discount of 10.9% on August 31st.
South African gold mining companies seem to have learned to cope with a
lower gold price. Costs have been kept under control and profits have been aided
by hedging. A longer-term weakness in the rand has also helped profitability.
This has been reflected in surprisingly good dividend declarations, which should
benefit the Company's earnings, at least over the balance of this fiscal year.
<PAGE>
The platinum price continues to strengthen and this has been reflected in
the price of the two platinum-mining companies held in our portfolio. The rising
price reflects uncertainty as to Russian deliveries, as political instability in
that country persists.Platinum jewelry demand has picked up, particularly from
Japan, where the strong yen has made the platinum price attractive. A recent
reduction in the import duty on platinum in India has created a strong demand
from that country. Robust demand for the metal has also come as a result of from
strong and growing automobile sales throughout most of the world.
During the third quarter we added to our portfolio a holding in Ashanti
Goldfields Company Limited ("Ashanti"). Ashanti is an Africa based international
gold mining and explorations group. It has six producing mines in three African
countries, Ghana, Guinea and Zimbabwe. A seventh mine is expected to be
operational in the year 2000 in Tanzania. Ashanti is listed on six international
stock exchanges, including New York and London. It reports 37 million ounces of
indicated gold reserves. In 1998, the company produced a record 1,547,610 ounces
of gold at a cash cost of $218 per ounce.
I would like to call to your attention the availability of the Dividend
Reinvestment Plan. Any inquiries in regard to the plan should be directed to
EquiServe-First Chicago Trust Division ("FCTD"), Dividend Reinvestment Plan,
P.O. Box 2598, Jersey City, NJ, 07303-2598, U.S.A. Also FCTDis now able to
communicate with shareholders through the Internet. The only requirement for
shareholder participation is use of a personal computer and access to an
electronic mail package. The FCTD address is "[email protected]", and access is
available 24-hours a day. In addition, FCTD has established a Response Center to
respond to shareholders' questions in a timely manner. The telephone number is
201-324-0498. The Response Center is available Monday through Friday between
8:30 a.m. and 7 p.m. (Eastern Standard Time).
ROBERT J.A. IRWIN
September 27, 1999 CHAIRMAN OF THE BOARD
2
<PAGE>
SCHEDULE OF INVESTMENTS
(NOTE 1)
August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Number of South African United States Percent of
Name of Company Shares Rand Dollars Net Assets
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ORDINARY SHARES OF GOLD MINING COMPANIES
SOUTH AFRICAN GOLD MINES
Anglogold Limited 1 194 947 R 364 458 835 30.8%
Gold Fields Limited 10 794 979 226 694 559 19.2
Western Areas Gold Mining Company Limited 600 300 10 205 100 .9
- ---------------------------------------------------------------------------------------------------------------
601 358 494 $98 907 647 50.9
- ---------------------------------------------------------------------------------------------------------------
NORTH AFRICAN GOLD MINES
Ashanti Goldfields Company Limited 306 500 12 345 820 1.0
- ---------------------------------------------------------------------------------------------------------------
306 500 12 345 820 2 030 563 1.0
- ---------------------------------------------------------------------------------------------------------------
CANADIAN GOLD MINES
Barrick Gold Corporation 282 000 32 790 960 2.8
Euro Nevada Mining Corporation Limited 398 000 29 233 100 2.5
Placer Dome Incorporated 365 312 22 905 062 1.9
- ---------------------------------------------------------------------------------------------------------------
84 929 122 13 968 606 7.2
- ---------------------------------------------------------------------------------------------------------------
698 633 436 114 906 816 59.1
- ---------------------------------------------------------------------------------------------------------------
OPTIONS
Randfontein options 55 939 83 349 13 708 --
- ---------------------------------------------------------------------------------------------------------------
ORDINARY SHARES OF OTHER COMPANIES
Anglo American Platinum Corporation Limited 1 014 800 140 448 320 11.9
Anglo American PLC 320 000 107 136 000 9.1
De Beers Consolidated Mines
Limited/Centenary AG 1 001 300 166 215 800 14.0
Impala Platinum Holdings Limited 262 700 51 226 500 4.3
- ---------------------------------------------------------------------------------------------------------------
465 026 620 76 484 641 39.3
Total Investments, at Market Value 1 163 743 405 191 405 165 98.4
CASH AND OTHER ASSETS LESS PAYABLES 19 423 713 3 209 878 1.6
- ---------------------------------------------------------------------------------------------------------------
Total Net Assets R1 183 167 118 $194 615 043 100.0%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The Company's accounts are maintained in rand, the currency of the Republic of
South Africa. United States dollar amounts are shown solely for the convenience
of United States shareholders. There is no assurance that the valuations at
which the Company's investments are carried could be realized upon sale.
The notes to the financial statements form an integral part of these statements.
3
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
August 31, 1999 August 31, 1998
South African United States South African United States
ASSETS Rand Dollars Rand Dollars
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments, at market value (Note 1)
Gold mining companies--
Cost R 203 930 373 $93 278 995 in 1999
R 125 014 358 $80 308 680 in 1998 R 698 716 785 $114 920 524 R513 234 653 $ 79 571 264
Other companies--
Cost R 80 132 354 $34 342 056 in 1999
R 108 723 218 $49 164 650 in 1998 465 026 620 76 484 641 316 160 735 49 017 168
- -------------------------------------------------------------------------------------------------------------------
1 163 743 405 191 405 165 829 395 388 128 588 432
Cash in banks 8 406 246 1 382 603 3 342 112 518 157
Dividends and interest receivable 10 956 591 1 802 071 14 894 700 2 309 255
Other assets 475 526 93 403 714 966 130 940
- -------------------------------------------------------------------------------------------------------------------
Total assets 1 183 581 768 194 683 242 848 347 166 131 546 784
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
Accounts payable and accrued liabilities 414 650 68 199 862 873 133 779
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 414 650 68 199 862 873 133 779
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS (SHAREHOLDERS' INVESTMENT)
- -------------------------------------------------------------------------------------------------------------------
Ordinary (common) shares R0.25 nominal (par) value
Authorized: 24,000,000 shares
Issued & outstanding: 9,600,000 shares 2 400 000 3 360 000 2 400 000 3 360 000
Share premium (capital surplus) 19 636 586 27 489 156 19 636 586 27 489 156
Undistributed net investment income 21 188 416 56 479 569 29 785 431 58 071 938
Undistributed net realized gain (loss) from
foreign currency transactions 3 830 432 (28 778 177) 4 399 793 (18 242 209)
Undistributed net realized gain on investments 249 184 977 72 844 552 189 058 719 62 175 232
Net unrealized appreciation (depreciation)
on investments 879 690 947 63 784 046 595 657 779 (884 898)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currency 7 235 760 (564 103) 6 545 985 (556 214)
- -------------------------------------------------------------------------------------------------------------------
Net assets R1 183 167 118 $194 615 043 R847 484 293 $131 413 005
- -------------------------------------------------------------------------------------------------------------------
Net asset value per share R123.25 $20.27 R88.28 $13.69
===================================================================================================================
</TABLE>
The closing price of the Company's shares on the New York Stock Exchange
was $18.0625 per share on August 31, 1999 and $13.625 per share on August
31, 1998.
The notes to the financial statements form an integral part of these
statements.
The latest valuation of net assets per share will be furnished upon
request to any shareholder by the Company, 36 Wierda Road West, Sandton,
South Africa or, for the convenience of United States shareholders, by
LGNAssociates, Lawrence G. Nardolillo, C.P.A., P.O. Box 269, Florham Park,
New Jersey, 07932, (973-377-3535)
4
<PAGE>
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
- ------------------------------------------------------------------------------------------------------------------------
August 31, 1999 August 31, 1998
South African United States South African United States
Rand Dollars Rand Dollars
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> >
Investment income
Dividends R 34 174 145 $ 5 560 140 R 40 068 462 $ 7 427 963
Interest 1 743 464 284 965 923 872 173 712
- ------------------------------------------------------------------------------------------------------------------------
35 917 609 5 845 105 40 992 334 7 601 675
- ------------------------------------------------------------------------------------------------------------------------
Expenses
Shareholders' report and proxy expenses 532 147 88 877 791 283 154 869
Directors' fees and expenses 1 902 909 312 425 1 468 331 270 800
Salaries 1 439 637 237 675 1 452 411 277 731
Other administrative expenses 1 573 193 260 269 1 363 568 260 402
Transfer agent, registrar and custodian 461 179 75 311 404 677 75 396
Professional fees and expenses 718 977 117 914 537 317 96 306
Insurance 431 728 71 007 505 682 95 485
Other 1 739 885 285 756 1 715 348 325 938
- ------------------------------------------------------------------------------------------------------------------------
8 799 655 1 449 234 8 238 617 1 556 927
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 27 117 954 4 395 871 32 753 717 6 044 748
========================================================================================================================
Net realized and unrealized gain (loss) from
investments and foreign currency transactions
Net realized gain from investments
Proceeds from sales 68 941 656 11 393 080 117 19
Cost of securities sold 27 128 438 3 820 019 -- --
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 41 813 218 7 573 061 117 19
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from foreign currency
transactions Investments -- (9 634 327) -- --
Foreign currency transactions (397 773) (47 289) 1 978 971 (217 068)
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from foreign currency
transactions (397 773) (9 681 616) 1 978 971 (217 068)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in unrealized appreciation
on investments
Balance, beginning of period 778 778 375 49 646 548 705 737 193 63 834 015
Balance, end of period 879 690 947 63 784 046 595 657 779 (884 898)
- ------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) 100 912 572 14 137 498 (110 079 414) (64 718 913)
- ------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
on translation of assets and liabilities in
foreign currency 1 796 956 (19 308) 264 382 (236 515)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) from
investments and foreign currency transactions 144 124 973 12 009 635 (107 835 944) (65 172 477)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations R171 242 927 $16 405 506 R(75 082 227) $(59 127 729)
=========================================================================================================================
</TABLE>
The notes to the financial statements form an integral part of these
statements.
5
<PAGE>
STATEMENTS OF SURPLUS AND STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
- ---------------------------------------------------------------------------------------------------------------------------
August 31, 1999 August 31, 1998
South African United States South African United States
STATEMENTS OF SURPLUS Rand Dollars Rand Dollars
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Share premium (capital surplus)
Balance, beginning and end of period R 19 636 586 $ 27 489 156 R 19 636 586 $ 27 489 156
===========================================================================================================================
Undistributed net investment income
Balance, beginning of period R 20 681 662 $ 56 403 698 R 28 481 314 $ 57 787 190
Net investment income for the period 27 117 954 4 395 871 32 753 717 6 044 748
- ---------------------------------------------------------------------------------------------------------------------------
47 799 616 60 799 569 61 235 031 63 831 938
Dividends paid (26 611 200) (4 320 000) (31 449 600) (5 760 000)
- ---------------------------------------------------------------------------------------------------------------------------
Balance, end of period R 21 188 416 $ 56 479 569 R 29 785 431 $ 58 071 938
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
foreign currency transactions
Balance, beginning of period R 4 228 205 $(19 096 561) R 2 420 822 $(18 025 141)
Net realized gain (loss) for the period (397 773) (9 681 616) 1 978 971 (217 068)
- ---------------------------------------------------------------------------------------------------------------------------
Balance, end of period R 3 830 432 $(28 778 177) R 4 399 793 $(18 242 209)
===========================================================================================================================
Undistributed net realized gain on investments
(Computed on identified cost basis)
Balance, beginning of period R 207 371 759 $ 65 271 491 R 189 058 602 $ 62 175 213
Net realized gain for the period 41 813 218 7 573 061 117 19
- ---------------------------------------------------------------------------------------------------------------------------
Balance, end of period R 249 184 977 $ 72 844 552 R 189 058 719 $ 62 175 232
===========================================================================================================================
Net unrealized appreciation on investments
Balance, beginning of period R 778 778 375 $ 49 646 548 R 705 737 193 $ 63 834 015
Increase (Decrease) for the period 100 912 572 14 137 498 (110 079 414) (64 718 913)
- ---------------------------------------------------------------------------------------------------------------------------
Balance, end of period R 879 690 947 $ 63 784 046 R 595 657 779 $ (884 898)
===========================================================================================================================
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currency
Balance, beginning of period R 5 438 804 $ (544 795) R 6 281 603 $ (319 699)
Net unrealized appreciation (depreciation)
for the period 1 796 956 (19 308) 264 382 (236 515)
- ---------------------------------------------------------------------------------------------------------------------------
Balance, end of period R 7 235 760 $ (564 103) R 6 545 985 $ (556 214)
===========================================================================================================================
Nine months ended
- ---------------------------------------------------------------------------------------------------------------------------
August 31, 1999 August 31, 1998
South African United States South African United States
STATEMENTS OF CHANGES IN NET ASSETS Rand Dollars Rand Dollars
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income R 27 117 954 $ 4 395 871 R 32 753 717 $ 6 044 748
Net realized gain from investments 41 813 218 7 573 061 117 19
Net realized gain (loss) from foreign currency
transactions (397 773) (9 681 616) 1 978 971 (217 068)
Net increase (decrease) in unrealized appreciation
on investments 100 912 572 14 137 498 (110 079 414) (64 718 913)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currency 1 796 956 (19 308) 264 382 (236 515)
- ---------------------------------------------------------------------------------------------------------------------------
171 242 927 16 405 506 (75 082 227) (59 127 729)
Dividends paid from net investment income (26 611 200) (4 320 000) (31 449 600) (5 760 000)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 144 631 727 12 085 506 (106 531 827) (64 887 729)
Net assets, beginning of period 1 038 535 391 182 529 537 954 016 120 196 300 734
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period R1 183 167 118 $194 615 043 R 847 484 293 $131 413 005
===========================================================================================================================
</TABLE>
The notes to the financial statements form an integral part of these
statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--The following is a summary
of the Company's significant accounting policies:
A. INVESTMENTS
Security transactions are recorded on the respective trade dates.
Securities owned are reflected in the accompanying financial statements at
quoted market value. The difference between cost and current market value
is reflected separately as net unrealized appreciation on investments. The
net realized gain or loss from the sale of securities is determined for
accounting purposes on the basis of the cost of specific certificates.
Substantially all shares in the Company's portfolio are traded on the
Johannesburg Stock Exchange. The Company cannot trade in securities markets
other than the Johannesburg Stock Exchange without permission of the South
African Exchange Control Authorities.
Quoted market value of those shares traded on the Johannesburg Stock
Exchange or other stock exchanges, as applicable, represents the last
recorded sales price on the financial statement date, or the mean between
the closing bid and asked prices of those securities not traded on that
date. In the event that a mean price cannot be computed due to the absence
of either a bid or an asked price, then the bid price plus 1% or the ask
price less 1%, as applicable, is used.
There is no assurance that the valuation at which the Company's investments
are carried could be realized upon sale.
B. TRANSLATION OF SOUTH AFRICAN RAND INTO UNITED STATES DOLLARS
The Company's accounts are maintained in rand, the currency of the Republic
of South Africa. United States dollar amounts are shown solely for the
convenience of United States shareholders. The Company translates rand into
U.S. dollars at the current rand exchange rate in computing its net asset
values. At August 31, 1999, the rand exchange rate was approximately R6.08
to the dollar ($.16 to the rand). United States dollar equivalents have
been determined at appropriate rates of exchange as follows:
(i) Purchases, sales, receipts and expenditures are translated at
the approximate official rates of exchange in effect at the respective
dates of such transactions.
(ii) Assets, including investment securities, at quoted market
value (Note (1) A), and liabilities at each reporting date are
translated at the official exchange rate in effect at such date.
(iii) Ordinary shares outstanding and share premium (capital
surplus) accounts are translated at historical rates, averaging $1.40
to the rand.
C. EXCHANGE GAINS AND LOSSES
The Company adopted the provisions of the American Institute of Certified
Public Accountants Statement of Position 93-4, Foreign Currency Accounting
and Financial Statement Presentation for Investment Companies ("SOP")
effective for the fiscal year beginning December 1, 1994. The adoption of
the SOP resulted in the reclassification of net realized gain (loss) from
foreign currency transactions, previously included as a component of net
investment income, to net realized gain (loss) from foreign currency
transactions, and the
7
<PAGE>
inclusion of unrealized gain (loss) on the translation of currency into net
unrealized appreciation (depreciation) on translation of assets and
liabilities in foreign currency.
D. SECURITY TRANSACTIONS AND INVESTMENT INCOME
During the nine months ended August 31, 1999 sales of securities amounted
to R 68,941,656 ($11,393,080) and purchases of securities amounted to R
167,246,260 ($10,983,353). Securities transactions are accounted for on the
date the securities are purchased or sold. Dividend income is recorded on
the ex-dividend date (the date on which the securities would be sold
ex-dividend). Interest income is recognized on the accrual basis.
E. DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders are recorded on the ex-dividend date.
F. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that effect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses for the period. Actual results could
differ from those estimates.
(2) TAX STATUS OF THE COMPANY--There is no South African tax on dividends
received by the Company and it is exempt from tax on gains realized on the
disposition of securities, provided, as has been the Company's practice, that
its purchases of securities are made for investment purposes. Effective June
1992, the Company is no longer subject to tax on interest income. Exemption has
been granted to the Company from the payment of a Secondary Tax on Companies.
The Company (a South African corporation) intends to conduct its business in a
manner that will not subject it to United States income or capital gain taxes.
The reporting for financial statement purposes of distributions made during
the period from net investment income or net realized gains may differ from
their ultimate reporting for U.S. federal income tax purposes. These differences
primarily are caused by the separate line item reporting for financial statement
purposes of foreign exchange gains or losses. See page 10 for additional tax
information for United States shareholders.
(3) CURRENCY EXCHANGE--There are exchange control regulations restricting
the transfer of funds from South Africa. In 1958 the South African Reserve Bank,
in the exercise of its powers under such regulations, advised the Company that
the exchange control authorities would permit the Company to transfer to the
United States in dollars both the Company's capital and its gross income,
whether received as dividends or as profits on the sale of investments, at the
current official exchange rate prevailing from time to time. Future
implementation of exchange control policies could be influenced by national
monetary considerations that may prevail at any given time.
(4) RETIREMENT PLAN--Effective April 1, 1989, the Company established a
defined contribution plan (the "Plan") to replace its previous pension plan. The
Plan covers all full-time employees. The Company will contribute 15% of each
covered employee's salary to the Plan. The Plan provides for immediate vesting
by the employee without regard to length of service. During the nine months
ended August 31, 1999, retirement plan expense aggregated R3,995 ($699), and in
the nine months ended August 31, 1998, retirement plan expense aggregated R6,480
($1,352). In addition, in 1998 the Company renewed an annuity policy owned by
the Company, for the benefit of the Chairman, at an annual cost of $25,000 per
year for five years.
8
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Nine months ended Year ended November 30
- ---------------------------------------------------------------------------------------------------------------------------
August 31 August 31
1999 1998 1998 1997 1996 1995 1994
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
South African Rand
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period R 108.18 R 99.38 R 99.38 R 161.77 R 127.19 R 181.42 R 154.00
===========================================================================================================================
Net investment income 2.82 3.41 3.59 4.43 4.52 5.17 5.74
Net realized gain from investments 4.36 -- 1.91 -- 1.50 2.39 .71
Net realized gain(loss) from foreign
currency transactions (.04) .21 .19 .11 (.12) .10 .17
Net increase(decrease) in unrealized
appreciation on investments 10.51 (11.47) 7.61 (61.40) 34.03 (54.67) 27.93
Net unrealized appreciation (depreciation)
on translation of assets and
liabilities in foreign currency .19 .03 (.09) .02 .62 .01 .01
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 17.84 (7.82) 13.21 (56.84) 40.55 (47.00) 34.56
Less dividends (2.77) (3.28) (4.41) (5.55) (5.97) (7.23) (7.14)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period R 123.25 R 88.28 R 108.18 R 99.38 R 161.77 R 127.19 R 181.42
===========================================================================================================================
United States Dollars
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 19.01 $ 20.45 $ 20.45 $ 35.09 $ 34.66 $ 51.10 $ 45.70
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income .46 .63 .66 .97 1.10 1.43 1.62
Net realized gain from investments .79 -- .32 -- .39 .65 .20
Net realized (loss) from foreign
currency transactions (1.01) (.02) (.11) -- (.71) (.93) (.23)
Net increase(decrease) in unrealized
appreciation on investments 1.47 (6.74) (1.49) (14.41) 1.05 (15.58) 5.82
Net unrealized appreciation (depreciation)
on translation of assets and
liabilities in foreign currency -- (.03) (.02) -- -- (.01) (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.72 (6.16) (.64) (13.44) 1.83 (14.44) 7.40
Less dividends (.45) (.60) (.80) (1.20) (1.40) (2.00) (2.00)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.27 $ 13.69 $ 19.01 $ 20.45 $ 35.09 $ 34.66 $ 51.10
===========================================================================================================================
Market value per share, end of period $ 18.06 $ 13.63 $ 19.13 $ 20.63 $ 37.63 $ 39.00 $ 43.63
TOTAL INVESTMENT RETURN
Based on market value per share (3.01)% (31.82%) (3.30%) (42.86%) (.28%) (6.36%) (.29%)
RATIOS TO AVERAGE NET ASSETS
Expenses .84% .82% 1.15% .71% .49% .53% .42%
Net investment income 2.56% 3.19% 3.34% 3.25% 2.72% 3.47% 3.23%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $194,615 $131,413 $182 530 $196 301 $336 882 $332 691 $490 595
Portfolio turnover rate 6.66% -- 1.06% -- 1.79% 2.40% 1.18%
Per share calculations are based on the 9,600,000 shares outstanding.
---------------------------
SUPPLEMENTARY INFORMATION
Nine months ended August 31, 1999 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
South African Rand
- ---------------------------------------------------------------------------------------------------------------------------
Certain fees incurred by the company
Directors' fees R 1 035 852
Officers' salaries 886 171
Arthur Andersen (Auditors) 281 914
Ranquin Associates (South African Secretary) 433 200
</TABLE>
9
<PAGE>
CERTAIN TAX INFORMATION FOR UNITED STATES SHAREHOLDERS
From December 1, 1963 through November 30, 1987, the Company was treated as
a "foreign investment company" for United States federal income tax purposes
pursuant to Section 1246 of the Internal Revenue Code (the "Code"). Under
Section 1246 of the Code, a United States shareholder who has held his shares of
the Company for more than one year is subject to tax at ordinary income tax
rates on his profit (if any) on a sale of his shares to the extent of his
"ratable share" of the Company's earnings and profits accumulated between
December 1, 1963 and November 30, 1987. If such shareholder's profit on the sale
of his shares exceeds such ratable share and he held his shares for more than
one year, then, subject to the discussion below regarding the United States
federal income tax rules applicable to taxable years of the Company beginning
after November 30, 1987, he is subject to tax at long term capital gain rates on
the excess.
The Company's per share earnings and profits accumulated (undistributed) in
each of the fiscal years from 1964 through 1987 is given below in United States
currency. All the per share amounts give effect to the two-for-one stock splits
that became effective on May 10, 1966, May 10, 1973 and May 9, 1975. All the per
share amounts reflect distributions through November 30, 1998.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 PER YEAR PER DAY YEAR ENDED NOVEMBER 30 PER YEAR PER DAY
- ---------------------- -------- ------- ---------------------- -------- -------
<S> <C> <C> <C> <C> <C>
1964 ......... $ .042 $.00012 1976 ......... .370 .00101
1965 ......... .067 .00019 1977 ......... .083 .00023
1966 ......... .105 .00029 1978 ......... .357 .00098
1967 ......... .277 .00076 1979 ......... .219 .00060
1968 ......... .241 .00066 1980 ......... 1.962 .00538
1969 ......... .461 .00126 1981 ......... .954 .00261
1970 ......... .218 .00060 1982 ......... .452 .00124
1971 ......... .203 .00056 1983 ......... -0- -0-
1972 ......... .445 .00122 1984 ......... -0- -0-
1973 ......... .497 ,00136 1985 ......... (.151) (.00041)
1974 ......... 1.151 .00316 1986 ......... -0- -0-
1975 ......... .851 .00233 1987 ......... -0- -0-
</TABLE>
Under rules enacted by the Tax Reform Act of 1986, the Company became a
"passive foreign investment company" (a "PFIC") on December 1, 1987. The manner
in which these rules apply depends on whether a United States shareholder elects
either to treat the PFIC as a qualified electing fund ("QEF") with respect to
his interest therein, or for taxable years of such United States shareholder
beginning after December 31, 1997, to "mark-to-market" his PFIC shares as of the
close of each taxable year.
In general, if a United States shareholder of the Company does NOT make
either such election, any gain realized on the direct or indirect disposition of
Company stock by the United States shareholder will be treated as ordinary
income. In addition, such non-electing United States shareholder will be subject
to an "interest charge" on part of his tax liability with respect to such gain,
as well as with respect to certain "excess distributions" made by the Company.
Furthermore, shares held by such non-electing United States shareholder may be
denied the benefit of any otherwise applicable increase in tax basis at death.
If the United States shareholder elects to treat the Company as a QEF with
respect to his interest therein for the first year he holds his shares during
which the Company is a PFIC (or who later makes the QEF election and also elects
to treat his interest generally as if it were sold on the first day of the first
taxable year of the Company for which the QEF election is effective), the rules
described in the preceding paragraph generally will not apply. Instead, the
electing United States shareholder would include annually in his gross income
his pro rata share of the Company's ordinary earnings and not capital gain (his
"QEF" inclusion) regardless of whether such income or gain was actually
distributed. A United States shareholder who made the QEF election for the first
year he held his shares during which the Company was a PFIC (or who later made
the election and also elected to treat his interest
10
<PAGE>
generally as if it were sold on the first day of the first taxable year of the
Company for which the QEF election is effective) would recognize capital gain on
any profit from the actual sale of his shares if those shares were held as
capital assets, except to the extent of the shareholder's ratable share of the
earnings and profits of the Company accumulated between December 1, 1963 and
November 30, 1987, as described above.
Alternatively, if the United States shareholder makes the mark-to-market
election with respect to regularly-traded PFIC stock for taxable years beginning
on or after January 1, 1998, such electing United States shareholder would be
required annually to report any unrealized gain with respect to such
shareholder's stock as an item of ordinary income, and any unrealized loss would
be permitted as an ordinary loss, but only to the extent of previous inclusions
of ordinary income. Any gain subsequently realized by the electing United States
shareholder on a sale or other disposition of the PFIC stock also would be
treated as ordinary income, but such United States shareholder would not be
subject to an interest charge on his resulting tax liability. Special rules
would apply to a United States shareholder that held his PFIC stock prior to the
first taxable year for which the mark-to-market election was effective.
A more detailed discussion of the United States federal income tax rules
applicable to PFICs, including information relating to the filing of QEF
elections, may be found in the Company's 1998 Annual Report under the heading
"Certain tax information for United States shareholders."
DUE TO THE COMPLEXITY OF THE APPLICABLE TAX RULES, UNITED STATES
SHAREHOLDERS OF THE COMPANY ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE IMPACT OF THESE RULES ON THEIR INVESTMENT IN THE COMPANY AND ON
THEIR INDIVIDUAL SITUATIONS.
11
<PAGE>
ASA LIMITED
Incorporated in the
Republic of South Africa
(Registration No. 58/01920/06)
DIRECTORS
HENRY R. BRECK ROBERT J.A. IRWIN
(U.S.A.) (U.S.A)
HARRY M. CONGER MALCOLM W. MACNAUGHT
(U.S.A.) (U.S.A)
CHESTER A. CROCKER RONALD L. MCCARTHY
(U.S.A.) (South Africa)
JOSEPH C. FARRELL ROBERT A. PILKINGTON
(U.S.A.) (Great Britain)
JAMES G. INGLIS A. MICHAEL ROSHOLT
(SOUTH AFRICA) (South Africa)
- ---------------------------------------------
WESLEY A. STANGER, JR., DIRECTOR EMERITUS
OFFICERS
ROBERT J.A. IRWIN, CHAIRMAN OF THE BOARD AND TREASURER
RONALD L. MCCARTHY, MANAGING DIRECTOR
CHESTER A. CROCKER, UNITED STATES SECRETARY
RANQUIN ASSOCIATES, SOUTH AFRICAN SECRETARY
HENRY R. BRECK, ASSISTANT TREASURER
AUDITORS
ARTHUR ANDERSEN & CO., JOHANNESBURG, SOUTH AFRICA
ARTHUR ANDERSEN LLP, NEW YORK, N.Y., U.S.A.
COUNSEL
WERKSMANS, JOHANNESBURG, SOUTH AFRICA,
SHEARMAN & STERLING, NEW YORK, N.Y., U.S.A.
CUSTODIAN
THE CHASE MANHATTAN BANK, N.A. NEW YORK, N.Y., U.S.A.
SHAREHOLDER SERVICES
LGN ASSOCIATES, FLORHAM PARK, NJ, USA (973) 377-3535
WEBSITE--HTTP://WWW.ASALTD.COM
SUBCUSTODIAN
STANDARD BANK OF SOUTH AFRICA LIMITED, JOHANNESBURG, SOUTH AFRICA
TRANSFER AGENT
EQUISERVE-FIRST CHICAGO TRUST DIVISION, JERSEY CITY, N.J.,
U.S.A.
[GRAPHIC]
ASA LIMITED
INTERIM
REPORT
FOR THE
NINE MONTHS
ENDED
AUGUST 31, 1999
