<PAGE>
LETTER TO SHAREHOLDERS THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
July 16, 1995
Dear Shareholder:
Southern Africa's progress towards a stable, democratic and free-market based
economic area continues apace. With the eyes of the world focused on the region
observers can only be impressed by the relatively smooth transition process
towards the modernization of both its political and economic structures.
Despite climatic problems that have severely impaired agricultural production,
Southern Africa's economic resurgence appears soundly based. Industrial
production has been growing rapidly while inflation remains relatively under
control. The recent rise in short-term interest rates in South Africa suggests
that both politicians and central bankers are taking the fight against inflation
seriously and that there is a good possibility that a more stable economic
recovery can be engineered, rather than the "boom to bust" cycles that have been
the historical norm for the region.
INCREASE IN INVESTMENT SPENDING
Most encouraging has been the upsurge in investment spending over the past
twelve months. Industrialists clearly display an enthusiasm for future
production and profit potential and we look forward to some reduction in the
alarmingly high levels of unemployment in the region as a result.
In this regard the progress towards a new labor bill in South Africa is to be
welcomed. A potential reduction in the hostile and often violent relationship
between capital and labor in the region can only be positive for the future.
However, for a sustained improvement in competitiveness and structural
unemployment levels the rigidities within the labor system must be reduced. The
government's desire to institutionalize a system of labor relations akin to the
Scandinavian or German models must take account of the need for flexibility. At
present, South African labor productivity is extremely poor relative to many
other industrializing countries jostling for a growing share of the world's
trade.
At the same time, it is to be hoped that domestic opposition to the
privatization of state assets, primarily generated from organized labor, can be
overcome. Besides the obvious benefits of forcing South Africa's "parastatals"
to become more competitive in a free market, the prospect of generating funds
from privatization proceeds for the country's Reconstruction and Development
Program will tend to alleviate international investor concerns as to the
potential impact on government finances of this huge investment program.
FOREIGN ASSET OWNERSHIP
Recent moves to liberalize capital flows are also welcome. South African
institutions, which were previously prohibited from owning overseas assets, may
now "swap" domestic assets with foreign assets provided they can find a
counterparty ready to execute the transaction. Foreign buyers will be approved
by the central bank on a case-by-case basis and will presumably be compelled to
agree to some restrictions on the sale of their newly acquired South African
assets. Though it is hard to see why an overseas party would agree to any
constraints on resale when that party may currently enter or exit the market
freely, any move towards greater liberalization must be welcome.
Overall, we remain very positive about the outlook for the region's stock
markets. With South Africa's corporate profits expected to rise by more than 25%
1
<PAGE>
THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
per annum in both 1995 and 1996, the current year price earnings multiple of
around 14.5 times does not appear excessive.
Overseas money flows into the region continue to grow steadily, though most
overseas funds remain underweighted in the region relative to the benchmark
weighting of South Africa in the Morgan Stanley Capital International Free Index
and the International Finance Corporation Investable Index. This is a positive
sign and we anticipate continued capital flows over the remainder of 1995 as
international investors build their exposure to this fast growing area of the
world.
AREAS OF INVESTMENT
We continue to maintain a broadly fully invested portfolio for The Southern
Africa Fund. We are focusing on issues that we believe offer long-term growth
characteristics, particularly in the areas of publishing, technology, retail and
telephone. More economically sensitive issues such as mining and paper remain
underweighted relative to the benchmark JSE All Share Index. We continue to
slowly build positions in the relatively illiquid markets of Botswana and
Zimbabwe and to monitor other potential opportunities in the region.
For the six months ended May 31, 1995, The Southern Africa Fund achieved a total
return of +7.4% on a net asset value basis, which compares with a +7.5% return
for the benchmark JSE Index over the same period.
Thank you for your interest and investment in The Southern Africa Fund. We look
forward to reporting its progress to you in the coming months.
Sincerely,
/s/ Dave H. Williams
Dave H. Williams
Chairman and President
/s/ Mark H. Breedon
Mark H. Breedon
Senior Vice President and Portfolio Manager
2
<PAGE>
TEN LARGEST EQUITY HOLDINGS
MAY 31, 1995 (UNAUDITED) THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COMPANY U.S.$ VALUE PERCENT OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Anglo-American Corp. of South Africa, Ltd. $ 6,376,733 5.9%
- ---------------------------------------------------------------------------------------------------------
De Beers Centenary AG 6,066,866 5.6
- ---------------------------------------------------------------------------------------------------------
South African Breweries, Ltd. 5,295,604 4.9
- ---------------------------------------------------------------------------------------------------------
Wooltru, Ltd.-Cl. A 4,188,167 3.9
- ---------------------------------------------------------------------------------------------------------
Rembrandt Group, Ltd. 4,153,921 3.8
- ---------------------------------------------------------------------------------------------------------
Malbak, Ltd. 3,791,791 3.5
- ---------------------------------------------------------------------------------------------------------
Sappi, Ltd. 3,329,709 3.1
- ---------------------------------------------------------------------------------------------------------
Nampak, Ltd. 3,326,013 3.1
- ---------------------------------------------------------------------------------------------------------
South African Iron & Steel Industrial Corp., Ltd. 3,264,155 3.0
- ---------------------------------------------------------------------------------------------------------
Gencor, Ltd. 3,223,702 2.9
- ---------------------------------------------------------------------------------------------------------
Total $43,016,661 39.7%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (UNAUDITED) THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 97.6%
BOTSWANA -- 0.5%
BEVERAGES -- 0.1%
Kgolo Ya Sechaba, Ltd................... 100,000 $ 55,800
------------
INSURANCE -- 0.1%
Botswana Insurance
Holding, Ltd......................... 190,000 140,220
------------
INVESTMENT
TRUSTS -- 0.3%
Sechaba Investment Trust................ 398,000 315,216
------------
Total Botswana Securities
(cost $580,995)...................... 511,236
------------
SOUTH AFRICA -- 93.0%
BEVERAGES -- 4.9%
South African Breweries, Ltd.(c)........ 187,332 5,295,604
------------
CHEMICALS -- 3.5%
AECI, Ltd............................... 150,000 1,243,544
African Oxygen, Ltd..................... 80,000 2,522,424
------------
3,765,968
------------
COMPUTER SOFTWARE
& SERVICES -- 1.2%
Dimension Data
Holdings, Ltd........................ 186,600 1,255,328
------------
ENERGY DOMESTIC
INTEGRATED -- 2.4%
Engen, Ltd.............................. 375,000 2,650,177
------------
ENGINEERING &
CONSTRUCTION -- 4.7%
Murray & Roberts
Holdings, Ltd........................ 530,650 3,101,108
Power Technologies, Ltd................. 918,900 2,023,129
------------
5,124,237
------------
FINANCIAL SERVICES -- 4.8%
Amalgamated Banks of
South Africa ........................ 800,000 2,935,580
Standard Bank
Investment Corp., Ltd................ 63,800 2,219,734
------------
5,155,314
------------
FOODS/FOOD
PROCESSING -- 2.0%
Premier Group Holdings, Ltd............. 1,700,000 $ 2,194,890
------------
HOUSEHOLD
PRODUCTS -- 1.9%
J.D. Group, Ltd......................... 507,143 2,067,721
------------
INSURANCE -- 4.4%
Metropolitan Life, Ltd.................. 305,800 2,929,995
Mutual & Federal
Insurance Co., Ltd................... 100,000 1,440,609
Real Africa Holdings, Ltd............... 900,000 415,874
------------
4,786,478
------------
MINING &
METALS -- 20.0%
Anglo-American Coal
Corp., Ltd........................... 45,000 3,143,517
Anglo-American Corp. of
South Africa, Ltd.................... 120,000 6,376,733
Driefontein Consolidated, Ltd........... 150,000 2,058,983
Gencor, Ltd............................. 1,000,000 3,223,702
HJ Joel Mining Co., Ltd.(a)............. 400,000 337,048
Leslie Gold Mines, Ltd.................. 200,000 271,813
Randfontein Estates
Gold Mining Co.,
Witwatersrand, Ltd................... 80,000 434,901
Rustenburg Platinum
Holdings, Ltd........................ 50,000 1,121,229
South Africa Iron &
Steel Industrial
Corp., Ltd........................... 2,729,279 3,264,155
Western Areas Gold
Mining Co., Ltd...................... 125,000 1,469,489
------------
21,701,570
------------
MULTI-INDUSTRY
COMPANIES -- 6.5%
Anglo-American Industrial
Corp., Ltd........................... 30,566 1,545,332
Anglovaal, Ltd.......................... 50,000 1,698,831
Barlow, Ltd............................. 250,000 2,616,200
Safmarine & Rennies
Holdings, Ltd........................ 400,000 1,168,796
------------
7,029,159
------------
</TABLE>
4
<PAGE>
THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
PACKAGING -- 3.1%
Nampak, Ltd............................. 741,600 $ 3,326,013
------------
PAPER & FOREST
PRODUCTS -- 3.1%
Sappi, Ltd.............................. 175,000 3,329,709
------------
PRINTING &
PUBLISHING -- 2.6%
Nasional Pers Beperk.................... 200,000 964,936
Omni Media Corp......................... 201,000 1,857,570
------------
2,822,506
------------
RETAIL -- 7.1%
Edgars Stores, Ltd...................... 50,000 1,630,878
McCarthy Retail, Ltd.................... 232,300 915,561
Pepkor, Ltd............................. 150,000 935,716
Wooltru, Ltd.-Class A................... 708,426 4,188,167
------------
7,670,322
------------
TELEPHONE
UTILITY -- 2.1%
Electronic Media
Network, Ltd......................... 700,000 428,105
Multichoice, Ltd........................ 700,000 1,902,691
------------
2,330,796
------------
TOBACCO -- 3.8%
Rembrandt Group, Ltd.(c)................ 571,300 4,153,921
------------
MISCELLANEOUS -- 14.9%
Bid Corp., Ltd.......................... 500,000 1,291,112
Compagnie Financiere
Richemont AG......................... 200,000 2,283,229
De Beers Centenary AG.(c)............... 240,000 6,066,866
Malbak, Ltd.(c)......................... 600,000 3,791,791
Servgro International, Ltd.............. 575,000 1,977,100
Tempora Investments, Ltd................ 120,000 766,513
------------
16,176,611
------------
Total South African Securities
(cost $80,260,567)................... 100,836,324
------------
ZIMBABWE -- 4.1%
AUTO & RELATED -- 0.1%
Chloride CA, Ltd........................ 2,300,000 149,439
------------
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
BEVERAGES -- 0.8%
Delta Corp.............................. 569,000 $ 840,224
------------
ENTERTAINMENT &
LEISURE -- 0.6%
Zimbabwe Sun............................ 2,610,000 632,073
------------
MINING &
METALS -- 0.9%
Bindura Nickel.......................... 150,000 194,920
Reunion Mining Plc.(b).................. 300,000 330,000
Reunion Mining Plc.
Warrants............................. 20,000 -0-
Zimbabwe Alloys ZM...................... 787,000 464,855
------------
989,775
------------
MULTI-INDUSTRY
COMPANIES -- 1.4%
PG Industries........................... 405,000 277,496
TA Holdings, Ltd........................ 12,008,000 1,276,692
------------
1,554,188
------------
PAPER & FOREST
PRODUCTS -- 0.2%
Art Corp................................ 3,000,000 194,920
------------
RETAIL -- 0.1%
Caps Holdings........................... 100,000 70,880
------------
Total Zimbabwean
Securities
(cost $4,822,873).................... 4,431,499
------------
Total Common Stocks
(cost $85,664,435)................... 105,779,059
------------
TIME DEPOSIT -- 1.4%
Sumitomo Trust &
Banking, NY 6.125%,
6/01/95 (cost $1,500,000)............ US$1,500 1,500,000
------------
TOTAL INVESTMENTS -- 99.0%
(cost $87,164,435)...................... 107,279,059
Other assets less liabilities -- 1.0%... 1,108,712
------------
NET ASSETS -- 100%......................... $108,387,771
============
</TABLE>
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Denominated in U.S. Dollars. Issued with one warrant per every three
ordinary shares. Each warrant gives the holder the right to subscribe for
one ordinary share at U.S. $7.50 twice a year through April, 1997.
(c) Security, or a portion thereof, has been segregated to collateralize a
forward exchange currency contract.
See notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995 (UNAUDITED) THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $87,164,435)........................... $107,279,059
Cash............................................................................. 66,769
Receivable for investment securities sold........................................ 4,045,530
Interest and dividends receivable................................................ 385,291
Net unrealized appreciation on forward foreign exchange contract................. 139,365
Deferred organization expenses and other assets.................................. 49,861
------------
Total assets..................................................................... 111,965,875
------------
LIABILITIES
Payable for investment securities purchased...................................... 2,981,279
Advisory fee payable............................................................. 241,489
Sub-advisory fees payable........................................................ 98,459
Administrative fee payable....................................................... 18,460
Accrued expenses and other liabilities........................................... 238,417
------------
Total liabilities................................................................ 3,578,104
------------
NET ASSETS (equivalent to $18.04 per share, based on 6,007,100
shares outstanding)........................................................... $108,387,771
============
COMPOSITION OF NET ASSETS:
Common stock, at par............................................................. $60,071
Additional paid-in capital....................................................... 83,255,566
Undistributed net investment income.............................................. 449,822
Accumulated net realized gain.................................................... 4,365,793
Net unrealized appreciation of investments and foreign currency
denominated assets and liabilities............................................ 20,256,519
------------
$108,387,771
============
NET ASSET VALUE PER SHARE........................................................... $18.04
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
MAY 31, 1995 (UNAUDITED) THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $132,523)............................................ $919,607
Interest......................................................................................... 903,037
--------
Total investment income.......................................................................... $1,822,644
EXPENSES
Advisory fee..................................................................................... 472,037
Sub-advisory fees................................................................................ 197,196
Directors' fees & expenses....................................................................... 119,183
Administrative fee............................................................................... 104,799
Custodian........................................................................................ 88,460
Audit & legal.................................................................................... 37,199
Transfer agency.................................................................................. 24,303
Reports and notices to shareholders.............................................................. 17,150
Amortization of organization expenses............................................................ 5,981
Miscellaneous.................................................................................... 14,325
--------
Total expenses................................................................................... 1,080,633
----------
Net investment income............................................................................ 742,011
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments................................................................. 910,151
Net realized gain on foreign currency transactions............................................... 3,455,642
Net change in unrealized appreciation of investments............................................. 931,143
Net change in unrealized appreciation of foreign currency denominated assets and liabilities..... (112,627)
----------
Net gain on investments.......................................................................... 5,184,309
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.......................................................... $5,926,320
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED MARCH 7,1994*
MAY 31, 1995 TO
(UNAUDITED) NOVEMBER 30, 1994
------------ -----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income............................................................ $ 742,011 $ 2,509,536
Net realized gain on investments and foreign currency transactions............... 4,365,793 4,917,386
Net unrealized appreciation of investments and foreign currency
denominated assets and liabilities............................................ 818,516 19,438,003
------------ ------------
Net increase in net assets from operations....................................... 5,926,320 26,864,925
DIVIDENDS & DISTRIBUTIONS
Dividend from net investment income.............................................. (2,847,473) -0-
Distribution from net realized gain.............................................. (4,579,449) -0-
Dividend in excess of net investment income...................................... (292,189) -0-
COMMON STOCK TRANSACTIONS
Net proceeds from sale of shares of common stock................................. -0- 84,600,000
Offering costs charged to additional paid-in capital............................. -0- (1,384,473)
------------ ------------
Total increase (decrease)........................................................ (1,792,791) 110,080,452
NET ASSETS:
Beginning of period.............................................................. 110,180,562 100,110
------------ ------------
End of period (including undistributed net investment income of $449,822
and $2,509,536, respectively)................................................. $108,387,771 $110,180,562
============ ============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
See notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (UNAUDITED) THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Southern Africa Fund, Inc. (the "Fund") was incorporated under the laws of
the State of Maryland on March 25, 1993 and is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. On February 14, 1994, the Fund sold 7,100 shares of common stock for
$100,110 to Alliance Capital Management, L.P. the ("Investment Manager"). The
Fund commenced operations on March 7, 1994. The following is a summary of
significant accounting policies of the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a securities exchange are valued at the closing
price on such exchange on the day of valuation or, if no such closing price is
available, the last bid price quoted on such day. Other securities for which
market quotations are readily available will be valued in a like manner.
Securities for which market quotations are not readily available are valued in
good faith at fair value using methods determined by the Board of Directors.
Readily marketable portfolio securities may be valued on the basis of prices
provided by a pricing service when such prices are believed by the Investment
Manager to reflect the fair market value of such securities. Securities which
mature in 60 days or less are valued at amortized cost, which approximates
market value, unless this method does not represent fair value.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when earned or accrued.
Net realized gains on currency transactions of $3,455,642 represent net foreign
exchange gains and losses from holding of foreign currencies, currency gains and
losses realized between the trade and settlement dates on foreign security
transactions, and the difference between amounts of dividends, interest and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected as
a component of net unrealized appreciation of investments and foreign currency
denominated assets and liabilities.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $60,000 have been deferred and are being
amortized on a straight-line basis through March 1999.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. Withholding taxes on foreign interest and dividends have been provided
for in accordance with the applicable tax requirements.
5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. Interest income is accrued daily. Security
transactions are accounted for on the date the securities are purchased or sold.
Security gains and losses are determined on the identified cost basis.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles.
8
<PAGE>
THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
7. CONCENTRATION OF RISK
Investing in equity securities of Southern African issuers involves special
considerations and risks not typically associated with investments in the United
States. Among others, the risks associated with political and economic
uncertainty, particularly with respect to South Africa, may adversely affect the
securities markets of Southern African countries.
8. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
Due to permanent book-to-tax differences in the treatment of foreign currency
transactions, a $337,937 foreign currency gain was reclassified from accumulated
net realized gain to undistributed net investment income.
- --------------------------------------------------------------------------------
NOTE B: ADVISORY, SUB ADVISORY AND ADMINISTRATIVE FEES
Under the terms of a Management Agreement, the Fund pays its Investment Manager
a fee, calculated and paid quarterly, equal to an annualized rate of .90 of 1%
of the Fund's average weekly net assets during the quarter.
Under the terms of Sub-Advisory Agreements, the Fund pays Investec Asset
Management (International) Limited and Sanlam Asset Management (Gibraltar)
Limited a fee, calculated and paid quarterly, equal to an annualized rate of .20
of 1% of the greater of (i) the Fund's average weekly net assets invested in
securities of South African issuers or (ii) 90% of the Fund's average weekly net
assets during the quarter.
Under the terms of an Administrative Agreement, the Fund pays its Administrator,
Middlesex Administrators L.P. (the "Administrator") a monthly fee equal to the
annualized rate of .20 of 1% of the Fund's average adjusted weekly net assets
subject to an annual minimum of $150,000. The Administrator prepares financial
and regulatory reports and provides other clerical and administrative services.
- --------------------------------------------------------------------------------
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $36,496,252 and $15,078,309, respectively, for the period ended
May 31, 1995.
At May 31, 1995 the cost of securities for federal income tax purposes was
$85,664,436. Accordingly, gross unrealized appreciation of investments was
$22,228,558 and gross unrealized depreciation of investments was $2,113,934,
resulting in net unrealized appreciation of $20,114,624 (excluding foreign
currency transactions).
FORWARD CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original contract
and the closing of such contract is included in net realized gain or loss on
foreign currency transactions.
Fluctuation in the value of forward exchange currency contracts are recorded for
financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash or investments in a separate
account of the Fund having a value equal to the aggregate amount of the Fund's
commitments under forward exchange currency contracts entered into with respect
to position hedges.
Risk may arise from the potential inability of a counterparty to meet the terms
of a contract and from
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
At May 31, 1995, the Fund had an outstanding forward exchange currency contract
with Brown Brothers Harriman & Co. to sell 91,970,000 South African Rand
expiring on June 30, 1995 with a cost of $24,870,832. The market value of the
forward exchange currency contract at May 31, 1995 was $25,010,197 resulting in
an unrealized appreciation of $139,365.
- --------------------------------------------------------------------------------
NOTE D: CAPITAL STOCK
There are 100,000,000 shares of $.01 par value capital stock authorized.
Of the 6,007,100 shares of Common Stock outstanding at May 31, 1995, the
Investment Manager owned 7,100 shares. In addition to the shares issued to the
Investment Manager, an initial public offering of the Fund's shares resulted in
the issuance of 6,000,000 shares of the Fund's common stock, for net proceeds of
$84,600,000 after deducting underwriting discounts and commissions.
Offering costs of $1,384,473 relating to the initial public offering have been
charged to additional paid-in capital.
- --------------------------------------------------------------------------------
NOTE E: QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET REALIZED
AND UNREALIZED NET INCREASE
GAIN (LOSS) ON (DECREASE)
INVESTMENTS AND IN NET ASSETS
NET INVESTMENT FOREIGN CURRENCY RESULTING FROM MARKET PRICE
INCOME TRANSACTIONS OPERATIONS ON NYSE
--------------- -------------------- ------------------- -----------------
TOTAL PER TOTAL PER TOTAL PER
QUARTER ENDED (000) SHARE (000) SHARE (000) SHARE HIGH LOW
- ------------- ------ ----- ------- ------ ------- ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
May 31, 1995............. $ 192 $.03 $11,295 $ 1.88 $11,487 $1.91 $15.50 $12.750
February 28, 1995........ 550 .09 (6,111) (1.01) (5,561) (.92) $15.25 $12.625
------ ---- ------- ------ ------- -----
$ 742 $.12 $ 5,184 $ .87 $ 5,926 $ .99
====== ==== ======= ====== ======= =====
November 30, 1994........ $ 840 $.14 $ 9,873 $ 1.64 $10,713 $1.78 $15.25 $13.625
August 31, 1994.......... 708 .12 12,652 2.11 13,360 2.23 $14.50 $11.125
May 31, 1994*............ 962 .16 1,830 .30 2,792 .46 $15.00 $10.750
------ ---- ------- ------ ------- -----
$2,510 $.42 $24,355 $ 4.05 $26,865 $4.47
====== ==== ======= ====== ======= =====
</TABLE>
- --------------------------------------------------------------------------------
* From March 7, 1994 (commencement of operations).
10
<PAGE>
FINANCIAL HIGHLIGHTS THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
DECEMBER 1, 1994 MARCH 7, 1994*
TO MAY 31, 1995 TO
(UNAUDITED) NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
Net asset value, beginning of period.................................... $ 18.34 $ 13.87(a)
------- -------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income................................................... .12 .42
Net realized and unrealized gain on investments
and foreign currency transactions.................................... .87 4.05
------- -------
Net increase in net asset value from operations......................... .99 4.47
------- -------
LESS: DISTRIBUTIONS
- -------------------
Dividend from net investment income..................................... (.47) -0-
Distribution from capital gains......................................... (.77) -0-
Distribution in excess of net investment income......................... (.05) -0-
------- -------
Total distributions..................................................... (1.29) -0-
------- -------
Net asset value, end of period.......................................... $ 18.04 $ 18.34
======= =======
Market value, end of period............................................. $14.875 $14.875
======= =======
TOTAL RETURN
- ------------
Total investment return based on: (b)
Market value......................................................... 9.15% 5.50%
======= =======
Net asset value...................................................... 7.36% 30.07%
======= =======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted)............................... $108,388 $110,181
Ratio of expenses to average net assets................................. 2.07%(c) 2.30%(c)
Ratio of net investment income to average net assets.................... 1.42%(c) 3.65%(c)
Portfolio turnover rate................................................. 17% 15%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Net of offering cost of $.23.
(b) 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. 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 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. Total investment return for a period
of less than one year is not annualized.
(c) Annualized.
11
<PAGE>
THE SOUTHERN AFRICA FUND, INC.
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
DAVE H. WILLIAMS, Chairman and President
T. N. CHAPMAN
PROF. DENNIS DAVIS
DAVID D.T. HATENDI
DOUGLAS DE JAGER
DR. WILLEM DE KLERK
STEPHEN KOSEFF
MOSS L. LEOKA
DR. ENOS MABUZA
RONNIE MASSON
FRANK SAVAGE
REBA W. WILLIAMS
PETER G.A. WRIGHTON
OFFICERS
NORMAN S. BERGEL, Senior Vice President
MARK H. BREEDON, Senior Vice President
NICHOLAS CROSSLAND, Vice President
EDMUND P. BERGAN, JR., Secretary
MARK D. GERSTEN, Treasurer & Chief Financial Officer
PATRICK J. FARRELL, Controller
ADMINISTRATOR
MIDDLESEX ADMINISTRATORS L.P.
P.O. Box 9011
Princeton, NJ 08543
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
THE BANK OF NEW YORK
101 Barclay Street
New York, NY 10286
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
Notice is hereby given in accordance with Section 23 (c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
This report, including the financial statements herein, is transmitted to the
shareholders of The Southern Africa Fund, Inc. for their information. The
financial information included herein is taken from the records of the Fund.
This is not a prospectus, circular or representation intended for use in the
purchases of shares of the Fund or any securities mentioned in this report.
12
<PAGE>
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<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
The
---------------
Southern Africa
---------------
Fund
---------------
Semi-Annual
[ARTWORK APPEARS HERE] Report
May 31, 1995
Alliance/(R)/
Mutual funds without the Mystery./TM/
THE SOUTHERN AFRICA FUND, INC.
Summary of General Information
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers. The Fund's NYSE trading
symbol is "SOA". Weekly comparative net asset value (NAV) and market price
information about the Fund is published each Monday in The Wall Street Journal
and each Saturday in The New York Times and other newspapers in a table called
"Closed-End Funds".
Additional Information about the Fund is available by calling 1-800-221-5672.
DIVIDEND REINVESTMENT PLAN
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains distributions in additional Fund shares. A brochure describing the
Plan is available from the Plan Agent, The Bank of New York, by calling
1-800-432-8224.
THE SOUTHERN AFRICA FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Alliance Capital [LOGO APPEARS HERE]
/(R)/These registered service marks used under license from the owner, Alliance
Capital Management L.P.
SAFSR
