Issues pertinent to Harvard University's holdings in companies with operations in South Africa are examined in this report to determine if Harvard should adopt any changes in its investment policy regarding U.S. companies in South Africa. The history of U.S. involvement in the South African economy is reviewed and both U.S. and South African regulations governing these business relationships are explained. South Africa's apartheid system is discussed and initiatives taken by Harvard relative to this situation are outlined. It is noted that current Harvard policy prohibits the University from investing in South African corporations or corporations that have a majority of their operations in South Africa. Harvard's relationship with companies conducting a minority of their operations in South Africa are examined. It is recommended that American corporate interests reassess their impact on South African society taking into account the fundamental human rights question raised by the government's apartheid policy. Criteria for behavior of companies that decide to stay in South Africa are proposed. The direct and indirect consequences of divestiture are examined in detail. Arguments for and against withdrawal are presented as the committee was unable to reach a consensus. The inherent uncertainty of consequences in South Africa of any massive action by American companies is emphasized. It is recommended that the issue of divestiture be examined on an individual company basis. Also discussed is the issue of U.S. bank loans to South Africa. A summary of recommendations and a timetable for implementation are included. Appended are: a list of relative bibliographic materials; an assessment of the financial costs of divestiture; and information supporting complete economic withdrawal from South Africa. (SF)