<PAGE>
LETTER TO SHAREHOLDERS The Southern Africa Fund, Inc.
================================================================================
July 22, 1996
Dear Shareholder:
We reported to you last quarter that the prospects for South Africa's stock
market were mixed. In fact, it appears now that their long bull run has come to
an end. During your Fund's most recent fiscal quarter and semi-annual period
ended May 31, 1996, investor confidence finally was eroded by Finance Minister
Chris Liebenberg's resignation and by the failure of the South African Reserve
Bank to stem a wave of speculation against the rand. Over the course of this
last quarter, the South African currency fell by 12.3% against the U.S. dollar,
a move that was exacerbated by the central bank's unwillingness to raise
short-term interest rates to deter speculative currency players.
Short sellers of the rand were encouraged by that lack of intervention, taking
it as a sign that the government favored a lower exchange rate in order to boost
the country's competitive position. The result was not only a decline in the
currency but also a substantial rise in bond yields caused by investors running
for cover against the perceived inflationary impact of the devalued rand. Bond
yields exceeded 16%, climbing from their 14% level prior to the currency scare.
In the face of sharply rising bond yields, equities retreated across a broad
front when foreign buyers, the mainstay of the market for the past two years,
refrained from further commitments to the stock market.
Concerns about the government's ability to restructure South Africa's industry
to meet the challenges of an increasingly competitive world market also
surfaced, causing the markets further distress.
INVESTMENT RESULTS
As a consequence of these developments, The Southern Africa Fund's performance
suffered during both the quarter and the semi-annual period ended May 31, 1996.
For the quarter, the Fund experienced a loss of 9.21% on a net asset value
basis, mirroring the direction and magnitude of the 9.2% decline posted by its
benchmark, the Johannesburg Stock Exchange (JSE) All Share Index. Both
performance figures include reinvested dividends. While returns for the fiscal
semi-annual period were disappointing also, the Fund did surpass its unmanaged
benchmark. The Fund's total return on a net asset value basis declined .14%
compared to a 2.84% loss recorded by the JSE All Share Index. By contrast, for
the rolling 12 months ended May 31, 1996, The Southern Africa Fund rewarded
investors with an 18.96% gain on a net asset basis versus a 7.7% increase for
its benchmark.
SOME POSITIVE SIGNS AMID THE PROBLEMS
There is little doubt that South African productivity is damagingly low and that
strong unions and political fears have prevented the necessary restructuring of
the country's industrial base. A perception that the government's policy of
choice is the "easy" route of continued devaluation and, as a consequence,
relatively high inflation also has alarmed many potential investors in the
country.
The new finance minister's first budget has served to quell foreign investors'
fears, however. It also has eased some of the concerns over the more histrionic
statements emanating from the Finance Ministry at the height of the currency
crisis.
Fundamentally, the government's commitment to maintaining a tight budget is
unaltered. While few
1
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
concrete proposals for the elimination of foreign exchange controls or
privatization have been delivered, it is now clear that the government is not
embarking on the tax-and-spend policy many investors had feared.
At the time of this writing, it is uncertain whether the restructuring of
industry, privatization, and liberalization will be achieved in the near term.
However, there is a growing conviction that the ruling echelons of the African
National Congress (ANC) understand the necessity of fostering a strong and
productive private sector. At the same time, recent fears of a significant
upturn in inflation appear to have diminished. Investors have been encouraged by
retail and producer indices, which have proved surprisingly immune to the higher
cost of imports. We attribute this to continued pressure on domestic producers
from overseas imports following the reduction in South Africa's trade barriers.
We are hopeful that South Africa has the ability and political will to enter a
sustained period of low inflation following the boom-bust cycles of the past
twenty years.
OUR PORTFOLIO STRATEGY
Our response to these traumatic events has been to take advantage of the sharp
increase in bond yields. We currently have committed approximately 19% of your
Fund's assets to the rand bond market. It is our opinion that current market
expectations regarding inflation are too pessimistic. Consequently, not only do
we feel that a real yield on bonds of nearly 10% is a highly attractive rate of
return, but we are persuaded that equities--particularly those of large,
industrial conglomerates--will find it hard to advance given such a high cost of
money.
We have positioned the Fund's bond holdings at the longer end of the maturity
spectrum, where we see the potential for capital gains when investors realize
that any increase in inflation will be moderate. We also have sold the stocks of
more cyclically sensitive companies while preserving our commitment to growth
stocks in such industries as publishing, media, cellular telephones, and
technology. In addition, we have continued to increase the Fund's exposure to
other countries in the Southern African region, where valuations appear much
more attractive and where growth prospects have been enhanced by relatively
heavy rains in the region. In the months ahead, we will adjust the portfolio as
necessary to pursue any opportunities and to minimize any risks that may
develop.
Thank you for your continued support and participation in The Southern Africa
Fund. We look forward to reporting to you in the coming months on market
activity and your Fund's investment results.
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, 1996 (unaudited) The Southern Africa Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
===========================================================================================================================
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
===========================================================================================================================
<S> <C> <C>
De Beers Centenary AG $ 4,882,319 4.1%
- ---------------------------------------------------------------------------------------------------------------------------
Anglo-American Corp. Of South Africa, Ltd. 4,856,487 4.1
- ---------------------------------------------------------------------------------------------------------------------------
Rembrandt Group, Ltd. 4,448,909 3.7
- ---------------------------------------------------------------------------------------------------------------------------
Dimension Data Holdings, Ltd. 4,436,280 3.7
- ---------------------------------------------------------------------------------------------------------------------------
Sappi, Ltd. 3,849,598 3.2
- ---------------------------------------------------------------------------------------------------------------------------
Driefontein Consolidated, Ltd. 3,673,938 3.1
- ---------------------------------------------------------------------------------------------------------------------------
Gencor, Ltd. 3,122,847 2.6
- ---------------------------------------------------------------------------------------------------------------------------
Omni Media Corp. 3,053,961 2.6
- ---------------------------------------------------------------------------------------------------------------------------
South African Breweries, Ltd. 3,048,220 2.5
- ---------------------------------------------------------------------------------------------------------------------------
Plessey Corp., Ltd. 3,021,027 2.5
- ---------------------------------------------------------------------------------------------------------------------------
$38,393,586 32.1%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
May 31, 1996 (unaudited) The Southern Africa Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--82.6%
BOTSWANA--0.8%
BEVERAGES--0.0%
Kgolo Ya Sechaba, Ltd. (a) ................... 100,000 $ 42,732
------------
FINANCIAL SERVICES--0.3%
Sechaba Investment Trust (a) ................. 398,000 304,956
------------
INSURANCE--0.1%
Botswana Insurance
Holding, Ltd.(a) ............................ 190,000 120,385
------------
MISCELLANEOUS--0.4%
Sefalana Holdings Co.(a) ..................... 350,000 515,725
------------
Total Botswana Securities
(cost $1,096,851) ............................ 983,798
------------
NAMIBIA--0.5%
BEVERAGES--0.5%
Namibian Breweries, Ltd.
(cost $574,506) ............................. 1,000,000 596,330
------------
SOUTH AFRICA--75.5%
BEVERAGES--2.5%
South African
Breweries, Ltd. ............................. 100,000 3,048,220
------------
COMPUTER SOFTWARE
& SERVICES--5.2%
Dimension Data
Holdings, Ltd. .............................. 3,000,000 4,436,280
Q Data, Ltd. ................................. 125,000 1,808,266
------------
6,244,546
------------
CONSUMER
MANUFACTURING--0.9%
Nampak, Ltd. ................................. 250,000 1,090,700
------------
ENERGY--0.1%
Energy Africa, Ltd. .......................... 43,750 130,597
------------
ENGINEERING &
CONSTRUCTION--1.1%
Murray & Roberts
Holdings, Ltd. .............................. 288,928 1,277,121
------------
FINANCIAL SERVICES--4.1%
Amalgamated Banks of
South Africa ................................ 424,674 2,159,938
Standard Bank Investment
Corp., Ltd. ................................. 75,000 2,738,232
------------
4,898,170
------------
FOODS/FOOD PROCESSING--1.1%
Premier Group
Holdings, Ltd. ................................. 1,006,323 1,275,523
------------
INSURANCE--5.9%
Fedsure Holdings, Ltd. ....................... 355,096 $ 2,364,589
Metropolitan Life, Ltd. ...................... 205,800 2,693,594
Mutual & Federal Insurance
Co., Ltd. ................................... 500,000 2,043,628
------------
7,101,811
------------
MINING & METALS--15.0%
Driefontein Consolidated, Ltd. ................. 250,000 3,673,938
Gencor, Ltd. ................................. 800,000 3,122,847
HJ Joel Mining Co., Ltd. ..................... 400,000 404,133
Ingwe Coal Corp., Ltd. ....................... 275,100 1,895,063
Kloof Gold Mining Co., Ltd. .................. 101,100 1,288,416
Leslie Gold Mines, Ltd. ...................... 200,000 229,621
Minorco, S.A ................................. 60,000 1,453,502
South Africa Iron & Steel
Industrial Corp., Ltd. ...................... 3,878,070 2,983,131
Western Areas Gold Mining
Co., Ltd. ................................... 126,900 2,010,586
Vaal Reefs Exploration &
Mining Co., Ltd. ............................ 8,500 872,445
------------
17,933,682
------------
MISCELLANEOUS--8.6%
De Beers Centenary AG ........................ 150,000 4,882,319
Richemont Securities (a) ..................... 200,000 2,927,669
Servgro International, Ltd. .................. 500,000 2,468,427
------------
10,278,415
------------
MULTI-INDUSTRY
COMPANIES--4.1%
Anglo-American Corp. of
South Africa, Ltd. .......................... 75,000 4,856,487
------------
PAPER & FOREST
PRODUCTS--3.2%
Sappi, Ltd. .................................. 350,000 3,849,598
------------
PRINTING &
PUBLISHING--5.7%
Nasional Pers Beperk (a) ..................... 303,000 2,783,008
Omni Media Corp. ............................. 190,000 3,053,961
Publico, Ltd. ................................ 1,021,090 914,409
------------
6,751,378
------------
RETAIL--5.5%
Edgars Stores, Ltd. .......................... 50,000 1,423,651
Housewares Group, Ltd. ....................... 450,000 867,968
McCarthy Retail, Ltd. ........................ 569,000 1,685,442
Metro Cash & Carry, Ltd. ..................... 375,000 1,291,619
Wooltru, Ltd.--Class A ....................... 319,481 1,269,121
------------
6,537,801
------------
</TABLE>
4
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY-
COMMUNICATIONS
EQUIPMENT--2.5%
Plessey Corp., Ltd. .......................... 1,458,600 $ 3,021,027
------------
TELEPHONE UTILITIES--6.3%
ELECTRONIC MEDIA
NETWORK, LTD ................................. 1,700,000 1,776,119
M-Cell, Ltd. (a) ............................. 3,770,484 2,813,794
Multichoice (a) .............................. 508,700 2,920,207
------------
7,510,120
------------
TOBACCO--3.7%
Rembrandt Group, Ltd. ........................ 500,000 4,448,909
------------
Total South African Securities
(cost $70,506,858) ........................... 90,254,105
------------
ZAMBIA--0.3%
TOBACCO--0.3%
Rothmans of Pall Mall
(Zambia) Berhad
(cost $517,638) ............................. 12,500,000 394,418
------------
ZIMBABWE--5.5%
AGRICULTURE--0.3%
Eastern Highland
Plantation (a) .............................. 4,128,000 420,367
------------
AUTO & RELATED--0.1%
Chloride CA, Ltd. (a) ........................ 2,300,000 128,819
------------
BEVERAGES--1.3%
Delta Corp. .................................. 569,000 1,506,517
------------
CONSUMER MANUFACTURING--
TEXTILES--0.1%
Zimbabwe Spinners &
Weavers ..................................... 1,223,000 168,131
------------
ENTERTAINMENT &
LEISURE--0.9%
Zimbabwe Sun (a) ............................. 2,730,060 1,028,638
------------
MINING & METALS--1.1%
Reunion Mining Plc (a) ....................... 420,000 474,985
Zimbabwe Alloys ZM ........................... 787,000 781,390
------------
1,256,375
------------
<CAPTION>
Shares or
Principal
Amount
Company (000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MULTI-INDUSTRY
COMPANIES--1.2%
PG Industries .................................. 405,000 $ 216,522
TA Holdings, Ltd. .............................. 8,024,800 1,225,784
------------
1,442,306
------------
PAPER & FOREST
PRODUCTS--0.0%
Art Corp.(a) ................................. 2,392,000 43,845
------------
PRINTING &
PUBLISHING--0.1%
Zimbabwe Newspapers .......................... 134,600 79,499
------------
REAL ESTATE--0.1%
Hippo Valley Estates ......................... 215,000 153,259
------------
TOBACCO--0.3%
T.S.L., Inc. (a) ............................. 1,062,500 389,511
------------
Total Zimbabwean Securities
(cost $5,213,471) ............................ 6,617,267
------------
Total Common Stocks
(cost $77,909,324) ........................... 98,845,918
------------
FOREIGN GOVERNMENT
OBLIGATIONS--16.2%
SOUTH AFRICA--16.2%
Republic of South Africa,
12.00% due 2/28/05 .......................... $ 37,100 6,860,101
Republic of South Africa,
13.00% due 8/31/10 .......................... 67,500 12,537,997
------------
Total Foreign Government
Obligations
(cost $19,714,602) ........................... 19,398,098
------------
TOTAL INVESTMENTS--98.8%
(cost $97,623,926) ........................... 118,244,016
Other assets less
liabilities--1.2% ............................ 1,401,361
------------
NET ASSETS--100% ............................... $119,645,377
============
</TABLE>
- --------------------------------------------------------------------------------
(a) Non-income producing security.
See notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996 (unaudited) The Southern Africa Fund, Inc.
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $97,623,926) ............................................... $118,244,016
Cash, at value (cost $1,846,918) ..................................................................... 1,857,094
Receivable for investment securities sold ............................................................ 1,889,859
Dividends and interest receivable .................................................................... 1,152,039
Deferred organization expenses and other assets ...................................................... 34,503
------------
Total assets ......................................................................................... 123,177,511
------------
LIABILITIES
Payable for investment securities purchased .......................................................... 2,929,893
Advisory fee payable ................................................................................. 280,559
Sub-advisory fees payable ............................................................................ 112,224
Administrative fee payable ........................................................................... 19,947
Accrued expenses and other liabilities ............................................................... 189,511
------------
Total liabilities .................................................................................... 3,532,134
------------
NET ASSETS ............................................................................................. $119,645,377
============
COMPOSITION OF NET ASSETS:
Common stock, at par ................................................................................. $ 60,071
Additional paid-in capital ............................................................................. 83,255,566
Undistributed net investment income .................................................................. 175,965
Accumulated net realized gain on investments ......................................................... 15,518,158
Net unrealized appreciation of investments and foreign currency
denominated assets and liabilities .................................................................. 20,635,617
------------
$119,645,377
============
NET ASSET VALUE PER SHARE (based on 6,007,100 shares outstanding) ...................................... $19.92
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
For The Six Months Ended May 31, 1996 (unaudited) The Southern Africa Fund, Inc.
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $27,185) ............................................ $ 1,103,173
Interest ........................................................................................ 665,233 $ 1,768,406
------------
EXPENSES
Advisory fee .................................................................................... 585,589
Sub-advisory fees ............................................................................... 239,047
Directors' fees & expenses ...................................................................... 144,414
Administrative fee .............................................................................. 130,251
Custodian ....................................................................................... 116,342
Audit & legal ................................................................................... 69,408
Transfer agency ................................................................................. 21,288
Reports and notices to shareholders ............................................................. 18,253
Amortization of organization expenses ........................................................... 6,014
Miscellaneous ................................................................................... 17,765
------------
Total expenses .................................................................................. 1,348,371
------------
Net investment income ........................................................................... 420,035
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments ................................................................ 15,944,848
Net realized loss on foreign currency transactions .............................................. (424,320)
Net change in unrealized appreciation of investments ............................................ (16,429,371)
Net change in unrealized depreciation of foreign currency denominated assets and liabilities .... 32,389
------------
Net loss on investments and foreign currency transactions ....................................... (876,454)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS ........................................................ $ (456,419)
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
May 31, 1996 Year Ended
(unaudited) November 30, 1995
------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income .................................................................. $ 420,035 $ 1,032,249
Net realized gain on investments and foreign currency transactions ..................... 15,520,528 8,024,150
Net change in unrealized appreciation of investments and foreign currency
denominated assets and liabilities .................................................... (16,396,982) 17,594,596
------------- -------------
Net increase (decrease) in net assets from operations .................................. (456,419) 26,650,995
DIVIDENDS & DISTRIBUTIONS
Dividends from net investment income ................................................... (3,544,189) (3,139,662)
Distributions from net realized gains .................................................. (5,466,461) (4,579,449)
------------- -------------
Total increase (decrease) .............................................................. (9,467,069) 18,931,884
NET ASSETS
Beginning of year ...................................................................... 129,112,446 110,180,562
------------- -------------
End of period (including undistributed net investment income of $175,965
and $3,300,119, respectively) ......................................................... $ 119,645,377 $ 129,112,446
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
May 31, 1996 (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. 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 loss on foreign currency transactions represents 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, foreign currency forward contracts, 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 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.
8
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
6. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend date
and are determined in accordance with income tax regulations.
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.
- --------------------------------------------------------------------------------
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 each 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. The Fund entered into a Shareholder Inquiry
Agency Agreement with Alliance Fund Services, Inc. ("AFS") whereby the Fund
reimburses AFS for costs relating to servicing calls for the Fund. The Fund
reimbursed AFS $2,427 during the six months ended May 31, 1996 relating to
shareholder servicing costs.
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
and U.S. Government obligations) aggregated $50,940,844 and $56,595,518,
respectively, for the period ended May 31, 1996.
At May 31, 1996 the cost of securities for federal income tax purposes was
$97,623,926. Accordingly, gross unrealized appreciation of investments was
$25,646,245 and gross unrealized depreciation of investments was $5,026,155
resulting in net unrealized appreciation of $20,620,090 (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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) The Southern Africa Fund, Inc.
================================================================================
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.
- --------------------------------------------------------------------------------
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, 1996, the
Investment Manager owned 7,100 shares.
10
<PAGE>
FINANCIAL HIGHLIGHTS The Southern Africa Fund, Inc.
================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months Ended March 7, 1994 (d)
May 31, 1996 Year Ended to
(unaudited) November 30, 1995 November 30, 1994
----------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 21.49 $ 18.34 $ 13.87(a)
------- ------- -------
Income From Investment Operations
Net investment income ............................................ .07 .17 .42
Net realized and unrealized gain (loss) on investments
and foreign currency transactions .............................. (.14) 4.27 4.05
------- ------- -------
Net increase (decrease) in net asset value
from operations ................................................ (.07) 4.44 4.47
------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ............................. (.59) (.52) -0-
Distributions from net realized gains ............................ (.91) (.77) -0-
------- ------- -------
Total dividends and distributions ................................ (1.50) (1.29) -0-
------- ------- -------
Net asset value, end of period ................................... $ 19.92 $ 21.49 $ 18.34
======= ======= =======
Market value, end of period ...................................... $15.750 $16.750 $14.875
======= ======= =======
Total Return
Total investment return based on: (b)
Market value ................................................... 1.30% 22.90% 5.50%
======= ======= =======
Net asset value ................................................ (.14)% 27.89% 30.07%
======= ======= =======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ........................ $119,645 $129,112 $110,181
Ratio of expenses to average net assets .......................... 2.08%(c) 2.05% 2.30%(c)
Ratio of net investment income to average net assets ............. .65%(c) .94% 3.65%(c)
Portfolio turnover rate .......................................... 39% 41% 15%
Average commission rate (e) ...................................... $ .0069 $ -0- $ -0-
</TABLE>
- --------------------------------------------------------------------------------
(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.
(d) Commencement of operations.
(e) For fiscal year beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for trades on which
commissions are charged.
11
<PAGE>
The Southern Africa Fund, Inc.
================================================================================
Supplemental Proxy Information
The Annual Meeting of the Shareholders of the Southern Africa Fund, Inc. was
held on Tuesday, March 19, 1996. The description of each proposal and number of
shares are as follows:
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect directors: Class One Directors
(term expires 1999)
David H. Williams 3,267,117 34,986
Dennis Davis 3,255,552 46,551
Douglas de Jager 3,255,452 46,651
Stephen Koseff 3,204,452 97,651
Desmond K. Smith 3,255,134 46,969
</TABLE>
<TABLE>
<CAPTION>
Shares Shares Voted 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 end November 30, 1996 3,210,145 21,886 70,072
</TABLE>
12
<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
Nicholas Crossland, Vice President & Chief Financial Officer
Joseph J. Mantineo, Controller
ADMINISTRATOR INDEPENDENT AUDITORS
Princeton Administrators L.P. Ernst & Young LLP
P.O. Box 9095 787 Seventh Avenue
Princeton, NJ 08543-9095 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.
13
<PAGE>
THE SOUTHERN AFRICA FUND, INC.
Summary of General Information
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek long-term capital appreciation
through investment in equity and fixed income securities of Southern African
issuers.
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 Sunday 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]
Investing without the Mystery/(SM)/
/(R)/These registered service marks used under license from the owner, Alliance
Capital Management L.P.
SAFSR
THE
- ---------------
SOUTHERN AFRICA
- ---------------
FUND
- ---------------
[GRAPHIC OF AFRICA]
SEMI-ANNUAL
REPORT
MAY 31, 1996
ALLIANCE/(R)/
Investing without the Mystery./(SM)/
