SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE ARGENTINA FUND, INC.
(Name of Registrant as Specified in Its Articles of Incorporation)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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Preliminary Copy
THE ARGENTINA FUND, INC.
IMPORTANT NEWS
AUGUST 22, 1997
FOR THE ARGENTINA FUND, INC. STOCKHOLDERS
While we encourage you to read the full text of the enclosed proxy
statement, here's a brief overview of some changes affecting your Fund which
require a stockholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Scudder, Stevens & Clark, Inc. ("Scudder"), your Fund's investment manager,
has agreed to form an alliance with Zurich Insurance Company ("Zurich").
Zurich is a leading international insurance and financial services
organization. As a result of the proposed alliance, there will be a change
in ownership of Scudder. In order for Scudder to continue to serve as
investment manager of your Fund, it is necessary for the Fund's
stockholders to approve a new investment management, advisory and
administration agreement. The following pages give you additional
information on Zurich, the proposed new investment management, advisory and
administration agreement and certain other matters. The most important
matters to be voted upon by you are approval of the new investment
management, advisory and administration agreement and the election of
Directors. The Board members of your Fund, including those who are not
affiliated with the Fund or Scudder, recommend that you vote FOR these
proposals.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT,
ADVISORY AND ADMINISTRATION AGREEMENT.
A. The Investment Company Act of 1940, which regulates investment companies
such as the Fund, requires a vote whenever there is a change in control of
a fund's investment manager. Zurich's alliance with Scudder will result in
such a change of control and requires stockholder approval of a new
investment management, advisory and administration agreement with the Fund.
Q. HOW WILL THE SCUDDER-ZURICH ALLIANCE AFFECT ME AS A FUND STOCKHOLDER?
A. Your Fund and your Fund's investment objective will not change. You will
still own the same shares in the same Fund. The terms of the new investment
management, advisory and administration agreement are the same in all
material respects as the investment management, advisory and administration
agreement that will be in effect immediately prior to the consummation of
the alliance. As described in more detail in the
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proxy statement, the investment management, advisory and administration
agreement that is currently in effect will be replaced, effective as of
November 1, 1997, by a new agreement to reduce the investment management
fees currently paid by the Fund under such agreement. Similarly, the other
service arrangements between you and Scudder will not be affected. You
should continue to receive the same level of services that you have come to
expect from Scudder over the years. If stockholders do not approve the new
investment management, advisory and administration agreement, the current
investment management, advisory and administration agreement will terminate
upon the closing of the transaction and the Board of Directors will take
such action as it deems to be in the best interests of your Fund and its
stockholders.
Q. WHY HAS SCUDDER DECIDED TO ENTER INTO THIS ALLIANCE?
Scudder believes that the Scudder-Zurich alliance will enable Scudder to
enhance its capabilities as a global asset manager. Scudder further
believes that the alliance will enable it to enhance its ability to deliver
the level of services currently provided to you and your Fund and to
fulfill its obligations under the new investment management, advisory and
administration agreement consistent with current practices.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. The investment management fees paid by your Fund will remain the same as
those in effect in the investment management, advisory and administration
agreement that will replace the current agreement to give effect to the
reduction in investment management fees, effective as of November 1, 1997.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
You are also being asked to vote for the approval of a new research and
advisory agreement and for the ratification of the Board's selection of the
Fund's accountants.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including
those who are not affiliated with the Fund or Scudder, recommend that you
vote in favor of all of the proposals on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-733-8481.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED
WITH THIS TRANSACTION?
A. No, Scudder will bear these costs, however, the Fund will bear the ordinary
costs incurred by the Fund in conducting an annual meeting.
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ABOUT THE PROXY CARD
If you have more than one account in the Fund in your name at the same
address, you will receive separate proxy cards for each account, but only one
proxy statement for the Fund. Please vote all issues on each proxy card that you
receive.
THANK YOU FOR MAILING YOUR PROXY CARD(S) PROMPTLY.
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THE ARGENTINA FUND, INC.
345 Park Avenue
New York, New York 10154
August 22, 1997
Dear Stockholder:
Scudder, Stevens & Clark, Inc. ("Scudder") entered into an agreement with Zurich
Insurance Company ("Zurich") pursuant to which Scudder and Zurich have agreed to
form an alliance. Under the terms of the agreement, Zurich will acquire a
majority interest in Scudder, and Zurich Kemper Investments, Inc., a Zurich
subsidiary, will become part of Scudder. Scudder's name will be changed to
Scudder Kemper Investments, Inc. As a result of this transaction, it is
necessary for the stockholders of each of the funds for which Scudder acts as
investment manager, including your Fund, to approve a new investment management
agreement.
The following important facts about the transaction are outlined below:
o The transaction has no effect on the number of shares you own or the value
of those shares.
o The advisory fees and expenses paid by your Fund will not increase as a
result of this transaction.
o The investment objective of your Fund will remain the same.
o The non-interested Directors of your Fund have carefully reviewed the
proposed transaction, and have concluded that the transaction should cause
no reduction in the quality of services provided to the Fund and should
enhance Scudder's ability to provide such services.
Stockholders are also being asked to approve certain other matters that have
been set forth in the Fund's Notice of Meeting. The Board members of your Fund
believe that each of the proposals set forth in the Notice of Meeting for your
Fund is important and recommend that you read the enclosed materials carefully
and then vote FOR all proposals.
Since all of the funds for which Scudder acts as investment manager are required
to conduct stockholder meetings, if you own shares of more than one fund, you
will receive more than one proxy card. Please sign and return each proxy card
you receive.
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Your vote is important. Please take a moment now to sign and return your proxy
card(s) in the enclosed postage-paid return envelope. If we do not receive your
executed proxy card(s) after a reasonable amount of time you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote your shares.
Thank you for your cooperation and continued support.
Respectfully,
Nicholas Bratt Edmond D. Villani
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND RETURN IT IN THE POSTAGE
PAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
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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") will be held at the offices of Scudder, Stevens & Clark,
Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York 10154, on
October 28, 1997, at 9:30 a.m., Eastern time, for the following purposes:
(1) (A) To approve or disapprove a new investment management, advisory
and administration agreement between the Fund and its investment
manager;
(B) To approve or disapprove a new research and advisory agreement
between the Fund's investment manager and its Argentine adviser;
(2) To elect Directors; and
(3) To ratify or reject the selection of Coopers & Lybrand L.L.P. as the
independent accountants for the Fund for the Fund's current fiscal
year.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of shares of common stock of the Fund at the close of
business on August 15, 1997 are entitled to vote at the meeting and at any
adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law, to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of the holders of a majority
of the Fund's shares present in person or by proxy at the Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor and will vote against any such adjournment those
proxies to be voted against that proposal.
By Order of the Board of Directors,
Thomas F. McDonough, Secretary
August 22, 1997
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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
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.
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THE ARGENTINA FUND, INC.
345 Park Avenue, New York, New York 10154
PROXY STATEMENT
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General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") 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 October 28, 1997 at 9:30 a.m.,
Eastern time, and at any and all adjournments thereof (the "Meeting"). (In the
descriptions of the various proposals below, the word "fund" is sometimes used
to mean investment companies or series thereof in general, and not the Fund
whose proxy statement this is.)
This Proxy Statement, the Notice of Annual Meeting and the proxy card are
first being mailed to stockholders on or about August 22, 1997 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, c/o Scudder, Stevens & Clark, Inc., 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, in favor of each proposal referred to in the Proxy
Statement.
The presence at any stockholders' meeting, in person or by proxy, of the
holders of a majority of the shares entitled to be cast shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the event
that the necessary quorum to transact business or the vote required to approve
or reject any proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law, to permit further solicitation of proxies with respect to any
proposal which did not receive the vote necessary for its passage or to obtain a
quorum. With respect to those proposals for which there is represented a
sufficient number of votes in favor, actions taken at the Meeting will be
effective irrespective of any adjournments with respect to any other proposals.
Any such adjournment will require the affirmative vote of the holders of a
majority of the Fund's shares present in person or by proxy at the Meeting. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor and will vote against any such
adjournment those proxies to be voted against that proposal. 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
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discretionary power to vote on a particular matter. Accordingly, stockholders
are urged to forward their voting instructions promptly.
Proposals 1(A) and 1(B) each require the affirmative vote of a "majority of
the outstanding voting securities" of the Fund. The term "majority of the
outstanding voting securities," as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), and as used in this proxy statement, means:
the affirmative vote of the lesser of (1) 67% of the voting securities of the
Fund present at the Meeting if more than 50% of the outstanding shares of the
Fund are present in person or by proxy or (2) more than 50% of the outstanding
shares of the Fund. Proposals 2 and 3 each require the approval of a majority of
shares voted at the Meeting.
Abstentions will have the effect of a "no" vote on all proposals. Broker
non-votes will have the effect of a "no" vote for Proposals 1(A) and 1(B) if
such vote is determined on the basis of obtaining the affirmative vote of more
than 50% of the outstanding shares of the Fund. Broker non-votes will not
constitute "yes" or "no" votes and will be disregarded in determining the voting
securities "present" if such vote is determined on the basis of the affirmative
vote of 67% of the voting securities of the Fund present at the Meeting with
respect to Proposals 1(A) and 1(B) and a majority of the voting securities of
the Fund present at the Meeting with respect to Proposals 2 and 3.
Holders of record of the shares of the common stock of the Fund at the
close of business on August 15, 1997 (the "Record Date"), will be entitled to
one vote per share on all business of the Meeting. The number of shares
outstanding as of June 30, 1997 was 9,266,717.
The Fund provides periodic reports to all of its stockholders which
highlight relevant information including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for the Fund, and a copy of any more recent semi-annual report, without
charge, by calling 1-800-349-4281 or writing the Fund, c/o Scudder, Stevens &
Clark, Inc., 345 Park Avenue, New York, New York 10154.
PROPOSAL 1(A): APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
Introduction
Scudder acts as the investment adviser to and manager and administrator for
the Fund pursuant to an Investment Advisory, Management and Administration
Agreement dated November 1, 1996. The investment management, advisory and
administration agreement that is currently in effect will be replaced, effective
as of November 1, 1997, by an agreement that reduces the investment management
fees that the Fund pays to Scudder pursuant to such agreement from the current
1.20% per annum of the value of the Fund's average weekly assets to 1.10% of
such amount in order to take account of a reduction in the fees that Scudder
pays to the Fund's Argentine adviser. The new agreement, which gives effect to
the reduction of fees payable by the Fund to Scudder, shall be referred to as
the "Current Investment Management Agreement." (Scudder is sometimes referred to
in this proxy statement as the "Investment Manager.")
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On June 26, 1997, Scudder entered into a Transaction Agreement (the
"Transaction Agreement") with Zurich Insurance Company ("Zurich") pursuant to
which Scudder and Zurich have agreed to form an alliance. Under the terms of the
Transaction Agreement, Zurich will acquire a majority interest in Scudder, and
Zurich Kemper Investments, Inc. ("ZKI"), a Zurich subsidiary, will become part
of Scudder. Scudder's name will be changed to Scudder Kemper Investments, Inc.
("Scudder Kemper"). The foregoing are referred to as the "Transactions." ZKI, a
Chicago-based investment adviser and the adviser to the Kemper funds, has
approximately $80 billion under management. The headquarters of Scudder Kemper
will be in New York. Edmond D. Villani, Scudder's Chief Executive Officer, will
continue as Chief Executive Officer of Scudder Kemper and will become a member
of Zurich's Corporate Executive Board.
Consummation of the Transactions would constitute an "assignment," as that
term is defined in the 1940 Act, of the Fund's Current Investment Management
Agreement with Scudder. As required by the 1940 Act, the Current Investment
Management Agreement provides for its automatic termination in the event of its
assignment. In anticipation of the Transactions, a new investment management,
advisory and administration agreement (the "New Investment Management
Agreement," together with the Current Investment Management Agreement, the
"Investment Management Agreement") between the Fund and Scudder Kemper is being
proposed for approval by stockholders of the Fund. A copy of the form of the New
Investment Management Agreement is attached hereto as Exhibit A. THE NEW
INVESTMENT MANAGEMENT AGREEMENT FOR THE FUND IS IN ALL MATERIAL RESPECTS ON THE
SAME TERMS AS THE CURRENT INVESTMENT MANAGEMENT AGREEMENT. Conforming changes
are being recommended to the New Investment Management Agreement in order to
promote consistency among all of the funds advised by Scudder and to permit ease
of administration. The material terms of the Current Investment Management
Agreement are described under "Description of the Current Investment Management
Agreement" below.
Board of Directors Recommendation
On July 29, 1997 the Board of the Fund, including Directors who are not
parties to such agreement or "interested persons" (as defined under the 1940
Act) ("Non-interested Directors") of any such party, voted to approve the New
Investment Management Agreement and to recommend its approval to stockholders.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors Evaluation" below.
The Board of the Fund recommends that stockholders vote in favor of the
approval of the New Investment Management Agreement.
Board of Directors Evaluation
On July 16, 1997, representatives of Scudder advised the Non-interested
Directors of the Fund, by means of a telephone conference call, that Scudder had
entered into the Transaction Agreement. At that time, Scudder representatives
described the general terms of the proposed Transactions and the perceived
benefits for the Scudder organization and for its investment advisory clients.
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Scudder subsequently furnished the Non-interested Directors additional
information regarding the proposed Transactions, including information regarding
the terms of the proposed Transactions, and information regarding the Zurich and
ZKI organizations. In a series of subsequent telephone conference calls and
in-person meetings, the Non-interested Directors discussed this information
among themselves and with representatives of Scudder and Zurich. They were
assisted in their review of this information by their independent legal counsel.
In the course of these discussions, Scudder advised the Non-interested
Directors that it did not expect that the proposed Transactions would have a
material effect on the operations of the Fund or its stockholders. Scudder has
advised the Non-interested Directors that the Transaction Agreement, by its
terms, does not contemplate any changes in the structure or operations of the
Fund. Scudder representatives have informed the Directors, that, Scudder intends
to maintain the separate existence of the funds that Scudder and ZKI manage in
their respective distribution channels. Scudder has also advised the
Non-interested Directors that, although it expects that various portions of the
ZKI organization would be combined with Scudder's operations, the senior
executives of Scudder overseeing those operations will remain largely unchanged.
It is possible, however, that changes in certain personnel currently involved in
providing services to the Fund may result from future efforts to combine the
strengths and efficiencies of both firms. In their discussions with the
Directors, Scudder representatives also emphasized the strengths of the Zurich
organization and its commitment to provide the new Scudder Kemper organization
with the resources necessary to continue to provide high quality services to the
Fund and the other investment advisory clients of the new Scudder Kemper
organization.
The Board was advised that Scudder intends to rely on Section 15(f) of the
1940 Act, which provides a non-exclusive safe harbor for an investment adviser
to an investment company or any of the investment adviser's affiliated persons
(as defined under the 1940 Act) to receive any amount or benefit in connection
with a change in control of the investment adviser so long as two conditions are
met. First, for a period of three years after the transaction, at least 75% of
the board members of the investment company must not be "interested persons" of
the investment company's investment adviser or its predecessor adviser. On or
prior to the consummation of the Transactions, the Board, assuming the election
of the nominees that you are being asked to elect in "Proposal 2: Election of
Directors," would be in compliance with this provision of Section 15(f). (See
"Proposal 2: Election of Directors.") Second, an "unfair burden" must not be
imposed upon the investment company as a result of such transaction or any
express or implied terms, conditions or understandings applicable thereto. The
term "unfair burden" is defined in Section 15(f) to include any arrangement
during the two-year period after the transaction whereby the investment adviser,
or any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
stockholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). No such compensation agreements are contemplated in
connection with the Transactions. Aside from the ordinary expenses incurred by
the Fund in conducting an
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annual meeting, Scudder has undertaken to pay the costs of preparing and
distributing proxy materials to, and of holding the meeting of, the Fund's
stockholders as well as other fees and expenses in connection with the
Transactions, including the fees and expenses of legal counsel and consultants
to the Fund and the Non-interested Directors.
During the course of their deliberations, the Non-interested Directors
considered a variety of factors, including 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 investment record of Scudder in managing the Fund; the increased
complexity of the domestic and international securities markets; Scudder's
profitability from advising the Fund; possible economies of scale; comparative
data as to investment performance, advisory fees and other fees, including
administrative fees, and expense ratios; the risks assumed by Scudder; the
advantages and possible disadvantages to the Fund of having an adviser of the
Fund which also serves other investment companies as well as other accounts;
possible benefits to Scudder from serving as manager to the Fund and from
affiliates of Scudder serving the Fund in various other capacities; 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; and 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.
In addition to the foregoing factors, the Non-interested Directors gave
careful consideration to the likely impact of the Transactions on the Scudder
organization. In this regard, the Non-interested Directors considered, among
other things, the structure of the Transactions which affords Scudder executives
substantial autonomy over Scudder's operations and provides substantial equity
participation and incentives for many Scudder employees; Scudder's and Zurich's
commitment to Scudder's paying compensation adequate to attract and retain top
quality personnel; Zurich's strategy for the development of its asset management
business through Scudder; information regarding the financial resources and
business reputation of Zurich; and the complementary nature of various aspects
of the business of Scudder and the Zurich Kemper organization and the intention
to maintain separate Scudder and Kemper brands in the mutual fund business.
Based on the foregoing, the Non-interested Directors concluded that the
Transactions should cause no reduction in the quality of services provided to
the Fund and believe that the Transactions should enhance Scudder's ability to
provide such services. The Non-interested Directors considered the foregoing
factors with respect to the Fund.
On July 29, 1997, the Directors of the Fund, including the Non-interested
Directors of the Fund, approved the New Investment Management Agreement.
Information Concerning the Transactions and Zurich
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in Scudder Kemper to a compensation
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pool for the benefit of Scudder and ZKI employees, as well as cash and warrants
on Zurich shares for award to Scudder employees, in each case subject to
five-year vesting schedules. After giving effect to the Transactions, current
Scudder stockholders will have a 29.6% fully diluted equity interest in Scudder
Kemper and Zurich will have a 69.5% fully diluted interest in Scudder Kemper.
Scudder's name will be changed to Scudder Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transactions is subject to
adjustment based on the impact to revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of Scudder Kemper will
enter into a Second Amended and Restated Security Holders Agreement (the "New
SHA"). Under the New SHA, Scudder stockholders will be entitled to designate
three of the seven members of the Scudder Kemper board and two of the four
members of an Executive Committee, which will be the primary management-level
committee of Scudder Kemper. Zurich will be entitled to designate the other four
members of the Scudder Kemper board and other two members of the Executive
Committee.
The names, addresses and principal occupations of the initial
Scudder-designated directors of Scudder Kemper are as follows: Lynn S. Birdsong,
345 Park Avenue, New York, New York, Managing Director of Scudder; Cornelia M.
Small, 345 Park Avenue, New York, New York, Managing Director of Scudder; and
Edmond D. Villani, 345 Park Avenue, New York, New York, President, Chief
Executive Officer and Managing Director of Scudder.
The names, addresses and principal occupations of the initial
Zurich-designated directors of Scudder Kemper are as follows: Lawrence W. Cheng,
Mythenquai 2, Zurich, Switzerland, Chief Investment Officer for Investments and
Institutional Asset Management and the corporate functions of Securities and
Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2, Zurich, Switzerland,
responsible for Reinsurance, Structured Finance, Capital Market Products and
Strategic Investments, and a member of the Corporate Executive Board of Zurich;
Rolf Hueppi, Mythenquai 2, Zurich, Switzerland, Chairman of the Board and Chief
Executive Officer of Zurich; and Markus Rohrbasser, Mythenquai 2, Zurich,
Switzerland, Chief Financial Officer and member of the Corporate Executive Board
of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of Scudder Kemper,
effecting a public offering before April 15, 2005, causing Scudder Kemper to
engage substantially in non-investment management and related business, making
material acquisitions or divestitures, making material changes in Scudder
Kemper's capital structure, dissolving or liquidating Scudder Kemper, or
entering into certain affiliated transactions with Zurich. The New SHA also
provides for various put and call rights with respect to Scudder Kemper stock
held by current Scudder employees,
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limitations on Zurich's ability to purchase other asset management companies
outside of Scudder Kemper, rights of Zurich to repurchase Scudder Kemper stock
upon termination of employment of Scudder Kemper personnel, and registration
rights for stock held by continuing Scudder stockholders.
The Transactions are subject to a number of conditions, including approval
by Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI
being at least 75%; Scudder and ZKI having obtained director and stockholder
approvals from U.S.-registered funds representing 90% of assets of such funds
under management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions; and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
The information set forth above concerning the Transactions has been
provided to the Fund by Scudder, and the information set forth below concerning
Zurich has been provided to the Fund by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services,
and have branch offices and subsidiaries in more than 40 countries throughout
the world. The Zurich Insurance Group is particularly strong in the insurance of
international companies and organizations. Over the past few years, Zurich's
global presence, particularly in the United States, has been strengthened by
means of selective acquisitions.
Description of the Current Investment Management Agreement
Under the Current Investment Management Agreement, Scudder provides the
Fund with continuing investment management services. The Investment Manager
makes investment decisions, prepares and 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 objectives and policies
and in accordance with guidelines and directions from the Fund's Board of
Directors. The Investment Manager assists 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. The Investment Manager is required to maintain or
cause to be maintained for the Fund all books, records and reports and any other
information required to be maintained under the 1940 Act to the extent such
books, records and reports and any other information are not maintained by the
Fund's custodian or other agents of the Fund. The Investment Manager also
supplies the Fund with office space in New York and furnishes clerical services
in the United States related to research, statistical and investment work. The
Investment Manager renders 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 Fund Stockholders, preparing and making filings with the
Securities and Exchange Commission and other regulatory and self-regulatory
organizations, including preliminary and definitive proxy materials and
post-effective amendments to the Fund's
-14-
<PAGE>
registration statement, providing assistance in certain accounting and tax
matters and investor public relations, monitoring the valuation of portfolio
securities, calculation of net asset value, and overseeing arrangements with the
Fund's custodian. The Investment Manager agrees to pay reasonable salaries, fees
and expenses of the Fund's officers and employees and any fees and expenses of
the Fund's directors who are directors, officers or employees of the Investment
Manager, except that the Fund bears travel expenses (or an appropriate portion
of those expenses) 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 or any committees of
or advisors to the Board. During the Fund's most recent fiscal year, no
compensation, direct or otherwise (other than through fees paid to the
Investment Manager), was paid or became payable by the Fund to any of its
officers or Directors who were affiliated with the Investment Manager.
Under the Current Investment Management Agreement, the Fund pays or causes
to be paid all of its other expenses, including, among others, the following:
organization and certain offering expenses (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 advisor or consultant to the Fund);
legal expenses; auditing and accounting expenses; telephone, facsimile, postage
and other communications expenses; taxes and governmental fees; stock exchange
listing fees; fees, dues and expenses incurred 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 of
registering or qualifying securities of the Fund for sale; expenses related to
investor and public relations; 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; any litigation expenses; and costs of shareholders' and
other meetings.
In return for the services provided by the Investment Manager as investment
manager, and the expenses it assumes under the Current Investment Management
Agreement (which takes into account the reduction in investment management fees
payable to the Investment Manager from 1.20% to 1.10% per annum of the value of
the Fund's average weekly net assets, effective as of November 1, 1997), the
Fund will pay the Investment Manager a monthly fee, which, on an annual basis,
is equal to 1.10% per annum of the value of the Fund's average weekly net
assets. This fee is higher than advisory fees paid by most other investment
companies, primarily because of the Fund's objective of investing in Argentine
securities, the additional time and expense required of the Investment Manager
in pursuing such objective and the need to enable the Investment Manager to
compensate the Argentine Adviser (as defined below) for its services. During the
fiscal year ended December 31, 1996, the fees paid to the Investment Manager,
pursuant to the investment management, advisory and administration agreement
dated November 1, 1996 (the agreement in effect prior to the reduction of
investment management fees), amounted to $[ ].
-15-
<PAGE>
Under the Current Investment Management Agreement, the Investment Manager
is permitted to provide investment advisory services to other clients, including
clients which may invest in securities of Argentine issuers and, in providing
such services, may use information furnished by advisors and consultants to the
Fund and others. Conversely, information furnished by others to the Investment
Manager in providing services to other clients may be useful to the Investment
Manager in providing services to the Fund.
Under the Current Investment Management Agreement, the Investment Manager
shall pay to any entity retained by the Investment Manager to provide
sub-advisory services with respect to Argentine securities, including the
Argentine Adviser, the fees required pursuant to the sub-advisory contract
relating to the Fund between Investment Manager and the Argentine Adviser. In
the event that the sub-advisory contract with the Argentine Adviser is
terminated, the Investment Manager is responsible for furnishing to the Fund the
services required to be performed by the Argentine Adviser 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.
The Current Investment Management Agreement may be terminated at any time
without payment of penalty by the Board of Directors, by vote of holders of a
majority of the outstanding voting securities of the Fund, or by the Investment
Manager on 60 days' written notice. The Current Investment Management Agreement
automatically terminates in the event of its assignment (as defined under the
1940 Act).
The Current Investment Management Agreement provides that the Investment
Manager is not liable for any act or omission, error of judgment or mistake of
laws or for any loss suffered by the Fund in connection with matters to which
the Investment Management Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Manager in the performance of its duties or from reckless disregard by the
Investment Manager of its obligations and duties under the Current Investment
Management Agreement.
Scudder has acted as the Investment Manager for the Fund since the Fund
commenced operations on August 16, 1991. The Current Investment Management
Agreement was last approved by the Board on July 29, 1997, at which meeting the
Board voted to reduce the fee paid to the Investment Manager as described above.
The Current Investment Management Agreement continues in effect until September
30, 1999. The investment management, advisory and administration agreement dated
November 1, 1996 (the agreement in effect prior to the reduction of investment
management fees) was last approved by the stockholders of the Fund on October
29, 1996. The purpose of the last submission to stockholders of this agreement
was to approve or disapprove an additional reduction in the fee paid to the
Investment Manager.
The New Investment Management Agreement
The New Investment Management Agreement for the Fund will be dated as of
the date of the consummation of the Transactions, which is expected to occur in
the fourth quarter of 1997, but in no event later than February 28, 1998. The
New Investment Management Agreement will be in effect for an initial term ending
on September 30, 1999, and may continue thereafter from year to year only if
specifically approved at least annually by the vote of
-16-
<PAGE>
"a majority of the outstanding voting securities" of the Fund, or by the
Board and, in either event, the vote of a majority of the Non-interested
Directors, cast in person at a meeting called for such purpose. In the event
that stockholders of the Fund do not approve the New Investment Management
Agreement, the Current Investment Management Agreement will remain in effect
until the closing of the Transactions, at which time it would terminate. In such
event, the Board of the Fund will take such action, if any, as it deems to be in
the best interest of the Fund and its stockholders. In the event the
Transactions are not consummated, Scudder will continue to provide services to
the Fund in accordance with the terms of the Current Investment Management
Agreement (which takes into account the reduction in investment management fees
payable to the Investment Manager from 1.20% to 1.10% per annum of the value of
the Fund's average weekly net assets, effective as of November 1, 1997) for such
periods as may be approved at least annually by the Board, including a majority
of the Non-interested Directors.
Differences Between the Current and New Investment Management Agreements
The New Investment Management Agreement is substantially the same as the
Current Investment Management Agreement in all material respects. The principal
changes that have been made are summarized below. The New Investment Management
Agreement reflects conforming changes that have been made in order to promote
consistency among all the funds advised by Scudder and to permit ease of
administration. For example, it is proposed that the New Investment Management
Agreement contain provisions that provide that Scudder Kemper shall use its best
efforts to seek the best overall terms available in executing transactions for
the Fund and selecting brokers and dealers and shall consider on a continuing
basis all factors it deems relevant, including the consideration of the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Fund [and/or other accounts
over which Scudder Kemper or an affiliate exercises investment discretion]. In
addition, with respect to the allocation of investment and sale opportunities
among the Fund and other accounts or funds managed by Scudder Kemper, it is
proposed that the New Investment Management Agreement provide that Scudder
Kemper shall allocate such opportunities in accordance with procedures believed
by Scudder Kemper to be equitable to [each entity]. It is proposed that the New
Investment Management Agreement will also clarify that such agreement supersedes
all prior agreements.
Investment Manager
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice. Scudder
provides investment counsel for many individuals and institutions, including
insurance companies, endowments, industrial corporations and financial and
banking organizations.
Scudder is a Delaware corporation. Daniel Pierce* is the chairman of the
Board of Scudder, Edmond D. Villani# is President and Chief Executive Officer of
Scudder, Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, E. Michael
Brown*, Mark S. Casady*, Linda C. Coughlin*, Margaret D. Hadzima*, Jerard K.
Hartman#, Richard A. Holt@, John T. Packard+, Kathryn L. Quirk#, Cornelia M.
Small# and Stephen A. Wohler* are the other members of the
-17-
<PAGE>
Board of Directors of Scudder (see footnote for symbol key). The principal
occupation of each of the above named individuals is serving as a Managing
Director of Scudder.
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 of the beneficial owners of
such securities (the "Representatives"), 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
and all Principals of Scudder own nonvoting stock.
Directors, officers and employees of Scudder from time to time may enter
into transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions will not
be influenced by existing or potential custodial or other Fund relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
computes net asset value and provides fund accounting services for the Fund.
Scudder Service Corporation ("SSC"), also a subsidiary of Scudder, is the
shareholding agent for the Fund. For the fiscal year ended October 31, 1996, the
fees paid to SFAC and SSC by the Fund were $89,292 and $15,000, respectively.
SFAC and SSC will continue to provide fund accounting and shareholding services
to the Fund under the current arrangements if the New Investment Management
Agreement is approved.
Exhibit B sets forth the fees and other information regarding other
investment companies advised by Scudder.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible, Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc., Two International Place,
Boston, Massachusetts 02110 (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. In
selecting brokers and dealers with which to place portfolio transactions for the
Fund, Scudder will not consider sales of shares of funds currently advised by
ZKI, although it may place such transactions with brokers and dealers that sell
shares of funds currently advised by ZKI. The Distributor receives no
commissions, fees or other remuneration from the Fund for this service.
Allocation of portfolio transactions is supervised by 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
-18-
<PAGE>
Required Vote
Approval of this Proposal requires the affirmative vote of a "majority of
the outstanding voting securities" of the Fund. The Directors recommend that the
stockholders vote in favor of this Proposal 1(A).
PROPOSAL 1(B): APPROVAL OR DISAPPROVAL OF
NEW RESEARCH AND ADVISORY AGREEMENT
Scudder has entered into a Research and Advisory Agreement with Sociedad
General de Negocios y Valores S.A. ("Sociedad General" or the "Argentine
Adviser") pursuant to which the Argentine Adviser furnishes information,
investment recommendations, advice and assistance to Scudder. The research and
advisory agreement that is currently in effect will be replaced, effective as of
November 1, 1997, by an agreement that reduces the fees that Scudder pays to
Sociedad General pursuant to such agreement from the current 0.26% per annum of
the average of the values of the net assets of the Fund on the last business day
of each week in the month for which the fee is computed to 0.16% of such amount.
The new agreement, which gives effect to the reduction of fees payable by
Scudder to Sociedad General, shall be referred to as the "Current Sub-Advisory
Agreement."
The Current Sub-Advisory Agreement provides that such agreement shall
automatically terminate in the event of the termination (due to assignment or
otherwise) of the Current Investment Management Agreement. As discussed in
Proposal 1(A), consummation of the Transactions will constitute an assignment of
the Current Investment Management Agreement and will therefore cause a
termination of the Current Sub-Advisory Agreement. (See Proposal 1(A) for more
information regarding the Current Investment Management Agreement.) In
anticipation of the Transactions, a new research and advisory agreement (the
"New Sub-Advisory Agreement," which together with the Current Sub-Advisory
Agreement, the "Sub-Advisory Agreement") between Scudder Kemper and Sociedad
General is being proposed for approval by stockholders of the Fund. THE NEW
SUB-ADVISORY AGREEMENT IS IN ALL MATERIAL RESPECTS ON THE SAME TERMS AS THE
CURRENT SUB-ADVISORY AGREEMENT. The material terms of the Current Sub-Advisory
Agreement are fully described under "The Sub-Advisory Agreement" below. A form
of the New Sub-Advisory Agreement is attached hereto as Exhibit C.
At its regularly scheduled, in-person meeting held on July 29, 1997, the
Board of the Fund, including a majority of the Non-interested Directors, voted
to approve the New Sub-Advisory Agreement. In considering whether to approve the
New Sub-Advisory Agreement, the Board considered similar factors to those it
considered in approving the New Investment Management Agreement, to the extent
applicable. (See Proposal 1(A) for more information regarding the Board of
Directors Evaluation.) In addition to the foregoing factors, the Board also
considered the Argentine Adviser's position as a leading firm in Argentina in
developing investment research capabilities; information submitted by the
Argentine Adviser as to revenues and expenses; information relating to the
execution of portfolio transactions for the Fund by an affiliate of the
Argentine Adviser; and various other factors.
-19-
<PAGE>
The Current Sub-Advisory Agreement
The Current Sub-Advisory Agreement provides that the Argentine Adviser
shall furnish Scudder such information, investment recommendations, advice and
assistance as Scudder shall from time to time reasonably request, although it
does not have authority to make investment decisions on behalf of the Fund.
Information from the Argentine Adviser is 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.
In return for the services it renders under the Current Sub-Advisory
Agreement (which takes into account the reduction of fees payable to the
Argentine Adviser from 0.26% to 0.16% per annum of the average of the values of
the net assets of the Fund on the last business day of each week in the month
for which the fee is computed, effective as of November 1, 1997), the Argentine
Adviser will be paid by Scudder monthly compensation which, on an annual basis,
is equal to 0.26% per annum of the average of the values of the net assets of
the Fund on the last business day of each week in the month for which the fee is
computed. During the fiscal year ended October 31, 1996, the fees paid by
Scudder to the Argentine Adviser, pursuant to the research and advisory
agreement dated November 1, 1996 (the agreement in effect prior to the reduction
of fees), amounted to $415,760.
The Current Sub-Advisory Agreement further provides that the Argentine
Adviser shall not be liable for any act or omission in the course of, connected
with or arising out of any services to be rendered under the Current
Sub-Advisory Agreement, 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 from reckless disregard by the Argentine Adviser of its obligations
and duties under the Current Sub-Advisory Agreement.
The Current Sub-Advisory Agreement may be terminated without penalty upon
sixty (60) days' written notice by either party, or by a majority vote of the
outstanding voting securities of the Fund, and, as stated above, automatically
terminates in the event of the termination of the Investment Management
Agreement or in the event of its assignment.
The Current Sub-Advisory Agreement was last approved by the Board on July
29, 1997, at which meeting the Board voted to reduce the fee paid to the
Argentine Adviser as discussed above. The Current Sub-Advisory Agreement
continues in effect until [September 30, 1999]. The research and advisory
agreement dated November 1, 1996 (the agreement in effect prior to the reduction
of fees) was last approved by the stockholders of the Fund on October 29, 1996.
The purpose of the last submission to stockholders of this agreement was to
approve or disapprove a reduction in the fee paid to the Argentine Sub-Adviser.
The New Sub-Advisory Agreement will be dated as of the date of the
consummation of the Transactions, which is expected to occur in the fourth
quarter of 1997, but in no event later than February 28, 1998. The New
Sub-Advisory Agreement will be in effect for an initial term ending on September
30, 1999, and may continue thereafter from year to year if specifically approved
at least annually by the vote of "a majority of the outstanding voting
securities" of the Fund, or by the Board and, in either event, the vote of a
majority of the Directors who are not parties to the agreement or interested
persons of any such party, cast in person at a meeting called
-20-
<PAGE>
for such purpose. In the event that stockholders of the Fund do not approve the
New Sub-Advisory Agreement, the Current Sub-Advisory Agreement will remain in
effect until the closing of the Transactions and the Board will take such
action, if any, as it deems to be in the best interests of the Fund and its
stockholders. In the event the Transactions are not consummated, the Argentine
Adviser will continue to provide services to Scudder in accordance with the
terms of the Current Sub-Advisory Agreement for such periods as may be approved
at least annually by the Board, including a majority of the Directors. The New
Sub-Advisory Agreement will not be implemented unless Proposal 1(A) is also
approved by the stockholders of the Fund.
Argentine Adviser
The Argentine Adviser, Sociedad General de Negocios y Valores S.A., 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 Esmeralda 130,
7th Floor, Office "C" (1035) Buenos Aires, Argentina.
The Chairman of the Argentine Adviser is Armando Braun, the Vice Chairman
is Julio D. Barroero and the Director is Claudio G. Waidelich. Their business
address is Esmeralda 130, 7th Floor, Office "C", Buenos Aires, Argentina. The
Chairman of the Board of BGN is Jose E. Rohm and Carlos A. Rohm is the Vice
Chairman of the Board, each of whom is also located at the aforementioned
address. The directors of BGN are Rudolf W. Hug, Dr. Jose Maria Alvarez de
Toledo, Dr. Jose A. Martinez de Hoz, Dr. Carlos Felix Pando Casado, Hector E.
Puppo, Jorge E. Kalledey, Hansgeorg Hofmann, Adalbert Krieger Vasena, David C.
Mulford and Brian O'Neill. The Argentine stockholders of BGN are the Rohm,
Dodero and de Corral family interests, and the non-Argentine stockholders are
Credit Suisse First Boston, Chase International Limited, Dresdner Bank
Lateinamerika A.G. and Banca Nazionale del Lavoro SPA.
Orders for the purchase and sale of securities for the Fund's portfolio may
be placed with BGN and its affiliates as well as other Argentine brokers and
financial institutions.
Exhibit D sets forth the fees and other information regarding other
investment companies advised by the Argentine Adviser.
Required Vote
Approval of this Proposal requires the affirmative vote of a "majority of
the outstanding voting securities" of the Fund. The Directors recommend that the
stockholders vote in favor of this Proposal 1(B).
PROPOSAL 2: ELECTION OF DIRECTORS
Persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies in favor of the election of the two
nominees listed below as Nominees for Director of the Fund to serve for the
stipulated terms, 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 will be voted for such person, if any, as shall be designated by the
Board of Directors to replace any such nominee.
-21-
<PAGE>
Information Concerning Nominees
The following table sets forth certain information concerning each of the
nominees as 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. For election of
Directors at the Meeting, the Board of Directors has approved the nomination of
the individuals listed below.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned and %
Present Office with the Fund, of Total
Principal Occupation or Director Outstanding on
Name (Age) Employment and Directorships Since June 30, 1997 (1)
- --------- ---------------------------- -------- -----------------
Class II Nominees to Serve Until 2000 Annual Meeting of Stockholders
<S> <C> <C> <C>
Nicholas Bratt* President; Managing Director of Scudder, -- 1,641
(49) Stevens & Clark, Inc.; and Director, Korea
Society (private society). Mr. Bratt
serves on the boards of an additional [15]
funds managed by Scudder.
Javier A. Chairman, Argentine Institute of Capital 1996 --
Gonzalez Fraga Markets; Vice President, Buenos Aires
(49) Stock Exchange.
</TABLE>
Information Concerning Continuing Directors
The Board of Directors is divided into three classes with each Director
serving for a term of three years. The following table sets forth certain
information regarding the Directors. Unless otherwise noted, each Director has
engaged in the principal occupation listed in the following table for more than
five years, but not necessarily in the same capacity.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned and %
Present Office with the Fund, of Total
Principal Occupation or Director Outstanding on
Name (Age) Employment and Directorships Since June 30, 1997 (1)
- --------- ---------------------------- -------- -----------------
Class III Directors Serving Until 1998 Annual Meeting of Stockholders
<S> <C> <C> <C>
Ronaldo A. da Director and Chief Executive Officer, 1991 1,100
Frota Nogueira (58) IMF Editora Ltda. (financial publisher).
Mr. Nogueira serves on the boards of
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned and %
Present Office with the Fund, of Total
Principal Occupation or Director Outstanding on
Name (Age) Employment and Directorships Since June 30, 1997 (1)
- --------- ---------------------------- -------- -----------------
Class III Directors Serving Until 1998 Annual Meeting of Stockholders
<S> <C> <C> <C>
an additional three funds managed by
Scudder.
Dr. Susan Kaufman Managing Director, Council of the 1991 200
Purcell (55) Americas; Vice President, Americas
Society; Director, Valero Energy Corp.
Dr. Purcell serves on the boards of an
additional two funds managed by Scudder.
Class I Directors Serving Until 1999 Annual Meeting of Stockholders
Wilson Nolen (70) Consultant; Trustee, Cultural 1991 10,979
Institutions Retirement Fund, Inc., New
York Botanical Garden, Skowhegan School
of Painting & Sculpture; Director,
Ecohealth, Inc. (biotechnology company)
(until 1996). Mr. Nolen serves on the
boards of an additional 16 funds
managed by Scudder.
All Directors and 24,920 (2)
Officers as a Group
<FN>
- ------------------------
* Director considered by the Fund and its counsel to be an "interested
person" (as defined in the 1940 Act) of the Fund or of its investment manager.
Mr. Bratt is deemed to be an interested person because of his affiliation with
the Fund's investment manager, Scudder, and because he is an officer of the
Fund.
(1) The information as to beneficial ownership is based on statements furnished
to the Fund by each Director. Unless otherwise noted, beneficial ownership is
based on sole voting and investment power. Each Director or Nominee's individual
shareholdings constitutes less than 1/4 of 1% of the shares outstanding.
(2) As a group, the Directors, Nominees and Officers own 0.27% of the
outstanding shares of the Fund.
</FN>
</TABLE>
Kathryn L. Quirk and Edmond D. Villani, who are currently Directors of the
Fund, will each resign effective as of the date of the Meeting.
- 23 -
<PAGE>
To the best of the Fund's knowledge, as of June 30, 1997, no person owned
beneficially more than 5% of the outstanding shares of the Fund, except as set
forth in Exhibit E.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
and Section 30(h) of the 1940 Act, as applied to a fund, require the fund's
officers, Directors, investment manager or adviser, affiliates of the investment
manager or adviser, and persons who beneficially own more than 10% 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 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 December 31, 1996, all filing requirements applicable to its Reporting
Persons were complied with except that Forms 3 on behalf of Eduardo Herrera,
Diego Portela, Ignacio Goni and Eljandro Castro (officers of Sociedad General)
as well as the following subsidiaries of Scudder were filed late: Scudder Fund
Accounting Corporation; Scudder Realty Holdings Corporation; Scudder, Stevens &
Clark Asia Limited; Scudder Canada Investor Services L.T.D.; Scudder Defined
Contribution Services, Inc.; Scudder Capital Stock Corporation; SIS Investment
Corporation; SRV Investment Corporation; Scudder Cayman Ltd.; Scudder, Stevens &
Clark Australia Limited; and Scudder Realty Holdings (II) L.L.C.
Honorary Director
Jose E. Rohm serves as an Honorary Director of the Fund. Honorary Directors
are invited to attend all Board meetings and to participate in Board
discussions, but are not entitled to vote on any matter presented to the Board.
Mr. Rohm served as a Director of the Fund since 1991 and resigned from the Board
in 1997.
- 24 -
<PAGE>
Committees of the Board - Board Meetings
The Board of the Fund has both an Audit committee and a Committee on
Independent Directors, the responsibilities of which are described below. The
Board of the Fund met four times during the Fund's most recently completed
fiscal year. Each then current director attended at least 75% of the total
number of meetings of the Board and the committees of which they served as
regular members that were held during that period, except Mr. Fraga, who
attended 50% of the meetings of the Board of Directors and related committees on
which he serves.
Audit Committee
The Board has an Audit Committee consisting of Non-interested Directors.
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.
The Audit Committee met once during the fiscal year ended October 31, 1996.
Committee on Independent Directors
The Board has a Committee on Independent Directors consisting of all the
Non-interested Directors. The Committee is charged with the duty of making all
nominations for Non-interested Directors and consideration of other related
matters. Stockholders' recommendations as to nominees received by management are
referred to the Committee for its consideration and action. The Committee met
once during the fiscal year ended October 31, 1996.
Executive Officers
In addition to Mr. Bratt, a Director who is also President of the Fund, the
following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Year First
Present Office with the Fund; Became
Name Principal Occupation or Employment (1) an Officer (2)
---- -------------------------------------- -------------
<S> <C> <C>
Paul J. Elmlinger (39) Vice President and Assistant Secretary;
Managing Director 1991
of Scudder, Stevens & Clark, Inc.
Edmund B. Games, Jr. (59) Vice President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
-25-
<PAGE>
Year First
Present Office with the Fund; Became
Name Principal Occupation or Employment (1) an Officer (2)
---- -------------------------------------- -------------
Jerard K. Hartman (64) Vice President, Managing Director of 1991
Scudder, Stevens & Clark, Inc.
David S. Lee (63) Vice President, Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Luis R. Luis (53) Vice President, Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Thomas F. McDonough (50) Vice President and Secretary; Principal 1991
of Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (43) Vice President and Treasurer; Managing 1991
Director of Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (52) Vice President and Assistant Treasurer; 1991
Principal of Scudder, Stevens & Clark, Inc.
Kathryn L. Quirk (44) Vice President and Assistant Secretary; 1991
Managing Director of Scudder, Stevens
& Clark, Inc.
<FN>
- ------------------------------
(1) Unless otherwise stated, all of the 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 holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Fund.
</FN>
</TABLE>
Transactions with, and Remuneration of, Directors and Officers
The aggregate direct remuneration paid by the Fund to Directors not
affiliated with Scudder was $69,431, including expenses, during the fiscal year
ended October 31, 1996. Each such unaffiliated Director currently receives fees,
paid by the Fund, of $750 per regular Directors' meeting attended. Each such
unaffiliated Director currently receives an annual Director's fee of $6,000.
Each Director also receives $250 per committee meeting attended (other than
Audit Committee meetings and meetings held for the purposes of considering
arrangements between the Fund and the Investment Manager or an affiliate of the
Investment Manager, 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 an
investment management fee for its services. Certain 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, 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.
-26-
<PAGE>
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 each Director of the Fund.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to
be paid by the Fund.
Column (5) Total compensation received by each Director from funds managed
by Scudder (collectively, the "Fund Complex") during the calendar year 1996.
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, 1996
(1) (2) (3) (4) (5)
Total
Pension or Estimated Compensation
Retirement Annual From the Fund
Aggregate Benefits Accrued Benefits and
Name of Person, Compensation As Part of Fund Upon Fund Complex
Position from the Fund Complex Expenses Retirement Paid to Director
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Javier A. Gonzalez Fraga, $4,019 N/A N/A $4,019 (1 fund)*
Director
Ronaldo A. da Frota $10,775 N/A N/A $49,775 (4 funds)
Nogueira, Director
Wilson Nolen, Director $12,250 N/A N/A $165,608 (17 funds)**
Dr. Susan Kaufman Purcell, $12,500 N/A N/A $37,900 (3 funds)
Director
<FN>
- ------------------------------
* Mr. Fraga became a Director of the Fund on June 1, 1996.
** This does not include membership on the Boards of Funds which commenced
operations in 1996.
</FN>
</TABLE>
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. The Directors of the Fund recommend that the stockholders vote in favor
of each of the nominees listed in this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Fund, including a majority of the
Non-interested Directors, has selected Coopers & Lybrand L.L.P. to act as
independent accountants for the Fund for the
-27-
<PAGE>
Fund's current fiscal year ending October 31, 1997. 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.
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. The Directors recommend that the stockholders of the Fund vote in favor
of this Proposal 3.
ADDITIONAL INFORMATION
General
Aside from the ordinary expenses incurred by the Fund in conducting an
annual meeting, the cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs incurred in
connection with the solicitation of proxies, including any additional
solicitation made by letter, telephone or telegraph, will be paid by Scudder. In
addition to solicitation by mail, certain officers and representatives of the
Fund, officers and employees of Scudder and certain financial services firms and
their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Meeting date approaches, certain
stockholders of the Fund may receive a telephone call from a representative of
SCC if their vote has not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from stockholders of the Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. These procedures have been reasonably designed to ensure that the
identity of the stockholder casting the vote is accurately determined and that
the voting instructions of the stockholder are accurately determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each stockholder's full name, address, social security or
employer identification number, title (if the stockholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned
and to confirm that the stockholder has received the proxy statement [and card]
in the mail. If the information solicited agrees with the information provided
to SCC, then the SCC representative has the responsibility to explain the
process, read the proposals listed on the proxy card, and ask for the
stockholder's instructions on each proposal. The SCC representative, although he
or she is permitted to answer questions about the process, is not permitted to
recommend to the stockholder how to vote, other than to read any recommendation
set forth in the proxy statement. SCC will record the stockholder's instructions
on the card. Within 72 hours, the stockholder will be sent a letter or mailgram
to confirm his or her vote and
-28-
<PAGE>
asking the stockholder to call SCC immediately if his or her instructions are
not correctly reflected in the confirmation.
If the stockholder wishes to participate in the Meeting, but does not wish
to give his or her proxy by telephone, the stockholder may still submit the
proxy card originally sent with the proxy statement or attend in person. Should
stockholders require additional information regarding the proxy or replacement
proxy cards, they may contact SCC toll-free at 1-800-733-8481. Any proxy given
by a stockholder, whether in writing or by telephone, is revocable.
Proposals of Stockholders
Stockholders wishing to submit proposals to be presented at the 1998
meeting of stockholders of the Fund should send their written proposals to the
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 meeting.
Other Matters to Come Before the Meeting
The Board of Directors of the Fund is not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of stockholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
-29-
<PAGE>
EXHIBIT A
FORM OF NEW INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of _____________ between THE
ARGENTINA FUND, INC., a Maryland corporation (herein referred to as the "Fund"),
and SCUDDER KEMPER INVESTMENTS, INC., a Delaware corporation (herein referred to
as the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed by
the parties as follows:
1. The 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 objectives
and policies and in accordance with guidelines and directions from the Fund's
Board of Directors; (ii) 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; (iii) to maintain or cause to be maintained for the
Fund all books, records, 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 custodian or other agents of the Fund; (iv) to furnish at the
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 Manager's expense clerical services in the United States related
to research, statistical and investment work; (v) 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 "SEC") and
other regulatory and self-regulatory organizations, including preliminary and
definitive proxy materials and post-effective amendments to the Fund's
registration statement on Form N-2 under the Securities Act of 1933, as amended,
and 1940 Act, as amended from time to time, providing assistance in certain
accounting and tax matters and investor and public relations, monitoring the
valuation of portfolio securities, assisting in the calculation of net asset
value and calculation and payment of distributions to stockholders, and
overseeing arrangements with the Fund's custodian, including the maintenance of
books and records of the Fund; and (vi) to pay the reasonable salaries, fees and
expenses of such of the Fund's officers and employees (including the Fund's
-30-
<PAGE>
shares of payroll taxes) and any fees and expenses of such of the Fund's
directors as are directors, officers or employees of the Manager; provided,
however, that the Fund, and not the 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 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 advisors thereto. The 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 Manager in
this paragraph 1. In particular, but without limiting the generality of the
foregoing, the 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 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 Manager or of any one or more organizations retained as an
advisor or consultant to the Fund); fees payable to the Manager and to any
advisor or consultants, including an advisory board, if applicable; legal
expenses; auditing and accounting expenses; telephone, telex, facsimile, postage
and other communication 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; 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 of registering or
qualifying securities of the Fund for sale; expenses relating to investor and
public relations; 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; costs of stationery; costs of stockholders' and other meetings;
litigation expenses; or expenses relating to the Fund's dividend reinvestment
and cash purchase plan (except for brokerage expenses paid by participants in
such plan).
2. The Fund agrees to pay to the Manager in United States dollars, as
full compensation for the services to be rendered and expenses to be borne by
the Manager hereunder, a monthly fee which, on an annual basis, is equal to
1.10% per annum of the value of the Fund's average weekly net assets. Each
payment of a monthly fee to the Manager shall be made within the ten days next
following the day as of which such payment is so computed. The Manager shall pay
any entity retained by the Manager to provide investment sub-advisory services
with respect to Argentine securities (the "Argentine Advisor") the fees required
pursuant to the sub-advisory contract with the Argentine Advisor. In the event
that the sub-advisory contract with the Argentine Advisor is terminated, the
Manager shall be responsible for furnishing to the Fund the services required to
be performed by the Argentine Advisor under these arrangements or arranging for
a successor sub-investment advisor on terms and
-31-
<PAGE>
conditions acceptable to the Fund and subject to the requirements of the 1940
Act. Upon any termination of this Agreement before the end of a month, the fee
for such part of that month shall be prorated according to the proportion that
such period bears to the full monthly period and shall be payable upon the date
of termination of this Agreement.
The value of the net assets of the Fund shall be determined pursuant to
the applicable provisions of the Articles of Incorporation and By-laws of the
Fund, as amended from time to time.
3. The 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. In executing transactions for the Fund and selecting brokers or
dealers, the Manager shall use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Manager shall consider on a continuing basis all factors it
deems relevant, including, but not limited to, breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission for
the specific transaction. In selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms available, the
Manager may consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Manager or an affiliate exercises
investment discretion.
5. Nothing herein shall be construed as prohibiting the 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 Manager by advisors and consultants to the Fund and others; nor shall
anything herein be construed as constituting the Manager as an agent of the
Fund.
Whenever the Fund and one or more other accounts or investment
companies advised by the Manager have available funds for investment,
investments suitable and appropriate for each shall be allocated in accordance
with procedures believed by the Manager to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by the Manager to be equitable. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund. In addition, the Fund acknowledges that
the persons employed by the Manager to assist in the performance of the
Manager's duties hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict the right of the
Manager or any affiliate of the Manager to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
-32-
<PAGE>
6. The Manager may rely on information reasonably believed by it to be
accurate and reliable. Neither the 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 Manager in the performance of its duties or by
reason of reckless disregard on the part of the Manager of its obligations and
duties under this Agreement. Any person, even though also employed by the
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 Manager.
7. This Agreement shall remain in effect until September 30, 1999, 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 parties to
this agreement or interested persons of any party to this agreement, or of any
entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with any party to this agreement, 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 Manager.
This Agreement shall automatically be terminated in the event of its
assignment, provided that an assignment to a corporate successor to all or
substantially all of the Manager's business or to a wholly-owned subsidiary of
such corporate successor which does not result in a change of actual control or
management of the Manager's business shall not be deemed to be an assignment for
the purposes of this Agreement. Any notice to the Fund or the Manager shall be
deemed given when received by the addressee.
8. 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 or rules and regulations adopted thereunder. 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 parties to this agreement or interested persons of any
party to this agreement, or of any entity regularly furnishing investment
advisory services with respect to the Fund pursuant to an agreement with any
party to this agreement, cast in person at a meeting called for the purpose of
voting on such approval.
9. This Agreement shall be construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of laws principles
thereof, 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.
10. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this agreement to produce or account for more than
one such counterpart.
11. This Agreement supersedes all prior investment advisory,
management, and/or administration agreements in effect between the Fund and the
Manager.
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 KEMPER INVESTMENTS, INC.
By: _________________________
Title:
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT B
Investment Objectives and Advisory Fees
For Funds Advised by Scudder, Stevens & Clark, Inc.
FUND OBJECTIVE FEE RATE
---- --------- --------
<S> <C> <C>
Money Market
Scudder U.S. Treasury Money Fund Safety, liquidity, and stability of capital and, 0.500% of net assets
consistent therewith, current income.
Scudder Cash Investment Trust Stability of capital while maintaining liquidity 0.500% to $250 million
of capital and providing current income from 0.450% next $250 million
money market securities. 0.400% next $500 million
0.350% thereafter
Scudder Money Market Series High level of current income consistent with 0.250% of net assets
preservation of capital and liquidity by
investing in a broad range of short-term money
market instruments.
Scudder Government Money Market High level of current income consistent with 0.250% of net assets
Series preservation of capital and liquidity by
investing exclusively in obligations issued or
guaranteed by the U.S. Government or its agencies
or instrumentalities and in certain repurchase
agreements.
Tax Free Money Market
Scudder Tax Free Money Fund Income exempt from regular federal income taxes 0.500% to $500 million
and stability of principal through investments in 0.480% thereafter
municipal securities.
Scudder Tax Free Money Market High level of current income consistent with 0.250% of net assets
Series preservation of capital and liquidity exempt from
federal income tax by investing primarily in high
quality municipal obligations.
-35-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Scudder California Tax Free Money Stability of capital and the maintenance of a 0.500% of net assets
Fund constant net asset value of $1.00 per share while
providing California tax payers income exempt
from both California personal and regular federal
income tax through investment in high quality,
short- term tax-exempt California municipal
securities.
Scudder New York Tax Free Money Stability of capital and income exempt from New 0.500% of net assets
Fund York state and New York City personal income
taxes and regular federal income tax through
investment in high quality, short-term municipal
securities in New York.
Tax Free
Scudder Limited Term Tax Free Fund High level of income exempt from regular federal 0.600% of net assets
income tax consistent with a high degree of
principal stability.
Scudder Medium Term Tax Free Fund High level of income exempt from regular federal 0.600% to $500 million
income tax and limited principal fluctuation 0.500% thereafter
through investment primarily in high grade
intermediate term municipal securities.
Scudder Managed Municipal Bonds Income exempt from regular federal income tax 0.550% to $200 million
primarily through investments in high-grade 0.500% next $500 million
long-term municipal securities. 0.475% thereafter
Scudder High Yield Tax Free Fund High level of income, exempt from regular federal 0.650% to $300 million
income tax, from an actively managed portfolio 0.600% thereafter
consisting primarily of investment grade
municipal securities.
Scudder California Tax Free Fund Income exempt from both California state personal 0.625% to $200 million
income tax and regular federal income tax 0.600% thereafter
primarily through investment grade municipal
securities.
Scudder Massachusetts Limited Term A high level of income exempt from both 0.600% of net assets
Tax Free Fund Massachusetts personal income tax and regular
federal income tax as is consistent with a high
degree of price stability.
-36-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Scudder Massachusetts Tax Free A high level of income exempt from both 0.600% of net assets
Fund Massachusetts personal income tax and regular
federal income tax through investment primarily
in long-term investment-grade municipal
securities in Massachusetts.
Scudder New York Tax Free Fund Income exempt from New York state and New York 0.625% to $200 million
City personal income taxes and regular federal 0.600% thereafter
income tax through investment primarily in
long-term investment-grade municipal securities
in New York.
Scudder Ohio Tax Free Fund Income exempt from Ohio personal income tax and 0.600% of net assets
regular federal income tax through investment
primarily in investment-grade municipal
securities in Ohio.
Scudder Pennsylvania Tax Free Fund Income exempt from Pennsylvania personal income 0.600% of net assets
tax and regular federal income tax through
investment primarily in investment-grade
municipal securities in Pennsylvania.
U.S. Income
Scudder Short Term Bond Fund High level of income consistent with a high 0.600% to $500 million
degree of principal stability through investments 0.500% next $500 million
primarily in high quality short-term bonds. 0.450% next $500 million
0.400% next $500 million
0.375% next $1 billion
0.350% thereafter
Scudder Zero Coupon 2000 Fund High investment returns over a selected period as 0.600% of net assets
is consistent with investment in U.S. Government
securities and the minimization of reinvestment
risk.
Scudder GNMA Fund High current income and safety of principal 0.650% to $200 million
primarily from investment in U.S. Government 0.600% next $300 million
mortgage-backed GNMA securities. 0.550% thereafter
-37-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Scudder Income Fund A high level of income, consistent with the 0.650% to $200 million
prudent investment of capital, through a flexible 0.600% next $300 million
investment program emphasizing high-grade bonds. 0.550% thereafter
Scudder High Yield Bond Fund A high level of current income and capital 0.700% of net assets
appreciation through investment primarily in
below investment-grade domestic debt securities.
Global Income
Scudder Global Bond Fund Total return with an emphasis on current income 0.750% to $1 billion
by investing primarily in high-grade bonds 0.700% thereafter
denominated in foreign currencies and the U.S.
dollar.
Scudder International Bond Fund Income primarily by investing in high-grade 0.850% to $1 billion
international bonds and protection and possible 0.800% thereafter
enhancement of principal value by actively
managing currency, bond market and maturity
exposure and by security selection
Scudder Emerging Markets Income High current income and, secondarily, long-term 1.000% of net assets
Fund capital appreciation by investing primarily in
high-yielding debt securities issued in emerging
markets.
Asset Allocation
Scudder Pathway Conservative Current income and, secondarily, long-term growth 0.000%
Portfolio of capital by investing substantially in bond
mutual funds, but will have some exposure to
equity mutual funds.
Scudder Pathway Balanced Portfolio Balance of growth and income by investing in a 0.000%
mix of money market, bond and equity mutual funds.
Scudder Pathway Growth Portfolio Long-term growth of capital by investing 0.000%
predominantly in equity mutual funds designed to
provide long-term growth.
-38-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Scudder Pathway International Maximize total return by investing in a select 0.000%
Portfolio mix of established international and global
Scudder Funds.
U.S. Growth and Income
Scudder Balanced Fund A balance of growth and income from a diversified 0.700% of net assets
portfolio of equity and fixed income securities
and long-term preservation of capital through a
quality oriented investment approach designed to
reduce risk.
Scudder Growth and Income Fund Long-term growth of capital, current income and 0.600% to $500 million
growth of income primarily from common stocks, 0.550% next $500 million
preferred stocks and securities convertible into 0.500% next $500 million
common stocks. 0.475% next $500 million
0.450% next $1 billion
0.425% next $1 billion
0.405% thereafter
U.S. Growth
Scudder Large Company Value Fund Maximize long-term capital appreciation through a 0.750% to $500 million
(formerly Scudder Capital Growth value driven investment program emphasizing 0.650% next $500 million
Fund) common stocks and preferred stocks.
Scudder Value Fund Long-term growth of capital through investment in 0.700% of net assets
undervalued equity securities.
Scudder Small Company Value Fund Long-term growth of capital by investing 0.750% of net assets
primarily in undervalued equity securities of
small U.S. companies.
Scudder Micro Cap Fund Long-term growth of capital by investing 0.750% of net assets
primarily in a diversified portfolio of U.S.
micro-cap common stocks.
Scudder Classic Growth Fund Long-term growth of capital while keeping the 0.700% of net assets
value of its shares more stable than other growth
mutual funds.
-39-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Scudder Large Company Growth Fund Long-term growth of capital through investment 0.700% of net assets
(formerly Scudder Quality Growth primarily in the equity securities of seasoned,
Fund) financially strong U.S. growth companies.
Scudder Development Fund Long-term growth of capital by investing 1.000% to $500 million
primarily in equity securities of emerging growth 0.950% next $500 million
companies. 0.900% thereafter
Scudder 21st Century Growth Fund Long-term growth of capital by investing 1.000% of net assets
primarily in the securities of emerging growth
companies poised to be leaders in the 21st
century.
Global Growth
Scudder Global Fund Long-term growth of capital through investment in Effective 9/11/97
a diversified portfolio of marketable foreign and 1.000% to $500 million
domestic securities, primarily equity securities. 0.950% next $500 million
0.900% next $500 million
0.850% thereafter
Institutional International Equity Long-term growth of capital primarily through a 0.900% of net assets
Portfolio diversified portfolio of marketable foreign
equity securities.
Scudder International Growth and Long-term growth of capital and current income 1.000% of net assets
Income Fund primarily from foreign equity securities
Scudder International Fund Long-term growth of capital primarily through a 0.900% to $500 million
diversified portfolio of marketable foreign 0.850% next $500 million
equity securities. 0.800% next $1 billion
0.750% next $1 billion
0.700% thereafter
Scudder Global Discovery Fund Above-average capital appreciation over the 1.100% of net assets
long-term by investing primarily in the equity
securities of small companies located throughout
the world.
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<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Scudder Emerging Markets Growth Long-term growth of capital primarily through 1.25% of net assets
Fund equity investments in emerging markets around the
globe.
Scudder Gold Fund Maximum return consistent with investing in a 1.000% of net assets
portfolio of gold-related equity securities and
gold.
Scudder Greater Europe Growth Fund Long-term growth of capital through investment 1.000% of net assets
primarily in the equity securities of European
companies.
Scudder Pacific Opportunities Fund Long-term growth of capital primarily through 1.100% of net assets
investment in the equity securities of Pacific
Basin companies, excluding Japan.
Scudder Latin America Fund Long-term capital appreciation through investment Effective 9/11/97:
primarily in the securities of Latin American 1.250% to $1 billion
issuers. 1.150% thereafter
The Japan Fund, Inc. Long-term capital appreciation through investment 0.850% to $100 million
primarily in equity securities of Japanese 0.750% next $200 million
companies. 0.700% next $300 million
0.650% thereafter
Closed-End Funds
The Argentina Fund, Inc. Long-term capital appreciation through investment Advisor:
primarily in equity securities of Argentine Effective 11/1/97
issuers. 1.100% of net assets
Sub-Advisor:
Paid by Advisor.
0.160% of net assets
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<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
The Brazil Fund, Inc. Long-term capital appreciation through investment 1.200% to $150 million
primarily in equity securities of Brazilian 1.050% next $150 million
issuers. 1.000% thereafter
Effectove 10/29/97:
1.200% to $150 million
1.050% next $150 million
1.000% next $200 million
0.900% thereafter
Administrator:
Receives an annual fee of
$50,000
The Korea Fund, Inc. Long-term capital appreciation through investment Advisor:
primarily in equity securities of Korean issuers. 1.150% to $50 million
1.100% next $50 million
1.000% next $250 million
0.950% next $400 million
0.900% thereafter
Sub-Advisor-Daewoo:
Paid by Advisor.
0.2875% to $50 million
0.275% next $50 million
0.250% next $250 million
0.2375% next $400 million
0.225% thereafter
The Latin America Dollar Income High level of current income and, secondarily, 1.200% of net assets
Fund, Inc. capital appreciation through investment
principally in dollar-denominated Latin American
debt instruments.
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<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Montgomery Street Income High level of current income consistent with 0.500% to $150 million
Securities, Inc. prudent investment risks through a diversified 0.450% next $50 million
portfolio primarily of debt securities. 0.400% thereafter
Scudder New Asia Fund, Inc. Long-term capital appreciation through investment 1.250% to $75 million
primarily in equity securities of Asian companies. 1.150% next $125 million
1.100% thereafter
Scudder New Europe Fund, Inc. Long-term capital appreciation through investment 1.250% to $75 million
primarily in equity securities of companies 1.150% next $125 million
traded on smaller or emerging European markets 1.100% thereafter
and companies that are viewed as likely to
benefit from changes and developments throughout
Europe.
Scudder Spain and Portugal Fund, Long-term capital appreciation through investment Advisor:
Inc. primarily in equity securities of Spanish & 1.000% of net assets
Portuguese issuers Administrator:
0.200% of net assets
Scudder World Income Opportunities High income and, consistent therewith, capital 1.200% of net assets
Fund, Inc. appreciation.
Insurance Products
Balanced Portfolio Balance of growth and income consistent with 0.475% of net assets
long-term preservation of capital through a
diversified portfolio of equity and fixed income
securities.
Bond Portfolio High level of income consistent with a high 0.475% of net assets
quality portfolio of debt securities.
Capital Growth Portfolio Long-term capital growth from a portfolio 0.475% to $500 million
consisting primarily of equity securities. 0.450% thereafter
-43-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
Global Discovery Portfolio Above-average capital appreciation over the 0.975% of net assets
long-term by investing primarily in the equity
securities of small companies located throughout
the world.
Growth and Income Portfolio Long-term growth of capital, current income and 0.475% of net assets
growth of income.
International Portfolio Long-term growth of capital primarily through 0.875% to $500 million
diversified holdings of marketable foreign equity 0.775% thereafter
investments.
Money Market Portfolio Stability of capital and, consistent therewith, 0.370% of net assets
liquidity of capital and current income.
AARP Funds
AARP High Quality Money Fund Current income and liquidity, consistent with Fee Rate Program
maintaining stability and safety of principal, Assets
through investment in high quality securities. 0.350% to $2 billion
0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.100% of net assets
-44-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP Balanced Stock and Bond Fund Long-term growth of capital and income, Fee Rate Program
consistent with a stable share price, through Assets
investment in a combination of stocks, bonds and 0.350% to $2 billion
cash reserves. 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.190% of net assets
AARP Capital Growth Fund Long-term capital growth, consistent with a Fee Rate Program
stable share price, through investment primarily Assets
in common stocks and securities convertible into 0.350% to $2 billion
common stocks. 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.320% of net assets
-45-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP Global Growth Fund Long-term growth of capital, consistent with a Fee Rate Program
stable share price, through investment primarily Assets
in a diversified portfolio of equity securities 0.350% to $2 billion
of corporations worldwide. 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.550% of net assets
AARP Growth and Income Fund Long-term growth of capital and income, Fee Rate Program
consistent with a stable share price, through Assets
investment primarily in common stocks and 0.350% to $2 billion
securities convertible into common stocks. 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.190% of net assets
-46-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP International Stock Fund Long-term growth of capital, consistent with a Fee Rate Program
stable share price, through investment primarily Assets
in foreign equity securities. 0.350% to $2 billion
0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.600% of net assets
AARP Small Company Stock Fund Long-term growth of capital, consistent with a Fee Rate Program
stable share price, through investment primarily Assets
in stocks of small U.S. companies. 0.350% to $2 billion
0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.550% of net assets
-47-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP U.S. Stock Index Fund Long-term growth of capital, consistent with Fee Rate Program
greater share price stability than a S&P 500 Assets
index fund, by taking an indexing approach to 0.350% to $2 billion
investing in common stocks, emphasizing higher 0.330% next $2 billion
dividend stocks while maintaining investment 0.300% next $2 billion
characteristics otherwise similar to the S&P 500 0.280% next $2 billion
index. 0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.000% of net assets
AARP Bond Fund for Income High level of current income, consistent with Fee Rate Program
greater share price stability than a long term Assets
bond, through investment primarily in 0.350% to $2 billion
investment-grade debt securities. 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.280% of net assets
-48-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP GNMA and U.S. Treasury Fund High level of current income, consistent with Fee Rate Program
greater share price stability than a long-term Assets
bond, through investment principally in U.S. 0.350% to $2 billion
Government-guaranteed GNMA securities and U.S. 0.330% next $2 billion
Treasury obligations. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.120% of net assets
AARP High Quality Bond Fund High level of income, consistent with greater Fee Rate Program
share price stability than a long-term bond, Assets
through investment primarily in a portfolio of 0.350% to $2 billion
high quality securities 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.190% of net assets
-49-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP Diversified Growth Portfolio Long-term growth of capital through investment There will be no fee as
primarily in AARP stock mutual funds. the manager will receive a
fee from the underlying
funds.
AARP Diversified Income Portfolio Current income with modest capital appreciation There will be no fee as
through investment primarily in AARP bond mutual the manager will receive a
funds. fee from the underlying
funds.
AARP High Quality Tax Free Money Current income exempt from federal income taxes Fee Rate Program
Fund and liquidity, consistent with maintaining Assets
stability and safety of principal, through
investment in high-quality municipal securities. 0.350% to $2 billion
0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.100% of net assets
-50-
<PAGE>
FUND OBJECTIVE FEE RATE
---- --------- --------
AARP Insured Tax Free General Bond High level of income free from federal Fee Rate Program
Fund taxes, consistent with greater share price Assets
stability than a long-term municipal bond, 0.350% to $2 billion
through investment primarily in municipal 0.330% next $2 billion
securities covered by insurance. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
Individual Fund Fee
0.190% of net assets
</TABLE>
-51-
<PAGE>
EXHIBIT C
FORM OF NEW SUB-ADVISORY AGREEMENT
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
SUB-ADVISORY CONTRACT
__________, 1997
Sociedad General de Negocios y Valores S.A.
Esmeralda 120
Piso 7 "C"
Buenos Aires 1035, Republica Argentina
Dear Sirs,
Scudder Kemper Investments, Inc. (the "Investment Manager") has entered
into an Investment Advisory, Management and Administration Agreement dated
_____________, 1997 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 0.16 percent of the value of the Fund's average
weekly net assets. The Argentine Adviser shall have no right to obtain
compensation
-52-
<PAGE>
directly from the Fund for services provided hereunder and agrees to look solely
to the Investment Manager for payment of fees due.
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
-53-
<PAGE>
Company Act of 1940, as amended (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.
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 Kemper Investments, 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.
Esmeralda 120
Piso 7 "C"
Buenos Aires 1035, Republica Argentina
Fax: (541) 322-8822
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
Argentine Adviser in the manner specified in the following paragraph or as
otherwise permitted by law.
-54-
<PAGE>
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 KEMPER INVESTMENTS, INC.
By:____________________________
Title:_________________________
The foregoing agreement is hereby accepted as of the date first above written.
SOCIEDAD GENERAL DE NEGOCIOS Y
VALORES, S.A.
By:____________________________
Title:_________________________
-55-
<PAGE>
ACCEPTED:
THE ARGENTINA FUND, INC.
By:_____________________________
Title:__________________________
<PAGE>
EXHIBIT D
INVESTMENT COMPANIES TO WHICH
ARGENTINE ADVISER SERVES AS INVESTMENT MANAGER
OR ADVISER
Net Assets Rate of Fee waiver
Name Investment as of Manager Arrangement
of Fund Objective [ ] Compensation (if any)
- ------- --------- ----------- ------------ --------
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<PAGE>
EXHIBIT E
HOLDERS OF 5% OR MORE BENEFICIAL INTERESTS
IN THE ARGENTINA FUND, INC.
According to filings made with the Securities and Exchange Commission
on Schedule 13G through June 30, 1997, the following are entities known to
beneficially own more than 5% of the outstanding shares of the Fund as of June
30, 1997:
(1) President and Fellows of Harvard College, c/o Harvard Management Company,
Inc., 600 Atlantic Avenue, Boston, Massachusetts 02210, reported beneficial
ownership of 930,400 shares, or 10.0% of the Fund's outstanding shares, in
Amendment No. 1 to its Schedule 13G, dated June 10, 1997.
(2) United Nations Joint Staff Pension Fund, United Nations, New York, New York
10017, in Amendment No. 1 to its Schedule 13G, dated February 3, 1997, and its
Investment Advisor, Fiduciary Trust Company International, Two World Trade
Center, New York, New York 10048, in Amendment No. 1 to its Schedule 13G, dated
January 31, 1997, each reported ownership of 575,000 shares, or 6.21% of the
Fund's outstanding shares. As to these shares, the United Nations Joint Staff
Pension Fund shares voting and dispositive power with its Investment Advisor.
-58-
<PAGE>
PROXY THE ARGENTINA FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - October 28, 1997
The undersigned hereby appoints Javier A. Gonzalez Fraga, Wilson Nolen
and Kathryn L. Quirk 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. (the "Fund") which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Fund 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 28, 1997 at 9:30 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.
The Board members of your Fund, including those who are not affiliated
with the Fund or Scudder, recommend that you vote FOR each item.
1(A). To approve the new Investment
Management, Advisory and
Administration Agreement
between the Fund and Scudder
Kemper Investments, Inc.; FOR [ ] AGAINST [ ] ABSTAIN [ ]
1(B). To approve the new Research
and Advisory Agreement between
the Fund and Sociedad General
de Negocios y Valores S.A.; FOR [ ] AGAINST [ ] ABSTAIN [ ]
[continued on other side]
-59-
<PAGE>
2. The election of Directors;
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) [ ] listed below [ ]
Nominees: Nicholas Bratt and Javier A. Gonzalez Fraga.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------
3. Ratification of the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ]
Coopers & Lybrand L.L.P. as the
Fund's independent accountants.
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)
Dated ___________________, 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED .
NO POSTAGE IS REQUIRED.
-60-
<PAGE>
