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OFFER FOR CASH
BY
MORGAN STANLEY DEAN WITTER
AFRICA INVESTMENT FUND, INC.
UP TO 1,333,612 OF ITS ISSUED AND OUTSTANDING
SHARES OF BENEFICIAL INTEREST
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 15, 2000, UNLESS THE OFFER IS EXTENDED
THIS ISSUER TENDER OFFER STATEMENT AND THE ACCOMPANYING LETTER OF
TRANSMITTAL (WHICH TOGETHER CONSTITUTE THE "OFFER") ARE NOT CONDITIONED ON ANY
MINIMUM NUMBER OF SHARES BEING TENDERED, BUT ARE SUBJECT TO OTHER CONDITIONS AS
OUTLINED HEREIN AND IN THE LETTER OF TRANSMITTAL.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
AND IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MORGAN
STANLEY DEAN WITTER AFRICA INVESTMENT FUND, INC. THE FUND HAS BEEN ADVISED THAT
NO DIRECTOR OR EXECUTIVE OFFICER OF THE FUND OR ANY AFFILIATE OF THE FUND
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any Stockholder desiring to tender any portion of his or her shares of
Common Stock of the Fund should either (1) complete and sign the Letter of
Transmittal or a facsimile thereof in accordance with the instructions in the
Letter of Transmittal, and mail or deliver the Letter of Transmittal or such
facsimile with his or her certificates for the tendered Shares if such
Stockholder has been issued physical certificates, signature guarantees for all
Stockholders tendering uncertificated Shares, and any other required documents
to the Depositary, or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee are urged to contact such broker, dealer, commercial
bank, trust company or other nominee if they desire to tender Shares so
registered.
Questions, requests for assistance and requests for additional copies of
this Issuer Tender Offer Statement and the Letter of Transmittal may be directed
to the Information Agent in the manner set forth on the last page of this Issuer
Tender Offer Statement.
August 14, 2000
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Summary Term Sheet.......................................... 3
Introduction................................................ 6
1. Terms of the Offer; Termination Date................... 6
2. Acceptance for Payment and Payment for Shares.......... 7
3. Procedure for Tendering Shares......................... 8
4. Rights of Withdrawal................................... 9
5. Source and Amount of Funds; Effect of the Offer........ 10
6. Purpose of the Offer................................... 12
7. NAV and Market Price Range of Shares; Dividends........ 12
8. Federal Income Tax Consequences of the Offer........... 13
9. Selected Financial Information......................... 14
10. Certain Information Concerning the Fund and the Fund's
Investment Manager........................................ 15
11. Interest of Directors and Officers; Transactions and
Arrangements Concerning the Shares........................ 16
12. Certain Legal Matters; Regulatory Approvals............ 16
13. Certain Conditions of the Offer........................ 17
14. Fees and Expenses...................................... 17
15. Miscellaneous.......................................... 18
16. Contacting the Depositary and the Information Agent.... 18
</TABLE>
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SUMMARY TERM SHEET
This Summary Term Sheet highlights certain information concerning this
tender offer. To understand the offer fully and for a more complete discussion
of the terms and conditions of the offer, you should read carefully the entire
Issuer Tender Offer Statement and the related Letter of Transmittal.
WHAT IS THE TENDER OFFER?
Morgan Stanley Dean Witter Africa Investment Fund, Inc. (the "Fund") is
offering to purchase 10% of its outstanding shares, or 1,333,612 of its
outstanding shares of Common Stock, for cash at a price per share equal to 95%
of the per share net asset value as of the close of regular trading on the New
York Stock Exchange on September 15, 2000 (or, if the offer is extended, on the
date after the date to which the offer is extended) upon specified terms and
subject to conditions as set forth in the tender offer documents.
WHEN WILL THE TENDER OFFER EXPIRE, AND MAY THE OFFER BE EXTENDED?
The tender offer will expire at 5:00 p.m., New York City time, on September
15, 2000, unless extended. The Fund may extend the period of time the offer will
be open by issuing a press release or making some other public announcement by
no later than the next business day after the offer otherwise would have
expired. See Section 1 of the Issuer Tender Offer Statement.
WHAT IS THE NET ASSET VALUE PER FUND SHARE AS OF A RECENT DATE?
As of August 1, 2000, the net asset value per share was $10.89. See Section
7 of the Issuer Tender Offer Statement for details. During the pendency of the
tender offer, current net asset value quotations can be obtained from Georgeson
Shareholder Communications Inc. by calling toll free at 800-223-2064 or call
collect at 212-440-9800 or by calling the Fund's toll free number at
800-221-6726 between 9:00 a.m. and 5:00 p.m. Eastern Time, Monday through Friday
(except holidays).
WILL THE NET ASSET VALUE BE HIGHER OR LOWER ON THE DATE THAT THE PRICE TO BE
PAID FOR TENDERED SHARES IS TO BE DETERMINED?
No one can accurately predict the net asset value at a future date.
HOW DO I TENDER MY SHARES?
If your shares are registered in your name, you should obtain the tender
offer materials, including the Issuer Tender Offer Statement and the related
Letter of Transmittal, read them, and if you should decide to tender, complete a
Letter of Transmittal and submit any other documents required by the Letter of
Transmittal. These materials must be received by American Stock Transfer and
Trust Company, the Depositary, in proper form before 5:00 p.m., New York City
time, on September 15, 2000 (unless the tender offer is extended by the Fund in
which case the new deadline will be as stated in the public announcement of the
extension). If your shares are held by a broker, dealer, commercial bank, trust
company or other nominee (e.g., in "street name"), you should contact that firm
to obtain the package of information necessary to make your decision, and you
can only tender your shares by directing that firm to complete, compile and
deliver the necessary documents for submission to the Depositary by September
15, 2000 (or if the offer is extended, the expiration date as extended). See
Section 3 of the Issuer Tender Offer Statement.
IS THERE ANY COST TO ME TO TENDER?
No fees or commission will be payable to the Fund in connection with the
Offer. However, brokers, dealers or other persons may charge stockholders a fee
for soliciting tenders for shares pursuant to this offer. See the Letter of
Transmittal.
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MAY I WITHDRAW MY SHARES AFTER I HAVE TENDERED THEM AND, IF SO, BY WHEN?
Yes, you may withdraw your shares at any time prior to 5:00 p.m., New York
City time, on September 15, 2000 (or if the offer is extended, at any time prior
to 5:00 p.m., New York City time, on the new expiration date). Withdrawn shares
may be re-tendered by following the tender procedures before the offer expires
(including any extension period). See Section 4 of the Issuer Tender Offer
Statement.
HOW DO I WITHDRAW TENDERED SHARES?
A notice of withdrawal of tendered shares must be timely received by
American Stock Transfer and Trust Company, which specifies the name of the
stockholder who tendered the shares, the number of shares being withdrawn (which
must be all of the shares tendered) and, as regards share certificates which
represent tendered shares that have been delivered or otherwise identified to
American Stock Transfer and Trust Company, the name of the registered owner of
such shares if different than the person who tendered the shares. See Section 4
of the Issuer Tender Offer Statement.
MAY I PLACE ANY CONDITIONS ON MY TENDER OF SHARES?
No.
IS THERE A LIMIT ON THE NUMBER OF SHARES I MAY TENDER?
No. See Sections 1 and 8 of the Issuer Tender Offer Statement.
WHAT IF MORE THAN 1,333,612 SHARES ARE TENDERED (AND NOT TIMELY WITHDRAWN)?
The Fund will purchase duly tendered shares from tendering stockholders
pursuant to the terms and conditions of the tender offer on a pro rata basis
(disregarding fractions) in accordance with the number of shares tendered by
each stockholder (and not timely withdrawn), unless the Fund determines not to
purchase any shares. The Fund's present intention, if the tender offer is
oversubscribed, is not to purchase more than 1,333,612 shares. See Section 1 of
the Issuer Tender Offer Statement.
IF I DECIDE NOT TO TENDER, HOW WILL THE TENDER OFFER AFFECT THE FUND SHARES I
HOLD?
Your percentage ownership interest in the Fund will increase after
completion of the tender offer.
DOES THE FUND HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. Although permitted to do so, the Fund does not expect to borrow money
to finance the purchase of any tendered shares. See Section 5 of the Issuer
Tender Offer Statement.
IF SHARES I TENDER ARE ACCEPTED BY THE FUND, WHEN WILL PAYMENT BE MADE?
It is contemplated, subject to change, that payment for tendered shares, if
accepted, will be made on or about September 25, 2000.
IS MY SALE OF SHARES IN THE TENDER OFFER A TAXABLE TRANSACTION?
For most stockholders, yes. All U.S. stockholders other than those who are
tax exempt who sell shares in the tender offer will recognize gain or loss for
U.S. federal income tax purposes equal to the difference between the cash they
receive for the shares sold and their adjusted basis in the shares. The sale
date for tax purposes will be the date the Fund accepts shares for purchase. See
Section 8 of the Issuer Tender Offer Statement for details, including the nature
of the income or loss and the differing rules for U.S. and non-U.S.
stockholders. Please consult your tax adviser as well.
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IS THE FUND REQUIRED TO COMPLETE THE TENDER OFFER AND PURCHASE ALL SHARES
TENDERED UP TO THE NUMBER OF SHARES TENDERED FOR?
Under most circumstances, yes. There are certain circumstances, however, in
which the Fund will not be required to purchase any shares tendered as described
in Section 13 of the Issuer Tender Offer Statement.
IS THERE ANY REASON SHARES TENDERED WOULD NOT BE ACCEPTED?
In addition to those circumstances described in Section 13 of the Issuer
Tender Offer Statement in which the Fund is not required to accept tendered
shares, the Fund has reserved the right to reject any and all tenders determined
by it not to be in appropriate form. Tenders will be rejected if the tender does
not include the original signature(s) or the original of any required signature
guarantee(s).
HOW WILL TENDERED SHARES BE ACCEPTED FOR PAYMENT?
Properly tendered shares, up to the number tendered for, will be accepted
for payment by a determination of the Fund followed by notice of acceptance to
American Stock Transfer and Trust Company which is thereafter to make payment as
directed by the Fund with funds to be deposited with it by the Fund. See Section
2 of the Issuer Tender Offer Statement.
WHAT ACTION NEED I TAKE IF I DECIDE NOT TO TENDER MY SHARES?
None.
DOES MANAGEMENT ENCOURAGE STOCKHOLDERS TO PARTICIPATE IN THE TENDER OFFER, AND
WILL THEY PARTICIPATE IN THE TENDER OFFER?
No. Neither the Fund, its Board of Directors nor the Fund's investment
manager, Morgan Stanley Dean Witter Investment Management Inc., is making any
recommendation to tender or not to tender shares in the tender offer. No
director, officer or affiliate of the Fund intends to tender shares. See Section
6 of the Issuer Tender Offer Statement.
WILL THIS BE MY LAST OPPORTUNITY TO TENDER SHARES TO THE FUND?
Possibly. The Fund has approved a tender offer policy whereby the Fund will
conduct a tender offer during the third quarter of 2001 and during the third
quarter of every year after 2001 if the Fund's shares of common stock have
traded on the New York Stock Exchange at an average discount to net asset value
of greater than 15% at the end of the last trading day in each week during the
12 calendar weeks preceding the third quarter. Each mandatory tender offer will
be conducted for up to 10% of the Fund's outstanding shares of common stock at a
price equal to 95% of net asset value on the last day of the tender period. See
Section 6 of the Issuer Tender Offer Statement.
HOW DO I OBTAIN INFORMATION?
Questions and requests for assistance should be directed to Georgeson
Shareholder Communications Inc., the Information Agent for the tender offer,
toll free at 800-223-2064 or call collect at 212-440-9800. Requests for
additional copies of the Issuer Tender Offer Statement, the Letter of
Transmittal and all other tender offer documents should also be directed to the
Information Agent for the tender offer, toll free at 800-223-2064. If you do not
own shares directly, you should obtain this information and the documents from
your broker, dealer, commercial bank, trust company or other nominee, as
appropriate.
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TO THE STOCKHOLDERS OF COMMON STOCK OF MORGAN STANLEY DEAN WITTER
AFRICA INVESTMENT FUND, INC.
INTRODUCTION
Morgan Stanley Dean Witter Africa Investment Fund, Inc., a Maryland
corporation (the "Fund") registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a closed-end, non-diversified management investment
company, hereby offers to purchase up to 10% of the Fund's outstanding shares of
common stock or 1,333,612 shares in the aggregate (the "Offer Amount"), of its
Common Stock, par value $0.01 per share (the "Shares"), at a price (the
"Purchase Price") per Share, net to the seller in cash, equal to 95% of the net
asset value in U.S. dollars ("NAV") per share as of the close of regular trading
on the New York Stock Exchange ("NYSE") on September 15, 2000, or such later
date to which the Offer is extended, upon the terms and subject to the
conditions set forth in this Issuer Tender Offer Statement and in the related
Letter of Transmittal (which together constitute the "Offer"). The depositary
for the Offer is American Stock Transfer and Trust Company (the "Depositary").
The Fund has mailed materials for the Offer to record holders on or about August
14, 2000.
THIS OFFER IS BEING EXTENDED TO ALL STOCKHOLDERS OF THE FUND AND IS NOT
CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED, BUT IS SUBJECT TO
OTHER CONDITIONS AS OUTLINED HEREIN AND IN THE LETTER OF TRANSMITTAL.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
AND IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MORGAN
STANLEY DEAN WITTER AFRICA INVESTMENT FUND, INC. THE FUND HAS BEEN ADVISED THAT
NO DIRECTOR OR EXECUTIVE OFFICER OF THE FUND OR ANY AFFILIATE OF THE FUND
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
As of August 1, 2000, there were 13,336,121 Shares issued and outstanding,
and the NAV was $10.89 per Share. The Fund does not expect that the number of
shares issued and outstanding will be materially different on the Termination
Date. Stockholders may contact Georgeson Shareholder Communications Inc., the
Fund's Information Agent, toll free at 800-223-2064 or collect at 212-440-9800,
or contact the Fund directly at 800-221-6726 to obtain current NAV quotations
for the Shares.
Any Shares acquired by the Fund pursuant to the Offer will become treasury
shares and will be available for issuance by the Fund without further
Stockholder action (except as required by applicable law). Tendering
Stockholders may be obligated to pay brokerage fees or commissions or, subject
to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares by the Fund; Stockholders may also be subject to other transaction costs,
as described in Section 1.
1. Terms of the Offer; Termination Date. Upon the terms and subject to the
conditions set forth in the Offer, the Fund will accept for payment, and pay
for, up to 10% of the Fund's outstanding Shares validly tendered on or prior to
5:00 p.m., New York City time, on September 15, 2000, or such later date to
which the Offer is extended (the "Termination Date"), and not withdrawn as
permitted by Section 4.
If the number of Shares properly tendered and not withdrawn prior to the
Termination Date is less than or equal to the Offer Amount, the Fund will, upon
the terms and conditions of the Offer, purchase all Shares so tendered. If more
than 1,333,612 Shares are duly tendered pursuant to the Offer (and not withdrawn
as provided in Section 4), unless the Fund determines not to purchase any
Shares, the Fund will purchase Shares from tendering Stockholders, in accordance
with the terms and conditions specified in the Offer, on a pro rata basis
(disregarding fractions), in accordance with the number of Shares duly tendered
by or on behalf of each Stockholder (and not so withdrawn); however, the Fund
will accept all Shares tendered by any Stockholder who owns, beneficially or of
record, an aggregate of not more than 99 Shares and who tenders all such Shares
by means of the Letter of Transmittal tendered by or on behalf of that
Stockholder. If Shares duly tendered by
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or on behalf of a Stockholder include Shares held pursuant to the Fund's
dividend reinvestment and cash purchase plan, the proration will be applied
first with respect to other Shares tendered and only thereafter, if and as
necessary, with respect to Shares held pursuant to that Plan. The Fund does not
contemplate extending the Offer and increasing the number of Shares covered
thereby by reason of more than 1,333,612 Shares having been tendered.
Stockholders should consider the relative costs of tendering Shares at a 5%
discount to NAV pursuant to the Offer or selling Shares at the market price with
the associated transaction costs.
The Fund expressly reserves the right, in its sole discretion, at any time
or from time to time, to extend the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary. Any
such extension will also be publicly announced by press release issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Termination Date. If the Fund makes a material change in
the terms of the Offer or the information concerning the Offer, or if it waives
a material condition of the Offer, the Fund will extend the Offer to the extent
required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). During any extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering Stockholder to withdraw his or her Shares.
Subject to the terms and conditions of the Offer, the Fund will pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of the Offer. Any extension, delay, termination, or
amendment will be followed as promptly as practicable by public announcement
thereof, such announcement, in the case of an extension, to be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Termination Date.
2. Acceptance for Payment and Payment for Shares. Upon the terms and
subject to the conditions of the Offer, the Fund will accept for payment, and
will pay for, Shares validly tendered on or before the Termination Date and not
properly withdrawn in accordance with Section 4 as soon as practicable after the
Termination Date. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (unless such Shares are held in
uncertificated form), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), and any other documents required by the
Letter of Transmittal. The Fund expressly reserves the right, in its sole
discretion, to delay the acceptance for payment of, or payment for, Shares, in
order to comply, in whole or in part, with any applicable law.
For purposes of the Offer, the Fund will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when the Fund gives
oral or written notice to the Depositary of its acceptance for payment of such
Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant
to the Offer will be made by deposit of the aggregate purchase price therefor
with the Depositary, which will act as agent for the tendering Stockholders for
purpose of receiving payments from the Fund and transmitting such payments to
the tendering Stockholders. Under no circumstances will interest on the purchase
price for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or are not paid because of an
invalid tender, or if certificates are submitted for more Shares than are
tendered (i) certificates for such unpurchased Shares will be returned, without
expense to the tendering Stockholder, as soon as practicable following
expiration or termination of the Offer, (ii) Shares delivered pursuant to the
Book-Entry Delivery Procedure (as defined in Section 3 below) will be credited
to the appropriate account maintained within the appropriate Book-Entry Transfer
Facility and (iii) uncertificated Shares held by the Fund's transfer agent
pursuant to the Fund's dividend reinvestment and cash purchase plan will be
returned to the dividend reinvestment and cash purchase plan account maintained
by the transfer agent.
If the Fund is delayed in its acceptance for payment of, or in its payment
for, Shares, or is unable to accept for payment or pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Fund's rights under
this Offer, the Depositary may, on behalf of the Fund, retain tendered Shares,
and such Shares may not be withdrawn unless and except to the extent tendering
Stockholders are entitled to withdrawal rights as described in Section 4.
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The purchase price of the Shares will equal 95% of their NAV (a 5%
discount) as of the close of regular trading or the NYSE on September 15, 2000,
or such later date to which the Offer is extended (the "Pricing Date").
Tendering Stockholders may be obliged to pay brokerage commissions or fees.
Under the circumstances set forth in Instruction 6 of the Letter of Transmittal,
Stockholders may pay transfer taxes on the purchase of Shares by the Fund.
The Fund normally calculates the NAV of its Shares daily at the close of
regular trading on the NYSE. On August 1, 2000, the NAV was $10.89 per Share.
The Shares are listed on the NYSE. On August 1, 2000, the last sales price at
the close of regular trading on the NYSE was $8.00 per Share. The NAV of the
Fund's Shares will be available daily through the Termination Date, through the
Fund's Information Agent toll free at 800-223-2064 or call collect at
212-440-9800 or through the Fund's toll free number at 800-221-6726.
3. Procedure for Tendering Shares. Stockholders having Shares that are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee should contact such firm if they desire to tender their Shares.
For a Stockholder validly to tender Shares pursuant to the Offer, (a)(i) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, and any other
documents required by the Letter of Transmittal, must be transmitted to and
received by the Depositary at one of its addresses set forth on the last page of
this Offer, and (ii) either the certificate for Shares must be transmitted to
and received by the Depositary at one of its addresses set forth on the last
page of this Offer, or the tendering Stockholder must comply with the Book-Entry
Delivery Procedure set forth in this Section 3, or (b) Stockholders must comply
with the Guaranteed Delivery Procedure set forth in this Section 3, in all cases
prior to the Termination Date.
The Fund's transfer agent holds Shares in uncertificated form for certain
Stockholders pursuant to the Fund's dividend reinvestment and cash purchase
plan. Stockholders may tender such uncertificated Shares by completing the
appropriate section of the Letter of Transmittal or Notice of Guaranteed
Delivery.
Signatures on Letters of Transmittal must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc. (the "NASD"), or by a commercial bank or trust company
having an office, branch or agency in the United States (each an "Eligible
Institution") unless (i) the Letter of Transmittal is signed by the registered
holder of the Shares tendered, including those Stockholders who are participants
in a Book-Entry Transfer Facility and whose name appears on a security position
listing as the owner of the Shares, but excluding those registered Stockholders
who have completed either the "Special Payment Instructions" box or the "Special
Delivery Instructions" box on the Letter of Transmittal, or (ii) such Shares are
tendered for the account of an Eligible Institution. In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5 of the Letter of Transmittal for further
information.
To prevent U.S. federal income tax backup withholding on payments made for
the purchase of Shares purchased pursuant to the Offer, a Stockholder who does
not otherwise establish an exemption from such backup withholding must provide
the Depositary with his or her correct taxpayer identification number and
certify that he is not subject to backup withholding by completing the
Substitute Form W-9 included with the Letter of Transmittal. Foreign
Stockholders who have not previously submitted a Form W-8 to the Fund must do so
in order to avoid backup withholding. If the Fund's purchase of Shares were
treated as a dividend rather than an exchange with respect to a tendering
Stockholder, such Stockholder may be subject to backup withholding if the
Internal Revenue Service so advised the Fund, or if such Stockholder failed to
certify that such Stockholder is not subject to backup withholding. See Section
8, "Federal Income Tax Consequences," below.
All questions as to the validity, form, eligibility (including time of
receipt), payment and acceptance for payment of any tender of Shares will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject any and all
tenders of Shares it determines not to be in proper form or the acceptance for
payment of which may, in the opinion of its counsel, be unlawful. The Fund also
reserves the absolute right to waive any of the conditions of the Offer or any
defect or irregularity in the tender of any Shares. No tender of Shares will be
deemed to have been validly made until all defects and irregularities have been
cured or waived. Neither the Fund, Morgan Stanley Dean Witter
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<PAGE> 9
Investment Management Inc., the Fund's investment manager (the "Investment
Manager"), the Information Agent, the Depositary, nor any other person shall be
under any duty to give notification of any defects or irregularities in tenders,
nor shall any of the foregoing incur any liability for failure to give any such
notification. The Fund's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and instructions thereto) will be final and
binding.
Payment for Shares tendered and accepted for payment pursuant to the Offer
will be made, in all cases, only after timely receipt of (i) certificates for
such Shares by the Depositary or book-entry confirmation of delivery of such
Shares to the account of the Depositary, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) for such Shares, and (iii)
any other documents required by the Letter of Transmittal. The tender of Shares
pursuant to any of the procedures described in this Section 3 will constitute an
agreement between the tendering Stockholder and the Fund upon the terms and
subject to the conditions of the Offer.
THE METHOD OF DELIVERY OF ALL REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF EACH TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery Procedure
The Depositary will establish accounts with respect to the Shares at the
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer. Any financial
institution that is a participant in any of the Book-Entry Transfer Facility's
systems may make delivery of tendered Shares by (i) causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account in
accordance with such Book-Entry Transfer Facility's procedure for such transfer
and (ii) causing a confirmation of receipt of such delivery to be received by
the Depositary (the "Book-Entry Delivery Procedure"). The Book-Entry Transfer
Facility may charge the account of such financial institution for tendering
Shares on behalf of Stockholders. Notwithstanding that delivery of Shares may be
properly effected in accordance with this Book-Entry Delivery Procedure, the
Letter of Transmittal (or facsimile thereof), with signature guarantee, if
required, and all other documents required by the Letter of Transmittal must be
transmitted to and received by the Depositary at the appropriate address set
forth on the last page of this Offer before the Termination Date, or the
tendering Stockholder must comply with the Guaranteed Delivery Procedure set
forth below. Delivery of documents to a Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary for purposes of this Offer.
Guaranteed Delivery Procedure
If certificates for Shares are not immediately available or time will not
permit the Letter of Transmittal and other required documents to reach the
Depositary prior to the Termination Date, Shares may be properly tendered
provided that (i) such tenders are made by or through an Eligible Institution
and (ii) the Depositary receives, prior to the Termination Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by the Fund (delivered by hand, mail, telegram or facsimile
transmission) and (iii) the certificates for all tendered Shares, or
confirmation of the delivery of Shares delivered into the Depositary's account
in accordance with such Book-Entry Transfer Facility's procedure for such
transfer, together with a properly completed and duly executed Letter of
Transmittal and any other documents required by the Letter of Transmittal, are
received by the Depositary within three business days after the Termination Date
(the "Guaranteed Delivery Deadline").
4. Rights of Withdrawal. Tenders of Shares made pursuant to the Offer may
be withdrawn at any time prior to the Termination Date (including any date to
which the Offer is extended). After the Termination Date (including any date to
which the Offer is extended), all tenders made pursuant to the Offer are
irrevocable.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the last page of this Offer. Any notice of
9
<PAGE> 10
withdrawal must specify the name of the person who executed the particular
Letter of Transmittal or Notice of Guaranteed Delivery, the number of Shares to
be withdrawn, and the names in which the Shares to be withdrawn are registered.
Any signature on the notice of withdrawal must be guaranteed by an Eligible
Institution. If certificates have been delivered to the Depositary, the name of
the registered holder and the serial numbers of the particular certificates
evidencing the Shares withdrawn must also be furnished to the Depositary. If
Shares have been delivered pursuant to the Book-Entry Delivery Procedure set
forth in Section 3, any notice of withdrawal must specify the name and number of
the account at the appropriate Book-Entry Transfer Facility to be credited with
the withdrawn Shares (which must be the same name, number, and Book-Entry
Transfer Facility from which the Shares were tendered), and must comply with the
procedures of that Book-Entry Transfer Facility.
All questions as to the form and validity, including time of receipt, of
any notice of withdrawal will be determined by the Fund, in its sole discretion,
which determination shall be final and binding. Neither the Fund, the Fund's
Investment Manager, the Information Agent, the Depositary, nor any other person
shall be under any duty to give notification of any defects or irregularities in
any notice of withdrawal, nor shall any of the foregoing incur any liability for
failure to give such notification. Any Shares properly withdrawn will be deemed
not to have been validly tendered for purposes of the Offer. However, withdrawn
Shares may be re-tendered by following the procedures described in Section 3 at
any time prior to the Termination Date.
If the Fund is delayed in its acceptance for payment of Shares, or is
unable to accept for payment Shares tendered pursuant to the Offer, for any
reason, then, without prejudice to the Fund's rights under this Offer, the
Depositary may, on behalf of the Fund, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering Stockholders are
entitled to withdrawal rights as set forth in this Section 4.
5. Source and Amount of Funds; Effect of the Offer. The actual cost to the
Fund cannot be determined at this time because the number of Shares to be
purchased will depend on the number tendered, and the price will be based on the
NAV per Share on the Pricing Date. If the NAV per Share on the Pricing Date were
the same as the NAV per Share on August 1, 2000, and if Stockholders tender 10%
of the Fund's outstanding Shares pursuant to the Offer, the estimated payments
by the Fund to the Stockholders would be approximately $13,802,884. See the Pro
Forma Capitalization table below.
The monies to be used by the Fund to purchase Shares pursuant to the Offer
will be obtained from cash and from sales of securities in the Fund's investment
portfolio.
THE OFFER MAY HAVE CERTAIN ADVERSE CONSEQUENCES FOR TENDERING AND
NON-TENDERING STOCKHOLDERS.
Effect on NAV and Consideration Received by Tendering Stockholders. If the
Fund is required to sell a substantial amount of portfolio securities to raise
cash to finance the Offer, the market prices of the Fund's portfolio securities,
and hence the Fund's NAV, may decline. If such a decline occurs, the Fund cannot
predict what its magnitude might be or whether such a decline would be temporary
or continue to or beyond the Termination Date. Because the price per Share to be
paid in the Offer will be dependent upon the NAV per Share as determined on the
Termination Date, if such a decline continued up to the Termination Date, the
consideration received by tendering Stockholders would be reduced. In addition,
the sale of portfolio securities will cause increased brokerage and related
transaction expenses, and the Fund may receive proceeds from the sale of
portfolio securities less than their valuations by the Fund. Accordingly,
because of the Offer, the Fund's NAV per Share may decline more than it
otherwise might, thereby reducing the amount of proceeds received by tendering
Stockholders and the value per Share for non-tendering Stockholders.
Stockholders should note, however, that the Offer may result in accretion
to the Fund's NAV per share, following the Offer, due to the fact that the
Purchase Price represents a 5% discount to the Fund's NAV per share. The
potential accretion to the Fund's NAV per share may offset in whole or in part
any decline in the Fund's NAV as discussed above.
The Fund will likely sell portfolio securities during the pendency of the
Offer to raise cash for the purchase of Shares. Thus, during the pendency of the
Offer, and possibly for a short time thereafter, the Fund
10
<PAGE> 11
will hold a greater than normal percentage of its net assets in cash and cash
equivalents. The Fund is required by law to pay for tendered Shares it accepts
for payment promptly after the Termination Date of this Offer. Because the Fund
will not know the number of Shares tendered until the Termination Date, the Fund
will not know until the Termination Date the amount of cash required to pay for
such Shares. If on or prior to the Termination Date the Fund does not have, or
believes it is unlikely to have, sufficient cash to pay for all Shares tendered,
it may extend the Offer to allow additional time to sell portfolio securities
and raise sufficient cash.
Recognition of Capital Gains. As noted, the Fund will likely be required
to sell portfolio securities pursuant to the Offer. If the Fund's tax basis for
the securities sold is less than the sale proceeds, the Fund will recognize
capital gains. The Fund would expect to declare any such gains to Stockholders
of record (reduced by net capital losses realized during the fiscal year, if
any, and available capital loss carryforwards) prior to the end of the Fund's
fiscal year on December 31st, and distribute such gains in January of the next
calendar year. This recognition and distribution of gains, if any, would have
two negative consequences: first, Stockholders at the time of a declaration of
distributions would be required to pay taxes on a greater amount of capital gain
distributions than otherwise would be the case; and second, to raise cash to
make the distributions, the Fund might need to sell additional portfolio
securities, thereby possibly being forced to realize and recognize additional
capital gains. It is impossible to predict what the amount of unrealized gains
or losses would be in the Fund's portfolio at the time that the Fund is required
to liquidate portfolio securities (and hence the amount of capital gains or
losses that would be realized and recognized). As of December 31, 1999, there
was unrealized appreciation of $5,496,000 in the Fund's portfolio as a whole,
and as of December 31, 1999, there was $3,166,000 of capital loss carryforwards
that for tax purposes could offset future gains actually realized.
In addition, some of the distributed gains may be realized on securities
held for one year or less, which would generate income taxable to the
Stockholders at ordinary income rates. This could adversely affect the Fund's
after-tax performance.
Tax Consequences of Repurchases to Stockholders. The Fund's purchase of
tendered Shares pursuant to the Offer will have tax consequences for tendering
Stockholders and may have tax consequences for non-tendering Stockholders. See
Section 8, "Federal Income Tax Consequences," below.
Higher Expense Ratio and Less Investment Flexibility. If the Fund
purchases a substantial number of Shares pursuant to the Offer, the net assets
of the Fund would be reduced accordingly. The reduced net assets of the Fund as
a result of the Offer will result in a higher expense ratio for the Fund, and
possibly in less investment flexibility for the Fund, depending on the number of
Shares repurchased.
Pro Forma Effects on Capitalization. The following table sets forth the
net assets of the Fund as of August 1, 2000, adjusted to give effect to the
Offer (excluding expenses and assuming the Fund repurchases 10% of its
outstanding Shares):
PRO FORMA CAPITALIZATION (1)
<TABLE>
<CAPTION>
ADJUSTMENT FOR
AS OF AUGUST 1, PURCHASE AT $10.35 PRO FORMA
2000 PER SHARE(2) AS ADJUSTED
--------------- ------------------ ------------
<S> <C> <C> <C>
Total net assets............................... $145,168,569 $13,802,884 $131,365,684
Shares outstanding............................. 13,336,121 1,333,612 12,002,509
NAV per Share(3)............................... $ 10.89 $ 10.35 $ 10.94
</TABLE>
---------------
(1) This table assumes purchase by the Fund of 1,333,612 Shares, equal to 10% of
the Fund's outstanding Shares.
(2) This amount represents 95% of the Fund's NAV as determined on August 1,
2000. Shares tendered pursuant to the Offer will be purchased at a 5%
discount to NAV on the Pricing Date, which may be more or less than $10.35
per Share, and the pro forma NAV per Share also may be more or less.
11
<PAGE> 12
(3) The NAV per Share of the Fund is normally determined daily on each day that
the NYSE is open, as of the close of regular trading on the NYSE, and is
determined by dividing the total net assets of the Fund by the number of
Shares outstanding.
6. Purpose of the Offer. Since the Fund's inception, the Board of
Directors has consistently recognized that it would be in the best interests of
Stockholders to attempt to reduce or eliminate any discount at which the Fund's
Shares may trade to their NAV. At a meeting held on April 19, 2000, the Board
determined to conduct a tender offer for shares of the Fund's common stock to
attempt to reduce the market discount at which the Fund's Shares were currently
trading. The Board committed the Fund to conduct a tender offer beginning in the
third quarter of 2000 for up to 10% of the Fund's outstanding Shares. The Board
determined to conduct the tender offer at a price equal to 95% of the Fund's NAV
on the termination of the Offer. The Board has determined to effect this Offer
under Rule 13e-4 of the Exchange Act.
Also, the Board approved a tender offer policy whereby the Fund will
conduct a tender offer during the third quarter of 2001 and during the third
quarter of every year after 2001 (each a "Mandatory Tender Offer") if the Fund's
shares of common stock have traded on the NYSE at an average discount to NAV of
greater than 15% at the end of the last trading day in each week during the 12
calendar weeks preceding the third quarter. Each Mandatory Tender Offer will be
conducted for up to 10% of the Fund's outstanding shares of common stock at a
price equal to 95% of NAV on the last day of the tender period (or as otherwise
permitted by the rules of the Securities and Exchange Commission (the
"Commission")).
Any Shares acquired by the Fund pursuant to the Offer will become treasury
Shares and will be available for issuance by the Fund without further
Stockholder action (except as required by applicable law or the rules of
national securities exchanges on which the Shares are listed).
NEITHER THE FUND, NOR ITS BOARD OF DIRECTORS, NOR THE INVESTMENT MANAGER
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ANY OF SUCH STOCKHOLDER'S SHARES AND NONE OF SUCH PERSONS HAS
AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. STOCKHOLDERS ARE URGED TO
EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT
AND TAX ADVISERS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES.
7. NAV And Market Price Range Of Shares; Dividends. The Shares are traded
on the NYSE. During each fiscal quarter of the Fund during the past two fiscal
years, the NAV (as of the last day of such fiscal quarter), and the High, Low
and Close Market Price per Share (as of the last day of such fiscal quarter)
were as follows:
<TABLE>
<CAPTION>
MARKET PRICE NET
-------------------------------- ASSET
FISCAL QUARTER ENDED HIGH LOW CLOSE VALUE
-------------------- -------- -------- -------- ------
<S> <C> <C> <C> <C>
March 31, 1998............................ $14.1875 $11.4375 $14.1875 $17.30
June 30, 1998............................. 14.75 11.6875 11.875 15.67
September 30, 1998........................ 12.875 9.125 9.3125 13.16
December 31, 1998......................... 10.875 8.375 8.375 11.69
March 31, 1999............................ 9.625 8.50 9.375 12.39
June 30, 1999............................. 8.875 7.625 7.9375 12.96
September 30, 1999........................ 10.125 8.875 9.375 12.38
December 31, 1999......................... 10.50 8.9375 10.375 14.51
March 31, 2000............................ 11.8125 9.0625 9.0625 13.29
June 30, 2000............................. 8.875 7.625 7.9375 11.37
</TABLE>
IT IS ANTICIPATED THAT NO CASH DIVIDEND WILL BE DECLARED BY THE BOARD OF
DIRECTORS WITH A RECORD DATE OCCURRING BEFORE THE EXPIRATION OF THE OFFER AND
THAT, ACCORDINGLY, HOLDERS OF SHARES PURCHASED PURSUANT TO THE OFFER WILL NOT
RECEIVE ANY SUCH DIVIDEND WITH RESPECT TO SUCH SHARES. THE AMOUNT AND FREQUENCY
OF DIVIDENDS IN THE FUTURE WILL DEPEND ON CIRCUMSTANCES EXISTING AT THAT TIME.
12
<PAGE> 13
8. Federal Income Tax Consequences of the Offer. The U.S. federal income
tax discussion set forth below is a summary included for general information
purposes only. In view of the individual nature of tax consequences, each
Stockholder is advised to consult its own tax adviser with respect to the
specific tax consequences to it of participation in the Offer, including the
effect and applicability of state, local, foreign, and other tax laws and the
possible effects of changes in federal or other tax laws.
The sale of Shares pursuant to the Offer will be a taxable transaction for
U.S. federal income tax purposes, either as a "sale or exchange," or under
certain circumstances, as a "dividend." Under Section 302(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), a sale of Shares pursuant to the
Offer generally will be treated as a "sale or exchange" if the receipt of cash
by the Stockholder: (a) results in a "complete termination" of the Stockholder's
interest in the Fund, (b) is "substantially disproportionate" with respect to
the Stockholder, or (c) is "not essentially equivalent to a dividend" with
respect to the Stockholder. In determining whether any of these tests has been
met, Shares actually owned, as well as Shares considered to be owned by the
Stockholder by reason of certain constructive ownership rules set forth in
Section 318 of the Code, generally must be taken into account. If any of these
three tests for "sale or exchange" treatment is met, a Stockholder will
recognize gain or loss equal to the difference between the price paid by the
Fund for the Shares purchased in the Offer and the Stockholder's adjusted basis
in such Shares. If such Shares are held as a capital asset, the gain or loss
will be capital gain or loss. The maximum tax rate applicable to net capital
gains recognized by individuals and other non-corporate taxpayers is (i) the
same as the applicable ordinary income rate for capital assets held for one year
or less or (ii) 20% for capital assets held for more than one year.
If the requirements of Section 302(b) of the Code are not met, amounts
received by a Stockholder who sells Shares pursuant to the Offer will be taxable
to the Stockholder as a "dividend" to the extent of such Stockholder's allocable
share of the Fund's current or accumulated earnings and profits. To the extent
that amounts received exceed such Stockholder's allocable share of the Fund's
current and accumulated earnings and profits, such excess will constitute a
non-taxable return of capital (to the extent of the Stockholder's adjusted basis
in the Shares sold pursuant to the Offer) and any amounts in excess of the
Stockholder's adjusted basis will constitute taxable gain. Any remaining
adjusted basis in the Shares tendered to the Fund will be transferred to any
remaining Shares held by such Stockholder. In addition, if a tender of Shares is
treated as a "dividend" to a tendering Stockholder, a constructive dividend
under Section 305(c) of the Code may result to a non-tendering Stockholder whose
proportionate interest in the earnings and assets of the Fund has been increased
by such tender. The Fund believes that the nature of the repurchase will be such
that the sale of Shares pursuant to the Offer will normally satisfy the test for
a sale that is "not essentially equivalent to a dividend" and therefore will
qualify for "sale or exchange" treatment (as opposed to "dividend" treatment).
Foreign Stockholders. Any payments to a tendering Stockholder who is a
nonresident alien individual, a foreign trust or estate or a foreign corporation
that does not hold his, her or its shares in connection with a trade or business
conducted in the United States (a "Foreign Stockholder") that are treated as
dividends for U.S. federal income tax purposes under the rules set forth above,
will be subject to U.S. withholding tax at the rate of 30% (unless a reduced
rate applies under an applicable tax treaty). A tendering Foreign Stockholder
who realizes a capital gain on a tender of Shares will not be subject to U.S.
federal income tax on such gain, unless the Stockholder is an individual who is
physically present in the United States for 183 days or more and certain other
conditions exist. Such persons are advised to consult their own tax adviser.
Special rules may apply in the case of Foreign Stockholders (i) that are engaged
in a U.S. trade or business, (ii) that are former citizens or residents of the
U.S. or (iii) that are "controlled foreign corporations," "foreign personal
holding companies," corporations that accumulate earnings to avoid U.S. federal
income tax, and certain foreign charitable organizations. Such persons are
advised to consult their own tax adviser.
Backup Withholding. The Fund generally will be required to withhold tax at
the rate of 31% ("backup withholding") from any payment to a tendering
Stockholder that is an individual (or certain other non-corporate persons) if
the Stockholder fails to provide to the Fund its correct taxpayer identification
number. If the payment by the Fund to any such Stockholder is treated as a
dividend rather than a "sale or exchange" as described above, backup withholding
also will be required with respect to that payment if the Internal Revenue
Service advises the Fund that the Stockholder is subject to backup withholding
for prior
13
<PAGE> 14
underreporting of reportable interest or dividend payments or if the Stockholder
fails to certify that it is not subject thereto. A foreign Stockholder generally
will be able to avoid backup withholding with respect to payments by the Fund
that are treated as made in exchange for tendered Shares only if it furnishes to
the Fund a duly completed Form W-8, signed under penalty of perjury, stating
that it (1) is neither a citizen nor a resident of the United States, (2) has
not been and reasonably does not expect to be present in the United States for a
period aggregating 183 days or more during the calendar year, and (3) reasonably
expects not to be engaged in a trade or business within the U.S. to which the
gain on sale of the Shares would be effectively connected. Backup withholding is
not an additional tax, and any amounts withheld may be credited against a
Stockholder's U.S. federal income tax liability.
9. Selected Financial Information. Set forth below is a summary of
selected financial information for the Fund as of and for the fiscal years ended
December 31, 1999 and December 31, 1998, and as of and for the six-month period
ended June 30, 2000. The information with respect to the two fiscal years has
been excerpted from the Fund's audited financial statements contained in its
Annual Reports to Stockholders for these years, and the information with respect
to the six-month period has been excerpted from the Fund's unaudited financial
statements contained in its Semi-Annual Report to Stockholders for that period.
These reports have previously been provided to Stockholders of the Fund. Copies
of the two audited statements and the unaudited statement can be obtained for
free, both at the website of the Commission (http://www.sec.gov) and from the
Fund by calling 800-221-6726. The summary of selected financial information set
forth below is qualified in its entirety by reference to such statements and the
financial information, the notes thereto and related matter contained therein.
SUMMARY OF SELECTED FINANCIAL INFORMATION
FOR THE PERIODS INDICATED BELOW
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED YEAR ENDED
ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, 2000 1999 1998
(000) (000) (000)
------------- ------------ ------------
(UNAUDITED) (AUDITED) (AUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
Investment income................................. $ 3,282 $ 7,958 $ 9,887
Expenses.......................................... 1,784 3,164 4,061
----------- ----------- -----------
Net investment income (loss)...................... 1,498 4,794 5,826
----------- ----------- -----------
Net gain (loss) on investments and foreign
currency transactions.......................... (2,991) 367 2,953
----------- ----------- -----------
Change in unrealized appreciation
(depreciation)................................. (43,486) 37,112 (39,777)
----------- ----------- -----------
Net increase (decrease) in net assets from
operations..................................... $ (44,979) $ 42,273 $ (30,998)
----------- ----------- -----------
STATEMENTS OF ASSETS AND LIABILITIES (AT END OF
PERIOD)
Total assets...................................... $ 152,385 $ 205,453 $ 180,282
Total liabilities................................. 643 3,924 12,559
----------- ----------- -----------
Net assets........................................ $ 151,742 $ 201,529 $ 167,723
----------- ----------- -----------
Net asset value per Share......................... $ 11.37 $ 14.51 $ 11.69
Shares outstanding................................ 13,343,121 13,891,121 14,346,421
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED YEAR ENDED
ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, 2000 1999 1998
(000) (000) (000)
------------- ------------ ------------
(UNAUDITED) (AUDITED) (AUDITED)
<S> <C> <C> <C>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD
Net Asset Value, beginning of period................ $ 14.51 $ 11.69 $ 14.45
Income From Investment Operations
Net investment income............................. $ 0.11 $ 0.34 $ 0.40
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions................................... (3.40) 2.68 (2.58)
----------- ----------- -----------
Net increase (decrease) in net asset value from
operations..................................... (3.29) 3.02 (2.18)
----------- ----------- -----------
Dividends and Distributions
Dividends from net investment income........... (0.00)# (0.28) (0.86)
Distributions in excess of net investment
income....................................... -- (0.02) --
Distributions in excess of net realized
gains........................................ -- -- (0.00)#
----------- ----------- -----------
Total dividends and distributions................. (0.00)# (0.30) (0.86)
----------- ----------- -----------
Anti-dilutive effect of share repurchases......... 0.15 0.10 0.28
----------- ----------- -----------
Net asset value, end of period.................... $ 11.37 $ 14.51 $ 11.69
----------- ----------- -----------
Market value, end of period....................... $ 7.94 $ 10.38 $ 8.38
----------- ----------- -----------
RATIOS
Expenses to average net assets.................... 2.02%* 1.78% 1.79%
Net investment income to average net assets....... 1.68%* 2.70% 2.56%
TOTAL INVESTMENT RETURN
Total investment return based on:
Market value...................................... (23.49)% 27.09% (20.62)%
Net asset value................................... (21.58)% 27.34% (11.82)%
</TABLE>
---------------
# -- amount is less than U.S. $0.01 per share
* -- annualized
10. Certain Information Concerning the Fund and the Fund's Investment
Manager. The Fund is a closed-end, non-diversified management investment
company organized as a Maryland corporation. The Shares were first issued to the
public on February 11, 1994. As a closed-end investment company, the Fund
differs from an open-end investment company (i.e., a mutual fund) in that it
does not redeem its Shares at the election of a Stockholder and does not
continuously offer its Shares for sale to the public. The Fund's investment
objective is long-term capital appreciation which it seeks to achieve by
investing primarily in equity securities of African issuers and by investing,
from time to time, in debt securities issued or guaranteed by African
governments or government entities. The principal executive offices and business
address of the Fund are located at 1221 Avenue of the Americas, New York, New
York 10020. The Fund's business telephone number is 212-762-8406.
Morgan Stanley Dean Witter Investment Management Inc. serves as the
investment manager to the Fund. The Investment Manager is a corporation
organized under the laws of Delaware and a registered investment adviser under
the Investment Advisers Act of 1940, as amended. The Investment Manager has
served as investment manager since the Fund's inception. The principal business
address of the Investment Manager is 1221 Avenue of the Americas, New York, New
York 10020.
The Fund is subject to the information and reporting requirements of the
1940 Act and in accordance therewith is obligated to file reports and other
information with the Commission relating to its business, financial condition
and other matters. The Fund has also filed an Issuer Tender Offer Statement on
Schedule TO with the Commission. Such reports and other information should be
available for inspection at the public
15
<PAGE> 16
reference room at the Commission's office 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C., and also should be available for inspection and copying
at the following regional offices of the Commission: Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois; 7 World Trade Center,
New York, New York. The Fund's filings are also available to the public on the
Commission's internet site (http://www.sec.gov). Copies may be obtained, by
mail, upon payment of the Commission's customary charges, by writing to its
principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549.
11. Interest of Directors and Officers; Transactions and Arrangements
Concerning the Shares. The directors and executive officers of the Fund and the
aggregate number and percentage of the Shares each of them beneficially owns is
set forth in the table below. The address of each of them is in care of the Fund
at 1221 Avenue of the Americas, New York, New York 10020.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES SHARES
NAME AND POSITION BENEFICIALLY OWNED BENEFICIALLY OWNED
----------------- ------------------ ------------------
<S> <C> <C>
John D. Barrett III, Director............................... 500 0.0037
Barton M. Biggs, Director and Chairman...................... 102 0.0008
Belinda Brady, Treasurer.................................... 0 0
Stefanie V. Chang, Vice President........................... 0 0
Robin Conkey, Assistant Treasurer........................... 0 0
Gerard E. Jones, Director................................... 0 0
Graham E. Jones, Director................................... 500 0.0037
Arthur J. Lev, Vice President............................... 0 0
John A. Levin, Director..................................... 1,000 0.0075
Andrew McNally IV, Director................................. 0 0
William G. Morton, Jr., Director............................ 1,305 0.0098
Mary E. Mullin, Secretary................................... 0 0
Samuel T. Reeves, Director.................................. 5,835 0.044
Fergus Reid, Director....................................... 1,000 0.0075
Frederick O. Robertshaw, Director........................... 50 0.0004
Harold J. Schaaff, Jr., Director and President.............. 0 0
Joseph P. Stadler, Vice President........................... 0 0
</TABLE>
Except as set forth in this Section 11, neither the Fund nor any subsidiary
of the Fund nor, to the best of the Fund's knowledge, any of the Fund's officers
or directors, or associates of any of the foregoing, has effected any
transaction in Shares during the past 60 business days. On the following dates,
the Investment Manager sold the following amounts of Shares at the prices listed
below: 14,031 Shares at $8.0027 per Share on June 26, 2000; 6,500 Shares at
$8.0625 per Share on June 28, 2000; 12,900 Shares at $8.0625 per Share on June
29, 2000; 8,800 Shares at $8.0625 per Share on June 30, 2000; 18,200 Shares at
$7.875 per Share on July 3, 2000; 52,200 Shares at $7.8075 per Share on July 7,
2000; and 20,800 Shares at $7.8486 per Share on July 10, 2000. Each of the above
sales of Shares by the Investment Manager were effected in open market
transactions.
Except as set forth in this Offer, neither the Fund, nor, to the best of
the Fund's knowledge, any of the Fund's officers or directors, nor any of the
officers or directors of any of its subsidiaries, is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly to the Offer with respect to any securities of the Fund,
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations.
12. Certain Legal Matters; Regulatory Approvals. The Fund is not aware of
any approval or other action by any government or governmental, administrative
or regulatory authority or agency, domestic or foreign, that would be required
for the acquisition or ownership of Shares by the Fund as contemplated herein.
16
<PAGE> 17
Should any such approval or other action be required, the Fund presently
contemplates that such approval or other action will be sought. The Fund is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of, or payment for, Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that the failure to obtain any such approval or other action might
not result in adverse consequences to the Fund's business. The Fund's
obligations under the Offer to accept for payment and pay for Shares are subject
to certain conditions described in Section 13.
13. Certain Conditions of the Offer. Notwithstanding any other provision
of the Offer, the Fund shall not be required to accept for payment or pay for
any Shares, may postpone the acceptance for payment of, or payment for, tendered
Shares, and may, in its reasonable discretion, terminate or amend the Offer as
to any Shares not then paid for if (1) such transactions, if consummated, would
(a) result in delisting of the Fund's Common Stock from the NYSE or (b) impair
the Fund's status as a regulated investment company under the Code (which would
make the Fund subject to U.S. federal income taxes on all of its income and
gains in addition to the taxation of Stockholders who receive distributions from
the Fund); (2) the amount of shares of Common Stock tendered would require
liquidation of such a substantial portion of the Fund's securities that the Fund
would not be able to liquidate portfolio securities in an orderly manner in
light of the existing market conditions and such liquidation would have an
adverse effect on the NAV of the Fund to the detriment of non-tendering
Stockholders; (3) there is any (a) in the Board of Directors' judgment, material
legal action or proceeding instituted or threatened challenging such
transactions or otherwise materially adversely affecting the Fund, (b)
suspension of or limitation on prices for trading securities generally on the
NYSE or other national securities exchange(s), or the NASDAQ National Market
System, (c) declaration of a banking moratorium by federal or state authorities
or any suspension of payment by banks in the United States or New York State,
(d) limitation affecting the Fund or the issuers of its portfolio securities
imposed by federal or state authorities on the extension of credit by lending
institutions, (e) commencement of war, armed hostilities or other international
or national calamity directly or indirectly involving the United States, or (f)
in the Board of Directors' judgment, other event or condition which would have a
material adverse effect on the Fund or its Stockholders if tendered Shares were
purchased; or (4) the Board of Directors determines that effecting any such
transaction would constitute a breach of their fiduciary duty owed to the Fund
or its Stockholders.
The foregoing conditions are for the sole benefit of the Fund and may be
asserted by the Fund regardless of the circumstances (including any action or
inaction by the Fund) giving rise to any such conditions or may be waived by the
Fund in whole or in part at any time and from time to time in its sole
discretion. The failure by the Fund at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Fund concerning the events described in this
Section shall be final and binding on all parties.
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
If the Offer is suspended or postponed, the Fund will provide notice to
Stockholders of such suspension or postponement.
14. Fees and Expenses. The Fund will not pay to any broker or dealer,
commercial bank, trust company or other person any solicitation fee for any
Shares purchased pursuant to the Offer. The Fund will reimburse such persons for
customary handling and mailing expenses incurred in forwarding the Offer. No
such broker, dealer, commercial bank or trust company has been authorized to act
as the agent of the Fund or the Depositary for purposes of the Offer.
The Fund has retained American Stock Transfer and Trust Company to act as
Depositary and Georgeson Shareholder Communications Inc. to act as Information
Agent. The Depositary and the Information Agent will each receive reasonable and
customary compensation for their services and will also be reimbursed for
certain out-of-pocket expenses, and the Information Agent will be indemnified
against certain liabilities by the Fund.
17
<PAGE> 18
15. Miscellaneous. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. The Fund may, in its sole discretion, take
such action as it may deem necessary to make the Offer in any such jurisdiction.
The Fund is not aware of any jurisdiction in which the making of the Offer
or the acceptance of Shares in connection therewith would not be in compliance
with the laws of such jurisdiction. Consequently, the Offer is currently being
made to all holders of Shares. However, the Fund reserves the right to exclude
Stockholders in any jurisdiction in which it is asserted that the Offer cannot
lawfully be made. So long as the Fund makes a good faith effort to comply with
any state law deemed applicable to the Offer, the Fund believes that the
exclusion of Stockholders residing in such jurisdiction is permitted under Rule
13e-4(f)(9) promulgated under the Exchange Act.
16. Contacting the Depositary and the Information Agent. The Letter of
Transmittal, certificates for the Shares and any other required documents should
be sent by each Stockholder of the Fund or his or her broker-dealer, commercial
bank, trust company or other nominee to the Depositary as set forth below.
Facsimile copies of the Letter of Transmittal will be accepted.
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<PAGE> 19
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
Facsimile Copy Number: (718) 234-5001
Confirm by Telephone: (718) 921-8200
For Account Information Call:
Toll Free: (800) 937-5449
or
(718) 921-8200
By First Class Mail, By Overnight Courier, By Hand:
American Stock Transfer and Trust Company
40 Wall Street
46th Floor
New York, NY 10005
Any questions or requests for assistance or additional copies of the Offer,
the Letter of Transmittal, the Notice of Guaranteed Delivery, and other
documents may be directed to the Information Agent at its telephone number and
location listed below. Stockholders may also contact their broker, dealer,
commercial bank or trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 State Street
New York, New York 10004
Toll Free: (800) 223-2064
or
Call Collect: (212) 440-9800
MORGAN STANLEY DEAN WITTER AFRICA INVESTMENT FUND, INC.
August 14, 2000
