(logo)
The Argentina Fund, Inc.
Semiannual Report
April 30, 1998
A closed-end investment company seeking
long-term capital appreciation through
investments primarily in the equity
securities of Argentine issuers.
<PAGE>
The Argentina Fund, Inc.
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Investment objective and policies
o long-term capital appreciation through investment primarily in equity
securities of Argentine issuers
Investment characteristics
o investments in a broad spectrum of Argentine industries
o non-diversified closed-end investment company
o a vehicle for international diversification through participation in the
Argentine economy
General Information
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Executive Offices
The Argentina Fund, Inc.
345 Park Avenue
New York, NY 10154
For Fund information: 1-800-349-4281
Transfer Agent, Registrar and Dividend
Reinvestment Plan Agent
For account information: 1-800-426-5523
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Legal Counsel
Willkie Farr & Gallagher
Custodian
Brown Brothers Harriman & Co.
Independent Accountants
Coopers & Lybrand L.L.P.
New York Stock Exchange Symbol -- AF
Contents
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In Brief 3
Letter to Shareholders 3
Investment Summary 6
Portfolio Summary 7
Investment Portfolio 8
Financial Statements 11
Financial Highlights 14
Notes to Financial Statements 15
Report of Independent Accountants 19
Dividend Reinvestment and
Cash Purchase Plan 20
Investment Manager 22
Directors and Officers 23
Net Asset Value
The Fund's net asset value is listed in the following publications:
The Wall Street Journal (Mondays)
The New York Times
Barron's
The Financial Times (daily)
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This report is sent to the shareholders of The Argentina Fund, Inc. for their
information. It is not a prospectus, circular, or representation intended for
use in the purchase or sale of the Fund or of any securities mentioned in the
report.
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2
<PAGE>
(logo) The Argentina Fund, Inc.
In Brief
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o Significant stock market volatility during the first half of the six-month
period ended April 30, 1998 was followed by a general strengthening of the
Argentine equity markets, as the impact of the Asian crisis abated.
o The Fund continued to emphasize well managed companies with significant
comparative advantages due to franchise value, pricing power, and
dollar-linked revenues.
(logo) Letter to Shareholders
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Dear Shareholders:
For the six-month period ended April 30, 1998, the Argentina Fund's shares
quoted on the New York Stock Exchange returned 9.41%, and the Fund's net asset
value (NAV) return was 13.21%. This performance compares to the 12.18% return of
the unmanaged IFC Argentina Global Total Return Index for the same period. The
Fund's market price reflected an 18.5% discount to NAV at the end of the period.
The Fund's net asset value return for the six-month period was in line with the
performance of major Latin American markets. The Fund's closed-end structure
aided in its ability to weather the volatility of the markets by allowing
management to focus on investment opportunities without concern for unexpected
cash flows.
Market Environment
The first half of the six-month period was characterized by significant stock
market volatility, followed by a general strengthening of the equity markets, as
the impact of the Asian crisis abated. Argentina's economic growth remained
vibrant, as gross fixed investment rose a strong 27% in 1997 with expectations
for continued increases in 1998. In addition, industrial production grew 10.4%
in 1997 and we project it to grow 6% in 1998. Consensus forecasts now point to
5.8% growth in gross domestic product (GDP) for 1998 and 4.5% growth in 1999.
While below 1997's torrid pace of 8.4%, this growth rate still makes Argentina
one of the fastest growing economies in the world. As we have emphasized in the
past, the implementation of the Convertibility Plan, and Argentina's steadfast
refusal to delink the Argentine peso from the dollar, have created the framework
for continuing price stability and minimal inflation, now projected at slightly
above 1% for 1998 and 1999.
However, Argentina still has some significant risks, despite renewed business
confidence, strong economic growth, and a steadfast exchange rate policy.
Principal among them is the increasing current account deficit, now projected at
$14.2 billion in 1998 and $15 billion in 1999 in U.S. dollars (4.2% and 5.0% of
GDP, respectively). Much of the weakness is due to the widening trade imbalance
which has grown from negative $2.9 billion in 1997 to a projected negative $5.3
billion in 1998. While a large part of this deficit can be explained by
declining prices for Argentina's principal exports -- agricultural products and
oil -- the continued reliance on imported capital goods and equipment, and
increasing domestic consumption of imported products have also contributed.
Argentina's government should be applauded for its foresight in refinancing much
of its foreign currency requirements at the beginning of 1998, as well as
establishing a standby agreement with the International Monetary Fund (IMF), and
a $7 billion line of credit with international banks for emergency purposes. It
is somewhat worrisome, however, that despite the strong economic growth and
rising tax collections, foreign debt continues to grow and is now projected to
total over $113 billion in 1998, amounting to 32% of GDP and 312% of exports.
3
<PAGE>
(logo) The Argentina Fund, Inc.
Letter to Shareholders
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While the steps the government has taken to strengthen domestic savings are
beginning to pay returns, Argentina will have to work harder to sustain a growth
rate in the 4-5% range.
The privatized Argentine pension funds are the principal vehicles for improving
the savings rate, which continues to provide strong underlying support to the
equity markets. Funds under management now total over $10 billion, of which 23%
is invested in equities. Likewise, bank mutual funds are becoming increasingly
important, totaling some $6 billion and growing quite rapidly. We believe that
continuing investment by pension and mutual funds is providing a steadily rising
tide to the Argentine equity market, as was particularly apparent over the final
three months of the Fund's 1997 fiscal year.
Politics continue to distract the markets. The difficulties of managing the
Partido Alianza coalition party in Congress, especially in light of the fact
that the principal members of the Coalition are jockeying for position leading
up to the presidential elections in 1999, has meant that little progress has
been made on the necessary reforms facing the government. President Menem, eager
to seek a third term, despite requiring a constitutional amendment to do so and
with very limited popular support, continues to look for ways to remain in the
forefront of the country's political and economic program. From an investor's
standpoint, however, there is no doubt that all of the political parties are
firmly committed to the existing economic program of the government, as
represented by the Convertibility Plan, with differences more focused around
addressing social concerns.
Portfolio Strategy
The Argentina Fund continues to focus on well-managed companies with significant
comparative advantages due to franchise value, pricing power, dollar-linked
revenues, and emphasis on the natural resource base of the country. We pay
particular attention to companies that are strong cash flow generators with
conservative levels of financial leverage. We believe this approach minimizes
the risks inherent to investing in the region. Our principal sector weights are
in the telecommunications and oil and gas sectors where we expect to benefit
from the strong consumer economy, the pent-up demand for communication services,
and the development of the electric utility sector throughout the Mercosur
region.
During the first half of the six-month period, the Fund increased its stake in
both YPF and Telefonica Argentina, and participated in the rights offering of
IRSA, the Argentine real estate management company. We also added to Dalmine
Siderca, the oil industry tubular goods manufacturer, at attractive prices due
to concerns over future oil field drilling in an environment of declining world
prices for petroleum. We also initiated investments in Chile, establishing
positions in LanChile, the regional airline, and Enersis, the energy
conglomerate active throughout the Mercosur region. Finally, we added Banco Itau
(which recently acquired a significant number of branches in Buenes Aires) to
our Brazilian holdings and increased our weightings in Petrobras, while keeping
our overall stake in Brazil below 5% as of the end of the period.
Year 2000 Issue
Like other mutual funds and financial and business organizations worldwide, the
Fund could be adversely affected if computer systems on which the Fund relies,
which primarily include those used by the Manager, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Fund's business and
operations. The Manager has commenced a review of the Year 2000 Issue as it may
affect the Fund and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
4
<PAGE>
(logo) The Argentina Fund, Inc.
Letter to Shareholders
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steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Fund or on global markets or economies generally.
Outlook
We have a cautious outlook for the Argentine equity market over the short term,
given the continuing economic repercussions from Asia, weak world commodity
prices, and concerns over the potential for rising interest rates in the United
States. (The dollar peg and Argentine borrowing requirements have a direct
impact on Argentine markets.) However, we believe that the positioning of the
Fund in strong, well-managed companies will provide attractive returns for
shareholders over the long term.
Sincerely,
/s/Nicholas Bratt
Nicholas Bratt
Chairman of the Board
and President
5
<PAGE>
(logo) The Argentina Fund, Inc.
Investment Summary as of April 30, 1998
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HISTORICAL
INFORMATION TOTAL RETURN (%)
LIFE OF FUND ---------------------------------------------------------------
MARKET VALUE NET ASSET VALUE (a) INDEX (b)
------------------- -------------------- -------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------- -------------------- -------------------
CURRENT QUARTER 8.76 -- 10.97 -- 10.15 --
ONE YEAR 2.64 2.64 10.33 10.33 7.86 7.86
THREE YEAR 20.66 6.46 64.09 17.95 77.79 21.12
FIVE YEAR 50.46 8.51 93.88 14.16 121.31 17.21
LIFE OF FUND* 29.23 4.01 73.28 8.79 71.06 8.61
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PER SHARE INFORMATION AND RETURNS (a)
YEARLY PERIODS ENDED APRIL 30
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) with the exact
data points listed in the table below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1992* 1993 1994 1995 1996 1997 1998
----------------------------------------------------------
NET ASSET VALUE... $12.68 $ 9.64 $13.98 $10.60 $13.12 $14.98 $16.18
INCOME DIVIDENDS.. $ .06 $ .05 $ .14 $ .27 $ .33 $ .33 $ .25
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ .09 $ .02 $ .46 $ -- $ -- $ --
TOTAL RETURN (%).. 13.81 -23.01 46.38 -19.48 26.97 17.13 10.33
</TABLE>
(a) Total investment returns reflect changes in net asset value per
share during each period and assume that dividends and capital gains
distributions, if any, were reinvested. These percentages are not an
indication of the performance of a shareholder's investment in the
Fund based on market price.
(b) IFC Argentina Global Total Return Index U.S.$.
* The Fund commenced operations on October 22, 1991. Index return begins
on October 31, 1991.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE
FUND.
6
<PAGE>
(logo) The Argentina Fund, Inc.
Portfolio Summary as of April 30, 1998
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DIVERSIFICATION
Equity Securities 97%
Cash Equivalents 3%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
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SECTORS
Energy 24%
Communications 21%
Financial 15%
Consumer Staples 13%
Utilities 12%
Metals & Minerals 8%
Construction 3%
Durables 1%
Other 3%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
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TEN LARGEST EQUITY HOLDINGS
1. YPF S.A.
2. TELECOM ARGENTINA S.A.
3. TELEFONICA DE ARGENTINA S.A.
4. INVERSIONES Y REPRESENTACIONES S.A.
5. SIDERAR SAIC
6. PEREZ COMPANC S.A.
7. METROGAS S.A.
8. DALMINE SIDERCA
9. TRANSPORTADORA DE GAS DEL SUR
10. BANCO DE GALICIA Y BUENOS AIRES
7
<PAGE>
[LOGO] The Argentina Fund, Inc.
Investment Portfolio as of April 30, 1998
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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SHORT TERM NOTES 3.4%
<S> <C> <C>
Federal Home Loan Mortgage Corp., 5.45%, 5/1/98** (Cost $5,088,000) ........................ 5,088,000 5,088,000
----------
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PREFERRED STOCKS 2.2%
Shares
----------
COMMUNICATIONS
Telephone/Communications
Nortel Inversora "A" (ADR) (b) ............................................................. 52,691 645,465
Nortel Inversora "B" (ADR) ................................................................. 88,685 2,638,379
----------
TOTAL PREFERRED STOCKS (Cost $1,673,504) 3,283,844
----------
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COMMON STOCKS 94.4%
CONSUMER DISCRETIONARY 0.2%
Specialty Retail
Grimoldi S.A. "B"* (b) .................................................................... 103,822 264,784
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CONSUMER STAPLES 12.2%
Alcohol & Tobacco 6.0%
Companhia Cervejaria Brahma (ADR) (c) ...................................................... 137,500 1,813,281
Massalin Particulares S.A .................................................................. 574,972 2,990,288
Nobleza Piccardo S.A. (b) .................................................................. 838,919 4,237,155
----------
9,040,724
----------
Food & Beverage 6.2%
Bagley y Cia Ltd. S.A. "B" ................................................................. 1,418,627 2,837,665
CINBA S.A .................................................................................. 254,323 325,580
Cresud S.A. Comercial* ..................................................................... 562,120 1,124,403
Quilmes Industrial S.A ..................................................................... 549,250 4,778,475
Quimica Estrella "B"* ...................................................................... 201,100 263,479
----------
9,329,602
----------
COMMUNICATIONS 18.5%
Telephone/Communications
Telecom Argentina S.A. "B" (ADR) ........................................................... 461,232 16,604,352
Telefonica de Argentina S.A. "B" ........................................................... 2,498,000 9,618,695
Telefonica de Argentina S.A. "B" (ADR) ..................................................... 40,000 1,542,500
----------
27,765,547
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</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
[logo] The Argentina Fund, Inc.
Investemnt Portfolio
<TABLE>
<CAPTION>
=====================================================================================
Market
Shares Value ($)
- -------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL 14.4%
Banks 8.8%
Banco Frances del Rio de la Plata .......... 382,266 3,708,518
Banco Itau S.A. (pfd.) (c) ................. 2,660,000 1,790,933
Banco Rio de la Plata S.A. (ADR)* .......... 204,000 2,805,000
Banco de Galicia y Buenos Aires "B" ........ 812,594 4,916,907
----------
13,221,358
----------
Other Financial Companies 0.7%
BI S.A. "A" (b) ............................ 1,000,000 1,080,000
Real Estate 4.9% ----------
Inversiones y Representaciones S.A. (GDR)... 189,886 7,381,818
----------
DURABLES 1.4%
Automobiles
Mirgor Sacifia "C"* (b) .................... 41,000 1,148,166
Mirgor Sacifia "C" (ADR)* .................. 350,000 980,000
----------
2,128,166
----------
MANUFACTURING 1.0%
Chemicals
Atanor S.A. "D"* ........................... 1,272,444 1,488,975
----------
ENERGY 23.0%
Oil & Gas Production 6.1%
Perez Companc S.A. "B" ..................... 987,872 5,937,972
Petroleo Brasileiro S.A. (ADR) (c) ......... 130,000 3,261,050
----------
9,199,022
----------
Oil Companies 16.9%
Astra CAPSA ................................ 1,290,630 2,297,655
YPF S.A. "D" (ADR) ......................... 660,000 23,017,500
----------
25,315,155
----------
METALS & MINERALS 7.8%
Steel & Metals
Dalmine Siderca ............................ 2,320,505 5,593,228
Siderar SAIC "A" ........................... 1,263,541 6,129,063
----------
11,722,291
----------
CONSTRUCTION 3.1%
Building Materials 3.0%
Loma Negra Cia. S.A.* (b) .................. 150,624 4,518,720
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
(logo) The Argentina Fund, Inc.
Investment Portfolio
<TABLE>
<CAPTION>
===========================================================================================
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Miscellaneous 0.1%
Guillermo Decker S.A. "B"* (b) ............................ 262,240 157,367
-----------
TRANSPORTATION 0.9%
Airlines
Linea Aerea Nacional de Chile (ADR)* (d) .................. 95,000 1,294,375
-----------
UTILITIES 11.9%
Electric Utilities 4.6%
Capex S.A. "A" ............................................ 635,700 3,477,783
Central Costanera "B" ..................................... 145,824 488,581
Central Puerto S.A. "B" ................................... 124,696 387,861
Electricidad Argentina S.A. "A" (ADR)* (b) ................ 77,143 1,350,003
Enersis S.A. (ADR)* (d) ................................... 40,000 1,177,500
-----------
6,881,728
-----------
Natural Gas Distribution 7.3%
MetroGas S.A. "B" (ADR) ................................... 572,675 5,690,958
Transportadora de Gas del Sur "B" ......................... 2,256,215 5,302,874
-----------
10,993,832
-----------
TOTAL COMMON STOCKS (Cost $108,517,463) ................... 141,783,464
-----------
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TOTAL INVESTMENT PORTFOLIO-- 100.0% (Cost $115,278,967) (a) 150,155,308
===========
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</TABLE>
NOTES TO INVESTMENT PORTFOLIO
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate. (Unaudited)
(a) The cost for federal income tax purposes was $115,410,721. At April 30,
1998, net unrealized appreciation for all securities based on tax cost was
$34,744,587. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $40,375,997, and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$5,631,410.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $13,401,660 (8.93% of net assets).
Their values have been estimated by the Valuation Committee in the absence
of readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at April 30, 1998 aggregated $13,683,050. These securities may
also have certain restrictions as to resale.
(c) Investments in Brazilian companies aggregating $6,865,264 (4.57% of net
assets).
(d) Investments in Chilean companies aggregating $2,471,875 (1.65% of net
assets).
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
================================================================================
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at market (identified cost $115,278,967) ................... $ 150,155,308
Cash .................................................................... 1,560
Receivable for investments sold ......................................... 220,139
Dividends and interest receivable ....................................... 91,479
Other assets ............................................................ 1,341
-------------
Total assets ............................................................ 150,469,827
LIABILITIES
Payable for investments purchased ....................................... 175,000
Accrued management fee .................................................. 135,378
Other payables and accrued expenses ..................................... 108,642
-------------
Total liabilities ....................................................... 419,020
-------------
Net assets, at market value ............................................. $ 150,050,807
=============
NET ASSETS
Net assets consist of:
Undistributed net investment income ..................................... 1,241,635
Net unrealized appreciation (depreciation) from:
Investments .......................................................... 34,876,341
Foreign currency related transactions ................................ (62)
Accumulated net realized gain (loss) .................................... (126,481)
Paid-in capital ......................................................... 114,059,374
-------------
Net assets, at market value ............................................. $ 150,050,807
=============
NET ASSET VALUE per share ($150,050,807 / 9,273,029 shares of common stock
issued and outstanding, $.01 par value, 100,000,000 shares authorized) $16.18
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
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11
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
================================================================================
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STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
<S> <C>
Dividends (net of foreign taxes withheld of $17,296) .................... $ 3,437,800
Interest ................................................................ 106,443
------------
3,544,243
------------
Expenses:
Management fee .......................................................... 774,285
Custodian and accounting fees ........................................... 152,900
Directors' fees and expenses ............................................ 17,244
Reports to shareholders ................................................. 7,170
Auditing ................................................................ 33,181
Services to shareholders ................................................ 16,164
Legal ................................................................... 6,348
Other ................................................................... 13,527
------------
1,020,819
------------
Net investment income ................................................... 2,523,424
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ............................................................. (70,510)
Foreign currency related transactions ................................... (7,866)
------------
(78,376)
------------
Net unrealized appreciation (depreciation) during the period on:
Investments ............................................................. 14,521,539
Foreign currency related transactions ................................... 204
------------
14,521,743
------------
Net gain (loss) on investment transactions .............................. 14,443,367
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... $ 16,966,791
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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12
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
================================================================================
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS 1998 1997
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................................... $ 2,523,424 $ 2,773,344
Net realized gain (loss) from investment transactions ............... (78,376) 4,588,584
Net unrealized appreciation (depreciation) on investment transactions
during the period ................................................ 14,521,743 13,315,259
------------- -------------
Net increase (decrease) in net assets resulting from operations ..... 16,966,791 20,677,187
------------- -------------
Distributions to shareholders from net investment income ............ (2,316,679) (3,055,188)
------------- -------------
Net asset value of shares issued to shareholders in reinvestment
of distributions ................................................. 73,375 109,275
------------- -------------
INCREASE (DECREASE) IN NET ASSETS ................................... 14,723,487 17,731,274
Net assets at beginning of period ................................... 135,327,320 117,596,046
============= =============
NET ASSETS AT END OF PERIOD (including undistributed net investment
income of $1,241,635 and $1,034,890, respectively) ................ $ 150,050,807 $ 135,327,320
============= =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ........................... 9,266,717 9,258,146
Shares issued to shareholders in reinvestment of distributions ...... 6,312 8,571
------------- -------------
Shares outstanding at end of period ................................. 9,273,029 9,266,717
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- -------------------------------------------------------------------------------
13
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Highlights
================================================================================
- --------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS AND MARKET PRICE DATA.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .......... $ 14.60 $ 12.70 $ 10.27 $ 14.53 $ 12.69 $ 9.35
--------- --------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (a) ................. .27 .30 .26 .31 .21 .05
Net realized and unrealized gain (loss)
on investment transactions............... 1.56 1.93 2.50 (3.84) 1.83 3.43
--------- --------- --------- --------- --------- ---------
Total from investment operations .............. 1.83 2.23 2.76 (3.53) 2.04 3.48
--------- --------- --------- --------- --------- ---------
Less distributions from:
Net investment income ....................... (.25) (.33) (.33) (.27) (.14) (.05)
Net realized gains on investment transactions -- -- -- (.46) (.02) (.09)
--------- --------- --------- --------- --------- ---------
Total distributions ........................... (.25) (.33) (.33) (.73) (.16) (.14)
--------- --------- --------- --------- --------- ---------
Antidilution resulting from offering of .......
second tranche............................... -- -- -- -- .04 --
--------- --------- --------- --------- --------- ---------
Second tranche offering costs ................. -- -- -- -- (.08) --
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ................ $ 16.18 $ 14.60 $ 12.70 $ 10.27 $ 14.53 $ 12.69
========= ========= ========= ========= ========= =========
Market value, end of period ................... $ 13.19 $ 12.31 $ 11.50 $ 10.13 $ 14.63 $ 14.00
========= ========= ========= ========= ========= =========
TOTAL RETURN
Per share market value (%) .................... 9.41** 9.84 16.52 (26.48) 5.45 47.41
Per share net asset value (%) (b) ............. 13.21** 17.94 26.86 (24.94) 15.58 37.55
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ........ 150 135 118 95 134 74
Ratio of operating expenses to average
net assets (%)............................... 1.45* 1.71 1.90 1.98 1.87 2.37
Ratio of net investment income (loss) to
average net assets (%)....................... 3.59* 1.96 2.11 2.71 1.48 .48
Portfolio turnover rate (%) ................... 11.9* 32.0 19.0 25.0 16.7 32.5
Average commission rate paid (c) .............. $ .0108 $ .0212 $ .0207 -- -- --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total investment returns reflect changes in net asset value per share
during each period and assume that dividends and capital gains
distributions, if any, were reinvested. These percentages are not an
indication of the performance of a shareholder's investment in the Fund
based on market price.
(c) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after October 31, 1996.
* Annualized
** Not annualized
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(logo) The Argentina Fund, Inc.
Notes to Financial Statements
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A. SIGNIFICANT ACCOUNTING POLICIES
The Argentina Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, closed-end management investment
company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the mean
between the most recent bid and asked quotations. If there are no such bid and
asked quotations the most recent bid quotation shall be used.
Portfolio debt securities other than money market instruments with an original
maturity over sixty days are valued by pricing agents approved by the officers
of the Fund, which quotations reflect broker/dealer-supplied valuations and
electronic data processing techniques. If the pricing agents are unable to
provide such quotations, the most recent bid quotation supplied by a bona fide
market maker shall be used. Money market instruments purchased with an original
maturity of sixty days or less are valued at amortized cost. All other
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the daily rates of exchange prevailing
on the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in the foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains and losses from investments.
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(logo) The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
Net realized gain (loss) from foreign currency related transactions includes
gains and losses between trade and settlement dates on securities transactions,
gains and losses arising from the sales of foreign currency, and gains and
losses between the ex and payment dates on dividends, interest, and foreign
withholding taxes. At April 30, 1998, the exchange rate for the Argentine peso
was U.S. $1 to .99986 Argentine peso.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the six months
ended April 30, 1998, the Fund utilized forward contracts as a hedge in
connection with portfolio purchases and sales of securities denominated in
foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
TAXATION. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment
companies, and to distribute substantially all of its investment company taxable
income to its shareholders. The Fund paid no U.S. federal income taxes, and no
federal income tax provision was required. Under Argentine tax laws, the Fund is
not subject to withholding taxes on dividends.
DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is made
annually. During any particular year, net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed, and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in foreign denominated securities,
passive foreign investment companies, and certain securities sold at a loss. As
a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
16
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(logo) The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
OTHER. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are accreted for both tax and financial reporting purposes.
B. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $11,984,230 and
$8,277,005, respectively.
C. RELATED PARTIES
Under the Investment Advisory, Management and Administration Agreement between
the Fund and Scudder, Stevens & Clark, Inc. ("Scudder" or the "Manager") which
was in effect prior to November 1, 1997 (the "Agreement"), the Fund agreed to
pay the Manager an annual rate of 1.20% of the Fund's average weekly net assets.
Effective November 1, 1997, the Fund, as approved by the Fund's Board of
Directors, adopted a new Investment Advisory, Management and Administration
Agreement (the "Investment Management Agreement") with Scudder. Under the
Investment Management Agreement the Manager directs the investments of the Fund
in accordance with its investment objective, policies, and restrictions. The
Manager determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into the Fund. In addition to
portfolio management services, the Manager provides certain administrative
services in accordance with the Investment Management Agreement. The management
fee payable under the Investment Management Agreement is equal to an annual rate
of 1.10% of the Fund's average weekly assets.
Effective December 31, 1997, Scudder and The Zurich Insurance Company
("Zurich"), an international insurance and financial services organization,
formed a new global investment organization by combining Scudder's business with
that of Zurich's subsidiary, Zurich Kemper Investments, Inc. As a result of the
transaction, Scudder changed its name to Scudder Kemper Investments, Inc.
("Scudder Kemper"). The transaction between Scudder and Zurich resulted in the
termination of the Fund's Investment Management Agreement with Scudder. However,
a new Investment Advisory, Management and Administration Agreement (the
"Management Agreement") between the Fund and Scudder Kemper was approved by the
Fund's Board of Directors and by the Fund's Shareholders. The Management
Agreement, which was effective December 31, 1997, is the same in all material
respects as the corresponding previous Investment Management Agreement, except
that Scudder Kemper is the new investment adviser to the Fund. For the six
months ended April 30, 1998, the fees pursuant to these agreements aggregated
$774,285.
The Manager has a Sub-Advisory Contract (the "Sub-Advisory Contract") with
Sociedad General de Negocios y Valores S.A. (the "Argentine Adviser") whereby
the Argentine Adviser provides such information, investment recommendations,
advice and assistance as the Manager may from time to time reasonably request.
Effective November 1, 1997, the Manager agreed to pay the Argentine Adviser a
monthly fee, equal to an annualized rate of 0.16% of the Fund's average weekly
net assets.
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(logo) The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Manager, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended April 30, 1998, the amount charged to the Fund by SFAC aggregated $50,906,
of which $8,838 was unpaid at April 30, 1998.
The Fund pays each Director not affiliated with the Manager or the Argentine
Adviser an annual retainer, plus specified amounts for attended board and
committee meetings. For the six months ended April 30, 1998, Directors' fees and
expenses aggregated $17,244.
D. FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN ARGENTINA
Investing in Argentina may involve considerations not typically associated with
investing in securities issued by U.S. companies, such as more volatile prices
and less liquid securities.
Foreign investment in Argentina is regulated by the Foreign Investment Law and
the Economic Emergency Law. In general, there are currently no restrictions on
the movement of funds into and out of Argentina and repatriation of income and
capital gains by the Fund is permitted at any time. Foreign enterprises may
obtain domestic credit with the same rights and under the same conditions as
domestic enterprises. Generally, there are few restrictions on the Fund's
ability, as a foreigner, to invest in Argentine companies. There can be no
guarantee, however, that restrictions would not be imposed in the future if
governmental authorities determine that financial and economic circumstances
justify such restrictions.
18
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(logo) The Argentina Fund, Inc.
Report of Independent Accpuntants
================================================================================
TO THE BOARD OF DIRECTORS AND THE SHAREHOLDERS OF THE ARGENTINA FUND, INC.:
We have audited the accompanying statement of assets and liabilities of The
Argentina Fund, Inc. including the investment portfolio, as of April 30, 1998,
the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and for the
year ended October 31, 1997, and the financial highlights for the six months
ended April 30, 1998 and for each of the five years in the period ended October
31, 1997. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Argentina Fund, Inc. as of April 30, 1998, the results of its operations for the
six months then ended, the changes in its net assets for the six months then
ended and for the year ended October 31, 1997, and the financial highlights for
the six months ended April 30, 1998 and for each of the five years in the period
ended October 31, 1997, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
June 5, 1998
19
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(logo) The Argentina Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
================================================================================
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The Plan
The Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers
you an automatic way to reinvest your dividends and capital gains distributions
in shares of the Fund. The Plan also provides for cash investments in Fund
shares of $100 to $3,000 semiannually through State Street Bank and Trust
Company, the Plan Agent.
Automatic Participation
Each shareholder of record is automatically a participant in the Plan
unless the shareholder has instructed the Plan Agent in writing otherwise. Such
a notice must be received by the Plan Agent not less than 10 days prior to the
record date for a dividend or distribution in order to be effective with respect
to that dividend or distribution. A notice which is not received by that time
will be effective only with respect to subsequent dividends and distributions.
Shareholders who do not participate in the Plan will receive all distributions
in cash paid by check in dollars mailed directly to the shareholder by State
Street Bank and Trust Company, as dividend paying agent.
Shares Held by a Nominee
If your shares are held in the name of a brokerage firm, bank, or other
nominee as the shareholder of record, please consult your nominee (or any
successor nominee) to determine whether it is participating in the Plan on your
behalf. Many nominees are generally authorized to receive cash dividends unless
they are specifically instructed by a client to reinvest. If you would like your
nominee to participate in the Plan on your behalf, you should give your nominee
instructions to that effect as soon as possible.
Pricing of Dividends and Distributions
If the market price per share on the payment date for the dividend or
distribution or, if that date is not a New York Stock Exchange trading date, the
next preceding trading date (the "Valuation Date") equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants at
the greater of the following on the Valuation Date: (a) net asset value, or (b)
95% of the market price. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan are considered to have elected to
receive shares of stock from the Fund, valued at market price, on the Valuation
Date. In either case, for Federal income tax purposes, the shareholder receives
a distribution equal to the market value on Valuation Date of new shares issued.
State and local taxes may also apply. If the Fund should declare an income
dividend or net capital gains distribution payable only in cash, the Plan Agent
will, as agent for the participants, buy Fund shares in the open market, on the
New York Stock Exchange or elsewhere, for the participants' account on, or
shortly after, the payment date.
Voluntary Cash Purchases
Participants in the Plan have the option of making additional cash payments
to the Plan Agent, semiannually, in any amount from $100 to $3,000, for
investment in the Fund's shares. The Plan Agent will use all such monies
received from participants to purchase Fund shares in the open market on or
about February 15 and August 15. Any voluntary cash payments received more than
30 days prior to these dates will be returned by the Plan Agent, and interest
will not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately ten days before February 15, or
20
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(logo) The Argentina Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
================================================================================
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August 15, as the case may be. A participant may withdraw a voluntary cash
payment by written notice, if the notice is received by the Plan Agent notless
than 48 hours before such payment is to be invested.
Participant Plan Accounts
The Plan Agent maintains all participant accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by participants for personal and tax records. Shares in the account of
each plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each participant will be able to vote those
shares purchased pursuant to the Plan at a shareholder meeting or by proxy.
No Service Fee to Reinvest
There is no service fee charged to participants for reinvesting dividends or
distributions from net realized capital gains. The Plan Agent's fees for the
handling of the reinvestment of dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage commissions with respect to
shares issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, participants will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of any
dividends or capital gains distributions payable only in cash.
Costs for Cash Purchases
With respect to purchases of Fund shares from voluntary cash payments, the
Plan Agent will charge $0.75 for each such purchase for a participant. Each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases of Fund shares in connection
with voluntary cash payments made by the participant.
Brokerage charges for purchasing small amounts of stock for individual
accounts through the Plan are expected to be less than the usual brokerage
charges for such transactions, because the Plan Agent will be purchasing stock
for all participants in blocks and pro-rating the lower commission thus
attainable.
Amendment or Termination
The Fund and the Plan Agent each reserve the right to terminate the Plan.
Notice of the termination will be sent to the participants of the Plan at least
30 days before the record date for a dividend or distribution. The Plan also may
be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by giving at least 30 days' written notice to participants in
the Plan.
A participant may terminate his account under the Plan by written notice to
the Plan Agent. If the written notice is received 10 days before the record day
of any distribution, it will be effective immediately. If received after that
date, it will be effective as soon as possible after the reinvestment of the
dividend or distribution.
If a participant elects to sell his shares before the Plan is terminated, the
Plan Agent will deduct a $2.50 fee plus brokerage commissions from the sale
transaction.
Plan Agent Address and Telephone Number
You may obtain more detailed information by requesting a copy of the Plan
from the Plan Agent. All correspondence (including notifications) should be
directed to: The Argentina Fund, Inc. Dividend Reinvestment and Cash Purchase
Plan, c/o State Street Bank and Trust Company, P.O. Box 8209, Boston, MA
02266-8209, 1-800-426-5523.
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(logo) The Argentina Fund, Inc.
Investment Manager
================================================================================
- --------------------------------------------------------------------------------
The investment manager of The Argentina Fund, Inc. (the "Fund") is Scudder
Kemper Investments, Inc., one of the most experienced investment management and
investment counsel firms in the United States. Established in 1919, the firm
provides investment counsel for individuals, investment companies and
institutions. Scudder has offices throughout the United States and subsidiaries
in London and in Tokyo.
Scudder has been a leader in international investment management for over 40
years. It manages Scudder International Fund, which was initially incorporated
in Canada in 1953 as the first foreign investment company registered with the
U.S. Securities and Exchange Commission. Scudder's investment company clients
include thirteen other open-end investment companies which invest primarily in
foreign securities.
In addition to the Fund, Scudder also manages the assets of six other
closed-end investment companies that invest in foreign securities: The Brazil
Fund, The Korea Fund, Scudder Global High Income Fund, Scudder New Asia Fund,
Scudder New Europe Fund and Scudder Spain and Portugal Fund are traded on the
New York Stock Exchange.
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(logo) The Argentina Fund, Inc.
Directors and Officers
================================================================================
- --------------------------------------------------------------------------------
NICHOLAS BRATT*
Chairman of the Board, President, and Director
JAVIER A. GONZALEZ FRAGA
Director
RONALDO A. DA FROTA NOGUEIRA
Director
MR. WILSON NOLEN
Director
DR. SUSAN KAUFMAN PURCELL
Director
JOSE E. ROHM
Honorary Director
JUDITH A. HANNAWAY*
Vice President
JERARD K. HARTMAN*
Vice President
LUIS R. LUIS*
Vice President
BRUCE H. GOLDFARB*
Vice President and Assistant Secretary
PAUL J. ELMLINGER*
Vice President and Assistant Secretary
THOMAS F. McDONOUGH*
Vice President, Treasurer and Secretary
KATHRYN L. QUIRK*
Vice President and Assistant Secretary
JOHN R. HEBBLE*
Assistant Treasurer
CAROLINE PEARSON*
Assistant Secretary
* Scudder Kemper Investments, Inc.
23
