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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
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/ / Definitive Proxy Statement
/X / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
The Southern Africa Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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The Southern Africa Fund, Inc.
April 20, 1999
Dear Fellow Southern Africa Fund Stockholder:
You should have received The Southern Africa Fund's proxy
materials for its April 27, 1999 Annual Meeting of Stockholders.
You may also have received proxy materials from Deep Discount
Advisors, Inc. ("Deep Discount") seeking, among other things, the
election of five of its own nominees to the Fund's Board of
Directors and the removal of Alliance Capital as the Fund's
investment manager. As Deep Discount's agenda will disrupt the
Fund's highly successful investment program and, indeed, destroy
the Fund, we are writing to enlist your support in thwarting this
irresponsible speculative attack on the Fund.
A. The Truth About Deep Discount
1. Deep Discount is a small money management firm located
in Asheville, North Carolina. As the firm's name suggests, Deep
Discount invests in closed-end funds whose shares are trading at
discounts from net asset value, in the hope of realizing above-
market returns as those discounts narrow. In recent years,
however, Deep Discount has veered into "fund busting," i.e.,
pressuring a closed-end fund to liquidate or convert to open-end
form, then quickly taking its profit and moving on to the next
victim. Unfortunately, Deep Discount has targeted the Fund as
its latest speculative sandbox.
2. Deep Discount is attacking The Southern Africa Fund even
though the relatively illiquid nature of the African equity
markets makes it quite impracticable for the Fund to function
successfully in open-end form. Worse, Deep Discount is
disguising its true intentions by purporting to advocate such
measures as "perpetual buybacks." In fact, the only practical
way for Deep Discount to achieve its own speculative objective
would be to force the liquidation or open-ending--i.e., the
destruction--of the Fund.
3. Deep Discount's disregard for the interests of
stockholders is reflected in the profiles of the five individuals
it seeks to have elected to the Fund's Board of Directors. None
of them, all but one of whom are Deep Discount employees, has any
investment expertise regarding Southern Africa, or any meaningful
background in closed-end fund governance. Clearly, candidates
such as these were proposed solely to achieve Deep Discount's
speculative "hit and run" profit objective.
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4. Deep Discount's motives and methods are best illustrated
by its recent activities in The Austria Fund, another closed-end
fund. Deep Discount accumulated a large position in Austria Fund
shares and, with the help of two other institutional
arbitrageurs, elected four representatives, allegedly champions
of stockholder interests, to The Austria Fund's Board of
Directors in January, 1999. But true to Deep Discount's selfish
"hit and run" form, on March 26, 1999, Deep Discount sold in the
open market virtually its entire position in The Austria Fund-
- -approximately 18% of the fund's outstanding shares--at a
handsome profit largely created by discount reduction measures
previously implemented by The Austria Fund's Board of Directors
at the recommendation of Alliance Capital.
B. The Truth About Alliance Capital
1. Alliance Capital is responsible for The Southern Africa
Fund's fine performance. From the Fund's inception on March 7,
1994 through March 31, 1999, the Fund's net asset value total
return was 66.64%, far superior to the 16.08% return of the
Johannesburg Stock Exchange All-Share Index (the broadly
representative index which is the Fund's benchmark). The
Southern Africa Fund is the only fund of its kind, and we at
Alliance Capital strongly believe that the Southern African
markets are poised to outperform over the next several years.
2. Alliance Capital has repeatedly demonstrated its
commitment to stockholder values. As one of the industry's
largest closed-end fund sponsors, Alliance has a long and
distinctive history of proactively recommending discount
reduction measures to the directors of the many closed-end funds
under its sponsorship. In the case of The Southern Africa Fund,
Alliance will shortly make recommendations to the Fund's Board of
Directors regarding both commencement of the Fund's imminent
"mandatory tender offer" and initiation of the share repurchase
program approved by the Board of Directors at Alliance's
recommendation late last year. Alliance is actively studying
further steps to provide significant and sustained discount
relief in a manner consistent with the best interests of all
stockholders.
3. Continuation of the Fund's relationship with Alliance
Capital is in your best interests. One of Deep Discount's
proposals would terminate the Fund's investment management
agreement with Alliance. The Fund would immediately lose
Alliance's services and the Fund's investment program would be
completely disrupted. This would not eliminate the Fund's market
discount and might very well increase it. A new agreement with
any adviser would require stockholder approval, which could only
occur months later, after considerable stockholder expense.
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During this time, your investment in the Fund could be
substantially harmed.
C. The Truth About the Fund
One of this century's most uplifting stories has been the
democratic transition of the Republic of South Africa from the
repressive apartheid regime to majority rule under the leadership
of President Nelson Mandela. In 1993, Congress declared it to be
the policy of the United States "to encourage United States
private sector investment in South Africa." We are particularly
proud that, at one of the most delicate moments of South Africa's
transition, shortly before the country's first democratic
election in 1994, we were able to successfully launch The
Southern Africa Fund. It would indeed be tragic if, as the
result of Deep Discount's financial piracy, the Fund's large pool
of capital were no longer available to support the hopes and
aspirations of the people of the new South Africa. We understand
that the South African Government has directly expressed its
anxieties regarding Deep Discount's activities to some of the
Fund's largest stockholders. We need your support as well to
repel Deep Discount's irresponsible assault on The Southern
Africa Fund.
To help us, please complete, sign and date the enclosed white
proxy card and return it in the enclosed postage-paid envelope as
soon as possible. If you inadvertently returned a green proxy
card, you have every right to change your mind and rescind it.
When you return our white proxy card it will automatically
rescind your previously mailed green card. In a proxy contest
like this, it's the latest dated proxy card that counts.
Should you have any questions or need additional assistance,
please call the Fund's proxy solicitor, Shareholder
Communications Corporation, at 1-800-733-8481 ext. 497.
Thank you for your time and your consideration.
Sincerely yours,
Dave H. Williams
Chairman and President
The Southern Africa Fund, Inc.
Chairman of the Board
Alliance Capital Management
Corporation
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