(logo)
The Argentina Fund, Inc.
Semiannual Report
April 30, 1999
A closed-end investment company
seeking long-term capital appreciation
through investments primarily in the
equity securities of Argentine issuers.
<PAGE>
(logo) The Argentina Fund, Inc.
================================================================================
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
================================================================================
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
EquiServe
Investor Relations Department
P.O. Box 8200
Boston, MA 02266-8200
Legal Counsel
Willkie Farr & Gallagher
Custodian
Brown Brothers Harriman & Co.
Independent Accountants
PricewaterhouseCoopers LLP
New York Stock Exchange Symbol -- AF
Contents
================================================================================
In Brief ............................ 3
Letter to Shareholder ............... 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
Stockholder Meeting Results..........20
Dividend Reinvestment and
Cash Purchase Plan ...............21
Investment Manager...................23
Directors and Officers...............24
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
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
2
<PAGE>
(logo)The Argentina Fund, Inc.
In Brief
================================================================================
o Although improved investor sentiment sparked a rally in stock prices during
the latter half of the reporting period, the market's rise does not
necessarily reflect the economic difficulties that still need to be addressed.
o The Fund continued to focus on companies whose revenues tend to remain
relatively stable amidst economic fluctuations, such as those in the energy
and communications sectors.
(logo)Letter to Shareholders
================================================================================
Dear Shareholders:
Stocks in Argentina have endured a period of high volatility over the past six
months. After rising sharply in November and December as the global financial
markets recovered from the shocks of early fall, Latin markets rapidly retraced
their gains in early January once it became evident that Brazil would devalue
its currency. Since then, equities have surged as optimism has increased
regarding Brazil's ability to withstand the inflationary effects of its
devaluation. In addition, interest rates in Brazil have fallen sharply, taking
pressure off the entire region. With an improving economic scenario in the
Southern Cone, the attractive valuations of leading Argentine companies led to
renewed investor interest in the final three months of the period. Against this
backdrop, the Argentina Fund's shares listed on the New York Stock Exchange
closed at $12.50 per share on April 30, representing a return of 37.06% for the
six-month period. The Fund's net asset value rose 22.89% over the same period,
trailing the 27.27% return of its unmanaged benchmark, the IFC Argentina Global
Total Return Index. The Fund's market price reflected a 17.55% discount to NAV
as of April 30.
Market Environment
Despite the recent recovery in stock prices, Argentina's economy continues to be
constrained by the recessionary environment in Chile and Brazil, the ongoing
weakness in commodity prices, and the absence of domestic credit expansion.
These problems have resulted in negative economic growth over the last two
quarters, and the country is not projected to pull out of its recession until at
least the third quarter of 1999. Given Argentina's slowdown in lending,
continued high unemployment, and lack of progress on labor and tax reform, the
country's anemic growth has brought the economic policies of the government back
into focus. Much of the discussion has centered on the currency board system and
the peso's peg to the U.S. dollar, since the peso has strengthened significantly
against the currencies of Brazil and Chile following their recent devaluations.
While we agree with the assessment of many economists that a devaluation is not
an effective solution for Argentina's ills, it is clear that the government will
have to forcefully address the country's economic woes in order to withstand
increasing pressures on the currency.
Unfortunately, many of the factors necessary for a resumption of economic growth
are outside of Argentina's control. Due to the closer ties that have developed
with Chile and Brazil following the Mercosur Trade Agreement, the economy has
become increasingly reliant on economic recovery in those two countries. While
we believe that such a rebound may be underway, Brazil's economy remains in a
tenuous state. Argentina's high level of dollar-denominated debt on both the
sovereign and corporate levels also continues to be a problem, and higher rates
in the United States have an immediate impact on both the economy and the
financial markets. In addition, an unforeseen consequence of foreign
institutions acquiring dominant local banks has been that credit expansion is
3
<PAGE>
(logo)The Argentina Fund, Inc.
Letter to Shareholders
===============================================================================
increasingly linked to global, as well as domestic concerns. Finally, ongoing
global growth leading to a sustained recovery in commodity prices will be
necessary for growth to resume in Argentina.
With presidential elections coming up in October, market participants are also
concerned about the effects the political transition will have on the
Convertibility Plan. Such fears are exacerbated by the fact that elections have
often been a source of instability in Latin America. This, combined with the
country's economic situation, has increased concerns about the government's
commitment to maintaining the peg to the dollar. While there appears to be no
difference in opinion among presidential candidates on the need to keep the
currency board regime in place, discussions of modifications to the
Convertibility Law, including the "dollarization" of the economy, have arisen.
Any uncertainty on this front will result in ongoing volatility for the
country's financial markets as the year progresses.
Beyond these economic and political developments, the most significant event in
the stock market recently was the cash tender offer made by Repsol (of Spain)
for YPF S.A. shares at a price of $44.78, a 35% premium to the company's market
value on the day of the announcement. The Fund's top holding, YPF has risen
sharply on investors' anticipation that the offer will prove successful. While
much of the freed-up cash will not be reinvested in Argentine shares, local
investors, pension funds, and The Argentina Fund will be looking to reinvest in
the Argentine market. There is evidence that the new liquidity will have a
positive impact on share prices, but at this juncture it is difficult to
ascertain what the absence of YPF will mean for the Argentine stock market.
Although it may result in a deeper market by providing more liquidity to
existing shares, it also could result in lower overall volume on the local
exchange. In the short term, however, the tender offer has had a decidedly
positive impact on the Fund.
Portfolio Strategy
The Argentina Fund remains committed to investing in well-managed companies with
significant comparative advantages derived from their franchise value, pricing
power, dollar-linked revenues, or emphasis on the natural resource base of the
country. We believe that our focus on companies with strong cash flow and
healthy balance sheets helps minimize the risks associated with investing in the
emerging markets. As the universe of companies that possess these
characteristics tends to remain stable over time, the Fund's portfolio turnover
is low. Our principal sector weightings continue to be in energy and
communications, where revenues are less dependent on the external environment.
During the period, we added to our holdings in the oil and gas sectors,
primarily YPF and Petrobras, due to their improved outlook and the positive
impact of rising energy prices. Our holding in Banco de Galicia y Buenos Aires,
the last domestically owned commercial bank, was increased, and we initiated a
position in Compania Cervecerias Unidas, the largest Chilean beer manufacturer
with extensive operations in Argentina. Valuation concerns prompted us to sell
our position in Astra and reduce our holdings in Banco Rio de Plata. In
addition, we sold our private placement in Electricidad Argentina S.A., an
electric distribution company, due to a lack of liquidity and opportunities to
deploy the cash elsewhere.
Soft Dollar Disclosure
The Board of Directors of the Fund has approved a soft dollar policy that
authorizes the Adviser to enter into arrangements with certain brokers or
dealers. Pursuant to the policy, the Adviser may, when it can be done
consistently with its policy of obtaining best execution, direct a portion of
the Fund's brokerage transactions to such brokers or dealers in exchange for
research services within the meaning of Section 28(e) of the Securities Exchange
Act of 1934. Research services obtained by the Adviser may, in appropriate
4
<PAGE>
(logo)The Argentina Fund, Inc.
Letter to Shareholders
===============================================================================
circumstances, be used for the benefit of other clients of the Adviser as well
as the Fund. As permitted by Section 28(e), the Adviser is authorized when
placing portfolio transactions for the Fund to pay a brokerage commission in
excess of that which another broker or dealer might charge for executing the
same transaction. Therefore, the Fund may pay higher brokerage rates than could
be obtained if the Adviser were not entering into soft dollar arrangements.
Year 2000 Issue
Like other registered investment companies and business organizations worldwide,
the Fund could be adversely affected if computer systems upon which the Fund
relies, which primarily include those used by the Adviser, its affiliates or
other service providers, are unable to correctly process date-related
information on or after January 1, 2000. This risk is commonly called the Year
2000 Issue (Y2K). 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 Adviser commenced a review of the Year 2000 Issue
and is taking steps it believes are reasonably designed to address the Year 2000
Issue, although there can be no assurances that these 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. The foregoing is a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.
Outlook
Despite the difficulties in Argentina, we remain confident in the country's
long-term economic potential. We will continue to pursue a strategy that
incorporates intensive fundamental analysis and an extended investment horizon
in order to find the best companies in the region. While it is likely that
volatility will continue to play a major role in Latin America's stock markets
in the months ahead, we believe that our strategy of investing in companies that
are able to prosper in any environment will continue to benefit shareholders of
the Fund.
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, 1999
- -------------------------------------------------------------------------------
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 47.06 -- 37.69 -- 45.25 --
One Year .04 .04 -1.11 -1.11 -1.58 -1.58
Three Year 9.50 3.07 27.80 8.52 30.48 9.27
Five Year 2.11 .42 30.66 5.49 40.12 6.98
Life of Fund* 29.27 3.47 71.35 7.42 68.35 7.19
- -------------------------------------------------------------------------------
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> <C>
1992* 1993 1994 1995 1996 1997 1998 1999
---------------------------------------------------------------
Net Asset Value... $12.68 $ 9.64 $13.98 $10.60 $13.12 $14.98 $16.18 $15.16
Income Dividends.. $ .06 $ .05 $ .14 $ .27 $ .33 $ .33 $ .25 $ .45
Capital Gains
Distributions..... $ -- $ .09 $ .02 $ .46 $ -- $ -- $ -- $ --
Total Return (%).. 13.81 -23.01 46.38 -19.48 26.97 17.13 10.33 -1.11
</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.$.
* The Fund commenced operations on October 22, 1991. Index return begins on
October 31, 1991
Past results are not necessarily indicative of future performance of the
fund.
6
<PAGE>
[logo] The Argentina Fund, Inc.
Portfolio Summary as of April 30, 1999
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Diversification
Equity Securities 97%
Cash Equivalents 3%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
- --------------------------------------------------------------------------------
Sectors Sector breakdown of the Fund's equity securities
Energy 33%
Communications 23%
Financial 14%
Consumer Staples 11%
Metals & Minerals 7%
Utilities 7%
Construction 3%
Transportation 1%
Other 1%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
- --------------------------------------------------------------------------------
Ten Largest Equity Holdings (72% of Portfolio)
1. YPF S.A.
2. Telecom Argentina S.A.
3. Telefonica de Argentina S.A.
4. Perez Companc S.A.
5. Inversiones y Representaciones S.A.
6. Banco de Galicia y Buenos Aires
7. Quilmes Industrial S.A.
8. Loma Negra Cia. S.A.
9. Transportadora de Gas del Sur
10. Siderar SAIC
7
<PAGE>
(logo) The Argentina Fund, Inc.
Investment Portfolio as of April 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 3.1%
Repurchase Agreement with Donaldson, Lufkin and Jenrette dated 4/30/1999 at 4.87%,
to be repurchased at $4,395,783 on 5/3/1999, collateralized by a $4,404,000
U.S. Treasury Note, 3.875%, 1/15/2009 (Cost $4,394,000) .......................... 4,394,000 4,394,000
---------
- -----------------------------------------------------------------------------------------------------------------
Preferred Stocks 1.4%
Shares
------
Communications
Telephone/Communications
Nortel Inversora "A" (ADS) (b) ..................................................... 47,423 512,643
Nortel Inversora "B" (ADR) ......................................................... 88,685 1,441,131
---------
Total Preferred Stocks (Cost $1,639,188) ........................................... 1,953,774
---------
- -----------------------------------------------------------------------------------------------------------------
Common Stocks 95.5%
Consumer Discretionary 0.1%
Specialty Retail
Grimoldi S.A. "B"* (b) ............................................................. 103,822 145,410
---------
Consumer Staples 10.6%
Alcohol & Tobacco 5.7%
Companhia Cervejaria Brahma (ADR) (c) .............................................. 177,500 1,730,625
Massalin Particulares S.A. (b) ..................................................... 574,972 3,566,289
Nobleza Piccardo S.A ............................................................... 850,919 2,809,184
---------
8,106,098
---------
Food & Beverage 4.9%
CINBA S.A .......................................................................... 254,323 178,099
Companhia Cervecerias Unidas S.A. (ADR) (d) ........................................ 18,000 442,125
Cresud S.A. Comercial .............................................................. 600,217 678,523
Quilmes Industrial S.A ............................................................. 569,250 5,123,250
Quilmes Industrial S.A. (ADR) ...................................................... 20,000 218,750
Quimica Estrella "B"* (b) .......................................................... 227,160 274,976
---------
6,915,723
---------
Communications 21.0%
Telephone/Communications
Telecom Argentina S.A. "B" (ADR) ................................................... 461,232 15,912,504
Telefonica de Argentina S.A. "B" ................................................... 2,698,000 10,040,677
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
(logo) The Argentina Fund, Inc.
Investment Portfolio
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Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Telefonica de Argentina S.A. "B" (ADR) .............................................................. 100,000 3,737,500
----------
29,690,681
----------
Financial 13.4%
Banks 8.3%
Banco de Galicia y Buenos Aires "B" ................................................................. 985,727 5,670,255
Banco Frances del Rio de la Plata ................................................................... 382,266 3,231,473
Banco Itau S.A. (pfd.) (c) .......................................................................... 3,360,000 1,780,132
Banco Rio de la Plata S.A. (ADR)* ................................................................... 77,000 996,189
----------
11,678,049
----------
Other Financial Companies 0.8%
BI S.A. "A" (b) ..................................................................................... 1,000,000 1,169,000
----------
Real Estate 4.3%
Inversiones y Representaciones S.A. (GDR) ........................................................... 180,647 6,051,675
----------
Durables 0.5%
Automobiles
Mirgor Sacifia "C" (b) .............................................................................. 41,000 391,300
Mirgor Sacifia "C" (ADR) ............................................................................ 350,000 301,000
----------
692,300
----------
Manufacturing 0.5%
Chemicals
Atanor S.A. "D"* .................................................................................... 992,289 694,887
----------
Energy 32.2%
Oil & Gas Production 7.6%
Perez Companc S.A. "B" .............................................................................. 1,712,872 10,624,162
----------
Oil Companies 24.6%
Petroleo Brasileiro S.A. (ADR) (c) .................................................................. 130,000 2,071,550
Petroleo Brasileiro S.A. (pfd.) (c) ................................................................. 12,000,000 1,943,408
YPF S.A. "D" (ADR) .................................................................................. 730,000 30,660,000
----------
34,674,958
----------
Metals & Minerals 6.4%
Steel & Metals
Acindar ............................................................................................. 480,000 715,493
Dalmine Siderca ..................................................................................... 2,420,505 4,164,976
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
(logo) The Argentina Fund, Inc.
Investment Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Market
Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Siderar SAIC "A" .................................................................................... 1,360,361 4,191,630
----------
9,072,099
----------
Construction 3.2%
Building Materials
Loma Negra Cia. S.A. (b) ............................................................................ 150,624 4,518,720
-----------
Transportation 0.6%
Airlines
Linea Aerea Nacional de Chile (ADR) (d) ............................................................. 115,200 878,400
-----------
Utilities 7.0%
Electric Utilities 0.9%
Capex S.A. "A"* ..................................................................................... 272,700 1,214,013
Empresa Nacional de Electricidad (ADR) (d) .......................................................... 10,000 140,000
-----------
1,354,013
-----------
Natural Gas Distribution 6.1%
Gas Natural Ban S.A ................................................................................. 615,184 1,181,638
MetroGas S.A. "B" (ADR) ............................................................................. 377,475 3,161,353
Transportadora de Gas del Sur "B" ................................................................... 2,256,215 4,311,138
----------
8,654,129
----------
Total Common Stocks (Cost $105,912,532) 134,920,304
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $111,945,720) (a) ........................................ 141,268,078
===========
- ---------------------------------------------------------------------------------------------------------------------------------
Notes to Investment Portfolio
* Non-income producing security.
(a) The cost for federal income tax purposes was $112,108,575. At April 30, 1999, net unrealized appreciation for all
securities based on tax cost was $29,159,503. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of $38,968,795, and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax cost over market value of
$9,809,292.
(b) Securities valued in good faith by the Valuation Committee of the Board of Directors at fair value amounted to
$10,578,338 (7.51% 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, 1999 aggregated
$11,835,014. These securities may also have certain restrictions as to resale.
(c) Investments in Brazilian companies aggregating $7,525,715 (5.35% of net assets).
(d) Investments in Chilean companies aggregating $1,460,525 (1.04% of net assets).
</TABLE>
10
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities
April 30, 1999
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments, at market (identified cost $111,945,720) $ 141,268,078
Cash ................................................ 654
Dividends and interest receivable ................... 173,448
-------------
Total assets ........................................ 141,442,180
-------------
LIABILITIES
Payable for investments purchased ................... 379,750
Accrued management fee .............................. 99,374
Other payables and accrued expenses ................. 175,795
-------------
Total liabilities ................................... 654,919
-------------
Net assets, at market value ......................... $ 140,787,261
=============
NET ASSETS
Net assets consist of:
Undistributed net investment income ................. 395,636
Net unrealized appreciation (depreciation) from:
Investments ...................................... 29,322,358
Foreign currency related transactions ............ 3,308
Accumulated net realized gain (loss) ................ (3,085,582)
Paid-in capital ..................................... 114,151,541
-------------
Net assets, at market value ......................... $ 140,787,261
=============
Net asset value per share ($140,787,261 / 9,284,370
shares of common stock issued and outstanding,
$.01 par value, 100,000,000 shares authorized)..... $15.16
=========
The accompanying notes are an integral part of the financial statements.
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</TABLE>
11
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Statement of Operations
Six Months Ended April 30, 1999
- -----------------------------------------------------------------------------------------------------------------------
Investment Income
Income:
<S> <C>
Dividends (net of foreign taxes withheld of $13,022) ................... $ 2,944,345
Interest ............................................................... 138,916
------------
3,083,261
------------
Expenses:
Management fee ......................................................... 588,333
Custodian and accounting fees .......................................... 125,415
Directors' fees and expenses ........................................... 27,986
Reports to shareholders ................................................ 36,644
Auditing ............................................................... 33,751
Services to shareholders ............................................... 18,697
Legal .................................................................. 6,541
Other .................................................................. 32,211
------------
869,578
------------
Net investment income .................................................. 2,213,683
------------
Net realized and unrealized gain (loss) on investment transactions
Net realized gain (loss) from:
Investments ............................................................ (1,015,394)
Foreign currency denominated transactions (including CPMF tax of $1,222) (19,317)
------------
(1,034,711)
------------
Net unrealized appreciation (depreciation) during the period on:
Investments ............................................................ 22,930,350
Foreign currency denominated transactions .............................. 3,644
------------
22,933,994
------------
Net gain (loss) on investment transactions ............................. 21,899,283
------------
Net increase (decrease) in net assets resulting from operations ........ $ 24,112,966
============
The accompanying notes are an integral part of the financial statements.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Six Months Year Ended
Ended October 31,
April 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
Net investment income .......................................................... $ 2,213,683 $ 3,656,073
Net realized gain (loss) from investment transactions .......................... (1,034,711) (2,022,234)
Net unrealized appreciation (depreciation) on investment transactions
during the period............................................................ 22,933,994 (13,962,864)
------------- -------------
Net increase (decrease) in net assets resulting from operations ................ 24,112,966 (12,329,025)
------------- -------------
Distributions to shareholders from net investment income ....................... (4,172,863) (2,316,679)
------------- -------------
Net asset value of shares issued to shareholders in reinvestment
of distributions ............................................................ 92,168 73,374
------------- -------------
Increase (decrease) in net assets .............................................. 20,032,271 (14,572,330)
Net assets at beginning of period .............................................. 120,754,990 135,327,320
------------- -------------
Net assets at end of period (including undistributed net investment
income of $395,636 and $2,354,816, respectively)............................. $ 140,787,261 $ 120,754,990
============= =============
Other Information
Increase (decrease) in Fund Shares
Shares outstanding at beginning of period ...................................... 9,273,029 9,266,717
Shares issued to shareholders in reinvestment of distributions ................. 11,341 6,312
------------- -------------
Shares outstanding at end of period ............................................ 9,284,370 9,273,029
============= =============
The accompanying notes are an integral part of the financial statements
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
(logo) The Argentina Fund, Inc.
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
Six Months Years Ended October 31,
Ended -----------------------------------------------------------
April 30, 1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 13.02 $ 14.60 $ 12.70 $ 10.27 $ 14.53 $ 12.69
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (a)................ .24 .39 .30 .26 .31 .21
Net realized and unrealized gain (loss)
on investment transactions............ 2.35 (1.72) 1.93 2.50 (3.84) 1.83
------- ------- ------- ------- ------ -------
Total from investment operations........... 2.59 (1.33) 2.23 2.76 (3.53) 2.04
------- ------- ------- ------- ------ -------
Less distributions from:
Net investment income.................... (.45) (.25) (.33) (.33) (.27) (.14)
Net realized gains on investment
transactions............................ -- -- -- -- (.46) (.02)
------- ------- ------- ------- ------ -------
Total distributions (.45) (.25) (.33) (.33) (.73) (.16)
------- ------- ------- ------- ------ -------
Antidilution resulting from offering of
second tranche........................... -- -- -- -- -- .04
------- ------- ------- ------- ------ -------
Second tranche offering costs -- -- -- -- -- (.08)
------- ------- ------- ------- ------ -------
Net asset value, end of period $ 15.16 $ 13.02 $ 14.60 $ 12.70 $ 10.27 $ 14.53
======= ======= ======= ======= ======= =======
Market value, end of period $ 12.50 $ 9.63 $ 12.31 $ 11.50 $ 10.13 $ 14.63
======= ======= ======= ======= ======= =======
Total Return
Per share market value (%)................. 37.06** (20.15) 9.84 16.52 (26.48) 5.45
Per share net asset value (%) (b).......... 22.89** (8.90) 17.94 26.86 (24.94) 15.58
Ratios and Supplemental Data
Net assets, end of period ($ millions)..... 141 121 135 118 95 134
Ratio of operating expenses to average
net assets (%)........................... 1.53* 1.48 1.71 1.90 1.98 1.87
Ratio of net investment income to
average net assets (%)................... 3.90* 2.75 1.96 2.11 2.71 1.48
Portfolio turnover rate (%)................ 7.7* 14.1 32.0 19.0 25.0 16.7
(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.
* Annualized
** Not annualized
------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
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(logo)The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
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 purchased with an original maturity over sixty days
are valued by pricing agents approved by the officers of the Fund, whose
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 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.
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
15
<PAGE>
(logo)The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
losses between the ex and payment dates on dividends, interest, and foreign
withholding taxes. At April 30, 1999, the exchange rate for the Argentine peso
was U.S. $1 to .9950 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 period, 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 of 1986, 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. As of October 31, 1998, the Fund
had a net tax basis capital loss carryforward of approximately $2,000,000, which
may be applied against any realized net taxable capital gains of each succeeding
year until fully utilized or until October 31, 2003 ($6,000) and October 31,
2006 ($1,994,000), the respective expiration dates, whichever occurs first.
The Fund is also subject to a .20% Contribuicao Provisoria sobre Movimentacoes
Financeiras (CPMF) tax which is applied to foreign exchange transactions
representing capital inflows or outflows to the Brazilian market. This tax has
been reported as part of the net realized gain (loss) from foreign currency
related transactions.
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
16
<PAGE>
(logo)The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
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.
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
---------------------------------
During the six months ended April 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $7,344,049 and
$4,299,394, respectively.
C. Related Parties
---------------
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Manager"), the Manager directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Manager determines the securities, instruments, and other
contracts relating to investments to be purchased, sold, or entered into by the
Fund. In addition to portfolio management services, the Manager provides certain
administrative services in accordance with the agreement. The management fee
payable under the agreement is equal to an annual rate of 1.04% of the Fund's
average weekly net assets and payable monthly. For the six months ended April
30, 1999, the fee pursuant to the Agreement amounted to $588,333, of which
$99,374 is unpaid at April 30, 1999.
Effective December 28, 1998, the Sub-Advisory Contract (the "Sub-Advisory
Contract") with Sociedad General de Negocios y Valores S.A. (the "Argentine
Adviser") expired. The Argentine Adviser provided such information, investment
recommendations, advice and assistance as the Manager may have from time to time
requested. From November 1, 1997 through December 28, 1998, 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.
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, 1999, the amount charged to the Fund by SFAC aggregated $41,635,
of which $13,982 is unpaid at April 30, 1999.
Scudder Service Corporation ("SSC"), a subsidiary of the Manager, provides
shareholder communications services for the Fund. For the six months ended April
30, 1999 the amount charged to the Fund by SSC aggregated $7,500, of which
$1,250 is unpaid at April 30, 1999.
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, 1999, Directors' fees and
expenses aggregated $27,986.
17
<PAGE>
(logo)The Argentina Fund, Inc.
Notes to Financial Statements
================================================================================
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.
E. Line of Credit
--------------
The Fund and several Scudder Funds (the "Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated pro rata among each of the Participants. Interest is
calculated based on the market rates at the time of the borrowing. The Fund may
borrow up to a maximum of 25 percent of its net assets under the agreement.
18
<PAGE>
(logo)The Argentina Fund, Inc.
Report of Independent Accountants
================================================================================
To the Board of Directors and the Shareholders of The Argentina Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Argentina Fund, Inc. (the
"Fund") at April 30, 1999, the results of its operations, the changes in its net
assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 10, 1999
19
<PAGE>
(logo)The Argentina Fund, Inc.
Stockholder Meeting Results
================================================================================
A Special Meeting of Stockholders (the "Meeting") of The Argentina Fund Fund,
Inc. (the "Fund") was held on December 17, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the stockholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Advisory, Management and Administration
Agreement for the Fund with Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
4,710,953 802,607 25,997 0
2. To approve a new Research and Advisory Agreement between Scudder Kemper
Investments, Inc. and Sociedad General de Negocios y Valores S.A.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
4,708,218 805,412 25,927 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
20
<PAGE>
(logo)The Argentina Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
================================================================================
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 August 15, as the
21
<PAGE>
(logo)The Argentina Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
================================================================================
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
EquiServe, P.O. Box 8209, Boston, MA 02266-8209, 1-800-426-5523.
22
<PAGE>
(logo)The Argentina Fund, Inc.
Investment Manager
================================================================================
The investment manager of The Argentina Fund, Inc., is Scudder Kemper
Investments Inc. ("the Manager"), one of the most experienced investment
management firms in the world. Established in 1919, the firm manages investments
for institutional and corporate clients, retirement and pension plans, insurance
companies, mutual fund investors, and individuals. The Manager has offices
throughout the United States and has subsidiaries in London, Switzerland, and
Tokyo.
The Manager has been a leader in international investment management for over
40 years. It manages Scudder International Fund, which was originally
incorporated in Canada in 1953 as the first foreign investment company
registered with the United States Securities and Exchange Commission. The
Manager's clients which invest primarily in foreign securities include thirty
open-end investment companies as well as portfolios for institutional investors.
The Manager also manages the assets of five other closed-end investment
companies which invest primarily in foreign securities: The Brazil Fund, Inc.,
The Korea Fund, Inc., Scudder Global High Income Fund, Inc., Scudder New Asia
Fund, Inc., and Scudder New Europe Fund, Inc.
23
<PAGE>
(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
WILSON NOLEN
Director
DR. SUSAN KAUFMAN PURCELL
Director
JOSE E. ROHM
Honorary Director
JUDITH A. HANNAWAY*
Vice President
LUIS R. LUIS*
Vice President
ANN M. MCCREARY*
Vice President
PAUL H. ROGERS*
Vice President
BRUCE H. GOLDFARB*
Vice President and Assistant Secretary
PAUL J. ELMLINGER*
Vice President and Assistant Secretary
KATHRYN L. QUIRK*
Vice President and Assistant Secretary
JOHN R. HEBBLE*
Treasurer
CAROLINE PEARSON*
Assistant Secretary
* Scudder Kemper Investments, Inc.
24
