345 Park Avenue (at 51st Street)
New York, New York 10154
(800) 349-4281
The Argentina Fund, Inc.
September 23, 1996
To the Stockholders:
The Annual Meeting of Stockholders of The Argentina Fund, Inc. (the "Fund")
is to be held at 10:00 a.m., eastern time, on Tuesday, October 29, 1996 at the
offices of Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st
Street), New York, New York 10154. Stockholders who are unable to attend this
meeting are strongly encouraged to vote by proxy, which is customary in
corporate meetings of this kind. A Proxy Statement regarding the meeting, a
proxy card for your vote at the meeting and an envelope--postage prepaid--in
which to return your proxy card are enclosed.
At the Annual Meeting, the stockholders will elect four Directors, consider
the ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants, consider the approval of a new Investment Advisory,
Management and Administration Agreement between the Fund and its investment
manager, Scudder, Stevens & Clark, Inc., and consider the approval of a new
Sub-Advisory Contract between Scudder, Stevens & Clark, Inc. and its Argentine
adviser, Sociedad General de Negocios y Valores S.A. In addition, the
stockholders present will hear a report on the Fund. There will be an
opportunity to discuss matters of interest to you as a stockholder.
Your Fund's Directors recommend that you vote in favor of each of the
foregoing matters.
Respectfully,
/s/Nicholas Bratt /s/Edmond D. Villani
Nicholas Bratt Edmond D. Villani
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
<PAGE>
THE ARGENTINA FUND, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of
The Argentina Fund, Inc.:
Please take notice that the Annual Meeting of Stockholders of The Argentina
Fund, Inc. (the "Fund"), has been called to be held at the offices of Scudder,
Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York,
New York 10154, on Tuesday, October 29, 1996 at 10:00 a.m., eastern time, for
the following purposes:
(1) To elect four Directors of the Fund to hold office for a designated
term or until their respective successors shall have been duly elected
and qualified;
(2) To ratify or reject the action taken by the Board of Directors in
selecting Coopers & Lybrand L.L.P. as independent accountants for the
fiscal year ending October 31, 1996;
(3) To approve or disapprove a new Investment Advisory, Management and
Administration Agreement between the Fund and Scudder, Stevens &
Clark, Inc.;
(4) To approve or disapprove a new Sub-Advisory Contract between Scudder,
Stevens & Clark, Inc. and Sociedad General de Negocios y Valores S.A.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of the shares of common stock of the Fund at the close of
business on September 6, 1996 are entitled to vote at the meeting and any
adjournments thereof.
By order of the Board of Directors,
Thomas F. McDonough, Secretary
September 23, 1996
IMPORTANT--We urge you to sign and date the enclosed proxy card and return it in
the enclosed addressed envelope which requires no postage and is intended for
your convenience. Your prompt return of the enclosed proxy card may save the
Fund the necessity and expense of further solicitations to ensure a quorum at
the Annual Meeting. If you can attend the meeting and wish to vote your shares
in person at that time, you will be able to do so.
2
<PAGE>
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Argentina Fund, Inc. (the "Fund") for
use at the Annual Meeting of Stockholders, to be held at the offices of Scudder,
Stevens & Clark, Inc. ("Scudder"), 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154, on Tuesday, October 29, 1996, at 10:00 a.m., eastern
time, and at any adjournments thereof (collectively, the "Meeting").
This Proxy Statement, the Notice of Annual Meeting and the proxy card are
first being mailed to stockholders on or about September 23, 1996, or as soon as
practicable thereafter. Any stockholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Fund, 345 Park Avenue, New York, New York 10154) or in person at the Meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, for each
proposal referred to in the Proxy Statement.
The presence at any stockholders' meeting, in person or by proxy, of
stockholders entitled to cast a majority of the votes entitled to be cast shall
be necessary and sufficient to constitute a quorum for the transaction of
business. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, stockholders are urged to forward their voting instructions
promptly.
Abstentions and broker non-votes will not be counted in favor of, but will
have no other effect on, the vote for proposals (1) and (2), which require the
approval of a majority of shares voting at the Meeting. Abstentions and broker
non-votes will have the effect of a "no" vote for proposals (3) and (4), which
require the approval of a specified percentage of the outstanding shares of the
Fund or of such shares present at the Meeting.
Holders of record of the common stock of the Fund at the close of business
on September 6, 1996, (the "Record Date"), will be entitled to one vote per
share on all business of the Meeting and any adjournments. There were 9,258,146
shares of common stock outstanding on the Record Date.
The Fund provides periodic reports to all stockholders which highlight
relevant information, including investment results and a review of portfolio
changes. You may receive an additional copy of the annual report for the fiscal
year ended October 31, 1995 and the semiannual report for the period ended April
30, 1996, without charge, by calling 800-349-4281 or writing the Fund at 345
Park Avenue, New York, New York 10154.
(1) ELECTION OF DIRECTORS
Persons named on the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies in favor of the election of the four
nominees listed below as Directors of the Fund to serve for a term as specified
below, or until their successors are duly elected and qualified. All nominees
have consented to stand for election and to serve if elected. If any such
nominee should be unable to serve, an event not now anticipated, the proxies
3
<PAGE>
will be voted for such person, if any, as shall be designated by the Board of
Directors to replace any such nominee.
Information Concerning Nominees
The following table sets forth certain information concerning each of the
four nominees as a Director of the Fund. Except for Ms. Quirk, each of the
nominees is now a Director of the Fund. Unless otherwise noted, each of the
nominees has engaged in the principal occupation listed in the following table
for more than five years, but not necessarily in the same capacity.
Class I--Nominees to serve until 1999 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if Shares
any; Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned of
Name (Age) in Publicly Held Companies Director July 31, 1996(1) Class
---------- -------------------------- -------- ----------------- -----
<S> <C> <C> <C> <C>
Edmond D. Villani (49)*+ Chairman of the Board; President and 1991 11,000 less than
Chief Executive Officer of Scudder, 1/4 of 1%
Stevens & Clark, Inc. Mr. Villani
serves on the boards of an additional
four funds managed by Scudder.
Dr. Wilson Nolen (69) Consultant; Trustee, Cultural 1991 10,702 less than
Institutions Retirement Fund, Inc.; 1/4 of 1%
Director, Ecohealth, Inc.
(biotechnology company) (until 1996);
and Director, Chattem, Inc. (drug and
chemical company) (until 1993). Dr.
Nolen serves on the boards of an
additional 18 funds managed by
Scudder.
</TABLE>
4
<PAGE>
Information Concerning Continuing Directors
The Board of Directors is divided into three classes, each Director serving
for a term of three years. Mr. Juris Padegs, currently a Class II Director, will
serve as Director of the Fund until October 29, 1996, at which time he will be
retiring from the Board. The terms of Class II and III do not expire this year.
However, Ms. Quirk, if elected at this meeting, and Mr. Fraga, who was elected
as a Director by the Board in 1996, will be designated as Class II Directors.
The following table sets forth certain information regarding the Directors in
such classes.
Class II--Directors to serve until 1997 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if Shares
any; Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned of
Name (Age) in Publicly Held Companies Director July 31, 1996(1) Class
---------- -------------------------- -------- ----------------- -----
<S> <C> <C> <C> <C>
Kathryn L. Quirk (43)* Vice President and Assistant Secretary; -- -- --
Managing Director of Scudder, Stevens &
Clark, Inc.
Javier A. Gonzalez Chairman, Argentine Institute of
Fraga (48) Capital Markets; Vice President,
Buenos Aires; Stock Exchange. 1996 -- --
</TABLE>
5
<PAGE>
Class III--Directors to serve until 1998 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if Shares
any; Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned of
Name (Age) in Publicly Held Companies Director July 31, 1996(1) Class
---------- -------------------------- -------- ----------------- -----
<S> <C> <C> <C> <C>
Jose E. Rohm (50)* Managing Director, Banco General de 1991 -- --
Negocios (bank); Director, Banco
Comercial and Sulzer Argentina S.A.;
Member, Chairman's International
Advisory Council, Americas Society;
Member, International Advisory Board,
Chemical Bank.
Ronaldo A. da Frota Director and Chief Executive Officer, 1991 1,000 less than
Nogueira (57) IMF Editora Ltda. (financial 1/4 of 1%
publisher). Mr. Nogueira serves on the
boards of an additional three funds
managed by Scudder.
Dr. Susan Kaufman Managing Director, Council of the 1991 200 less than
Purcell (54) Americas; Vice President, Americas 1/4 of 1%
Society; Director, Valero Energy Corp.
Dr. Purcell serves on the boards of an
additional two funds managed by
Scudder.
All Directors and Officers as a group 24,502 0.26%
</TABLE>
6
<PAGE>
* Persons considered by the Fund and its counsel to be "interested persons"
(which as used in this proxy statement is as defined in the Investment
Company Act of 1940, as amended) of the Fund or of the Fund's investment
manager or Argentine adviser. Mr. Villani and Ms. Quirk are deemed to be
interested persons because of their affiliation with the Fund's investment
manager, Scudder, Stevens & Clark, Inc., or because they are Officers of
the Fund or both. Mr. Rohm is deemed to be an interested person because of
his affiliation with the Fund's Argentine adviser, Sociedad General de
Negocios y Valores S.A.
+ Mr. Villani is a member of the Executive Committee of the Fund.
(1) The information as to beneficial ownership is based on statements furnished
to the Fund by the Directors. Unless otherwise noted, beneficial ownership
is based on sole voting and investment power.
Section 30(f) of the Investment Company Act of 1940, as amended (the "1940
Act"), as applied to a fund, requires the fund's Officers and Directors,
Investment Manager, affiliates of the Investment Manager, and persons who
beneficially own more than ten percent of a registered class of the fund's
outstanding securities ("Reporting Persons"), to file reports of ownership of
the fund's securities and changes in such ownership with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange. Such persons
are required by SEC regulations to furnish the fund with copies of all such
filings.
Based solely upon its review of the copies of such forms received by it and
written representations from certain Reporting Persons that no year-end reports
were required for those persons, the Fund believes that during the fiscal year
ended October 31, 1995, all filing requirements applicable to its Reporting
Persons were satisfied.
To the best of the Fund's knowledge, as of July 31, 1996 no other person
owned beneficially more than 5% of the Fund's outstanding stock.
Committees of the Board--Board Meetings
The Board of Directors of the Fund met six times during the fiscal year
ended October 31, 1995. Each Director attended at least 75% of the total number
of meetings of the Board of Directors and of all committees of the Board on
which they served as regular members, except Mr. Rohm, who attended 66.7% of the
meetings of the Board of Directors and related committees on which he serves.
The Board of Directors, in addition to an Executive Committee, has an Audit
Committee, a Valuation Committee and a Committee on Independent Directors. The
Executive and Valuation Committees consist of regular members, allowing
alternates.
Audit Committee
The Board has an Audit Committee consisting of those Directors who are not
interested persons of the Fund or of Scudder or of Sociedad General de Negocios
y Valores S.A. ("Noninterested Directors") as defined in the 1940 Act, which met
once during the Fund's last fiscal year. The Audit Committee reviews with
management and the independent accountants for the Fund, among other things, the
scope of the audit and the controls of the Fund and its agents, reviews and
approves in advance the type of services to be rendered by independent
accountants, recommends the selection of independent accountants for the Fund to
the Board and in general considers and reports to the Board on matters regarding
the Fund's accounting and bookkeeping practices.
7
<PAGE>
Committee on Independent Directors
The Board has a Committee on Independent Directors consisting of the
Noninterested Directors. The Committee is charged with the duty of making all
nominations for Noninterested Directors and considers other related matters.
Stockholders' recommendations as to nominees received by management are referred
to the Committee for its consideration and action. The Committee met on February
29, 1996 and May 28, 1996 to consider and to nominate the nominees as set forth
above.
Executive Officers
In addition to Messrs. Villani, Padegs and Ms. Quirk, Directors and a
Nominee for Director, respectively, who are also Officers of the Fund, the
following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Present Office with the Fund; Year First Became
Name (Age) Principal Occupation or Employment (1) an Officer (2)
---------- -------------------------------------- --------------
<S> <C> <C>
Nicholas Bratt (47) President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Paul J. Elmlinger (37) Vice President and Assistant 1991
Secretary; Managing Director of
Scudder, Stevens & Clark, Inc.
Edmund B. Games, Jr. (58) Vice President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Jerard K. Hartman (63) Vice President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
David S. Lee (62) Vice President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Luis R. Luis (52) Vice President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (42) Treasurer; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (51) Vice President and Assistant 1991
Treasurer; Principal of Scudder,
Stevens & Clark, Inc.
Thomas F. McDonough (49) Secretary; Principal of Scudder, 1991
Stevens & Clark, Inc.
Coleen Downs Dinneen (35) Assistant Secretary; Vice President of 1992
Scudder, Stevens & Clark, Inc.
</TABLE>
(1) Unless otherwise stated, all Executive Officers have been associated with
Scudder for more than five years, although not necessarily in the same
capacity.
(2) The President, Treasurer and Secretary each hold office until his or her
successor has been duly elected and qualified, and all other officers hold
offices at the pleasure of the Directors.
8
<PAGE>
Transactions with and Remuneration of Directors and Officers
The aggregate direct remuneration by the Fund of Directors not affiliated
with Scudder was $57,270, including expenses, during the fiscal year ended
October 31, 1995. Each such unaffiliated Director currently receives fees, paid
by the Fund, of $750 per Directors' meeting attended and an annual Director's
fee of $6,000. Each Director also receives $250 per committee meeting attended
(other than audit committee meetings, for which such Director receives a fee of
$750). Scudder supervises the Fund's investments, pays the compensation and
certain expenses of its personnel who serve as Directors and Officers of the
Fund and receives a management fee for its services. Several of the Fund's
Officers and Directors are also Officers, Directors, employees or stockholders
of Scudder and participate in the fees paid to that firm (see "Investment
Manager"), although the Fund makes no direct payments to them other than for
reimbursement of travel expenses in connection with the attendance at Board of
Directors and committee meetings.
The following Compensation Table, provides in tabular form, the following data:
Column (1) All Directors who receive compensation from the Fund.
Column (2) Aggregate compensation received by a Director from the Fund.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to be
paid by the Fund. The Fund does not pay its Directors such benefits.
Column (5) Total compensation received by a Director from the Fund, plus
compensation received from all funds managed by Scudder for which a Director
serves. The total number of funds from which a Director receives such
compensation is also provided in column (5). Generally, compensation received by
a Director for serving on the Board of a closed-end fund is greater than the
compensation received by a Director for serving on the Board of an open-end
fund.
<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1995
-------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Pension or Estimated Total Compensation
Aggregate Retirement Benefits Annual Benefits From the Fund and
Name of Person, Compensation Accrued As Part of Upon Fund Complex
Position from the Fund Fund Expenses Retirement Paid to Director
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ronaldo A. da Frota Nogueira, $12,250 N/A N/A $57,950
Director (4 funds)
Dr. Wilson Nolen, $12,250 N/A N/A $148,342
Director (16 funds)*
Dr. Susan Kaufman Purcell, $12,250 N/A N/A $37,950
Director (3 funds)
</TABLE>
* This does not include membership on the Boards of funds which commenced
operations in 1996.
The Fund's Board of Directors has established a board of outside,
independent advisers (the "Advisory Board") with which Scudder and the Board of
Directors consult on economic and political trends and developments affecting
Argentina. The Advisory Board currently is composed of four persons selected on
9
<PAGE>
the basis of their expertise and accomplishments in Argentine affairs and two
Honorary members. The Advisory Board possesses no authority or responsibility
with respect to the Fund's investments, management or operation and will make no
recommendations as to particular investments made or contemplated by the Fund.
Each member of the Advisory Board, with the exception of the Honorary members,
receives from the Fund an annual fee of $7,000. For the fiscal year ended
October 31, 1995, Advisory Board fees and expenses amounted to $33,250.
Required Vote
Election of each of the listed nominees for Director requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. Your Fund's Directors recommend that stockholders vote in favor of each
of the nominees.
(2) RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting held on May 28, 1996, the Board of Directors of the Fund,
including a majority of the Noninterested Directors, selected Coopers & Lybrand
L.L.P. to act as independent accountants for the Fund for the fiscal year ending
October 31, 1996. Coopers & Lybrand L.L.P. are independent accountants and have
advised the Fund that they have no direct financial interest or material
indirect financial interest in the Fund. One or more representatives of Coopers
& Lybrand L.L.P. are expected to be present at the Meeting and will have an
opportunity to make a statement if they so desire. Such representatives are
expected to be available to respond to appropriate questions posed by
stockholders or management.
The Fund's financial statements for the fiscal year ended October 31, 1995
were audited by Coopers & Lybrand L.L.P. In connection with its audit services,
Coopers & Lybrand L.L.P. reviewed the financial statements included in the
Fund's annual and semiannual reports to stockholders and its filings with the
SEC.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. Your Fund's Directors recommend that stockholders ratify the selection of
Coopers & Lybrand L.L.P. as independent accountants.
(3) and (4) APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY, MANAGEMENT AND ADMINISTRATION AGREEMENT
AND A NEW SUB-ADVISORY CONTRACT
Scudder, Stevens & Clark, Inc., 345 Park Avenue, New York, New York, acts
as investment adviser to and manager and administrator for the Fund pursuant to
an Investment Advisory, Management and Administration Agreement dated October
10, 1991 (the "Agreement"). Sociedad General de Negocios y Valores S.A. (the
"Argentine Adviser") acts as Argentine Adviser to Scudder pursuant to a
Sub-Advisory Contract (the "Sub-Advisory Contract") with Scudder dated October
7, 1991. The continuance of the Agreement and the Sub-Advisory Contract was last
approved by the Directors, including a majority of the Noninterested Directors
on July 29, 1996. At the same meeting, the Directors of the Fund, including a
majority of the Noninterested Directors, recommended that the stockholders
approve a new Agreement and a new Sub-Advisory Contract at the Meeting. The
proposed Agreement is attached hereto as Exhibit A.
10
<PAGE>
In considering the proposed Agreement and the proposed Sub-Advisory
Contract and recommending their approval by the stockholders, the Directors of
the Fund, including the Noninterested Directors, considered the best interests
of the stockholders of the Fund and in light of their business judgment, took
into account all such factors they deemed relevant. The Noninterested Directors
of the Fund have been advised and represented at the Fund's expense by
independent counsel, Ropes & Gray. Counsel for the Fund is Willkie Farr &
Gallagher.
Required Vote
Approval of the proposed Agreement and of the proposed Sub-Advisory
Contract both require the affirmative vote of a majority of the Fund's
outstanding voting securities which, as used in this proposal, means (1) the
holders of more than 50% of the outstanding shares of the Fund or (2) the
holders of 67% or more of the shares present if more than 50% of the shares are
present at the Meeting in person or by proxy, whichever is less. If an
affirmative vote of stockholders is not obtained, the present Agreement and the
present Sub-Advisory Contract will continue in effect for the time being pending
consideration by the Directors of such further action as they may deem to be in
the best interests of the stockholders of the Fund. Your Fund's Directors
recommend that stockholders vote to approve the proposed Agreement and the
proposed Sub-Advisory Contract.
Reduction in Rate of Compensation Under the Proposed Agreement
The principal difference between the present Agreement and the proposed
Agreement is the reduction in the fee payable to Scudder from (a) 1.30% per
annum of the value of the Fund's average weekly net assets to (b) 1.20% per
annum of the value of the Fund's average weekly net assets, which reflects the
reduction in the fee payable by Scudder to the Argentine Adviser as described
below. Under both Agreements payment is made monthly to Scudder within the ten
days next following the day as of which such payment is so computed.
The present fee and the proposed fee are higher than those paid by many
funds which invest primarily in U.S. securities primarily because of the Fund's
objective of investing in Argentine securities, the additional time and expenses
required of Scudder in pursuing such objective and the need to enable Scudder to
compensate the Argentine Adviser for its services. However, each fee is not
necessarily higher than the fees charged to funds with investment objectives
similar to that of the Fund.
The following table compares actual fees and expenses incurred under the
present Agreement with the fees that would have been payable under the proposed
Agreement during the last fiscal year of the Fund (unaudited).
<TABLE>
<CAPTION>
Advisory Fees Fees Payable Under
Actually the Proposed
Year Ended Incurred (a) Agreement (b) $ Change (c) % Change
---------- ------------ ------------- ------------ --------
<S> <C> <C> <C> <C>
October 31, 1995 $1,354,299 1,246,556 ($107,743) 7.96%
</TABLE>
(a) Computed pursuant to the present fee schedule as described above.
(b) Computed pursuant to the proposed fee schedule as described above.
(c) Equals the difference between fees payable under the proposed Agreement
and advisory fees actually incurred.
11
<PAGE>
The ratio of operating expenses to average net assets for the year ended
October 31, 1995 was 1.98% and if the proposed Agreement had been in effect such
ratio would have been 1.88%. As of August 13, 1996, the net assets of the Fund
were approximately $109.8 million.
The Board of Directors has determined that the compensation to be paid to
Scudder under the proposed Agreement is fair and reasonable. In approving the
proposed Agreement described below, and recommending its approval by
stockholders, the Directors of the Fund, including the Noninterested Directors,
considering the best interests of stockholders of the Fund, took into account
all such factors they deemed relevant.
Such factors include the nature, quality and extent of the services
furnished by Scudder to the Fund; the necessity of Scudder maintaining and
enhancing its ability to retain and attract capable personnel to serve the Fund;
the experience of Scudder in international investing; possible economies of
scale; the investment record of Scudder in managing the Fund; Scudder's
profitability with respect to the Fund and the other investment companies
managed by Scudder; comparative data as to investment performance, advisory fees
and other fees, including administrative fees, and expense ratios, particularly
fee and expense ratios of funds with foreign investments, including single
country funds, advised by Scudder and other investment advisers; the risks
assumed by Scudder; the advantages and possible disadvantages to the Fund of
having an adviser which also serves other investment companies as well as other
accounts; possible benefits to Scudder from serving as adviser to the Fund;
current and developing conditions in the financial services industry, including
the entry into the industry of large and well capitalized companies which are
spending and appear to be prepared to continue to spend substantial sums to
engage personnel and to provide services to competing investment companies; the
financial resources of Scudder and the continuance of appropriate incentives to
assure that Scudder will continue to furnish high quality services to the Fund;
and various other factors.
Investment Advisory, Management and Administration Agreement
If approved by the stockholders, the proposed Agreement will become
effective on November 1, 1996, the present Agreement will terminate and the
proposed Agreement will remain in force for two years from that date. The
proposed Agreement would continue in effect thereafter by its terms from year to
year only so long as its continuance is specifically approved at least annually
by the affirmative vote of a majority of the Noninterested Directors cast in
person at a meeting called for the purpose of voting on such approval, and
either by the vote of a majority of all of the Directors or a majority of the
Fund's outstanding voting securities, as defined above. The proposed Agreement
may be terminated on 60 days' written notice, without penalty, by the Directors,
by the vote of the holders of a majority of the Fund's outstanding voting
securities, or by Scudder, and automatically terminates in the event of its
assignment. The present Agreement requires annual approval of its continuance
and contains the same termination provisions as the proposed Agreement.
Under both the present and proposed Agreements, Scudder regularly makes
investment decisions, makes available research and statistical data and
supervises the acquisition and disposition of securities by the Fund, all in
accordance with the Fund's investment objective and policies and the direction
and control of the Fund's Board of Directors. Scudder maintains or causes to be
maintained for the Fund all books and records required to be maintained under
the 1940 Act, as amended, to the extent such books, records and reports and
other information are not maintained or furnished by the Fund's custodian or
12
<PAGE>
other agents. Scudder also supplies office space in New York and furnishes
clerical services in the United States related to research, statistical and
investment work. In addition, Scudder pays the reasonable salaries and expenses
of the Fund's Officers, and any fees and expenses of the Fund's Directors, who
are Directors, Officers or employees of Scudder, except that the Fund bears
travel expenses or an appropriate portion thereof of Directors and Officers of
the Fund who are Directors, Officers or employees of Scudder to the extent that
such expenses relate to attendance at meetings of the Fund's Board of Directors
or any committees thereof.
The Fund pays or causes to be paid all of its other expenses, including
among other things: legal expenses; auditing and accounting expenses; taxes and
governmental fees; stock exchange listing fees; dues and expenses incurred in
connection with membership in investment company organizations; fees and
expenses of the Fund's custodians, accounting agent, subcustodians, transfer
agents and registrars; payment for portfolio pricing services to a pricing
agent, if any; expenses of preparing share certificates and other expenses in
connection with the issuance, offering or underwriting of securities issued by
the Fund; expenses relating to investor and public relations; expenses of
registering or qualifying securities of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities of the Fund; expenses of preparing and distributing
reports, notices and dividends to stockholders; expenses of the Dividend
Reinvestment and Cash Purchase Plan (except for brokerage expenses paid by
participants in such Plan); costs of stationery; litigation expenses; and costs
of stockholders' and other meetings.
Under both the present and proposed Agreements, Scudder is permitted to
provide investment advisory services to other clients, and, in providing such
services, may use information furnished by others. Conversely, information
furnished by others to Scudder in providing services to other clients may be
useful to Scudder in providing services to the Fund.
The Agreements provide that Scudder shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with matters to which the Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Scudder in the
performance of its duties or from reckless disregard by Scudder of its
obligations and duties under the Agreement.
Investment Manager
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the
Board of Scudder. Edmond D. Villani# is the President and Chief Executive
Officer of Scudder. Stephen R. Beckwith#, E. Michael Brown*, Lynn S. Birdsong#,
Nicholas Bratt#, Mark S. Casady*, Linda C. Coughlin*, Margaret D. Hadzima*,
Jerard K. Hartman#, Richard A. Holt@, Dudley H. Ladd*, John T. Packard+++,
Kathryn L. Quirk#, Cornelia M. Small# and Stephen Wohler* are the other members
of the Board of Directors of Scudder. The principal occupation of each of the
above named individuals is serving as a Managing Director of Scudder.
- --------------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois
13
<PAGE>
All of the outstanding voting and nonvoting securities of Scudder are held
of record by Stephen R. Beckwith, Juris Padegs, Daniel Pierce and Edmond D.
Villani in their capacity as the representatives (the "Representatives") of the
beneficial owners of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder, and such
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocations will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock;
all Principals own nonvoting stock.
Scudder or an affiliate manages in excess of $100 billion in assets for
individuals, mutual funds and other organizations. The following are other open-
or closed-end mutual funds with investment objectives similar to the Fund, for
which Scudder provides investment management:
<TABLE>
<CAPTION>
Total Net Assets
as of Management Compensation
July 31, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
----- ------------- ----------------------------------
<S> <C> <C>
The Japan Fund, Inc. $480,800 0.85 of 1% of the first $100 million of
average daily net assets; 0.75 of 1% on
assets in excess of $100 million up to and
including $300 million; 0.70 of 1% on assets
in excess of $300 million up to and including
$600 million; 0.65 of 1% on assets in excess
of $600 million.
Total Net Assets
as of Management Compensation
July 31, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Weekly Net Assets
----- ------------- ----------------------------------
The Brazil Fund, Inc.* $411,700 1.175%; Scudder has agreed to waive an amount
equal to 0.10% of average weekly net assets
in excess of $300 million.
Total Net Assets
as of Management Compensation
July 31, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Monthly Net Assets
----- ------------- ----------------------------------
The Korea Fund, Inc.* $700,500 1.15% of the Fund's month end net assets up
to and including $50 million; 1.10% on net
assets in excess of $50 million; 1% on net
assets in excess of $100 million; 0.95 of 1%
on net assets in excess of $350 million; 0.90
of 1% on net assets in excess of $750
million. Scudder pays Daewoo Capital
Management Co., Ltd. for investment and
research services 0.2875 of 1% of the Fund's
month end net assets up to and including $50
million; 0.275 of 1% on net assets in excess
of $50 million; 0.25 of 1% on net assets in
excess of $100 million; 0.2375 of 1% on net
assets in excess of $350 million; 0.2250 of
1% on net assets in excess of $750 million.
</TABLE>
* These funds are not subject to state imposed expense limitations.
14
<PAGE>
Directors, Officers and employees of Scudder from time to time may have
transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions that have
occurred were not influenced by existing or potential custodial or other Fund
relationships.
Sub-Advisory Contract
Under the proposed Sub-Advisory Contract, the Argentine Adviser has agreed
to furnish to Scudder such information, investment recommendations, advice and
assistance as Scudder shall from time to time reasonably request. The Argentine
Adviser has agreed to maintain within its organization a technical department
specialized in the analysis of securities to furnish such services exclusively
to Scudder. The Argentine Adviser has agreed to pay the fees and expenses of any
Directors or officers of the Fund who are Directors, officers or employees of
the Argentine Adviser or any of its affiliates. The proposed Contract is
attached hereto as Exhibit B.
Information from the Argentine Adviser will be evaluated by Scudder's
research department and portfolio managers, in light of their own expertise and
information from other sources, in making investment decisions for the Fund.
The principal difference between the present and the proposed contract is a
reduction in the amount the Argentine Adviser receives from Scudder from (a)
0.36% of the value of the Fund's average weekly net assets to (b) 0.26% of the
Fund's average weekly net assets, annualized. This reduction reflects the
increasing availability of brokerage research on Argentine companies as well as
information on the Argentine stock market generally.
Under both the present and proposed Sub-Advisory Contracts, the Argentine
Adviser will not be liable for any act or omission in the course of, connected
with or arising out of any services rendered under the agreement, except by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties, or reckless disregard of its obligations and duties under the
agreement.
If approved by the stockholders, the proposed Sub-Advisory Contract will
become effective on November 1, 1996, the present Sub-Advisory Contract will
terminate and the proposed Sub-Advisory Contract will remain in force for two
years from that date. The proposed Sub-Advisory Contract would continue in
effect thereafter by its terms from year to year only so long as its continuance
is specifically approved at least annually by the affirmative vote of a majority
of the Noninterested Directors cast in person at a meeting called for the
purpose of voting on such approval, and either by the vote of a majority of all
of the Directors or a majority of the Fund's outstanding voting securities, as
defined above. The proposed Sub-Advisory Contract may be terminated on 60 days'
written notice, without penalty, by the Directors, by the vote of the holders of
a majority of the Fund's outstanding voting securities, or by Scudder, and
automatically terminates in the event of its assignment. The present
Sub-Advisory Contract requires annual approval of its continuance and contains
the same termination provisions as the proposed Sub-Advisory Contract.
Argentine Adviser
The Argentine Adviser, an investment adviser registered under the United
States Investment Advisers Act of 1940, was organized in August 1991, and is 99%
owned by Banco General de Negocios ("BGN"), an Argentine bank. The Adviser is
located at 1607 Lavalle Street, 1048 Buenos Aires, Argentina.
15
<PAGE>
The Directors of the Argentine Adviser are Armando M. Braun, Director; Juan
Carlos Iarezza, Manager of Investment Banking; and Julio D. Barroero, Manager of
Capital Markets. Their business address is Esmeralda 130, Buenos Aires,
Argentina. The managing directors of BGN are Carlos A. Rohm and Jose E. Rohm,
who are also located at the aforementioned address. The directors of BGN are Dr.
Jose Maria Alvarez de Toledo, Dr. Rudolf W. Hug, Dr. Jose A. Martinez de Hoz,
Donald G. McCouch, Dr. Carlos Felix Pando Casado, Hector E. Puppo and Albrecht
C. Raedecke. The Argentine stockholders of BGN are the Rohm, Dodero and de
Corral family interests, and the non-Argentine stockholders are Credit Suisse,
Chemical Bank, Deutsche Sudamerikanische Bank and Banca Nazionale del Lavoro.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc. (the "Distributor") (a
corporation registered as a broker/dealer and a subsidiary of Scudder), which in
turn places orders on behalf of the Fund with issuers, underwriters or other
brokers and dealers. The Distributor receives no commissions, fees or other
remuneration from the Fund for this service. Allocation of portfolio
transactions is supervised by Scudder.
During the fiscal year ended October 31, 1995, the Fund paid total
brokerage commissions of $164,922 of which $26,152 (15.9% of the Fund's total
brokerage commissions for the period) was paid to BGN in respect to portfolio
transactions for the Fund.
Other Matters
The Board of Directors does not know of any matters to be brought before
the Meeting other than those mentioned in this Proxy Statement. The appointed
proxies will vote on any other business that comes before the Meeting or any
adjournments thereof in accordance with their best judgment.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by Officers of the Fund or personnel of Scudder. The Fund
has retained Corporate Investor Communications, Inc., 111 Commerce Road,
Carlstadt, New Jersey 07072-2586, to assist in the proxy solicitation. The cost
of their services is estimated at $6,000. The expenses connected with the
solicitation of the proxies and with any further proxies which may be solicited
by the Fund's Officers or Corporate Investor Communications, Inc., in person, by
telephone or by facsimile will be borne by the Fund. The Fund will reimburse
banks, brokers, and other persons holding the Fund's shares registered in their
names or in the names of their nominees, for their expenses incurred in sending
proxy material to and obtaining proxies from the beneficial owners of such
shares.
In the event that sufficient votes in favor of any proposal set forth in
the Notice of this Meeting are not received by October 29, 1996, the persons
named as appointed proxies on the enclosed proxy card may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as appointed proxies on the enclosed proxy card
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of the proposal for which further solicitation of proxies is to be
made. They will vote against any such adjournment those proxies required to be
voted against such proposal. The costs of any such additional solicitation and
of any adjourned session will be borne by the Fund.
16
<PAGE>
Shareholder Proposals
Any proposal by a stockholder of the Fund intended to be presented at the
1997 meeting of stockholders of the Fund must be received by Thomas F.
McDonough, Secretary of the Fund, c/o Scudder, Stevens & Clark, Inc., 345 Park
Avenue, New York, New York 10154, within a reasonable time before the
solicitation of proxies for such stockholders' meeting.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
345 Park Avenue
New York, New York 10154
September 23, 1996
17
<PAGE>
Exhibit A
INVESTMENT ADVISORY, MANAGEMENT AND ADMINISTRATION AGREEMENT
Agreement, dated as of November 1, 1996 between THE ARGENTINA FUND, INC., a
corporation organized under the laws of the State of Maryland (herein referred
to as the "Fund"), and SCUDDER, STEVENS & CLARK, INC., a corporation organized
under the laws of the State of Delaware (herein referred to as the "Investment
Manager").
WITNESSETH: That, in consideration of the mutual covenants herein
contained, it is agreed by the parties as follows:
1. The Investment Manager hereby undertakes and agrees, upon the terms and
conditions herein set forth, (i) to make investment decisions for the Fund, to
prepare and make available to the Fund research and statistical data in
connection therewith and to supervise the acquisition and disposition of
securities by the Fund, including the selection of brokers or dealers to carry
out the transactions, all in accordance with the Fund's investment objective and
policies and under the direction and control of the Fund's Board of Directors;
(ii) to maintain or cause to be maintained for the Fund all books, records and
reports and any other information required under the Investment Company Act of
1940, as amended (the "1940 Act"), to the extent that such books, records and
reports and other information are not maintained or furnished by the Fund's
custodian or other agents of the Fund; (iii) to furnish at the Investment
Manager's expense for the use of the Fund such office space and facilities as
the Fund may require for its reasonable needs in the City of New York and to
furnish at the Investment Manager's expense clerical services in the United
States related to research, statistical and investment work; (iv) to render to
the Fund administrative services, such as preparing reports to and meeting
materials for the Fund's Board of Directors and reports and notices to
stockholders, preparing and making filings with the Securities and Exchange
Commission (the "Commission") and other regulatory and self-regulatory
organizations, including preliminary and definitive proxy materials and
post-effective amendments to the Fund's Registration Statement, providing
assistance in certain accounting and tax matters and investor and public
relations, monitoring the valuation of portfolio securities, calculation of net
asset value, and overseeing arrangements with the Fund's custodian, including
the maintenance of books and records of the Fund; (v) to assist the Fund as it
may reasonably request in the conduct of the Fund's business, subject to the
direction and control of the Fund's Board of Directors; and (vi) to pay the
reasonable salaries, fees and expenses of such of the Fund's officers and
employees (including the Fund's share of payroll taxes) and any fees and
expenses of such of the Fund's directors as are directors, officers or employees
of the Investment Manager; provided, however, that the Fund, and not the
Investment Manager, shall bear travel expenses (or an appropriate portion
thereof) of directors and officers of the Fund who are directors, officers or
employees of the Investment Manager to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Fund or any committees
thereof or advisers thereto. The Investment Manager shall bear all expenses
arising out of its duties hereunder but shall not be responsible for any
expenses of the Fund other than those specifically allocated to the Investment
Manager in this paragraph 1. In particular, but without limiting the generality
A-1
<PAGE>
of the foregoing, the Investment Manager shall not be responsible, except to the
extent of the reasonable compensation of such of the Fund's employees as are
directors, officers or employees of the Investment Manager whose services may be
involved, for the following expenses of the Fund: organization and certain
offering expenses of the Fund (including out-of-pocket expenses, but not
including overhead or employee costs of the Investment Manager or of any one or
more organizations retained as an adviser or consultant to the Fund); fees
payable to the Investment Manager and to any advisers or consultants, including
the Fund's Advisory Board; legal expenses; auditing and accounting expenses;
telephone, telex, facsimile, postage and other communications expenses; taxes
and governmental fees; stock exchange listing fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's custodians, subcustodians,
transfer agents and registrars, and accounting agents; payment for portfolio
pricing or valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates and other expenses
in connection with the issuance, offering, distribution, sale or underwriting of
securities issued by the Fund; expenses relating to investor and public
relations; expenses of registering or qualifying securities of the Fund for
sale; freight, insurance and other charges in connection with the shipment of
the Fund's portfolio securities; brokerage commissions or other costs of
acquiring or disposing of any portfolio securities of the Fund; expenses of
preparing and distributing reports, notices and dividends to stockholders;
expenses of the Fund's dividend reinvestment and cash purchase plan (except for
brokerage expenses paid by participants in such plan); costs of stationery; any
litigation expenses; and costs of stockholders' and other meetings.
2. The Fund agrees to pay in United States dollars to the Investment
Manager, as full compensation for the services to be rendered and expenses to be
borne by the Investment Manager hereunder, a monthly fee which, on an annual
basis, is equal to 1.20% per annum of the value of the Fund's average weekly net
assets. Each payment of a monthly fee to the Investment Manager shall be made
within the ten days next following the day as of which such payment is so
computed. The Investment Manager shall pay to any entity retained by the
Investment Manager to provide investment sub-advisory services with respect to
Argentine securities (the "Argentine Adviser") the fees required pursuant to the
sub-advisory contract relating to the Fund between the Investment Manager and
the Argentine Adviser. In the event that the sub-advisory contract with the
Argentine Adviser is terminated, the Investment Manager shall be responsible for
furnishing to the Fund the services required to be performed by the Argentine
Adviser under these arrangements or arranging for a successor sub-investment
adviser on terms and conditions acceptable to the Fund and subject to the
requirements of the 1940 Act.
3. The Investment Manager agrees that it will not make a short sale of
any capital stock of the Fund, or purchase any share of the capital stock of the
Fund otherwise than for investment.
4. Nothing herein shall be construed as prohibiting the Investment
Manager from providing investment advisory services to, or entering into
investment advisory agreements with, other clients (including other registered
investment companies), including clients which may invest in securities of
Argentine issuers, or from utilizing (in providing such services) information
furnished to the Investment Manager by advisers and consultants to the Fund and
others; nor shall anything herein be construed as constituting the Investment
Manager an agent of the Fund.
A-2
<PAGE>
5. The Investment Manager may rely on information reasonably believed by it
to be accurate and reliable. Neither the Investment Manager nor its officers,
directors, employees or agents shall be subject to any liability for any act or
omission, error of judgment or mistake of law, or for any loss suffered by the
Fund, in the course of, connected with or arising out of any services to be
rendered hereunder, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
duties or by reason of reckless disregard on the part of the Investment Manager
of its obligations and duties under this Agreement. Any person, even though also
employed by the Investment Manager, who may be or become an employee of the Fund
and paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the Fund and
not as an employee or agent of the Investment Manager.
6. This Agreement shall remain in effect for a period of two years hereof,
the date the Fund's Registration Statement is declared effective by the
Commission, and shall continue in effect thereafter, but only so long as such
continuance is specifically approved at least annually by the affirmative vote
of (i) a majority of the members of the Fund's Board of Directors who are not
interested persons of the Fund or of the Investment Manager cast in person at a
meeting called for the purpose of voting on such approval, and (ii) a majority
of the Fund's Board of Directors or the holders of a majority of the outstanding
voting securities of the Fund. This Agreement may nevertheless be terminated at
any time without penalty, on 60 days' written notice, by the Fund's Board of
Directors, by vote of holders of a majority of the outstanding voting securities
of the Fund or by the Investment Manager. Any such notice shall be deemed given
when received by the addressee. This Agreement shall automatically be terminated
in the event of its assignment.
7. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto, except as permitted under the
1940 Act. It may be amended by mutual agreement, but only after authorization of
such amendment by the affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Fund, and (ii) a majority of the members of
the Fund's Board of Directors who are not interested persons of the Fund or of
the Investment Manager, cast in person at a meeting called for the purpose of
voting on such approval.
8. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act. As used herein, the terms "interested
person", "assignment", and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by their
officers thereunto duly authorized as of the day and year first written above.
THE ARGENTINA FUND, INC.
By:
---------------------------
Title: President
SCUDDER, STEVENS & CLARK, INC.
By:
---------------------------
Title: Managing Director
A-4
<PAGE>
Exhibit B
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
SUB-ADVISORY CONTRACT
November 1, 1996
Sociedad General de Negocios y Valores S.A.
1607 Lavalle Street
First floor, Room D
1048 Buenos Aires, Argentina
Dear Sirs,
Scudder, Stevens & Clark, Inc. (the "Investment Manager") has entered into
an Investment Advisory, Management and Administration Agreement dated November
1, 1996 with The Argentina Fund, Inc., a Maryland corporation (the "Fund"),
pursuant to which the Investment Manager is to act as investment adviser to and
manager of the Fund.
The Investment Manager wishes to avail itself of your investment advisory
services (the "Argentine Adviser"). Accordingly, the Investment Manager, with
the acceptance of the Fund, hereby agree with you as follows for the duration of
this agreement:
1. The Argentine Adviser upon the terms and conditions herein set forth
shall serve as the Fund's Argentine adviser and, as such, shall furnish to the
Investment Manager on behalf of the Fund such information, investment
recommendations, advice and assistance as the Investment Manager shall from time
to time reasonably request.
The Argentine Adviser agrees that neither the Investment Manager nor the
Fund shall be responsible for fees, salaries or other compensation due to
directors, officers or employees of the Argentine Adviser. The Argentine Adviser
undertakes to indemnify and hold the Investment Manager and the Fund harmless
against any potential claims by any such director, officer or employee for fees,
salaries or other compensation (and any related expenses) based on services
performed for the Fund or the Investment Manager other than those that either
the Fund or the Investment Manager have agreed to bear.
2. The Investment Manager shall pay to the Argentine Adviser, as full
compensation for the services to be rendered and expenses to be borne by the
Argentine Adviser hereunder, a monthly fee payable in U.S. dollars which, on an
annual basis, shall be equal to 0.26 percent of the value of the Fund's average
weekly net assets. The Argentine Adviser shall have no right to obtain
compensation directly from the Fund for services provided hereunder and agrees
to look solely to the Investment Manager for payment of fees due.
B-1
<PAGE>
3. The Argentine Adviser agrees that it will not make a short sale of any
capital stock of the Fund, or purchase any share of the capital stock of the
Fund otherwise than for investment.
4. Nothing herein or in the agreement contemplated herein shall be
construed as prohibiting the Argentine Adviser from providing investment
advisory services to, or entering into investment advisory agreements with,
other clients (including other U.S. registered investment companies), including
clients which may invest in securities of Argentine issuers, or from utilizing
(in providing such services) information furnished to the Investment Manager;
nor shall anything herein be construed as constituting the Argentine Adviser an
agent of the Investment Manager.
5. The Argentine Adviser may rely on information reasonably believed by it
to be accurate and reliable. Neither the Argentine Adviser nor its officers,
directors, employees or agents shall be subject to any liability for any act or
omission, error of judgment or mistake of law, or for any loss suffered by the
Fund or the Investment Manager, in the course of, connected with or arising out
of any services to be rendered hereunder, except by reason of willful
misfeasance, bad faith or gross negligence on the part of the Argentine Adviser
in the performance of its duties or by reason of reckless disregard on the part
of the Argentine Adviser of its obligations and duties under the agreement
contemplated herein.
6. Neither this proposal or the agreement contemplated herein nor the
actions of the parties in the course of performance of the agreement
contemplated herein shall be deemed in any manner to create or impose a joint
venture, partnership or agency relationship between the parties hereto. In all
respects, the Argentine Adviser shall be acting solely as an independent
contractor to the Investment Manager in the course of supplying the services
contemplated by this proposal and the agreement contemplated herein, and shall
not be acting as an agent, servant or employee of either the Fund or the
Investment Manager.
7. Should this proposal be accepted, the agreement contemplated herein
shall remain in effect for a period of two years from the date hereof, and shall
continue in effect thereafter, but only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) a
majority of the members of the Fund's Board of Directors who are not interested
persons of the Fund, the Investment Manager or the Argentine Adviser, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
a majority of the Fund's Board of Directors or the holders of a majority of the
outstanding voting securities of the Fund. The agreement contemplated herein may
nevertheless be terminated at any time without penalty, on 60 days' written
notice to the other parties, by the Fund's Board of Directors, by vote of
holders of a majority of the outstanding voting securities of the Fund or by the
Argentine Adviser. Any such notice shall be deemed given when received by the
addressee at the address indicated in Section 9 below. The agreement
contemplated herein shall automatically be terminated in the event of its
assignment or in the event of the termination of the Fund's investment advisory
agreement with the Investment Manager.
8. The agreement contemplated herein may not be transferred, assigned, sold
or in any manner hypothecated or pledged by either party hereto, except as
permitted under the U.S. Investment Company Act of 1940, as amended (the "1940
B-2
<PAGE>
Act"). It may be amended by mutual agreement, but only after authorization of
such amendment by the affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Fund and (ii) a majority of the members of
the Fund's Board of Directors who are not interested persons of the Fund or of
the Investment Manager, cast in person at a meeting called for the purpose of
voting on such approval.
9. Any notice given in connection with this proposal or under the agreement
contemplated herein to either party shall be in writing and shall be deemed to
have been duly given upon receipt at such party's address specified below, or at
such other address as such party shall have designated to the party giving such
notice.
The Investment Manager:
Scudder, Stevens & Clark, Inc.
c/o Legal Department
345 Park Avenue
New York, New York 10154
Fax: (212) 223-3127
The Argentine Adviser:
Sociedad General de
Negocios y Valores S.A.
1607 Lavalle Street
First floor, Room D
1048 Buenos Aires, Argentina
Fax:541 334-6429
10. This proposal and the agreement contemplated herein shall be construed
in accordance with the laws of the State of New York, provided, however, that
nothing herein shall be construed as being inconsistent with the 1940 Act. As
used herein, the terms "interested person", "assignment", and "vote of a
majority of the outstanding voting securities" shall have the meanings set forth
in the 1940 Act.
11. The Argentine Adviser irrevocably submits to the jurisdiction of any
New York State or U.S. Federal court sitting in the Borough of Manhattan, The
City of New York over any suit, action or proceeding arising out of or relating
to this proposal and the agreement contemplated herein. The Argentine Adviser
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have to the laying of the venue of any such suit, action or proceeding
brought in such a court and any claim that any such suit, action or proceeding
brought in such a court has been brought in an inconvenient forum. The Argentine
Adviser agrees that final judgment in any such suit, action or proceeding
brought in such a court shall be conclusive and binding upon the Argentine
Adviser, and may be enforced to the extent permitted by applicable law in any
court of the jurisdiction of which the Argentine Adviser is subject by a suit
upon such judgment, provided that service of process is effected upon the
B-3
<PAGE>
Argentine Adviser in the manner specified in the following paragraph or as
otherwise permitted by law.
As long as the agreement contemplated herein remains in effect, the
Argentine Adviser will at all times have an authorized agent in the Borough of
Manhattan, The City of New York upon whom process may be served in any legal
action or proceeding in a New York State or U.S. Federal court sitting in the
Borough of Manhattan, The City of New York over any suit, action or proceeding
arising out of or relating to this proposal or the agreement contemplated
herein. The Argentine Adviser hereby appoints CT Corporation System as its agent
for such purpose, and covenants and agrees that service of process in any such
legal action or proceeding may be made upon it at the office of such agent at
1633 Broadway, New York, New York 10019 (or at such other address in the Borough
of Manhattan, The City of New York, as said agent may designate by written
notice to the Argentine Adviser and the Investment Manager). The Argentine
Adviser hereby consents to the process being served in any suit, action or
proceeding of the nature referred to in the preceding paragraph by service upon
such agent together with the mailing of a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to the address of the
Argentine Adviser set forth above or to any other address of which the Argentine
Adviser shall have given written notice to the Investment Manager. The Argentine
Adviser irrevocably waives, to the fullest extent permitted by law, all claim of
error by reason of any such service (but does not waive any right to assert lack
of subject matter jurisdiction) and agrees that such service (i) shall be deemed
in every respect effective service of process upon the Argentine Adviser in any
suit, action or proceeding and (ii) shall, to the fullest extent permitted by
law, be taken and held to be valid personal service upon and personal delivery
to the Argentine Adviser.
Nothing in this Section 11 shall affect the right of the Investment Manager
to serve process in any manner permitted by law or limit the right of the
Investment Manager to bring proceedings against the Argentine Adviser in the
courts of any jurisdiction or jurisdictions.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Yours sincerely,
SCUDDER, STEVENS & CLARK, INC.
By:
_______________________________
Title:
B-4
<PAGE>
The foregoing agreement is hereby accepted as of the date first above written.
SOCIEDAD GENERAL DE NEGOCIOS Y
VALORES S.A.
By:
_______________________________
Title:
ACCEPTED:
THE ARGENTINA FUND, INC.
By: __________________________
Title:
B-5
<PAGE>
<TABLE>
<S> <C> <C>
PROXY THE ARGENTINA FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders--October 29, 1996
The undersigned hereby appoints Edmond D. Villani, Wilson Nolen and Javier A. Gonzales Fraga and each of them, the
proxies of the undersigned, with the power of substitution to each of them, to vote all shares of The Argentina Fund,
Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders of The Argentina Fund, Inc. to be
held at the offices of Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York
10154, on Tuesday, October 29, 1996 at 10:00 a.m., eastern time, and at any adjournments thereof.
Unless otherwise specified in the squares provided, the undersigned's vote will be cast FOR each numbered item
listed below.
1. The election of Directors;
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [] to vote for all nominees listed below []
Nominees: Edmond D. Villani, Dr. Wilson Nolen, Kathryn L. Quirk and Javier A. Gonzales Fraga
(INSTRUCTION To withhold authority to vote for any individual nominee, write that nominee's name on the space
provided below.)
2. Ratification of the selection of Coopers & Lybrand L.L.P. as independent FOR [] AGAINST [] ABSTAIN []
accountants.
(continued on other side)
<PAGE>
3. Approval of a new Investment Advisory, Management and Administration FOR [] AGAINST [] ABSTAIN []
Agreement between the Fund and Scudder, Stevens & Clark, Inc.;
4. Approval of a new Sub-Advisory Contract between Scudder, Stevens & Clark, FOR [] AGAINST [] ABSTAIN []
Inc. and Sociedad General de Negocios y Valores S.A.;
The Proxies are authorized to vote in their discretion on any other
business which may properly come before the meeting and any adjournments
thereof.
Please sign exactly as your name or names appear.
When signing as attorney, executor, administrator,
trustee or guardian, please give your full title
as such.
____________________________________________________
(Signature of Stockholder)
____________________________________________________
(Signature of joint owner, if any)
Date__________________________________________, 1996
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
</TABLE>
