<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1998
SECURITIES ACT FILE NO. 33-74266
INVESTMENT COMPANY ACT FILE NO. 8118298
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
------------------------
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
THE NEW SOUTH AFRICA FUND INC.
(Name of Issuer)
THE NEW SOUTH AFRICA FUND INC.
(Name of Person(s) Filing Statement)
SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
------------------------
64880R101
(CUSIP Number of Class of Securities)
ARNOLD WITKIN
PRESIDENT AND CHAIRMAN
THE NEW SOUTH AFRICA FUND INC.
C/O FLEMING INTERNATIONAL ASSET MANAGEMENT LIMITED
25 COPTHALL AVENUE
LONDON EC2R 7DR, ENGLAND
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)
------------------------
With Copies To:
<TABLE>
<S> <C>
NICHOLAS J. SERWER JOHN F. FITZPATRICK
BAKER & MCKENZIE BAKER & MCKENZIE
1 TEMASEK AVENUE 805 THIRD AVENUE, NEW YORK,
#27-01 MILLENIA TOWER NEW YORK 10022, U.S.A.
SINGAPORE 039192
</TABLE>
------------------------
JULY 1, 1998
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------
Transaction Valuation: $6,839,206.92(1) Amount of Filing Fee: $1,367.84(2)
- -----------------------------------------------------------------------------------------------------
</TABLE>
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously paid: Filing party:
-------------------------- -----------------
Form or Registration No.: Date filed:
-------------------------- -----------------
- ------------
(1) Calculated as the aggregate estimated maximum purchase price to be paid for
449,652 shares in the Offer, based upon the net asset value per share of
$15.21 at June 26, 1998.
(2) Calculated at 1/50th of 1% of the Transaction Valuation.
================================================================================
<PAGE> 2
ITEM 1 SECURITY AND ISSUER
(a) The name of the issuer is The New South Africa Fund Inc. (the "Fund"),
a non-diversified, closed-end management investment company registered
under the Investment Company Act of 1940 (the "1940 Act"). The
principal executive office of the Fund is c/o Custodial Trust Company,
101 Carnegie Center, Princeton, New Jersey 08540.
(b) The Fund is seeking tenders for 449,652 (approximately 10%) of its
issued and outstanding shares of common stock, par value $0.001 per
share (the "Shares") for cash at a price equal to their net asset value
("NAV") determined as of the close of the regular trading session of
the New York Stock Exchange ("NYSE") on the closing date of the Offer,
which is July 29, 1998, unless the Offer is extended, subject to the
terms and conditions set forth in the Offer to Purchase, dated July 1,
1998, and the related Letter of Transmittal (which together constitute
the "Offer"). The Offer expires at 12:00 midnight, New York City time,
on July 29, 1998, unless extended (the "Expiration Date"). If the Offer
is extended beyond July 29, 1998, the purchase price for the Shares
will be equal to their NAV determined as of the close of the regular
trading session of the NYSE on the Expiration Date, as extended. Copies
of the Offer to Purchase and the Letter of Transmittal are filed as
Exhibits (a)(1)(ii) and (a)(2)(i) to this statement, respectively.
As of the date hereof, there were 4,496,521 Shares issued and
outstanding.
To the Fund's knowledge, no officer, director or affiliate of the Fund
intends to tender Shares pursuant to this Offer except that Arthur
Levy, a Director of the Fund, has advised that he intends to tender all
5,000 Shares beneficially owned by him. Reference is hereby made to the
Cover Page and Section 1--"Price; Number of Shares" and Section
9--"Interest of Certain Related Persons" of the Offer to Purchase,
which are incorporated herein by reference.
(c) The principal market in which the Shares are traded is the NYSE.
Reference is made to Section 7--"Price Range of Shares; Dividends" of
the Offer to Purchase, which is incorporated herein by reference.
(d) Not applicable.
ITEM 2 SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) Reference is made to Section 12--"Source and Amount of Funds" of the
Offer to Purchase, which is incorporated herein by reference.
ITEM 3 PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE
Reference is hereby made to Section 6--"Purpose of the Offer; Plans or
Proposals of the Fund". Section 7--"Price Range of Shares; Dividends", Section
10--"Certain Effects of the Offer" and Section 12--"Source and Amount of Funds"
of the Offer to Purchase, which are incorporated herein by reference.
ITEM 4 INTEREST IN SECURITIES OF THE ISSUER
To the Fund's knowledge, except through the automatic reinvestment of the
dividends under the Fund's Dividend Reinvestment Plan, there have not been any
transactions in Shares of the Fund that were effected during the past 40
business days by the Fund, any member of the Board or executive officer of the
Fund, any person controlling the Fund, any executive officer or director of any
corporation ultimately in control of the Fund or by any associate or subsidiary
of the foregoing, including any officer or director of any such subsidiary. To
the Fund's knowledge, no officer, director or affiliate of the Fund intends to
tender Shares pursuant to the Offer except that Arthur Levy, a Director of the
Fund, has advised that he intends to tender all 5,000 Shares beneficially owned
by him.
2
<PAGE> 3
ITEM 5 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES
Reference is hereby made to Section 2--"Procedure for Tendering Shares",
Section 4--"Payment for Shares" and Section 6--"Purpose of the Offer; Plans or
Proposals of the Fund" of the Offer to Purchase, which are incorporated herein
by reference.
Except as set forth in these Sections, the Fund does not know of any
contract, arrangement, understanding or relationship relating, directly or
indirectly, to the Offer between (a) the Fund, any executive officer or director
of the Fund, or any person controlling the Fund or any executive officer or
director of any corporation ultimately in control of the Fund, and (b) any other
person, 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).
ITEM 6 PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Fund has entered into a Depositary Agreement, dated as of June 30,
1998, with PNC Bank, N.A. (the "Depositary") to provide certain depositary
services in connection with the Offer. For its services, the Depositary will
receive a fee of $15,000 and will also be reimbursed for certain out-of-pocket
expenses and indemnified against certain liabilities. The Depositary Agreement
is filed as Exhibit (c)(1) to this Statement and is incorporated herein by
reference.
The Fund has entered into an agreement, dated as of June 26, 1998, with
MacKenzie Partners, Inc. (the "Information Agent") to provide customary services
to the Fund in connection with the Offer including distribution of the Offer
materials to stockholders and providing information to the stockholders from
such materials. For its services, the Information Agent will receive a fee of
$4,500 and will also be reimbursed for certain out-of-pocket expenses and
indemnified against certain liabilities. The agreement with the Information
Agent is filed as Exhibit (c)(2) to this Statement and is incorporated herein by
reference.
No other persons have been employed, retained or are to be compensated by
the Fund to make solicitations or recommendations in connection with the Offer
to Purchase.
ITEM 7 FINANCIAL INFORMATION
(a)(1) The Fund's unaudited financial statements for the three month period
ended May 31, 1998 and audited financial statements for the fiscal
years ended February 28, 1998 and February 28, 1997 (the "Financial
Statements") are included as part of Exhibit (a)(1)(ii) attached
hereto, which is incorporated herein by reference in its entirety.
(a)(2) The Fund is not required to file quarterly reports under the Securities
Exchange Act of 1934, as amended.
(a)(3) Selected financial information for the Fund for the three month period
ended May 31, 1998, for the fiscal years ended February 28, 1998, 1997
and 1996 and for the period March 11, 1994 (commencement of operations)
through February 28, 1995 is set forth in Section 8--"Selected
Financial Information" of the Offer to Purchase, which is incorporated
herein by reference in its entirety.
Certain ratios applicable to the Fund for the period March 1, 1996 to May 31,
1998 are contained in the Financial Statements.
(a)(4) The Fund's NAV per Share as of February 28, 1998 and as of May 31, 1998
is set forth in Section 7--"Price Range of Shares; Dividends" and Section
8--"Selected Financial Information" of the Offer to Purchase, which are
incorporated herein by reference. Such information is also set forth in the
Audited Financial Statements and the Unaudited Financial Statements,
respectively.
3
<PAGE> 4
ITEM 8 ADDITIONAL INFORMATION
(a) to (d) Not applicable
(e) The Offer to Purchase, which is filed as Exhibit (a)(1)(ii), is
incorporated herein by reference in its entirety.
ITEM 9 MATERIAL TO BE FILED AS EXHIBITS
(a)(1)(i) Advertisement printed in The New York Times.
(a)(1)(ii) Offer to Purchase.
(a)(2)(i) Form of Letter of Transmittal.
(a)(2)(ii) Form of Notice of Guaranteed Delivery.
(a)(2)(iii) Guidelines for Certification of Taxpayer Identification Number.
(a)(2)(iv) Form W-8
(a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and other Nominees.
(a)(3)(ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(a)(3)(iii) Form of Letter to Stockholders who have requested information.
(a)(4) Text of Press Release, dated June 30, 1998.
(b) Not applicable.
(c)(1) Depositary Agreement, dated as of June 30, 1998, between the Fund and
PNC Bank, N.A.
(c)(2) Agreement, dated as of June 26, 1998, between the Fund and MacKenzie
Partners, Inc., as the Information Agent.
(d)-(f) Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
The New South Africa Fund Inc.
By: /s/ ARNOLD WITKIN
------------------------------
Name: Arnold Witkin
Title: President and Chairman
Date: July 1, 1998
4
<PAGE> 5
EXHIBIT INDEX
The following exhibits are filed as part of this Issuer Tender Offer
Statement.
(a)(1)(i) Advertisement printed in The New York Times.
(a)(1)(ii) Offer to Purchase.
(a)(2)(i) Form of Letter of Transmittal.
(a)(2)(ii) Form of Notice of Guaranteed Delivery.
(a)(2)(iii) Guidelines for Certification of Taxpayer Identification Number.
(a)(2)(iv) Form W-8.
(a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and other Nominees.
(a)(3)(ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(a)(3)(iii) Form of Letter to Stockholders who have requested information.
(a)(4) Text of Press Release, dated June 30, 1998.
(b) Not applicable.
(c)(1) Depositary Agreement, dated as of June 30, between the Fund and PNC
Bank, N.A.
(c)(2) Agreement dated as of June 26, 1998, between the Fund and MacKenzie
Partners, Inc. as the Information Agent.
(d)-(f) Not applicable.
5
<PAGE> 1
This announcement is not an offer to
purchase or a solicitation of an offer to
sell Shares. The Offer is made only by the
Offer to Purchase, dated July 1, 1998, and
the related Letter of Transmittal.
THE NEW SOUTH AFRICA FUND INC.
NOTICE OF OFFER TO PURCHASE FOR CASH
449,652 ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS
12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998, UNLESS
EXTENDED.
The New South Africa Fund Inc. (the "Fund") is offering to purchase 449,652
(approximately 10%) of its outstanding common stock, par value $0.001 per share
(the "Shares"), for cash at a price equal to their net asset value ("NAV")
determined as of the close of the regular trading session of the New York Stock
Exchange (the "NYSE") on July 29, 1998 unless the Offer is extended upon the
terms and conditions set forth in the Offer to Purchase, dated July 29, 1998,
and the related Letter of Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended beyond July
29, 1998, the purchase price for the Shares will be equal to their NAV
determined as of the close of the regular trading session of the NYSE on the
Expiration Date, as extended. The NAV per Share of the Fund on June 26, 1998 was
$15.21.
The price for the Fund's shares on the NYSE has often been at a discount to
their NAV. The Fund is making the Offer as part of a series of actions initiated
by the Fund's Board of Directors (the "Board") intended to reduce the size and
persistence of the discount. In addition to the Offer, these other actions
include (i) considering the implementation of a share repurchase program or a
further self-tender offer for a number of Shares to be determined so as to seek
to cause the discount to NAV to narrow to and remain at a level considered to be
acceptable by the Board if, following the Expiration Date, the discount to NAV
of the market price for the Fund's Shares reaches and persists at a level judged
by the Board to be unacceptably high, and (ii) calling a special meeting of
stockholders of the Fund on or about September 28, 1998 at which the Board
expects to ask stockholders to vote to adopt a new fundamental policy enabling
the Fund to conduct further tender offers. The Board also expects to ask
stockholders to vote to adopt a new fundamental policy authorizing the Board to
consider taking other actions the Board deems advisable should the Board come to
the view that continuing to operate the Fund as a closed-end management
investment company is no longer economically feasible or in the best interests
of all stockholders.
THIS ADVERTISEMENT DOES NOT CONSTITUTE A SOLICITATION OF ANY PROXIES IN
CONNECTION WITH THE SPECIAL STOCKHOLDERS MEETING TO BE HELD ON OR ABOUT
SEPTEMBER 28, 1998 OR OTHERWISE. ANY SUCH SOLICITATION WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION
14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
The Offer is being made to all stockholders of the Fund and is not
conditioned upon the tender of any minimum number of the Fund's outstanding
Shares. However, a stockholder wishing to accept the Offer must tender, or cause
the tender of, all Shares actually owned or constructively owned by the
stockholder, pursuant to Section 318 of the Internal Revenue Code of 1986, as
amended, as of the date of purchase of Shares pursuant to the Offer.
Stockholders should consult their tax advisers as to the application of the
constructive ownership rules of Section 318. A tender of all Shares actually and
constructively owned is necessary to avoid the risk of adverse tax consequences
to non-tendering stockholders. If more than 449,652 Shares are duly
<PAGE> 2
tendered prior to the expiration of the Offer (as extended), the Fund will
purchase Shares from tendering stockholders, in accordance with the terms and
conditions specified in this Offer to Purchase, pro rata in accordance with the
number of Shares tendered by each stockholder during the period the Offer
remains open, unless the Fund determines not to purchase any Shares.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 midnight, New York City time, on July 29, 1998, and, if not yet accepted
for payment by the Fund, Shares may also be withdrawn at any time after 12:00
midnight, New York City time, on August 26, 1998. The information required to be
disclosed by paragraph (d)(1) of Rule 13e-4 under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference. The Offer to Purchase and the related Letter of Transmittal
contain important information that should be read carefully before any decision
is made with respect to the Offer.
Questions and requests for assistance or for copies of the Offer to
Purchase, Letter of Transmittal and any other tender offer document, may be
directed to MacKenzie Partners, Inc. (the "Information Agent") at the address
and telephone number below. Copies will be furnished promptly at no expense to
you. Stockholders who do not own Shares directly may tender their Shares through
their broker, dealer, or nominee. Requests for current net asset value
quotations should be directed to MacKenzie Partners, Inc., toll-free at
1-800-322-2885.
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Telephone: 1-800-322-2885
Date: July 1, 1998
2
<PAGE> 1
THE NEW SOUTH AFRICA FUND INC.
OFFER TO PURCHASE FOR CASH 449,652
ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS
12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998, UNLESS EXTENDED.
To the Stockholders of
THE NEW SOUTH AFRICA FUND INC.:
The New South Africa Fund Inc. (the "Fund"), a non-diversified, closed-end
management investment company, is offering to purchase 449,652 (approximately
10%) of its issued and outstanding common stock, par value $0.001 per share (the
"Shares"), for cash at a price equal to their net asset value ("NAV") determined
as of the close of the regular trading session of the New York Stock Exchange
(the "NYSE") on July 29, 1998, unless the Offer is extended. This Offer is
subject to the terms and conditions set forth in this Offer to Purchase, dated
July 1, 1998, and the related Letter of Transmittal (which together constitute
the "Offer"). THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY
29, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended
beyond July 29, 1998, the purchase price for the Shares will be equal to their
NAV determined as of the close of the regular trading session of the NYSE on the
Expiration date, as extended.
The Shares are currently traded on the NYSE under the symbol "NSA". You can
obtain current NAV quotations during the pendency of the Offer by calling
MacKenzie Partners, Inc. (the "Information Agent"), toll-free at 1-800-322-2885,
between the hours of 9:00 a.m. and 5:00 p.m., New York City time, Monday-Friday
(except holidays).
The price for the Fund's shares on the NYSE has often been at a discount to
their NAV. The Fund is making the Offer as part of a series of actions initiated
by the Fund's Board of Directors (the "Board") intended to reduce the size and
persistence of the discount.
In addition to the Offer, these other actions include (i) considering the
implementation of a share repurchase program or a further self-tender offer for
a number of Shares to be determined so as to seek to cause the discount to NAV
to narrow to and remain at a level considered to be acceptable by the Board if,
following the Expiration Date, the discount to NAV of the market price for the
Fund's Shares reaches and persists at a level judged by the Board to be
unacceptably high, and (ii) calling a special meeting of stockholders of the
Fund on or about September 28, 1998, at which the Board expects to ask
stockholders to vote to adopt a new fundamental policy enabling the Fund to
conduct further tender offers. The Board also expects to ask stockholders to
vote to adopt a new fundamental policy authorizing the Board to consider taking
other actions the Board deems advisable should the Board come to the view that
continuing to operate the Fund as a closed-end management investment company is
no longer economically feasible or in the best interests of all stockholders.
The Board believes that the Offer and the other actions it has taken or
plans to take are in the best interests of all stockholders of the Fund.
------------------------
The date of this Offer to Purchase is July 1, 1998
<PAGE> 2
THE OFFER AND THIS OFFER TO PURCHASE DO NOT CONSTITUTE A SOLICITATION OF
ANY PROXIES IN CONNECTION WITH THE SPECIAL STOCKHOLDERS MEETING TO BE HELD ON OR
ABOUT SEPTEMBER 28, 1998 OR OTHERWISE. ANY SUCH SOLICITATION WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION
14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
The Offer is being made to all stockholders of the Fund and is not
conditioned upon the tender of any minimum number of the Fund's outstanding
Shares. However, a stockholder wishing to accept the Offer must tender, or cause
the tender of, all Shares actually owned or constructively owned by the
stockholder, pursuant to Section 318 of the Internal Revenue Code of 1986, as
amended (the "Code"), as of the date of purchase of Shares pursuant to the
Offer. Stockholders should consult their tax advisers as to the application of
the constructive ownership rules of Section 318. A tender of all Shares actually
and constructively owned is necessary to avoid the risk of adverse tax
consequences to non-tendering stockholders. If more than 449,652 Shares are duly
tendered prior to the expiration of the Offer (as extended), the Fund will
purchase Shares from tendering stockholders, in accordance with the terms and
conditions specified in this Offer to Purchase, pro rata in accordance with the
number of Shares tendered by each stockholder during the period the Offer
remains open, unless the Fund determines not to purchase any Shares.
To prevent federal income tax backup withholding equal to 31% of the gross
payments made pursuant to this Offer: (i) each U.S. stockholder must have
submitted to PNC Bank, N.A. (the "Depositary") a correct, completed, and signed
Form W-9 or Substitute Form W-9, or other confirmation of an exemption from
backup withholding requirements; and (ii) each non-U.S. stockholder must have
submitted to the Depositary a correct, completed, and signed Form W-8. The
Letter of Transmittal contains a Substitute Form W-9 or a Form W-8, as
necessary.
THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 5.
IMPORTANT
If you desire to tender your Shares, you should either: (i) complete and
sign the Letter of Transmittal (or a photocopy thereof bearing original
signature(s) and any required signature guarantees) and mail or deliver it along
with such Shares (in proper certificated or uncertificated form), and any other
documents required by the Letter of Transmittal; or (ii) request your broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for you. If your Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee, you must contact such
firm if you desire to tender your Shares. Stockholders are not required to pay a
service charge to the Fund or the Depositary in connection with their tender of
Shares, but may be charged a fee by a broker, dealer or other institution for
processing the tender requested. The Fund reserves the absolute right to reject
tenders determined not to be in appropriate form.
If you do not wish to tender your Shares, you need not take any action.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES.
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 THEIR SHARES.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
FUND OR FLEMING INTERNATIONAL ASSET MANAGEMENT LIMITED, THE INVESTMENT ADVISER
OF THE FUND, AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. ANY SUCH RECOMMENDATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND OR THE INVESTMENT ADVISER.
(ii)
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND OR THE INVESTMENT ADVISER.
Questions and requests for assistance may be directed to the Information
Agent at the address and at the toll-free telephone number set forth below.
Requests for additional copies of this Offer to Purchase and the Letter of
Transmittal may also be directed to the Information Agent. Stockholders who do
not own Shares directly may also obtain such information and copies from their
broker, dealer, commercial bank, trust company or other nominee and, if they
decide to tender, are required to tender their Shares through that firm.
July 1, 1998
THE NEW SOUTH AFRICA FUND INC.
c/o Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
Tel: 1-800-322-2885
The Depositary for the Offer is:
PNC BANK, N.A.
<TABLE>
<S> <C>
By Mail/Overnight Courier: By Hand:
400 Bellevue Parkway The Depository Trust Company
Wilmington, DE 19809 Transfer Agent Drop Service Department
Attn: Closed-End Fund Department ("TADS")
The New South Africa Fund Inc. 55 Water Street; South Street Entrance
Ground Floor
New York, New York 10041
Attn: Ken Batchelor
</TABLE>
Facsimile Transmission:
302-791-1008
(iii)
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1. Price; Number of Shares..................................... 1
2. Procedure for Tendering Shares.............................. 1
A. Proper Tender of Shares................................. 1
B. Signature Guarantees and Method of Delivery............. 2
C. Dividend Reinvestment Plan.............................. 3
D. Book-Entry Delivery..................................... 3
E. Guaranteed Delivery..................................... 3
F. Determination of Validity............................... 4
G. Federal Income Tax Withholding.......................... 4
3. Withdrawal Rights........................................... 4
4. Payment for Shares.......................................... 5
5. Certain Conditions of the Offer............................. 5
6. Purpose of the Offer; Plans or Proposals of the Fund........ 6
7. Price Range of Shares; Dividends............................ 7
8. Selected Financial Information.............................. 7
9. Interest of Certain Related Persons......................... 9
10. Certain Effects of the Offer................................ 9
11. Certain Information about the Fund.......................... 9
12. Source and Amount of Funds.................................. 10
13. Additional Information...................................... 10
14. Certain U.S. Federal Income Tax Consequences................ 11
15. Extension of Tender Period; Termination; Amendments......... 12
16. Fees And Expenses........................................... 12
17. Miscellaneous............................................... 12
</TABLE>
EXHIBIT A: Unaudited Financial Statements For The Three Month Period Ended
May 31, 1998 and Audited Financial Statements For The Fiscal Years Ended
February 28, 1998 and February 28, 1997.
(iv)
<PAGE> 5
1. Price; Number Of Shares. The Fund will accept for payment up to 449,652
of its issued and outstanding Shares subject to the terms and conditions set
forth in the Offer. The purchase price of the Shares will be their NAV as of the
close of regular trading on the NYSE on July 29, 1998, subject to the terms and
conditions of the Offer. THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JULY 29, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is
extended beyond July 29, 1998, the purchase price for the Shares will be equal
to their NAV determined as of the close of the regular trading session of the
NYSE on the Expiration Date, as extended.
The Fund reserves the right to extend, terminate or amend the Offer. See
Sections 5 and 15. The Fund will not be obligated to purchase Shares pursuant to
the Offer under certain circumstances. See Section 5. Holders of Shares may
tender Shares to the Depositary or withdraw Shares previously tendered. See
Sections 2 and 3. The Fund will not pay interest on the purchase price under any
circumstances.
The NAV on June 26, 1998 was $15.21 per Share. During the pendency of the
Offer, you may obtain current NAV quotations for the Fund as of the close of
business on the previous business day by calling the Fund's Information Agent,
MacKenzie Partners, Inc., toll-free at 1-800-322-2885 between the hours of 9:00
a.m. and 5:00 p.m., New York City time, Monday-Friday (except holidays).
The Offer is being made to all stockholders of the Fund and is not
conditioned upon the tender of any minimum number of the Fund's outstanding
Shares. A stockholder wishing to accept the Offer must tender or cause the
tender of all of the Shares actually owned or constructively owned by the
stockholder, pursuant to Section 318 of the Code, as of the date of purchase of
Shares pursuant to the Offer. Stockholders should consult their tax advisers as
to the application of the constructive ownership rules of Section 318. A tender
of all Shares actually and constructively owned is necessary to avoid the risk
of adverse tax consequences to non-tendering stockholders. If more than 449,652
Shares are duly tendered prior to the expiration of the Offer, the Fund will
purchase Shares from tendering stockholders, in accordance with the terms and
conditions specified in this Offer to Purchase, pro rata in accordance with the
number of Shares tendered by each stockholder during the period the Offer
remains open, unless the Fund determines not to purchase any Shares.
As of June 26, 1998, there were 4,496,521 Shares issued and outstanding and
there were approximately 56 holders of record of Shares. Certain of these
holders of record were nominees for brokers, dealers, commercial banks, trust
companies and other institutions that held Shares on behalf of multiple
beneficial owners. The Fund has been informed that no officer, director or
affiliate of the Fund intends to tender Shares pursuant to the Offer except that
Arthur Levy, a Director of the Fund, has advised that he intends to tender all
5,000 Shares beneficially owned by him.
2. Procedure For Tendering Shares.
A. Proper Tender Of Shares. For Shares to be properly tendered pursuant to
the Offer, a properly completed and duly executed Letter of Transmittal (or a
photocopy or facsimile thereof bearing original signature(s) and any required
signature guarantees), all Shares owned or constructively owned by the tendering
stockholder pursuant to Section 318 of the Code (in proper certificated or
uncertificated form), and any other documents required by the Letter of
Transmittal must be received by the Depositary at the appropriate address set
forth on page (iii) of this Offer to Purchase on or prior to the Expiration
Date. Letters of Transmittal and certificates representing tendered Shares
should NOT be sent or delivered to the Fund. Stockholders who desire to tender
Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee should contact such firm to effect a tender on their
behalf.
Section 14(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14e-4 promulgated thereunder make it unlawful for any
person, acting alone or in concert with others, to tender Shares in a partial
tender offer for such person's own account unless at the time of tender, and at
the time the Shares are accepted for payment, the person tendering has a net
long position equal to or greater than the amount tendered in (i) Shares, and
will deliver or cause to be delivered such Shares for the purpose of tender to
the person making the Offer within the period specified in the Offer, or (ii) an
equivalent security and, upon acceptance of his or her tender, will acquire
Shares by conversion, exchange, or exercise of such equivalent security to the
extent required by the terms of the Offer, and will deliver or cause to be
delivered
1
<PAGE> 6
the Shares so acquired for the purpose of tender to the Fund prior to or on the
Expiration Date. Section 14(e) and Rule 14e-4 provide a similar restriction
applicable to the tender or guarantee of a tender on behalf of another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering stockholder and the Fund upon the terms and
subject to the conditions of the Offer, including the tendering stockholder's
representation that (i) such stockholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act and (ii) the tender of such Shares complies with Rule 14e-4.
B. Signature Guarantees And Method Of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is signed
by the registered holder(s) (which term, for purposes of this document, shall
include any participant in The Depository Trust Company ("DTC") book-entry
transfer facility whose name appears on DTC's security position listing as the
owner of Shares) of Shares tendered herewith, unless such holder(s) has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" in the Letter of Transmittal, or (ii)
if such Shares are tendered for the account of a firm (an "Eligible
Institution") which is a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of a Stock Transfer
Association approved medallion program (such as STAMP, SEMP or MSP). 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.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered thereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered thereby are owned of record by two or more
joint owners, all such owners must sign the Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If the Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Fund of their authority so to act must be submitted.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted thereby, no endorsements of certificates or separate stock
powers are required unless payment is to be made to or certificates for Shares
not purchased are to be issued in the name of a person other than the registered
holder(s). Signatures on such certificates or stock powers must be guaranteed by
an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appears on the certificate(s)
for such Shares. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Stockholders have the responsibility to cause their Shares (in proper
certificated or uncertificated form), the Letter of Transmittal (or a photocopy
or facsimile thereof bearing original signature(s) and any required signature
guarantees), and any other documents required by the Letter of Transmittal to be
timely delivered. Timely delivery is a condition precedent to acceptance of
Shares for purchase pursuant to the Offer and to payment of the purchase amount.
2
<PAGE> 7
C. Dividend Reinvestment Plan. PNC Bank, N.A., the Fund's transfer agent,
holds Shares in uncertificated form for certain stockholders pursuant to the
Fund's Dividend Reinvestment Plan. Stockholders wishing to accept the Offer must
tender all such uncertificated Shares. Stockholders may tender such
uncertificated Shares by completing the Letter of Transmittal.
D. Book-entry Delivery. The Depositary will establish an account with
respect to the Shares at DTC for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in the DTC system may make book-entry delivery of Shares by causing
DTC to transfer such Shares into the Depositary's account at DTC in accordance
with DTC's transfer procedures. However, although delivery of Shares may be
effected through book-entry transfer at DTC, a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and any other documents required by the Letter of
Transmittal, must in any case be received by the Depositary at the address set
forth on page (iii) of this Offer to Purchase on or prior to the Expiration
Date, or the tendering stockholder must comply with the guaranteed delivery
procedures described below.
The term "Agent's Message" means a message from DTC transmitted to, and
received by, the Depositary forming a part of a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation"), which states that (i) DTC has
received an express acknowledgment from the DTC participant tendering the Shares
that are the subject of the Book-Entry Confirmation, (ii) the DTC participant
has received and agrees to be bound by the terms of the Letter of Transmittal,
and (iii) the Fund may enforce such agreement against the DTC participant.
Delivery of documents to DTC in accordance with DTC's procedures does not
constitute delivery to the Depositary.
E. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant
to the Offer and such stockholder's Share certificates are not immediately
available, time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or a stockholder cannot complete the
procedures for delivery by book-entry transfer on a timely basis, then such
stockholder's Shares may nevertheless be tendered, provided that all of the
following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Fund herewith, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Share certificates evidencing all Shares, in proper form for
transfer, or a Book-Entry Confirmation, together with the Letter of
Transmittal (or a facsimile thereof) properly completed and duly executed
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required by the
Letter of Transmittal, are received by the Depositary within five NYSE
trading days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the stockholder
owns the Shares tendered within the meaning of, and that the tender of the
Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in the Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share certificates evidencing such Shares or a
Book-Entry Confirmation of the delivery of such Shares (if available), (ii)
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) or, in the case of a book-entry transfer, an Agent's Message, and (iii)
any other documents required by the Letter of Transmittal. Accordingly, payment
may not be made to all tendering stockholders at the same time and will depend
upon
3
<PAGE> 8
when Share certificates are received by the Depositary or Book-Entry
Confirmations of tendered Shares are received in the Depositary's account at
DTC.
F. Determination Of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders 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 or all
tenders determined not to be in appropriate form or to refuse to accept for
payment, purchase or pay for any Shares if, in the opinion of the Fund's
counsel, accepting, purchasing or paying for such Shares would be unlawful. The
Fund also reserves the absolute right to waive any of the conditions of the
Offer or any defect in any tender, whether generally or with respect to any
particular Share(s) or stockholder(s). The Fund's interpretations of the terms
and conditions of the Offer shall be final and binding.
NONE OF THE FUND, THE INVESTMENT ADVISER TO THE FUND, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE
OF DEFECTS OR IRREGULARITIES IN TENDERS, AND NONE OF THEM WILL INCUR ANY
LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
G. Federal Income Tax Withholding. To prevent federal income tax backup
withholding equal to 31% of the gross payments made pursuant to the Offer, each
U.S. stockholder who has not previously submitted a correct, completed and
signed Form W-9 to the Fund or does not otherwise establish an exemption from
such withholding must notify the Depositary of such stockholder's correct
taxpayer identification number (or certify that such taxpayer is awaiting a
taxpayer identification number) and provide certain other information by
completing the Substitute Form W-9 included in the Letter of Transmittal.
Non-U.S. stockholders who are individuals and who have not previously
submitted a correct, completed and signed Form W-8 to the Fund must submit such
a form to the Depositary in order to avoid backup withholding. For such
stockholders, a copy of Form W-8 is included with the Letter of Transmittal.
For a discussion of certain other U.S. federal income tax consequences to
tendering stockholders, see Section 14.
3. Withdrawal Rights. Except as otherwise provided in this Section 3,
tenders of Shares made pursuant to the Offer will be irrevocable. At any time
during the pendency of the Offer on or prior to the Expiration Date, and, if the
Shares have not yet been accepted for payment by the Fund, at any time after
12:00 midnight, New York City time, on August 26, 1998, stockholders may
withdraw all, but not less than all, of the Shares that they have tendered.
To be effective, a written or telegraphic notice of withdrawal must be
timely received by the Depositary at the appropriate address set forth on page
(iii) of this Offer to Purchase. Stockholders may also send a facsimile
transmission notice of withdrawal, which must be timely received by PNC Bank,
N.A., the Depositary, at 302-791-1008, and the original notice of withdrawal
must be delivered to the Depositary by overnight courier or by hand the next
day.
Any notice of withdrawal must specify the name of the person having
tendered the Shares to be withdrawn, and, if certificates representing such
Shares have been delivered or otherwise identified to the Depositary, the name
of the registered owner(s) of such Shares as set forth in such certificates if
different from the name of the person tendering the Shares. If certificates have
been delivered to the Depositary, then, prior to the release of such
certificates, the certificate numbers shown on the particular certificates
evidencing such Shares must also be submitted and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Fund in its sole discretion,
which determination shall be final and binding. Shares properly withdrawn shall
not thereafter be deemed to be tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following the procedures described in
Section 2 on or prior to the Expiration Date.
4
<PAGE> 9
NONE OF THE FUND, THE INVESTMENT ADVISER TO THE FUND, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE
OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL, AND NONE OF THEM
WILL INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE OF DEFECTS OR
IRREGULARITIES.
4. Payment For Shares. For purposes of the Offer, the Fund will be deemed
to have purchased Shares pursuant to the Offer when, as and if it gives oral or
written notice to the Depositary of its acceptance of such Shares for purchase.
Pursuant to a rule under the Exchange Act, the Fund is obligated to pay for or
return tendered Shares promptly after the termination, expiration or withdrawal
of the Offer. Upon the terms and subject to the conditions of the Offer, the
Fund will pay for Shares properly tendered as soon as practicable after the
Expiration Date. The Fund will make payment for Shares purchased pursuant to the
Offer by depositing the aggregate purchase price therefor with the Depositary,
which will make payment to stockholders promptly as directed by the Fund. The
Fund will not pay interest on the purchase price under any circumstances.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of: (a) a properly completed
and duly executed Letter of Transmittal (or a photocopy thereof bearing original
signature(s) and any required signature guarantees), (b) such Shares (in proper
certificated or uncertificated form), and (c) any other documents required by
the Letter of Transmittal. Stockholders are not required to pay a service charge
to the Fund or the Depositary in connection with their tender of Shares, but may
be charged a fee by a broker, dealer or other institution for processing the
tender requested. Certificates representing Shares tendered but not purchased
will be returned promptly following the termination, expiration or withdrawal of
the Offer, without expense to the tendering stockholder.
The Fund will pay any transfer taxes payable on the transfer to it of
Shares purchased pursuant to the Offer. However, if tendered Shares are
registered in the name of any person other than the person signing the Letter of
Transmittal, the amount of any such transfer taxes (whether imposed on the
registered owner or such other person) payable on account of the transfer to
such person of such Shares will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. The Fund will not pay any interest on the purchase price under any
circumstances. The Fund may not be obligated to purchase Shares pursuant to the
Offer under certain conditions. See Section 5.
Any tendering stockholder or other payee who has not previously submitted a
correct, completed and signed Form W-8 or Form W-9, as necessary, and who fails
to complete fully and sign either the Form W-8 or Substitute Form W-9 in the
Letter of Transmittal and provide such form to the Depositary, may be subject to
required federal income tax withholding of 31% of the gross proceeds paid to
such stockholder or other payee pursuant to the Offer. See Section 14.
5. Certain Conditions Of The Offer. Notwithstanding any other provision of
the Offer or the Fund's Prospectus, it is the announced policy of the Directors
of the Fund, which may be changed by the Directors, that the Fund cannot accept
tenders or effect repurchases if (a) such transactions, if consummated, would
(i) result in the delisting of the Fund's Shares from the NYSE or (ii) impair
the Fund's status as a regulated investment company under the Code (which would
make the Fund a taxable entity, causing the Fund's income to be taxed at the
corporate level in addition to the taxation of stockholders who receive
dividends from the Fund); (b) the Fund would not be able to liquidate portfolio
securities in an orderly manner and consistent with the Fund's investment
objectives and policies in order to repurchase Shares; (c) there is any (i)
material legal action or proceeding instituted or threatened which challenges,
in the Board of Director's judgment, such transactions or otherwise materially
adversely affects the Fund, (ii) suspension of or limitation on prices for
trading securities generally on the NYSE or any foreign exchange on which
portfolio securities of the Fund are traded, (iii) declaration of a banking
moratorium by federal, state or foreign authorities or any suspension of payment
by banks in the United States, New York State or in a foreign country which is
material to the Fund, (iv) limitation which affects the Fund or the issuers of
its portfolio securities imposed by federal, state or foreign authorities on the
extension of credit by lending institutions or on the exchange of foreign
currencies, (v) commencement of war, armed hostilities or other international or
national calamity
5
<PAGE> 10
directly or indirectly involving the United States or any foreign country which
is material to the Fund, or (vi) other event or condition which, in the Board's
judgment, would have a material adverse effect on the Fund or its stockholders
if Shares were repurchased; or (d) the Board determines that effecting any such
transaction would constitute a breach of its fiduciary duty owed to the Fund or
its stockholders. The Board may modify these conditions in light of experience.
The foregoing conditions are for the Fund's sole benefit and may be
asserted by the Fund regardless of the circumstances giving rise to any such
condition (including any action or inaction of the Fund), and any such condition
may be waived by the Fund, in whole or in part, at any time and from time to
time in its sole discretion. The Fund's failure at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts or circumstances; 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 5 shall be final and shall be binding.
The Fund reserves the right, at any time during the pendency of the Offer,
to terminate, extend, or amend the Offer in any respect. See Section 15.
6. Purpose Of The Offer; Plans Or Proposals Of The Fund. The price for the
Fund's shares on the NYSE has often been at a discount to their NAV. The Fund is
making the Offer as part of a series of actions by the Board intended to reduce
the size and persistence of the discount.
In addition to the Offer, these other actions include (a) considering the
implementation of a share repurchase program or a further self-tender offer for
a number of Shares to be determined so as to seek to cause the discount to NAV
to narrow to and remain at a level considered to be acceptable by the Board if,
following the Expiration Date, the discount to NAV of the market price for the
Fund's Shares reaches and persists at a level judged by the Board to be
unacceptably high, and (b) calling a special meeting of stockholders of the Fund
on or about September 28, 1998, at which the Board expects to ask stockholders
to vote to adopt a new fundamental policy enabling the Fund to conduct further
tender offers. The Board also expects to ask stockholders to vote to adopt a new
fundamental policy authorizing the Board to consider taking other actions the
Board deems advisable should the Board come to the view that continuing to
operate the Fund as a closed-end management investment company is no longer
economically feasible or in the best interests of all stockholders.
The Board believes that the Offer and the other actions it has taken or
plans to take are in the best interests of all stockholders of the Fund.
There can be no assurance that this Offer, or any of the other actions
authorized by the Board will reduce or eliminate any market price discount from
NAV of the Shares. The market price of the Shares will, among other things, be
determined by the relative demand for and supply of Shares in the market, the
Fund's investment performance, the Fund's dividends and yield and investor
perception of the Fund's overall attractiveness as an investment as compared
with other investment alternatives. Nevertheless, the fact that the Shares may
be subject to the Offer may result in more of a reduction in the spread between
market price and NAV than might otherwise be the case.
Other than as stated in the preceding paragraphs in this Section, the Fund
does not have any present plans or proposals that relate to or would result in
(a) the acquisition by any person of additional securities of the Fund, or the
disposition of securities of the Fund; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the Fund;
(c) other than in connection with liquidating assets for purposes of funding the
tender offer and possible future repurchase of Shares, a sale or transfer of a
material amount of assets of the Fund (the Fund purchases and sells assets in
the ordinary course of its business); (d) any change in the present Board of
Directors or management of the Fund including, but not limited to, any plans or
proposals to change the number or the term of the Board of Directors, to fill
any existing vacancy on the Board or to change any material term of the
employment contract of any executive officer; (e) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the Fund;
(f) any other material change in the Fund's corporate structure or business,
including any plans or
6
<PAGE> 11
proposals to make any changes in the Fund's investment policy for which a vote
would be required by Section 13 of the Investment Company Act of 1940, as
amended (the "1940 Act"); (g) changes in the Fund's charter, bylaws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Fund by any person; (h) causing a class of equity
security of the Fund to be delisted from a national securities exchange or to
cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; (i) a class of equity security of
the Fund becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act; or (j) the suspension of the Fund's obligation to
file reports pursuant to Section 15(d) of the Exchange Act.
7. Price Range Of Shares; Dividends. The following table sets forth, for
the periods indicated, the high and low NAV per Share and the high and low sales
prices per Share of the Fund as reported by the NYSE Composite Tape and the
amount of cash dividends per Share.
<TABLE>
<CAPTION>
CAPITAL
NET ASSET MARKET GAIN
VALUE PRICE DIVIDENDS DISTRIBUTIONS
PERIOD ----------- ----------------- --------- -------------
(FISCAL QUARTERS) HIGH LOW HIGH LOW
- ----------------- ---- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $
1994
1st Quarter.............................. 14.91 12.72 13 5/8 11 1/8
2nd Quarter.............................. 15.88 14.34 13 7/8 12 1/4
3rd Quarter.............................. 17.77 15.84 14 3/4 12 3/4
4th Quarter.............................. 17.60 15.06 15 12 1/8 0.57 0.20
1995
1st Quarter.............................. 18.28 16.30 14 7/8 13 1/8
2nd Quarter.............................. 18.27 17.80 14 1/2 14
3rd Quarter.............................. 19.62 18.23 15 1/2 14 1/8 0.12
4th Quarter.............................. 21.49 19.38 18 15 0.30 0.38
1996
1st Quarter.............................. 19.29 16.80 15 3/4 13 1/2
2nd Quarter.............................. 17.57 15.37 14 1/2 12 1/2
3rd Quarter.............................. 17.32 15.94 14 12 5/8
4th Quarter.............................. 17.73 15.20 14 3/8 12 1/4 0.07
1997
1st Quarter.............................. 18.33 17.54 15 13 7/8
2nd Quarter.............................. 19.37 18.35 15 1/2 14 7/8
3rd Quarter.............................. 18.52 15.83 15 1/4 12 1/2 0.02
4th Quarter.............................. 17.56 13.47 14 1/16 11 0.11 1.18
1998
1st Quarter.............................. 20.27 17.04 17 5/8 14 1/16
</TABLE>
The NAV per Share on February 28, 1998 and May 31, 1998 was $17.56 and
$18.81, respectively. During the pendency of the Offer, you may obtain current
NAV quotations for the Fund by calling the Fund's Information Agent, MacKenzie
Partners, Inc., toll-free at 1-800-322-2885 between the hours of 9:00 a.m. and
5:00 p.m., New York City time, Monday-Friday (except holidays).
8. Selected Financial Information. Set forth below is a summary of
selected financial information for the Fund for the three month period ended May
31, 1998, for the fiscal years ended February 28, 1998, 1997 and 1996, and for
the period March 11, 1994 (commencement of operations) through February 28,
1995. The information with respect to the period March 11, 1994 to February 28,
1998 has been excerpted from the Fund's audited financial statements for such
period and the information with respect to the three month period ended May 31,
1998 has been excerpted from the Fund's unaudited financial statements for such
period. All such other information has been excerpted from the Fund's audited
financial statements for the respective periods indicated. More comprehensive
financial information is included in the Fund's financial statements, which are
included as Exhibit A to this Offer to Purchase, and the summary of selected
financial information set forth below is qualified in its entirety by reference
to the information included in such statements.
7
<PAGE> 12
THE NEW SOUTH AFRICA FUND INC.
FINANCIAL HIGHLIGHTS
Set forth below is per Share operating performance data, total investment
return, ratios to average net assets and other supplemental data for each
financial period of the Fund indicated. This information has been derived from
and is qualified by reference to the information provided in the financial
statements included in Exhibit A to this Offer to Purchase and market price data
for the Fund's shares.
<TABLE>
<CAPTION>
FOR THE THREE FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED MARCH 11, 1994*
MAY 31, 1998 --------------------------------------------------------- THROUGH
(UNAUDITED) FEBRUARY 28, 1998 FEBRUARY 28, 1997 FEBRUARY 29, 1996 FEBRUARY 28, 1995
U.S. $ U.S. $ U.S. $ U.S. $ U.S. $
------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of the
period.......................... 17.56 17.56 19.38 15.89 13.95**
Offering costs charged to
additional paid-in capital...... -- -- -- -- (0.19)
------- ------- ------- ------- -------
17.56 17.56 19.38 15.89 13.76
------- ------- ------- ------- -------
Net investment income............. 0.06 0.14+ 0.17+ 0.33 0.39
Net realized and urealized
gain/(loss) on investments,
foreign currency holdings and
other assets and liabilities
denominated in foreign
currencies...................... 1.19 1.15+ (2.12)+ 3.96 2.51
------- ------- ------- ------- -------
Total from investment
operations...................... 1.25 1.29+ (1.95)+ 4.29 2.90
------- ------- ------- ------- -------
Dividends and distributions to
shareholders from:
Net investment income......... -- (0.11) (0.07) (0.33) (0.39)
In excess of net investment
income...................... -- -- -- (0.42) (0.32)
Net realized gains on
investments................. (0.78)
In excess of net realized
gains on investments........ -- (0.42) -- (0.05) (0.06)
------- ------- ------- ------- -------
Total dividends and
distributions to
shareholders............ -- (1.31) (0.07) (0.80) (0.77)
------- ------- ------- ------- -------
Antidilutive impact due to shares
of beneficial interest
repurchased..................... -- 0.02 0.20 -- --
------- ------- ------- ------- -------
Net asset value, end of period.... 18.81 17.56 17.56 19.38 15.89
------- ------- ------- ------- -------
Market value, end of period....... 16.50 13.94 14.00 15.38 13.38
======= ======= ======= ======= =======
Total investment return based
on:(a)(b)
Market value.................. 18.38% 10.80% (8.43)% 20.38% 1.50%
Net asset value............... 7.12% 11.29% (8.88)% 27.72% 22.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)........................ 84,592 78,977 79,364 92,196 75,605
Ratio of expenses to average net
assets.......................... 1.99%++ 2.07% 2.35% 1.98% 2.10%++
Ratio of net investment income to
average net assets.............. 1.23%++ 0.82% 1.01% 1.77% 2.61%++
Portfolio turnover rate........... 13.05%+++ 90.53% 9.92% 18.91% 10.88%+++
Average commission rate per
share(c)........................ $0.0104 $0.0119 $0.0084 -- --
</TABLE>
- ---------------
* Commencement of operations
** Initial public offering price of $15.00 per share less underwriting discount
of $1.05 per share.
+ Based on average shares outstanding.
++ Annualized.
+++ Not annualized.
(a) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
the period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's Dividend Reinvestment Plan. Total investment return does not reflect
sales charges or brokerage commissions. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on the net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such periods.
(b) Total investment return for periods of less than one year are not
annualized.
(c) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the
respective periods for which commissions were charged, as required by the
Securities and Exchange Commission for fiscal years beginning on or after
September 1, 1995.
8
<PAGE> 13
9. Interest Of Certain Related Persons. The Fund employs Fleming
International Asset Management Limited (the "Investment Adviser") to manage the
investment and reinvestment of the assets of the Fund pursuant to an Investment
Advisory Agreement dated, March 4, 1994. For the services provided by the
Investment Adviser under the Investment Advisory Agreement, the Fund pays the
Investment Adviser a fee computed and payable monthly in an amount equal to
1.25% of the Fund's average weekly net asset value on an annualized basis.
Based upon information provided to the Fund, except through the automatic
reinvestment of dividends under the Fund's Dividend Reinvestment Plan, there
have not been any transactions in Shares of the Fund that were effected during
the past 40 business days by the Fund, any member of the Board or executive
officer of the Fund, any person controlling the Fund, any executive officer or
director of any corporation ultimately in control of the Fund or by any
associate or subsidiary of any of the foregoing, including any executive officer
or director of any such subsidiary. Based upon information provided to the Fund,
no officer, director or affiliate of the Fund intends to tender Shares pursuant
to the Offer except that Arthur Levy, a Director of the Fund, has advised that
he intends to tender all 5,000 Shares beneficially owned by him.
10. Certain Effects Of The Offer. The purchase of Shares pursuant to the
Offer will have the effect of increasing the proportionate interest in the Fund
of non-tendering stockholders. All persons remaining stockholders of the Fund
after the Offer will be subject to any increased risks associated with the
reduction in the Fund's aggregate assets resulting from payment for the tendered
Shares, such as possible greater volatility due to decreased diversification and
proportionately higher expenses. Under certain circumstances, the need to raise
cash in connection with the purchase of Shares pursuant to the Offer may have an
adverse effect on the Fund's NAV per Share. See Section 12. All Shares purchased
by the Fund pursuant to the Offer will remain authorized but unissued.
11. Certain Information About The Fund. The Fund was incorporated under
the laws of the State of Maryland on January 11, 1994 and is registered as a
non-diversified, closed-end management investment company under the 1940 Act.
The Fund's investment objective is to seek long-term capital appreciation
through investment primarily in equity securities of issuers in the Republic of
South Africa as well as, to a lesser extent, in other countries in the Southern
African region. As a matter of fundamental policy, under normal circumstances,
the Fund will invest at least 80% of its assets in securities of South African
issuers including at least 65% of its assets in equity securities of South
African issuers as defined below. The Fund may also invest (subject to
compliance with applicable laws and regulations) up to 15% of its assets in
equity securities of (a) issuers located in Botswana, Lesotho, Mauritius,
Namibia, Swaziland and Zimbabwe ("Southern African countries") and (b) Southern
African associated issuers. Up to 35% of the Fund's assets may be invested in
certain fixed income securities which, in the Investment Adviser's judgment,
have the potential for long-term capital appreciation. Current income is not an
objective of the Fund and will be only an incidental consideration in making
investment decisions. Fixed income securities in which the Fund may invest
include, with respect to up to 35% of the Fund's assets, securities issued or
guaranteed by the government or governmental entities of South Africa or certain
supranational organizations and, with respect to up to 15% of the Fund's assets,
securities issued or guaranteed by governments or governmental entities of
Southern African countries provided that, after giving effect to such
investments, (a) no more than 35% of the Fund's assets are invested in fixed
income securities and (b) no more than 15% of the Fund's assets are invested in
(in aggregate): (i) fixed income securities issued or guaranteed by governments
or governmental entities of Southern African countries, (ii) equity securities
of Southern African issuers (as defined below), and (iii) equity securities of
Southern African associated issuers (as defined below). In addition, under
normal circumstances, not more than 10% of the Fund's assets will be invested in
equity or fixed-income securities of issuers located in any single Southern
African country and up to 10% of the Fund's assets may be invested in securities
for which there is no liquid trading market.
Equity securities in which the Fund may invest include common stock,
preferred stock, rights, warrants or options to purchase common or preferred
stock and debt securities convertible into common or preferred stock. The Fund
deems non-governmental South African issuers to include issuers (a) that are
organized under the laws of South Africa and conduct business in South Africa,
(b) that derive 50% or more of their total revenues from business in South
Africa, (c) the equity or debt securities of which are traded principally
9
<PAGE> 14
on the Johannesburg Stock Exchange, or (d) the equity or debt securities of
which are traded directly or in depositary receipt form on an exchange or
over-the-counter outside South Africa and that satisfy the test in (a), (b) or
(c) above. The Fund defines Southern African issuers to be issuers (a) that are
organized under the laws of one of the Southern African countries and conduct
business in such country, (b) that derive 50% or more of their total revenues
from business in such country, or (c) the equity or debt securities of which are
trade principally on a stock exchange in such country. The Fund defines
"Southern African associated issuers" as issuers that do not meet the definition
of a Southern African issuer but whose current or expected performance the
Investment Adviser believes is strongly associated with the Southern African
region. Among the factors that the Investment Adviser may consider in making
such a determination are (a) the margin by which an issuer fails to qualify as a
Southern African issuer under the assets and revenue test described above, (b)
growth trends in the location of an issuer's assets and sources of its revenues
and profits, (c) the absolute size of an issuer's assets in, or revenues or
profits derived from, the South African region, and (d) the listing of an
issuer's equity securities on a stock exchange in the Southern African region.
Reference is made to Section 7 and Section 8 of this Offer to Purchase and
to the financial statements of the Fund attached hereto as Exhibit A, which are
incorporated herein by reference.
The principal executive office of the Fund is c/o Custodial Trust Company,
101 Carnegie Center, Princeton, New Jersey 08540, U.S.A.
12. Source And Amount Of Funds. The total cost to the Fund of purchasing
449,652 Shares pursuant to the Offer would be approximately $6.84 million (based
on a price per share of $15.21, the NAV as of June 26, 1998). On June 26, 1998,
the net assets of the Fund aggregated approximately $68.39 million.
To pay the aggregate purchase price of Shares accepted for payment pursuant
to the Offer, the Fund anticipates that funds will be derived first from any
cash on hand and then from the proceeds from the sale of portfolio securities
held by the Fund. The selection of which portfolio securities to sell, if any,
will be made by Fleming International Asset Management Limited, the Fund's
investment adviser, which will take into account investment merit, relative
liquidity and applicable investment restrictions and legal requirements.
Although the Fund is authorized to borrow money to finance the repurchase of
Shares, the Board believes that the Fund will have sufficient resources through
disposition of assets to repurchase Shares in the Offer without necessitating
any borrowings. Nevertheless, the Fund reserves the right to finance a portion
of the Offer through temporary borrowings.
The repurchase of Shares by the Fund will decrease the total assets of the
Fund and, therefore, have the effect of increasing the Fund's expense ratio. In
addition, such repurchases may have an adverse effect on the Fund's investment
performance. This is because the market value of portfolio securities which the
Fund sells to raise cash to pay for Shares tendered in the Offer could actually
decline as the result of such sales due to the relative lack of liquidity of the
Johannesburg Stock Exchange. If the Fund retains securities of the same class
and of the same issuer as it has sold, and the value of which have declined, NAV
would be negatively affected. In addition, in order to raise funds to pay for
Shares in the Offer, the Fund may liquidate portfolio securities at a time when
the Investment Adviser would not otherwise do so. Liquidating portfolio
securities will also entail transaction costs which will negatively affect NAV.
A decline in NAV may adversely affect any tendering stockholders whose Shares
are accepted for purchase by the Fund, as well as those stockholders who do not
sell Shares pursuant to the Offer. Stockholders who retain their Shares may be
subject to certain other effects of the Offer. See Section 10.
Because the Fund will sell portfolio securities during the pendency of the
Offer to raise cash for the purchase of Shares, the Fund may temporarily hold a
greater than normal percentage of its assets in cash and cash equivalents.
13. Additional Information. The Fund has filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the Securities and Exchange Commission (the
"SEC"); the Schedule 13E-4 includes certain additional information relating to
the Offer, which material may be inspected and copied at prescribed rates at the
SEC's public reference facilities at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and Seven World Trade Center, New York, New York 10048.
Copies of such material may also be obtained by mail at
10
<PAGE> 15
prescribed rates from the Public Reference Branch of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 or may be viewed and downloaded by
accessing the SEC's EDGAR database through the SEC's website at
http://www.sec.gov.
14. Certain U.S. Federal Income Tax Consequences. The following discussion
is a general summary of the U.S. federal income tax consequences of a sale of
Shares pursuant to the Offer. The discussion is for general information purposes
only and does not purport to consider all aspects of U.S. federal income
taxation that might be relevant to beneficial owners of Shares. YOU SHOULD
CONSULT YOUR OWN TAX ADVISER FOR A COMPLETE DESCRIPTION OF THE TAX CONSEQUENCES
TO YOU OF A SALE OF SHARES PURSUANT TO THE OFFER, INCLUDING POTENTIAL STATE,
LOCAL AND NON-U.S. TAXATION BY TAXING JURISDICTIONS OF WHICH YOU ARE A RESIDENT
OR DOMICILIARY.
U.S. Stockholders. Under current federal income tax law, regulations and
Internal Revenue Service rulings, it is anticipated that stockholders selling
Shares in accordance with the terms of the Offer will recognize gain or loss for
U.S. federal income tax purposes equal to the difference between the amount of
cash received pursuant to the Offer and the adjusted tax basis of the Shares
sold. Such gain or loss will be capital gain or loss if the Shares sold have
been held by the tendering stockholder as a capital asset. In general, capital
gain or loss with respect to the Shares sold will be long-term capital gain or
loss if such Shares have been held for more than one year. Net capital gain
recognized by an individual from the sale of Shares pursuant to the Offer that
have been held for more than 18 months will generally be subject to tax at a
rate not to exceed 20%. Net capital gain recognized by an individual from the
sale of Shares pursuant to the Offer that have been held for more than 12 months
but not for more than 18 months will be subject to tax at a rate not to exceed
28%. In view of the requirement of the Offer that a tendering stockholder tender
or cause the tender of all of the Shares actually owned and constructively owned
by such stockholder under Section 318 of the Code as of the date of purchase of
Shares pursuant to the Offer, stockholders should consult their tax advisers
regarding the application of the constructive ownership rules of Section 318. In
general, Section 318 provides that Shares owned by certain family members of,
and by entities treated by that section as related to, the tendering stockholder
are treated as owned by the tendering stockholder. Under the "wash sale" rules,
recognition of a loss on Shares sold pursuant to the Offer will ordinarily be
disallowed to the extent a stockholder acquires Shares within 30 days before or
after the date Shares are purchased pursuant to the Offer and, in that event,
the basis and holding period of the Shares acquired will be adjusted to reflect
the disallowed loss.
The Depositary may be required to withhold 31% of the gross proceeds paid
to a stockholder or other payee pursuant to the Offer unless either: (a) the
stockholder has completed and submitted to the Depositary the Substitute Form
W-9 included with the Transmittal Letter, providing the stockholder's taxpayer
identification number/social security number and certifying under penalties of
perjury: (i) that such number is correct, and (ii) either that (A) the
stockholder is exempt from backup withholding, (B) the stockholder has not been
notified by the Internal Revenue Service that the stockholder is subject to
backup withholding as a result of an under-reporting interest or dividends, or
(C) the Internal Revenue Service has notified the stockholder that the
stockholder is no longer subject to backup withholding; or (b) an exception
applies under applicable law and Treasury regulations.
Non-U.S. Stockholders. U.S. taxation of a stockholder who, under the Code,
is a non-resident alien individual, foreign trust or estate, foreign corporation
or foreign partnership (a "Non-U.S. stockholder") depends on whether the income
from the Fund is "effectively connected" with a U.S. trade or business carried
on by such Non-U.S. stockholder. If income from the Fund is not treated as
"effectively connected," any gain realized upon the tender of Shares pursuant to
the terms of the Offer will not ordinarily be subject to U.S. taxation. If,
however, the Non-U.S. stockholder is treated as a non-resident alien individual
but is physically present in the United States for more than 182 days during the
taxable year, then, in certain circumstances, gain from the tender of Shares
pursuant to the terms of the Offer will be subject to U.S. tax of 30% (or lower
treaty rate).
11
<PAGE> 16
If the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by a Non-U.S. stockholder, then any gain realized upon the
sale of Shares of the Fund pursuant to the terms of the Offer will be subject to
U.S. federal income tax at the graduated rates applicable to U.S. taxpayers.
Non-U.S. stockholders should provide the Depositary with a completed Form
W-8 in order to avoid 31% backup withholding. A copy of Form W-8 is provided
with the Letter of Transmittal for such stockholders.
Non-U.S. stockholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of a tender of Shares
pursuant to the Offer.
15. Extension Of Tender Period; Termination; Amendments. The Fund reserves
the right, at any time during the pendency of the Offer, to terminate, extend,
or amend the Offer in any respect. Without limiting the manner in which the Fund
may choose to make a public announcement of termination, extension or amendment,
the Fund shall have no obligation to publish, advertise or otherwise communicate
any such public announcement, except as provided by applicable law (including
Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act) and by the
requirements of the NYSE (including the listing agreement with respect to the
Shares).
Except to the extent required by applicable law (including Rule 13e-4(f)(1)
promulgated under the Exchange Act), the Fund will have no obligation to extend
the Offer. In the event that the Fund is obligated or elects to extend the
Offer, the purchase price for Shares will be equal to the NAV determined as of
the close of the regular trading session of the NYSE on the Expiration Date, as
extended. Between the previously scheduled Expiration Date and the new
Expiration Date, the rights of stockholders (such as rights to tender and
withdraw Shares) will remain unchanged. No Shares will be accepted for payment
until on or after the new Expiration Date.
16. Fees And Expenses. The Fund has retained MacKenzie Partners, Inc. to
act as Information Agent and PNC Bank, N.A. to act as Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telegraph and personal interviews and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Offer to beneficial owners. Neither the Information Agent nor the Depositary
will make solicitations or recommendations in connection with the Offer. The
Information Agent and the Depositary will each receive reasonable and customary
compensation for their respective services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
The Fund will not pay any fees or commissions to any broker, dealer or any
other person (other than the Information Agent and the Depositary) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by the Company for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers.
17. Miscellaneous. The Offer is not being made to, nor will the Fund
accept tenders from, owners of Shares in any jurisdiction in which the Offer or
its acceptance would not comply with the securities or "blue sky" laws of such
jurisdiction. The Fund is not aware of any jurisdiction in which the making of
the Offer or the acceptance of tenders of, purchase of or payment for Shares
would not be in compliance with the laws of such jurisdiction. However, the Fund
reserves the right to exclude stockholders in any jurisdiction in which it is
asserted that the Offer cannot lawfully be made or tendered Shares cannot
lawfully be accepted, purchased or paid for. 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 holders residing in any such
jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange
Act. In any jurisdiction the securities or "blue sky" laws
12
<PAGE> 17
of which require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on the Fund's behalf by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Date: July 1, 1998
The New South Africa Fund
Inc.
c/o Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
13
<PAGE> 18
EXHIBIT A
THE NEW SOUTH AFRICA FUND INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
<TABLE>
<CAPTION>
FOR THE THREE FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED MARCH 11, 1994(*)
MAY 31, 1998 --------------------------------------------------------- THROUGH
(UNAUDITED) FEBRUARY 28, 1998 FEBRUARY 28, 1997 FEBRUARY 29, 1996 FEBRUARY 28, 1995
U.S. $ U.S. $ U.S. $ U.S. $ U.S. $
------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of the
period.......................... 17.56 17.56 19.38 15.89 13.95**
Offering costs charged to
additional paid-in capital...... -- -- -- -- (0.19)
------- ------- ------- ------- -------
17.56 17.56 19.38 15.89 13.76
------- ------- ------- ------- -------
Net investment income............. 0.06 0.14+ 0.17+ 0.33 0.39
Net realized and unrealized
gain/(loss) on investments,
foreign currency holdings and
other assets and liabilities
denominated in foreign
currencies...................... 1.19 1.15+ (2.12)+ 3.96 2.51
------- ------- ------- ------- -------
Total from investment
operations...................... 1.25 1.29+ (1.95) 4.29 2.90
------- ------- ------- ------- -------
Dividends and distributions to
shareholders from:
Net investment income......... -- (0.11) (0.07) (0.33) (0.39)
In excess of net investment
income...................... -- -- -- (0.42) (0.32)
Net realized gains on
investments................. (0.78)
In excess of net realized
gains on investments........ -- (0.42) -- (0.05) (0.06)
------- ------- ------- ------- -------
Total dividends and distributions
to shareholders................. -- (1.31) (0.07) (0.80) (0.77)
------- ------- ------- ------- -------
Antidilutive impact due to shares
of beneficial interest
repurchased..................... -- 0.02 0.20 -- --
------- ------- ------- ------- -------
Net asset value, end of period.... 18.81 17.56 17.56 19.38 15.89
------- ------- ------- ------- -------
Market value, end of period....... 16.50 13.94 14.00 15.38 13.38
======= ======= ======= ======= =======
Total investment return based
on:(a)(b)
Market value.................. 18.38% 10.80% (8.43%) 20.38% 1.50%
Net asset value............... 7.12% 11.29% (8.88%) 27.72% 22.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)........................ 84,592 78,977 79,364 92,196 75,605
Ratio of expenses to average net
assets.......................... 1.99%++ 2.07% 2.35% 1.98% 2.10%++
Ratio of net investment income to
average net assets.............. 1.23%++ 0.82% 1.01% 1.77% 2.61%++
Portfolio turnover rate........... 13.05%+++ 90.53% 9.92% 18.91% 10.88%+++
Average commission rate per
share(c)........................ $0.0104 $0.0119 $0.0084 -- --
</TABLE>
- ------------
* Commencement of operations
** Initial public offering price of $15.00 per share less underwriting discount
of $1.05 per share.
+ Based on average shares outstanding.
++ Annualized.
+++ Not annualized.
(a) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
the period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's Dividend Reinvestment Plan. Total investment return does not reflect
sales charges or brokerage commissions. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on the net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such periods.
(b) Total investment return for periods of less than one year are not
annualized.
(c) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the
respective periods for which commissions were charged, as required by the
SEC for fiscal years beginning on or after September 1, 1995.
See accompanying notes to financial statements.
A-1
<PAGE> 19
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO (UNAUDITED)
AT MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES U.S. $
- ----------- ---------- ----------
<S> <C> <C>
COMMON STOCKS--92.60%
BOTSWANA--7.81%
Beverages & Hotels--4.02%
Sechaba Breweries......................................... 2,110,800 3,397,405
----------
Commercial Banks--3.79%
Barclays Bank of Botswana Ltd............................. 51,000 258,539
Standard Chartered Bank Botswana Ltd...................... 528,900 2,949,326
----------
3,207,865
----------
Total Botswana (cost $4,585,742) 6,605,270
----------
SOUTH AFRICA--84.55%
Audio & Video Products--2.88%
Teljoy Holdings Ltd....................................... 1,080,000 2,440,259
----------
Base Metals--0.12%
Gencor Ltd................................................ 50,000 97,944
----------
Building & Construction--0.57%
LTA Ltd................................................... 100,000 481,962
----------
Commercial Banks--6.10%
NBS Holdings Ltd.......................................... 467,042 923,937
Nedcor Ltd................................................ 51,949 1,390,409
Orion Selections Ltd...................................... 1,506,590 2,848,957
----------
5,163,303
----------
Commercial Services--0.63%
Sasani Ltd................................................ 3,553,875 530,737
----------
Computers--Integrated Systems--7.02%
Dimension Data Holdings Ltd............................... 289,988 1,940,374
Persetel Holdings Ltd..................................... 381,790 3,998,578
----------
5,938,952
----------
Diversified Operations--15.77%
Adcorp Holdings Ltd....................................... 236,000 1,327,383
New Africa Investments Ltd. Class N....................... 1,300,000 1,790,144
Primedia Ltd. Class N..................................... 490,000 3,896,424
Real Africa Holdings Ltd.................................. 1,009,557 4,562,186
The Board of Executors Ltd................................ 980,000 1,767,646
----------
13,343,783
----------
Electronic & Electrical Equipment--1.96%
Spescom Electronics Ltd................................... 651,200 1,660,835
----------
Finance & Banking--8.74%
Genbel Securities Ltd..................................... 75,896 1,133,433
Investec Group Ltd........................................ 68,900 3,327,399
RMB Holdings Ltd.......................................... 978,981 2,933,520
----------
7,394,352
----------
</TABLE>
A-2
<PAGE> 20
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES U.S. $
- ----------- ---------- ----------
<S> <C> <C>
Food--4.33%
The Bidvest Group Ltd..................................... 363,631 3,667,334
----------
Furniture & Households--8.88%
JD Group Ltd.............................................. 361,135 3,158,874
Protea Furnishers Ltd..................................... 4,562,036 4,353,214
----------
7,512,088
----------
Gold Mining--1.08%
Anglo American Corporation of South Africa Ltd............ 19,000 910,200
----------
Insurance--6.14%
Capital Alliance Holdings Ltd............................. 301,962 2,342,602
Fedsure Holdings Ltd...................................... 185,000 2,848,908
----------
5,191,510
----------
Investment Companies--7.64%
Coronation Holdings Ltd. Class N.......................... 138,187 2,819,481
Theta Group Ltd.*......................................... 743,400 3,640,577
----------
6,460,058
----------
Retail--Convenience Stores--1.96%
Metro Cash & Carry Ltd.................................... 1,580,164 1,654,941
----------
Stores--4.11%
Pepkor Ltd................................................ 305,001 1,685,902
Specialty Stores Ltd...................................... 520,832 510,123
Specialty Stores Ltd. Class N............................. 1,316,531 1,276,696
----------
3,472,721
----------
Telecommunications Equipment--6.62%
Allied Technologies Ltd................................... 30,000 948,408
Paradigm Interactive Media Ltd............................ 2,400,000 4,654,762
----------
5,603,170
----------
Total South Africa (cost $48,297,486) 71,524,149
----------
ZIMBABWE--0.24%
Commercial Banks--0.24%
NMBZ Holdings Ltd......................................... 285,000 200,055
----------
Total Zimbabwe (cost $821,801) 200,055
----------
TOTAL COMMON STOCKS
(cost $53,705,029) 78,329,474
----------
</TABLE>
A-3
<PAGE> 21
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PAR VALUE
DESCRIPTION (000) U.S. $
- ----------- ---------- ----------
<S> <C> <C>
DEBT OBLIGATION--4.20%
Republic of South Africa Bond, 13.50%, 09/15/15 (cost
$3,763,431)........................................... R 19,000 3,552,934
----------
SHORT-TERM INVESTMENTS--2.86%
Repurchase Agreement--2.86%
Repurchase agreement dated 05/29/98 with Bear, Stearns
& Co. Inc., 5.45%, due 06/01/98, collateralized by
$2,696,941 Federal National Mortgage Association Gtd.
9.744%, 03/25/24; total value $2,447,878; proceeds:
$2,418,079 (cost $2,416,981).......................... U.S.$2,417 2,416,981
----------
TOTAL INVESTMENTS--99.66% (Cost $59,885,441)(a) 84,299,389
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES--.34% 292,307
----------
NET ASSETS--100.00% 84,591,696
==========
</TABLE>
- ------------
* Non income producing securities.
R Republic of South Africa rand.
U.S.$ United States dollars.
(a) Aggregate cost of U.S. federal income tax purposes is $59,885,441. The
aggregate unrealized appreciation/(depreciation) for all securities is as
follows:
<TABLE>
<CAPTION>
U.S. $
----------
<S> <C> <C>
Excess of market value over tax cost........................ 25,837,653
Excess of tax cost over market value........................ (1,423,705)
----------
Net unrealized appreciation................................. 24,413,948
==========
</TABLE>
See accompanying notes to financial statements.
A-4
<PAGE> 22
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
AT MAY 31, 1998
<TABLE>
<CAPTION>
U.S.$
----------
<S> <C>
ASSETS
Investments, at value (cost $59,885,441) (Note 2)........... 84,299,389
Cash (representing foreign currency holdings with a cost of
$31,257 in an interest-bearing account)................... 30,704
Receivables:
Dividends................................................. 305,826
Interest.................................................. 112,136
Deferred organizational costs and prepaid expenses.......... 54,056
----------
TOTAL ASSETS................................................ 84,802,111
==========
LIABILITIES
Payables:
Investment advisory fees (Note 4)......................... 94,107
Administration fees (Note 4).............................. 21,771
Directors' fees........................................... 16,551
Other accrued expenses.................................... 77,986
----------
TOTAL LIABILITIES........................................... 210,415
----------
NET ASSETS.................................................. 84,591,696
==========
Net assets consist of:
Common stock, $0.001 par value (200,000,000 shares
authorized; 4,496,521 shares issued and outstanding) (Note
7)........................................................ 4,497
Additional paid-in capital.................................. 61,028,440
Undistributed net investment income......................... 393,439
Accumulated net realized loss on investments and foreign
currency transactions..................................... (1,238,162)
Net unrealized appreciation on investments, foreign currency
holdings and other assets and liabilities denominated in
foreign currencies........................................ 24,403,482
----------
NET ASSETS.................................................. 84,591,696
==========
NET ASSET VALUE PER SHARE
($84,591,696 / 4,496,521)................................. $ 18.81
==========
</TABLE>
See accompanying notes to financial statements.
A-5
<PAGE> 23
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MAY 31, 1998
<TABLE>
<CAPTION>
U.S.$
---------
<S> <C>
INVESTMENT INCOME
Dividends (Note 2).......................................... 497,871
Less: foreign withholding taxes............................. (2,320)
Interest.................................................... 186,225
---------
TOTAL INVESTMENT INCOME..................................... 681,776
---------
EXPENSES
Investment advisory fees (Note 4)........................... 264,683
Professional fees........................................... 33,948
Administration fees (Note 4)................................ 31,762
Custodian fees.............................................. 19,780
Accounting fees............................................. 18,601
Directors' fees and expenses................................ 11,652
Reports and notices to shareholders......................... 11,040
Transfer agent fees and expenses............................ 9,660
Insurance................................................... 8,421
Amortization of organizational costs (Note 1)............... 5,494
NYSE listing fees........................................... 3,731
Miscellaneous............................................... 2,566
---------
TOTAL EXPENSES.............................................. 421,338
---------
NET INVESTMENT INCOME....................................... 260,438
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, FOREIGN
CURRENCY HOLDINGS AND OTHER ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES (Note 2)
Net realized gain/(loss) on:
Investments............................................... 653,222
Foreign currency transactions............................. (12,530)
---------
640,692
---------
Net change in unrealized appreciation/(depreciation) on:
Investments............................................... 4,721,443
Foreign currency holdings and other assets and liabilities
denominated in foreign currencies...................... (8,189)
---------
4,713,254
---------
Net realized and unrealized gain on investments, foreign
currency holdings and other assets and liabilities
denominated in foreign currencies......................... 5,353,946
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 5,614,384
=========
</TABLE>
See accompanying notes to financial statements.
A-6
<PAGE> 24
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MAY 31, 1998 FOR THE YEAR ENDED
(UNAUDITED) FEBRUARY 28, 1998
U.S.$ U.S.$
------------- ------------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
OPERATIONS
260,438 637,707
Net investment income.....................................
640,692 3,483,467
Net realized gain on investments and foreign currency
transactions...........................................
4,713,254 1,676,678
Net change in unrealized appreciation/(depreciation) on
investments, foreign currency holdings and other assets
and liabilities denominated in foreign currencies......
---------- ------------------
5,614,384 5,797,852
Net increase in net assets resulting from operations......
---------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
-- (515,660)
Net investment income.....................................
(3,496,384)
Net realized gains on investments.........................
-- (1,878,854)
In excess of net realized gains on investments............
---------- ------------------
-- (5,890,898)
---------- ------------------
CAPITAL STOCK TRANSACTIONS
-- (293,944)
Cost of shares repurchased................................
---------- ------------------
5,614,384 (386,990)
NET INCREASE/(DECREASE) IN NET ASSETS.......................
Net Assets:
78,977,312 79,364,302
Beginning of period.........................................
---------- ------------------
84,591,696 78,977,312
End of period (including undistributed net investment income
of $393,439 and $133,001, respectively)...................
========== ==================
</TABLE>
See accompanying notes to financial statements.
A-7
<PAGE> 25
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)
AT MAY 31, 1998
1. ORGANIZATION
The New South Africa Fund Inc. (the "Fund") was incorporated in the State
of Maryland on January 11, 1994 as a registered, non-diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). Organizational costs of $109,346 have
been deferred and are being amortized on a straight-line basis over a 60-month
period from the date the Fund commenced operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies, which are
generally accepted in the United States of America, followed by the Fund.
i) Security Valuation
All securities for which the primary market is an exchange are valued at
the last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Portfolio securities
that are actively traded on the over-the-counter market, including listed
securities for which the primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked prices
provided by the principal market makers. Securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors. U.S. government
securities and other debt instruments having 60 days or less remaining until
maturity are stated at amortized cost if their original maturity was 60 days or
less, or by amortizing their market value as of the 61st day prior to maturity
if their original term to maturity exceeded 60 days (unless in either case the
Board of Directors determines that this method does not represent fair value).
ii) Repurchase Agreements
The Fund may invest temporarily, without limitation, in repurchase
agreements, which are agreements pursuant to which securities are acquired by
the Fund from a third party with the understanding that they will be repurchased
by the seller at a fixed price on an agreed date. These agreements may be made
with respect to any of the portfolio securities in which the Fund is authorized
to invest. Repurchase agreements may be characterized as loans secured by the
underlying securities. The Investment Adviser monitors the continued
creditworthiness of counterparties, subject to the supervision of the Fund's
Board of Directors. The resale price reflects the purchase price plus an agreed
upon market rate of interest which is unrelated to the coupon rate or date of
maturity of the purchased security. The collateral is marked to market daily. In
the event of default or bankruptcy of the counterparty, the Fund's realization
of the value of the collateral may be delayed or limited.
iii) Taxes
It is the intention of the Fund to continue to qualify as a regulated
investment company and to distribute, at least annually, substantially all of
its net investment income and any net long-term capital gains in excess of net
short-term capital losses. Accordingly, no provision for U.S. federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a U.S. federal excise
tax.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, but within the fiscal year are deemed
to arise on the first day of the following fiscal year. For the fiscal year
ended February 28, 1998, the Fund incurred and elected to defer $1,341,276 of
realized capital losses and $537,578 of realized foreign exchange losses.
A-8
<PAGE> 26
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED) (CONTINUED)
The Republic of South Africa ("South Africa") does not impose a withholding
tax on dividends paid by South African companies to the Fund. However, other
income received by the Fund from sources within South Africa or Southern African
regions may be subject to withholding and other taxes imposed by such countries.
iv) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Realized gains
and losses on the sale of investment securities are determined on the identified
cost basis. Interest income is recorded on the accrual basis and amortization of
premium and discount are recorded on a straight-line basis. Dividend income and
other distributions are recorded on the ex-dividend date or as the Fund becomes
aware of such dividends. The collectibility of income receivable from foreign
securities is evaluated periodically and resulting allowance for uncollectible
amounts, if any, are reflected currently in the determination of net investment
income. At May 31, 1998, no such allowance was established.
v) Distribution of Income and Gains
The Fund intends to distribute to shareholders at least annually,
substantially all of its net investment income and net realized capital gains.
Dividends and distributions to shareholders are recorded by the Fund on the
ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with U.S. federal income
tax regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within capital accounts based on their U.S. federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes, but not for tax purposes, are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent distributions exceed current and
accumulated earnings and profits for U.S. federal income tax purposes, they are
reported as distributions of paid-in capital.
vi) Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the 12 p.m. mid-market
price of such currencies against U.S. dollars as quoted by major New York banks
as follows:
- investments, other assets and liabilities; at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income and expenses: at the
prevailing rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of equity-related securities sold
during the period. Accordingly, realized and unrealized foreign currency gains
and losses with respect to such securities are included in the reported net
realized and unrealized gains and losses on investment transactions balances.
However, the Fund does isolate the effect of fluctuations in foreign exchange
rates when determining the gain or loss upon the sale or maturity of foreign
currency denominated debt obligations pursuant to U.S.
A-9
<PAGE> 27
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED) (CONTINUED)
federal income tax regulations. Such amount is categorized as foreign exchange
gain or loss for both financial reporting and income tax reporting purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities (other than investments) at period-end exchange rates are reflected
as a component of net unrealized appreciation/depreciation on investments,
foreign currency holdings, and other assets and liabilities denominated in
foreign currencies.
Net realized foreign exchange losses of $12,530 represent foreign exchange
gains and losses from sales and maturities of debt securities, holdings of
foreign currencies, transactions in forward foreign currency contracts, exchange
gains or losses realized between the trade dates and settlement dates on
security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
3. INVESTMENT TRANSACTIONS
For the three months ended May 31, 1998, total purchases and sales of
portfolio investments excluding short-term securities, were $12,826,359 and
$10,250,189, respectively.
4. INVESTMENT ADVISER AND ADMINISTRATOR
i) Fleming International Asset Management Limited provides investment
advisory services to the Fund under the terms of an Investment Advisory
Agreement. Under the Investment Advisory Agreement, the Investment Adviser is
paid a monthly advisory fee at an annual rate of 1.25% of the Fund's average
weekly net assets.
ii) Bear Stearns Funds Management Inc. (the "Administrator"), a
wholly-owned subsidiary of The Bear Stearns Companies Inc., provides
administrative services to the Fund under an Administration Agreement. The
Administrator receives a fee that is computed weekly and paid quarterly at an
annual rate of 0.15% of the Fund's average weekly net assets.
5. TRANSACTIONS WITH AFFILIATES
For the three months ended May 31, 1998, the Fund paid $6,166 in brokerage
commissions to Fleming Martin Ltd., an affiliate of the Investment Adviser.
6. CONCENTRATION OF RISK
The South African and the Southern African regions' securities markets are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the securities of many
companies in South Africa or Southern African regions may be held by a limited
number of persons, which may limit the number of securities available for
investment by the Fund. The limited liquidity of South Africa and the Southern
African region securities markets may also affect the Fund's ability to acquire
or dispose of securities at the price and time it wishes to do so. The Fund,
subject to local investment limitation, may invest up to 10% of its assets in
non-publicly traded equity securities which may involve a high degree of
business and financial risk and may result in substantial losses. Because of the
current absence of any liquid trading market for these investments, the Fund may
take longer to liquidate these positions than would be the case for publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized on such sales could be less than
those originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded. At May 31, 1998, the Fund held no such securities.
A-10
<PAGE> 28
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED) (CONTINUED)
The Fund is permitted to engage in the trading of sovereign debt of South
Africa or Southern African regions which involves a substantial degree of risk.
The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal and/or
interest when due in accordance with the terms of such debt. Sovereign debt in
which the Fund invests is widely considered to have credit quality below
investment grade as determined by U.S. rating agencies. As a result, sovereign
debt may be regarded as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligations and involves major risk exposure to adverse conditions. However, the
Fund's investment in the government bond held at May 31, 1998 has been rated by
U.S. rating agencies as investment grade.
7. CAPITAL STOCK
The authorized capital stock of the Fund is 200,000,000 shares of common
stock, $0.001 par value. Of the 4,496,521 shares outstanding at May 31, 1998,
Robert Fleming Inc., an affiliate of the Investment Adviser, owned 7,169 shares.
In addition to the issuance of common stock to Robert Fleming Inc., a public
offering of the Fund's shares by a group of underwriters resulted in the
issuance of 4,750,000 shares of the Fund's common stock.
On February 29, 1996, the Board of Directors announced that it had given
the Fund's Investment Adviser discretion to cause the Fund to repurchase up to
5% of the outstanding shares when the discount to net asset value exceeds 20%.
During the quarter ended February 28, 1996, the Fund repurchased 5% or 237,858
of its outstanding shares.
In addition, on February 20, 1997, the Board of Directors announced a
second share repurchase program with identical terms to the initial program.
During the fiscal year ended February 28, 1998 the Fund repurchased 22,790 of
its outstanding shares. There were no Fund share repurchases during the three
months ended May 31, 1998.
8. SUBSEQUENT EVENT--TENDER OFFER
The Board of Directors has approved a tender offer for up to 10% of the
Fund's shares. Tendered shares will be accepted by the Fund at their net asset
value on the last day of the tender offering period, currently anticipated to
commence in June or July 1998 and conclude in August 1998. If more than 10% of
the shares are tendered, they will be accepted on a pro rata basis.
A-11
<PAGE> 29
THE NEW SOUTH AFRICA FUND INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED MARCH 11, 1994*
--------------------------------------------------------- THROUGH
FEBRUARY 28, 1998 FEBRUARY 28, 1997 FEBRUARY 29, 1996 FEBRUARY 28, 1995
U.S. $ U.S. $ U.S. $ U.S. $
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................. 17.56 19.38 15.89 13.95**
Offering costs charged to additional
paid-in capital.................... -- -- -- (0.19)
------- ------- ------- ------
17.56 19.38 15.89 13.76
------- ------- ------- ------
Net investment income................ 0.14+ 0.17+ 0.33 0.39
Net realized and unrealized
gain/(loss) on investments, foreign
currency holdings and other assets
and liabilities denominated in
foreign currencies................. 1.15+ (2.12)+ 3.96 2.51
------- ------- ------- ------
Total from investment operations..... 1.29+ (1.95)+ 4.29 2.90
------- ------- ------- ------
Dividends and distributions to
shareholders from:
Net investment income.............. (0.11) (0.07) (0.33) (0.39)
In excess of net investment
income........................... -- (0.42) (0.32)
Net realized gains on
investments...................... (0.78) -- (0.05) (0.06)
In excess of net realized gains on
investments...................... (0.42) -- -- --
------- ------- ------- ------
Total dividends and distributions to
shareholders....................... (1.31) (0.07) (0.80) (0.77)
------- ------- ------- ------
Antidilutive impact due to shares of
beneficial interest repurchased.... 0.02 0.20 -- --
------- ------- ------- ------
Net asset value, end of period....... 17.56 17.56 19.38 15.89
======= ======= ======= ======
Market value, end of period.......... 13.94 14.00 15.38 13.38
======= ======= ======= ======
Total investment return based on:
(a)(b)
Market value....................... 10.80% (8.43)% 20.38 1.50%
Net asset value.................... 11.29% (8.88)% 27.72 22.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)........................... 78,977 79,364 92,196 75,605
Ratio of expenses to average net
assets............................. 2.07% 2.35% 1.98% 2.10%++
Ratio of net investment income to
average net assets................. 0.82% 1.01% 1.77% 2.61%++
Portfolio turnover rate.............. 90.53% 9.92% 18.91% 10.88%+++
Average commission rate per share
(c)................................ $0.0119 $0.0084 -- --
</TABLE>
- ---------------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting discount
of $1.05 per share.
+ Based on average shares outstanding.
++ Annualized.
+++ Not annualized.
(a) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
the period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's Dividend Reinvestment Plan. Total investment return does not reflect
sales charges or brokerage commissions. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on the net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such periods.
(b) Total investment return for periods of less than one year are not
annualized.
(c) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the
respective periods for which commissions were charged, as required by the
SEC for fiscal years beginning on or after September 1, 1995.
See accompanying notes to financial statements.
A-12
<PAGE> 30
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO
AT FEBRUARY 28, 1998
<TABLE>
<CAPTION>
MARKET
VALUE
DESCRIPTION SHARES U.S. $
- ----------- --------- ----------
<S> <C> <C>
COMMON STOCKS--88.74%
BOTSWANA--5.74%
BEVERAGES & HOTELS--2.87%
Sechaba Breweries*........................................ 2,110,800 2,267,162
----------
COMMERCIAL BANKS--2.87%
Barclays Bank of Botswana Ltd............................. 51,000 215,438
Standard Chartered Bank Botswana Ltd...................... 520,900 2,046,903
----------
2,262,341
----------
TOTAL BOTSWANA (cost $4,545,249) 4,529,503
----------
SOUTH AFRICA--82.74%
AUDIO & VIDEO PRODUCTS--1.94%
Teljoy Holdings Ltd....................................... 750,000 1,532,932
----------
BEVERAGES & HOTELS--2.64%
The South African Breweries Ltd........................... 74,382 2,086,274
----------
BUILDING & CONSTRUCTION--0.66%
LTA Ltd................................................... 100,000 521,096
----------
CHEMICALS & OIL--1.08%
Sasol Ltd................................................. 99,889 853,042
----------
COMMERCIAL BANKS--9.72%
NBS Holdings Ltd.......................................... 467,042 1,464,967
Nedcor Ltd................................................ 51,949 1,513,840
Orion Selections Ltd...................................... 1,506,590 4,695,222
----------
7,674,029
----------
COMMERCIAL SERVICES--0.63%
Sasani Ltd................................................ 3,037,500 497,899
----------
COMPUTERS--INTEGRATED SYSTEMS--6.09%
Dimension Data Holdings Ltd............................... 289,988 1,725,312
Persetel Q Data Holdings Ltd.............................. 381,791 3,082,754
----------
4,808,066
----------
DIVERSIFIED OPERATIONS--6.58%
Primedia Ltd. Class N..................................... 490,000 3,093,791
The Board of Executors Ltd................................ 49,000 2,102,191
----------
5,195,982
----------
ELECTRONIC & ELECTRICAL EQUIPMENT--1.08%
Spescom Electronics Ltd................................... 511,200 853,464
----------
</TABLE>
A-13
<PAGE> 31
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO--(CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
DESCRIPTION SHARES U.S. $
- ----------- --------- ----------
<S> <C> <C>
FINANCE & BANKING--10.50%
Genbel Securities Ltd..................................... 75,896 959,929
Investec Group Ltd........................................ 62,900 3,113,490
RMB Holdings Ltd.......................................... 851,288 4,220,685
----------
8,294,104
----------
FOOD--4.63%
The Bidvest Group Ltd..................................... 363,631 3,657,278
----------
FURNITURE & HOUSEHOLDS--8.83%
JD Group Ltd.............................................. 358,243 3,425,467
Protea Furnishers Ltd..................................... 4,520,000 3,549,037
----------
6,974,504
----------
GOLD MINING--2.12%
Anglo American Corporation of South Africa Ltd............ 40,000 1,675,601
----------
INSURANCE--9.14%
Capital Alliance Holdings Ltd............................. 301,962 1,830,162
Fedsure Holdings Ltd...................................... 185,000 2,770,408
Liberty Life Association of Africa Ltd.................... 86,278 2,618,977
----------
7,219,547
----------
INVESTMENT COMPANIES--7.38%
Coronation Holdings Ltd. Class N.......................... 138,187 2,446,896
Theta Group Ltd. *........................................ 1,100,000 3,383,581
----------
5,830,477
----------
RETAIL--CONVENIENCE STORES--2.15%
Metro Cash & Carry Ltd.................................... 1,580,164 1,694,800
----------
RETAIL--MISCELLANEOUS/DIVERSIFIED--1.27%
Mathomo Group Ltd......................................... 1,412,240 1,000,269
----------
STORES--4.68%
Pepkor Ltd................................................ 305,001 2,092,383
Specialty Stores Ltd...................................... 520,832 484,837
Specialty Stores Ltd. Class N............................. 1,316,531 1,118,976
----------
3,696,196
----------
TELECOMMUNICATIONS EQUIPMENT--1.62%
Allied Technologies Ltd................................... 30,000 729,736
Plessey Corporation Ltd................................... 400,000 550,439
----------
1,280,175
----------
TOTAL SOUTH AFRICA (cost $45,143,434) 65,345,735
----------
ZIMBABWE--0.26%
COMMERCIAL BANKS--0.26%
NMBZ Holdings Ltd. (cost $786,953)........................ 250,000 208,333
----------
TOTAL COMMON STOCKS
(cost $50,475,636) 70,083,571
----------
</TABLE>
A-14
<PAGE> 32
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO--(CONTINUED)
<TABLE>
<CAPTION>
PAR VALUE
DESCRIPTION (000) U.S. $
- ----------- ----------- ----------
<S> <C> <C>
DEBT OBLIGATION--4.87%
Republic of South Africa Bond, 13.50%, 09/15/15
(cost $3,761,697)...................................... R 19,000 3,846,267
----------
SHORT-TERM INVESTMENT--6.32%
REPURCHASE AGREEMENT--6.32%
Repurchase Agreement dated 02/27/98 with Bear, Stearns & Co.
Inc., 5.54%, due 03/02/98, collateralized by $5,148,649
Federal National Mortgage Association 7.00%, due 04/25/24;
total value: $5,058,548; proceeds: $4,995,911 (cost
$4,993,606)............................................... U.S.$ 4,994 4,993,606
----------
TOTAL INVESTMENTS--99.93%
(cost $59,230,939)(a) 78,923,444
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES--0.07% 53,868
----------
NET ASSETS--100.00% 78,977,312
==========
</TABLE>
- ------------
* Non income producing securities.
R Republic of South Africa rand.
U.S.$United States dollars.
(a) Aggregate cost for U.S. federal income tax purposes is $59,230,939. The
aggregate unrealized appreciation/(depreciation) for all securities is as
follows:
<TABLE>
<CAPTION>
U.S. $
----------
<S> <C> <C>
Excess of market value over tax cost........................ 22,277,936
Excess of tax cost over market value........................ (2,585,431)
----------
Net unrealized appreciation................................. 19,692,505
==========
</TABLE>
See accompanying notes to financial statements.
A-15
<PAGE> 33
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
AT FEBRUARY 28, 1998
<TABLE>
<CAPTION>
U.S.$
-----------
<S> <C>
ASSETS
Investments, at value (cost $59,230,939) (Note 2)........... 78,923,444
Cash (representing foreign currency holdings with a cost of
$134,291 in an interest-bearing account).................. 135,288
Receivables:
Interest.................................................. 268,117
Dividends................................................. 28,295
Deferred organizational costs and prepaid expenses (Note
1)........................................................ 23,582
-----------
TOTAL ASSETS................................................ 79,378,726
-----------
LIABILITIES
Payables:
Investment advisory fees (Note 4)......................... 134,519
Directors' fees........................................... 41,399
Administration fees (Note 4).............................. 16,146
Other accrued expenses.................................... 209,350
-----------
TOTAL LIABILITIES........................................... 401,414
-----------
NET ASSETS.................................................. 78,977,312
===========
NET ASSETS CONSIST OF:
Common stock, $0.001 par value (200,000,000 shares
authorized; 4,496,521 shares issued and outstanding)
(Note 7)............................................... 4,497
Additional paid-in capital................................ 61,028,440
Undistributed net investment income....................... 133,001
Accumulated net realized loss on investments and foreign
currency transactions.................................. (1,878,854)
Net unrealized appreciation on investments, foreign
currency holdings and other assets and liabilities
denominated in foreign currencies...................... 19,690,228
-----------
NET ASSETS.................................................. 78,977,312
===========
NET ASSET VALUE PER SHARE
($78,977,312 / 4,496,521)................................. $ 17.56
===========
</TABLE>
See accompanying notes to financial statements.
A-16
<PAGE> 34
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
FOR THE YEAR ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
U.S. $
---------
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $5,054) (Note
2)........................................................ 1,217,406
Interest.................................................... 1,034,960
---------
TOTAL INVESTMENT INCOME..................................... 2,252,366
---------
EXPENSES
Investment advisory fees (Note 4)........................... 973,141
Professional fees........................................... 164,198
Administration fees (Note 4)................................ 117,110
Custodian fees.............................................. 87,122
Accounting fees............................................. 75,359
Transfer agent fees and expenses............................ 41,284
Insurance................................................... 41,085
Directors' fees and expenses................................ 38,030
Reports and notices to shareholders......................... 24,835
Amortization of organizational costs (Note 1)............... 21,798
NYSE listing fees........................................... 16,779
Miscellaneous............................................... 13,918
---------
TOTAL EXPENSES.............................................. 1,614,659
---------
NET INVESTMENT INCOME....................................... 637,707
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, FOREIGN
CURRENCY HOLDINGS AND OTHER ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES (Note 2)
Net realized gain/(loss) on:
Investments............................................... 3,973,595
Foreign currency transactions............................. (490,128)
---------
3,483,467
---------
Net change in unrealized appreciation/(depreciation) on:
Investments............................................... 1,848,813
Foreign currency holdings and other assets and liabilities
denominated in foreign currencies...................... (172,135)
---------
1,676,678
---------
Net realized and unrealized gain on investments, foreign
currency holdings and other assets and liabilities
denominated in foreign currencies......................... 5,160,145
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 5,797,852
=========
</TABLE>
See accompanying notes to financial statements.
A-17
<PAGE> 35
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
-------------------------------------
FEBRUARY 28, 1998 FEBRUARY 28, 1997
U.S. $ U.S. $
----------------- -----------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS OPERATIONS
Net investment income..................................... 637,707 771,986
Net realized gain/(loss) on investments and foreign
currency transactions.................................. 3,483,467 (630,421)
Net change in unrealized appreciation on investments,
foreign currency holdings and other assets and
liabilities denominated in foreign currencies.......... 1,676,678 (9,258,326)
---------- -----------
Net increase/(decrease) in net assets resulting from
operations............................................. 5,797,852 (9,116,761)
---------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income..................................... (515,660) (335,785)
Net realized gains on investments......................... (3,496,384) --
In excess of net realized gains on investments............ (1,878,854) --
---------- -----------
(5,890,898) (335,785)
---------- -----------
CAPITAL STOCK TRANSACTIONS
Cost of shares repurchased................................ (293,944) (3,379,400)
---------- -----------
NET DECREASE IN NET ASSETS.................................. (386,990) (12,831,946)
Net Assets:
Beginning of year......................................... 79,364,302 92,196,248
---------- -----------
End of year............................................... 78,977,312* 79,364,302
========== ===========
</TABLE>
- ------------
* Includes undistributed net investment income of $133,001.
See accompanying notes to financial statements.
A-18
<PAGE> 36
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS
AT FEBRUARY 28, 1998
1. ORGANIZATION
The New South Africa Fund Inc. (the "Fund") was incorporated in the State
of Maryland on January 11, 1994 as a registered, non-diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). Organizational costs of $109,346 have
been deferred and are being amortized on a straight-line basis over a 60-month
period from the date the Fund commenced operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies, which are
generally accepted in the United States of America, followed by the Fund.
i) Security Valuation
All securities for which the primary market is an exchange are valued at
the last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Portfolio securities
that are actively traded on the over-the-counter market, including listed
securities for which the primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked prices
provided by the principal market makers. Securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors. U.S. government
securities and other debt instruments having 60 days or less remaining until
maturity are stated at amortized cost if their original maturity was 60 days or
less, or by amortizing their market value as of the 61st day prior to maturity
if their original term to maturity exceeded 60 days (unless in either case the
Board of Directors determines that this method does not represent fair value).
ii) Repurchase Agreements
The Fund may invest temporarily, without limitation, in repurchase
agreements, which are agreements pursuant to which securities are acquired by
the Fund from a third party with the understanding that they will be repurchased
by the seller at a fixed price on an agreed date. These agreements may be made
with respect to any of the portfolio securities in which the Fund is authorized
to invest. Repurchase agreements may be characterized as loans secured by the
underlying securities. The Investment Adviser monitors the continued
creditworthiness of counterparties, subject to the supervision of the Fund's
Board of Directors. The resale price reflects the purchase price plus an agreed
upon market rate of interest which is unrelated to the coupon rate or date of
maturity of the purchased security. The collateral is marked to market daily. In
the event of default or bankruptcy of the counterparty, the Fund's realization
of the value of the collateral may be delayed or limited.
iii) Taxes
It is the intention of the Fund to continue to qualify as a regulated
investment company and to distribute, at least annually, substantially all of
its net investment income and any net long-term capital gains in excess of net
short-term capital losses. Accordingly, no provision for U.S. federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a U.S. federal excise
tax.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, but within the fiscal year are deemed
to arise on the first day of the following fiscal year. For the fiscal year
ended February 28, 1998, the Fund incurred and elected to defer $1,341,276 of
realized capital losses and $537,578 of realized foreign exchange losses.
A-19
<PAGE> 37
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Republic of South Africa ("South Africa") does not impose a withholding
tax on dividends paid by South African companies to the Fund. However, other
income received by the Fund from sources within South Africa or Southern African
regions may be subject to withholding and other taxes imposed by such countries.
iv) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Realized gains
and losses on the sale of investment securities are determined on the identified
cost basis. Interest income is recorded on the accrual basis and amortization of
premium and discount are recorded on a straight-line basis. Dividend income and
other distributions are recorded on the ex-dividend date or as the Fund becomes
aware of such dividends. The collectibility of income receivable from foreign
securities is evaluated periodically and resulting allowance for uncollectible
amounts, if any, are reflected currently in the determination of net investment
income. At February 28, 1998, no such allowance was established.
v) Distribution of Income and Gains
The Fund intends to distribute to shareholders at least annually,
substantially all of its net investment income and net realized capital gains.
Dividends and distributions to shareholders are recorded by the Fund on the
ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with U.S. federal income
tax regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within capital accounts based on their U.S. federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes, but not for tax purposes, are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent distributions exceed current and
accumulated earnings and profits for U.S. federal income tax purposes, they are
reported as distributions of paid-in capital. At February 28, 1998, the Fund
reclassified within the composition of net assets permanent book/tax differences
relating to realized gains on foreign currency denominated transactions of
$10,954 from accumulated realized losses to undistributed net investment income.
vi) Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the 12 p.m. mid-market
price of such currencies against U.S. dollars as quoted by major New York banks
as follows:
- investments, other assets and liabilities; at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income and expenses: at the
prevailing rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of equity-related securities sold
during the period. Accordingly, realized and unrealized foreign currency gains
and losses with respect to such securities are included in the reported net
realized and unrealized gains and losses on investment transactions balances.
However, the Fund does isolate the effect of fluctuations in foreign exchange
rates when determining
A-20
<PAGE> 38
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
the gain or loss upon the sale or maturity of foreign currency denominated debt
obligations pursuant to U.S. federal income tax regulations. Such amount is
categorized as foreign exchange gain or loss for both financial reporting and
income tax reporting purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities (other than investments) at period-end exchange rates are reflected
as a component of net unrealized appreciation/depreciation on investments,
foreign currency holdings, and other assets and liabilities denominated in
foreign currencies.
Net realized foreign exchange losses of $490,128 represent foreign exchange
gains and losses from sales and maturities of debt securities, holdings of
foreign currencies, transactions in forward foreign currency contracts, exchange
gains or losses realized between the trade dates and settlement dates on
security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
3. INVESTMENT TRANSACTIONS
For the year ended February 28, 1998, total purchases and sales of
portfolio investments excluding short-term securities, were $64,462,776 and
$66,290,417, respectively.
4. INVESTMENT ADVISER AND ADMINISTRATOR
i) Fleming International Asset Management Limited provides investment
advisory services to the Fund under the terms of an Investment Advisory
Agreement. Under the Investment Advisory Agreement, the Investment Adviser is
paid a monthly advisory fee at an annual rate of 1.25% of the Fund's average
weekly net assets.
ii) Bear Stearns Funds Management Inc. (the "Administrator"), a
wholly-owned subsidiary of The Bear Stearns Companies Inc., provides
administrative services to the Fund under an Administration Agreement. The
Administrator receives a fee that is computed weekly and paid quarterly at an
annual rate of 0.15% of the Fund's average weekly net assets.
5. TRANSACTIONS WITH AFFILIATES
For the year ended February 28, 1998, the Fund paid $207,152 and $10,537 in
brokerage commissions to Fleming Martin Ltd. and Robert Fleming Inc.,
respectively, affiliates of the Investment Adviser.
6. CONCENTRATION OF RISK
The South African and the Southern African regions' securities markets are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the securities of many
companies in South Africa or Southern African regions may be held by a limited
number of persons, which may limit the number of securities available for
investment by the Fund. The limited liquidity of South Africa and the Southern
African region securities markets may also affect the Fund's ability to acquire
or dispose of securities at the price and time it wishes to do so. The Fund,
subject to local investment limitation, may invest up to 10% of its assets in
non-publicly traded equity securities which may involve a high degree of
business and financial risk and may result in substantial losses. Because of the
current absence of any liquid trading market for these investments, the Fund may
take longer to liquidate these positions than would be the case for publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized on such sales could be less than
those originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded. At February 28, 1998, the Fund held no such securities.
A-21
<PAGE> 39
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Fund is permitted to engage in the trading of sovereign debt of South
Africa or Southern African regions which involves a substantial degree of risk.
The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal and/or
interest when due in accordance with the terms of such debt. Sovereign debt in
which the Fund invests is widely considered to have credit quality below
investment grade as determined by U.S. rating agencies. As a result, sovereign
debt may be regarded as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligations and involves major risk exposure to adverse conditions. However, the
Fund's investment in the government bond held at February 28, 1998 has been
rated by U.S. rating agencies as investment grade.
7. CAPITAL STOCK
The authorized capital stock of the Fund is 200,000,000 shares of common
stock, $0.001 par value. Of the 4,496,521 shares outstanding at February 28,
1998, Robert Fleming Inc., an affiliate of the Investment Adviser, owned 7,169
shares. In addition to the issuance of common stock to Robert Fleming Inc., a
public offering of the Fund's shares by a group of underwriters resulted in the
issuance of 4,750,000 shares of the Fund's common stock.
On February 29, 1996, the Board of Directors announced that it had given
the Fund's Investment Adviser discretion to cause the Fund to repurchase up to
5% of the outstanding shares when the discount to net asset value exceeds 20%.
During the quarter ended May 31, 1996, the Fund repurchased 5% or 237,858 of its
outstanding shares.
In addition, on February 20, 1997, the Board of Directors announced a
second share repurchase program with identical terms to the initial program.
During the quarter ended November 30, 1997, the Fund repurchased 22,790 of its
outstanding shares.
A-22
<PAGE> 40
THE NEW SOUTH AFRICA FUND INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
The New South Africa Fund Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The New South Africa Fund Inc. (the
"Fund") at February 28, 1998, the results of its operations for the year then
ended, the changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at February 28, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 8, 1998
A-23
<PAGE> 41
THE NEW SOUTH AFRICA FUND INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 11, 1994*
------------------------------------- THROUGH
FEBRUARY 28, 1997 FEBRUARY 29, 1996 FEBRUARY 28, 1995
----------------- ----------------- -----------------
U.S. $ U.S. $ U.S. $
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period................... 19.38 15.89 13.95**
Offering costs charged to additional paid-in capital... -- -- (0.19)
----------- ----------- ----------
19.38 15.89 13.76
----------- ----------- ----------
Net investment income.................................. 0.17+ 0.33 0.39
Net realized and unrealized gains/(losses) on
investments, foreign currency holdings and other
assets and liabilities denominated in foreign
currencies........................................... (2.12)+ 3.96 2.51
----------- ----------- ----------
Total from investment operations....................... (1.95)+ 4.29 2.90
----------- ----------- ----------
Dividends and distributions to shareholders from:
Net investment income................................ (0.07) (0.33) (0.39)
In excess of net investment income................... -- (0.42) (0.32)
Net realized gains on investments.................... -- (0.05) (0.06)
----------- ----------- ----------
Total dividends and distributions to shareholders...... (0.07) (0.80) (0.77)
----------- ----------- ----------
Antidilutive impact due to shares of beneficial
interest repurchased................................. 0.20 -- --
----------- ----------- ----------
Net asset value, end of period......................... 17.56 19.38 15.89
=========== =========== ==========
Market value, end of period............................ 14.00 15.38 13.38
=========== =========== ==========
Total investment return based on:(a)(b)
Market value......................................... (8.43)% 20.38% 1.50%
Net asset value...................................... (8.88)% 27.72% 22.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period.............................. 79,364,302 92,196,248 75,604,754
Ratio of expenses to average net assets................ 2.35% 1.98% 2.10%++
Ratio of net investment income to average net assets... 1.01% 1.77% 2.61%++
Portfolio turnover rate................................ 9.92% 18.91% 10.88%+++
Average commission rate per share(c)................... $ 0.0084 -- --
</TABLE>
- ------------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share.
+ Based on average shares outstanding.
++ Annualized.
+++ Not annualized.
(a) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of the period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained under
the Fund's Dividend Reinvestment Plan. Total investment return does not
reflect sales charges or brokerage commissions. Generally, total investment
return based on net asset value will be higher than total investment return
based on market value in periods where there is an increase in the discount
or a decrease in the premium of the market value to the net asset value
from the beginning to the end of such periods. Conversely, total investment
return based on the net asset value will be lower than total investment
return based on market value in periods where there is a decrease in the
discount or an increase in the premium of the market value to the net asset
value from the beginning to the end of such periods.
(b) Total investment return for periods of less than one year are not
annualized.
(c) Disclosure is required for fiscal years beginning on or after September 1,
1995. Represents average commission rate per share charged to the Fund on
purchases and sales of investments subject to such commissions during the
period.
See accompanying notes to financial statements.
A-24
<PAGE> 42
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO
AT FEBRUARY 28, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
DESCRIPTION SHARES U.S. $
- ----------- --------- ----------
<S> <C> <C>
COMMON STOCKS--88.59%
BOTSWANA--0.03%
Beverages & Hotels--0.01%
Sechaba Investment Trust Co. Ltd.......................... 10,800 7,766
----------
Commercial Banks--0.02%
Barclays Bank of Botswana Ltd............................. 5,000 7,826
Standard Chartered Bank Botswana Ltd...................... 10,000 11,844
----------
19,670
----------
Total Botswana (cost $33,443) 27,436
----------
SOUTH AFRICA--85.42%
Base Metals--7.79%
Anglovaal Ltd. "N" ordinary............................... 60,000 1,848,421
Gencor Ltd................................................ 1,000,000 4,330,840
----------
6,179,261
----------
Beverages & Hotels--3.66%
Interleisure Ltd.......................................... 382,800 461,462
Sun International (South Africa) Ltd...................... 381,400 255,430
The South African Breweries Ltd........................... 73,136 2,187,794
----------
2,904,686
----------
Building & Construction--5.11%
Barlow Ltd................................................ 180,000 1,898,649
LTA Ltd................................................... 200,000 1,294,787
Pretoria Portland Cement Co. Ltd.......................... 50,000 862,261
----------
4,055,697
----------
Chemicals & Oil--6.00%
Sasol Ltd................................................. 334,889 3,625,877
Sentrachem Ltd............................................ 600,000 1,133,162
----------
4,759,039
----------
Coal Mining--1.07%
Ingwe Coal Corporation Ltd................................ 135,700 848,220
----------
Commercial Banks--6.74%
NBS Holdings Ltd.......................................... 149,300 2,249,749
Nedcor Ltd................................................ 50,932 864,121
Standard Bank Investment Corp. Ltd........................ 54,900 2,236,689
----------
5,350,559
----------
Computers--Integrated Systems--1.60%
Persetel Holdings Ltd..................................... 200,000 1,272,464
----------
Diamond Mining--6.56%
DeBeers Consolidated Mines Ltd............................ 150,000 5,207,054
----------
Diversified Operations--0.98%
Anglo American Industrial Corp. Ltd....................... 20,000 779,105
----------
</TABLE>
A-25
<PAGE> 43
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
DESCRIPTION SHARES U.S. $
- ----------- --------- ----------
<S> <C> <C>
Electronics--1.24%
Reunert Ltd............................................... 368,633 987,520
----------
Food--8.91%
The Bidvest Group Ltd..................................... 352,240 2,201,746
The Tongaat-Hulett Group Ltd.............................. 224,883 3,526,740
Tiger Oats Ltd............................................ 80,000 1,343,900
----------
7,072,386
----------
Furniture & Households--3.78%
JD Group Ltd.............................................. 355,890 1,946,491
Protea Furnishers Ltd..................................... 4,000,000 1,053,689
----------
3,000,180
----------
Gold Mining--9.55%
Anglo American Corporation of South Africa Ltd............ 80,000 5,045,206
JCI Company Ltd........................................... 131,158 1,427,381
Western Areas Gold Mining Co. Ltd......................... 80,000 1,107,266
----------
7,579,853
----------
Insurance--4.99%
Liberty Life Association of Africa Ltd.................... 84,980 2,461,470
Norwich Holdings S.A. Ltd................................. 750,000 1,496,819
----------
3,958,289
----------
Paper & Packaging--3.85%
C.G. Smith Ltd............................................ 400,000 2,321,688
Nampak Ltd................................................ 170,000 730,550
----------
3,052,238
----------
Platinum--0.79%
Potgietersrust Platinums Ltd.............................. 100,000 625,070
----------
Steel & Alloys--0.74%
Iscor Ltd................................................. 769,844 584,322
----------
Stores--5.65%
CNA Gallo Ltd............................................. 719,097 642,123
Pepkor Ltd................................................ 305,001 1,327,719
Pick 'n Pay Stores Ltd.................................... 311,000 383,239
Pick 'n Pay Stores Ltd. "N"............................... 1,002,000 1,107,244
Specialty Stores Ltd...................................... 512,759 299,906
Specialty Stores Ltd. "N"................................. 1,295,793 723,180
----------
4,483,411
----------
Tobacco--3.88%
Rembrandt Group Ltd....................................... 300,000 3,080,701
----------
Transportation--2.53%
Safmarine & Rennies Holdings Ltd.......................... 800,000 2,009,153
----------
Total South Africa (cost $51,346,132) 67,789,208
----------
</TABLE>
A-26
<PAGE> 44
THE NEW SOUTH AFRICA FUND INC.
INVESTMENT PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
DESCRIPTION SHARES U.S. $
- ----------- --------- ----------
<S> <C> <C>
ZIMBABWE--3.14%
Beverages & Hotels--1.52%
Delta Corp. Ltd........................................... 770,703 1,206,647
----------
Building & Construction--0.48%
Portland Holdings Ltd..................................... 225,000 382,465
----------
Commercial Banks--0.73%
Barclays Bank of Zimbabwe Ltd............................. 175,000 579,289
----------
Tobacco--0.41%
BAT (Zimbabwe) Ltd........................................ 35,000 67,323
T.S.L. Ltd................................................ 430,000 261,597
----------
328,920
----------
Total Zimbabwe (cost $1,090,698) 2,497,321
----------
TOTAL COMMON STOCKS (cost $52,470,273) 70,313,965
SHORT-TERM INVESTMENT--4.40%
REPURCHASE AGREEMENT--4.40%
Repurchase Agreement dated 02/28/97 with Bear, Stearns
Securities Corp., 5.26%, due 03/03/97, collateralized
by $8,240,000 U.S. Treasury Strips (Principal--Only)
8.125%, 05/15/21; total value: $3,560,570; proceeds:
$3,491,469 (cost $3,489,939)........................... U.S.$3,490 3,489,939
TOTAL INVESTMENTS--92.99%
(cost $55,960,212)(a) 73,803,904
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES--7.01% 5,560,398
----------
NET ASSETS--100.00% 79,364,302
==========
</TABLE>
- ------------
U.S. $ United States dollars.
<TABLE>
(a) Aggregate cost for U.S. federal income tax purposes is $55,960,212. The
aggregate unrealized appreciation (depreciation) for all securities is as
follows:
U.S. $
----------
<S> <C> <C>
Excess of market value over tax cost................................... 20,037,312
Excess of tax cost over market value......................... (2,193,620)
----------
Net unrealized appreciation.................................. 17,843,692
==========
</TABLE>
See accompanying notes to financial statements.
A-27
<PAGE> 45
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
AT FEBRUARY 28, 1997
<TABLE>
<CAPTION>
U.S. $
-----------
<S> <C>
ASSETS
Investments, at value (cost $55,960,212) (Note 2)........... 73,803,904
Cash (representing foreign currency holdings with a cost of
$5,315,704 in an interest-bearing account)................ 5,483,946
Interest and dividends receivable........................... 228,522
Deferred organizational costs (Note 1)...................... 44,613
Receivable for securities sold.............................. 16,676
Prepaid expenses............................................ 20,130
-----------
TOTAL ASSETS........................................... 79,597,791
-----------
LIABILITIES
Payables:
Investment advisory fee (Note 5)....................... 74,889
Administration fee (Note 5)............................ 18,222
Other accrued expenses................................. 140,378
-----------
TOTAL LIABILITIES...................................... 233,489
-----------
NET ASSETS............................................. 79,364,302
-----------
Net assets consist of:
Common stock, $0.001 par value (200,000,000 shares
authorized; 4,519,311 shares issued and outstanding)
(Note 8).............................................. 4,519
Additional paid-in capital............................. 61,322,362
Accumulated net realized gain on investments and
foreign currency transactions......................... 23,871
Net unrealized appreciation on investments, foreign
currency holdings and other assets and liabilities
denominated in foreign currencies..................... 18,013,550
-----------
NET ASSETS............................................. 79,364,302
===========
NET ASSET VALUE PER SHARE
($79,364,302 / 4,519,311)................................. $ 17.56
===========
</TABLE>
See accompanying notes to financial statements.
A-28
<PAGE> 46
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
U.S. $
----------
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $5,387) (Note
2)........................................................ 1,686,571
Interest.................................................... 885,675
----------
TOTAL INVESTMENT INCOME..................................... 2,572,246
----------
EXPENSES
Investment advisory fees (Note 5)........................... 965,494
Legal fees.................................................. 277,931
Administration fees (Note 5)................................ 115,860
Custodian fees.............................................. 84,473
Accounting fees............................................. 75,803
Directors' fees and expenses................................ 66,727
Audit fees.................................................. 55,776
Reports and notices to shareholders......................... 49,076
Transfer agent fees and expenses............................ 35,960
Insurance................................................... 33,408
Amortization of organizational costs (Note 1)............... 21,798
NYSE listing fees........................................... 15,371
Miscellaneous............................................... 2,583
----------
TOTAL EXPENSES.............................................. 1,800,260
----------
NET INVESTMENT INCOME....................................... 771,986
----------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON INVESTMENTS,
FOREIGN CURRENCY HOLDINGS AND OTHER ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES (Note 2)
Net realized gain/(loss) on:
Investments............................................... 708,930
Foreign currency transactions............................. (1,339,351)
----------
(630,421)
----------
Net change in unrealized appreciation/(depreciation) on:
Investments............................................... (9,262,103)
Foreign currency holdings and other assets and liabilities
denominated in foreign currencies...................... 3,777
----------
(9,258,326)
----------
Net realized and unrealized losses on investments, foreign
currency holdings and other assets and liabilities
denominated in foreign currencies......................... (9,888,747)
----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........ (9,116,761)
==========
</TABLE>
See accompanying notes to financial statements.
A-29
<PAGE> 47
THE NEW SOUTH AFRICA FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
-------------------------------------
FEBRUARY 28, 1997 FEBRUARY 29, 1996
----------------- -----------------
U.S. $ U.S. $
----------------- -----------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS OPERATIONS
Net investment income.................................. 771,986 1,578,571
Net realized gain/(loss) on investments and foreign
currency transactions............................... (630,421) 1,842,268
Net change in unrealized appreciation on investments,
foreign currency holdings and other assets and
liabilities denominated in foreign currencies....... (9,258,326) 16,976,390
----------- ----------
Net increase/(decrease) in net assets resulting from
operations............................................. (9,116,761) 20,397,229
----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income.................................. (335,785) (1,578,571)
In excess of net investment income..................... -- (2,004,621)
Net realized gains on investments...................... -- (222,543)
----------- ----------
(335,785) (3,805,735)
----------- ----------
CAPITAL STOCK TRANSACTIONS
Cost of shares repurchased............................. (3,379,400) --
----------- ----------
NET INCREASE/(DECREASE) IN NET ASSETS.................... (12,831,946) 16,591,494
Net Assets:
Beginning of year........................................ 92,196,248 75,604,754
----------- ----------
End of year.............................................. 79,364,302 92,196,248
=========== ==========
</TABLE>
See accompanying notes to financial statements.
A-30
<PAGE> 48
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The New South Africa Fund Inc. (the "Fund") was incorporated in the State
of Maryland on January 11, 1994 as a registered, non-diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). Organizational costs of $109,346 have
been deferred and are being amortized on a straight-line basis over a 60-month
period from the date the Fund commenced operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies, which are
generally accepted in the United States of America, followed by the Fund.
i) Security Valuation
All securities for which the primary market is an exchange are valued at
the last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Portfolio securities
that are actively traded on the over-the-counter market, including listed
securities for which the primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked prices
provided by the principal market makers. Securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors. U.S. government
securities and other debt instruments having 60 days or less remaining until
maturity are stated at amortized cost if their original maturity was 60 days or
less, or by amortizing their market value as of the 61st day prior to maturity
if their original term to maturity exceeded 60 days (unless in either case the
Board of Directors determines that this method does not represent fair value).
ii) Repurchase Agreements
The Fund may invest temporarily, without limitation, in repurchase
agreements, which are agreements pursuant to which securities are acquired by
the Fund from a third party with the understanding that they will be repurchased
by the seller at a fixed price on an agreed date. These agreements may be made
with respect to any of the portfolio securities in which the Fund is authorized
to invest. Repurchase agreements may be characterized as loans secured by the
underlying securities. The Investment Adviser monitors the continued
creditworthiness of counterparties, subject to the supervision of the Fund's
Board of Directors. The resale price reflects the purchase price plus an agreed
upon market rate of interest which is unrelated to the coupon rate or date of
maturity of the purchased security. The collateral is marked to market daily. In
the event of default or bankruptcy of the counterparty, the Fund's realization
of the value of the collateral may be delayed or limited.
iii) Taxes
It is the intention of the Fund to continue to qualify as a regulated
investment company and to distribute, at least annually, substantially all of
its net investment income and any net long-term capital gains in excess of net
short-term capital losses. Accordingly, no provision for U.S. federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a U.S. federal excise
tax.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, but within the fiscal year are deemed
to arise on the first day of the following fiscal year. For the fiscal year
ended February 28, 1997, the Fund incurred and elected to defer foreign exchange
losses of $36,497.
A-31
<PAGE> 49
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Republic of South Africa ("South Africa") does not impose a withholding
tax on dividends paid by South African companies to the Fund. However, other
income received by the Fund from sources within South Africa or Southern African
regions may be subject to withholding and other taxes imposed by such countries.
iv) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Realized gains
and losses on the sale of investment securities are determined on the identified
cost basis. Interest income is recorded on the accrual basis. Dividend income
and other distributions are recorded on the ex-dividend date or as the Fund
becomes aware of such dividends. The collectibility of income receivable from
foreign securities is evaluated periodically and resulting allowance for
uncollectible amounts, if any, are reflected currently in the determination of
net investment income. At February 28, 1997, no such allowance was established.
v) Distribution of Income and Gains
The Fund intends to distribute to shareholders at least annually,
substantially all of its net investment income and net realized capital gains.
Dividends and distributions to shareholders are recorded by the Fund on the
ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with U.S. federal income
tax regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within capital accounts based on their U.S. federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent distributions exceed current and
accumulated earnings and profits for U.S. federal income tax purposes, they are
reported as distributions of paid-in capital. At February 28, 1997, the Fund
reclassified within the composition of net assets permanent book/tax differences
relating to realized gains on passive foreign investment company holdings of
$626,291 and realized losses on foreign currency denominated transactions of
$1,506,038 from accumulated realized gains to undistributed net investment
income. In addition, the Fund reclassified a net operating loss of $734,137 to
paid-in capital.
vi) Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the 12 p.m. mid-market
price of such currencies against U.S. dollars as quoted by major New York banks
as follows:
- investments, other assets and liabilities; at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income and expenses: at the
prevailing rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of equity-related securities sold
during the period. Accordingly, realized and unrealized foreign currency gains
and losses with respect to such securities are included in the reported net
realized and unrealized gains and losses on investment transactions
A-32
<PAGE> 50
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
balances. However, the Fund does isolate the effect of fluctuations in foreign
exchange rates when determining the gain or loss upon the sale or maturity of
foreign currency denominated debt obligations pursuant to U.S. federal income
tax regulations. Such amount is categorized as foreign exchange gain or loss for
both financial reporting and income tax reporting purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities (other than investments) at period-end exchange rates are reflected
as a component of net unrealized appreciation/depreciation on investments,
foreign currency holdings, and other assets and liabilities denominated in
foreign currencies.
Net realized foreign exchange losses of $1,339,351 represent foreign
exchange gains and losses from sales and maturities of debt securities, holdings
of foreign currencies, transactions in forward foreign currency contracts,
exchange gains or losses realized between the trade dates and settlement dates
on security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
3. FORWARD CURRENCY CONTRACTS
The Fund conducts any currency exchange transactions on a spot, i.e. cash,
basis at the rate prevailing in the currency exchange market. A forward currency
contract typically involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. When the Fund enters into a forward contract or other currency
obligation, the Fund's custodian or a sub-custodian will place cash or high
grade debt securities in a segregated account of the Fund in an amount equal to
the value of the Fund's total assets committed to the consummation of the
obligation. If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account so that
the value of the account will be equal to the amount of the Fund's commitment
with respect to the contract. During the year ended February 28, 1997, the Fund
held no such contracts.
4. INVESTMENT TRANSACTIONS
For the year ended February 28, 1997, total purchases and sales of
portfolio investments excluding short-term securities, were $7,058,988 and
$13,356,002, respectively.
5. INVESTMENT ADVISER AND ADMINISTRATOR
i) Fleming International Asset Management Limited provides investment
advisory services to the Fund under the terms of an Investment Advisory
Agreement. Under the Investment Advisory Agreement, the Investment Adviser is
paid a monthly advisory fee at an annual rate of 1.25% of the Fund's average
weekly net assets.
ii) Bear Stearns Funds Management Inc. (the "Administrator"), an affiliate
of Bear, Stearns & Co. Inc. ("Bear Stearns"), provides administrative services
to the Fund under an Administration Agreement. The Administrator receives a fee
that is computed weekly and paid quarterly at an annual rate of 0.15% of the
Fund's average weekly net assets.
6. TRANSACTIONS WITH AFFILIATES
For the year ended February 28, 1997, the Fund paid $9,476 and $1,014 in
brokerage commissions to Fleming Martin Ltd. and Martin & Co., respectively,
affiliates of the Investment Adviser.
A-33
<PAGE> 51
THE NEW SOUTH AFRICA FUND INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. CONCENTRATION OF RISK
The South African and the Southern African regions securities markets are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the securities of many
companies in South Africa or Southern African regions may be held by a limited
number of persons, which may limit the number of securities available for
investment by the Fund. The limited liquidity of South Africa and the Southern
African region securities markets may also affect the Fund's ability to acquire
or dispose of securities at the price and time it wishes to do so.
The Fund, subject to local investment limitation, may invest up to 10% of
its assets in non-publicly traded equity securities which may involve a high
degree of business and financial risk and may result in substantial losses.
Because of the current absence of any liquid trading market for these
investments, the Fund may take longer to liquidate these positions than would be
the case for publicly traded securities. Although these securities may be resold
in privately negotiated transactions, the prices realized on such sales could be
less than those originally paid by the Fund. Further, companies whose securities
are not publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded. At February 28, 1997, the Fund held no such securities.
The Fund is permitted to engage in the trading of sovereign debt of South
Africa or Southern African regions which involves a substantial degree of risk.
The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal and/or
interest when due in accordance with the terms of such debt. Sovereign debt in
which the Fund invests is widely considered to have credit quality below
investment grade as determined by U.S. rating agencies. As a result, sovereign
debt may be regarded as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligations and involves major risk exposure to adverse conditions.
8. CAPITAL STOCK
The authorized capital stock of the Fund is 200,000,000 shares of common
stock, $0.001 par value. Of the 4,519,311 shares outstanding at February 28,
1997, Robert Fleming Inc., an affiliate of the Investment Adviser, owned 7,169
shares. In addition to the issuance of common stock to Robert Fleming Inc., a
public offering of the Fund's shares by a group of underwriters resulted in the
issuance of 4,750,000 shares of the Fund's common stock.
On February 29, 1996, the Board of Directors announced that it had given
the Fund's investment adviser discretion to cause the Fund to repurchase up to
5% of the outstanding shares when the discount to net asset value exceeds 20%.
During the quarter ended May 31, 1996, the Fund repurchased 5% or 237,858 of its
outstanding shares.
In addition, on February 20, 1997, the Board of Directors announced a
second share repurchase program with identical terms to the initial program.
Since the date of the announcement through April 14, 1997, the Fund has not made
any such repurchases.
A-34
<PAGE> 52
THE NEW SOUTH AFRICA FUND INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
The New South Africa Fund Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The New South Africa Fund Inc. (the
"Fund") at February 28, 1997, the results of its operations for the year then
ended, the changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at February 28, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 14, 1997
A-35
<PAGE> 1
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK, $0.001 PAR VALUE
OF
THE NEW SOUTH AFRICA FUND INC.
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 1, 1998
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
JULY 29, 1998,
UNLESS THE OFFER IS EXTENDED
Depositary: PNC BANK, N.A.
<TABLE>
<S> <C>
By Mail/Overnight Courier: By Hand:
-------------------------- --------
400 Bellevue Parkway The Depository Trust Company
Wilmington, DE 19809 Transfer Agent Drop Service Department
Attn: Closed-End Fund Department ("TADS")
The New South Africa Fund Inc. 55 Water Street; South Street Entrance
Ground Floor
New York, New York 10041
Attn: Ken Batchelor
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set
forth above does not constitute a valid delivery.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be used (a) if you desire to effect the
tender transaction yourself, (b) if you intend to request your broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
you and the Shares are not registered in the name of such broker, dealer,
commercial bank, trust company or other nominee, and (c) by a broker, dealer,
commercial bank, trust company or other nominee effecting the transaction as a
registered owner or on behalf of a registered owner. To accept the Offer in
accordance with its terms, a properly completed and duly executed Letter of
Transmittal (or photocopy thereof bearing original signature(s) and any required
signature guarantees), any certificates representing Shares tendered, and any
other documents required by this Letter of Transmittal should be mailed or
delivered to the Depositary at the appropriate address set forth herein and must
be received by the Depositary prior to 12:00 midnight, New York City time, on
July 29, 1998, or such later time and date to which the Offer is extended,
unless the tendering party has satisfied the conditions for guaranteed delivery
described in Section 2 of the Offer to Purchase. Stockholders are not required
to pay a service charge to the Fund or the Depositary in connection with their
tender of Shares, but may be charged a fee by a broker, dealer or other
institution for processing the tender requested. Delivery of documents to a
book-entry transfer facility does not constitute delivery to the Depositary.
<PAGE> 2
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, EXACTLY AS NAME(S) APPEAR(S) ON TENDERED CERTIFICATE(S))
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) ENCLOSED
CERTIFICATE(S) (ATTACH SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
NO. OF
CERTIFICATE NO. OF SHARES
NO(S)* SHARES TENDERED
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL NO. OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed by Stockholders who tender Shares by book-entry transfer.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE UNDERSIGNED TENDERS ALL UNCERTIFICATED SHARES THAT MAY BE HELD IN THE
NAME(S) OF THE REGISTERED OWNER(S) BY THE FUND'S TRANSFER AGENT PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
THE BOXES BELOW ARE TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY
<TABLE>
<S> <C> <C>
- ---------
CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY
WITH THE DEPOSITORY TRUST COMPANY ("DTC") AND COMPLETE THE
FOLLOWING:
- ---------
Name of Tendering Institution.....................................
DTC Participant Number............................................
Transaction Code Number...........................................
- ---------
CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
- ---------
Name(s) of Registered Holder(s)...................................
Window Ticket Number (If Any).....................................
Date of Execution of Notice of Guaranteed Delivery................
Name of Eligible Institution Which Guaranteed Delivery............
DTC Participant Number (If Delivered by Book-entry Transfer)......
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
</TABLE>
2
<PAGE> 3
Ladies and Gentlemen:
The person(s) signing this Letter of Transmittal (the "Signor") hereby
tenders to The New South Africa Fund Inc. (the "Fund"), a non-diversified,
closed-end management investment company organized as a Maryland corporation,
the above-described shares of common stock, par value $0.001 per share (the
"Shares"), of the Fund, at a price (the "Purchase Price") equal to the net asset
value ("NAV") per Share determined as of the close of the regular trading
session of the New York Stock Exchange on July 29, 1998 (or, if the Offer is
extended, on the Expiration Date as defined in the Offer to Purchase) in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated July 1, 1998, receipt of which is hereby acknowledged, and in this Letter
of Transmittal (which Offer to Purchase and Letter of Transmittal together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the Signor hereby
sells, assigns and transfers to, or upon the order of, the Fund all right, title
and interest in and to all of the Shares that are being tendered hereby that are
purchased pursuant to the Offer and hereby irrevocably constitutes and appoints
PNC Bank, N.A. (the "Depositary") as attorney-in-fact of the Signor with respect
to such Shares, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) present
certificate(s) for such Shares, if any, for cancellation and transfer on the
Fund's books and (b) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms and subject to the conditions set forth in the Offer.
The Signor hereby represents and warrants that (a) the Signor, if a broker,
dealer, commercial bank, trust company or other nominee, has obtained the
tendering stockholder's instructions to tender pursuant to the terms and
conditions of this Offer in accordance with the letter from the Fund to brokers,
dealers, commercial banks, trust companies and other nominees; (b) when and to
the extent the Fund accepts the Shares for purchase, the Fund will acquire good,
marketable and unencumbered title thereto, free and clear of all security
interests, liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to their sale or transfer, and not
subject to any adverse claim; (c) on request, the Signor will execute and
deliver any additional documents that the Depositary or the Fund deems necessary
or desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and (d) the Signor has read and agrees to all of the terms and
conditions of the Offer.
The name(s) and address(es) of the registered owner(s) should be printed as
on the registration of the Shares. If the Shares tendered hereby are in
certificated form, the certificate(s) representing such Shares must be returned
together with this Letter of Transmittal.
The Signor recognizes that, under certain circumstances set forth in the
Offer to Purchase, the Fund may terminate or amend the Offer or may not be
required to purchase any of the Shares tendered hereby. In any such event, the
Signor understands that certificate(s) for the Shares not purchased, if any,
will be returned to the Signor at its registered address unless otherwise
indicated under the Special Delivery Instructions below. The Signor recognizes
that the Fund has no obligation, pursuant to the Special Payment Instructions,
to transfer any Shares from the name of the registered owner thereof if the Fund
purchases none of such Shares. The Signor understands that acceptance of Shares
by the Fund for payment will constitute a binding agreement between the Signor
and the Fund upon the terms and subject to the conditions of the Offer.
The check for the Purchase Price of the tendered Shares purchased will be
issued to the order of the Signor and mailed to the address indicated, unless
otherwise indicated in the box titled Special Payment Instructions or the box
titled Special Delivery Instructions. The Fund will not pay interest on the
Purchase Price under any circumstances.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Signor and all obligations of the Signor hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the Signor. Except as stated in the Offer, this tender is
irrevocable.
3
<PAGE> 4
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Purchase Price and/or return any certificate for
Shares not accepted for payment in the name(s) of the registered holder(s)
appearing under "Description of Shares Tendered." Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
Purchase Price for any Shares purchased and/or return any certificates for
Shares not accepted for payment (and accompanying documents, as appropriate) to
the address(es) of the registered holder(s) appearing under "Description of
Shares Tendered." In the event that both the Special Payment Instructions and
the Special Delivery Instructions are completed, please issue the check for the
Purchase Price and/or return any certificates for Shares not accepted for
payment in the name of, and deliver such check and/or return any such
certificates for Shares to, the person(s) so indicated. The undersigned
recognizes that the Fund has no obligation pursuant to the Special Payment
Instructions to transfer any Shares from the name of the registered holder
thereof if the Fund does not accept for payment any of the Shares tendered
hereby.
4
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6, 7 AND 11)
To be completed ONLY if certificates for unpurchased Shares and/or
any check are to be issued in the name of and sent to someone other than
the undersigned, or if Shares delivered by book-entry transfer which are
not purchased are to be returned by credit to an account maintained by
DTC.
Issue [ ] check [ ] certificates to:
[ ] Credit unpurchased Shares delivered by book-entry transfer to the DTC
account set forth below:
Name(s)
--------------------------------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
--------------------------------------------------------------------------
(DTC ACCOUNT NUMBER)
SIGNATURE
(IF SPECIAL PAYMENT INSTRUCTIONS ARE GIVEN)
(SEE INSTRUCTION 7)
--------------------------------------------------------------------------
SIGNATURE(S) OF PAYEE(S)
Dated , 1998
By signing and completing the form above, under the penalties of perjury,
I/we certify that the above tax identification or social security
number(s) is/are correct.
Note: Failure to complete and sign may result in backup withholding of 31%
of the payments due to you. See Instruction 11.
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 7)
To be completed ONLY if certificates for unpurchased Shares and/or
check, issued in the name of the undersigned, are to be sent to someone
other than the undersigned or to the undersigned at an address other than
that shown above.
Issue [ ] check [ ] certificates to:
[ ] Credit unpurchased Shares delivered by book-entry transfer to the DTC
account set forth below:
Name(s)
--------------------------------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
5
<PAGE> 6
IMPORTANT:
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 (BELOW) OR FORM W-8 (ENCLOSED)
AS APPLICABLE (SEE INSTRUCTIONS 1, 5, 6 AND 11)
The Offer is hereby accepted in accordance
with its terms.
- --------------------------------------------
- --------------------------------------------
(Signature(s) of Stockholder(s))
Dated: , 1998
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share certificates or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, agents, officers of corporations or others acting
in a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s):
- -------------------------------------------------
(Please Type or Print)
Capacity (Full Title):
- -------------------------------------------------
(See Instruction 5)
Address:
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
(Include Zip Code)
Area Codes and Telephone Number:
Home: Business:
Taxpayer Identification or Social Security No. (if applicable):
(Complete Substitute Form W-9 below or Form W-8 (enclosed), as applicable) (See
Instruction 11)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- -------------------------------------------------
Name:
- -------------------------------------------------
(Please Type or Print)
Title:
- -------------------------------------------------
Name of Firm:
- -------------------------------------------------
Address:
- -------------------------------------------------
- -------------------------------------------------
(Include Zip Code)
Area Code and Tel. No.:
- -------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith (including, for purposes of
this document, any participant in the book-entry transfer facility of The
Depository Trust Company ("DTC") whose name appears on DTC's security position
listing as the owner of Shares), unless such holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" above, or (b) if such Shares are tendered for the account
of a firm (an "Eligible Institution") which is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
a Stock Transfer Association approved medallion program (such as STAMP, SEMP or
MSP). In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be used (a) if Shares are to be forwarded herewith, (b) if
uncertificated Shares held by the Fund's transfer agent pursuant to the Fund's
Dividend Reinvestment Plan are to be tendered, or (c) if tenders are to be made
by book-entry transfer to the account maintained by the Depositary pursuant to
the procedure set forth in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL,
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. Stockholders have the responsibility to cause their
Shares (in proper certificated or uncertificated form), this Letter of
Transmittal (or a photocopy hereof bearing original signature(s) and any
required signature guarantees), and any other documents required by this Letter
of Transmittal to be timely delivered in accordance with the Offer.
The Fund will not accept any alternative, conditional or contingent
tenders.
All tendering stockholders, brokers, dealers, commercial banks, trust
companies and other nominees, by execution of this Letter of Transmittal (or
photocopy hereof), waive any right to receive any notice of the acceptance of
their tender.
3. Inadequate Space. If the space provided in any of the above boxes is
inadequate, the necessary information should be listed on a separate schedule
signed by all of the required signatories and attached hereto.
4. Tender of All Shares Held by the Stockholder. A stockholder wishing to
accept the Offer must tender, or cause the tender of, all Shares actually owned
or constructively owned by the stockholder pursuant to Section 318 of the
Internal Revenue Code of 1986, as amended, as of the date of purchase of Shares
pursuant to the Offer. Stockholders should consult their tax advisers as to the
application of the constructive ownership rules of Section 318. If more than
449,652 Shares are duly tendered prior to the expiration of the Offer (as
extended), the Fund will purchase Shares from tendering stockholders, in
accordance with the terms and conditions specified in the Offer to Purchase, pro
rata in accordance with the number of Shares tendered by each stockholder during
the period the Offer remains open, unless the Fund determines not to purchase
any Shares. Certificates representing Shares tendered but not purchased will be
returned promptly following the termination, expiration or withdrawal of the
Offer, without expense to the tendering stockholder.
5. Signatures on Letter of Transmittal, Authorizations and Endorsements.
(a) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever.
7
<PAGE> 8
(b) If any of the Shares tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
(c) If any of the tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations
of certificates.
(d) If this Letter of Transmittal or stock powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence
satisfactory to the Fund of their authority so to act must be submitted.
(e) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment is to be made to or
certificates for Shares not purchased are to be issued in the name of a
person other than the registered holder(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must
be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appears on the
certificate(s) for such Shares. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
6. Transfer Taxes. The Fund will pay any transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, (a)
payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) unpurchased Shares are to be registered in the name(s)
of, any person(s) other than the registered owner(s), or (b) if any tendered
certificate(s) are registered, or the Shares tendered are otherwise held, in the
name(s) of any person(s) other than the registered owner, the amount of any
transfer taxes (whether imposed on the registered owner(s) or such other
person(s)) payable on account of the transfer to such person(s) will be deducted
from the Purchase Price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted.
7. Special Payment and Delivery Instructions. If certificate(s) for
unpurchased Shares and/or check(s) are to be issued in the name of a person
other than the registered owner(s) or if such certificate(s) and/or check(s) are
to be sent to someone other than the registered owner(s) or to the registered
owner(s) at a different address, the captioned boxes "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal must be completed.
8. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tenders 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 or all tenders determined not
to be in appropriate form or to refuse to accept for payment, purchase or pay
for any Shares if, in the opinion of the Fund's counsel, accepting, purchasing
or paying for such Shares would be unlawful. The Fund also reserves the absolute
right to waive any of the conditions of the Offer or any defect in any tender,
whether generally or with respect to any particular Share(s) or stockholder(s).
The Fund's interpretations of the terms and conditions of the Offer (including
these instructions) shall be final and binding.
NONE OF THE FUND, THE INVESTMENT ADVISER TO THE FUND, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE
OF DEFECTS IN TENDERS, AND NONE OF THEM SHALL INCUR ANY LIABILITY FOR FAILURE TO
GIVE ANY SUCH NOTICE.
9. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to MacKenzie Partners, Inc., the
Information Agent, by telephoning 1-800-322-2885 toll-free. Requests for
additional copies of the Offer to Purchase and this Letter of Transmittal may
also be directed to the Information Agent. Stockholders who do not own Shares
directly may also obtain such
8
<PAGE> 9
information and copies from their broker, dealer, commercial bank, trust company
or other nominee. Stockholders who do not own Shares directly are required to
tender their Shares through their broker, dealer, commercial bank, trust company
or other nominee and should NOT submit this Letter of Transmittal to the
Depositary.
10. Restriction on Short Sales. Section 14(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14e-4 promulgated
thereunder make it unlawful for any person, acting alone or in concert with
others, to tender Shares in a partial tender offer for such person's own account
unless at the time of tender, and at the time the Shares are accepted for
payment, the person tendering has a net long position equal to or greater than
the amount tendered in (i) Shares, and will deliver or cause to be delivered
such Shares for the purpose of tender to the person making the Offer within the
period specified in the Offer, or (ii) an equivalent security and, upon
acceptance of his or her tender, will acquire Shares by conversion, exchange, or
exercise of such equivalent security to the extent required by the terms of the
Offer, and will deliver or cause to be delivered the Shares so acquired for the
purpose of tender to the Fund prior to or on the Expiration Date. Section 14(e)
and Rule 14e-4 provide a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering stockholder and the Fund, upon the terms and
subject to the conditions of the Offer, including such stockholder's
representation that (i) such stockholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act; and (ii) the tender of such Shares complies with Rule 14e-4.
11. Backup Withholding Tax. Each tendering U.S. stockholder who has not
already submitted a correct, completed and signed Form W-9 to the Fund, or does
not otherwise establish an exemption from withholding, must notify the
Depositary of such stockholder's correct taxpayer identification number ("TIN")
(or certify that such taxpayer is awaiting a TIN) and provide certain other
information by completing and providing to the Depositary the Substitute Form
W-9 provided under "Important Tax Information" below. Failure either to provide
the information on the form or to check the box in Part 2 of the form may
subject the tendering stockholder to 31% federal income tax backup withholding
on the payments made to the stockholder (or other payee) with respect to Shares
purchased pursuant to the Offer. The box in Part 3 of the form may be checked if
the tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked
and the Depositary is not provided with a TIN within sixty (60) days, the
Depositary will withhold 31% on all such payments thereafter until a TIN is
provided to the Depositary.
Each tendering non-U.S. stockholder who has not already submitted a
correct, completed and signed Form W-8 to the Fund should complete the Form W-8
included with this Letter of Transmittal and provide it to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL, OR FACSIMILE HEREOF BEARING ORIGINAL
SIGNATURE(S), PROPERLY COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES, SHARES (IN PROPER CERTIFICATED OR UNCERTIFICATED FORM),
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering stockholder and the Fund, upon the terms and
subject to the conditions of the Offer, including such stockholder's
representation that the Shares being tendered represent and will represent all
Shares actually owned by such stockholder as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by such stockholder
as of such date under Section 318 of the Internal Revenue Code of 1986, as
amended, have been or will be tendered pursuant to the Offer.
9
<PAGE> 10
IMPORTANT TAX INFORMATION
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO NON-U.S. STOCKHOLDERS. ALL
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE OFFER.
SUBSTITUTE FORM W-9 OR FORM W-8
Under the U.S. federal income tax laws, the Depositary may be required to
withhold 31% of the amount of any payment made to certain holders pursuant to
the Offer. In order to avoid such backup withholding, each tendering U.S.
stockholder must provide the Depositary with such stockholder's correct TIN by
completing the Substitute Form W-9 set forth below. In general, if a stockholder
is an individual, the TIN is the Social Security number of such individual. If
the Depositary is not provided with the correct TIN, the stockholder may be
subject to a penalty imposed by the Internal Revenue Service. Certain
stockholders (including, among others, all corporations) are not subject to
these backup withholding and reporting requirements, but should nonetheless
complete a Substitute Form W-9 to avoid possible erroneous backup withholding.
For further information regarding backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if Shares are held in more
than one name), consult the enclosed Guidelines for Certification of Taxpayer
Identification Number.
In order for a non-U.S. stockholder to avoid 31% backup withholding, such
stockholder must submit a statement to the Depositary signed under penalties of
perjury attesting as to its non-U.S. status. Form W-8 and instructions for such
statement are enclosed for such stockholders.
CONSEQUENCES OF FAILURE TO FILE SUBSTITUTE FORM W-9 OR FORM W-8
Failure to complete Substitute Form W-9 or Form W-8 will not, by itself,
cause the Shares to be deemed invalidly tendered but may require the Depositary
to withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, the
stockholder may claim a refund from the Internal Revenue Service.
<TABLE>
<C> <S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE SOCIAL SECURITY NUMBER
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND OR ----------------------------------
DATING BELOW EMPLOYER ID NUMBER
------------------------------------------------------------------------------------
PART 2--CHECK THE BOX IF YOU ARE NOT SUBJECT TO BACKUP WITHHOLDING UNDER THE
DEPARTMENT OF THE TREASURY PROVISIONS OF SECTION 3406(A)(1)(C) OF THE INTERNAL REVENUE CODE BECAUSE (1) YOU HAVE
INTERNAL REVENUE SERVICE NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF FAILURE TO
REPORT ALL INTEREST OR DIVIDENDS OR (2) THE INTERNAL REVENUE SERVICE HAS NOTIFIED YOU
THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING. [ ]
------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION: UNDER THE PENALTIES OF PERJURY. I CERTIFY THAT PART 3
IDENTIFICATION NUMBER THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT, AND AWAITING TIN [ ]
(TIN) COMPLETE.
SIGNATURE DATE
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER" FOR
ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
10
<PAGE> 11
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number to the payer, 31% of all
reportable payments due to me pursuant to the Offer will be withheld until I
provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within 60 days, such retained amounts
shall be remitted to the IRS as backup withholding.
Signature:
- ---------------------------------------------
Date:
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
REGARDING THE OFFER BY
THE NEW SOUTH AFRICA FUND INC.
TO PURCHASE FOR CASH 449,652 ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
This form must be used to accept the Offer (as defined below) if a
stockholder's certificates for Shares are not immediately available or if time
will not permit the Letter of Transmittal and other required documents to reach
PNC Bank, N.A., the Depositary, on or before the Expiration Date. Terms used in
this form that are not otherwise defined herein shall have the meanings
specified in the Offer to Purchase, dated July 1, 1998. This form may be
delivered by hand, overnight courier or mail to PNC Bank, N.A., the Depositary,
at the address set forth below AND MUST BEAR ORIGINAL SIGNATURES (NOT
PHOTOCOPIES OR FACSIMILES). Tenders using this form may be made only by or
through a member firm of a registered national securities exchange, or a
commercial bank or trust company having an office, branch or agency in the
United States.
Depositary: PNC BANK, N.A.
<TABLE>
<S> <C>
By Mail/Overnight Courier: By Hand:
400 Bellevue Parkway The Depository Trust Company
Wilmington, DE 19809 Transfer Agent Drop Service Department
Attn: Closed-End Fund Department ("TADS")
The New South Africa Fund Inc. 55 Water Street; South Street Entrance
Ground Floor
New York, New York 10041
Attn: Ken Batchelor
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to The New South Africa Fund Inc. (the
"Fund"), upon the terms and subject to the conditions set forth in its Offer to
Purchase, dated July 1, 1998, and the related Letter of Transmittal (which
together constitute the "Offer"), receipt of which are hereby acknowledged, the
number of Shares specified below and all Shares that may be held in the name(s)
of the registered holder(s) by the Fund's transfer agent pursuant to the
Dividend Reinvestment Plan pursuant to the guaranteed delivery procedures set
forth in Section 2 of the Offer to Purchase.
Number of Shares Tendered:
<TABLE>
<S> <C>
Certificate Nos. (if available): Name(s) of Record Holder(s):
- ---------------------------------------- ---------------------------------------
- ---------------------------------------- ---------------------------------------
Address:
------------------------------
------------------------------
------------------------------
If Shares will be tendered by book-entry
transfer to The Depository Trust Company,
please check box: [ ]
DTC Participant Number:
---------------
Area Code and Telephone Number:
---------------
</TABLE>
The undersigned also tenders all uncertificated Shares that may be held in
the name(s) of the registered holder(s) by the Fund's transfer agent pursuant to
the Fund's Dividend Reinvestment Plan.
If the undersigned is the beneficial owner of the Shares being tendered,
the undersigned hereby represents and warrants that such Shares represent and
will represent all Shares actually owned by the undersigned as of the date of
purchase of Shares pursuant to the Offer, and all Shares constructively owned by
the undersigned as of such date under Section 318 of the Internal Revenue Code
of 1986, as amended, have been or will be tendered pursuant to the Offer.
<TABLE>
<S> <C>
Dated: , 1998 --------------------------------------------
Signature
</TABLE>
2
<PAGE> 3
GUARANTEE
The undersigned, a member firm of a registered national securities
exchange, or a commercial bank or trust company having an office, branch or
agency in the United States, hereby: (a) represents that the above named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, as amended; (b) represents that the
tender of such Shares complies with Rule 14e-4; and (c) guarantees to deliver to
PNC Bank, N.A., the Depositary, certificates representing the Shares tendered
hereby, in proper form for transfer (or to tender Shares pursuant to the
procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company if so specified on the foregoing page), together with a
properly completed and duly executed Letter of Transmittal with any required
signature guarantees, and any other required documents, within five New York
Stock Exchange trading days after the date of receipt hereof by the Depositary.
Name of Firm:
--------------------------------------
(Please Print)
Authorized Signature:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address:
--------------------------------------
(Include Zip Code)
--------------------------------------
(Area Code and Telephone Number)
Dated: , 1998
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
1. An individual's account. The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individual(s)(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Account in the name of The ward, minor or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
6. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under State law
7. Sole proprietorship account The owner(4)
- -----------------------------------------------------------
8. A valid trust, estate, or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
9. Corporate account The corporation
10. Religious, charitable, or The organization
educational organization
account or an association,
club, or other tax-exempt
organization
11. Partnership account held in The partnership
the name of the business
12. A broker or registered nominee The broker or nominee
13. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owners Social Security number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number or Form W-7. Application
for International Taxpayer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, check the box in Part 3 of the Form. Generally, you will then have 60
days to obtain a taxpayer identification number and furnish it to the requester.
If the requester does not receive your taxpayer identification number within 60
days, backup withholding, if applicable, will begin and will continue until you
furnish your taxpayer identification number to the requester.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 408(b)(7) if the account
satisfies the requirements of section 401(f)(2).
- - The United States, or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A dealer in securities or commodities registered in the U.S., the District of
Columbia or a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remained trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payment to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include a portion of an includible payment for interest, dividends, or patronage
dividends in gross income, such failure will be subject to a penalty of 20% on
any portion of an underpayment attributable to that failure unless it is shown
that you acted with reasonable cause and in good faith.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
<TABLE>
<CAPTION>
CERTIFICATE OF FOREIGN STATUS
<S> <C> <C>
FORM W-8
(REV. NOVEMBER 1992)
DEPARTMENT OF THE
TREASURY
INTERNAL REVENUE SERVICE
- --------------------------------------------------------------------------------------------------------------
NAME OF OWNER (If joint account, also give joint owner's U.S. taxpayer identification number
name.)(See SPECIFIC INSTRUCTIONS.) (if any)
--------------------------------------------------------------------------------------------------
PLEASE PERMANENT ADDRESS (See SPECIFIC INSTRUCTIONS.) (Include apt.
PRINT or suite no.)
OR TYPE ------------------------------------------------------------
City, province or state, postal code, and country
------------------------------------------------------------
CURRENT MAILING ADDRESS, if different from permanent address
(Include apt. or suite no., or P.O. box if mail is not
delivered to street address.)
------------------------------------------------------------
City, town or post office, state, and ZIP code (If foreign
address, enter city, province or state, postal code, and
country.)
- -----------------------------------------------------------------------------------------------------------------------------
List account Account number Account type Account number Account type
information
here (Optional, see
SPECIFIC
INSTRUCTIONS.)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTICE OF CHANGE IN STATUS -- To notify the payer, mortgage interest recipient,
broker, or barter exchange that you no longer qualify for exemption, check
here....................................................................... [ ]
IF YOU CHECK THIS BOX, REPORTING WILL BEGIN ON THE ACCOUNT(S) LISTED.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
PLEASE CERTIFICATION -- (Check applicable box(es)). Under penalties
SIGN of perjury, I certify that:
HERE [ ] For INTEREST PAYMENTS, I am not a U.S. citizen or
resident (or I am filing for a foreign corporation,
partnership, estate, or trust).
[ ] For DIVIDENDS, I am not a U.S. citizen or resident (or I
am filing for a foreign corporation, partnership, estate, or
trust).
[ ] For BROKER TRANSACTIONS OR BARTER EXCHANGES, I am an
exempt foreign person as defined in the instructions below.
------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------
</TABLE>
GENERAL INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE UNLESS OTHERWISE NOTED.)
PURPOSE -- Use Form W-8 or a substitute form containing a substantially similar
statement to tell the payer, mortgage interest recipient, middleman, broker, or
barter exchange that you are a nonresident alien individual, foreign entity, or
exempt foreign person not subject to certain U.S. information return reporting
or backup withholding rules.
CAUTION: Form W-8 does not exempt the payee from the 30% (or lower treaty)
nonresident withholding rates.
NONRESIDENT ALIEN INDIVIDUAL -- For income tax purposes, "nonresident alien
individual" means an individual who is neither a U.S. citizen nor resident.
Generally, an alien is considered to be a U.S. resident if:
- - The individual was a lawful permanent resident of the United States at any
time during the calendar year, that is, the alien held an immigrant visa (a
"green card"), or
- - The individual was physically present in the United States on:
(1) at least 31 days during the calendar year, and
(2) 183 days or more during the current year and the 2 preceding calendar years
(counting all the days of physical presence in the current year, one-third
the number of days of presence in the first preceding year, and only
one-sixth of the number of days in the second preceding year).
SEE PUB. 519, U.S. Tax Guide for Aliens, for more information on resident and
nonresident alien status.
NOTE: If you are a nonresident alien individual married to a U.S. citizen or
resident and have made an election under section 6013(g) or (h), you are treated
as a U.S. resident and may not use Form W-8.
EXEMPT FOREIGN PERSON -- For purposes of this form, you are an "exempt foreign
person" for a calendar year in which:
1. You are a nonresident alien individual or a foreign corporation,
partnership, estate or trust,
2. You are an individual who has not been, and plans not to be, present in the
United States for a total of 183 days or more during the calendar year, and
3. You are neither engaged, nor plan to be engaged during the year, in a U.S.
trade or business that has effectively connected gains from transactions with a
broker or barter exchange.
If you do not meet the requirements of 2 or 3 above, you may instead certify
on Form 1001, Ownership, Exemption, or Reduced Rate Certificate, that your
country has a tax treaty with the United States that exempts your transactions
from U.S. tax.
FILING INSTRUCTIONS
WHEN TO FILE. -- File Form W-8 or substitute form before a payment is made.
Otherwise, the payer may have to withhold and send part of the payment to the
Internal Revenue Service (see Backup Withholding below). This certificate
generally remains in effect for three calendar years. However, the payer may
require you to file a new certificate each time a payment is made to you.
WHERE TO FILE. -- File this form with the payer of the qualifying income who is
the withholding agent (see Withholding
Agent on page 2). Keep a copy for your own records.
BACKUP WITHHOLDING. -- A U.S. taxpayer identification number or Form W-8 or
substitute form must be given to the payers of certain income. If a taxpayer
identification number or Form W-8 or substitute form is not provided or the
wrong taxpayer identification number is provided, these payers may have to
withhold 20% of each payment or transaction. This is called backup withholding.
NOTE: On January 1, 1993, the backup withholding rate increases from 20% to 31%.
Reportable payments subject to backup withholding rules are:
- - Interest payments under section 6049(a).
- - Dividend payments under sections 6042(a) and 6044.
- - Other payments (i.e., royalties and payments from brokers and barter
exchanges) under sections 6041, 6041A(a), 6045, 6050A and 6050N.
If backup withholding occurs, an exempt foreign person who is a nonresident
alien individual may get a refund by filing Form 1040NR, U.S. Nonresident Alien
Income Tax Return, with the Internal Revenue Service Center, Philadelphia, PA
19255, even if filing the return is not otherwise required.
U.S. TAXPAYER IDENTIFICATION NUMBER. -- The Internal Revenue law requires that
certain income be reported to the Internal Revenue Service using a U.S. taxpayer
identification number (TIN). This number can be a social security number
assigned to individuals by the Social Security Administration or an employer
identification
(Continued on back.)
- --------------------------------------------------------------------------------
Form W-8 (Rev. 11-92)
<PAGE> 2
Form W-8 (Rev. 11-92) Page 2
- --------------------------------------------------------------------------------
number assigned to businesses and other entities by the Internal Revenue
Service.
Payments to account holders who are foreign persons (nonresident alien
individuals, foreign corporations, partnerships, estates or trusts) generally
are not subject to U.S. reporting requirements. Also, foreign persons are not
generally required to have a TIN, nor are they subject to any backup withholding
because they do not furnish a TIN to a payer or broker.
However, foreign persons with income effectively connected with a trade or
business in the United States (income subject to regular (graduated) income
tax), must have a TIN. To apply for a TIN, use Form SS-4, Application for
Employer Identification Number, available from local Internal Revenue Service
offices, or Form SS-5, Application for a Social Security Card, available from
local Social Security Administration offices.
SPECIAL RULES
MORTGAGE INTEREST. -- For purposes of the reporting rules, mortgage interest is
interest paid on a mortgage to a person engaged in a trade or business
originating mortgages in the course of that trade or business. A mortgage
interest recipient is one who receives interest on a mortgage that was acquired
in the course of a trade or business.
Mortgage interest is not subject to backup withholding rules, but is subject
to reporting requirements under section 6050H. Generally, however, the reporting
requirements do not apply if the payer of record is a nonresident alien
individual who pays interest on a mortgage not secured by real property in the
United States. Use Form W-8 or substitute form to notify the mortgage interest
recipient that the payer is a nonresident alien individual.
PORTFOLIO INTEREST. -- Generally, portfolio interest paid to a nonresident alien
individual or foreign partnership, estate, or trust is not subject to backup
withholding rules. However, if interest is paid on portfolio investments to a
beneficial owner that is neither a financial institution nor a member of a
clearing organization, Form W-8 or substitute form is required.
REGISTERED OBLIGATIONS NOT TARGETED TO FOREIGN MARKETS qualify as portfolio
interest not subject to 30% withholding, but require the filing of Form W-8 or
substitute form. See Instructions to Withholding Agents on this page for
reporting rules.
See Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign
Corporations, for registered obligations targeted to foreign markets and when
Form W-8 or substitute form is not required on these payments.
BEARER OBLIGATIONS. -- The interest from bearer obligations targeted to foreign
markets is treated as portfolio interest and is
not subject to 30% withholding. Form W-8 or substitute form is not required.
DIVIDENDS. -- Any distribution or payment of dividends by a U.S. corporation
sent to a foreign address is subject to the 30% (or lower treaty) withholding
rate, but is not subject to backup withholding. Also, there is no backup
withholding on dividend payments made to a foreign person by a foreign
corporation. However, the 30% withholding (or lower treaty) rate applies to
dividend payments made to a foreign person by a foreign corporation if:
- - 25% or more of the foreign corporation's gross income for the three preceding
taxable years was effectively connected with a U.S. trade or business, and
- - The corporation was not subject to the branch profits tax because of an income
tax treaty (see section 884(e)).
If a foreign corporation makes payments to another foreign corporation, the
recipient must be a qualified resident of its country of residence to benefit
from that country's tax treaty.
BROKER OR BARTER EXCHANGES. -- Income from transactions with a broker or barter
exchanges is subject to reporting rules and backup withholding unless Form W-8
or substitute form is filed to notify the broker or barter exchange that you are
an exempt foreign person as defined on page 1.
SPECIFIC INSTRUCTIONS
NAME OF OWNER. -- If Form W-8 is being filed for portfolio interest, enter the
name of the beneficial owner.
U.S. TAXPAYER IDENTIFICATION NUMBER. -- If you have a U.S. taxpayer
identification number, enter your number in this space (see the discussion
earlier).
PERMANENT ADDRESS. -- Enter your complete address in the country where you
reside permanently for income tax purposes.
<TABLE>
<CAPTION>
IF YOU ARE: SHOW THE ADDRESS OF:
<S> <C>
An individual........ Your permanent
residence
A partnership or
corporation.......... Principal office
An estate
or trust............. Permanent residence or
principal office of
any fiduciary
</TABLE>
Also show your current mailing address if it differs from your permanent
address.
ACCOUNT INFORMATION (OPTIONAL) -- If you have more than one account (savings,
certificate of deposit, pension, IRA, etc.) with the same payer, list all
account numbers and types on one Form W-8 or substitute form unless your payer
requires you to file a separate certificate for each account.
If you have more than one payer, file a separate Form W-8 with each payer.
SIGNATURE. -- If only one foreign person owns the account(s) listed on this
form, that foreign person should sign the Form W-8.
If each owner of a joint account is a foreign person, each should sign a
separate Form W-8.
NOTICE OF CHANGE IN STATUS. -- If you become a U.S. citizen or resident after
you have filed Form W-8 or substitute form, or you cease to be an exempt foreign
person, you must notify the payer in writing within 30 days of your change in
status.
To notify the payer, you may check the box in the space provided on this form
or use the method prescribed by the payer.
Reporting will then begin on the account(s) listed and backup withholding may
also begin unless you certify to the payer that:
(1) The U.S. taxpayer identification number you have given is correct, and
(2) The Internal Revenue Service has not notified you that you are subject to
backup withholding because you failed to report certain income.
You may use Form W-9, Request for Taxpayer Identification Number and
Certification, to make these certifications.
If an account is no longer active, you do not have to notify a payer of your
change in status unless you also have another account with the same payer that
is still active.
FALSE CERTIFICATE. -- If you file a false certificate when you are not entitled
to the exemption from withholding or reporting, you may be subject to fines
and/or imprisonment under U.S. perjury laws.
INSTRUCTIONS TO
WITHHOLDING AGENTS
WITHHOLDING AGENT. -- Generally, the person responsible for payment of the items
discussed above to a nonresident alien individual or foreign entity is the
withholding agent (see Pub. 515).
RETENTION OF STATEMENT. -- Keep Form W-8 or substitute form in your records for
at least four years following the end of the last calendar year during which the
payment is paid or collected.
PORTFOLIO INTEREST. -- Although registered obligations not targeted to foreign
markets are not subject to 30% withholding, you must file Form 1042S, Foreign
Person's U.S. Source Income Subject to Withholding, to report the interest
payment. Both Form 1042S and a copy of Form W-8 or substitute form must be
attached to Form 1042, Annual Withholding Tax Return for U.S. Source Income of
Foreign Persons.
<PAGE> 1
LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES
REGARDING THE OFFER BY
THE NEW SOUTH AFRICA FUND INC.
TO PURCHASE FOR CASH 449,652
ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
TO: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Pursuant to your request, we are enclosing herewith the material listed
below relating to the offer by The New South Africa Fund Inc. (the "Fund") to
purchase 449,652 of its issued and outstanding shares of common stock, par value
$0.001 per share (the "Shares"), for cash at a price equal to their net asset
value ("NAV") determined as of the close of the regular trading session of the
New York Stock Exchange ("NYSE") on July 29, 1998, subject to the terms and
conditions set forth in the Offer to Purchase, dated July 1, 1998, and the
related Letter of Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended beyond July
29, 1998, the purchase price for Shares will be their NAV determined as of the
close of the regular trading session of the NYSE on the Expiration Date, as
extended.
The following documents are enclosed:
(1) OFFER TO PURCHASE, DATED JULY 1, 1998;
(2) LETTER OF TRANSMITTAL TO BE USED TO TENDER SHARES;
(3) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER;
(4) NOTICE OF GUARANTEED DELIVERY; AND
(5) LETTER TO CLIENTS, WHICH MAY BE SENT UPON ANY REQUEST FOR
INFORMATION BY YOUR CLIENTS FOR WHOSE ACCOUNT YOU HOLD SHARES
REGISTERED IN YOUR NAME (OR IN THE NAME OF YOUR NOMINEE) WITH
SPACE PROVIDED FOR OBTAINING SUCH CLIENTS' INSTRUCTIONS WITH
REGARD TO THE OFFER.
PLEASE NOTE THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998, UNLESS EXTENDED.
No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Shares pursuant to the Offer. The Fund will pay all
transfer taxes on its purchase of Shares, subject to Instruction 6 of the Letter
of Transmittal. Backup tax withholding at a 31% rate may be required unless an
exemption is proved or unless the required taxpayer identification information
is or has previously been provided. Certain withholdings may also apply with
respect to payments to non-U.S. stockholders. See Instruction 11 of the Letter
of Transmittal.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) stockholders residing 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. To the extent that the securities laws of any jurisdiction would
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on the Fund's behalf by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
<PAGE> 2
If a client instructs you by telephone to tender Shares, please record the
telephone conversation (in accordance with applicable law) and ask the client to
affirm that the Shares tendered by such client represent and will represent all
Shares actually owned by such client as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by such client as of
such date under Section 318 of the Internal Revenue Code of 1986, as amended,
have been or will be tendered pursuant to the Offer.
Additional copies of the enclosed material may be obtained from MacKenzie
Partners, Inc., the Information Agent, by calling 1-800-322-2885 toll-free. Any
question you have with respect to the Offer should be directed to the
Information Agent at the number indicated in the previous sentence.
Very truly yours,
THE NEW SOUTH AFRICA FUND INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF THE FUND, THE DEPOSITARY OR THE INFORMATION
AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON (A) TO MAKE ANY STATEMENTS WITH
RESPECT TO THE OFFER, OTHER THAN THE STATEMENTS SPECIFICALLY SET FORTH IN THE
OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL, OR (B) TO DISTRIBUTE ANY
MATERIAL WITH RESPECT TO THE OFFER OTHER THAN AS SPECIFICALLY AUTHORIZED HEREIN.
2
<PAGE> 1
LETTER TO CLIENTS OF BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES
REGARDING THE OFFER BY
THE NEW SOUTH AFRICA FUND INC.
TO PURCHASE FOR CASH 449,652
ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
To Our Clients:
Pursuant to your request, enclosed for your consideration are the Offer to
Purchase, dated July 1, 1998, (the "Offer to Purchase") of The New South Africa
Fund Inc. (the "Fund") and the related Letter of Transmittal pursuant to which
the Fund is offering to purchase 449,652 shares of its issued and outstanding
common stock, par value $0.001 per share (the "Shares"), for cash at a price
equal to their net asset value ("NAV") determined as of the close of the regular
trading session of the New York Stock Exchange ("NYSE") on July 29, 1998,
subject to the terms and conditions set forth in the Offer to Purchase and the
related Letter of Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended beyond July
29, 1998, the purchase price for Shares will be their NAV determined as of the
close of the regular trading session of the NYSE on the Expiration Date, as
extended.
The price for the Fund's shares on the NYSE has often been at a discount to
their NAV. The Fund is making the Offer as part of a series of actions by the
Fund's Board of Directors (the "Board") intended to reduce the size and
persistence of the discount.
In addition to the Offer, these other actions include (i) considering the
implementation of a share repurchase program or a further self-tender offer for
a number of Shares to be determined so as to seek to cause the discount to NAV
to narrow to and remain at a level considered to be acceptable by the Board if,
following the Expiration Date, the discount to NAV of the market price for the
Fund's Shares reaches and persists at a level judged by the Board to be
unacceptably high, and (ii) calling a special meeting of stockholders of the
Fund on or about September 28, 1998 at which the Board expects to ask
stockholders to vote to adopt a new fundamental policy enabling the Fund to
conduct further tender offers. The Board also expects to ask stockholders to
vote to adopt a new fundamental policy authorizing the Board to consider taking
other actions the Board deems advisable should the Board come to the view that
continuing to operate the Fund as a closed-end management investment company is
no longer economically feasible or in the best interests of all stockholders.
The Board believes that the Offer and the other actions it has taken or
plans to take are in the best interests of all stockholders of the Fund.
The Offer to Purchase and the Letter of Transmittal are being forwarded to
you as the beneficial owner of Shares held by us for your account but not
registered in your name. We are sending you the Letter of Transmittal for your
information only; you cannot use it to tender Shares we hold for your account. A
tender of such Shares can be made only by us as the holder of record and only
pursuant to your instructions.
Your attention is called to the following:
(1) The purchase price is the NAV determined as of the close of the
regular trading session of the NYSE on July 29, 1998, subject to the terms
and conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
(2) The Offer is for 449,652 of the issued and outstanding Shares of
the Fund and is not conditioned upon any minimum number of outstanding
Shares being tendered, but is subject to certain conditions set
<PAGE> 2
forth in the Offer to Purchase. Under the conditions described in the Offer
to Purchase, the Fund may terminate or amend the Offer or may postpone the
acceptance for payment of, payment for or purchase of any Shares.
(3) A stockholder wishing to accept the Offer must tender, or cause
the tender of, all Shares actually or constructively owned by the
stockholder, pursuant to Section 318 of the Internal Revenue Code of 1986,
as amended, as of the date of purchase of Shares pursuant to the Offer.
Stockholders should consult their tax advisers as to the application of the
constructive ownership rules of Section 318.
(4) Assuming more than 449,652 Shares are duly tendered prior to the
expiration of the Offer (as extended), the Fund will purchase Shares from
tendering stockholders in accordance with the terms and conditions
specified in the Offer to Purchase pro rata in accordance with the number
of Shares tendered by each stockholder during the period the Offer remains
open, unless the Fund determines not to purchase any Shares.
(5) Tendering stockholders will not be obligated to pay brokerage
commissions or, subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Fund pursuant to the Offer;
however, a broker, dealer or other person may charge a fee for processing
the transactions on behalf of stockholders. Stockholders are not required
to pay a service charge to the Fund or the Depositary in connection with
their tender of Shares.
If you wish to have us tender your Shares, please so instruct us by
completing, executing and returning to us the instruction form on the
reverse side hereof.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JULY 29, 1998, UNLESS EXTENDED.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) owners of Shares in any jurisdiction in which the Offer or its
acceptance would violate the laws of such jurisdiction. To the extent that the
securities laws of any jurisdiction would require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on the Fund's
behalf by one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Very truly yours,
THE NEW SOUTH AFRICA FUND INC.
2
<PAGE> 3
INSTRUCTIONS REGARDING THE OFFER BY
THE NEW SOUTH AFRICA FUND INC.
TO PURCHASE FOR CASH 449,652
ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
THIS FORM IS NOT TO BE USED TO TENDER SHARES DIRECTLY TO THE DEPOSITARY. IT
SHOULD BE SENT TO YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE ONLY IF SUCH FIRM IS THE HOLDER OF RECORD OF YOUR SHARES AND WILL BE
EFFECTING THE TENDER ON YOUR BEHALF. THE DEPOSITARY MUST RECEIVE YOUR SHARES ON
OR PRIOR TO JULY 29, 1998.
DO NOT COMPLETE THIS FORM IF YOU HAVE DECIDED NOT TO TENDER YOUR SHARES.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated July 1, 1998, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by The New
South Africa Fund Inc. (the "Fund") to purchase 449,652 shares of its issued and
outstanding common stock, par value $0.001 per share (the "Shares") at the net
asset value per Share as of the close of the regular trading session of the New
York Stock Exchange on July 29, 1998 (or, if the Offer is extended, on the new
Expiration Date), on the terms and subject to the conditions of the Offer.
The undersigned hereby instructs you to tender to the Fund all Shares that
are held by you for the account of the undersigned, including all Shares held by
you and all uncertificated Shares that may be held for the account of the
undersigned by the Fund's transfer agent pursuant to the Fund's Dividend
Reinvestment Plan, upon the terms and subject to the conditions of the Offer.
The undersigned hereby represents and warrants that: (i) the Shares which
you are being instructed to tender hereby represent and will represent all
Shares actually owned by the undersigned as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by the undersigned as
of such date under Section 318 of the Internal Revenue Code of 1986, as amended,
have been or will be tendered pursuant to the Offer; (ii) the undersigned has a
net long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended; and (iii) the
tender of such Shares complies with Rule 14e-4.
<TABLE>
<S> <C>
Account Number:
---------------------------------------------
Tax Identification or Social Security Number:
---------------------------------------------
Name(s) of Beneficial Owner(s):
---------------------------------------------
(Please Print)
---------------------------------------------
(Please Print)
---------------------------------------------
(Please Print)
Address:
---------------------------------------------
Area Code and Telephone Number:
---------------------------------------------
---------------------------------------------
(Signature of beneficial owner)
---------------------------------------------
(Signature of additional beneficial owner, if
any)
</TABLE>
Date: , 1998
3
<PAGE> 1
THE NEW SOUTH AFRICA FUND INC.
c/o Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
Dear Stockholder:
As you requested, we are enclosing a copy of The New South Africa Fund
Inc.'s Offer to Purchase, dated July 1, 1998 (the "Offer to Purchase"), 449,652
shares of its issued and outstanding common stock, par value $0.001 per share
(the "Shares"), for cash at a price equal to their net asset value ("NAV")
determined as of the close of the regular trading session of the New York Stock
Exchange ("NYSE") on July 29, 1998, subject to the terms and conditions set
forth in the Offer to Purchase and the related Letter of Transmittal (which
together constitute the "Offer").
THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 29, 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended beyond July
29, 1998, the purchase price for Shares will be their NAV determined as of the
close of the regular trading session of the NYSE on the Expiration Date, as
extended.
If, after reviewing the information set forth in the Offer to Purchase and
Letter of Transmittal, you wish to tender Shares for purchase by The New South
Africa Fund Inc. (the "Fund"), please contact your broker, dealer or other
nominee to effect the tender for you or, if you are the record owner of the
Shares, you may follow the instructions contained in the Offer to Purchase and
Letter of Transmittal. You must tender, or cause the tender of, all Shares
actually or constructively owned by you pursuant to Section 318 of the Internal
Revenue Code of 1986, as amended, as of the date of purchase of Shares pursuant
to the Offer. You should consult your tax adviser as to the application of the
constructive ownership rules of Section 318. Tendering stockholders will not be
obligated to pay brokerage commissions or, subject to Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the Fund
pursuant to the Offer; however, a broker, dealer or other person may charge a
fee for processing the transactions on behalf of stockholders. Stockholders are
not required to pay a service charge to the Fund or the Depositary in connection
with their tender of Shares.
Neither the Fund nor its Board of Directors is making any recommendation to
any holder of Shares as to whether to tender Shares. Each stockholder is urged
to consult his or her broker, investment adviser or tax adviser before deciding
whether to tender any Shares.
The Fund's NAV on June 26, 1998 was $15.21 per Share. The Fund's NAV is
published each week in The Wall Street Journal under the heading "Closed-End
Funds." The Fund's NAV is also published in The New York Times and Barron's.
During the pendency of the Offer, you may obtain current NAV quotations for
the Fund as of the close of business on the previous business day by calling
MacKenzie Partners, Inc., toll-free, at 1-800-322-2885 between the hours of 9:00
a.m. and 5:00 p.m., New York City time, Monday-Friday (except holidays).
Requests for additional copies of the Offer to Purchase, the Letter of
Transmittal and any other tender offer documents may also be directed to
MacKenzie Partners, Inc., the Information Agent, toll-free, at 1-800-322-2885.
Should you have any other questions on the enclosed material, please do not
hesitate to contact your broker, dealer or other nominee, or call MacKenzie
Partners, Inc., the Information Agent, at the number set forth immediately
above.
Yours truly,
THE NEW SOUTH AFRICA FUND INC.
<PAGE> 1
EXHIBIT a(4)
FOR IMMEDIATE RELEASE
Contact: Stockholder Relations
The New South Africa Fund Inc.
(800) 852-4750
The New South Africa Fund Inc. Announces Self-tender Offer and Other Measures
New York, June 30, 1998 -- The New South Africa Fund Inc. (NYSE: NSA), a
closed-end, non-diversified management investment company that seeks long-term
capital appreciation through investing primarily in equity securities of issuers
in the Republic of South Africa as well as, to a lesser extent, in other
countries in the Southern Africa region, today announced a series of significant
steps intended to reduce the discount to Net Asset Value ("NAV") at which the
Fund's shares have traded on The New York Stock Exchange.
First, the Fund announced its intention to conduct a self-tender offer pursuant
to which up to 10% of its outstanding securities will be repurchased by the Fund
at their full NAV as determined on the closing date of the tender offer. The
Fund stated that it expects the tender offer to start within five business days
and that it would remain open for 20 business days, unless extended.
Second, the Fund stated that if the discount to NAV reaches and persists at a
level judged by the Directors to be unacceptably high following the close of the
tender offer, the Directors would consider implementing a share repurchase
program or a further self-tender offer for a number of shares to be determined
so as to seek to cause the discount to NAV to narrow to and remain at a level
considered to be acceptable by the Board.
<PAGE> 2
Third, the Fund announced that its Board of Directors has called a special
stockholders' meeting to take place on or about September 28, 1998, at which it
expects to ask stockholders to:
o adopt a new fundamental policy to allow the Fund to conduct further self-
tender offers in the discretion of the Board of Directors; and
o adopt a resolution authorizing the Board of Directors to consider taking
other actions it deems advisable should the Directors come to the view that
continuing to operate the Fund as a closed-end management investment
company is no longer economically feasible or in the best interests of all
stockholders.
The Fund also said that the Directors wished to make it clear in this
announcement that it is their intention to continue to take action to combat the
discount to NAV following the self-tender if the discount again rises to an
unacceptably high level and is persistent. The Fund said that the Directors did
not wish to commit to any specific measures, or timing, because they wished to
retain maximum flexibility to deal with the problem should it recur. Discounts
to NAVs for shares of closed-end investment companies appear and close from time
to time depending upon various facts and circumstances, such as cyclical
popularity in the marketplace of such funds' underlying investments, and are
generally unpredictable, the Fund said.
The Fund stated that the self-tender and other similar measures which it might
take may be expected to have the effect of increasing the Fund's expenses
overall as well as increasing expenses per share because such measures will
result in there being fewer shares outstanding.
<PAGE> 3
Arnold Witkin, Chairman of the Fund, stated: "The Fund has enjoyed more than
respectable relative investment performance but stockholders have not fully
benefited from this performance because of the persistence and size of the
discount to NAV at which the Fund's shares have traded over the years. The
Board is determined to take action which will have the effect of narrowing the
discount on a sustained basis. This is why we are authorizing the self-tender
now and why we are announcing that we fully intend to consider further
self-tenders or share buy-back programs should the discount once again become
unacceptably high and persistent following our self-tender."
"We have also called for a special meeting of stockholders on or about September
28, 1998, in effect to seek stockholders' endorsement of the measures which we
have taken, and to obtain their approval to conduct further measures which we
believe to be in the best interests of stockholders in order to reduce the
discount to NAV on a sustained basis. At that meeting, we will ask stockholders
to authorize the Fund to conduct further self-tender offers. The discount
problem is faced by many closed-end funds, including the other NYSE-listed funds
investing in South Africa, and there are no easy answers to dealing with it.
The Board of Directors of The Fund wants to give all stockholders of the Fund
the opportunity to express their approval or disapproval of the actions we have
taken and are proposing to take."
Mr. Witkin went on to say: "The paradox is, unfortunately, that we may 'win the
battle but lose the war'. In other words, our concerted efforts going forward
to reduce or eliminate the discount to NAV on a long-term basis by repurchasing
shares in a tender offer, and taking other similar
<PAGE> 4
actions if necessary in the future, may be successful, but they will also shrink
the Fund and ultimately may make it too small to operate efficiently. This
eventuality is a real possibility and is another reason why we are calling for a
special stockholders' meeting."
The Fund stated that it would issue a proxy statement covering the special
stockholders' meeting in due course and that any stockholder who wishes to
submit a proposal for inclusion in the Fund's proxy statement may do so by
sending such proposal to: The New South Africa Fund Inc., c/o Bear Stearns Funds
Management Inc., 245 Park Avenue, New York, New York 10167. Proposals must be
received not later than July 20, 1998 to be considered for inclusion. The Fund
stated that any proposal must be accompanied by documentation proving share
ownership and other matters required by law. The Fund said that it reserves
the right to exclude from the proxy statement any proposal which does not comply
with applicable law.
Shares of The New South Africa Fund Inc. are traded on The New York Stock
Exchange, Inc. under the trading symbol "NSA". Fleming International Asset
Management Limited, the Fund's investment adviser, is an affiliate of Robert
Fleming Holdings Limited. As of December 31, 1997, The Fleming Group managed
approximately $100 billion in assets worldwide.
<PAGE> 1
EXHIBIT (c)(1)
DEPOSITARY AGREEMENT
Dated: as of June 30, 1998
PNC Bank, N.A.
400 Bellevue Parkway
Wilmington, Delaware 19809
Gentlemen:
The New South Africa Fund Inc., a Maryland corporation (the "Fund"), is making
a tender offer (hereinafter referred to, together with any amendment or
extensions thereof, as the "Tender Offer") to purchase outstanding shares of its
Common Stock, par value of $0.001 per share (the "Shares"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated July 1, 1998
(the "Offer to Purchase"), and in the related Letter of Transmittal ("Letter of
Transmittal"), including the instructions set forth therein. Definitive copies
of each document being distributed by the Fund to its stockholders in connection
with the Tender Offer have been or will be delivered to you.
The Tender Offer is being made on July 1, 1998 and will expire at 12:00
midnight, New York City time, on July 29, 1998, unless extended by the Fund as
provided in the Tender Offer (the last date to which the Tender Offer is
extended and on which it expires is herein referred to as the "Expiration
Date").
This will confirm our agreement with you to act as the Depositary in
connection with the Tender Offer as provided herein. In such capacity you will
receive and make payment for, on behalf of the Fund, Shares tendered pursuant to
the terms of the Tender Offer. In carrying out your duties as the Depositary in
connection with the Tender Offer, you are to act in accordance with the
following instructions:
1. You shall take steps to establish and, subsequent to such establishment,
maintain an account at The Depository Trust Company (hereinafter referred to
as "DTC") for book-
<PAGE> 2
entry transfers of Shares, as set forth in the Letter of Transmittal and
Section 2 of the Offer to Purchase.
2. You shall examine the Letters of Transmittal, the certificates for Shares
and the other documents delivered or mailed to you in connection with
tenders of Shares to ascertain whether they are completed and executed in
accordance with the instructions set forth in the Letters of Transmittal.
In the event any Letter of Transmittal has not been completed or executed
in accordance with the instructions set forth in such Letter of Transmittal,
or the certificates for Shares accompanying such Letter of Transmittal
are not in proper form for transfer (as required by the aforesaid
instructions), you shall endeavor to cause such action to be taken as is
necessary to correct such irregularity or you shall seek written
instructions from the Fund with respect to the validity or invalidity of such
attempted tender of Shares. All questions as to the validity, form,
eligibility (including timeliness of receipt) and acceptance of any
Shares tendered or delivered shall be determined by you on behalf of the
Fund in the first instance, but final decisions on all such matters shall
be made by the Fund. The Fund will reserve in the Tender Offer the absolute
right to reject any or all tenders of any particular Shares not in
appropriate form or the acceptance of which would, in the opinion of the
Fund's counsel, be unlawful and to waive any of the conditions of the
Tender Offer or any defect or irregularity in the tender of any Shares,
and the Fund's interpretation of the terms and conditions of the Tender
Offer will be final. Tendering shareholders are required to tender all
Shares actually and constructively owned as of the date of purchase of
Shares by the Fund pursuant to the Tender Offer ("complete position
tender"). Tenders that are not complete position tenders shall be
considered invalid and, if not corrected by the Expiration Date, shall be
rejected.
3. All Shares must be tendered in accordance with the terms and conditions
set forth in the Tender Offer. Payment for Shares tendered and purchased
pursuant to the Tender Offer shall be made only after deposit with you of
the certificates therefor, the Letter of Transmittal and any other
documents required by the Offer to Purchase or the Letter of Transmittal.
4. A tendering stockholder may withdraw Shares tendered as set forth in
Section 3 of the Offer to Purchase, in which event you shall, as promptly as
possible after notification of
<PAGE> 3
of such withdrawal, return such Shares to, or in accordance with the
instruction of, such stockholder and such Shares shall no longer be
considered properly tendered. All questions as to the form and validity
of notices of withdrawal, including timeliness of receipt, shall be
determined by the Fund, whose determination shall be final and binding.
5. On each business day up to the Expiration Date, you shall advise by
facsimile transmission, not later than 5:00 p.m., Wilmington time, and on
the Expiration Date, you shall advise by facsimile transmission not later
than 1:00 a.m. Wilmington time on the morning of the day following the
Expiration Date, the Fund and such other persons as the Fund may direct,
of the number of Shares which have been duly tendered on such day up until
4:00 p.m. Wilmington time and on the Expiration Date up until 12:00 midnight
Wilmington time, stating separately (i) the number of Shares tendered by
Notices of Guaranteed Delivery pursuant to Section 2 of the Offer to
Purchase, (ii) the number of Shares tendered about which you have questions
concerning validity and (iii) the cumulative number of Shares tendered. You
shall also inform, and cooperate in making available to, the Fund, and such
other persons as may be designated by the Fund, upon reasonable request made
from time to time, of such other information maintained by and accessible
to you in accordance with your standard operating procedure, as the Fund
may reasonably request, including, without limitation, the names and
addresses of registered holders of tendered Shares. Such cooperation
shall include, without limitation, the granting by you to the Fund and such
other persons as the Fund may request, of reasonable access to those
persons on your staff who are responsible for receiving tenders of
Shares, in order to ensure that immediately prior to the Expiration Date,
the Fund shall have received such information in sufficient detail as the
Fund may reasonably require.
6. Letters of Transmittal and telegrams, telexes, facsimile transmissions and
letters submitted in lieu thereof pursuant to Section 2 of the Offer to
Purchase shall be stamped by you as of the date and time of receipt thereof
and preserved by you as permanent records for seven years, or until you are
otherwise instructed by the Fund, whichever is shorter . You are to match
Notices of Guaranteed Delivery submitted pursuant to Section 2 of the
Offer to Purchase with the Share(s) tendered pursuant thereto. If so
instructed by the Fund, you shall telephone Eligible Institutions (as
defined in Section 2 of the Offer to
<PAGE> 4
Purchase) which have tendered a significant number of Shares by means of
the aforementioned procedures to ascertain information in connection
therewith.
7. The Fund will notify you of, and confirm in writing, any extension or
amendment of the Tender Offer.
8. You shall follow and act upon any amendments, modifications or supplements
to these instructions, and upon any further instructions in connection
with the Tender Offer, any of which may be given to you by the Fund in
writing or such other persons as it may authorize, but none of
which will increase your responsibilities without your consent.
9. The Fund will from time to time deposit or cause to be deposited with you
within a reasonable time after the Fund's acceptance for purchase of
tendered Shares, an amount equal to the aggregate purchase price of all
Shares to be purchased which you then hold. The Fund will deposit with
you or cause to be deposited with you an amount equal to the total stock
transfer taxes, if any, payable by the Fund pursuant to the provisions
of Instruction 6 of the Letter of Transmittal in respect of the transfer
of all the Shares to be purchased which you hold. You shall thereupon,
as promptly as possible, (a) purchase and affix appropriate stock
transfer tax stamps if required, (b) cause the tendered Shares which
have been thus paid for to be transferred and delivered to the Fund by
you, and (c) send a check for the purchase price (less the amount, if
any, of any stock transfer taxes which under Instruction 6 of the Letter
of Transmittal are to be deducted from the purchase price and, if
applicable, adjusted in accordance with the provisions of the Tender
Offer) of the Shares purchased to, or in accordance with the instruction
of, each of the stockholders who has tendered Shares deposited with you.
10. If, pursuant to the provisions of Instruction 4 of the Letter of
Transmittal, fewer than all the Shares evidenced by any certificate
submitted to you are purchased pursuant to the Tender Offer, you shall,
promptly after the Expiration Date, return or cause to be returned a new
certificate for the remainder of Shares not being tendered to, or in
accordance with the instruction of, each of such stockholders who has
made a partial tender of Shares deposited with you.
<PAGE> 5
11. If, pursuant to the Tender Offer, the Fund does not accept the receipt
of instructions and/or Shares from a tendering stockholder, you shall
return the certificates for such Shares to, or in accordance with the
instructions of, the persons who deposited the same, together with a letter
of notice, in form satisfactory to the Fund, explaining why the deposited
Shares are being returned, and return to the Fund any surplus funds
deposited by the Fund with you.
12. You hereby agree to perform the services as provided for herein and in the
Offer to Purchase and the Letter of Transmittal, including, but not
limited to, making proration computations and returning to stockholders
Shares tendered but not accepted for purchase.
13. As Depositary you:
a. shall have no obligation to make payment for any tendered Shares
unless the Fund shall have provided the necessary funds to pay in full
all amounts due and payable with respect thereto;
b. shall have no duties or obligations other than those specifically set
forth herein or as may subsequently be agreed to between you and the
Fund with respect to the Tender Offer;
c. will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness
of any stock certificates or the Shares represented thereby deposited
with you pursuant to the Tender Offer and will not be required and
will make no representations as to the validity, value or genuineness
of the Tender Offer;
d. shall not initiate any legal action hereunder without written approval
of the Fund and then only upon such reasonable indemnity as you may
request;
e. may rely on and shall be protected and indemnified by the Fund in
acting upon any certificate, instrument, opinion, notice, letter,
facsimile transmission, telegram or
<PAGE> 6
other document, or any security delivered to you, and reasonably
believed by you to be genuine and to have been signed by the proper
party or parties;
f. may rely on and shall be protected and indemnified by the Fund as
provided for herein in acting upon written or oral instructions with
respect to any matter relating to your acting as Depositary pursuant
to this Depositary Agreement;
g. shall carry insurance protecting the Fund and yourself against any
liability arising out of the loss, destruction or non-delivery of
checks or certificates for any cause; and
h. shall not at any time advise any person as to the wisdom of making
any tender pursuant to the Tender Offer, the value of the Shares or
as to any other financial or legal aspect of the Tender Offer or any
transaction related thereto.
14. It is understood and agreed that the securities, money, assets or
property (the "Property") to be deposited with or received by you as
Depositary from the Fund constitute a special, segregated account, held
solely for the benefit of the Fund and stockholders tendering
Shares, as their interests may appear, and the Property shall not be
commingled with the securities, money, assets or properties of you or any
other person, firm or corporation. You hereby waive any and all rights
of lien, attachment or set-off whatsoever, if any, against the Property
so to be deposited, whether such rights arise by reason of statutory or
common law, by contract or otherwise.
15. For services rendered as Depositary hereunder, you shall be entitled
to payment of a $15,000 flat fee, which does not include out of pocket
expenses, such as, but not limited to postage, form cost, printing, and
envelopes. Out of pocket expenses will be billed to the Fund as incurred.
16. The Fund covenants and agrees to indemnify and to hold you and PFPC Inc.
harmless against any costs, expenses (including reasonable fees of your
legal counsel), losses or damages, which may be paid, incurred or
suffered by or to which you may become subject, arising from or out of,
directly or indirectly, any claims or liability resulting from
<PAGE> 7
your actions or omission as Depositary pursuant hereto; PROVIDED that such
covenant and agreement does not extend to, and you shall not be indemnified
with respect to, such costs, expenses, losses and damages incurred or
suffered by you as a result of, or arising out of, your negligence, bad
faith, or willful failure to perform any of your obligations hereunder. In
no case will the Fund be liable under this indemnity with respect to any
claim against you unless, promptly after you have received any written
assertion of a claim or have been served with summons or other first legal
process giving information as to the nature and basis of the claim, you
notify the Fund, by letter or by cable or telex confirmed by letter, of the
written assertion of such claim against you or of any action commenced
against you or of the service of any summons on you, or other first legal
process giving information as to nature and basis of the claim provided
however, that failure by you to furnish such notification shall not impair
your right or indemnity unless such failure prejudices the Fund's ability
to defend such claim in any manner. The Fund will be entitled to
participate at its own expense in the defense of any such claim. In the
event the Fund determines to assume the defense of any such suit, the Fund
may select counsel of its own choosing (reasonably satisfactory to you) for
such purpose and the Fund will not be liable for the fees and expenses of
any additional counsel thereafter retained by you. The Fund shall not
settle or make any compromise of any claim without your consent, which
consent shall not be unreasonably withheld.
17. This Depositary Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware and shall inure to the benefit of
and the obligations created hereby shall be binding upon the successors and
assigns of the parties hereto. Nothing in this Agreement shall confer any
rights upon any person or entity other than the parties hereto and their
respective heirs, successors and permitted assigns.
18. This Depositary Agreement may be executed in separate counterparts, each
of which when executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE> 8
If the foregoing is acceptable to you, please acknowledge receipt of this
letter and confirm the arrangements herein provided by signing and returning
the enclosed copy.
Very truly yours,
The New South Africa Fund Inc.
By: /s/ Arnold Witkin
-----------------
Name: Arnold Witkin
Title: President and Chairman
ACCEPTANCE AS OF THE DATE HEREOF:
PNC Bank, N.A., as Depositary
By: /s/ Robert J. Perlsweig
-----------------------
Name: Robert J. Perlsweig
Title: Vice President
<PAGE> 1
EXHIBIT (c)(2)
MACKENZIE PARTNERS, INC.
156 Fifth Avenue, New York, NY 10010
Tel: 212-929-5500 Fax: 212-929-0308
1888 Century Park East, Los Angeles, CA 90067
Tel: 310-284-3110 Fax: 310-284-3140
June 26, 1998
The New South Africa Fund Inc.
c/o Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
Dear Sirs:
This is to confirm our agreement that effective the date hereof MacKenzie
Partners, Inc. ("MacKenzie Partners") has been engaged by The New South Africa
Fund Inc. (the "Company") as Information Agent for its proposed tender offer to
purchase 449,652 of its issued and outstanding shares of common stock, par
value $0.001 per share (the "Shares"), for cash at a price equal to the Net
Asset Value as of the close of the offer (the "Offer"). As Information Agent,
MacKenzie Partners will perform customary services (the "Services") to the
Company, including: i) distribution of the Offer materials to securityholders,
brokers and nominees, ii) telephoning brokers, nominees and other institutional
holders, iii) receiving telephone calls from securityholders, iv) providing
information to securityholders from the materials, and v) providing such other
advisory services as may be requested from time to time by the Company. We
agree not to make any representation not contained in the offer to Purchase and
related documents.
The Services shall continue until the expiration, termination or cancellation
of the Offer. In consideration of the Services you agree to pay MacKenzie
Partners the following:
1. The fee will be $4,500. In the event you request us to provide additional
services not contemplated by this agreement, you agree to pay us an
additional amount, if any, to be mutually agreed upon based on such
additional services provided. All fees will be payable upon expiration,
termination or cancellation of the Offer.
2. MacKenzie Partners' reasonable out-of-pocket expenses which shall include
but not be limited to: telephone and telecopier charges; copying costs;
messenger services; electronic news distribution; news wire service
charges; transportation, meals and lodging; data processing, and mailing,
postage and courier costs.
You agree that information and data which you furnish to us, whether written,
oral or pictorial, will be true, accurate and complete to the best of the
Company's knowledge and in all material respects and we are authorized to rely
upon it, as well as any information or data received from third parties with
your permission and on your behalf, as true, accurate and complete in all
<PAGE> 2
New South Africa Fund Inc.
June 26, 1998
Page 2
material respects. You agree to review carefully any materials which we prepare
for you pursuant to this Agreement and to promptly advise if in your reasonable
opinion these materials are materially false, inaccurate or incomplete.
You agree to indemnify and hold us and our employees harmless against any
losses, claims, damages, liabilities or expenses (including, without limitation,
legal and other related fees and expenses) to which we may become subject
arising from or in connection with the Services or matters which are the subject
of this Agreement; provided, however, that you shall not be liable under this
sentence in respect of any loss, claim, damage, liability or expense which was
the result of our (or our employees or agents) willful misfeasance or bad faith.
The Company will not be liable under this indemnity unless we give you prompt
written notice of any related claim or action brought against us. At your
election, you may assume the defense of any such claim or action. The provisions
of this paragraph shall indefinitely survive the period of this Agreement.
This Agreement shall be interpreted according to and governed by the laws of the
State of New York and each of us consents to the exclusive jurisdiction of the
courts of such State.
If any provision of this Agreement shall be held illegal, invalid or
unenforceable by any court, this Agreement shall be construed and enforced as if
that provision had not been contained herein and shall be deemed an Agreement
among us to the full extent permitted by applicable law.
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to us the enclosed duplicate of this letter.
Sincerely yours,
Agreed to as of the date first written above.
MacKenzie Partners, Inc. The New South Africa Fund Inc.
By: /s/ Joseph P. Doherty By: /s/ Arnold Witkin
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Joseph P. Doherty Arnold Witkin
Vice President President and Chairman
