<PAGE>
LETTER TO SHAREHOLDERS The Southern Africa Fund, Inc.
================================================================================
January 19, 1996
Dear Shareholder:
The South African stock market moved ahead strongly over the quarter under
review, helped by an improvement in the outlook for inflation and substantial
overseas buying.
Overall, Southern Africa's progress toward liberalization and growth has
continued apace and has encouraged a sharp increase in capital inflows to the
region. Despite these new flows, however, the majority of global investors
remain relatively sparsely exposed to the region. Consequently we anticipate
further substantial overseas investment in the Southern Africa area during 1996.
GROWTH LED BY CONSUMER & INVESTMENT SPENDING
Certainly growth should continue to be led upwards by a combination of
consumer and investment spending in 1996 and be further enhanced by a revival
in agricultural production during the year as a result of the end of the
one-year drought in the region with heavy rains in November and December.
Consequently, we would expect GDP growth of around 4.0% for 1996 well above the
anticipated OECD average. (OECD stands for Overseas Economic Cooperation and
Development.)
The news on inflation also continued to be positive. The consumer price
index declined from above 10% early in 1995 to around 6.5% at the end of the
year. Weaker food prices have certainly helped, but the central banks' tight
money policy and the benefits of a decline in import prices following the
General Agreement on Tariffs and Trade (GATT) have been the major factors
behind the improvement.
Money supply growth remains high (above 15% year on year), and there will
probably need to be some improvement in this figure before the Reserve Bank
begins to reduce the current high level of short-term interest rates of around
14%.
With both earnings growth and business confidence at high levels it is
unlikely that we will see a significant easing of money policy but we would
anticipate a general cautious easing through the year.
GOVERNMENT EXPENDITURES IN QUESTION
It is the level of government expenditures that provides the major
uncertainty for 1996. With the budget deficit currently standing at around 6%
of GDP, and with significant expenditure on the Reconstruction and Development
Program yet to kick in, there remains a question mark over the government's
ability to control the deficit. Although overall debt levels in South Africa
are not significantly different from - and in many cases are much better than -
the OECD average, the authorities must demonstrate a conviction as to the need
to keep spending under control.
Prospects for the equity market remain favorable. Corporate earnings growth
in 1996 should average above 25% and the prospect of some reduction in interest
rates should keep money flowing to the market - particularly from overseas.
Although it is certainly harder today to point to value in South Africa's
stock market, both growth and liquidity considerations remain strongly in favor
of further price gains for equities.
AREAS OF OPPORTUNITY
Your Fund's portfolio continues to emphasize growth stocks, with a focus on
publishing, retail, technology, media and cellular telephony despite the
significant outperformance of these areas in 1995. However, we have recently
built up holdings in mining stocks, and particularly gold, towards more neutral
positions.
1
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
Although we see little in the way of global inflationary pressures, the
current supply/demand imbalance in the gold market could see bullion prices
move higher in the short term. South African gold producers are highly
leveraged to the bullion price. Consequently, a neutral position in gold shares
should prevent any negative relative returns that could be caused by an upward
move in the price of spot gold.
At the same time we have been increasing the portfolio's positions in the
markets outside South Africa. To date our focus has been on Zimbabwe but we
anticipate increased participation in Botswana and Zambia and we are currently
reviewing potential opportunities in Mozambique.
Overall we continue to view Southern Africa's combination of liberalization,
privatization and growth as offering one of the more exciting investment areas
over the remainder of the current decade.
INVESTMENT RESULTS
For the fiscal year ended November 30, 1995, The Southern Africa Fund achieved a
total return of +27.9% on a net asset value basis. This compares with a return
of +19.2% for the benchmark JSE All Share Index over the same period.
Thank you for your interest and investment in The Southern Africa Fund. We
look forward to reporting to you again in the coming period.
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
November 30, 1995 The Southern Africa Fund, Inc.
================================================================================
Company U.S. $ Value Percent Of Net Assets
South African Breweries, Ltd. $ 5,763,666 4.5%
Servgro International, Ltd. 5,155,483 4.0
Rembrandt Group, Ltd. 5,142,635 4.0
Gencor, Ltd. 4,645,390 3.6
Dimension Data Holdings, Ltd. 4,531,171 3.5
Anglo-American Corp. of South
Africa, Ltd. 4,408,756 3.4
South Africa Iron & Steel Industrial
Corp., Ltd. 4,311,601 3.3
De Beers Centenary AG 4,255,319 3.3
Amalgamated Banks of South Africa 4,236,199 3.3
Metropolitan Life, Ltd. 4,212,466 3.2
------------ ----
$ 46,662,686 36.1%
3
<PAGE>
PORTFOLIO OF INVESTMENTS
November 30, 1995 The Southern Africa Fund, Inc.
================================================================================
Company Shares U.S.$ Value
- ----------------------------------------------------------------------
COMMON STOCKS--96.4%
BOTSWANA--0.4%
BEVERAGES--0.1%
Kgolo Ya Sechaba, Ltd. 100,000 $ 47,655
------------
FINANCIAL SERVICES--0.2%
Sechaba Investment Trust 398,000 280,988
------------
INSURANCE--0.1%
Botswana Insurance Holding, Ltd.(a) 190,000 164,321
------------
Total Botswana Securities
(cost $580,995) 492,964
------------
SOUTH AFRICA--92.6%
BEVERAGES--4.5%
South African Breweries, Ltd.(b) 170,400 5,763,666
------------
CHEMICALS--3.3%
African Oxygen, Ltd. 80,000 3,229,678
Sentrachem, Ltd. GDR(c) 75,000 1,050,000
------------
4,279,678
------------
COMPUTER SOFTWARE & SERVICES--3.5%
Dimension Data Holdings, Ltd. 367,100 4,531,171
------------
CONSUMER MANUFACTURING--3.2%
Nampak, Ltd.(b) 741,600 4,146,972
------------
CONSUMER SERVICES--0.9%
Bidvest Group, Ltd. 186,000 1,116,203
------------
ENERGY--0.9%
Engen, Ltd. 175,000 1,145,663
------------
ENGINEERING & CONSTRUCTION--3.5%
Murray & Roberts Holdings, Ltd. 365,828 2,419,893
Power Technologies, Ltd. 918,900 2,067,901
------------
4,487,794
------------
FINANCIAL SERVICES--5.7%
Amalgamated Banks of South Africa 819,520 4,236,199
Standard Bank Investment Corp., Ltd. 75,000 3,130,115
------------
7,366,314
------------
FOODS/FOOD PROCESSING--2.1%
Premier Group Holdings, Ltd. 1,725,400 2,682,700
------------
Company Shares U.S.$ Value
- ----------------------------------------------------------------------
HOUSEHOLD PRODUCTS--2.2%
J.D. Group, Ltd. 511,538 $ 2,860,483
------------
INSURANCE--6.7%
Fedsure Holdings, Ltd. 350,000 2,291,326
Metropolitan Life, Ltd. 305,800 4,212,466
Mutual & Federal Insurance Co., Ltd. 100,000 2,100,382
------------
8,604,174
MINING & METALS--12.3%
Anglo-American Coal Corp., Ltd. 45,000 2,725,041
Driefontein Consolidated, Ltd. 150,000 1,605,974
Gencor, Ltd. 1,300,000 4,645,390
HJ Joel Mining Co., Ltd.(a) 400,000 338,243
Leslie Gold Mines, Ltd. 200,000 201,855
South Africa Iron & Steel
Industrial Corp., Ltd. 4,804,355 4,311,601
Western Areas Gold Mining Co., Ltd. 126,050 2,037,224
------------
15,865,328
------------
MULTI-INDUSTRY COMPANIES--8.6%
Anglo-American Corp. of South
Africa, Ltd.(b) 75,000 4,408,756
Anglo-American Industrial Corp., Ltd. 30,566 1,359,045
Anglovaal, Ltd. 50,000 1,977,632
Barlow, Ltd. 250,000 3,358,565
------------
11,103,998
------------
PRINTING & PUBLISHING--4.8%
Nasional Pers Beperk(a) 303,000 2,603,519
Omni Media Corp. 202,850 2,766,639
Publico, Ltd. 1,021,090 835,589
------------
6,205,747
------------
RETAIL--5.0%
Edgars Stores, Ltd. 64,900 2,566,967
McCarthy Retail, Ltd.(b) 500,000 2,182,215
Wooltru, Ltd.--Class A(b) 316,229 1,768,329
------------
6,517,511
------------
TECHNOLOGY--COMMUNICATIONS EQUIPMENT--2.9%
Plessey Corp., Ltd. 1,558,100 3,718,869
------------
4
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
Company Shares U.S.$ Value
- ----------------------------------------------------------------------
TELEPHONE UTILITIES--4.7%
Electronic Media Network, Ltd. 1,700,000 $ 1,553,464
M-Cell, Ltd. 3,409,984 2,697,478
Multichoice, Ltd. 508,700 1,838,591
------------
6,089,533
------------
TRANSPORTATION--1.3%
Imperial Holdings, Ltd. 151,365 1,692,844
------------
TOBACCO--4.0%
Rembrandt Group, Ltd.(b) 571,300 5,142,635
------------
MISCELLANEOUS--12.5%
De Beers Centenary AG.(b) 150,000 4,255,319
Malbak, Ltd. GDR 500,000 3,200,000
Richemont Secs.(a)(b) 200,000 2,782,324
Servgro International, Ltd.(b) 945,000 5,155,483
Tempora Investments, Ltd. 120,000 736,498
------------
16,129,624
------------
Total South African Securities
(cost $82,386,865) 119,450,907
------------
ZIMBABWE--3.4%
AUTO & RELATED--0.1%
Chloride CA, Ltd.(a) 2,300,000 111,831
------------
BEVERAGES--0.7%
Delta Corp. 569,000 922,204
------------
CONSUMER MANUFACTURING--TEXTILES--0.0%
Zimbabwe Spinners & Weavers 252,000 27,229
------------
Shares or
Principal
Amount
Company (000) U.S.$ Value
- ----------------------------------------------------------------------
ENTERTAINMENT & LEISURE--0.6%
Zimbabwe Sun 2,730,060 $ 766,953
------------
MINING & METALS--0.7%
Reunion Mining Plc(a)(d) 420,000 378,000
Warrants(a) 20,000 -0-
Zimbabwe Alloys ZM 787,000 561,232
------------
939,232
------------
MULTI-INDUSTRY COMPANIES--1.0%
PG Industries 405,000 192,545
TA Holdings, Ltd. 8,024,800 1,101,188
------------
1,293,733
------------
PAPER & FOREST PRODUCTS--0.1%
Art Corp.(a) 2,392,000 93,044
------------
TOBACCO--0.2%
T.S.L., Inc. 1,062,500 275,527
------------
Total Zimbabwean Securities
(cost $4,356,303) 4,429,753
------------
Total Common Stocks
(cost $87,324,163) 124,373,624
------------
TIME DEPOSIT--0.2%
Dresdner Bank
5.9375%, 12/01/95
(cost $300,000) $ 300 300,000
------------
TOTAL INVESTMENTS--96.6%
(cost $87,624,163) 124,673,624
Other assets less liabilities--3.4% 4,438,822
------------
NET ASSETS--100% $129,112,446
============
- ------------------------
(a) Non-income producing security.
(b) Security, or a portion thereof, has been segregated to collateralize a
forward exchange currency contract. Total value of securities amounted to
$35,052,967 at November 30, 1995.
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1995, this security amounted to $1,050,000 or 0.8% of net assets.
(d) 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.
Glossary:
GDR--Global Depositary Receipt.
See notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995 The Southern Africa Fund, Inc.
================================================================================
ASSETS
Investments in securities, at value (cost $87,624,163)......... $124,673,624
Cash, at value (cost $5,186,654)............................... 5,162,448
Receivable for investment securities sold...................... 1,087,721
Interest and dividends receivable.............................. 220,080
Net unrealized appreciation on forward foreign
exchange contract............................................. 1,608
Deferred organization expenses and other assets................ 74,553
------------
Total assets................................................... 131,220,034
------------
LIABILITIES
Payable for investment securities purchased.................... 1,493,246
Advisory fee payable........................................... 268,802
Sub-advisory fees payable...................................... 111,107
Administrative fee payable..................................... 20,983
Accrued expenses and other liabilities......................... 213,450
------------
Total liabilities.............................................. 2,107,588
------------
NET ASSETS...................................................... $129,112,446
============
COMPOSITION OF NET ASSETS:
Common stock, at par............................................ $ 60,071
Additional paid-in capital...................................... 83,255,566
Undistributed net investment income............................. 3,300,119
Accumulated net realized gain on investments.................... 5,464,091
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities............ 37,032,599
------------
$129,112,446
============
NET ASSET VALUE PER SHARE (based on 6,007,100
shares outstanding)............................................ $21.49
======
- --------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
Year Ended November 30, 1995 The Southern Africa Fund, Inc.
================================================================================
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $198,602)..................................... $2,063,548
Interest.......................................... 1,221,143
----------
Total investment income........................... $ 3,284,691
EXPENSES
Advisory fee...................................... 987,848
Sub-advisory fees................................. 411,987
Administrative fee................................ 219,673
Directors' fees & expenses........................ 215,480
Custodian......................................... 196,609
Audit & legal..................................... 102,614
Reports and notices to shareholders............... 41,860
Transfer agency................................... 29,603
Amortization of organization expenses............. 11,994
Miscellaneous..................................... 34,774
----------
Total expenses.................................... 2,252,442
-----------
Net investment income............................. 1,032,249
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments.................. 5,464,091
Net realized gain on foreign currency
transactions..................................... 2,560,059
Net change in unrealized appreciation
of investments................................... 17,865,980
Net change in unrealized appreciation
of foreign currency denominated assets
and liabilities.................................. (271,384)
-----------
Net gain on investments and foreign currency
transactions...................................... 25,618,746
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS......... $26,650,995
===========
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
For the March 7, 1994*
Year Ended to
November 30, 1995 November 30, 1994
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income............................. $ 1,032,249 $ 2,509,536
Net realized gain on investments and foreign
currency transactions............................ 8,024,150 4,917,386
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities............... 17,594,596 19,438,003
------------ ------------
Net increase in net assets from operations........ 26,650,995 26,864,925
DIVIDENDS & DISTRIBUTIONS
Dividends from net investment income............. (3,139,662) -0-
Distributions from net realized gains............ (4,579,449) -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................................... 18,931,884 110,080,452
NET ASSETS
Beginning of period.............................. 110,180,562 100,110
------------ ------------
End of period (including undistributed
net investment income of $3,300,119
and $2,509,536, respectively)................... $129,112,446 $110,180,562
============ ============
</TABLE>
- -------------------------
* Commencement of operations.
See notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1995 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 are 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 gain on foreign currency transactions of $2,560,059 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 year 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 Investment 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. Investment
transactions are accounted for on the date the securities are purchased or
sold. Investment 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.
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 differences between the accounting and tax classification
of foreign currency transactions, a $2,897,996 foreign currency gain was
reclassified from accumulated net realized gain to undistributed net investment
income. This reclassification had no effect on net assets.
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, Princeton 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 $59,389,672 and $40,865,941, respectively, for the
year ended November 30, 1995.
At November 30, 1995, the cost of securities for federal income tax purposes
was $87,850,511. Accordingly, gross unrealized appreciation of investments was
$38,373,255 and gross unrealized depreciation of investments was $1,550,142
resulting in net unrealized appreciation of $36,823,113 (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.
Fluctuations 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 unanticipated movements in the value of foreign
currencies relative to the U.S. dollar.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) The Southern Africa Fund, Inc.
================================================================================
At November 30, 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 December 29, 1995 with a value on origination date of
$24,934,931. The market value of the forward exchange currency contract at
November 30, 1995 was $24,933,323 resulting in an unrealized appreciation of
$1,608. The Fund had entered into exchange traded financial futures contracts
through April, 1995.
Financial Futures Contracts
The Fund bears the market risk that arises from changes in the value of
these financial instruments. At the time the Fund enters into a futures
contract, it is required to make a margin deposit with its custodian of a
specified amount of cash or eligible securities. Subsequently, gain or loss is
recognized and payments are made on a daily basis between the Fund and the
broker as the market price of the futures contract fluctuates. Realized gains
and losses on futures contracts are recorded for financial statement purposes
as a component of set realized gain on investments. For the year ended November
30, 1995, the Fund incurred a net realized loss on the sale of futures
contracts of $4,224,972.
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 November 30, 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 (unaudited)
<TABLE>
<CAPTION>
Net Realized
and Unrealized Net Increase
Gain (Loss) on (Decrease)
Investments and In Net Assets
Net Investment Foreign Currency 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>
November 30, 1995 $ 123 $.02 $17,464 $ 2.91 $17,587 $2.93 $16.750 $14.250
August 31, 1995 167 .03 2,971 .50 3,138 .53 $14.875 $14.125
May 31, 1995 192 .03 11,295 1.88 11,487 1.91 $15.500 $12.750
February 28, 1995 550 .09 (6,111) (1.02) (5,561) (.93) $15.250 $12.625
------ ---- ------- ------ ------- -----
$1,032 $.17 $25,619 $ 4.27 $26,651 $4.44
====== ==== ======= ====== ======= =====
November 30, 1994 $840 $.14 $ 9,873 $ 1.64 $10,713 $1.78 $15.250 $13.625
August 31, 1994 708 .12 12,652 2.11 13,360 2.23 $14.500 $11.125
May 31, 1994* 962 .16 1,830 .30 2,792 .46 $15.000 $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 Each Period
<TABLE>
<CAPTION>
For the March 7, 1994*
Year Ended to
November 30, 1995 November 30, 1994
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of period....... $ 18.34 $ 13.87(a)
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income...................... 0.17 0.42
Net realized and unrealized gain on
investments and foreign currency
transactions.............................. 4.27 4.05
------- -------
Net increase in net asset value from
operations................................ 4.44 4.47
------- -------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income....... (0.52) -0-
Distributions from net realized gains...... (0.77) -0-
------- -------
Total dividends and distributions.......... (1.29) -0-
------- -------
Net asset value, end of period............. $ 21.49 $ 18.34
======= =======
Market value, end of period................ $16.750 $14.875
======= =======
TOTAL RETURN
Total investment return based on: (b)
Market value.............................. 22.90% 5.50%
======= =======
Net asset value........................... 27.89% 30.07%
======= =======
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).. $129,112 $110,181
Ratio of expenses to average net assets.... 2.05% 2.30%(c)
Ratio of net investment income to
average net assets........................ 0.94% 3.65%(c)
Portfolio turnover rate.................... 41% 15%
</TABLE>
- ------------------------
* Commencement of operations.
(a) Net of offering costs 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>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS The Southern Africa Fund, Inc.
================================================================================
To the Shareholders and Board of Directors
The Southern Africa Fund, Inc.
We have audited the accompanying statement of assets and liabilities of The
Southern Africa Fund, Inc., including the portfolio of investments, as of
November 30, 1995 and the related statement of operations for the year then
ended, and the statement of changes in net assets and financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
The Southern Africa Fund, Inc. at November 30, 1995, the results of its
operations, for the year then ended, and the changes in its net assets and the
financial highlights for each of the indicated periods, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
January 4, 1996
12
<PAGE>
ADDITIONAL INFORMATION The Southern Africa Fund, Inc.
================================================================================
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
pursuant to which dividends and capital gain distributions to shareholders will
be paid in or reinvested in additional shares of the Fund. The Bank of New York
(the "Agent") will act as agent for participants under the Plan. Shareholders
whose shares are held in the name of a broker or nominee should contact such
broker or nominee to determine whether or how they may participate in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue
new shares at the greater of net asset value or 95% of the then current
market price.
(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or elsewhere,
for the participants' accounts. Such purchases will be made on or shortly
after the payment date for such dividend or distribution and in no event
more than 30 days after such date except where temporary curtailment or
suspension of purchase is necessary to comply with Federal securities laws.
If, before the Plan Agent has completed its purchases, the market price
exceeds the net asset value of a share of Common Stock, the average purchase
price per share paid by the Plan Agent may exceed the net asset value of the
Fund's shares of Common Stock, resulting in the acquisition of fewer shares
than if the dividend or distribution had been paid in shares issued by the
Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund
to satisfy the dividend reinvestment requirements. However, each participant
will pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions, of any shares purchased in the open market
plus the cost of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to participants in the
Plan at least 90 days before the record date for such dividend or distribution.
The Plan may also be amended or terminated by the Agent on at least 90 days'
written notice to participants in the Plan. All correspondence concerning the
Plan should be directed to the Agent at The Bank of New York, 101 Barclay
Street, New York, New York 10286.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change
of control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio,
who is Mark H. Breedon, a Senior Vice President of the Fund.
13
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
Supplement Proxy Information
The Annual Meeting of Shareholders of The Southern Africa Fund, Inc. was held on
Tuesday, March 14, 1995. The description of each proposal and number of shares
voted at the meeting are as follows:
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect directors: Class One Directors
(term expires in 1996)
Prof. Dennis Davis 5,468,316 130,152
Douglas de Jager 5,466,835 131,633
Stephen Koseff 5,461,335 137,133
Dave H. Williams 5,463,666 134,802
Class Two Directors
(term expires in 1997)
Dr. Willem de Klerk 5,465,435 133,033
Moss L. Leoka 5,466,966 131,502
Ronnie Masson 5,468,616 129,852
Frank Savage 5,473,816 124,652
Peter G. A. Wrighton 5,466,966 131,502
Class Three Directors
(term expires in 1998)
T. N. Chapman 5,467,166 131,302
David D. T. Hatendi 5,467,266 131,202
Dr. Enos Mabuza 5,468,766 129,702
Reba W. Williams 5,473,766 124,702
<CAPTION>
Shares Shares Shares Voted
Voted For Against Abstain
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst
& Young LLP as the Fund's independent
auditors for the Fund's fiscal year
ending November 30, 1995: 5,402,657 100,061 95,750
</TABLE>
14
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
BOARD OF DIRECTORS
Dave H. Williams, Chairman and President Moss L. Leoka
T.N. Chapman Dr. Enos Mabuza
Prof. Dennis Davis Ronnie Masson
David D.T. Hatendi Frank Savage
Douglas de Jager Desmond Smith
Dr. Willem de Klerk Reba W. Williams
Stephen Koseff Peter G.A. Wrighton
OFFICERS
Norman S. Bergel, Senior Vice President Edmund P. Bergan Jr., Secretary
Mark H. Breedon, Senior Vice President Mark D. Gersten, Treasurer & Chief
Financial Officer
Nicholas Crossland, Vice President Joseph J. Mantineo, Controller
ADMINISTRATOR INDEPENDENT AUDITORS
Princeton Administrators L.P. Ernst & Young LLP
P.O. Box 9011 787 Seventh Avenue
Princeton, NJ 08543 New York, NY 10019
CUSTODIAN DIVIDEND PAYING AGENT,
Brown Brothers Harriman & Co. TRANSFER AGENT AND REGISTRAR
40 Water Street The Bank of New York
Boston, MA 02109 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.
15
<PAGE>
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]
*These registered service marks used under license from the owner, Alliance
Capital Management L.P.
SAFAR
THE
---------------------------------------
SOUTHERN AFRICA
---------------------------------------
FUND
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Annual Report
November 30, 1995
Alliance (R)
Mutual funds with the mystery (SM)
