<PAGE>
[LOGO OF ALLIANCE CAPITAL]
The Southern
Africa Fund
Semi-Annual Report
May 31, 2000
ALLIANCE CAPITAL [LOGO]
------------------------------------
The Investment Professional's Choice
<PAGE>
Investment Products Offered
. Are Not FDIC Insured
. May Lose Value
. Are Not Bank Guaranteed
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
LETTER TO SHAREHOLDERS
July 6, 2000
Dear Shareholder:
This report contains investment results and market commentary for The Southern
Africa Fund (the "Fund") for the semi-annual reporting period ended May 31,
2000.
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.
Investment Results
The following table provides investment results for the Fund and its benchmark,
the Johannesburg Stock Exchange ("JSE") All-Share Index (expressed in U.S.
dollars), for the three-, six- and 12-month periods ended May 31, 2000.
Market Commentary
Following a somewhat disappointing gross domestic product ("GDP") number for
the first quarter of 2000, investors in South Africa have become concerned over
the sustainability of the economic recovery that had been gathering pace since
the middle of last year. At the same time, political events in Africa, and in
particular Zimbabwe, have unsettled foreign investors in the region.
We attribute this slowdown in the first quarter growth to the impact of the
dramatic floods in the region earlier in the year and anticipate that South
Africa's recovery will regain momentum in the second half of the year. We also
believe that following the, albeit tainted,
INVESTMENT RESULTS*
Periods Ended May 31, 2000
<TABLE>
<CAPTION>
Total Returns
3 Months 6 Months 12 Months
--------------------------------------
<S> <C> <C> <C>
The Southern
Africa Fund -20.12% 1.44% 30.59%
--------------------------------------
Johannesburg
Stock Exchange
(JSE) All-Share
Index (USD) -15.51% -12.51% 3.86%
--------------------------------------
</TABLE>
* The Fund's
investment results
are total returns
for the periods
shown and are based
on the net asset
value as of May 31,
2000. All fees and
expenses related to
the operation of the
Fund have been
deducted. Returns
for the Fund include
the reinvestment of
any distributions
paid during each
period. Past
performance is no
guarantee of future
results.
The unmanaged
Johannesburg Stock
Exchange (JSE) All-
Share Index is a
capitalization-
weighted index of
all domestic stocks
traded on the
Johannesburg Stock
Exchange. The index
reflects no fees or
expenses. An
investor cannot
invest directly in
an index and its
results are not
indicative of the
performance for any
specific investment
including The
Southern Africa
Fund.
Additional
investment results
appear on pages 4-6.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.1
<PAGE>
LETTER TO
SHAREHOLDERS
conclusion of the Zimbabwean election, where the ruling Zanu/PF party managed
to cling on to power, we will see some renewed stability in the region and a
return of foreign capital.
South African economic fundamentals remain stable. Despite the dramatic rise
in the price of oil and a decline in the South African rand, the domestic in-
flation rate has remained relatively stable at around 8% at the core level.
However, most observers now assume there will be no further cuts in interest
rates in the near term, and the next move in monetary policy is likely to be
towards a further tightening. This will be particularly so if our anticipated
pickup in growth materializes.
On a political level, investors have become anxious over the potential for the
land issue to move to South Africa from Zimbabwe. Left-wing politicians are
adding their voices to proposals for a compulsory re-distribution of land to
the black population. The government is currently strongly resisting such
pressure, and it is to be hoped that South Africa's agricultural production
will not be destabilized by similar farm invasions to those seen in Zimbabwe.
Market Outlook
The South African stock market has weakened in the face of these anxieties as
well as reacted to the sell-off in high technology stocks around the globe. At
current levels, we forecast a market price earning multiple of only 10x for
the current year, a level we consider to be inappropriately cheap in the face
of our expectations of more than 30% earnings growth this year and 15% for
2001. However, we recognize that the key to any multiple expansion for the
market will be a renewed interest from overseas investors, and in this regard,
believe that the recent stabilization of the currency, as well as an improve-
ment in the South African Central Bank's reserve position, can encourage port-
folio inflows to both the fixed-income and equity markets.
This powerful combination of attractive valuation, strong earnings growth, and
positive liquidity flows, should enable the Johannesburg Stock Exchange to re-
new its positive trend later in the year. We have consequently moved the Fund
to a fully invested position to take advantage of this expected upturn.
Our industry focus remains tilted towards those sectors which offer high rela-
tive long term growth, most notably technology, media and cellular telephone.
These sectors are currently out of favor following the dramatic rise and sell-
off of the NASDAQ market during the first half of this year. However, we be-
lieve that the fundamentals for the companies that we own in these sectors re-
main strong and market earnings forecasts will continue to be exceeded. We
continue to be underrepresented in the mining and holding company sectors
where the former offers little attraction in the face of a predicted slow down
in the U.S. economy and the latter consists of companies which show little in-
clination to maximizing shareholder value.
Thank you for your continued interest and participation in The Southern Africa
Fund. We look forward to reporting
-------------------------------------------------------------------------------
2.THE SOUTHERN AFRICA FUND
<PAGE>
LETTER TO SHAREHOLDERS
Dave H.
Williams
[Photo to Come]
Mark H.
Breedon
[Photo to Come]
Portfolio Manager, Mark
H. Breedon, has over 23
years of investment ex-
perience.
to you again on developments in the Southern African markets and your Fund's
investment results in the coming periods.
Sincerely,
[PHOTO]
Dave H. Williams
Chairman and President
[PHOTO]
Mark H. Breedon
Senior Vice President
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.3
<PAGE>
PERFORMANCE
UPDATE
PERFORMANCE UPDATE
THE SOUTHERN AFRICA FUND (NAV)
HISTORY OF RETURNS
YEARLY PERIODS ENDED 5/31
<TABLE>
<CAPTION>
The Southern Africa Fund -- Yearly Periods Ended 5/31
---------------------------------------------------------------------------------------------------
Johannesburg
Stock
The Southern Exchange All
African Fund Share Index
---------------------------------------------------------------------------------------------------
<S> <C> <C>
5/31/94* 1.63% 11.13%
5/31/95 37.4% 33.9%
5/31/96 18.96% 7.68%
5/31/97 20.58% 2.87%
5/31/98 14.67% -3.51%
5/31/99 -27.72% -27.63%
5/31/2000 30.59% 3.86%
</TABLE>
Past performance is no guarantee of future results. The Fund's investment re-
sults represent total returns and are based on the net asset value. All fees
and expenses related to the operation of the Fund have been deducted. Returns
for the Fund include the reinvestment of any distributions paid during the pe-
riod.
The unmanaged Johannesburg Stock Exchange (JSE) All-Share Index is a capital-
ization-weighted index of all domestic stocks traded on the Johannesburg Stock
Exchange. The index reflects no fees or expenses. An investor cannot invest di-
rectly in an index and its results are not indicative of the performance for
any specific investment, including The Southern Africa Fund.
* The fund's return for the period ended 5/31/94 is from the Fund's inception
date of 3/7/94 through 5/31/94. The benchmark's return for the period ended
5/31/94 is from 2/28/94 through 5/31/94.
--------------------------------------------------------------------------------
4.THE SOUTHERN AFRICA FUND
<PAGE>
PERFORMANCE UPDATE
PERFORMANCE UPDATE
THE SOUTHERN AFRICA FUND
GROWTH OF A $10,000 INVESTMENT
3/31/94* to 5/31/00
[GRAPH SHOWING PERFORMANCE UPDATE OF THE SOUTHERN AFRICA FUND]
This chart illustrates the total value of an assumed $10,000 investment in The
Southern Africa Fund at net asset value (NAV) (from 3/31/94 to 5/31/00) as com-
pared to the performance of an appropriate index. The chart assumes the rein-
vestment of dividends and capital gains. Past performance is not indicative of
future results, and is not representative of future gain or loss in capital
value or dividend income.
The unmanaged Johannesburg Stock Exchange All-Share Index is a capitalization-
weighted index of all domestic stocks traded on the Johannesburg Stock Ex-
change.
When comparing The Southern Africa Fund to the index shown above, you should
note that no charges or expenses are reflected in the performance of the index.
An investor cannot invest directly in an index its results are not indicative
of any specific investment, including The Southern Africa Fund.
*Closest month-end after Fund's inception date of 3/7/94.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.5
<PAGE>
PORTFOLIO SUMMARY
May 31, 2000
PORTFOLIO SUMMARY
INCEPTION DATE PORTFOLIO STATISTICS
3/7/94 ASSETS ($ mil): $77.6
[GRAPHIC]
All data as of May 31, 2000. The Fund's sector breakdown and country holdings
may vary over time. These breakdowns are expressed as a percentage of total in-
vestments.
--------------------------------------------------------------------------------
6.THE SOUTHERN AFRICA FUND
<PAGE>
TEN LARGEST HOLDINGS
May 31, 2000 (unaudited)
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percent
of Net
Company U.S.$ Value Assets
----------------------------------------------------------
<S> <C> <C>
Dimension Data Holdings, Ltd. $ 5,403,478 7.0%
----------------------------------------------------------
Anglo American Plc. 5,161,294 6.7
----------------------------------------------------------
Sasol Limited 5,075,524 6.5
----------------------------------------------------------
Billiton Plc. 4,576,187 5.9
----------------------------------------------------------
M-Cell, Ltd. 4,442,235 5.7
----------------------------------------------------------
Compagnie Financiere Richemont AG 3,892,721 5.0
----------------------------------------------------------
Old Mutual Plc. 3,794,487 4.9
----------------------------------------------------------
Johnnie Holdings, Ltd. 3,707,725 4.8
----------------------------------------------------------
Standard Bank Investment Corp., Ltd. 3,509,708 4.5
----------------------------------------------------------
Softline, Ltd. 3,267,222 4.2
----------------------------------------------------------
$42,830,581 55.2%
----------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.7
<PAGE>
PORTFOLIO OF INVESTMENTS
May 31, 2000 (unaudited)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Company Shares U.S.$ Value
--------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks - 98.6%
Botswana - 2.6%
Consumer Manufacturing - 0.4%
Miscellaneous - 0.4%
Sefalana Holding Company, Ltd. ........................... 350,000 $ 268,940
----------
Consumer Staples - 1.4%
Beverages - 1.4%
Kgolo Ya Sechaba, Ltd. ................................... 100,000 19,210
Sechaba Breweries, Ltd. .................................. 1,398,000 1,074,223
----------
1,093,433
----------
Financial Services - 0.8%
Insurance - 0.8%
Botswana Insurance Holdings, Ltd. ........................ 230,139 629,988
----------
Total Botswanan Securities
(cost $1,851,877)........................................ 1,992,361
----------
Kenya - 0.5%
Consumer Staples - 0.5%
Beverages - 0.5%
East African Breweries, Ltd.
(cost $448,932).......................................... 480,390 416,505
----------
Malawi - 0.7%
Consumer Services - 0.7%
Printing & Publishing - 0.7%
Press Corporation(a)(b)(c)
(cost $2,002,638)........................................ 188,750 566,250
----------
Mauritius - 1.4%
Consumer Services - 0.7%
Restaurants & Lodging - 0.7%
New Mauritius Hotels, Ltd. ............................... 167,358 262,154
Rogers and Company, Ltd. ................................. 83,679 278,337
----------
540,491
----------
Consumer Staples - 0.2%
Beverages - 0.2%
Mauritius Breweries, Ltd. ................................ 102,122 215,264
----------
Financial Services - 0.5%
Banking - 0.5%
Mauritius Commercial Bank................................. 100,000 336,492
----------
Total Mauritian Securities
(cost $1,154,737)........................................ 1,092,247
----------
Namibia - 1.3%
Basic Industry - 0.7%
Mining & Metals - 0.7%
Namibian Minerals Corp.(a)................................ 130,000 520,000
----------
</TABLE>
--------------------------------------------------------------------------------
8.THE SOUTHERN AFRICA FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Company Shares U.S.$ Value
-------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples - 0.6%
Beverages - 0.6%
Namibia Breweries, Ltd. ................................ 1,000,000 $ 495,334
-----------
Total Namibian Securities
(cost $1,071,883)...................................... 1,015,334
-----------
South Africa - 87.1%(d)
Basic Industries - 24.4%
Chemicals - 6.5%
Sasol Limited........................................... 772,700 5,075,524
-----------
Gold - 1.2%
Anglogold, Ltd. ........................................ 23,560 940,370
-----------
Mining & Metals - 9.3%
Anglo American Platinum Corp. .......................... 59,100 1,637,660
Billiton Plc. .......................................... 1,362,100 4,576,187
ISCOR, Ltd. ............................................ 429,558 962,111
-----------
7,175,958
-----------
Paper & Forest - 2.6%
Sappi Limited........................................... 275,000 2,053,123
-----------
Miscellaneous - 4.8%
Johnnie Holdings, Ltd. ................................. 294,798 3,707,725
-----------
18,952,700
-----------
Consumer Services - 9.9%
Broadcasting & Cable - 3.6%
MIH Holdings, Ltd. ..................................... 555,692 2,792,422
-----------
Printing & Publishing - 3.9%
Nasionale Pers Beperk, N Shares......................... 351,000 3,058,966
-----------
Retail - General Merchandise - 2.4%
New Clicks Holdings, Ltd. .............................. 597 874
Pick 'N Pay Stores, Ltd. ............................... 1,236,221 1,828,152
-----------
1,829,026
-----------
7,680,414
-----------
Consumer Staples - 5.0%
Beverages - 2.6%
South African Breweries, Ltd. .......................... 326,345 1,991,337
-----------
Tobacco - 2.4%
Rembrandt Group, Ltd. .................................. 213,000 1,859,354
-----------
3,850,691
-----------
Financial Services - 18.5%
Banking - 14.0%
Firstrand Limited....................................... 1,599,000 1,680,500
Nedcor, Ltd. ........................................... 78,675 1,502,337
Old Mutual Plc. ........................................ 1,804,000 3,794,487
RMB Holdings Limited.................................... 241,020 351,235
Standard Bank Investment Corp., Ltd. ................... 958,632 3,509,708
-----------
10,838,267
-----------
</TABLE>
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.9
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Company Shares U.S.$ Value
-------------------------------------------------------------------------------
<S> <C> <C>
Insurance - 1.7%
Alexander Forbes, Ltd. ................................. 642,300 $ 1,327,943
-----------
Miscellaneous Finance - 2.8%
BOE Corp. .............................................. 261,600 376
BOE Limited............................................. 3,500,732 2,136,125
-----------
2,136,501
-----------
14,302,711
-----------
Multi-Industry Companies - 12.5%
African Lakes Corp(a)................................... 900,968 612,738
Anglo American Plc. .................................... 118,720 5,161,294
Compagnie Financiere Richemont AG....................... 158,000 3,892,721
-----------
9,666,753
-----------
Technology - 11.1%
Computer Software - 11.1%
Dimension Data Holdings, Ltd. .......................... 775,984 5,403,478
Softline, Ltd. ......................................... 3,298,000 3,267,222
-----------
8,670,700
-----------
Utility - 5.7%
Telephone Utility - 5.7%
M-Cell, Ltd. ........................................... 874,016 4,442,235
-----------
Total South African Securities
(cost $60,571,145)..................................... 67,566,204
-----------
Zambia - 0.9%
Consumer Staples - 0.1%
Beverages - 0.1%
National Breweries Plc. ................................ 2,000,000 116,447
-----------
Food - 0.2%
Zambia Sugar Co., Ltd. ................................. 30,720,000 121,263
-----------
Tobacco - 0.6%
Rothmans of Pall Mall - (Zambia) Berhad................. 16,079,032 449,578
-----------
Total Zambian Securities
(cost $1,162,450)...................................... 687,288
-----------
Zimbabwe - 4.1%
Consumer Staples - 0.6%
Beverages - 0.6%
Delta Corp., Ltd. ...................................... 4,015,139 435,929
-----------
Consumer Services - 3.5%
Broadcasting & Cable - 3.5%
Econet Wireless Holdings................................ 13,500,000 2,721,214
-----------
Total Zimbabwean Securities
(cost $2,044,300)...................................... 3,157,143
-----------
Total Common Stocks
(cost $70,307,962)..................................... 76,493,332
-----------
</TABLE>
--------------------------------------------------------------------------------
10.THE SOUTHERN AFRICA FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Principal
Amount
Company (000) U.S.$ Value
<S> <C> <C>
-------------------------------------------------------------------------------
Time Deposit - 0.8%
Brown Brothers Harriman & Co.
6.75%, 6/01/2000
(cost $600,000)........................................ $ 600 $ 600,000
-----------
Total Investments - 99.4%
(cost $70,907,962)..................................... 77,093,332
Other assets less liabilities - 0.6%.................... 476,830
-----------
Net Assets - 100%....................................... $77,570,162
-----------
</TABLE>
(a) Non-income producing security.
(b) U.S. Dollar denominated security.
(c) Restricted and illiquid security, valued at fair value (see Notes A&E).
(d) Securities, or portion thereof, with an aggregate market value of
$67,566,204, have been segregated to collateralize forward exchange
currency contracts.
See notes to financial statements.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000 (unaudited)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost $70,907,962)........... $77,093,332
Cash, at value (cost $964,901)................................... 335,435
Receivable for investment securities sold........................ 5,651,346
Dividends and interest receivable................................ 672,391
Net unrealized appreciation of forward exchange currency
contract........................................................ 510,832
Prepaid expenses and other assets................................ 40,165
-----------
Total assets..................................................... 84,303,501
-----------
Liabilities
Payable for shares tendered...................................... 3,986,311
Payable for investment securities purchased...................... 1,602,495
Advisory fee payable............................................. 380,478
Sub-advisory fee payable......................................... 224,461
Tender fees payable.............................................. 223,265
Administrative fee payable....................................... 13,563
Accrued expenses................................................. 302,766
-----------
Total liabilities................................................ 6,733,339
-----------
Net assets....................................................... $77,570,162
-----------
Composition of Net Assets:
Common stock, at par............................................. $ 45,654
Additional paid-in capital....................................... 61,227,707
Accumulated net investment loss.................................. (105,658)
Accumulated net realized gains on investments
and foreign currency transactions............................... 10,331,866
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities............. 6,070,593
-----------
$77,570,162
-----------
Net Asset Value Per Share
(based on 4,565,396 shares outstanding)......................... $16.99
-----------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
12.THE SOUTHERN AFRICA FUND
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2000 (unaudited)
STATEMENT OF OPERATIONS
<TABLE>
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $22,583).. $1,078,418
Interest.............................................. 86,402 $ 1,164,820
----------
Expenses
Management fee........................................ 380,478
Custodian............................................. 133,002
Sub-advisory fee...................................... 126,826
Directors' fees and expenses.......................... 95,660
Administrative fee.................................... 94,217
Audit and legal....................................... 60,921
Registration.......................................... 21,284
Reports and notices to shareholders................... 14,456
Transfer agency....................................... 5,342
Miscellaneous......................................... 11,307
----------
Total expenses........................................ 943,493
------------
Net investment income................................. 221,327
------------
Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions
Net realized gain on investment transactions.......... 13,500,927
Net realized gain on foreign currency transactions.... 615,829
Net change in unrealized appreciation/depreciation of:
Investments.......................................... (13,047,778)
Foreign currency denominated assets and liabilities.. (97,224)
------------
Net gain on investments and foreign
currency transactions................................ 971,754
------------
Net Increase in Net Assets from Operations............ $ 1,193,081
------------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 2000 November 30,
(unaudited) 1999
---------------- ------------
<S> <C> <C>
Increase (Decrease) in Net Assets
from Operations
Net investment income........................... $ 221,327 $ 421,926
Net realized gain (loss) on investments and
foreign currency transactions.................. 14,116,756 (3,659,032)
Net change in unrealized appreciation/
depreciation of investments and foreign
currency denominated assets and liabilities.... (13,145,002) 30,349,680
------------ ------------
Net increase in net assets from operations...... 1,193,081 27,112,574
Dividends and Distributions to Shareholders
from:
Net investment income........................... (235,480) (310,672)
Distribution in excess of net realized gains.... - 0 - (1,828,878)
Tax return of capital........................... - 0 - (161,170)
Common Stock Transactions
Tender offer (resulting in the redemption of
240,284 and 1,201,420 shares of its
common stock, respectively).................... (3,986,311) (17,180,306)
Tender offer costs.............................. (160,526) (149,637)
------------ ------------
Total increase (decrease)....................... (3,189,236) 7,481,911
Net Assets:
Beginning of period............................. 80,759,398 73,277,487
------------ ------------
End of period................................... $ 77,570,162 $ 80,759,398
------------ ------------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
14.THE SOUTHERN AFRICA FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
May 31, 2000 (unaudited)
NOTES TO FINANCIAL STATEMENTS
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 financial state-
ments have been prepared in conformity with accounting principles generally
accepted in the United States, which require management to make certain esti-
mates and assumptions that affect the reported amounts of asset and liabili-
ties in the financial statements and amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The fol-
lowing is a summary of significant accounting policies of the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) or on The
Nasdaq Stock Market, Inc. are generally valued at the last reported sales
price or if no sale occurred, at the mean of the closing bid and asked prices
on that day. Readily marketable securities traded in the over-the-counter mar-
ket, securities listed on a foreign securities exchange whose operations are
similar to the U.S. over-the-counter market, and securities listed on a na-
tional securities exchange whose primary market is believed to be over-the-
counter (but excluding securities traded on The Nasdaq Stock Market, Inc.),
are valued at the mean of the current bid and asked prices. U.S. government
and fixed income securities which mature in 60 days or less are valued at am-
ortized cost, unless this method does not represent fair value. Securities for
which current market quotations are not readily available are valued at their
fair value as determined in good faith by, or in accordance with procedures
adopted by, the Fund's Board of Directors. Fixed income securities may be val-
ued on the basis of prices obtained from a pricing service when such prices
are believed to reflect the fair market value of such securities.
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 ex-
change prevailing when accrued.
Net realized gains or losses on foreign currency transactions represents for-
eign exchange gains and losses from sales and maturities of foreign fixed-in-
come investments and closed forward exchange currency contracts, holdings of
foreign currencies, currency gains and losses realized between the trade and
settlement dates on foreign investment transactions and the difference between
the amounts of dividends, interest and
-------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.15
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid.
Net 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. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially
all of its investment company taxable income and net realized gains, if any,
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.
4. 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 trans-
actions are accounted for on the date the securities are purchased or sold.
Investment gains and losses are determined on the identified cost basis. The
Fund accretes discounts on short-term securities as adjustments to interest
income.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance
with accounting principles generally accepted in the United States. To the ex-
tent these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary differ-
ences do not require such reclassification.
NOTE B
Management, Sub-advisory and Administrative fees
Under the terms of the Investment Management Agreement, amended as of May 1,
1998, the Fund pays Alliance Capital Management L.P. (the "Investment Manag-
er") a fee calculated and paid quarterly, based on either (i) .81% of the
Fund's average weekly net assets if 90% or less of the Fund's average weekly
net assets are invested in securities of South African issuers, or (ii) the
sum of (a) .80% of the Fund's average weekly net assets and (b) .10% of the
Fund's average weekly net assets not invested in securities of South African
issuers if greater than 90% of the Fund's average weekly net assets are in-
vested in securities of South African issuers.
Under the new terms of the Sub-Advisory Agreement, effective May 31, 1998, the
Fund pays Gensec Asset Management (PTY) a fee calculated and paid quarterly
equal to an annualized rate of .30 of 1% of the greater of (i) the Fund's av-
erage weekly net assets invested in securities of South African issuers or
(ii) 90% of the Fund's average weekly net assets during the quarter.
-------------------------------------------------------------------------------
16.THE SOUTHERN AFRICA FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Manager, the Fund reim-
burses AFS for costs relating to servicing phone inquires for the Fund. The
Fund reimbursed AFS $395 during the six months ended May 31, 2000.
Under the terms of an Administrative Agreement, the Fund pays Princeton Admin-
istrators, 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 certain financial and
regulatory reports for the Fund and provides clerical and other services.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $22,435,143 and $27,140,238, respec-
tively, for the six months ended May 31, 2000. There were no purchases or sales
of U.S. government or government agency obligations for the six months ended
May 31, 2000.
At May 31, 2000, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $14,977,554 and
gross unrealized depreciation of investments was $8,792,184 resulting in net
unrealized appreciation of $6,185,370 (excluding foreign currency transac-
tions).
At November 30, 1999, the Fund had a capital loss carryforward of $3,376,645,
all of which will expire in the year 2007.
Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio hold-
ings, to hedge certain firm purchase and sales commitments denominated in for-
eign currencies and for investment purposes. A forward exchange currency con-
tract is a commitment to purchase or sell a foreign currency at a future date
at a negotiated forward rate. The gain or loss arising from the difference be-
tween the original contracts and the closing of such contracts is included in
net realized gains or losses on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value at
least equal to the aggregate amount of the Fund's commitments under forward ex-
change currency contracts entered into with respect to position hedges.
Risk may arise from the potential inability of a counterparty to meet the terms
of a contract and from unanticipated movements in the value of foreign curren-
cies relative to the U.S. dollar.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.17
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
At May 31, 2000, the Fund had a forward exchange currency contract, as follows:
<TABLE>
<CAPTION>
U.S.$
Contract Value on U.S.$
Amount Origination Current Unrealized
(000) Date Value Appreciation
-------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Forward Exchange Currency
Sale Contract
South African Rand
Settling 7/28/2000.............. 151,324 $22,237,178 $21,726,346 $510,832
</TABLE>
NOTE D
Capital Stock
There are 100,000,000 shares of $.01 par value capital stock authorized. On May
31, 2000, the Fund purchased and retired 240,284 shares of its outstanding com-
mon stock for $16.59 per share pursuant to a tender offer. The Fund incurred
tender offer costs of $160,526 which were charged to additional paid-in capi-
tal.
NOTE E
Restricted Security
<TABLE>
<CAPTION>
Date U.S.$
Acquired Cost
-------- ----------
<S> <C> <C>
Press Corp.,
Ltd. ......... 3/10/98 $2,002,638
</TABLE>
The security shown above is restricted as to resale and has been valued at fair
value in accordance with the procedures described in Note A. The Fund will not
bear any costs including those involved in registration under the Securities
Act of 1933, in connection with the disposition of these securities. The value
of this security at May 31, 2000 was $566,250 representing 0.7% of net assets.
NOTE F
Concentration of Risk
Investment in securities of foreign companies involves special risks which in-
clude the possibility of future political and economic developments which could
adversely affect the value of such securities. Moreover, securities of many
foreign companies and their markets may be less liquid and their prices more
volatile than those of comparable U.S. companies.
--------------------------------------------------------------------------------
18.THE SOUTHERN AFRICA FUND
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months
Ended
May 31, Year Ended November 30,
2000 ---------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 16.80 $ 12.20 $ 19.01 $ 20.08 $ 21.49 $ 18.34
-------------------------------------------------------------------
Income From Investment
Operations
Net investment income... .05(a) .08(a) .16 .41 .39 .17
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions .......... 0.19 4.90 (3.96) 1.10 (.30) 4.27
-------------------------------------------------------------------
Net increase (decrease)
in net asset value from
operations ............ 0.24 4.98 (3.80) 1.51 .09 4.44
-------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income...... (0.05) (.05) (.15) (.34) (.59) (.52)
Distributions in excess
of net investment
income................. - 0 - - 0 - (.27) - 0 - - 0 - - 0 -
Distribution from net
realized gains on
investments and foreign
currency transactions.. - 0 - - 0 - (2.59) (2.24) (.91) (.77)
Distribution in excess
of net realized gains
on investments and
foreign currency
transactions........... - 0 - (.30) - 0 - - 0 - - 0 - - 0 -
Tax return of capital... - 0 - (.03) - 0 - - 0 - - 0 - - 0 -
-------------------------------------------------------------------
Total dividends and
distributions.......... (0.05) (.38) (3.01) (2.58) (1.50) (1.29)
-------------------------------------------------------------------
Net asset value, end of
period................. $ 16.99 $ 16.80 $ 12.20 $ 19.01 $ 20.08 $ 21.49
-------------------------------------------------------------------
Market value, end of
period................. $12.1875 $13.3125 $10.0625 $ 15.375 $ 16.50 $ 16.75
-------------------------------------------------------------------
Total Return
Total investment return
based on:(b)
Market value............ (8.17)% 37.53% (18.11)% 9.28% 6.12% 22.90%
Net asset value......... 1.44 % 43.15% (19.70)% 11.03% .66% 27.89%
Ratios/Supplemental Data
Net assets, end of
period (000's
omitted)............... $ 77,570 $ 80,759 $ 73,277 $114,182 $120,612 $129,112
Ratio of expenses to
average net assets..... 2.01 %(c) 2.39% 2.10 % 2.05% 2.04% 2.05%
Ratio of net investment
income to average net
assets................. .47 %(c) .57% .95 % 2.00% 1.87% .94%
Portfolio turnover
rate................... 26 % 55% 86 % 46% 62% 41%
</TABLE>
(a) Based on average shares outstanding.
(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.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.19
<PAGE>
ADDITIONAL INFORMATION
ADDITIONAL
INFORMATION
Supplemental Proxy Information (unaudited)
The Annual Meeting of the Shareholders of The Southern Africa Fund was held on
April 6, 2000. The description of each proposal and number of shares are as
follows:
<TABLE>
<CAPTION>
Abstain/
Authority
Voted For Withheld
------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect Directors: Class Two Directors
(term expires in 2003)
Dr. Willem de Klerk 3,361,532 66,843
Moss L. Leoka 3,356,621 71,754
Ronnie Masson 3,356,321 72,054
Frank Savage 3,366,093 62,282
Peter G.A. Wrighton 3,364,311 64,064
</TABLE>
<TABLE>
<CAPTION>
Abstain/
Authority
Voted For Voted Against Wihheld
------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young 3,413,197 6,475 8,703
LLP as the Fund's independent auditors
for the Fund's fiscal year ending
November 30, 2000
</TABLE>
--------------------------------------------------------------------------------
20.THE SOUTHERN AFRICA FUND
<PAGE>
GLOSSARY OF INVESTMENT TERMS
GLOSSARY OF INVESTMENT TERMS
benchmark
A standard by which a fund's performance can be measured. A benchmark is usu-
ally an unmanaged index, such as the Standard & Poor's 500 Stock Index or the
Lehman Brothers Aggregate Bond Index.
index
A compilation of securities of similar types of companies that is used to meas-
ure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by
the number of shares outstanding.
price-to-earnings (P/E) ratio
What an investor pays for a security versus a company's earnings per share of
outstanding stock.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.21
<PAGE>
ALLIANCE CAPITAL
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $394
billion in assets under management. In recognition of our far-reaching invest-
ment capabilities, Alliance Capital has been selected by employee benefit plans
for 28 of the FORTUNE 100 companies and public retirement funds in 33 states as
well as by hundreds of foundations, endowments and foreign institutions. By
sharing this institutional money management experience with millions of mutual
fund investors as well, Alliance stands out as a "manager of choice" for thou-
sands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 276 in-
vestment professionals in 22 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios man-
aged by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 3/31/00.
--------------------------------------------------------------------------------
22.THE SOUTHERN AFRICA FUND
<PAGE>
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Dave H. Williams, Chairman and President
T.N. Chapman(/1/)
Prof. Dennis Davis(/1/)
David D.T. Hatendi(/1/)
Dr. Willem de Klerk(/1/)
Wendy N. Luhabe
Ronnie Masson
Sam N. Montsi
Johannes C. van Reenen
Frank Savage
Dr. Reba W. Williams
Peter G.A. Wrighton(/1/)
OFFICERS
Norman S. Bergel, Senior Vice President
Mark H. Breedon, Senior Vice President
Russell Brody, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
<TABLE>
<S> <C>
Administrator Independent Auditors
Princeton Administrators, Ernst & Young LLP
L.P. 787 Seventh Avenue
P.O. Box 9095 New York, NY 10019
Princeton, NJ 08543-9095
Custodian Dividend Paying Agent,
Brown Brothers Harriman & Transfer Agent And Registrar
Co. The Bank of New York
40 Water Street 101 Barclay Street
Boston, MA 02109 New York, NY 10286
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
</TABLE>
(1) Member of the Audit Committee.
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 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 pur-
chases of shares of the Fund or any securities mentioned in this report.
--------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.23
<PAGE>
ALLIANCE CAPITAL FAMILY OF FUNDS
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quassar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privalization Fund
Select Investor Series
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Limited Maturity Government Fund
Mortgage Securities Income Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Alliance also offers AFD Exchange Reserves, which
serves as the money market fund exchange vehicle for
the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund,
call your investment professional, or call Alliance at
(800) 227-4818.
--------------------------------------------------------------------------------
24.THE SOUTHERN AFRICA FUND
<PAGE>
SUMMARY OF GENERAL INFORMATION
SUMMARY OF GENERAL INFORMATION
Investment Policies and Objectives
The investment objective of the Fund is to seek long-term capital appreciation
through investment in equity and fixed- income securities of Southern Africa
issuers.
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 432-8224. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Inc., Morningstar, Inc. and Bloomberg.
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 in-
formation 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".
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains distributions in additional Fund shares.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call The Bank of
New York at 1-(800)-432-8224.
-------------------------------------------------------------------------------
THE SOUTHERN AFRICA FUND.25
<PAGE>
The Southern Africa Fund
1345 Avenue of the Americas
New York, New York 10105
[LOGO OF ALLIANCE]
(R) These registered
service Marks used
under license from the
owner, Alliance Capital
Management L.P.
SAFSR500
