<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 19, 1997
SECURITIES ACT FILE NO. 33-71394
INVESTMENT COMPANY ACT FILE NO. 811-8150
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
SCHRODER ASIAN GROWTH FUND, INC.
(Name of Issuer)
SCHRODER ASIAN GROWTH FUND, INC.
(Name of Person(s) Filing Statement)
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
808084107
(CUSIP Number of Class of Securities)
ALEXANDRA POE, ESQ.
SCHRODER ASIAN GROWTH FUND, INC.
787 SEVENTH AVENUE, 34TH FLOOR
NEW YORK, NEW YORK 10019
(212) 641-3849
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
WITH COPIES TO:
MARCIA L. MACHARG, ESQ.
DEBEVOISE & PLIMPTON
555 13TH STREET, N.W.
WASHINGTON, D.C. 20004
FEBRUARY 19, 1997
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION: $47,670,000(A) AMOUNT OF FILING FEE: $9,534.00 (B)
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(a) Calculated as the aggregate maximum purchase price to be paid for 3,500,000
shares in the offer, based upon the net asset value per share ($13.62) at
February 13, 1997.
(b) Calculated as 1/50th of 1% of the Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid:______________________________________________________
Form or Registration No.:____________________________________________________
Filing Party:________________________________________________________________
Date Filed:__________________________________________________________________
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Schroder Asian Growth Fund, Inc. (the "Fund"),
a non-diversified, closed-end management investment company. The principal
executive office of the Fund is 787 Seventh Avenue, 34th Floor, New York, New
York 10019.
(b) The Fund is seeking tenders for 3,500,000 of its issued and outstanding
shares of common stock, par value $.01 per share (the "Shares") for cash at a
price equal to their net asset value ("NAV") determined as of the close of the
regular trading session of the New York Stock Exchange ("NYSE") on March 21,
1997, subject to the terms and conditions set forth in the Offer to Purchase
dated February 19, 1997 and the related Letter of Transmittal (which together
constitute the "Offer"). THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 20, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is
extended beyond March 20, 1997, the purchase price for Shares will be equal to
their NAV determined as of the close of the regular trading session of the NYSE
on the Expiration Date, as extended. Copies of the Offer to Purchase and the
Letter of Transmittal are filed as Exhibits (a)(1) and (a)(2)(i) to this
statement, respectively.
As of the date hereof, there were 19,607,100 Shares issued and outstanding.
Reference is hereby made to the Cover Page, Section 1--"Price; Number of
Shares" and Section 9-- "Interest of Certain Related Persons" of the Offer to
Purchase, which are incorporated herein by reference.
(c) The principal market in which the Shares are traded is the New York
Stock Exchange. Reference is hereby made to the Cover Page and Section 7--"Price
Range of Shares; Dividends" of the Offer to Purchase, which are incorporated
herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Reference is hereby made to Section 12--"Source and Amount of Funds"
of the Offer to Purchase, which is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Reference is hereby made to Section 6--"Purpose of the Offer; Plans or
Proposals of the Fund," Section 7--"Price Range of Shares; Dividends," Section
10--"Certain Effects of the Offer" and Section 12--"Source and Amount of Funds"
of the Offer to Purchase, which are incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Reference is hereby made to Section 9--"Interest of Certain Related Persons"
of the Offer to Purchase, which is incorporated herein by reference. Based upon
information provided to the Fund, except through the automatic reinvestment of
dividends under the Fund's Dividend Reinvestment Plan, there have not been any
transactions in Shares of the Fund that were effected during the past 40
business days by the Fund, any executive officer or director of the Fund, any
person controlling the Fund, any executive officer or director of any
corporation ultimately controlling the Fund or by any associate or subsidiary of
the foregoing, including any executive officer or director of any such
subsidiary. Based upon information provided to the Fund, no officer, director or
affiliate of the Fund intends to tender Shares pursuant to the Offer.
2
<PAGE>
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
Reference is hereby made to Section 2--"Procedure for Tendering Shares,"
Section 4--"Payment for Shares" and Section 6--"Purpose of the Offer; Plans or
Proposals of the Fund" of the Offer to Purchase, which are incorporated herein
by reference.
Except as set forth therein, the Fund does not know of any contract,
arrangement, understanding or relationship relating, directly or indirectly, to
the Offer between the (A) Fund, any executive officer or director of the Fund,
or any person controlling the Fund or any executive officer or director of any
corporation ultimately in control of the Fund, and (B) any other person, with
respect to any securities of the Fund (including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss, or the giving or
withholding of proxies, consents or authorizations).
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Fund has entered into a Depositary Agreement, dated as of February 18,
1997, with State Street Bank and Trust Company (the "Depositary") to provide
certain depositary services in connection with the Offer. For its services, the
Depositary will receive a fee of $6,000, plus expenses. The Depositary Agreement
is filed as Exhibit (c)(1) to this statement and is incorporated herein by
reference.
No persons have been employed or retained or are to be compensated by or on
behalf of the Fund to make solicitations or recommendations in connection with
the Offer.
ITEM 7. FINANCIAL INFORMATION.
(a)(1) The Fund's audited financial statements for the period December 30,
1993 (commencement of operations) to October 31, 1994 and the fiscal years ended
October 31, 1995 and October 31, 1996 (the "Audited Financial Statements"),
together with the consent of Coopers & Lybrand L.L.P., the independent
accountants of the Fund, are included as part of Exhibit (a)(1) attached hereto,
which is incorporated herein by reference in its entirety.
(2) The Fund is not required to file quarterly reports under the Securities
Exchange Act of 1934, as amended.
(3) A summary of selected financial information ratios for the period
December 30, 1993 (commencement of operations) to January 31, 1997 is set forth
in Section 8--"Selected Financial Information" of the Offer to Purchase, which
is incorporated herein by reference in its entirety.
Certain ratios applicable to the Fund for the period December 30, 1993 to
October 31, 1996 are contained in the Audited Financial Statements. Certain
ratios applicable to the Fund for the period November 1, 1996 to January 31,
1997 are contained in the unaudited financial statements for such period (the
"Unaudited Financial Statements"), which are included as part of Exhibit (a)(1)
attached hereto, which is incorporated herein by reference in its entirety.
(4) The Fund's NAV as of October 31, 1996 and as of January 31, 1997 are set
forth in Section 7-- "Price Range of Shares; Dividends" of the Offer to
Purchase, which is incorporated herein by reference. Such information is also
set forth in the Audited Financial Statements and the Unaudited Financial
Statements, respectively.
(b) Reference is hereby made to the Audited Financial Statements and the
Unaudited Financial Statements included as part of Exhibit (a)(1) attached
hereto, which are incorporated herein by reference in their entirety.
3
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a)-(d) Not applicable.
(e) The Offer to Purchase, which is filed as Exhibit (a)(1), is incorporated
herein by reference in its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS:
<TABLE>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2)(i) Form of Letter of Transmittal.
(a)(2)(ii) Form of Notice of Guaranteed Delivery.
(a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees.
(a)(3)(ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies
and other Nominees.
(a)(3)(iii) Form of Letter to Shareholders who have requested information.
(b) Not applicable.
(c)(1) Depositary Agreement, dated as of February 18, 1997, between the Fund and State
Street Bank and Trust Company.
(c)(2) Investment Advisory Agreement, dated as of May 15, 1996, between the Fund and
Schroder Capital Management International Inc.
(d)-(f) Not applicable.
</TABLE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Schroder Asian Growth Fund, Inc.
/s/ LOUISE CROSET
--------------------------------------
By: Louise Croset
Title: President
Date: February 19, 1997
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2)(i) Form of Letter of Transmittal.
(a)(2)(ii) Form of Notice of Guaranteed Delivery.
(a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees.
(a)(3)(ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies
and other Nominees.
(a)(3)(iii) Form of Letter to Shareholders who have requested information.
(b) Not applicable.
(c)(1) Depositary Agreement, dated as of February 18, 1997, between the Fund and State
Street Bank and Trust Company.
(c)(2) Investment Advisory Agreement, dated as of May 15, 1996, between the Fund and
Schroder Capital Management International Inc.
(d)-(f) Not applicable.
</TABLE>
5
<PAGE>
SCHRODER ASIAN GROWTH FUND, INC.
OFFER TO PURCHASE FOR CASH 3,500,000
OF ITS ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL
DEADLINE IS 5:00 P.M., NEW YORK CITY TIME,
ON MARCH 20, 1997, UNLESS EXTENDED.
To the Shareholders of
Schroder Asian Growth Fund, Inc.:
Schroder Asian Growth Fund, Inc. (the "Fund"), a non-diversified, closed-end
management investment company, is offering to purchase 3,500,000 of its issued
and outstanding shares of common stock, par value $.01 per share (the "Shares"),
for cash at a price equal to their net asset value ("NAV") determined as of the
close of the regular trading session of the New York Stock Exchange ("NYSE") on
March 21, 1997, subject to the terms and conditions set forth in the Offer to
Purchase dated February 19, 1997 and the related Letter of Transmittal (which
together constitute the "Offer"). THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY
TIME, ON MARCH 20, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer
is extended beyond March 20, 1997, the purchase price for Shares will be equal
to their NAV determined as of the close of the regular trading session of the
NYSE on the Expiration Date, as extended.
The Shares are currently traded on the NYSE under the symbol "SHF." You can
obtain current NAV quotations during the pendency of the Offer by calling State
Street Bank and Trust Company, the Depositary, at 1-800-426-5523, between the
hours of 9:00 a.m. and 5:00 p.m., New York City time, Monday-Friday (except
holidays).
The purpose of the Offer is to fulfill an undertaking made in the Fund's
prospectus, dated December 22, 1993 (the "Prospectus"). There the Fund stated
that, in recognition of the possibility that the Fund's Shares might trade at a
discount to NAV, the Board of Directors has determined that it would be in the
best interests of shareholders of the Fund to take action to attempt to reduce
or eliminate a market value discount from NAV.
In the Prospectus, the Fund undertook to conduct an annual tender offer for
Shares during the first calendar quarter of each year commencing in 1997 that
the average of the closing prices of the Shares on the NYSE for the Fund's
weekly valuation day in each week during a specified period (the "Measurement
Period") represents a discount of 3% or more from the average NAV of the Fund as
determined on the same days in the same period. The Measurement Period is
required to be a 12-week consecutive period beginning in the fourth calendar
quarter of a calendar year and ending in the immediately following first
calendar quarter. On October 14, 1996, the Board of Directors fixed the
Measurement Period for the Offer as the period beginning on November 11, 1996
and ending on January 31, 1997. The average trading price of the Shares on the
valuation days during the Measurement Period was $12.115 per Share and the
average NAV of the Fund on the same days was $13.607, representing a discount of
10.96%. Accordingly, the Fund is conducting the Offer, subject to the terms and
conditions specified in the Offer to Purchase.
Consistent with their fiduciary obligations, in addition to the Offer, the
Board of Directors will continue to explore other means to reduce or eliminate
the Fund's market value discount from NAV. See Section 6 of this Offer to
Purchase.
The Offer is being made to all shareholders of the Fund and is not
conditioned upon the tender of any minimum number of the Fund's outstanding
Shares. However, pursuant to the Fund's Prospectus, a shareholder wishing to
accept the Offer must tender, or cause the tender of, all Shares actually owned
or constructively owned by the shareholder, pursuant to Section 318 of the
Internal Revenue Code of 1986, as amended (the "Code"), as of the date of
purchase of Shares pursuant to the Offer. Shareholders should consult their tax
advisers as to the application of the constructive ownership rules of Section
318. A tender
<PAGE>
of all Shares actually and constructively owned is necessary to avoid the risk
of adverse tax consequences to non-tendering shareholders. If more than
3,500,000 Shares are duly tendered prior to the expiration of the Offer, the
Fund will purchase Shares from tendering shareholders, in accordance with the
terms and conditions specified in this Offer to Purchase, pro rata in accordance
with the number of Shares tendered by each shareholder during the period the
Offer remains open, unless the Fund determines not to purchase any Shares.
To prevent federal income tax backup withholding equal to 31% of the gross
payments made pursuant to this Offer: (1) each U.S. shareholder must have
submitted to the Depositary a correct, completed, and signed Form W-9 or
Substitute Form W-9, or other confirmation of an exemption from backup
withholding requirements; and (2) each non-U.S. shareholder must have submitted
to the Depositary a correct, completed, and signed Form W-8. The Letter of
Transmittal contains a Substitute Form W-9 or a Form W-8, as necessary.
THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 5.
ii
<PAGE>
IMPORTANT
If you desire to tender your Shares, you should either: (1) complete and
sign the Letter of Transmittal (or a photocopy thereof bearing original
signature(s) and any required signature guarantees) and mail or deliver it along
with such Shares (in proper certificated or uncertificated form), and any other
documents required by the Letter of Transmittal to the Depositary; or (2)
request your broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for you. If your Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, you must
contact such firm if you desire to tender your Shares. Shareholders are not
required to pay a service charge to the Fund or the Depositary in connection
with their tender of Shares, but may be charged a fee by a broker, dealer or
other institution for processing the tender requested.
If you do not wish to tender your Shares, you need not take any action.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SUCH SHAREHOLDER'S
SHARES. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE
OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISERS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER THEIR SHARES.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
FUND OR SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC., THE INVESTMENT ADVISER
OF THE FUND, AS TO WHETHER SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. ANY SUCH RECOMMENDATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND OR THE INVESTMENT ADVISER.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE INVESTMENT ADVISER.
Questions and requests for assistance may be directed to the Depositary at
the appropriate address and at the telephone number set forth below. Requests
for additional copies of this Offer to Purchase and the Letter of Transmittal
may also be directed to the Depositary. Shareholders who do not own Shares
directly may also obtain such information and copies from their broker, dealer,
commercial bank, trust company or other nominee and are required to tender their
Shares through such firm.
February 19, 1997
Schroder Asian Growth Fund, Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
STATE STREET BANK AND TRUST COMPANY, DEPOSITARY
PHONE 1-800-426-5523
<TABLE>
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BY MAIL: BY OVERNIGHT COURIER: BY HAND:
State Street Bank and State Street Bank and Securities Transfer and
Trust Company Trust Company Reporting Services Inc.
Corporate Reorganization Corporate Reorganization Boston EquiServe L.P.
PO Box 9061 70 Campanelli Drive Corporate Reorganization
Boston, MA 02205 Braintree, MA 02184 55 Broadway, Third Floor
New York, NY 10006
</TABLE>
iii
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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1. Price; Number of Shares.............................................................................. 1
2. Procedure for Tendering Shares....................................................................... 1
A. Proper Tender of Shares................................................................... 1
B. Signature Guarantees and Method of Delivery............................................... 2
C. Dividend Reinvestment Plan................................................................ 3
D. Book-Entry Delivery....................................................................... 3
E. Guaranteed Delivery....................................................................... 3
F. Determination of Validity................................................................. 4
G. Federal Income Tax Withholding............................................................ 4
3. Withdrawal Rights.................................................................................... 4
4. Payment for Shares................................................................................... 5
5. Certain Conditions of the Offer...................................................................... 5
6. Purpose of the Offer; Plans or Proposals of the Fund................................................. 6
7. Price Range of Shares; Dividends..................................................................... 8
8. Selected Financial Information....................................................................... 8
9. Interest of Certain Related Persons.................................................................. 10
10. Certain Effects of the Offer......................................................................... 10
11. Certain Information about the Fund................................................................... 10
12. Source and Amount of Funds........................................................................... 11
13. Additional Information............................................................................... 11
14. Certain U.S. Federal Income Tax Consequences......................................................... 11
15. Extension of Tender Period; Termination; Amendments.................................................. 12
16. Miscellaneous........................................................................................ 13
</TABLE>
Exhibit A: Audited Financial Statements of the Fund for the period December
30, 1993 to October 31, 1994 and the fiscal years ended October
31, 1995 and October 31, 1996, together with the consent of
Coopers & Lybrand L.L.P., the independent accountants of the
Fund; Unaudited Financial Statements of the Fund for the period
November 1, 1996 to January 31, 1997.
iv
<PAGE>
1. PRICE; NUMBER OF SHARES. The Fund will accept for payment and purchase
up to 3,500,000 of its issued and outstanding Shares for cash at a price equal
to their NAV determined as of the close of the regular trading session of the
NYSE on March 21, 1997, subject to the terms and conditions set forth in the
Offer to Purchase dated February 19, 1997 and the related Letter of Transmittal.
THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 20, 1997, UNLESS
EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended beyond March 20,
1997, the purchase price for Shares will be their NAV determined as of the close
of the regular trading session of the NYSE on the Expiration Date, as extended.
The Fund reserves the right to extend, terminate or amend the Offer. See
Sections 5 and 15. The Fund will not be obligated to purchase Shares pursuant to
the Offer under certain circumstances. See Section 5. Holders of Shares may
tender Shares to the Depositary or withdraw Shares previously tendered. See
Sections 2 and 3. The Fund will not pay interest on the purchase price under any
circumstances.
The NAV on February 13, 1997 was $13.62 per Share. During the pendency of
the Offer, you may obtain current NAV quotations for the Fund by calling the
Depositary at 1-800-426-5523 between the hours of 9:00 a.m. and 5:00 p.m., New
York City time, Monday-Friday (except holidays).
The Offer is being made to all shareholders of the Fund and is not
conditioned upon the tender of any minimum number of the Fund's outstanding
Shares. A shareholder wishing to accept the Offer must tender or cause the
tender of all of the Shares actually owned or constructively owned by the
shareholder, pursuant to Section 318 of the Internal Revenue Code of 1986, as
amended (the "Code"), as of the date of purchase of Shares pursuant to the
Offer. Shareholders should consult their tax advisers as to the application of
the constructive ownership rules of Section 318. A tender of all Shares actually
and constructively owned is necessary to avoid the risk of adverse tax
consequences to non-tendering shareholders. If more than 3,500,000 Shares are
duly tendered prior to the expiration of the Offer, the Fund will purchase
Shares from tendering shareholders, in accordance with the terms and conditions
specified in this Offer to Purchase, pro rata in accordance with the number of
Shares tendered by each shareholder during the period the Offer remains open,
unless the Fund determines not to purchase any Shares.
On February 13, 1997 there were 19,607,100 Shares issued and outstanding and
there were approximately 268 holders of record of Shares. Certain of these
holders of record were nominees for brokers, dealers, commercial banks, trust
companies and other institutions that held Shares on behalf of multiple
beneficial owners. The Fund has been informed that no officer, director or
affiliate of the Fund intends to tender Shares pursuant to the Offer.
2. PROCEDURE FOR TENDERING SHARES.
A. PROPER TENDER OF SHARES. For Shares to be properly tendered pursuant to
the Offer, a properly completed and duly executed Letter of Transmittal (or a
photocopy or facsimile thereof bearing original signature(s) and any required
signature guarantees), all Shares owned or constructively owned by the tendering
shareholder pursuant to Section 318 of the Code (in proper certificated or
uncertificated form), and any other documents required by the Letter of
Transmittal must be received by the Depositary at the appropriate address set
forth on page iii of this Offer to Purchase on or prior to the Expiration Date.
Letters of Transmittal and certificates representing tendered Shares should NOT
be sent or delivered to the Fund. Shareholders who desire to tender Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee should contact such firm to effect a tender on their behalf.
Section 14(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14e-4 promulgated thereunder make it unlawful for any
person, acting alone or in concert with others, to tender Shares in a partial
tender offer for such person's own account unless at the time of tender, and at
the time the Shares are accepted for payment, the person tendering has a net
long position equal to or greater than the amount tendered in (i) Shares, and
will deliver or cause to be delivered such Shares for the purpose of tender to
the person making the Offer within the period specified in the Offer,
1
<PAGE>
or (ii) an equivalent security and, upon acceptance of his or her tender, will
acquire Shares by conversion, exchange, or exercise of such equivalent security
to the extent required by the terms of the Offer, and will deliver or cause to
be delivered the Shares so acquired for the purpose of tender to the Fund prior
to or on the Expiration Date. Section 14(e) and Rule 14e-4 provide a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering shareholder and the Fund upon the terms and
subject to the conditions of the Offer, including the tendering shareholder's
representation that (i) such shareholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act and (ii) the tender of such Shares complies with Rule 14e-4.
B. SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required on the Letter of Transmittal (a) if the Letter of Transmittal is signed
by the registered holder(s) (which term, for purposes of this document, shall
include any participant in the Depository Trust Company ("DTC") book-entry
transfer facility whose name appears on DTC's security position listing as the
owner of Shares) of Shares tendered herewith, unless such holder(s) has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" in the Letter of Transmittal or (b) if
such Shares are tendered for the account of a firm (an "Eligible Institution")
which is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of a Stock Transfer Association
approved medallion program (such as STAMP, SEMP or MSP). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5 of the Letter of Transmittal.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered thereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered thereby are owned of record by two or more
joint owners, all such owners must sign the Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If the Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Fund of their authority so to act must be submitted.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted thereby, no endorsements of certificates or separate stock
powers are required unless payment is to be made to or certificates for Shares
not purchased are to be issued in the name of a person other than the registered
holder(s). Signatures on such certificates or stock powers must be guaranteed by
an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder(s) of the certificate(s) listed, the certificate(s) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appears on the certificate(s) for such
Shares. Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. Shareholders have
the responsibility to cause their Shares (in proper certificated or
uncertificated form), the
2
<PAGE>
Letter of Transmittal (or a photocopy thereof bearing original signature(s) and
any required signature guarantees), and any other documents required by the
Letter of Transmittal to be timely delivered. Timely delivery is a condition
precedent to acceptance of Shares for purchase pursuant to the Offer and to
payment of the purchase amount.
C. DIVIDEND REINVESTMENT PLAN. State Street Bank and Trust Company, the
Fund's transfer agent and Depositary, holds Shares in uncertificated form for
certain shareholders pursuant to the Fund's dividend reinvestment plan.
Shareholders wishing to accept the Offer must tender all such uncertificated
Shares. Shareholders may tender such uncertificated Shares by completing the
appropriate section in the Letter of Transmittal.
D. BOOK-ENTRY DELIVERY. The Depositary will establish an account with
respect to the Shares at DTC for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in the DTC system may make book-entry delivery of Shares by causing
DTC to transfer such Shares into the Depositary's account at DTC in accordance
with DTC's transfer procedures. However, although delivery of Shares may be
effected through book-entry transfer at DTC, a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and any other documents required by the Letter of
Transmittal, must in any case be received by the Depositary at one of its
addresses set forth on at page iii of this Offer to Purchase on or prior to the
Expiration Date, or the tendering shareholder must comply with the guaranteed
delivery procedures described below.
The term "Agent's Message" means a message from DTC transmitted to, and
received by, the Depositary forming a part of a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation"), which states that (i) DTC has
received an express acknowledgment from the DTC participant tendering the Shares
that are the subject of the Book-Entry Confirmation, (ii) the DTC participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and (iii) the Fund may enforce such agreement against the DTC participant.
Delivery of documents to DTC in accordance with DTC's procedures does not
constitute delivery to the Depositary.
E. GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant
to the Offer and such shareholder's Share certificates are not immediately
available, time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or a shareholder cannot complete the
procedures for delivery by book-entry transfer on a timely basis, then such
shareholder's Shares may nevertheless be tendered, provided that all of the
following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Fund herewith, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(c) the Share certificates evidencing all Shares, in proper form for
transfer, or a Book-Entry Confirmation, together with the Letter of
Transmittal (or a facsimile thereof) properly completed and duly executed
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal, are received by the Depositary within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the shareholder
owns the Shares tendered within the meaning of, and that the tender
3
<PAGE>
of the Shares effected thereby complies with, Rule 14e-4 under the Exchange Act,
each in the form set forth in the Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share certificates evidencing such Shares or a
Book-Entry Confirmation of the delivery of such Shares (if available), (ii) a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) or, in the case of a book-entry transfer, an Agent's Message, and (iii)
any other documents required by the Letter of Transmittal. Accordingly, payment
may not be made to all tendering shareholders at the same time and will depend
upon when Share certificates are received by the Depositary or Book-Entry
Confirmations of tendered Shares are received in the Depositary's account at
DTC.
F. DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject any or all
tenders determined not to be in appropriate form or to refuse to accept for
payment, purchase or pay for any Shares if, in the opinion of the Fund's
counsel, accepting, purchasing or paying for such Shares would be unlawful. The
Fund also reserves the absolute right to waive any of the conditions of the
Offer or any defect in any tender, whether generally or with respect to any
particular Share(s) or shareholder(s). The Fund's interpretations of the terms
and conditions of the Offer shall be final and binding.
NONE OF THE FUND, THE INVESTMENT ADVISER, THE DEPOSITARY OR ANY OTHER PERSON
IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF DEFECTS OR IRREGULARITIES IN
TENDERS, AND NONE OF THEM WILL INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH
NOTICE.
G. FEDERAL INCOME TAX WITHHOLDING. To prevent federal income tax backup
withholding equal to 31% of the gross payments made pursuant to the Offer, each
U.S. shareholder who has not previously submitted a correct, completed and
signed Form W-9 to the Fund or does not otherwise establish an exemption from
such withholding must notify the Depositary of such shareholder's correct
taxpayer identification number (or certify that such taxpayer is awaiting a
taxpayer identification number) and provide certain other information by
completing the Substitute Form W-9 included in the Letter of Transmittal.
Non-U.S. shareholders who are individuals and who have not previously
submitted a correct, completed and signed Form W-8 to the Fund must submit such
a form to the Depositary in order to avoid backup withholding. For such
shareholders, a copy of Form W-8 is included with the Letter of Transmittal.
For a discussion of certain other U.S. federal income tax consequences to
tendering shareholders, see Section 14.
3. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 3,
tenders of Shares made pursuant to the Offer will be irrevocable. At any time
during the pendency of the Offer on or prior to the Expiration Date, and, if the
Shares have not yet been accepted for payment by the Fund, at any time after
12:00 midnight, New York City time, on April 14, 1997, shareholders may withdraw
all, but not less than all, of the Shares that they have tendered.
To be effective, a written or telegraphic notice of withdrawal must be
timely received by the Depositary at the appropriate address set forth on page
iii of this Offer to Purchase. Shareholders may also send a facsimile
transmission notice of withdrawal, which must be timely received by the
Depositary at (617) 575-2233, and the original notice of withdrawal must be
delivered to the Depositary by overnight courier or by hand the next day.
Any notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, and, if certificates representing such Shares have
been delivered or otherwise identified to the
4
<PAGE>
Depositary, the name of the registered owner(s) of such Shares as set forth in
such certificates if different from the name of the person tendering the Shares.
If certificates have been delivered to the Depositary, then, prior to the
release of such certificates, the certificate numbers shown on the particular
certificates evidencing such Shares must also be submitted and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Fund in its sole discretion,
which determination shall be final and binding. Shares properly withdrawn shall
not thereafter be deemed to be tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following the procedures described in
Section 2 on or prior to the Expiration Date.
NONE OF THE FUND, THE INVESTMENT ADVISER, THE DEPOSITARY OR ANY OTHER PERSON
IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF ANY DEFECTS OR IRREGULARITIES IN
ANY NOTICE OF WITHDRAWAL, AND NONE OF THEM WILL INCUR ANY LIABILITY FOR FAILURE
TO GIVE ANY SUCH NOTICE OF DEFECTS OR IRREGULARITIES.
4. PAYMENT FOR SHARES. For purposes of the Offer, the Fund will be deemed
to have purchased Shares pursuant to the Offer when, as and if it gives oral or
written notice to the Depositary of its acceptance of such Shares for purchase.
Pursuant to a rule under the Exchange Act, the Fund is obligated to pay for or
return tendered Shares promptly after the termination, expiration or withdrawal
of the Offer. Upon the terms and subject to the conditions of the Offer, the
Fund will pay for Shares properly tendered as soon as practicable after the
Expiration Date. The Fund will make payment for Shares purchased pursuant to the
Offer by depositing the aggregate purchase price therefor with the Depositary,
which will make payment to shareholders promptly as directed by the Fund. The
Fund will not pay interest on the purchase price under any circumstances.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of: (a) a properly completed
and duly executed Letter of Transmittal (or a photocopy thereof bearing original
signature(s) and any required signature guarantees), (b) such Shares (in proper
certificated or uncertificated form), and (c) any other documents required by
the Letter of Transmittal. Shareholders are not required to pay a service charge
to the Fund or the Depositary in connection with their tender of Shares, but may
be charged a fee by a broker, dealer or other institution for processing the
tender requested. Certificates representing Shares tendered but not purchased
will be returned promptly following the termination, expiration or withdrawal of
the Offer, without expense to the tendering shareholder.
The Fund will pay any transfer taxes payable on the transfer to it of Shares
purchased pursuant to the Offer. However, if tendered Shares are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of any such transfer taxes (whether imposed on the registered owner
or such other person) payable on account of the transfer to such person of such
Shares will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes, or exemption therefrom, is submitted. The Fund will
not pay any interest on the purchase price under any circumstances. The Fund may
not be obligated to purchase Shares pursuant to the Offer under certain
conditions. See Section 5.
Any tendering shareholder or other payee who has not previously submitted a
correct, completed and signed Form W-8 or Form W-9, as necessary, and who fails
to complete fully and sign either the Form W-8 or Substitute Form W-9 in the
Letter of Transmittal and provide such form to the Depositary, may be subject to
required federal income tax withholding of 31% of the gross proceeds paid to
such shareholder or other payee pursuant to the Offer. See Section 14.
5. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer or the Fund's Prospectus, it is the announced policy of the directors
of the Fund, which may be changed by the directors, that the Fund cannot accept
tenders or effect repurchases if (1) such transactions, if
5
<PAGE>
consummated, would (a) result in the delisting of the Fund's Shares from the
NYSE (the NYSE having advised the Fund that it would consider delisting if the
aggregate market value of the Fund's outstanding shares is less than $5,000,000,
the number of publicly held Shares falls below 600,000 or the number of
round-lot holders falls below 1,200) or (b) impair the Fund's status as a
regulated investment company under the Code (which would make the Fund subject
to U.S. Federal income taxes on all of its income and gains in addition to the
taxation of shareholders who receive distributions from the Fund); (2) the
amount of Shares tendered would require liquidation of such a substantial
portion of the Fund's securities that the Fund would not be able to liquidate
portfolio securities in an orderly manner in light of the existing market
conditions and such liquidation would have an adverse effect on the net asset
value of the Fund to the detriment of non-tendering shareholders; (3) there is
any (a) in the Board of Directors' judgment, material legal action or proceeding
instituted or threatened challenging such transactions or otherwise materially
adversely affecting the Fund, (b) suspension of or limitation on prices for
trading securities generally on the New York Stock Exchange or other national
securities exchange(s), or the NASDAQ National Market System, (c) declaration of
a banking moratorium by Federal or state authorities or any suspension of
payment by banks in the United States or New York State, (d) limitation
affecting the Fund or the issuers of its portfolio securities imposed by Federal
or state authorities on the extension of credit by lending institutions, (e)
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, or (f) in the Board
of Directors' judgment, other event or condition which would have a material
adverse effect on the Fund or its shareholders if Shares were repurchased; or
(4) the Board of Directors determines that effecting any such transaction would
constitute a breach of their fiduciary duty owed the Fund or its shareholders.
The directors may modify these conditions in light of experience.
The foregoing conditions are for the Fund's sole benefit and may be asserted
by the Fund regardless of the circumstances giving rise to any such condition
(including any action or inaction of the Fund), and any such condition may be
waived by the Fund, in whole or in part, at any time and from time to time in
its sole discretion. The Fund's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts or circumstances; and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Fund concerning the events described
in this Section 5 shall be final and shall be binding.
The Fund reserves the right, at any time during the pendency of the Offer,
to terminate, extend, or amend the Offer in any respect. See Section 15.
6. PURPOSE OF THE OFFER; PLANS OR PROPOSALS OF THE FUND. The purpose of
the Offer is to fulfill an undertaking made in the Fund's Prospectus. There the
Fund stated that, in recognition of the possibility that the Fund's Shares might
trade at a discount to NAV, the Fund's Board of Directors determined that it
would be in the best interests of shareholders to take action to attempt to
reduce or eliminate a market value discount from NAV.
In the Prospectus, the Fund undertook to conduct an annual tender offer for
Shares during the first calendar quarter of each year commencing in 1997 that
the average of the closing prices of the Shares on the NYSE for the Fund's
weekly valuation day in each week during a specified period (the "Measurement
Period") represents a discount of 3% or more from the average NAV of the Fund as
determined on the same days in the same period. The Measurement Period is
required to be a 12-week consecutive period beginning in the fourth calendar
quarter of a calendar year and ending in the immediately following first
calendar quarter. On October 14, 1996, the Board of Directors fixed the
Measurement Period for the Offer as the period beginning on November 11, 1996
and ending on January 31, 1997. The average trading price of the Shares on the
valuation days during the Measurement Period was $12.115 per Share and the
average NAV of the Fund on the same days was $13.607, representing a discount of
10.96%. Accordingly, the Fund is conducting the Offer, subject to the terms and
conditions specified in the Offer to Purchase.
6
<PAGE>
Consistent with their fiduciary obligations, in addition to the Offer, the
Board of Directors will continue to explore other means to reduce or eliminate
the Fund's market value discount from NAV.
There can be no assurance that this Offer will reduce or eliminate any
market price discount from NAV of the Shares. The market price of the Shares
will, among other things, be determined by the relative demand for and supply of
Shares in the market, the Fund's investment performance, the Fund's dividends
and yield and investor perception of the Fund's overall attractiveness as an
investment as compared with other investment alternatives. Nevertheless, the
fact that the Shares may be subject to the Offer may result in more of a
reduction in the spread between market price and NAV than might otherwise be the
case.
The Fund does not have any present plans or proposals that relate to or
would result in (a) the acquisition by any person of additional securities of
the Fund, or the disposition of securities of the Fund; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Fund; (c) other than in connection with liquidating assets for purposes of
funding the tender offer, a sale or transfer of a material amount of assets of
the Fund (the Fund purchases and sells assets in the ordinary course of its
business); (d) any change in the present Board of Directors or management of the
Fund including, but not limited to, any plans or proposals to change the number
or the term of Board of Directors, to fill any existing vacancy on the Board or
to change any material term of the employment contract of any executive officer;
(e) any material change in the present dividend rate or policy, or indebtedness
or capitalization of the Fund; (f) any other material change in the Fund's
corporate structure or business, including any plans or proposals to make any
changes in the Fund's investment policy for which a vote would be required by
Section 13 of the Investment Company Act of 1940, as amended (the "1940 Act");
(g) changes in the Fund's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Fund by any
person; (h) causing a class of equity security of the Fund to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity security of the Fund becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) the
suspension of the Fund's obligation to file reports pursuant to Section 15(d) of
the Exchange Act.
7
<PAGE>
7. PRICE RANGE OF SHARES; DIVIDENDS. The following table sets forth, for
the periods indicated, the high and low NAV per Share and the high and low sales
prices per Share of the Fund as reported by the NYSE Composite Tape and the
amount of cash dividends per Share.
<TABLE>
<CAPTION>
MARKET PRICE NET ASSET VALUE
-------------------- --------------------
PERIOD HIGH LOW HIGH LOW
- -------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1993
Fourth Quarter*........................................................... 15 7/8 15 14.01 14.01
1994
First Quarter............................................................. 16 1/8 11 1/8 13.92 12.48
Second Quarter............................................................ 14 1/8 10 1/2 13.26 12.44
Third Quarter............................................................. 13 3/4 11 5/8 14.12 12.89
Fourth Quarter............................................................ 12 3/4 9 5/8 13.84 12.36
1995
First Quarter............................................................. 11 9 3/8 12.55 11.54
Second Quarter............................................................ 12 1/8 10 13.18 11.91
Third Quarter............................................................. 12 1/8 10 5/8 13.56 12.83
Fourth Quarter............................................................ 12 3/8 10 1/8 13.09 11.91
1996
First Quarter............................................................. 13 7/8 11 5/8 14.22 13.44
Second Quarter............................................................ 13 3/8 12 1/4 14.53 14.03
Third Quarter............................................................. 13 1/8 11 7/8 14.34 13.45
Fourth Quarter............................................................ 12 3/8 11 5/8 13.74 13.15
1997
First Quarter (through January 31, 1997).................................. 12 7/8 11 7/8 13.84 13.65
<CAPTION>
PERIOD DIVIDENDS
- -------------------------------------------------------------------------- --------------
<S> <C>
1993
Fourth Quarter*...........................................................
1994
First Quarter.............................................................
Second Quarter............................................................
Third Quarter.............................................................
Fourth Quarter............................................................
1995
First Quarter.............................................................
Second Quarter............................................................
Third Quarter.............................................................
Fourth Quarter............................................................
1996
First Quarter.............................................................
Second Quarter............................................................
Third Quarter.............................................................
Fourth Quarter............................................................ $ 0.093159**
1997
First Quarter (through January 31, 1997)..................................
</TABLE>
- ------------------------
* The Fund commenced operations on December 30, 1993.
** Dividend paid December 18, 1996 to shareholders of record on December 6,
1996.
During the pendency of the Offer, you may obtain current NAV quotations for
the Fund by calling the Depositary at 1-800-426-5523 between the hours of 9:00
a.m. and 5:00 p.m., New York City time, Monday-Friday (except holidays).
8. SELECTED FINANCIAL INFORMATION. Set forth below is a summary of selected
financial information for the Fund for the period December 30, 1993
(commencement of operations) to January 31, 1997. The information with respect
to the period December 30, 1993 (commencement of operations) to October 31, 1996
has been excerpted from the Fund's audited financial statements for such period
and the information with respect to the period November 1, 1996 to January 31,
1997 has been excerpted from the Fund's unaudited financial statements for such
period. More comprehensive financial information is included in the financial
statements, which are included as Exhibit A to this Offer to Purchase, and the
summary of selected financial information set forth below is qualified in its
entirety by reference to such documents and the financial information, the notes
thereto and related matter contained therein.
8
<PAGE>
SUMMARY OF SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PERIOD+ PERIOD++
11/1/96- YEAR ENDED YEAR ENDED 12/30/93-
1/31/97 10/31/96 10/31/95 10/31/94
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
Investment income:
Interest and dividend........................... 454,324 3,710,284 4,392,175 3,233,284
Expenses........................................ 1,039,130 4,218,827 4,096,237 3,445,158
------------- ------------- ------------- -------------
Net investment income (loss).................... (584,806) (508,543) 295,938 (211,874)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain/loss on investments, foreign
currency transactions and forward foreign
currency contracts.............................. (3,798,882) 2,590,806 (29,229,803) (6,204,372)
Net unrealized appreciation on investments and
foreign currency transactions and forward
foreign currency contracts+++................... 16,000,478 8,328,629 5,001,661 2,869,106
STATEMENT OF ASSETS AND LIABILITIES (at end of
period)
Total assets...................................... 274,138,607 259,779,901 249,271,412 277,198,100
Total liabilities................................. 6,506,483 1,935,189 1,784,288 5,778,772
------------- ------------- ------------- -------------
Net assets........................................ 267,632,124 257,844,712 247,487,124 271,419,328
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net asset value per share......................... 13.65 13.15 12.62 13.84
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Shares of common stock outstanding................ 19,607,100 19,607,100 19,607,100 19,607,100
PER SHARE
Net investment income (loss)...................... (0.03) (0.03) 0.02 (0.01)
Dividends from net investment income.............. (0.09) -- -- --
RATIOS
Total expenses to average net assets.............. 0.39% 1.57% 1.65% 1.59%*
Net investment income to average net assets....... (0.22)% (0.19)% 0.12% (0.10)%*
TOTAL RETURN**
Total investment return, market value***.......... 2.87% 7.87% (7.29)% (20.00)%
Total investment return, net asset value****...... 4.60% 4.20% (8.82)% (1.21)%
</TABLE>
- ------------------------
+ Unaudited.
++ The Fund commenced operations on December 30, 1993.
+++ Net of estimated tax liability on Indian investments of $292,429, $266,350,
$0 and $0 for the periods ended January 31, 1997, October 31, 1996, October
31, 1995 and October 31, 1994, respectively.
* Annualized.
** Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the
9
<PAGE>
premium of the market value to the net asset value from the beginning to the
end of such periods. Conversely, total investment returns based on net asset
value will be lower than total investment returns based on market value in
periods where there is a decrease in the discount or an increase in the
premium of the market value to the net asset value from the beginning to the
end of such periods. Total investment returns for periods of less than one
full year are not annualized.
*** Based on the change in market price of a Share during the period and assumes
reinvestment of distributions at actual prices pursuant to the Fund's
dividend reinvestment plan.
****Based on the change in net asset value of a Share during the period and
assumes reinvestment of distributions at net asset value.
9. INTEREST OF CERTAIN RELATED PERSONS. Pursuant to an Investment Advisory
Agreement dated as of May 15, 1996, the Fund employs Schroder Capital Management
International Inc. ("SCMI") to manage the investment and reinvestment of the
assets of the Fund. SCMI has been the Fund's investment adviser since the Fund's
commencement of operations. SCMI is also responsible for overall management of
the business affairs of the Fund. For services provided by SCMI under the
Investment Advisory Agreement, the Fund pays SCMI a fee computed and paid
monthly in arrears at an annual rate of (i) 1.00% of the Fund's average weekly
net assets (I.E., the average weekly value of the total assets of the Fund minus
the sum of liabilities of the Fund) up to and including $300 million; and (ii)
0.85% of the Fund's average weekly net assets in excess of $300 million.
Based upon information provided to the Fund, except through the automatic
reinvestment of dividends under the Fund's Dividend Reinvestment Plan, there
have not been any transactions in Shares of the Fund that were effected during
the past 40 business days by the Fund, any member of the Board of Directors or
executive officer of the Fund, any person controlling the Fund, any executive
officer or director of any corporation ultimately in control of the Fund or by
any associate or subsidiary of any of the foregoing, including any executive
officer or director of any such subsidiary. Based upon information provided to
the Fund, no officer, director or affiliate of the Fund intends to tender Shares
pursuant to the Offer.
10. CERTAIN EFFECTS OF THE OFFER. The purchase of Shares pursuant to the
Offer will have the effect of increasing the proportionate interest in the Fund
of non-tendering shareholders. All shareholders remaining after the Offer will
be subject to any increased risks associated with the reduction in the Fund's
aggregate assets resulting from payment for the tendered Shares, such as any
greater volatility due to decreased diversification and proportionately higher
expenses. Under certain circumstances, the need to raise cash in connection with
the purchase of Shares pursuant to the Offer may have an adverse effect on the
Fund's NAV per Share. See Section 12. All Shares purchased by the Fund pursuant
to the Offer will remain authorized but unissued.
11. CERTAIN INFORMATION ABOUT THE FUND. The Fund was organized as a
Maryland corporation on November 5, 1993 and is registered as a non-diversified,
closed-end management investment company under the 1940 Act. The Fund's
investment objective is to seek long-term capital appreciation through
investment primarily in equity securities of Asian Companies, as described
below. As a matter of fundamental policy, under normal market conditions the
Fund will invest at least 65% of its total assets in equity securities of Asian
Companies. Asian Companies include companies that (i) are organized under the
laws of China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Pakistan,
the Philippines, Singapore, Sri Lanka, Taiwan, or Thailand, or any other
countries in the Asian region located south of the border of the former Soviet
Union, east of the borders of Afghanistan and Iran, north of the Australian
sub-continent and west of the International Date Line that in the future permit
foreign investors to participate in their stock markets (collectively, "Asian
Countries"), or (ii) regardless of where organized, and as determined by the
Fund's investment adviser, (A) derive at least 75% of their revenues from goods
produced or sold, investments made or services performed in Asian Countries or
(B) maintain at least 75% of their assets in Asian Countries.
10
<PAGE>
Reference is made to Section 7 and Section 8 of this Offer to Purchase and
the financial statements attached hereto as Exhibit A, which are incorporated
herein by reference.
The principal executive office of the Fund is 787 Seventh Avenue, 34th
Floor, New York, New York 10019.
12. SOURCE AND AMOUNT OF FUNDS. The total cost to the Fund of purchasing
3,500,000 of its issued and outstanding Shares pursuant to the Offer would be
approximately $47.67 million (based on a price per share of $13.62, the NAV as
of February 13, 1997). On February 13, 1997, the net assets of the Fund
aggregated approximately $267 million.
To pay the aggregate purchase price of Shares accepted for payment pursuant
to the Offer, the Fund anticipates that funds will first be derived from any
cash on hand and then from the proceeds from the sale of portfolio securities
held by the Fund. The selection of which portfolio securities to sell, if any,
will be made by SCMI, the Fund's investment adviser, taking into account
investment merit, relative liquidity and applicable investment restrictions and
legal requirements. Although the Fund is authorized to borrow money to finance
the repurchase of Shares, the Board of Directors believes that the Fund will
have sufficient resources through disposition of assets to repurchase Shares in
the Offer without utilizing such borrowing. However, the Fund reserves the right
to finance a portion of the Offer through temporary borrowing.
The repurchase of Shares by the Fund will decrease the total assets of the
Fund and, therefore, have the effect of increasing the Fund's expense ratio. In
addition, such repurchases may have an adverse effect on the Fund's investment
performance.
Under some market circumstances it may be necessary to raise cash by
liquidating portfolio securities in a manner that could tend to reduce the
market value of such securities and, thus, reduce both the NAV of the Shares and
the proceeds from the sale of such securities. Liquidating portfolio securities,
if necessary, may also lead to the premature disposition of portfolio
investments and additional transaction costs. Depending upon the timing of such
sales, any such decline in NAV may adversely affect any tendering shareholders
whose Shares are accepted for purchase by the Fund, as well as those
shareholders who do not sell Shares pursuant to the Offer. Shareholders who
retain their Shares may be subject to certain other effects of the Offer. See
Section 10.
Because the Fund will sell portfolio securities during the pendency of the
Offer to raise cash for the purchase of Shares, the Fund may hold a greater than
normal percentage of its assets in cash and cash equivalents. In addition, if
the Fund liquidates portfolio securities, it may realize gains on securities
held for less than three months. The Fund must limit such gains in order to
qualify as a regulated investment company under the Code. Accordingly, realizing
such gains would reduce the Fund's ability to sell other portfolio securities
held for less than three months that the Fund might wish to sell in the ordinary
course of its portfolio management. This may adversely affect the Fund's
performance.
13. ADDITIONAL INFORMATION. The Fund has filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the Securities and Exchange Commission (the
"SEC"); the Schedule 13E-4 includes certain additional information relating to
the Offer, which material may be inspected and copied at prescribed rates at the
SEC's public reference facilities at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and Seven World Trade Center, New York, New York 10048.
Copies of such material may also be obtained by mail at prescribed rates from
the Public Reference Branch of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549.
14. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The following discussion
is a general summary of the U.S. federal income tax consequences of a sale of
Shares pursuant to the Offer. You should consult your own tax adviser for a
complete description of the tax consequences to you of a sale of Shares pursuant
to the Offer, including potential state, local and non-U.S. taxation by taxing
jurisdictions of which you are a resident or domiciliary.
11
<PAGE>
U.S. SHAREHOLDERS. Under current federal income tax law, regulations and
Internal Revenue Service rulings, it is anticipated that shareholders selling
Shares in accordance with the terms of the Offer will recognize gain or loss for
U.S. federal income tax purposes equal to the difference between the amount of
cash received pursuant to the Offer and the adjusted tax basis of the Shares
sold. Such gain or loss will be capital gain or loss if the Shares sold have
been held by the tendering shareholder as a capital asset. In general, capital
gain or loss with respect to the Shares sold will be long-term capital gain or
loss if such Shares have been held for more than one year. In view of the
requirement of the Offer that a tendering shareholder tender or cause the tender
of all of the Shares actually owned and constructively owned by such shareholder
under Section 318 of the Code as of the date of purchase of Shares pursuant to
the Offer, shareholders should consult their tax advisers regarding the
application of the constructive ownership rules of Section 318. In general,
Section 318 provides that Shares owned by certain family members of, and by
entities treated by that section as related to, the tendering shareholder are
treated as owned by the tendering shareholder. Under the "wash sale" rules,
recognition of a loss on Shares sold pursuant to the Offer will ordinarily be
disallowed to the extent a shareholder acquires Shares within 30 days before or
after the date Shares are purchased pursuant to the Offer and, in that event,
the basis and holding period of the Shares acquired will be adjusted to reflect
the disallowed loss.
The Depositary may be required to withhold 31% of the gross proceeds paid to
a shareholder or other payee pursuant to the Offer unless either: (a) the
shareholder has completed and submitted to the Depositary the Substitute Form
W-9 included with the Transmittal Letter, providing the shareholder's taxpayer
identification number/social security number and certifying under penalties of
perjury: (i) that such number is correct, and (ii) either that (A) the
shareholder is exempt from backup withholding, (B) the shareholder has not been
notified by the Internal Revenue Service that the shareholder is subject to
backup withholding as a result of an under-reporting interest or dividends or
(C) the Internal Revenue Service has notified the shareholder that the
shareholder is no longer subject to backup withholding; or (b) an exception
applies under applicable law and Treasury regulations.
NON-U.S. SHAREHOLDERS. U.S. taxation of a shareholder who, under the Code,
is a non-resident alien individual, foreign trust or estate, foreign corporation
or foreign partnership (a "Non-U.S. shareholder") depends on whether the income
from the Fund is "effectively connected" with a U.S. trade or business carried
on by such Non-U.S. shareholder. Ordinarily, income from the Fund will not be
treated as "effectively connected" and, if that is the case, any gain realized
upon the tender of Shares pursuant to the terms of the Offer will not ordinarily
be subject to U.S. taxation. If, however, the Non-U.S. shareholder is treated as
a non-resident alien individual but is physically present in the United States
for more than 182 days during the taxable year, then, in certain circumstances,
gain from the tender of Shares pursuant to the terms of the Offer will be
subject to U.S. tax of 30% (or lower treaty rate).
If the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by a Non-U.S. shareholder, then any gain realized upon the
sale of Shares of the Fund pursuant to the terms of the Offer will be subject to
U.S. federal income tax at the graduated rates applicable to U.S. taxpayers.
Non-U.S. shareholders should provide the Depositary with a completed Form
W-8 in order to avoid 31% backup withholding. A copy of Form W-8 is provided
with the Letter of Transmittal for such shareholders.
Non-U.S. shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of a tender of Shares
pursuant to the Offer.
15. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. The Fund reserves
the right, at any time during the pendency of the Offer, to terminate, extend,
or amend the Offer in any respect. Without limiting the manner in which the Fund
may choose to make a public announcement of termination, extension, or
amendment, the Fund shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, except as provided by applicable law
(including
12
<PAGE>
Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act) and by the
requirements of the NYSE (including the listing agreement with respect to the
Shares).
Except to the extent required by applicable law (including Rule 13e-4(f)(1)
promulgated under the Exchange Act), the Fund will have no obligation to extend
the Offer. In the event that the Fund is obligated or elects to extend the
Offer, the purchase price for Shares will be equal to the NAV determined as of
the close of the regular trading session of the NYSE on the Expiration Date, as
extended. Between the previously scheduled Expiration Date and the new
Expiration Date, the rights of shareholders (such as rights to tender and
withdraw Shares) will remain unchanged. No Shares will be accepted for payment
until on or after the new Expiration Date.
16. MISCELLANEOUS. The Offer is not being made to, nor will the Fund
accept tenders from, owners of Shares in any jurisdiction in which the Offer or
its acceptance would not comply with the securities or "blue sky" laws of such
jurisdiction. The Fund is not aware of any jurisdiction in which the making of
the Offer or the acceptance of tenders of, purchase of or payment for Shares
would not be in compliance with the laws of such jurisdiction. However, the Fund
reserves the right to exclude shareholders in any jurisdiction in which it is
asserted that the Offer cannot lawfully be made or tendered Shares cannot
lawfully be accepted, purchased or paid for. So long as the Fund makes a
good-faith effort to comply with any state law deemed applicable to the Offer,
the Fund believes that the exclusion of holders residing in any such
jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange
Act. In any jurisdiction the securities or "blue sky" laws of which require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on the Fund's behalf by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
February 19, 1997
Schroder Asian Growth Fund, Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
13
<PAGE>
EXHIBIT A
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF JANUARY 31, 1997
INVESTMENT BY INDUSTRY
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
- ------------------------------------------------------ -----------------
<S> <C>
Services 20.9%
Finance 14.2%
Real Estate 13.9%
Multi-Industry 11.7%
Energy 10.5%
Capital Equipment 10.2%
Consumer Goods 8.2%
Insurance 2.2%
Materials 0.8%
Cash 7.4%
-----
Total 100%
-----
-----
</TABLE>
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ------------------------------------------------------ -----------------
<S> <C>
China Resources Development Enterprises (HK) 3.7%
Sun Hung Kai Properties Ltd (HK) 3.4%
Hutchinson Whampoa (HK) 3.0%
Island & Peninsular Berhad (Mal) 3.0%
Huaneng Power International , Ltd (CNY) 3.0%
DCB Holdings Berhad (Mal) 2.8%
Citic Pacific Ltd. (HK) 2.8%
Ayala Land Inc.'B' (Phil) 2.5%
Mahanager Telephone Nigam Ltd (Ind) 2.5%
Malayan Banking Berhad (Mal) 2.4%
-----
Total 29.1%
-----
-----
</TABLE>
COUNTRY WEIGHTINGS
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS
- ------------------------------------------------------ -----------------
<S> <C>
Hong Kong 20.5%
Malaysia 16.2%
Singapore 11.8%
Japan 11.3%
India 8.2%
Philippines 7.5%
Korea 5.1%
Indonesia 4.7%
Thailand 3.6%
China 3.3%
Taiwan 0.4%
Cash 7.4%
-----
Total 100.0%
-----
-----
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-1
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.1%
SHARES VALUE US$
- ----------- ------------
<C> <S> <C>
CHINA - 3.3%
SERVICES - 0.3%
1,109,500 Chiwan Wharf Holdings Ltd.
"B"(1) 794,699
------------
UTILITIES ELECTRICAL & GAS - 3.0%
375,000 Huaneng Power International,
Ltd.(a)* 7,968,750
------------
TOTAL CHINA
(COST $7,174,216) 8,763,449
------------
HONG KONG - 20.5%
BUILDING & CONSTRUCTION - 1.0%
930,000 New World Infrastructure
Ltd.* 2,748,532
------------
CHEMICALS - 0.7%
3,160,000 Chen Hsong Holdings Ltd. 1,794,412
------------
HOLDING COMPANY - 3.3%
7,000,000 Guangdong Investments 6,278,635
------------
MULTI-INDUSTRY - 8.8%
4,600,000 China Resources Development 9,825,127
1,508,000 Citie Pacific Ltd. 7,434,420
672,000 Swire Pacific Ltd. "A" 6,179,261
------------
23,438,808
------------
REAL ESTATE - 4.5%
800,000 Sun Hung Kai Properties Ltd. 9,034,007
650,000 Wharf (Holdings) Ltd. 2,936,052
------------
11,970,059
------------
SERVICES - 3.0%
1,070,000 Hutchison Whampoa 8,078,338
------------
TRANSPORTATION - RAIL - 0.3%
1,250,000 Guangshen Railway Co. Ltd.* 580,758
------------
TOTAL HONG KONG
(COST $34,186,049) 54,889,542
------------
INDIA - 8.2%
AUTOMOBILE - 1.2%
130,000 Bajaj Auto Ltd. 3,235,112
------------
BANKING - 0.5%
165,000 State Bank of India 1,259,392
------------
ENERGY - 0.8%
222,000 Bharat Petroleum Corporation
Ltd. 2,201,397
------------
HEALTH & PERSONAL CARE - 1.0%
148,000 Ranbaxy Laboratories Ltd. 2,583,799
------------
HOUSEHOLD PRODUCTS - 1.3%
132,000 Hindustan Lever Ltd. 3,272,346
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ----------- ------------
<C> <S> <C>
INDIA (CONCLUDED)
MACHINARY & ENGINEERING - 0.0%
506 Tata Engineering & Locomotive
Company Ltd. 4,543
------------
TELECOMMUNICATIONS - 3.5%
993,000 Mahanagar Telephone Nigam
Ltd. 6,601,508
107,000 Videsh Sanchar Nigam Ltd. 2,734,777
------------
9,336,285
------------
TOTAL INDIA
(COST $19,398,071) 21,892,874
------------
INDONESIA - 4.7%
BEVERAGES & TOBACCO - 1.6%
874,000 P.T. Gudang Garam 4,268,800
------------
BUILDING MATERIALS & COMPONENTS - 0.1%
196,000 P.T. Indocement Tunggal 292,968
------------
FOOD & HOUSEHOLD PRODUCTS - 1.6%
1,273,900 P.T. Indofood Sukses Makmur 2,815,989
82,500 P.T. Unilever Indonesia 1,597,895
------------
4,413,884
------------
TELECOMMUNICATIONS - 1.4%
20,000 P.T. Indonesian Satellite
Corp.(a) 562,500
1,720,000 P.T. Telekomunikasi Indonesia 3,077,895
------------
3,640,395
------------
TOTAL INDONESIA
(COST $8,224,586) 12,616,047
------------
JAPAN - 10.8%
BUILDING & CONSTRUCTION - 0.8%
188,000 Higashi Nihon House 2,187,129
------------
ELECTRICAL EQUIPMENT - 0.8%
117,000 Inaba Denkisangyo Co. 2,123,762
------------
INDUSTRIAL COMPONENTS - 3.6%
225,000 Glory Ltd. 4,492,574
104,000 Mabuchi Motors Co., Ltd. 5,148,515
------------
9,641,089
------------
INSURANCE - 1.0%
656,000 Koa Fire & Marine Ins. Co.,
Ltd. 2,690,033
------------
LEISURE & TOURISM - 0.5%
205,000 Airport Facillities Co., Ltd. 1,386,964
------------
MACHINERY & ENGINEERING - 0.4%
118,000 Amada Metrecs Co., Ltd. 983,333
------------
MERCHANDISING - 0.2%
66,200 Kahmo Co., Ltd. 644,521
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-2
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ----------- ------------
JAPAN (CONCLUDED)
<C> <S> <C>
MULTI-INDUSTRY - 0.9%
703,000 Hanshin Electric Railway* 2,331,733
------------
RETAIL SALES - 0.9%
110,000 Credit Saison Co. Ltd. 2,341,584
------------
RETAIL TRADE - 0.3%
60,000 Doshisha Co. Ltd. 801,980
------------
UTILITIES ELECTRICAL & GAS - 1.4%
70,700 Hirose Electric 3,710,000
------------
TOTAL JAPAN
(COST $40,346,246) 28,842,128
------------
KOREA - 5.2%
BANKING - 0.8%
151,479 Shinhan Bank(1) 2,176,874
------------
ELECTRONICS - 0.9%
35,413 Samsung Electronics(1) 2,425,585
------------
METALS-STEEL - 0.2%
8,000 Pohang Iron & Steel Co.,
Ltd.(1) 546,243
------------
TELECOMMUNICATIONS - 2.0%
45,830 Korea Mobile
Telecommunications Corp.(1) 5,275,761
------------
TRANSPORTATION-AIR - 0.3%
40,000 Korean Air(1) 766,767
------------
UTILITIES - ELECTRICAL & GAS - 1.0%
77,000 Korea Electric Power Corp.(1) 2,593,731
------------
TOTAL KOREA
(COST $16,638,823) 13,784,961
------------
MALAYSIA - 16.2%
BANKING - 5.2%
1,988,000 DCB Holdings Berhad(1) 7,518,487
584,000 Malayan Banking Berhad(1) 6,461,477
------------
13,979,964
------------
CONSUMER NON-DURABLE - 0.9%
920,000 R.J.Reynolds Berhad 2,294,910
------------
DIVERSIFIED INDUSTRIALS - 3.1%
615,000 United Engineers (Malaysia)
Ltd. 5,517,803
------------
ENERGY - 1.7%
978,000 Tenaga Nasional Berhad 4,682,438
------------
INSURANCE - 1.2%
540,625 Malaysian Assurance Alliance
Berhad 3,219,171
------------
LEISURE & TOURISM - 1.4%
561,500 Genting Berhad 3,817,884
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ----------- ------------
<C> <S> <C>
MALAYSIA (CONCLUDED)
MACHINERY & ENGINEERING - 0.7%
475,000 Gamuda Berhad 1,853,752
------------
REAL ESTATE - 3.0%
2,069,000 Island & Peninsular Berhad 7,991,310
------------
TOTAL MALAYSIA
(COST $34,060,115) 43,357,232
------------
PHILIPPINES - 7.5%
BANKING - 1.3%
145,000 Metropolitan Bank & Trust Co. 3,966,565
------------
REAL ESTATE - 3.2%
5,514,375 Ayala Land, Inc. "B" 6,704,407
3,526,500 C&P Homes Inc. 1,909,294
------------
8,613,701
------------
TELECOMMUNICATION - 1.1%
48,170 Philippine Long Distance
Telephone 2,919,117
------------
UTILITIES - ELECTRICAL & GAS - 1.7%
537,550 Manila Electric Co. "B" 4,513,623
------------
TOTAL PHILIPPINES
(COST $14,782,540) 20,013,006
------------
SINGAPORE - 11.7%
BANKING - 4.0%
740,000 Overseas Union Bank Ltd. 5,994,457
407,880 United Overseas Bank Ltd. 4,753,238
------------
10,747,695
------------
BEVERAGE & TOBACCO - 0.4%
110,000 Fraser & Neave Ltd. 1,063,036
------------
BROADCASTING & PUBLISHING - 1.9%
253,200 Singapore Press Holdings Ltd. 5,073,716
------------
MACHINERY & ENGINEERING - 1.8%
608,000 Keppel Corporation Ltd. 4,925,176
------------
REAL ESTATE - 3.6%
576,000 City Developments Ltd. 5,771,051
956,000 DBS Land Ltd. 3,940,027
------------
9,711,078
------------
TOTAL SINGAPORE
(COST $23,118,587) 31,520,701
------------
TAIWAN - 0.4%
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-3
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ----------- ------------
TRANSPORT - MARINE - 0.4%
<C> <S> <C>
1,118,000
86,000 Yang Ming Marine(b)*
------------
TOTAL TAIWAN
(COST $1,001,040) 1,118,000
------------
THAILAND - 3.6%
BANKING - 1.1%
500,200 Thai Farmers Bank Ltd. 2,896,911
48,337 Thai Farmers Bank Ltd., wts.
(1)* 32,660
------------
2,929,571
------------
REAL ESTATE - 0.6%
275,000 Land & House Corp., Ltd. 1,751,931
------------
TELECOMMUNICATIONS - 1.0%
630,000 TelecomAsia Corporation* 1,210,135
197,000 Total Access Communication
Public Co. Ltd. 1,388,850
------------
2,598,985
------------
UTILITIES - ELECTRICAL & GAS - 0.9%
997,200 Electricity Generating Public
Co., Ltd. 3,425,622
------------
TOTAL THAILAND
(COST $14,974,010) 9,706,109
------------
TOTAL COMMON STOCKS
(COST $213,904,283) 246,504,049
------------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE BOND - 0.6%
PRINCIPAL
AMOUNT
(000) VALUE US$
- ---------- ------------
<C> <S> <C>
JAPAN - 0.5%
MERCHANDISING - 0.5%
CHF 1,900 Arcland Sakamoto
.125% 2/20/98
(Cost $1,386,916) 1,281,799
------------
REPURCHASE AGREEMENT - 4.4%
UNITED STATES - 4.4%
US$ 12,000 With Chase Securities
Incorporated, 5.45% dated
1/31/97, due 2/3/97 in the
amounts of $12,000,000 (cost
$12,000,000; collateralized by
$8,355,000 U.S. Treasury Note,
12.00% due 8/15/13; value
$12,328,450) 12,000,000
------------
TOTAL INVESTMENTS
(COST $227,291,199) 97.1% 259,785,848
------------
Other assets less liabilities
2.9% 7,846,276
------------
Net Assets 100% $267,632,124
------------
------------
</TABLE>
* Non-income producing security
(a) American Depository Receipt.
(b) Global Depositary Receipt.
(1) Priced at fair value as determined by the Adviser and approved by the Board
of Directors.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-4
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $227,291,199) $259,785,848
Cash 5,831,111
Receivable for securities sold 8,327,722
Receivable for dividends 93,746
Receivable for interest 18,544
Deferred organization expenses 64,983
Prepaid expenses 16,653
-----------
Total Assets 274,138,607
-----------
LIABILITIES:
Payable for securities purchased 5,619,156
Estimated tax liability on Indian investments 292,429
Investment advisory fee payable 223,748
Administration fee payable 55,937
Unrealized depreciation on forward foreign currency
contracts 13,131
Accrued expenses payable and other liabilities 302,082
-----------
Total Liabilities 6,506,483
-----------
Net Assets $267,632,124
-----------
-----------
NET ASSETS WERE COMPOSED OF:
Capital Stock, par value ($.01 per share, applicable to
19,607,100 shares issued: authorized 100,000,000
shares) $ 196,071
Paid-in capital in excess of par 271,662,493
Accumulated net investment loss (584,794)
Accumulated net realized losses from investments (35,816,719)
Accumulated net realized losses from foreign currency
transactions and forward foreign currency contracts (24,801)
Net unrealized appreciation of investments (net of
estimated tax liability on Indian investments of
$292,429) 32,202,220
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies and forward foreign
currency contracts (2,346)
-----------
Net Assets $267,632,124
-----------
-----------
Net asset value per share ($267,632,124
divided by 19,607,100 shares outstanding) $ 13.65
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-5
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $39,620) $ 333,364
Interest and discount earned 120,960
-----------
Total Investment Income 454,324
-----------
EXPENSES:
Investment advisory fee 663,603
Administration fee 165,901
Custodian's fees and expenses 77,152
Transfer agent's fees and expenses 26,318
Insurance expense 21,978
Directors' fees and expenses 20,921
Legal fees and expenses 20,164
Reports to shareholders 18,733
Amortization of deferred organization expenses 8,565
Independent accountants' fees and expenses 7,940
Registration fees 6,115
Miscellaneous expenses 1,740
-----------
Total Expenses 1,039,130
-----------
NET INVESTMENT LOSS (584,806)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized loss from:
Investments (3,774,081)
Foreign currency transactions and forward foreign currency
contracts (24,801)
Net change in unrealized appreciation on:
Investments (net of estimated tax liability on Indian
investments of $292,429) 16,000,371
Translation of assets and liabilities in foreign
currencies and forward foreign currency contracts 107
-----------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 12,201,596
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $11,616,790
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-6
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
THREE MONTH PERIOD
ENDED FOR THE YEAR
JANUARY 31, 1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
<S> <C> <C>
- ------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (584,806) $ (508,543)
Net realized gain (loss) on
investment transactions (3,774,081) 21,946
Net realized gain (loss) from
foreign currency transactions
and forward foreign currency
contracts (24,801) 2,568,860
Net change in unrealized
appreciation on investments
(net of estimated tax liability
on Indian investments of
$292,429 and $266,350,
respectively) 16,000,371 8,574,019
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies and forward foreign
currency contracts 107 (245,390)
------------------ -----------------
Net Increase in Net Assets
Resulting from Operations 11,616,790 10,410,892
------------------ -----------------
DIVIDENDS TO SHAREHOLDERS:
From net investment income (1,826,573) --
CAPITAL STOCK TRANSACTIONS:
Tender offer costs charged to
paid-in-capital in excess of
par (2,805) (53,304)
------------------ -----------------
TOTAL INCREASE IN NET ASSETS 9,787,412 10,357,588
------------------ -----------------
NET ASSETS:
Beginning of period 257,844,712 247,487,124
------------------ -----------------
End of period (including net
investment losses of $584,794
and undistributed net
investment income of $1,826,585
for 1997 and 1996,
respectively) $ 267,632,124 $ 257,844,712
------------------ -----------------
------------------ -----------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-7
<PAGE>
- ------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios:
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR FOR THE YEAR DECEMBER 30,
MONTH PERIOD ENDED ENDED ENDED 1993* TO
JANUARY 31,1997 OCTOBER 31, OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1996 1995 1994
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.15 $ 12.62 $ 13.84 $ 14.01**
Investment Operations:
Net investment income (loss) (0.03) (0.03) 0.02 (0.01)
Net realized and unrealized gain (loss) on
investments (net of estimated tax
liability on Indian investments) and
foreign currencies and forward foreign
currency contracts 0.62 0.56 (1.24) (0.16)
------- ------------- ------------- -------
Total from investment operations 0.59 0.53 (1.22) (0.17)
------- ------------- ------------- -------
Dividends to shareholders from net
investment income (0.09) -- -- --
------- ------------- ------------- -------
Net asset value, end of period $ 13.65 $ 13.15 $ 12.62 $ 13.84
------- ------------- ------------- -------
------- ------------- ------------- -------
Market value, end of period $ 12.25 $ 12.00 $ 11.125 $ 12.00
------- ------------- ------------- -------
------- ------------- ------------- -------
Total investment return based on (1):
Market value 2.87% 7.87% (7.29)% (20.00)%
------- ------------- ------------- -------
------- ------------- ------------- -------
Net asset value 4.60% 4.20% (8.82)% (1.21)%
------- ------------- ------------- -------
------- ------------- ------------- -------
Ratio/Supplementary Data:
Net assets, end of period (Millions) $ 267.63 $ 257.84 $ 247.49 $ 271.42
Ratio of expenses to average net assets 0.39% 1.57% 1.65% 1.59%***
Ratio of net investment income (loss) to
average net assets (0.22)% (0.19)% 0.12% (0.10)%***
Portfolio turnover rate 6.58% 34.71% 66.79% 19.76%
Average commission rate per share**** $ 0.0148 $ 0.0166 N/A N/A
</TABLE>
* Commencement of investment operations.
** Net of $.09 offering expenses.
*** Annualized
**** For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged.
(1) Total investment return is calculated assuming a purchase of common
stock on the opening of the first day and a sale on the closing of the
last day of each period reported. Dividends and distributions, if any, are
assumed for the purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions. Generally, total investment
return based on net asset value will be higher than total investment
return based on market value in periods where there is an increase in the
discount or decrease in the premium of the market value to the net asset
value from the beginning to the end of such periods. Conversely, total
investment return based on net asset value will be lower than total
investment return based on market value in periods where there is a
decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of such periods.
Total investment returns for periods of less than one full year are not
annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-8
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES:
Schroder Asian Growth 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 was incorporated in Maryland on November
5, 1993 and investment operations commenced on December 30, 1993. The following
is a summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements.
SECURITY VALUATION
Portfolio securities listed or traded on a recognized stock exchange or
NASDAQ Nation Market System are valued at the last reported sales price on the
exchange on which the securities are principally traded. Other securities for
which market quotations are readily available are valued at the last sales price
prior to the time of determination. If there is no sales price on such date, and
if bid and asked quotations are available, such securities are valued at the
mean between the last current bid and asked prices. The value of a foreign
security is determined in its national currency as of 9:00 a.m., New York time,
and that value is then converted into its U.S. dollar equivalent on the day of
valuation as of 11:30 a.m., New York time. Securities for which market
quotations are not readily available, and securities for which, in judgement of
the Adviser, the prices or values available do not represent the fair value of
the instrument, are valued at fair value, pursuant to the Funds pricing
procedures as determined by the Adviser and approved in good faith by the Board
of Directors. In determining the fair value of such securities, the Adviser and
the Board consider all relevant information, including but not limited to types
of securities, current financial and market information and restrictions on
dispositions. The values assigned to the securities holdings do not necessarily
represent amounts which might ultimately be realized upon their sale or other
disposition, since such amounts depend on future circumstances and cannot
reasonably be determined until the actual disposition occurs. However, because
of the inherent uncertainty of such valuations, those estimated values may
differ significantly from the values that would have been used had a ready
market for the investments existed, and the differences could be material. At
January 31, 1997, the portfolio contained ten securities for which market
quotations were not readily available and which were fair valued pursuant to the
Fund's procedures. These securities had a total value of $28,592,284
representing 10.7% of the Fund's net assets.
The Fund may enter into repurchase agreements whereby the Fund, through its
custodian, receives delivery of the underlying securities. The underlying
collateral is valued daily on a marked-to-market basis to assure that the value,
including accrued interest, is at least equal to the repurchase price.
In the event of a default of the obligation to repurchase, the Fund has the
right to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. If the seller defaults and the value of the collateral declines,
realization of the collateral by the Fund may be delayed or limited.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date except for certain dividends from foreign
securities which are recorded as soon as the Fund is informed of the ex-dividend
date. Interest income (including accretion of discount) is recorded on the
accrual basis. Realized gains and losses from security transactions are
determined on the identified cost basis.
FOREIGN CURRENCY TRANSLATION
Foreign currency amounts denominated in or expected to settle in foreign
currencies ("FC") are translated into U.S. dollars on the following basis:
market value of investment securities and other assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
investment securities and income and expenses at the rate of exchange prevailing
on the respective dates of such transactions.
A-9
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
the investment.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions payable by the Fund, if any, are accrued on the
ex-dividend date. Dividends from net investment income and capital gain
distributions are determined in accordance with U.S. Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions.
FORWARD CONTRACTS
The Fund may enter into forward contracts to purchase or sell foreign
currencies to protect against the effect of possible adverse movements in
foreign exchange rates on the U.S. dollar value of the underlying portfolio.
Risks associated with such contracts include the movement in value of the FC
relative to the U.S. dollar and the ability of the counterparty to perform.
Forward currency contracts are valued at the forward rate and are marked-to-
market weekly. Fluctuations in the value of such contracts are recorded as
unrealized gains or losses; realized gains or losses include net gains or losses
on contracts which have terminated by settlement.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized on a straight line basis over a five-year
period from the commencement of investment operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
OTHER
The financial statements were prepared on a basis consistent with the
October 31, 1996 financial statements. The financial statements contain all
normal and recurring adjustments which are necessary for a fair statement of the
results for the interim period.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate cost of securities purchased and the proceeds from sales of
securities, excluding short-term investments, for the three months ended January
31, 1997 were $16,764,199 and $33,575,454, respectively.
A-10
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FORWARD EXCHANGE CONTRACTS AS OF JANUARY 31, 1997:
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS TO SETTLEMENT IN EXCHANGE DEPRECIATION
DELIVER DATE FOR VALUE ($) ($)
--------------- ---------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Open Currency Transactions:
Hong Kong Dollar $1,342,233 2/03/97 HKD10,399,621 $1,342,146 (87)
Hong Kong Dollar HKD 457,709 2/17/97 $59,059 $59,070 (11)
Hong Kong Dollar HKD 544,376 2/18/97 $70,249 $70,255 (6)
Hong Kong Dollar HKD 1,401,142 2/19/97 $180,793 $180,828 (35)
Indonesian Rupiah IDR 574,377,763 2/03/97 $241,843 $241,843 0
Indonesian Rupiah IDR 552,478,700 2/04/97 $232,476 $232,623 (147)
Indonesian Rupiah IDR 322,789,082 2/05/97 $135,825 $135,911 (86)
Japanese Yen JPY 190,425,505 2/04/97 $1,566,579 $1,571,168 (4,589)
Japanese Yen JPY 21,445,167 2/04/97 $176,634 $176,940 (306)
Japanese Yen JPY 20,841,213 2/05/97 $171,483 $171,957 (474)
Japanese Yen JPY 107,053,871 2/05/97 $880,848 $883,283 (2,435)
Malaysian Ringit MYR 2,040,872 2/03/97 $817,081 $821,111 (4,030)
Malaysian Ringit MYR 1,550,396 2/04/97 $623,877 $623,776 101
Malaysian Ringit $943,776 2/14/97 MYR 2,345,660 $943,738 (38)
Malaysian Ringit $923,447 2/17/97 MYR 2,295,044 $923,373 (74)
Singapore Dollar $1,071,824 2/11/97 $1,071,824 $1,070,910 (914)
-------
($13,131)
-------
-------
</TABLE>
4. INVESTMENT ADVISORY AND ADMINISTRATIVE AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES:
The Fund retains Schroder Capital Management International Inc. as
Investment Adviser. The Investment Adviser is paid a fee at an annual rate of
(i) 1.00% of the Fund's average weekly net assets up to and including $300
million, and (ii) 0.85% of the Fund's average weekly net assets in excess of
$300 million.
The Fund retains Princeton Administrators, L.P. (formerly Middlesex
Administrators L.P.) as the Administrator. The Administrator receives a monthly
fee equal to the greater of (a) $150,000 per annum or (b) an annual rate of (i)
0.25% of the Fund's average weekly net assets up to and including $300 million,
and (ii) 0.22% of the Fund's average weekly net assets in excess of $300
million.
Several individuals who are directors or officers (or both) of the Fund are
also directors or officers of the Investment Adviser or its affiliates.
5. FEDERAL INCOME TAXES:
Since it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its stockholders, no
Federal income tax provision is required.
For Federal income tax purposes, the tax basis of investment securities
owned is $227,291,199. At January 31, 1997, net unrealized appreciation on
investments was $32,494,649. This consisted of aggregate gross unrealized
appreciation of $55,711,057 for all securities in which there was an excess of
market value over tax cost and
A-11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
aggregate gross unrealized depreciation of $23,216,408 for all securities in
which there was an excess of tax cost over market value.
For Federal income tax purposes, the Fund had a capital loss carry forward
as of October 31, 1996 of $32,042,638 ($5,994,149 expiring in 2002 and
$26,048,489 expiring in 2003) which is available to offset future capital gains,
subject to limitations imposed under the Internal Revenue Code.
Under the applicable foreign tax law, a withholding tax may be imposed on
interest, dividends, and capital gains at various rates. Indian tax regulations
require that taxes be paid on capital gains realized by the Fund. At January 31,
1997, the Fund decreased net unrealized appreciation by the estimated tax
liability attributable to Indian investments of $292,429.
6. CAPITAL STOCK:
There are 100,000,000 shares of $.01 par value common stock authorized.
There are 19,607,100 shares outstanding as of January 31, 1997. For the three
months ended January 31, 1997, the Fund offered no additional shares.
7. TENDER OFFER PROVISION
In accordance with provisions of the Fund's prospectus, the Board of
Directors (the "Board") has fixed a period of twelve consecutive calendar weeks
beginning on November 11, 1996 and ending on January 31, 1997, as the
measurement period for the purposes of calculating the average trading price of
the Fund's shares. In the event the average of the closing prices of the shares
of the Fund on the Fund's valuation day in each week during such 12 week period
represents a discount of 3% or more from the average net asset value of the Fund
as determined on the same days in the same period, it is currently anticipated
that a tender offer for shares of the Fund will be conducted during the first
calendar quarter of 1997.
For the three months ended January 31, 1997, cost incurred in connection
with the tender offer in the amount of $2,805 and as of October 31, 1996 in the
amount of $53,304, respectively, have been charged to paid-in-capital in excess
of par.
A-12
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Issuer Tender Offer
Statement on Schedule 13E-4 (SEC File No. 33-71394) of our reports dated
December 4, 1996, December 15, 1995, and December 12, 1994, on our audits of the
financial statements and financial highlights of Schroder Asian Growth Fund,
Inc. as of and for the years ending October 31, 1996, October 31, 1995 and for
the period from December 30, 1993 (commencement of operations) to October 31,
1994, respectively, appearing in this Offer To Purchase filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
Coopers & Lybrand L.L.P.
New York, New York
December 4, 1996
A-13
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS - 97.2%
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
CHINA - 2.7%
SERVICES - 0.5%
2,832,000 Chiwan Wharf Holdings Ltd. 'B'
(1) 1,234,410
------------
UTILITIES ELECTRICAL & GAS - 2.2%
375,000 Huaneng Power International,
Ltd.(a)* 5,718,750
------------
TOTAL CHINA
(COST $7,969,618) 6,953,160
------------
HONG KONG - 20.3%
CHEMICALS - 0.7%
3,160,000 Chen Hsong Holdings Ltd. 1,818,793
------------
HOLDING COMPANY - 2.0%
7,000,000 Guangdong Investments 5,024,898
------------
LEISURE & TOURISM - 2.5%
3,240,000 Cathay Pacific Airways 5,070,685
2,000,000 Shun Tak Holdings Ltd. 1,319,278
------------
6,389,963
------------
MULTI-INDUSTRY - 8.5%
4,600,000 China Resources Development
Enterpirses 5,176,227
2,234,000 Citic Pacific Ltd. 10,864,438
672,000 Swire Pacific Ltd. 'A' 5,932,096
------------
21,972,761
------------
REAL ESTATE - 3.5%
800,000 Sun Hung Kai Properties Ltd. 9,105,607
------------
SERVICES - 2.9%
1,070,000 Hutchison Whampoa 7,473,324
------------
TRANSPORTATION - RAIL - 0.2%
1,250,000 Guangshen Railway Co. Ltd.,
'H'* 464,819
------------
TOTAL HONG KONG
(COST $36,331,419) 52,250,165
------------
INDIA - 10.0%
AUTOMOBILE - 1.4%
130,000 Bajaj Auto Ltd. 3,497,183
------------
ENERGY - 0.7%
222,000 Bharat Petroleum Corporation
Ltd. 1,791,947
------------
HEALTH & PERSONAL CARE - 1.0%
148,000 Ranbaxy Laboratories Ltd. 2,605,634
------------
HOUSEHOLD PRODUCTS - 1.1%
132,000 Hindustan Lever Ltd. 2,922,963
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
INDIA (CONCLUDED)
LEISURE & TOURISM - 1.0%
136,650 Indian Hotels Co., Ltd. 2,540,535
------------
MACHINERY & ENGINEERING - 1.0%
207,200 Tata Engineering & Locomotive
Company Ltd. 2,428,326
------------
TELECOMMUNICATIONS - 3.8%
993,000 Mahanagar Telephone Nigam Ltd. 6,380,375
110,000 Videsh Sanchar Nigam Ltd. 3,501,408
------------
9,881,783
------------
TOTAL INDIA
(COST $23,369,046) 25,668,371
------------
INDONESIA - 5.3%
BEVERAGES & TOBACCO - 1.3%
874,000 P.T. Gudang Garam 3,489,996
------------
BUILDING MATERIALS & COMPONENTS - 0.6%
1,018,000 P.T. Indocement Tunggal 1,540,769
------------
FOOD & HOUSEHOLD PRODUCTS - 1.5%
1,273,900 P.T. Indofoods Sukses Makmur 2,680,167
82,500 P.T. Unilever Indonesia 1,239,802
------------
3,919,969
------------
TELECOMMUNICATIONS - 1.9%
74,000 P.T. Indonesian Satellite
Corp. 'B'(a) 2,229,250
1,720,000 P.T. Telekomunikasi Indonesia 2,566,337
------------
4,795,587
------------
TOTAL INDONESIA
(COST $12,148,844) 13,746,321
------------
JAPAN - 16.3%
BUILDING & CONSTRUCTION - 1.1%
188,000 Higashi Nihon House 2,710,506
------------
ELECTRICAL EQUIPMENT - 1.0%
117,000 Inaba Denkisangyo Co. 2,478,857
------------
INDUSTRIAL COMPONENTS - 4.3%
225,000 Glory Ltd. 5,795,604
104,000 Mabuchi Motors Co., Ltd. 5,302,857
------------
11,098,461
------------
INSURANCE - 1.5%
656,000 Koa Fire & Marine Insurance
Co., Ltd. 3,846,611
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-14
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
JAPAN (CONCLUDED)
<C> <S> <C>
LEISURE & TOURISM - 0.6%
205,000 Airport Facilities Co., Ltd. 1,629,187
------------
MACHINERY & ENGINEERING - 1.0%
223,000 Amada Sonoike Co., Ltd. 2,646,593
------------
MERCHANDISING - 0.6%
109,000 Kahma Co., Ltd. 1,581,099
------------
METAL PRODUCTS - 1.3%
1,365,000 Kobe Steel Ltd.* 3,240,000
------------
MULTI-INDUSTRY - 1.1%
703,000 Hanshin Electric Railway* 2,855,262
------------
REAL ESTATE - 0.7%
144,000 Mitsui Home Co., Ltd. 1,924,220
------------
RETAIL SALES - 1.0%
110,000 Credit Saison Co., Ltd. 2,543,297
------------
RETAIL TRADE - 0.5%
60,000 Doshisha Co., Ltd. 1,202,637
------------
UTILITIES ELECTRICAL & GAS - 1.6%
70,700 Hirose Electric 4,201,600
------------
TOTAL JAPAN
(COST $49,419,595) 41,958,330
------------
KOREA - 5.4%
BANKING - 1.2%
151,479 Shinhan Bank (1) 3,019,561
------------
ELECTRONICS - 0.7%
17,859 Samsung Electronics Co. (1) 1,271,825
10,204 Samsung Electronics Co. (New)
(1) 706,664
------------
1,978,489
------------
MANUFACTURING - MISC. - 0.3%
72,000 Hyundai Motor Co., Ltd.(b) 810,000
------------
METALS - STEEL - 0.2%
8,000 Pohang Iron & Steel Co., Ltd.
(1) 520,995
------------
TELECOMMUNICATIONS - 1.8%
4,450 Korea Mobile
Telecommunications Corp. (1) 4,580,962
------------
TRANSPORTATION - AIR - 0.3%
40,000 Korean Air Lines (1) 814,854
------------
UTILITIES ELECTRICAL & GAS - 0.9%
77,000 Korea Electric & Power Corp. 2,270,753
------------
TOTAL KOREA
(COST $16,595,095) 13,995,614
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
MALAYSIA - 15.5%
BANKING - 4.9%
1,988,000 DCB Holdings Berhad (1) 6,807,680
584,000 Malayan Banking Berhad (1) 5,779,889
------------
12,587,569
------------
CONSUMER NON-DURABLE - 1.0%
920,000 R.J. Reynolds Berhad 2,676,960
------------
DIVERSIFIED INDUSTRIALS - 1.5%
500,000 United Engineers (Malaysia)
Ltd. 3,958,828
------------
ENERGY - 1.5%
978,000 Tenaga Nasional Berhad 3,910,451
------------
FOOD & HOUSEHOLD - 0.7%
236,000 Nestle (Malaysia) Berhad 1,849,881
------------
INSURANCE - 1.0%
540,625 Malaysian Assurance Alliance
Berhad 2,653,900
------------
LEISURE & TOURISM - 2.2%
741,500 Genting Berhad 5,548,040
------------
REAL ESTATE - 2.7%
2,069,000 Island & Peninsular Berhad 6,839,331
------------
TOTAL MALAYSIA
(COST $34,191,463) 40,024,960
------------
PHILIPPINES - 7.0%
BANKING - 1.3%
145,000 Metropolitan Bank & Trust Co. 3,205,030
------------
REAL ESTATE - 3.6%
6,684,375 Ayala Land, Inc. 'B' 7,132,717
3,526,500 C&P Homes Inc. 1,612,729
3,044,060 SM Prime Holdings Inc. 649,647
------------
9,395,093
------------
TELECOMMUNICATIONS - 0.6%
25,170 Philippine Long Distance
Telephone 1,510,776
------------
UTILITIES ELECTRICAL & GAS - 1.5%
537,550 Manila Electric Co. 'B' 3,953,779
------------
TOTAL PHILIPPINES
(COST $14,690,691) 18,064,678
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-15
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- -----------
<C> <S> <C>
SINGAPORE - 9.5%
BANKING - 3.5%
740,000 Overseas Union Bank Ltd. 5,044,380
407,880 United Overseas Bank Ltd. 3,967,873
-----------
9,012,253
-----------
BROADCASTING & PUBLISHING - 1.6%
253,200 Singapore Press Holdings Ltd. 4,207,115
-----------
MACHINERY & ENGINEERING - 1.8%
608,000 Keppel Corp., Ltd. 4,533,125
-----------
REAL ESTATE - 2.6%
480,000 City Development Ltd. 3,783,285
956,000 DBS Land Ltd. 3,014,017
-----------
6,797,302
-----------
TOTAL SINGAPORE
(COST $21,160,936) 24,549,795
-----------
THAILAND - 5.2%
BANKING - 1.5%
159,000 Krung Thai Bank Public Co.,
Ltd. 430,438
441,700 Thai Farmers Bank Ltd. 3,379,296
48,337 Thai Farmers Bank Ltd., wts.
(1)* 47,412
-----------
3,857,146
-----------
REAL ESTATE - 0.9%
275,000 Land & House Corp., Ltd. 2,287,351
-----------
TELECOMMUNICATIONS - 1.5%
188,000 Total Access Communication Co.,
Ltd. 1,297,200
330,000 United Communications
Industries 2,744,821
-----------
4,042,021
-----------
UTILITIES ELECTRICAL & GAS - 1.3%
1,148,000 Electricity Generating Public
Co., Ltd. 3,333,019
-----------
TOTAL THAILAND
(COST $18,605,826) 13,519,537
-----------
TOTAL COMMON STOCKS
(COST $234,482,533) 250,730,931
-----------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE BOND - 0.6%
PRINCIPAL
AMOUNT
(000) VALUE US$
- ---------- ------------
<C> <S> <C>
JAPAN - 0.6%
MERCHANDISING - 0.6%
CHF 1,900 Arcland Sakamoto
.125% 2/20/98
(Cost $1,386,916) 1,606,717
------------
SHORT-TERM INVESTMENT - 1.2%
REPURCHASE AGREEMENT - 1.2%
US$ 3,000 With Chase Securities
Incorporated dated 10/31/96,
5.47%, due 11/01/96
(repurchase proceeds
$3,000,456); collateralized
by: $3,000,000 U.S. Treasury
Note, 7.50%, due 1/31/97
(value $3,071,250) (cost
$3,000,000) 3,000,000
------------
TOTAL INVESTMENTS
(COST $238,869,449) - 99.0% 255,337,648
Other assets less
liabilities - 1.0% 2,507,064
------------
Net Assets - 100% $257,844,712
------------
------------
</TABLE>
* Non-income producing security
(a) American Depositary Receipt.
(b) Global Depositary Receipt.
(1) Priced at fair value as determined by the Adviser and approved by the Board
of Directors.
Percentages are based on net assets
CHF - Swiss Franc
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-16
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $238,869,449) $ 255,337,648
Cash 3,897,107
Receivable for dividends 333,120
Receivable for securities sold 99,493
Receivable for interest 22,331
Deferred organization expenses 73,549
Prepaid expenses 16,653
-------------
Total Assets 259,779,901
-------------
LIABILITIES:
Payable for securities purchased 1,084,326
Estimated tax liability on Indian investments (Note 5) 266,350
Investment advisory fee payable 220,087
Professional fees payable 84,804
Administration fee payable 55,022
Directors' fees payable 53,852
Unrealized depreciation on forward foreign currency
contracts 142
Accrued expenses payable and other liabilities 170,606
-------------
Total Liabilities 1,935,189
-------------
Net Assets $ 257,844,712
-------------
-------------
NET ASSETS WERE COMPOSED OF:
Capital Stock, par value ($.01 per share, applicable to
19,607,100 shares issued: authorized 100,000,000
shares) $ 196,071
Paid-in-capital in excess of par 271,665,298
Undistributed net investment income 1,826,585
Accumulated net realized losses from investments (32,042,638)
Net unrealized appreciation of investments (net of
estimated tax liability on Indian investments of
$266,350 - See Note 5) 16,201,849
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies and forward foreign
currency contracts (2,453)
-------------
Net Assets $ 257,844,712
-------------
-------------
Net asset value per share ($257,844,712
divided by 19,607,100 shares outstanding) $ 13.15
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-17
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $464,895) $ 3,163,002
Interest and discount earned 547,282
-----------
Total Investment Income 3,710,284
-----------
EXPENSES:
Investment advisory fee 2,681,822
Administration fee 670,455
Custodian's fees and expenses 298,744
Legal fees and expenses 128,639
Transfer agent's fees and expenses 103,922
Insurance expense 98,315
Directors' fees and expenses 88,716
Reports to shareholders 53,675
Amortization of deferred organization expenses 34,074
Independent accountants' fees and expenses 26,155
Registration fees 24,260
Miscellaneous expenses 10,050
-----------
Total Expenses 4,218,827
-----------
NET INVESTMENT LOSS (508,543)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain from:
Investments 21,946
Foreign currency transactions and forward foreign currency
contracts 2,568,860
Net change in unrealized appreciation (depreciation) on:
Investments (net of estimated tax liability on Indian
investments of $266,350 - Note 5) 8,574,019
Translation of assets and liabilities in foreign
currencies and forward foreign currency contracts (245,390)
-----------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 10,919,435
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,410,892
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-18
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
<S> <C> <C>
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ (508,543) $ 295,938
Net realized gain (loss) from
investment transactions 21,946 (26,048,489)
Net realized gain (loss) from
foreign currency transactions and
forward foreign currency contracts 2,568,860 (3,181,314)
Net change in unrealized
appreciation on investments (net
of estimated tax liability on
Indian investments of $266,350 and
$0, respectively - Note 5) 8,574,019 2,267,623
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign currencies
and forward foreign currency
contracts (245,390) 2,734,038
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 10,410,892 (23,932,204)
----------------- -----------------
CAPITAL STOCK TRANSACTIONS:
Tender offer costs charged to paid-
in-capital in excess of par (53,304) -
----------------- -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,357,588 (23,932,204)
----------------- -----------------
NET ASSETS:
Beginning of year 247,487,124 271,419,328
----------------- -----------------
End of year (including undistributed
net investment income of
$1,826,585 and $0 for 1996 and
1995, respectively) $ 257,844,712 $ 247,487,124
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-19
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios:
<TABLE>
<CAPTION>
FOR THE FOR THE DECEMBER 30,
YEAR ENDED YEAR ENDED 1993* TO
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Net asset value, beginning of
period $ 12.62 $ 13.84 $ 14.01**
Investment Operations:
Net investment income (loss) (0.03) 0.02 (0.01)
Net realized and unrealized gain
(loss) on investments (net of
estimated tax liability on
Indian investments) and foreign
currencies and forward currency
contracts 0.56 (1.24) (0.16)
----------- ----------- -------
Total from investment operations 0.53 (1.22) (0.17)
----------- ----------- -------
Net asset value, end of period $ 13.15 $ 12.62 $ 13.84
----------- ----------- -------
----------- ----------- -------
Market value, end of period $ 12.00 $ 11.125 $ 12.00
----------- ----------- -------
----------- ----------- -------
Total investment return based on
(1):
Market value 7.87% -7.29% -20.00%
----------- ----------- -------
----------- ----------- -------
Net asset value 4.20% -8.82% -1.21%
----------- ----------- -------
----------- ----------- -------
Ratio/Supplementary Data:
Net assets, end of period
(Millions) $ 257.84 $ 247.49 $ 271.42
Ratio of expenses to average net
assets 1.57% 1.65% 1.59%***
Ratio of net investment income
(loss) to average net assets (0.19)% 0.12% (0.10)%***
Portfolio turnover rate 34.71% 66.79% 19.76%
Average commission rate per
share**** $ 0.02 N/A N/A
</TABLE>
* Commencement of investment operations.
** Net of $.09 offering expenses.
*** Annualized.
**** For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged.
(1) Total investment return is calculated assuming a purchase of common
stock on the opening of the first day and a sale on the closing of the last
day of each period reported. Dividends and distributions, if any, are
assumed for the purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions. Generally, total investment
return based on net asset value will be higher than total investment return
based on market value in periods where there is an increase in the discount
or a decrease in the premium of the market value to the net asset value from
the beginning to the end of such periods. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such periods. Total investment returns for
periods of less than one full year are not annualized.
- --------------------------------------------------------------------------------
A-20
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES:
Schroder Asian Growth Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as a
non-diversified, closed-end management investment company. The Fund was
incorporated in Maryland on November 5, 1993 and investment operations
commenced on December 30, 1993. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements.
SECURITY VALUATION
Portfolio securities listed or traded on a recognized stock exchange or
NASDAQ National Market System are valued at the last reported sales price on
the exchange on which the securities are principally traded. Other
securities for which market quotations are readily available are valued at
the last sales price prior to the time of determination. If there is no
sales price on such date, and if bid and asked quotations are available,
such securities are valued at the mean between the last current bid and
asked prices. The value of a foreign security is determined in its national
currency as of 9:00 a.m., New York time, and that value is then converted
into its U.S. dollar equivalent on the day of valuation as of 11:30 a.m.,
New York time. Securities for which market quotations are not readily
available, and securities for which, in the judgement of the Adviser, the
prices or values available do not represent the fair value of the
instrument, are valued at fair value, pursuant to the Fund's pricing
procedures as determined by the Adviser and approved in good faith by the
Board of Directors. In determining the fair value of such securities, the
Adviser and the Board consider all relevant information, including but not
limited to types of securities, current financial and market information and
restrictions on dispositions. The values assigned to the securities holdings
do not necessarily represent amounts which might ultimately be realized upon
their sale or other disposition, since such amounts depend on future
circumstances and cannot reasonably be determined until the actual
disposition occurs. However, because of the inherent uncertainty of such
valuations, those estimated values may differ significantly from the values
that would have been used had a ready market for the investments existed,
and the differences could be material. At October 31, 1996, the portfolio
contained ten securities for which market quotations were not readily
available and which were fair valued pursuant to the Fund's procedures.
These securities had a total value of $24,784,252 representing 9.6% of the
Fund's net assets.
The Fund may enter into repurchase agreements whereby the Fund, through
its custodian, receives delivery of the underlying securities. The
underlying collateral is valued daily on a marked-to-market basis to assure
that the value, including accrued interest, is at least equal to the
repurchase price.
In the event of a default of the obligation to repurchase, the Fund has
the right to liquidate the collateral and apply the proceeds in satisfaction
of the obligation. If the seller defaults and the value of the collateral
declines, realization of the collateral by the Fund may be delayed or
limited.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date except for certain dividends from foreign
securities which are recorded as soon as the Fund is informed of the
ex-dividend date. Interest income (including accretion of discount) is
recorded on the accrual basis. Realized gains and losses from security
transactions are determined on the identified cost basis.
FOREIGN CURRENCY TRANSLATION
Foreign currency amounts denominated in or expected to settle in foreign
currencies ("FC") are translated into U.S. dollars on the following basis:
market value of investment securities and other assets and liabilities at
- --------------------------------------------------------------------------------
A-21
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the rate of exchange at the end of the respective period, purchases and
sales of investment securities and income and expenses at the rate of
exchange prevailing on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from the investment.
Reported net realized foreign exchange gains or losses arise from sales
of portfolio securities, sales and maturities of short-term securities,
sales of FCs, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities other than investments
in securities at fiscal year end, resulting from changes in the exchange
rate.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions payable by the Fund, if any, are accrued on
the ex-dividend date. Dividends from net investment income and capital gain
distributions are determined in accordance with U.S. Federal income tax
regulations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign
currency transactions. At October 31, 1996, the Fund increased
paid-in-capital by $233,732, increased net investment income by $2,335,128
and decreased accumulated realized gains from foreign currency transactions
and forward foreign currency contracts by $2,568,860. Net assets were not
affected by the reclassification.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward contracts to purchase or sell FCs to
protect against the effect of possible adverse movements in foreign exchange
rates on the U.S. dollar value of the underlying portfolio. Risks associated
with such contracts include the movement in value of the FC relative to the
U.S. dollar and the ability of the counterparty to perform. Forward currency
contracts are valued at the forward rate and are marked-to-market weekly.
Fluctuations in the value of such contracts are recorded as unrealized gains
or losses; realized gains or losses include net gains or losses on contracts
which have terminated by settlement.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and
initial registration are being amortized on a straight line basis over a
five-year period from the commencement of investment operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate cost of securities purchased and the proceeds from sales
of securities, excluding short-term investments, for the year ended October
31, 1996 were $91,751,957 and $88,968,172, respectively.
- --------------------------------------------------------------------------------
A-22
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FORWARD FOREIGN CURRENCY CONTRACTS AS OF OCTOBER 31, 1996:
<TABLE>
<CAPTION>
CURRENCY TO SETTLEMENT IN EXCHANGE UNREALIZED
DELIVER DATE FOR VALUE ($) DEPRECIATION ($)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
OPEN CURRENCY TRANSACTIONS:
Thai Baht THB2,023,460 11/01/96 $ 79,258 $ 79,388 (130)
Thai Baht THB 512,414 11/04/96 $ 20,092 $ 20,104 (12)
------
Total ($142)
------
------
</TABLE>
4. INVESTMENT ADVISORY AND ADMINISTRATIVE AGREEMENTS AND OTHER TRANSACTIONS
WITH AFFILIATES:
The Fund retains Schroder Capital Management International, Inc. as
Investment Adviser. During the period from January 1, 1996 to May 15, 1996,
the Investment Advisory Agreement provided for a monthly fee at the annual
rate of 1% on the Fund's average weekly net assets.
At the Annual Meeting of Shareholders of the Fund held on May 15, 1996,
the shareholders of the Fund voted to approve an amendment to the Investment
Advisory Agreement in order to provide for a reduction in the advisory fees
paid to the Investment Adviser. Pursuant to that amendment, effective May
16, 1996, the Investment Adviser is paid a fee at an annual rate of (i)
1.00% of the Fund's average weekly net assets up to and including $300
million, and (ii) 0.85% of the Fund's average weekly net assets in excess of
$300 million.
The Fund retains Princeton Administrators, L.P. (formerly Middlesex
Administrators L.P.) as the Administrator. For its services during the
period from January 1, 1996 to May 15, 1996, the Administrator received a
monthly fee equal to the greater of $150,000 per annum or an annual rate of
0.25% of the Fund's average weekly net assets.
The Fund and the Administrator have entered into an amended
Administration Agreement, effective upon the approval of the amended
Investment Advisory Agreement on May 15, 1996. Pursuant to the amended
Administration Agreement, effective May 16, 1996, the Administrator receives
a monthly fee equal to the greater of (a) $150,000 per annum or (b) an
annual rate of (i) 0.25% of the Fund's average weekly net assets up to and
including $300 million, and (ii) 0.22% of the Fund's average weekly net
assets in excess of $300 million.
Several individuals who are directors or officers (or both) of the Fund
are also directors or officers of the Investment Adviser or its affiliates.
5. FEDERAL INCOME TAXES:
Since it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its stockholders, no
Federal income tax provision is required.
For Federal income tax purposes, the tax basis of investment securities
owned is $238,869,449. At October 31, 1996, net unrealized appreciation on
investments was $16,468,199. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $38,452,473 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value was $21,984,274.
- --------------------------------------------------------------------------------
A-23
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For Federal income tax purposes, the Fund had a capital loss carry
forward as of October 31, 1996 of $32,042,638 ($5,994,149 expiring in 2002
and $26,048,489 expiring in 2003) which is available to offset future
capital gains, subject to limitations imposed under the Internal Revenue
Code.
Under the applicable foreign tax law, a withholding tax may be imposed
on interest, dividends, and capital gains at various rates. Indian tax
regulations require that taxes be paid on capital gains realized by the
Fund. At October 31, 1996, the Fund decreased net unrealized appreciation by
the estimated tax liability attributable to Indian investments of $266,350.
6. CAPITAL STOCK:
There are 100,000,000 shares of $.01 par value common stock authorized.
There are 19,607,100 shares outstanding as of October 31, 1996. During the
year ended October 31, 1996, the Fund offered no additional shares.
7. TENDER OFFER PROVISION
In accordance with provisions of the Fund's prospectus, the Board of
Directors (the "Board") has fixed a period of twelve consecutive calendar
weeks beginning on November 11, 1996 and ending on January 31, 1997, as the
measurement period for the purposes of calculating the average trading price
of the Fund's shares. In the event the average of the closing prices of the
shares of the Fund on the Fund's valuation day in each week during such 12
week period represents a discount of 3% or more from the average net asset
value of the Fund as determined on the same days in the same period, it is
currently anticipated that a tender offer for shares of the Fund will be
conducted during the first calendar quarter of 1997.
As of October 31, 1996, costs incurred in connection with the tender
offer in the amount of $53,304 have been charged to paid-in-capital in
excess of par.
- --------------------------------------------------------------------------------
A-24
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SPECIAL 1996 TAX INFORMATION (UNAUDITED)
On November 26, 1996, the Fund declared an ordinary income dividend of
$1,826,585 or $0.093159 per share to shareholders of record on December 6, 1996,
payable on December 18, 1996.
The Fund intends to elect to make an election under the Internal Revenue
Code that will allow shareholders to treat their proportionate share of income
taxes paid by the Fund in foreign countries during its fiscal year ended October
31, 1996 as having been directly paid by the shareholders. In accordance with
current tax laws, the foreign income and foreign tax per share (for a share
outstanding on October 31, 1996) is as follows:
<TABLE>
<CAPTION>
GROSS FOREIGN FOREIGN
SOURCE INCOME TAXES PAID
COUNTRY PER SHARE PER SHARE
- ------------------------ -------------- ----------
<S> <C> <C>
China 0.001192 --
Hong Kong 0.023735 --
Indonesia 0.003395 0.001271
India 0.004086 0.002178
Japan 0.004826 0.002306
Korea 0.003324 0.001589
Malaysia 0.010689 0.009111
<CAPTION>
GROSS FOREIGN FOREIGN
SOURCE INCOME TAXES PAID
COUNTRY PER SHARE PER SHARE
- ------------------------ -------------- ----------
<S> <C> <C>
Philippines 0.001747 0.001241
Singapore 0.005469 0.004112
Thailand 0.006698 0.001903
United Kingdom 0.009528 --
-------------- ----------
Total 0.074689 0.023711
-------------- ----------
-------------- ----------
</TABLE>
The pass-through of foreign taxes will affect only those shareholders of the
Fund who are holders on the dividend record date in December 1996. Accordingly,
shareholders will receive more detailed information along with their Form
1099-DIV in January 1997.
PROXY RESULTS (UNAUDITED)
During the year ended October 31, 1996, Schroder Asian Growth Fund, Inc.
shareholders voted on the following proposals. The proposals were approved at
the annual meeting of shareholders on May 15, 1996. The description of the
proposals and number of shares voted are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SHARES
VOTED FOR ABSTENTIONS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. To elect certain Directors: Peter E. 15,667,122 468,767
Guernsey(1)
15,671,747 464,142
I. Peter
Sedgwick(1)
(1) Nominee for Class I director to serve until 1999 annual meeting of shareholders.
- --------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES
SHARES VOTED
VOTED FOR AGAINST ABSTENTIONS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
2. To ratify the selection of Coopers & Lybrand L.L.P. as
the Fund's independent accountants. 15,691,876 218,030 225,983
3. To approve an amendment to the Investment Advisory
Agreement between the Fund and the Investment
Adviser. 15,341,422 365,564 428,903
- --------------------------------------------------------------------------------------------------------
</TABLE>
There were no broker non-votes returned with respect to any matter subject
to a vote of the shareholders. There were no votes cast against either of the
nominees for director.
- --------------------------------------------------------------------------------
A-25
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
DIVIDEND DISTRIBUTION (UNAUDITED)
On November 26, 1996, the Board of Directors of the Fund declared a dividend
of $1,826,585, or $0.093159 per share, payable on December 18, 1996 to
shareholders of record on December 6, 1996. Through the dividend, the Fund is
distributing its net investment income for the fiscal year ended October 31,
1996, derived from gains realized on foreign currency contracts.
In addition, the Fund intends to make an election under the Internal Revenue
Code that will allow shareholders to treat their proportionate share of income
taxes paid by the Fund in foreign countries as having been paid directly by the
shareholders. For U.S. federal income tax purposes, therefore, the net
investment income, foreign tax pass-through and total ordinary income per share
for the fiscal year are as follows:
<TABLE>
<CAPTION>
*FOREIGN TAXES
NET PAID OR TOTAL ORDINARY
INVESTMENT INCOME WITHHELD INCOME
- ----------------- --------------- ---------------
<S> <C> <C>
$ 0.093159 $0.023711 $0.116870
</TABLE>
* The foreign taxes paid or withheld per share represent taxes incurred by the
Fund on interest and dividends received by the Fund from foreign sources.
Foreign taxes paid or withheld should be included in gross income for U.S.
federal income tax purposes with an offsetting deduction from gross income OR
a credit for taxes paid to foreign governments. Shareholders should consult
their tax counsel or other tax advisors regarding the appropriate treatment of
foreign taxes paid. The per share allocation of foreign taxes will be
reflected on shareholders' 1996 Form 1099-Div.
DIVIDEND REINVESTMENT PLAN
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment Plan (the "Plan"), pursuant to which
dividends and capital gain distributions to shareholders will be paid in or
reinvested in additional shares of the Fund (the "Dividend Shares"). State
Street Bank and Trust Company (the "Plan Agent") will act as agent for
participants under the Plan. Shareholders whose shares are held in the name of a
brokerage firm, bank, or other nominee should contact such nominee to see if it
will participate in the Plan on the shareholders' behalf. If the nominee is
unable to do so, the shareholder may wish to request that their shares be
reregistered in the shareholder's own name.
A shareholder may elect to withdraw from the Plan without penalty at any
time upon written notice to the Plan Agent. When a participant withdraws from
the Plan, or upon termination of the Plan, certificates for whole Dividend
Shares credited to the shareholder's account under the Plan will be issued and
cash payment will be made for any fractional Dividend Shares credited to such
account. An election to withdraw from the Plan will, until such election is
changed, be deemed to be an election by a shareholder to take all subsequent
dividends and distributions in cash. Elections will be effective immediately if
notice is received by the Plan Agent not less than ten days prior to any
dividend or distribution record date; otherwise, such termination will be
effective after the investment of the then current dividend or distribution. If
a withdrawing shareholder requests the Plan Agent to sell the shareholder's
Dividend Shares upon withdrawal from participation in the Plan, the withdrawing
shareholder will be required to pay a $2.50 fee plus a brokerage commission.
Whenever the Fund declares a distribution from capital gains or an income
dividend payable either in cash or in shares of the Fund, participants in the
Plan will receive shares of the Fund. Whenever the market price per share is
equal to or exceeds the net asset value of the valuation date, participants will
be issued shares of the Fund at a price per share equal to the greater of (a)
the net asset value per share on the date or (b) 95% of the market price of the
Fund's shares on the date. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the New York
Stock Exchange, the immediately preceding trading day. The Fund will not issue
Dividend Shares under the Plan at a price below net asset value. If net asset
value exceeds the market price of Fund shares as of the valuation date, or if
the Fund should declare a dividend or capital gains
- --------------------------------------------------------------------------------
A-26
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
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' accounts on or shortly after the payment
date. If, before the Plan Agent has completed its purchase, the market price
exceeds the net asset value of a Fund share, the average per share purchase
price paid by the Plan Agent may exceed the net asset value of the Fund's
shares, resulting in the acquisition of fewer Dividend Shares than if the
dividend or capital gains distribution had been paid in shares issued by the
Fund.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmation of all transactions in the accounts, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in noncertificated form in
the name of the participant, and each shareholder's proxy will include those
Dividend Shares purchased pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions. The Plan Agent's fee for the handling of reinvestment of
dividends and distributions will be paid by the Fund. There will be no brokerage
charges with respect to Dividend Shares issued directly by the Fund as a result
of dividends or capital gains distributions payable either in shares or in cash.
However, each participant 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 dividends or capital gains distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. Federal income tax that may be payable on such
dividends or distributions. To the extent dividends and distributions are
reinvested in additional Dividend Shares issued by the Fund, participants should
be treated for U.S. Federal income tax purposes as receiving a distribution in
an amount equal to the fair market value, determined as of the valuation date,
of the shares received (regardless of the net asset value of the shares on the
valuation date), and should have a cost basis in such shares equal to such fair
market value.
Experience under the plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to notice of the change
sent to participants in the plan at least 90 days before the record date for
such dividend or distribution. The Plan may also be amended or terminated by the
Plan Agent at least 90 days prior written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent at
State Street Bank and Trust Company, P.O. Box 8200, Boston, Massachusetts
02266-8200.
- --------------------------------------------------------------------------------
A-27
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Schroder Asian Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Schroder Asian Growth Fund, Inc., including the schedule of investments, as of
October 31, 1996, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the two years in the
period then ended, and for the period December 30, 1993 (commencement of
operations) to October 31, 1994. 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
October 31, 1996, 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
Schroder Asian Growth Fund, Inc. as of October 31, 1996, the results of its
operations for the year then ended, and the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the two years in the period then ended and for the period December 30, 1993
(commencement of operations) to October 31, 1994, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
December 4, 1996
------------------------------------------------------------
A-28
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCKS - 96.6%
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
CHINA - 1.9%
SERVICES - 0.5%
2,832,000 Chiwan Wharf Holdings Ltd. 'B' 1,263,795
------------
UTILITIES ELECTRICAL & GAS - 1.4%
220,000 Huaneng Power International,
Ltd.(a)* 3,492,500
------------
TOTAL CHINA
(COST $5,391,276) 4,756,295
------------
HONG KONG - 20.9%
CHEMICALS - 0.7%
3,160,000 Chen Hsong Holdings Ltd. 1,839,348
------------
CONSTRUCTION & HOUSING - 1.4%
4,522,000 Kumagai Gumi Ltd. 3,421,770
------------
HOLDING COMPANY - 1.7%
7,000,000 Guangdong Investments 4,119,778
------------
LEISURE & TRAVEL - 3.5%
4,835,000 Cathay Pacific Airways 7,129,608
2,000,000 Shun Tak Holdings Ltd. 1,578,062
------------
8,707,670
------------
MULTI-INDUSTRY - 6.0%
2,934,000 Citic Pacific Ltd. 9,165,192
750,000 Swire Pacific Ltd. 'A' 5,626,698
------------
14,791,890
------------
REAL ESTATE - 4.0%
2,675,000 Harbour Centre Development
Ltd. 2,992,983
874,000 Sun Hung Kai Properties Ltd. 6,980,921
------------
9,973,904
------------
SERVICES - 3.6%
1,592,000 Hutchison Whampoa 8,772,371
------------
TOTAL HONG KONG
(COST $46,747,444) 51,626,731
------------
INDIA - 6.1%
AUTOMOBILE - 1.8%
168,000 Bajaj Auto Ltd. (b)* 4,515,000
------------
HEALTH & PERSONAL CARE - 1.1%
122,000 Ranbaxy Laboratories (c) 2,775,500
------------
HOUSEHOLD PRODUCTS - 0.6%
70,000 Hindustan Lever Ltd. 1,305,572
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
INDIA (CONCLUDED)
MACHINERY & ENGINEERING - 2.6%
207,200 Tata Engineering & Locomotive
Company Ltd. 2,521,642
191,000 Tata Engineering & Locomotive
Company Ltd. (b) 3,961,340
------------
6,482,982
------------
TOTAL INDIA
(COST $14,242,545) 15,079,054
------------
INDONESIA - 8.3%
BEVERAGES & TOBACCO - 2.1%
600,000 P.T. Gudang Garam 5,220,264
------------
BUILDING MATERIALS & COMPONENTS - 1.2%
784,000 P.T. Indocement Tunggal 2,901,145
------------
FOOD & HOUSEHOLD PRODUCTS - 2.9%
82,500 P.T. Unilever Indonesia 1,162,996
1,061,950 P.T. Indofood Sukses Makmur 4,912,104
230,000 P.T. Sorini* 1,281,718
------------
7,356,818
------------
HEALTH & PERSONAL CARE - 0.5%
360,000 P.T. Kalbe Farma 1,141,850
------------
REAL ESTATE - 0.5%
450,000 P.T. Jaya Real Property 1,283,590
------------
TELECOMMUNICATIONS - 1.1%
82,000 P.T. Indonesian Satellite
Corp. (a) 2,706,000
------------
TOTAL INDONESIA
(COST $20,015,391) 20,609,667
------------
JAPAN - 16.0%
FINANCIAL SERVICES - 1.9%
261,000 Nomura Securities Co., Ltd.* 4,785,000
------------
HEALTH & PERSONAL CARE - 0.7%
120,000 Torii & Co., Ltd 1,823,529
------------
INDUSTRIAL COMPONENTS - 7.2%
225,000 Glory Ltd. 7,919,118
104,000 Mabuchi Motors Co., Ltd. 6,311,373
56,700 Hirose Electric 3,629,912
------------
17,860,403
------------
INSURANCE - 1.0%
450,000 Koa Fire & Marine Ins. Co.,
Ltd. 2,466,176
------------
LEISURE & TOURISM - 0.4%
102,000 Airport Facilities Co., Ltd. 990,000
------------
MACHINERY & ENGINEERING - 1.2%
482,000 Amada Sonoike Co., Ltd. 2,958,157
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-29
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
JAPAN (CONCLUDED)
MERCHANDISING - 1.2%
172,900 Kahma Co., Ltd. 2,915,569
------------
REAL ESTATE - 0.9%
150,000 Mitsui Homes Co., Ltd. 2,132,353
------------
TELECOMMUNICATIONS - 1.5%
450 DDI Corporation 3,657,352
------------
TOTAL JAPAN
(COST $43,132,501) 39,588,539
------------
KOREA - 7.7%
BANKING - 1.0%
96,000 Shinhan Bank(1) 2,269,946
8,079 Shinhan Bank (New)* 166,839
------------
2,436,785
------------
ELECTRONICS - 3.0%
27,338 Samsung Electronics(1) 6,092,897
5,095 Samsung Electronics (New)*(1) 1,122,085
478 Samsung Electronics (New
2)*(1) 103,085
------------
7,318,067
------------
METALS-STEEL - 0.7%
8,000 Pohang Iron & Steel Co.,
Ltd.(1) 804,318
40,000 Pohang Iron & Steel Co., Ltd.
(d) 1,040,000
------------
1,844,318
------------
TELECOMMUNICATIONS - 1.7%
4,450 Korea Mobile
Telecommunications Corp.*(1) 4,157,734
------------
UTILITIES-ELECTRICAL & GAS - 1.3%
77,000 Korea Electric Power Corp.(1) 3,376,235
------------
TOTAL KOREA
(COST $17,056,270) 19,133,139
------------
MALAYSIA - 12.5%
BANKING - 3.3%
1,265,000 DCB Holdings Berhad 3,584,416
584,000 Malayan Banking Berhad 4,711,531
------------
8,295,947
------------
CONSTRUCTION - 2.0%
3,171,000 Renong Berhad 4,841,983
------------
DISTRIBUTION - 0.8%
246,000 Edaran Otomobil Nasional
Berhad 1,936,246
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
<C> <S> <C>
MALAYSIA (CONCLUDED)
FOOD & HOUSEHOLD PRODUCTS - 0.7%
236,000 Nestle (Malaysia) Berhad 1,662,495
------------
INSURANCE - 1.2%
741,000 Malaysian Assurance Alliance
Berhad 3,003,660
------------
LEISURE & TOURISM - 2.5%
741,500 Genting Berhad (1) 6,262,917
------------
REAL ESTATE - 2.0%
2,069,000 Island & Peninsular Berhad 5,007,615
------------
TOTAL MALAYSIA
(COST $28,782,473) 31,010,863
------------
PHILIPPINES - 5.1%
BEVERAGES & TOBACCO - 0.7%
560,600 San Miguel Corp. 'B' 1,855,720
------------
REAL ESTATE - 2.4%
2,381,250 Ayala Land, Inc. 'B' 2,749,711
2,600,000 C&P Homes Inc.* 1,676,522
5,200,000 SM Prime Holdings Inc.* 1,401,078
------------
5,827,311
------------
SHIP REPAIR - 0.0%
111,850 Keppel Philippine Holdings
'B' * 51,663
------------
TELECOMMUNICATIONS - 1.0%
43,170 Philippine Long Distance
Telephone 2,409,411
------------
UTILITIES ELECTRICAL & GAS - 1.0%
333,500 Manila Electric Co. 'B' 2,490,339
------------
TOTAL PHILIPPINES
(COST $12,714,244) 12,634,444
------------
SINGAPORE - 9.3%
BANKING - 3.3%
740,000 Overseas Union Bank Ltd. 4,607,982
407,880 United Overseas Bank Ltd. 3,578,907
------------
8,186,889
------------
BROADCASTING & PUBLISHING - 1.6%
253,200 Singapore Press Holdings Ltd. 3,959,609
------------
MACHINERY & ENGINEERING - 2.0%
608,000 Keppel Corporation Ltd. 4,990,660
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-30
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- -----------
<C> <S> <C>
SINGAPORE - (CONCLUDED)
REAL ESTATE - 2.4%
480,000 City Developments Ltd. 2,971,979
956,000 DBS Land Ltd. 2,827,682
-----------
5,799,661
-----------
TOTAL SINGAPORE
(COST $21,160,936) 22,936,819
-----------
THAILAND - 8.8%
BANKING - 3.1%
3,500,000 Siam City Bank Ltd. 4,451,510
386,700 Thai Farmers Bank Ltd. 3,196,884
-----------
7,648,394
-----------
BUILDING MATERIALS & COMPONENTS - 1.9%
84,000 Siam Cement Co. Ltd. 4,580,604
-----------
REAL ESTATE - 1.4%
220,000 Land & House Corp. Ltd. 3,550,080
-----------
TELECOMMUNICATIONS - 1.1%
919,000 TelecomAsia Corp.* 2,775,994
-----------
UTILITIES ELECTRICAL & GAS - 1.3%
913,000 Electricity Generating Public
Co., Ltd.* 3,120,747
-----------
TOTAL THAILAND
(COST $22,289,706) 21,675,819
-----------
TOTAL COMMON STOCKS
(COST $231,532,786) 239,051,370
-----------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE BONDS - 0.6%
PRINCIPAL
AMOUNT
(000) VALUES US$
- ---------- ------------
<C> <S> <C>
JAPAN - 0.6%
MERCHANDISING - 0.6%
Swfr 1,900 Arcland Sakamoto
.125% 2/20/98
(Cost $1,386,916) 1,496,162
------------
TOTAL CONVERTIBLE BONDS
(COST $1,386,916) 1,496,162
------------
TOTAL INVESTMENTS
(COST $232,919,702) -- 97.2% 240,547,532
Other assets less
liabilities -- 2.8% 6,939,592
------------
Net Assets -- 100% 247,487,124
------------
------------
</TABLE>
* Non-income producing security
(a) American Depository Receipt
(b) Global Depositary Receipt
(c) Global Depositary Share
(d) American Depositary Share
(1) Priced at fair value as determined by the Board of Directors
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-31
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $232,919,702) $ 240,547,532
Cash 8,145,946
Receivable for dividends 140,159
Receivable for interest 57,649
Net unrealized appreciation on forward foreign exchange
contracts 233,732
Deferred organization expenses 107,623
Prepaid expenses 38,771
-------------
Total Assets 249,271,412
-------------
LIABILITIES:
Payable for securities purchased 1,286,803
Advisory fee payable 211,828
Administration fee payable 52,957
Accrued expenses payable and other liabilities 232,700
-------------
Total Liabilities 1,784,288
-------------
Net Assets $ 247,487,124
-------------
-------------
NET ASSETS WERE COMPOSED OF:
Capital Stock, par value ($.01 per share, applicable to
19,607,100 shares issued: authorized 100,000,000
shares) $ 196,071
Paid-in capital in excess of par 271,484,870
Accumulated net realized losses from investments (32,064,584)
Net unrealized appreciation of investments 7,627,830
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies and forward foreign
currency contracts 242,937
-------------
Net Assets $ 247,487,124
-------------
-------------
Net asset value per share ($247,487,124
divided by 19,607,100 shares outstanding) $ 12.62
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-32
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $439,833) $ 3,697,277
Interest and discount earned 694,898
------------
Total Income 4,392,175
------------
EXPENSES:
Investment advisory fee 2,479,442
Administration fee 619,861
Custodian's fees and expenses 370,550
Legal fees and expenses 150,615
Transfer agent's fees and expenses 114,282
Directors' fees and expenses 84,074
Reports to shareholders 84,040
Insurance expense 82,632
Independent accountants' fees and expenses 40,335
Amortization of deferred organization expenses 33,981
Registration fees 24,260
Miscellaneous expenses 10,820
Interest expense 1,345
------------
Total Expenses 4,096,237
------------
NET INVESTMENT INCOME 295,938
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized loss from:
Investments (26,048,489)
Foreign currency transactions and forward foreign currency
contracts (3,181,314)
Net change in unrealized appreciation of:
Investments 2,267,623
Translation of assets and liabilities in foreign
currencies and forward foreign currency contracts 2,734,038
------------
NET REALIZED AND UNREALIZED LOSS FROM INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS (24,228,142)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(23,932,204)
------------
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-33
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR DECEMBER 30, 1993*
ENDED TO OCTOBER 31,
OCTOBER 31, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 295,938 $ (211,874)
Net realized loss on investment
transactions (26,048,489) (6,016,095)
Net realized loss from foreign
currency transactions and forward
foreign currency contracts (3,181,314) (188,277)
Net change in unrealized
appreciation on investments 2,267,623 5,360,207
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign currencies
and forward foreign currency
contracts 2,734,038 (2,491,101)
----------------- ------------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS (23,932,204) (3,547,140)
----------------- ------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from the initial public
offering of 17,200,000 shares -- 242,520,000
Proceeds from the issuance of
2,400,000 shares in connection
with exercising of an
overallotment option granted to
underwriters of the initial
public offering -- 33,840,000
Offering costs charged to paid-in
capital in excess of par -- (1,493,642)
----------------- ------------------
NET INCREASE IN NET ASSETS DERIVED FROM
CAPITAL STOCK TRANSACTIONS -- 274,866,358
----------------- ------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (23,932,204) 271,319,218
----------------- ------------------
NET ASSETS:
Beginning of period 271,419,328 100,110
----------------- ------------------
End of period $ 247,487,124 $ 271,419,328
----------------- ------------------
----------------- ------------------
</TABLE>
* Commencement of investment operations
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-34
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Schroder Asian Growth 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 was incorporated in Maryland on
November 5, 1993 and investment operations commenced on December 30, 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION
Portfolio securities listed on a recognized stock exchange or NASDAQ
National Market System are valued at the last reported sales price on the
exchange on which the securities are principally traded. Other securities
for which market quotations are readily available are valued at the last
sales price prior to the time of determination. If there is no sales price
on such date, and if bid and asked quotations are available, such securities
are valued at the mean between the last current bid and asked prices.
Securities for which market quotations are not readily available, foreign
securities where local regulators restrict purchases by foreign investors
and other assets are valued by procedures as determined by the Investment
Adviser and approved in good faith by the Board of Directors. At October 31,
1995, the portfolio contained eight securities for which market quotations
were not available and which were fair valued by the Adviser. These
securities had a total value of $24,189,217, representing 9.8% of the Fund's
net assets.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date except for certain dividends from foreign
securities which are recorded as soon as the Fund is informed of the
ex-dividend date. Interest income (including accretion of discount) is
recorded on the accrual basis. Realized gains and losses from security
transactions are determined on the identified cost basis.
FOREIGN CURRENCY TRANSLATION
Foreign currency amounts denominated in or expected to settle in foreign
currencies (FC) are translated into U.S. dollars on the following basis:
market value of investment securities and other assets and liabilities at
the rate of exchange at the end of the respective period, purchases and
sales of investment securities and income and expenses at the rate of
exchange prevailing on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from the investment.
Reported net realized foreign exchange gains or losses arise from sales
of portfolio securities, sales and maturities of short-term securities,
sales of FCs, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities other than investments
in securities at fiscal year end, resulting from changes in the exchange
rate.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions payable by the Fund, if any, are accrued on
the ex-dividend date. Dividends from net investment income and capital gain
distributions are determined in accordance with U.S. Federal income tax
regulations which may differ from generally accepted accounting principles.
At October 31, 1995, the Fund decreased paid-in-capital by $2,885,376,
decreased undistributed net investment income by $295,938 and increased
accumulated realized losses from foreign currency transactions by
$3,181,314. These differences are primarily due to the reclassification of
realized losses on foreign currency and forward foreign currency contracts
to ordinary income.
- --------------------------------------------------------------------------------
A-35
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORWARD CONTRACTS
The Fund may enter into forward contracts to purchase or sell foreign
currencies to protect against the effect of possible adverse movements in
foreign exchange rates on the U.S. dollar value of the underlying portfolio.
Risks associated with such contracts include the movement in value of the
foreign currency relative to the U.S. dollar and the ability of the
counterparty to perform. Forward exchange contracts are valued at the
forward rate and are marked-to-market weekly. Fluctuations in the value of
such contracts are recorded as unrealized gains or losses; realized gains or
losses include net gains or losses on contracts which have terminated by
settlement.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and
initial registration are being amortized on a straight line basis over a
five-year period from the commencement of investment operations.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate cost of securities purchased and the proceeds from sales
of securities, excluding short-term investments, for the year ended October
31, 1995 were $167,028,062 and $158,464,792, respectively.
3. FORWARD EXCHANGE CONTRACTS AS OF OCTOBER 31, 1995:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO SETTLEMENT IN EXCHANGE APPRECIATION
DELIVER DATE FOR VALUE ($) (DEPRECIATION) ($)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
HEDGE POSITIONS:
Japanese Yen Y1,200,000,000 12/21/95 1$2,206,286 11,854,342 351,944
Japanese Yen Y1,430,000,000 3/22/96 1$4,206,239 14,324,451 (118,212)
--------
Total $ 233,732
--------
--------
</TABLE>
4. ADVISORY AND ADMINISTRATIVE FEES:
The Fund retains Schroder Capital Management International Inc. as
Investment Adviser. The investment advisory contract provides for a monthly
fee at the annual rate of 1% on the Fund's average weekly net assets. The
Fund paid or accrued fees to the Investment Adviser of $2,479,442 for the
year ended October 31, 1995.
The Fund retains Middlesex Administrators L.P. as the Administrator. For
its services, the Administrator receives a monthly fee equal to the greater
of $150,000 per annum or an annual rate of .25% of the Fund's average weekly
net assets. The Fund paid or accrued fees to the Administrator of $619,861
during the year ended October 31, 1995.
5. FEDERAL INCOME TAXES:
Since it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its stockholders, no
Federal income tax provision is required. Under the applicable foreign tax
law, a withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
For Federal income tax purposes, the tax basis of investment securities
owned at October 31, 1995 was $232,919,702. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $23,361,766 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value was $15,733,936.
For Federal income tax purposes, the Fund had a capital loss carry
forward as of October 31, 1995 of $32,064,584 ($6,016,095 expiring in 2002
and $26,048,489 expiring in 2003) which is available to offset future
capital gains, subject to limitations imposed under the Internal Revenue
Code.
- --------------------------------------------------------------------------------
A-36
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. CAPITAL STOCK:
There are 100,000,000 shares of $.01 par value common stock authorized.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 30, 1993*
OCTOBER 31, TO
1995 OCTOBER 31, 1994
--------------- ------------------
<S> <C> <C>
Shares outstanding at beginning of
period 19,607,100 --
Shares issued to the Adviser -- 7,100
Shares issued in initial public
offering -- 17,200,000
Shares issued in underwriters'
over-allotment option -- 2,400,000
--------------- ----------
Shares outstanding at end of period 19,607,100 19,607,100
--------------- ----------
--------------- ----------
</TABLE>
* Commencement of investment operations.
7. FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
<TABLE>
<CAPTION>
FOR THE YEAR DECEMBER 30,1993*
ENDED TO
OCTOBER 31, 1995 OCTOBER 31, 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Net Asset Value, beginning of period $ 13.84 $ 14.01**
Investment Operations:
Net investment income (loss) 0.02 (.01)
Net realized and unrealized loss on
investments and foreign currency
transactions (1.24) (.16)
------- -------
Total from investment operations (1.22) (.17)
------- -------
Net asset value, end of period $ 12.62 $ 13.84
------- -------
------- -------
Market value, end of period $ 11.125 $ 12.00
------- -------
------- -------
Total investment return based on (1):
Market Value -7.29% -20.00%
------- -------
Net Asset Value -8.82% -1.21%
------- -------
Ratio/Supplementary Data:
Net assets, fiscal year end (Millions) $ 247.49 $ 271.42
Ratio of expenses to average net assets 1.65% 1.59%***
Ratio of net investment income (loss)
average net assets 0.12% (0.10)%***
Portfolio turnover rate 66.79% 19.76%
</TABLE>
* Commencement of investment operations.
** Net of $.09 of offering expenses.
*** Annualized
(1) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Total investment return does not
reflect sales loads or brokerage commissions. Generally, total investment
return based on net asset value will be higher than total investment return
based on market value in periods where there is an increase in the discount
or decrease in the premium of the market value to the net asset value from
the beginning to the end of such periods. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such periods.
- --------------------------------------------------------------------------------
A-37
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
8. QUARTERLY DATA (UNAUDITED):
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED GAINS NET INCREASE PRICE ON
(LOSSES) (DECREASE) THE
ON INVESTMENTS AND IN NET ASSETS NEW YORK
TOTAL NET INVESTMENT FOREIGN CURRENCY RESULTING FROM STOCK
INCOME INCOME (LOSS) TRANSACTIONS OPERATIONS EXCHANGE
----------------------------------------------------------------------------------------------
QUARTERLY PER PER PER PER
PERIOD AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE HIGH LOW
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
12/30/93*
to 01/31/94 $ 365,127 $0.02 $ 1,916 -- $ (6,528,281) $(0.33) $(6,526,365) $ (0.33) $16 1/8 $ 15
- -----------------------------------------------------------------------------------------------------------
02/01/94 to
04/30/94 1,019,686 0.05 (75,248) -- (14,749,149) (0.75) (14,824,397) (0.75) 15 1/8 10 1/2
- -----------------------------------------------------------------------------------------------------------
05/01/94 to
07/31/94 943,863 0.05 (161,721) ($0.01) 3,714,093 0.19 3,552,372 0.18 14 1/8 11 1/4
- -----------------------------------------------------------------------------------------------------------
08/01/94 to
10/31/94 904,608 0.04 23,179 -- 14,228,071 0.73 14,251,250 0.73 13 3/4 11 1/2
- -----------------------------------------------------------------------------------------------------------
11/01/94 to
01/31/95 510,128 0.03 (518,073) (0.03) (43,861,236) (2.23) (44,379,309) (2.26) 12 1/8 9 5/8
- -----------------------------------------------------------------------------------------------------------
02/01/95 to
04/30/95 1,263,061 0.06 291,404 0.02 7,583,199 0.38 7,874,603 0.40 10 7/8 9 3/8
- -----------------------------------------------------------------------------------------------------------
05/01/95 to
07/31/95 1,591,359 0.08 534,445 0.03 (10,887,137) (0.56) (10,352,692) (0.53) 12 1/8 10 1/8
- -----------------------------------------------------------------------------------------------------------
08/01/95 to
10/31/95 1,027,627 0.05 (11,838) 0.00 22,937,032 1.17 22,925,194 1.17 11 7/8 10 5/8
</TABLE>
* Commencement of investment operations.
PROXY RESULTS (UNAUDITED)
During the year ended October 31, 1995, Schroder Asian Growth Fund, Inc.
shareholders voted on the following proposals. The proposals were approved at
the annual meeting of shareholders on May 11, 1995. The description of the
proposals and number of shares voted are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SHARES
VOTED
FOR ABSTENTIONS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Directors to the Fund: Peter E. Guernsey(1) 16,790,627 849,493
John I. Howell(2) 16,792,027 848,093
Laura E.
Luckyn-Malone(3) 16,879,220 760,900
William L. Means(3) 16,838,338 801,782
David M. Salisbury(2) 16,887,646 752,474
I. Peter Sedgwick(1) 16,886,511 753,609
Madelon DeVoe
Talley(3) 16,888,681 751,439
</TABLE>
(1) Nominee for Class I director to serve until 1996 annual meeting of
stockholders.
(2) Nominee for Class II director to serve until 1997 annual meeting of
stockholders.
(3) Nominee for Class III director to serve until 1998 annual meeting of
stockholders.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED
FOR AGAINST ABSTENTIONS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants. 16,983,359 325,743 331,018
3. To approve the Investment Advisory Agreement between the Fund and the Investment
Advisor. 16,205,455 742,817 691,848
</TABLE>
- --------------------------------------------------------------------------------
A-38
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
Report of Independent Accountants
To the Shareholders and Board of Directors of
Schroder Asian Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Schroder Asian Growth Fund, Inc., including the schedule of investments, as of
October 31, 1995, and the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
the year then ended and for the period December 30, 1993 (commencement of
operations) to October 31, 1994. 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
October 31, 1995 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
Schroder Asian Growth Fund, Inc. as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and financial
highlights for the year then ended and for the period December 30, 1993
(commencement of operations) to October 31, 1994, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
December 15, 1995
------------------------------------------------------------
A-39
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1994
<TABLE>
<CAPTION>
COMMON STOCKS -- 91.7%
SHARES VALUE US$
- ---------- ------------
<C> <S> <C>
HONG KONG - 10.5%
BROADCASTING & PUBLISHING - 1.5%
6,534,000 South China Morning Post
Holdings Ltd. 4,080,156
------------
CHEMICALS - 0.5%
2,060,000 Chen Hsong Holdings Ltd. 1,306,362
------------
LEISURE & TOURISM - 1.0%
11,082,000 Regal Hotel International
Holdings Ltd. 2,696,350
------------
MERCHANDISING - 1.7%
3,550,000 Dairy Farm Int'l Holdings
Ltd. 4,617,371
------------
MULTI-INDUSTRY - 3.0%
292,000 Jardine Matheson Holdings
Ltd. 2,428,043
750,000 Swire Pacific Ltd. 'A' 5,726,821
------------
8,154,864
------------
REAL ESTATE - 2.8%
830,000 Cheung Kong (Holdings) Ltd. 3,995,962
2,704,000 Harbour Centre Development
Ltd. 3,569,498
------------
7,565,460
------------
TOTAL HONG KONG
(COST $33,603,545) 28,420,563
------------
INDIA - 3.3%
APPLIANCES & HOUSEHOLD DURABLES - 0.4%
238,000 Videocon Int'l Ltd. (a) 1,249,500
------------
AUTOMOBILE - 0.3%
28,000 Bajaj Auto Ltd. (a) 728,000
------------
BEVERAGES & TOBACCO - 0.4%
86,000 ITC GDR (a) 1,000,180
------------
CHEMICALS - 0.1%
70,000 Indo Gulf Fertilizer (a)* 217,000
------------
HEALTH &PERSONAL CARE - 0.5%
67,000 Ranbaxy Laboratories GDS (b) 1,415,375
------------
METALS-STEEL - 0.4%
45,000 Grasim Industries Ltd. GDS
(b) 1,091,250
------------
TEXTILES & APPAREL - 0.6%
114,000 Arvind Mills Ltd. (a) 627,000
59,200 Indian Rayon & Ind. Ltd. GDS
(b) 1,139,600
------------
1,766,600
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ---------- ------------
<C> <S> <C>
UTILITIES ELECTRICAL & GAS - 0.6%
1,593,200
140,000 CESC Industries Ltd. (a)
------------
TOTAL INDIA
(COST $10,272,674) 9,061,105
------------
INDONESIA - 7.1%
BEVERAGES & TOBACCO - 1.2%
500,000 P.T. Gudang Garam 3,293,792
------------
BUILDING MATERIALS & COMPONENTS - 1.1%
784,000 P.T. Indocement Tunggal 2,961,557
------------
FOOD & HOUSEHOLD PRODUCTS - 0.4%
65,000 P.T. Unilever Indonesia 1,167,799
------------
HEALTH &PERSONAL CARE - 1.6%
980,000 P.T. Kalbe Farma 4,333,986
------------
METALS--NON-FERROUS - 0.2%
195,000 P.T. Supreme Cable
Manufacturing Corp. 651,273
------------
REAL ESTATE - 1.4%
2,655,000 P.T. Dharmala Intiland 3,638,662
------------
TELECOMMUNICATIONS - 1.2%
82,000 P.T. Indonesian Satellite
Corp. (c) 3,177,500
------------
TOTAL INDONESIA
(COST $21,783,355) 19,224,569
------------
JAPAN - 24.0%
AUTOMOBILES-COMPONENTS - 1.9%
316,000 Bridgestone Corporation 5,219,366
------------
CONSTRUCTION & HOUSING - 1.5%
262,000 National House Industrial
Co., Ltd. 3,921,751
------------
ELECTRICALS & ELECTRONICS - 1.8%
634,000 Toshiba Corp. 5,000,268
------------
FINANCIAL SERVICES - 3.0%
346,000 Kokusai Securities Co., Ltd. 5,750,594
301,000 Nippon Shinpan Co., Ltd. 2,367,730
------------
8,118,324
------------
HEALTH &PERSONAL CARE - 1.5%
50,000 Santen Pharmaceuticals Co.,
Ltd. 1,326,520
120,000 Torii & Co., Ltd. 2,849,179
------------
4,175,699
------------
INDUSTRIAL COMPONENTS - 4.1%
163,000 Glory Ltd. 5,670,589
72,000 Mabuchi Motor Co., Ltd. 5,515,020
------------
11,185,609
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-40
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ---------- ------------
INSURANCE - 1.2%
<C> <S> <C>
450,000 Koa Fire & Marine Ins. Co., 3,158,873
Ltd.
------------
LEISURE & TOURISM - 1.4%
60,000 Airport Facilities Co., Ltd. 768,040
16,000 Toho Co., Ltd. 3,088,676
------------
3,856,716
------------
MACHINERY & ENGINEERING - 1.6%
482,000 Amada Sonoike Co., Ltd. 4,353,773
------------
MERCHANDISING - 3.0%
76,100 Familymart Co., Ltd. 4,964,922
99,000 Kahma Co., Ltd. 3,045,525
------------
8,010,447
------------
TELECOMMUNICATIONS - 1.5%
450 DDI Corporation 4,078,662
------------
TEXTILES & APPAREL - 1.5%
140,000 Aoki International Co., Ltd. 3,974,399
------------
TOTAL JAPAN
(COST $61,000,095) 65,053,887
------------
KOREA - 1.9%
ELECTRONICS - 0.6%
10,500 Samsung Electronics 1,794,354
------------
FINANCIAL SERVICES - 0.8%
104,000 Dongsuh Securities 2,074,780
------------
METALS--STEEL - 0.5%
40,000 Pohang Iron & Steel Co. (d)* 1,315,000
------------
TOTAL KOREA
(COST $5,987,381) 5,184,134
------------
MALAYSIA - 16.0%
AUTOMOBILES-DISTRIBUTION - 2.1%
816,000 Edaran Otomobil Nasional
Berhad 5,812,603
------------
BANKING - 3.7%
990,000 Development & Commercial Bank
Berhad 2,731,703
1,088,000 Malayan Banking Berhad 7,409,472
------------
10,141,175
------------
BROADCASTING & PUBLISHING - 1.9%
1,312,000 New Straits Time Press
Malaysia Berhad 5,135,029
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ---------- ------------
<C> <S> <C>
CONSTRUCTION & HOUSING - 1.3%
1,496,086
275,000 Kim Hin Industries Berhad
2,107,867
544,000 Metacorp Berhad
------------
3,603,953
------------
FOOD & HOUSEHOLD - 0.6%
236,000 Nestle (Malaysia) Berhad 1,588,728
------------
FOREST PRODUCTS & PAPER - 0.6%
55,600 Aokam Perdana 'A' 435,225
139,000 Aokam Perdana Berhad 1,147,906
------------
1,583,131
------------
LEISURE & TOURISM - 3.3%
964,500 Genting Berhad 8,871,135
------------
REAL ESTATE - 2.5%
1,000,000 Country Heights Holdings
Berhad 2,446,184
1,531,000 Island & Peninsular Berhad 4,254,442
------------
6,700,626
------------
TOTAL MALAYSIA
(COST $40,817,722) 43,436,380
------------
PHILIPPINES - 8.3%
BANKING - 1.2%
207,116 Philippine National Bank 3,253,131
------------
BEVERAGES & TOBACCO - 1.4%
712,000 San Miguel Corp. 'B' 3,871,124
------------
FOOD & HOUSEHOLD - 0.3%
1,000,000 Universal Robina 875,957
------------
MACHINERY & ENGINEERING - 0.3%
1,118,500 Keppel Philippine Holdings
'B'* 855,880
------------
REAL ESTATE - 1.5%
2,550,000 Ayala Land Inc. 4,005,236
------------
TELECOMMUNICATIONS - 1.5%
69,000 Philippine Long Distance
Telephone 4,001,611
------------
UTILITIES ELECTRICAL & GAS - 2.1%
409,000 Manila Electric Co. 'B' 5,765,203
------------
TOTAL PHILIPPINES
(COST $22,215,454) 22,628,142
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-41
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- ---------- ------------
SINGAPORE - 12.0%
<C> <S> <C>
BANKING - 2.9%
740,000 Overseas Union Bank Ltd. 4,234,332
339,900 United Overseas Bank Ltd. 3,727,786
------------
7,962,118
------------
BROADCASTING & PUBLISHING - 3.3%
490,000 Singapore Press Holdings Ltd. 8,978,883
------------
MACHINERY & ENGINEERING - 3.7%
225,000 Jurong Shipyard Ltd. 2,023,161
868,000 Keppel Corporation, Ltd. 7,982,289
------------
10,005,450
------------
TRANSPORTATION-AIRLINES - 2.1%
586,000 Singapore Airlines 5,628,474
------------
TOTAL SINGAPORE
(COST $28,581,150) 32,574,925
------------
THAILAND - 8.6%
BANKING - 3.3%
1,024,000 Thai Farmers Bank Ltd. 9,042,668
------------
BROADCASTING & PUBLISHING - 0.4%
136,800 Matichon Co. Ltd. 1,043,311
------------
BUILDING MATERIALS & COMPONENTS - 2.4%
115,000 Siam Cement Co. Ltd. 6,720,989
------------
REAL ESTATE - 0.9%
118,000 Land & House Corp. Ltd. 2,425,079
------------
TELECOMMUNICATIONS - 0.7%
250,000 Thai Telephone and Telecom 1,866,495
------------
WHOLESALE & INT'L TRADE - 0.9%
103,950 Int'l Cosmetics Co., Ltd. 2,336,611
------------
TOTAL THAILAND
(COST $20,024,946) 23,435,153
------------
TOTAL COMMON STOCKS
(COST $244,286,322) 249,018,858
------------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK -- 0.0%
SHARES VALUE US$
- ----------- -----------
<C> <S> <C>
KOREA - 0.0%
ELECTRONIC COMPONENTS & INSTRUMENTS - 0.0%
8,308 Anam Electronics Co.
(Cost $170,933) 113,623
-----------
TOTAL PREFERRED STOCK 113,623
-----------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE BONDS --2.5%
PRINCIPAL
AMOUNT
(000)
- ----------
<C> <S> <C>
INDONESIA - 1.1%
FOOD & HOUSEHOLD PRODUCTS - 1.1%
US$ 2,700 PT Global Market (Indofood)
CB 3.50% 4/06/97
(Cost $2,700,000) 2,970,000
------------
JAPAN - 0.7%
MERCHANDISING - 0.7%
Swfr 1,900 Arcland Sakamoto
.125% 2/20/98
(Cost $1,386,916) 1,724,522
------------
INDIA - 0.7%
FINANCIAL SERVICES - 0.4%
US$ 1,250 Industrial Credit &
Investment
Corp. of India 2.50% 4/03/00 1,078,125
METAL--STEEL - 0.3%
US$ 430 Essar Gujarat 5.50% 8/05/98 860,000
------------
TOTAL INDIA
(COST $1,860,750) 1,938,125
------------
TOTAL CONVERTIBLE BONDS
(COST $5,947,666) 6,632,647
------------
TOTAL INVESTMENTS
(COST $250,404,921) 94.2% 255,765,128
------------
Other assets less liabilities
5.8% 15,654,200
------------
Net Assets 100% $271,419,328
------------
</TABLE>
* Non-income producing security
(a) Global Depository Receipt.
(b) Global Depository Share.
(c) American Depository Share.
(d) American Depository Receipt.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-42
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $250,404,921) $ 255,765,128
Cash 16,990,953
Receivable for investments sold 3,856,732
Receivable for dividends 278,933
Receivable for withholding tax reclaim 6,838
Receivable for interest 139,878
Deferred organization expenses 141,604
Prepaid expenses 18,034
-------------
Total Assets 277,198,100
-------------
Liabilities:
Payable for investments purchased 2,748,491
Net unrealized depreciation on forward foreign exchange
contracts 2,492,362
Advisory fee payable 223,738
Administration fee payable 55,934
Accrued expenses payable and other liabilities 258,247
-------------
Total Liabilities 5,778,772
-------------
Net Assets $ 271,419,328
-------------
NET ASSETS WERE COMPOSED OF:
Capital Stock, par value ($.01 per share, applicable to
19,607,100 shares issued; authorized 100,000,000
shares) $ 196,071
Paid-in capital in excess of par 274,370,246
Accumulated net realized losses from investment (6,016,095)
Net unrealized appreciation of investments 5,360,207
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies (2,491,101)
-------------
Net Assets $ 271,419,328
-------------
-------------
Net asset value per share ($271,419,328
divided by 19,607,100 shares outstanding) $ 13.84
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-43
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 30, 1993* TO OCTOBER 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $380,831) $ 2,335,754
Interest 897,530
-----------
Total Income 3,233,284
-----------
EXPENSES:
Investment advisory fee 2,156,730
Administration fee 539,182
Custodians' fees and expenses 349,571
Reports to shareholders 77,290
Insurance expense 69,959
Directors' fees and expenses 69,859
Transfer agent's fees and expenses 58,063
Independent accountants' fees and expenses 33,000
Legal fees and expenses 29,719
Amortization of deferred organization expenses 28,396
Registration fees 20,862
Miscellaneous 12,527
-----------
Total Expenses 3,445,158
-----------
NET INVESTMENT LOSS (211,874)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized loss from:
Investments (6,016,095)
Foreign currency transactions (188,277)
Net increase (decrease) in unrealized appreciation on:
Investments 5,360,207
Translation of assets and liabilities in foreign currencies (2,491,101)
-----------
NET REALIZED AND UNREALIZED LOSS FROM INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS (3,335,266)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,547,140)
-----------
-----------
</TABLE>
* Commencement of operations
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-44
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD DECEMBER 30, 1993* TO OCTOBER 31, 1994
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (211,874)
Net realized loss on investment transactions (6,016,095)
Net realized losses from foreign currency transactions (188,277)
Net unrealized appreciation on investments 5,360,207
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies (2,491,101)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (3,547,140)
-------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from the initial public offering of 17,200,000
shares 242,520,000
Proceeds from issuance of 2,400,000 shares in connection
with exercising of an overallotment option granted to
underwriters of the initial public offering 33,840,000
Offering costs charged to paid-in capital in excess of
par (1,493,642)
-------------
Net Increase in Net Assets Derived from Capital Stock
Transactions 274,866,358
-------------
TOTAL INCREASE IN NET ASSETS 271,319,218
NET ASSETS:
Beginning of period 100,110
-------------
End of period $ 271,419,328
-------------
-------------
</TABLE>
* Commencement of operations
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
A-45
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES:
Schroder Asian Growth 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 was incorporated in Maryland on
November 5, 1993 and investment operations commenced on December 30, 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION
Portfolio securities listed on a recognized stock exchange or NASDAQ are
valued at the last reported sales price on the exchange on which the
securities are principally traded. Other securities for which market
quotations are readily available are valued at the last sales price prior to
the time of determination. If there is no sales price on such date, and if
bid and asked quotations are available, such securities are valued at the
mean between the last current bid and asked prices. Securities for which
market quotations are not readily available and other assets are valued as
determined by the Investment Adviser and approved by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date except for certain dividends from foreign
securities which are recorded as soon as the Fund is informed of the
ex-dividend date. Interest income is recorded on the accrual basis. Realized
gains and losses from security transactions are determined on the identified
cost basis.
FOREIGN CURRENCY TRANSLATION
Foreign currency amounts denominated in or expected to settle in foreign
currencies (FC) are translated into U.S. dollars on the following basis:
market value of investment securities and other assets and liabilities at
the rate of exchange at the end of the respective period, purchases and
sales of investment securities and income and expenses at the rate of
exchange prevailing on the respective dates of such transactions.
The fund isolates that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales
of portfolio securities, sales and maturities of short-term securities,
sales of FCs, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities including investments in
securities at fiscal year end, resulting from changes in the exchange rate.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions payable by the Fund are accrued on the
ex-dividend date.
FORWARD EXCHANGE CONTRACTS
The Fund may enter into forward exchange contracts to purchase or sell
foreign currencies to protect against the effect of possible adverse
movements in foreign exchange rates on the U.S. dollar value of the
underlying portfolio. Risks associated with such contracts include the
movement in value of the foreign currency relative to the U.S. dollar and
the ability of the counterparty to perform. Forward exchange contracts are
valued at the forward rate and are marked-to-market weekly. Fluctuations in
the value of such contracts are recorded as unrealized gains or losses:
realized gains or losses include net gains or losses on contracts which have
terminated by settlement.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and
initial registration are being amortized on a straight line basis over a
five-year period from the commencement of investment operations.
- --------------------------------------------------------------------------------
A-46
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. PURCHASES AND SALES OF SECURITIES:
The aggregate cost of securities purchased and the proceeds from sales
of securities, excluding short-term invest-ments, for the period ended
October 31, 1994 were $304,862,332 and $48,440,482, respectively.
3. FORWARD EXCHANGE CONTRACTS AS OF OCTOBER 31, 1994:
<TABLE>
<CAPTION>
CONTRACTS TO SETTLEMENT IN EXCHANGE UNREALIZED APPRECIATION
DELIVER DATE FOR VALUE($) (DEPRECIATION)($)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
(A) OPEN CURRENCY TRANSACTIONS
Sinagapore Dollars $497,169 November 1, 1994 SGD 730,440 497,575 406
Malaysian Ringit $58,056 November 10, 1994 MYR 143,207 56,049 (7)
Japanese Yen Y48,717,540 November 4, 1994 $501,261 502,916 (1,655)
(B) HEDGE POSITIONS
Japanese Yen Y3,660,000,000 December 14, 1994 $35,423,925 37,915,031 (2,491,106)
-----------
Total $(2,492,362)
</TABLE>
4. ADVISORY AND ADMINISTRATIVE FEES:
The Fund retains Schroder Capital Management International, Inc. as
Investment Adviser. The investment advisory contract provides for a monthly
fee at the annual rate of 1% on the Fund's average weekly net assets. The
Fund paid or accrued fees to the Adviser of $2,156,730 for the period ended
October 31, 1994.
The Fund retains Middlesex Administrators L.P. as the Administrator. For
its services, the Administrator receives a monthly fee equal to the greater
of $150,000 per annum or an annual rate of .25% of the Fund's average weekly
net assets. The Fund paid or accrued fees to the Administrator of $539,182
during the period ended October 31, 1994.
5. FEDERAL INCOME TAXES:
Since it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its stockholders, no
federal income tax provision is required. Under the applicable foreign tax
law, a withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
For federal income tax purposes, the tax basis of investment securities
owned at October 31, 1994 was $250,404,921. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $27,600,833 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value was $22,240,626.
For Federal income tax purposes, the Fund had a capital loss carry
forward as of October 31, 1994 of $6,016,095 (expiring in 2003) which is
available to offset future capital gains, subject to limitations imposed
under the Internal Revenue Code.
6. CAPITAL STOCK:
There are 100,000,000 shares of $.01 par value common stock authorized.
Transactions in shares of common stock were as follows for the period ended
October 31, 1994:
<TABLE>
<S> <C>
Shares issued to the Adviser 7,100
Shares issued in initial public offering 17,200,000
Shares issued in underwriters' over-allotment option 2,400,000
----------
Shares outstanding at October 31, 1994 19,607,100
----------
----------
</TABLE>
- --------------------------------------------------------------------------------
A-47
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
7. FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C>
Selected Per Share Data and Ratios
December 30, 1993* to October 31, 1994
Net Asset Value, beginning of period $ 14.01**
INVESTMENT OPERATIONS:
Net investment losses (.01)
Net realized and unrealized losses
on investments and foreign currencies (.16)
---------
Total from investment operations (.17)
Net asset value, end of period $ 13.84
---------
---------
Market value, end of period $ 12.00
---------
---------
TOTAL INVESTMENT RETURN BASED ON (1):
Market Value (20.00)%
---------
Net Asset Value (1.21)%
---------
RATIO/SUPPLEMENTARY DATA:
Net assets, fiscal year end (Millions) $ 271.42
Ratio of expenses to average net assets 1.59%***
Ratio of net investment loss to average net assets (0.10)%***
Portfolio turnover rate 19.76%
</TABLE>
* Commencement of operations.
** Net of .09 offering expenses.
*** Annualized
(1) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value periods where there is an increase in the discount or decrease in the
premium of the market value to the net asset value from the beginning to the
end of such periods. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in he
premium of the market value to the net asset value from the beginning to the
end of such periods.
8. QUARTERLY DATA (UNAUDITED):
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED GAINS NET INCREASE PRICE ON
(LOSSES) (DECREASE) THE
ON INVESTMENTS AND IN NET ASSETS NEW YORK
TOTAL NET INVESTMENT FOREIGN CURRENCY RESULTING FROM STOCK
INCOME INCOME (LOSS) TRANSACTION OPERATIONS EXCHANGE
----------------------------------------------------------------------------------------------
QUARTERLY PER PER PER PER
PERIOD AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE HIGH LOW
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
12/30/93*
to 01/31/94 $365,127 $0.02 $1,916 -- $(6,528,281) $(0.33) $(6,526,365) $(0.33) $16 1/8 $ 15
02/01/94 to
04/30/94 1,019,686 0.05 (75,248) (14,749,149) (0.75) (14,824,397) (0.75) 15 1/8 10 1/2
05/01/94 to
07/31/94 943,863 0.05 (161,721) $(0.01) 3,714,093 0.19 3,552,372 0.18 14 1/8 11 1/4
08/01/94 to
10/31/94 904,608 0.04 23,179 -- 14,228,071 0.73 14,251,250 0.73 13 3/4 11 1/2
</TABLE>
* Commencement of operations.
- --------------------------------------------------------------------------------
A-48
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
To the Shareholders and Board of Directors of
Schroder Asian Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Schroder Asian Growth Fund, Inc., including the schedule of investments, as of
October 31, 1994, and the related statements of operations, and changes in net
assets and the financial highlights for the period December 30, 1993
(commencement of operations) to October 31, 1994. 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 audit.
We conducted our audit 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
October 31, 1994 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 audit provides 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
Schroder Asian Growth Fund, Inc. as of October 31, 1994, the results of its
operations, changes in its net assets and financial highlights for the period
December 30, 1993 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
December 12, 1994
- --------------------------------------------------------------------------------
A-49
<PAGE>
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK, $0.01 PAR VALUE
OF
SCHRODER ASIAN GROWTH FUND, INC.
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 19, 1997
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON MARCH 20, 1997, UNLESS THE OFFER IS EXTENDED
<TABLE>
<S> <C> <C>
DEPOSITARY:
PHONE 1-800-426-5523
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
State Street Bank and State Street Bank and Securities Transfer and
Trust Company Trust Company Reporting Services Inc.
Corporate Reorganization Corporate Reorganization Boston EquiServe L.P.
PO Box 9061 70 Campanelli Drive Corporate Reorganization
Boston, MA 02205 Braintree, MA 02184 55 Broadway, Third Floor
New York, NY 10006
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
This Letter of Transmittal is to be used (a) if you desire to effect the
tender transaction yourself, (b) if you intend to request your broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
you and the Shares are not registered in the name of such broker, dealer,
commercial bank, trust company or other nominee, and (c) by a broker, dealer,
commercial bank, trust company or other nominee effecting the transaction as a
registered owner or on behalf of a registered owner. To accept the Offer in
accordance with its terms, a properly completed and duly executed Letter of
Transmittal (or photocopy thereof bearing original signature(s) and any required
signature guarantees), any certificates representing Shares tendered, and any
other documents required by this Letter of Transmittal should be mailed or
delivered to the Depositary at the appropriate address set forth herein and must
be received by the Depositary prior to 5:00 p.m., New York City time, on March
20, 1997, or such later time and date to which the Offer is extended, unless the
tendering party has satisfied the conditions for guaranteed delivery described
in Section 2 of the Offer to Purchase. Shareholders are not required to pay a
service charge to the Fund or the Depositary in connection with their tender of
Shares, but may be charged a fee by a broker, dealer or other institution for
processing the tender requested. Delivery of documents to a book-entry transfer
facility does not constitute delivery to the Depositary.
<TABLE>
<S> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK,
EXACTLY AS NAME(S) APPEAR(S) ON TENDERED CERTIFICATES
CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
<S> <C> <C>
<CAPTION>
TOTAL NUMBER OF
SHARES
SHARE CERTIFICATE REPRESENTED BY
NUMBER(S)* CERTIFICATE(S)*
<S> <C> <C>
Total Shares.........
* Need not be completed by Book-Entry shareholders.
</TABLE>
<PAGE>
THE UNDERSIGNED TENDERS ALL UNCERTIFICATED SHARES THAT MAY BE HELD IN THE
NAME(S) OF THE REGISTERED OWNER(S) BY THE FUND'S TRANSFER AGENT PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
THE BOXES BELOW ARE TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE DEPOSITORY TRUST COMPANY
("DTC") AND COMPLETE THE FOLLOWING:
NAME OF TENDERING INSTITUTION: _________________________________________________
DTC PARTICIPANT NUMBER: ________________________________________________________
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
NAME(S) OF REGISTERED HOLDER(S): _______________________________________________
WINDOW TICKET NUMBER (IF ANY): _________________________________________________
DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY: ____________________________
NAME OF ELIGIBLE INSTITUTION WHICH GUARANTEED DELIVERY:
________________________________________________________________________________
DTC PARTICIPANT NUMBER (IF DELIVERED BY BOOK-ENTRY TRANSFER):
________________________________________________________________________________
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
<PAGE>
Ladies and Gentlemen:
The person(s) signing this Letter of Transmittal (the "Signor") hereby
tenders to Schroder Asian Growth Fund, Inc. (the "Fund"), a non-diversified,
closed-end management investment company organized as a Maryland corporation,
the above-described shares of common stock, par value $0.01 per share (the
"Shares") of the Fund, at a price (the "Purchase Price") equal to the net asset
value ("NAV") per Share determined as of the close of the regular trading
session of the New York Stock Exchange on March 21, 1997 (or, if the Offer is
extended, on the Expiration Date as defined in the Offer to Purchase) in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated February 19, 1997, receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which Offer to Purchase and Letter of Transmittal
together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the Signor hereby
sells, assigns and transfers to, or upon the order of, the Fund all right, title
and interest in and to all of the Shares that are being tendered hereby that are
purchased pursuant to the Offer and hereby irrevocably constitutes and appoints
State Street Bank and Trust Company (the "Depositary") as attorney-in-fact of
the Signor with respect to such Shares, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) present certificate(s) for such Shares, if any, for
cancellation and transfer on the Fund's books and (b) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares, subject to
the next paragraph, all in accordance with the terms and subject to the
conditions set forth in the Offer.
The Signor hereby represents and warrants that (a) the Signor, if a broker,
dealer, commercial bank, trust company or other nominee, has obtained the
tendering shareholder's instructions to tender pursuant to the terms and
conditions of this Offer in accordance with the letter from the Fund to brokers,
dealers, commercial banks, trust companies and other nominees; (b) when and to
the extent the Fund accepts the Shares for purchase, the Fund will acquire good,
marketable and unencumbered title thereto, free and clear of all security
interests, liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to their sale or transfer, and not
subject to any adverse claim; (c) on request, the Signor will execute and
deliver any additional documents that the Depositary or the Fund deems necessary
or desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and (d) the Signor has read and agrees to all of the terms and
conditions of the Offer.
The name(s) and address(es) of the registered owner(s) should be printed as
on the registration of the Shares. If the Shares tendered hereby are in
certificate form, the certificate(s) representing such Shares must be returned
together with this Letter of Transmittal.
The Signor recognizes that, under certain circumstances set forth in the
Offer to Purchase, the Fund may terminate or amend the Offer or may not be
required to purchase any of the Shares tendered hereby. In any such event, the
Signor understands that certificate(s) for the Shares not purchased, if any,
will be returned to the Signor at its registered address unless otherwise
indicated under the Special Delivery Instructions below. The Signor recognizes
that the Fund has no obligation, pursuant to the Special Payment Instructions,
to transfer any Shares from the name of the registered owner thereof if the Fund
purchases none of such Shares.
The Signor understands that acceptance of Shares by the Fund for payment
will constitute a binding agreement between the Signor and the Fund upon the
terms and subject to the conditions of the Offer.
The check for the Purchase Price of the tendered Shares purchased will be
issued to the order of the Signor and mailed to the address indicated, unless
otherwise indicated in the box titled Special Payment Instructions or the box
titled Special Delivery Instructions. The Fund will not pay interest on the
Purchase Price under any circumstances.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Signor and all obligations of the Signor hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the Signor. Except as stated in the Offer, this tender is
irrevocable.
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Purchase Price and/or return any Share
certificates not accepted for payment in the name(s) of the registered holder(s)
appearing under "Description of Shares Tendered." Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
Purchase Price for any Shares purchased and/or return any Share certificates not
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Payment Instructions and the
Special Delivery Instructions are completed, please issue the check for the
Purchase Price and/or return any Share certificates not accepted for payment in
the name of, and deliver such check and/or return any such Share certificates
to, the person(s) so indicated. The undersigned recognizes that the Fund has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
from the name of the registered holder thereof if the Fund does not accept for
payment any of the Shares tendered hereby.
/ / SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share certificates accepted for payment and/or the
check for the purchase price of Shares accepted for payment are to be issued in
the name of someone other than the undersigned.
Issue: / / Check / / Certificate(s) to:
Name(s):________________________________________________________________________
(Please Type or Print)
Address:________________________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security No., if applicable)
(See Substitute Form W-9 below.)
/ / SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share certificates not accepted for payment and/or
the check for the purchase price of Shares accepted for payment are to be sent
to someone other than the undersigned, or to the undersigned at an address other
than that shown above.
Mail: / / Check / / Certificate(s) to:
Name(s):________________________________________________________________________
(Please Type or Print)
Address:________________________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security No., if applicable)
(See Substitute Form W-9 below.)
<PAGE>
IMPORTANT:
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 (BELOW)
OR FORM W-8 (ENCLOSED) AS APPLICABLE
The Offer is hereby accepted in accordance with its
terms.
________________________________________________________
(Signature(s) of Shareholder(s))
Dated: _____________________________________________,
1997
(Must be signed by the registered holder(s) exactly as
name(s) appear(s) on the Share certificates or on a
security position listing or by person(s) authorized to
become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or
others acting in a fiduciary or representative capacity,
please provide the following information. See
Instruction 5.)
Name(s): _______________________________________________
(Please Type or Print)
Capacity (Full Title): _________________________________
(See Instruction 5)
Address: _______________________________________________
_______________________________________________________
(Include Zip Code)
Area Codes and Telephone Numbers:
<TABLE>
<S> <C>
Home Business
</TABLE>
Taxpayer Identification or Social Security No. (if
applicable):
_______________________________________________________
(Complete Substitute Form W-9 below or
Form W-8 (enclosed), as applicable)
<PAGE>
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
________________________________________________________
Name:
________________________________________________________
(Please Type or Print)
Title:
________________________________________________________
Name of Firm:
________________________________________________________
Address:
________________________________________________________
(Include Zip Code)
(Area Code and Tel. No.)
____________________________________ Dated: ___________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith (including, for purposes of
this document, any participant in the book-entry transfer facility of The
Depositary Trust Company ("DTC") whose name appears on DTC's security position
listing as the owner of Shares), unless such holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" above, or (b) if such Shares are tendered for the account
of a firm (an "Eligible Institution") which is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
a Stock Transfer Association approved medallion program (such as STAMP, SEMP or
MSP). In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used (a) if Shares are to be forwarded herewith, (b) if
uncertificated Shares held by the Fund's transfer agent pursuant to the Fund's
dividend reinvestment plan are to be tendered, or (c) if tenders are to be made
by book-entry transfer to the account maintained by the Depositary pursuant to
the procedure set forth in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL,
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. Shareholders have the responsibility to cause their
Shares (in proper certificated or uncertificated form), this Letter of
Transmittal (or a photocopy hereof bearing original signature(s) and any
required signature guarantees), and any other documents required by this Letter
of Transmittal to be timely delivered in accordance with the Offer.
The Fund will not accept any alternative, conditional or contingent tenders.
All tendering shareholders, brokers, dealers, commercial banks, trust companies
and other nominees, by execution of this Letter of Transmittal (or photocopy
hereof), waive any right to receive any notice of the acceptance of their
tender.
3. INADEQUATE SPACE. If the space provided in any of the above boxes is
inadequate, the necessary information should be listed on a separate schedule
signed by all of the required signatories and attached hereto.
4. TENDER OF ALL SHARES HELD BY THE SHAREHOLDER. A shareholder wishing to
accept the Offer must tender, or cause the tender of, all Shares actually owned
or constructively owned by the shareholder pursuant to Section 318 of the
Internal Revenue Code of 1986, as amended, as of the date of purchase of Shares
pursuant to the Offer. Shareholders should consult their tax advisers as to the
application of the constructive ownership rules of Section 318. If more than
3,500,000 Shares are duly tendered prior to the expiration of the Offer, the
Fund will purchase Shares from tendering shareholders, in accordance with the
terms and conditions specified in the Offer to Purchase, pro rata in accordance
with the number of Shares tendered by each shareholder during the period the
Offer remains open, unless the Fund determines not to purchase any Shares.
Certificates representing Shares tendered but not purchased will be returned
promptly following the termination, expiration or withdrawal of the Offer,
without expense to the tendering shareholder.
5. SIGNATURES ON LETTER OF TRANSMITTAL, AUTHORIZATIONS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
<PAGE>
If this Letter of Transmittal or stock powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Fund of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted hereby, no endorsements of certificates or separate stock
powers are required unless payment is to be made to or certificates for Shares
not purchased are to be issued in the name of a person other than the registered
holder(s). Signatures on such certificates or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appears on the certificate(s)
for such Shares. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. TRANSFER TAXES. The Fund will pay any transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, (a)
payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) unpurchased Shares are to be registered in the name(s)
of, any person(s) other than the registered owner(s), or (b) if any tendered
certificate(s) are registered, or the Shares tendered are otherwise held, in the
name(s) of any person(s) other than the registered owner, the amount of any
transfer taxes (whether imposed on the registered owner(s) or such other
person(s)) payable on account of the transfer to such person(s) will be deducted
from the Purchase Price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for
unpurchased Shares and/or check(s) are to be issued in the name of a person
other than the registered owner(s) or if such certificate(s) and/or check(s) are
to be sent to someone other than the registered owner(s) or to the registered
owner(s) at a different address, the captioned boxes "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal must be completed.
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tenders will be determined by the
Fund, in its sole discretion, which determination shall be final and binding.
The Fund reserves the absolute right to reject any or all tenders determined not
to be in appropriate form or to refuse to accept for payment, purchase or pay
for any Shares if, in the opinion of the Fund's counsel, accepting, purchasing
or paying for such Shares would be unlawful. The Fund also reserves the absolute
right to waive any of the conditions of the Offer or any defect in any tender,
whether generally or with respect to any particular Share(s) or shareholder(s).
The Fund's interpretations of the terms and conditions of the Offer (including
these instructions) shall be final and binding.
NONE OF THE FUND, SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. (THE FUND'S
INVESTMENT ADVISER), THE DEPOSITARY OR ANY OTHER PERSON IS OR WILL BE OBLIGATED
TO GIVE ANY NOTICE OF DEFECTS IN TENDERS, AND NONE OF THEM SHALL INCUR ANY
LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Depositary at the mailing
address provided above or by telephoning 1-800-426-5523. Requests for additional
copies of the Offer to Purchase and this Letter of Transmittal may also be
directed to the Depositary. Shareholders who do not own Shares directly may also
obtain such information and copies from their broker, dealer, commercial bank,
trust company or other nominee. Shareholders who do not own Shares directly are
required to tender their Shares through their broker, dealer, commercial bank,
trust company or other nominee and should NOT submit this Letter of Transmittal
to the Depositary.
<PAGE>
10. RESTRICTION ON SHORT SALES. Section 14(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14e-4 promulgated
thereunder make it unlawful for any person, acting alone or in concert with
others, to tender Shares in a partial tender offer for such person's own account
unless at the time of tender, and at the time the Shares are accepted for
payment, the person tendering has a net long position equal to or greater than
the amount tendered in (i) Shares, and will deliver or cause to be delivered
such Shares for the purpose of tender to the person making the Offer within the
period specified in the offer, or (ii) an equivalent security and, upon
acceptance of his or her tender, will acquire Shares by conversion, exchange, or
exercise of such equivalent security to the extent required by the terms of the
Offer, and will deliver or cause to be delivered the Shares so acquired for the
purpose of tender to the Fund prior to or on the Expiration Date. Section 14(e)
and Rule 14e-4 provide a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering shareholder and the Fund, upon the terms and
subject to the conditions of the Offer, including such shareholder's
representation that (i) such shareholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act; and (ii) the tender of such Shares complies with Rule 14e-4.
11. BACKUP WITHHOLDING TAX. Each tendering U.S. shareholder who has not
already submitted a correct, completed and signed Form W-9 to the Fund, or does
not otherwise establish an exemption from withholding, must notify the
Depositary of such shareholder's correct taxpayer identification number ("TIN")
(or certify that such taxpayer is awaiting a TIN) and provide certain other
information by completing and providing to the Depositary the Substitute Form
W-9 provided under "Important Tax Information" below. Failure either to provide
the information on the form or to check the box in Part 2 of the form may
subject the tendering shareholder to 31% federal income tax backup withholding
on the payments made to the shareholder (or other payee) with respect to Shares
purchased pursuant to the Offer. The box in Part 2 of the form may be checked if
the tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 2 is checked
and the Depositary is not provided with a TIN within sixty (60) days, the
Depositary will withhold 31% on all such payments thereafter until a TIN is
provided to the Depositary.
Each tendering non-U.S. shareholder who has not already submitted a correct,
completed and signed Form W-8 to the Fund should complete the Form W-8 included
with this Letter of Transmittal and provide it to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL, OR FACSIMILE HEREOF BEARING ORIGINAL
SIGNATURE(S), PROPERLY COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES, SHARES (IN PROPER CERTIFICATED OR UNCERTIFICATED FORM),
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering shareholder and the Fund, upon the terms and
subject to the conditions of the Offer, including such shareholder's
representation that the Shares being tendered represent and will represent all
Shares actually owned by such shareholder as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by such shareholder
as of such date under Section 318 of the Internal Revenue Code of 1986, as
amended, have been or will be tendered pursuant to the Offer.
IMPORTANT TAX INFORMATION
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO NON-U.S. SHAREHOLDERS. ALL
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE OFFER.
<PAGE>
SUBSTITUTE FORM W-9 OR FORM W-8
Under the U.S. federal income tax laws, the Depositary may be required to
withhold 31% of the amount of any payment made to certain holders pursuant to
the Offer. In order to avoid such backup withholding, each tendering U.S.
shareholder must provide the Depositary with such shareholder's correct TIN by
completing the Substitute Form W-9 set forth below. In general, if a shareholder
is an individual, the TIN is the Social Security number of such individual. If
the Depositary is not provided with the correct TIN, the shareholder may be
subject to a penalty imposed by the Internal Revenue Service. Certain
shareholders (including, among others, all corporations) are not subject to
these backup withholding and reporting requirements, but should nonetheless
complete a Substitute Form W-9 to avoid possible erroneous backup withholding.
For further information regarding backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if Shares are held in more
than one name), consult the enclosed Guidelines for Certification of Taxpayer
Identification Number.
In order for a non-U.S. shareholder to avoid 31% backup withholding, such
shareholder must submit a statement to the Depositary signed under penalties of
perjury attesting as to its non-U.S. status. Form W-8 and instructions for such
statement are enclosed for such shareholders.
CONSEQUENCES OF FAILURE TO FILE SUBSTITUTE FORM W-9 OR FORM W-8
Failure to complete Substitute Form W-9 or Form W-8 will not, by itself,
cause the Shares to be deemed invalidly tendered but may require the Depositary
to withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, the
shareholder may claim a refund from the Internal Revenue Service.
<PAGE>
<TABLE>
<S> <C> <C> <C>
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN PART 2--Awaiting TIN / /
FORM W-9 (SOCIAL SECURITY NUMBER) AND Please see below.
CERTIFY BY SIGNING AND DATING
BELOW:
DEPARTMENT OF THE TREASURY CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1)
INTERNAL REVENUE SERVICE THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND
PAYER'S REQUEST FOR TAXPAYER COMPLETE AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER
IDENTIFICATION NUMBER BECAUSE I AM EXEMPT FROM BACKUP WITHHOLDING OR I HAVE NOT BEEN
NOTIFIED BY THE INTERNAL REVENUE SERVICE (THE "IRS") THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF UNDER-REPORTING
INTEREST OR DIVIDENDS OR THE IRS HAS NOTIFIED ME THAT I AM NO
LONGER SUBJECT TO BACKUP WITHHOLDING. (YOU MUST CROSS OUT ITEM
(2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDER-REPORTING
INTEREST OR DIVIDENDS ON YOUR RETURN. HOWEVER, IF AFTER BEING
NOTIFIED BY THE IRS THAT YOU WERE SUBJECT TO BACKUP WITHHOLDING
YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS THAT YOU ARE NO
LONGER SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT ITEM
(2).)
Signature: _____________________________ Date: ______________
</TABLE>
Name: __________________________________________________________________________
(Please Print)
Address: _______________________________________________________________________
(Include Zip Code)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER" FOR
ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the
payer, 31% of all reportable payments due to me pursuant to the Offer will be
withheld until I provide a Taxpayer Identification Number to the payer and
that, if I do not provide my Taxpayer Identification Number within 60 days,
such retained amounts shall be remitted to the IRS as backup withholding.
Signature: ________________________________________ Date: ___________________
<PAGE>
NOTICE OF GUARANTEED DELIVERY
REGARDING THE OFFER BY
SCHRODER ASIAN GROWTH FUND, INC.
TO PURCHASE FOR CASH 3,500,000 OF ITS ISSUED AND OUTSTANDING
SHARES AT NET ASSET VALUE PER SHARE
This form must be used to accept the Offer (as defined below) if a
shareholder's certificates for Shares are not immediately available or if time
will not permit the Letter of Transmittal and other required documents to reach
the Depositary on or before the Expiration Date. Terms used in this form that
are not otherwise defined herein shall have the meanings specified in the Offer
to Purchase, dated February 19, 1997. This form may be delivered by hand,
overnight courier or mail to the Depositary at the appropriate address set forth
below AND MUST BEAR ORIGINAL SIGNATURES (NOT PHOTOCOPIES OR FACSIMILES). Tenders
using this form may be made only by or through a member firm of a registered
national securities exchange, or a commercial bank or trust company having an
office, branch or agency in the United States.
DEPOSITARY:
PHONE 1-800-426-5523
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
<S> <C> <C>
State Street Bank and State Street Bank and Securities Transfer and
Trust Company Trust Company Reporting Services Inc.
Corporate Corporate Boston EquiServe L.P.
Reorganization Reorganization Corporate
PO Box 9061 70 Campanelli Drive Reorganization
Boston, MA 02205 Braintree, MA 02184 55 Broadway, Third
Floor
New York, NY 10006
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Schroder Asian Growth Fund, Inc. (the
"Fund"), upon the terms and subject to the conditions set forth in its Offer to
Purchase dated February 19, 1997 and the related Letter of Transmittal (which
together constitute the "Offer"), receipt of which are hereby acknowledged, the
number of Shares specified below and all Shares that may be held in the name(s)
of the registered holder(s) by the Fund's transfer agent pursuant to the
dividend reinvestment plan pursuant to the guaranteed delivery procedures set
forth in Section 2 of the Offer to Purchase.
Number of Shares Tendered: _____________________________________________________
<TABLE>
<CAPTION>
Certificate Nos. (if available): Name(s) of Record Holder(s):
<S> <C>
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
Address:
If Shares will be tendered by book- --------------------------------------------
entry transfer to The Depository --------------------------------------------
Trust Company, please check box: / /
DTC Participant Number: Area Code and Telephone Number:
-------------------- --------------------------------------------
</TABLE>
The undersigned also tenders all uncertificated Shares that may be held in
the name(s) of the registered holder(s) by the Fund's transfer agent pursuant to
the Fund's dividend reinvestment plan.
If the undersigned is the beneficial owner of the Shares being tendered, the
undersigned hereby represents and warrants that such Shares represent and will
represent all Shares actually owned by the undersigned as of the date of
purchase of Shares pursuant to the Offer, and all Shares constructively owned by
the undersigned as of such date under Section 318 of the Internal Revenue Code
of 1986, as amended, have been or will be tendered pursuant to the Offer.
Dated: ___________________, 1997 __________________________
Signature
<PAGE>
GUARANTEE
The undersigned, a member firm of a registered national securities exchange,
or a commercial bank or trust company having an office, branch or agency in the
United States, hereby: (a) represents that the above named person(s) "own(s)"
the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended; (b) represents that the tender of such Shares
complies with Rule 14e-4; and (c) guarantees to deliver to the Depositary
certificates representing the Shares tendered hereby, in proper form for
transfer (or to tender Shares pursuant to the procedure for book-entry transfer
into the Depositary's account at The Depository Trust Company if so specified on
the foregoing page), together with a properly completed and duly executed Letter
of Transmittal with any required signature guarantees, and any other required
documents, within five New York Stock Exchange trading days after the date of
receipt hereof by the Depositary.
Name of Firm:
________________________________________________________________________________
(Please Print)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
(Please Print)
Title: _________________________________________________________________________
Name: __________________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ________________________________________________
Dated: ________________________ , 1997
2
<PAGE>
LETTER TO BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES
REGARDING THE OFFER BY
SCHRODER ASIAN GROWTH FUND, INC.
TO PURCHASE FOR CASH 3,500,000 OF ITS ISSUED AND OUTSTANDING SHARES AT NET ASSET
VALUE PER SHARE
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Pursuant to your request, we are enclosing herewith the material listed
below relating to the offer by Schroder Asian Growth Fund, Inc. (the "Fund") to
purchase 3,500,000 of its issued and outstanding shares of common stock, par
value $.01 per share (the "Shares") for cash at a price equal to their net asset
value ("NAV") determined as of the close of the regular trading session of the
New York Stock Exchange ("NYSE") on March 21, 1997, subject to the terms and
conditions set forth in the Offer to Purchase dated February 19, 1997 and the
related Letter of Transmittal (which together constitute the "Offer"). THE OFFER
EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 20, 1997, UNLESS EXTENDED
(THE "EXPIRATION DATE"). If the Offer is extended beyond March 20, 1997, the
purchase price for Shares will be their NAV determined as of the close of the
regular trading session of the NYSE on the Expiration Date, as extended.
The following documents are enclosed:
(1) OFFER TO PURCHASE DATED FEBRUARY 19, 1997;
(2) LETTER OF TRANSMITTAL TO BE USED TO TENDER SHARES;
(3) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER;
(4) NOTICE OF GUARANTEED DELIVERY; AND
(5) LETTER TO CLIENTS, WHICH MAY BE SENT UPON ANY REQUEST FOR INFORMATION BY
YOUR CLIENTS FOR WHOSE ACCOUNT YOU HOLD SHARES REGISTERED IN YOUR NAME (OR IN
THE NAME OF YOUR NOMINEE) WITH SPACE PROVIDED FOR OBTAINING SUCH CLIENTS'
INSTRUCTIONS WITH REGARD TO THE OFFER.
PLEASE NOTE THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 5:00 P.M.,
NEW YORK CITY TIME, ON MARCH 20, 1997, UNLESS EXTENDED.
No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Shares pursuant to the Offer. The Fund will pay all
transfer taxes on its purchase of Shares, subject to Instruction 6 of the Letter
of Transmittal. Backup tax withholding at a 31% rate may be required unless an
exemption is proved or unless the required taxpayer identification information
is or has previously been provided. Certain withholdings may also apply with
respect to payments to non-U.S. shareholders. See Instruction 11 of the Letter
of Transmittal.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) shareholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent that the securities laws of any jurisdiction would
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on the Fund's behalf by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
If a client instructs you by telephone to tender Shares, please record the
telephone conversation (in accordance with applicable law) and ask the client to
affirm that the Shares tendered by such client represent and will represent all
Shares actually owned by such client as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by such client as of
such date under Section 318 of the Internal Revenue Code of 1986, as amended,
have been or will be tendered pursuant to the Offer.
<PAGE>
Additional copies of the enclosed material may be obtained from State Street
Bank and Trust Company, the Depositary, at the appropriate addresses and
telephone numbers set forth in the Offer to Purchase. Any question you have with
respect to the Offer should be directed to the Depositary at 1-800-426-5523.
Very truly yours,
SCHRODER ASIAN GROWTH FUND, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF EITHER THE FUND OR THE DEPOSITARY OR
AUTHORIZE YOU OR ANY OTHER PERSON (A) TO MAKE ANY STATEMENTS WITH RESPECT TO THE
OFFER, OTHER THAN THE STATEMENTS SPECIFICALLY SET FORTH IN THE OFFER TO PURCHASE
AND THE LETTER OF TRANSMITTAL, OR (B) TO DISTRIBUTE ANY MATERIAL WITH RESPECT TO
THE OFFER OTHER THAN AS SPECIFICALLY AUTHORIZED HEREIN.
2
<PAGE>
LETTER TO CLIENTS OF BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES
REGARDING THE OFFER BY
SCHRODER ASIAN GROWTH FUND, INC.
TO PURCHASE FOR CASH 3,500,000 OF ITS
ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
To Our Clients:
Pursuant to your request, enclosed for your consideration are the Offer to
Purchase dated February 19, 1997 of Schroder Asian Growth Fund, Inc. (the
"Fund") and the related Letter of Transmittal pursuant to which the Fund is
offering to purchase 3,500,000 shares of its issued and outstanding common
stock, par value $0.01 per share (the "Shares") for cash at a price equal to
their net asset value ("NAV") determined as of the close of the regular trading
session of the New York Stock Exchange ("NYSE") on March 21, 1997, subject to
the terms and conditions set forth in the Offer to Purchase dated February 19,
1997 and the related Letter of Transmittal (which together constitute the
"Offer"). THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 20, 1997,
UNLESS EXTENDED (THE "EXPIRATION DATE"). If the Offer is extended beyond March
20, 1997, the purchase price for Shares will be their NAV determined as of the
close of the regular trading session of the NYSE on the Expiration Date, as
extended.
The purpose of the Offer is to fulfill an undertaking made in the Fund's
prospectus, dated December 22, 1993 (the "Prospectus"). There the Fund stated
that, in recognition of the possibility that the Fund's Shares might trade at a
discount to NAV, the Board of Directors of the Fund determined that it would be
in the best interests of shareholders of the Fund to take action to attempt to
reduce or eliminate a market value discount from NAV.
In the Prospectus, the Fund undertook to conduct an annual tender offer for
Shares during the first calendar quarter of each year commencing in 1997 that
the average of the closing prices of the Shares on the NYSE for the Fund's
weekly valuation day in each week during a specified period (the "Measurement
Period") represents a discount of 3% or more from the average NAV of the Fund as
determined on the same days in the same period. The Measurement Period is
required to be a 12-week consecutive period beginning in the fourth calendar
quarter of a calendar year and ending in the immediately following first
calendar quarter. On October 14, 1996, the Board of Directors fixed the
Measurement Period for the Offer as the period beginning on November 11, 1996
and ending on January 31, 1997. The average trading price of the Shares on the
valuation days during the Measurement Period was $12.115 per Share and the
average NAV of the Fund on the same days was $13.607, representing a discount of
10.96%. Accordingly, the Fund is conducting the Offer, subject to the terms and
conditions specified in the Offer to Purchase.
Consistent with their fiduciary obligations, in addition to the Offer, the
Board of Directors will continue to explore other means to reduce or eliminate
the Fund's market value discount from NAV.
The Offer to Purchase and the Letter of Transmittal are being forwarded to
you as the beneficial owner of Shares held by us for your account but not
registered in your name. We are sending you the Letter of Transmittal for your
information only; you cannot use it to tender Shares we hold for your account. A
tender of such Shares can be made only by us as the holder of record and only
pursuant to your instructions.
<PAGE>
Your attention is called to the following:
1. The purchase price is the NAV determined as of the close of the regular
trading session of the NYSE on March 21, 1997, subject to the terms and
conditions set forth in the Offer to Purchase dated February 19, 1997 and
the related Letter of Transmittal. THE OFFER EXPIRES AT 5:00 P.M., NEW YORK
CITY TIME, ON MARCH 20, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). If
the Offer is extended beyond March 20, 1997, the purchase price for Shares
will be their NAV determined as of the close of the regular trading session
of the NYSE on the Expiration Date, as extended.
2. The Offer is for 3,500,000 of the issued and outstanding Shares of the Fund
and is not conditioned upon any minimum number of outstanding Shares being
tendered, but is subject to certain conditions set forth in the Offer to
Purchase. Under the conditions described in the Offer to Purchase, the Fund
may terminate or amend the Offer or may postpone the acceptance for payment
of, payment for or purchase of any Shares.
3. A shareholder wishing to accept the Offer must tender, or cause the tender
of, all Shares actually or constructively owned by the shareholder, pursuant
to Section 318 of the Internal Revenue Code of 1986, as amended, as of the
date of purchase of Shares pursuant to the Offer. Shareholders should
consult their tax advisers as to the application of the constructive
ownership rules of Section 318.
4. If more than 3,500,000 Shares are duly tendered prior to the expiration of
the Offer, the Fund will purchase Shares from tendering shareholders in
accordance with the terms and conditions specified in the Offer to Purchase
pro rata in accordance with the number of Shares tendered by each
shareholder during the period the Offer remains open, unless the Fund
determines not to purchase any Shares.
5. Tendering shareholders will not be obligated to pay brokerage commissions
or, subject to Instruction 6 of the Letter of Transmittal, transfer taxes on
the purchase of Shares by the Fund pursuant to the Offer; however, a broker,
dealer or other person may charge a fee for processing the transactions on
behalf of shareholders. Shareholders are not required to pay a service
charge to the Fund or the Depositary in connection with their tender of
Shares.
If you wish to have us tender your Shares, please so instruct us by
completing, executing and returning to us the instruction form on the reverse
side hereof.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 20, 1997, UNLESS EXTENDED.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) owners of Shares in any jurisdiction in which the Offer or its
acceptance would violate the laws of such jurisdiction. To the extent that the
securities laws of any jurisdiction would require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on the Fund's
behalf by one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Very truly yours,
SCHRODER ASIAN GROWTH FUND, INC.
2
<PAGE>
INSTRUCTIONS REGARDING THE OFFER BY
SCHRODER ASIAN GROWTH FUND, INC.
TO PURCHASE FOR CASH 3,500,000 OF ITS ISSUED AND OUTSTANDING
SHARES AT NET ASSET VALUE PER SHARE
THIS FORM IS NOT TO BE USED TO TENDER SHARES DIRECTLY TO THE DEPOSITARY. IT
SHOULD BE SENT TO YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE ONLY IF SUCH FIRM IS THE HOLDER OF RECORD OF YOUR SHARES AND WILL BE
EFFECTING THE TENDER ON YOUR BEHALF. THE DEPOSITARY MUST RECEIVE YOUR SHARES ON
OR PRIOR TO MARCH 20, 1997.
DO NOT COMPLETE THIS FORM IF YOU HAVE DECIDED NOT TO TENDER YOUR SHARES.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 19, 1997 and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by Schroder
Asian Growth Fund, Inc. (the "Fund") to purchase 3,500,000 shares of its issued
and outstanding common stock, par value $0.01 per share (the "Shares") at the
net asset value per Share as of the close of the regular trading session of the
New York Stock Exchange on March 21, 1997 (or, if the Offer is extended, on the
new Expiration Date), on the terms and subject to the conditions of the Offer.
The undersigned hereby instructs you to tender to the Fund all Shares that
are held by you for the account of the undersigned, including all Shares held by
you and all uncertificated Shares that may be held for the account of the
undersigned by the Fund's transfer agent pursuant to the Fund's dividend
reinvestment plan, upon the terms and subject to the conditions of the Offer.
The undersigned hereby represents and warrants that: (i) the Shares which
you are being instructed to tender hereby represent and will represent all
Shares actually owned by the undersigned as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by the undersigned as
of such date under Section 318 of the Internal Revenue Code of 1986, as amended,
have been or will be tendered pursuant to the Offer; (ii) the undersigned has a
net long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended; and (iii) the
tender of such Shares complies with Rule 14e-4.
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<PAGE>
Account Number:
- -------------------------------------------------------------------------
Tax Identification or
Social Security Number:
- --------------------------------------------------------------------------------
Name(s) of Beneficial Owner(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature of beneficial owner)
- --------------------------------------------------------------------------------
(Signature of additional beneficial owner, if any)
Date:
- --------------------------------------------------------------------------------
4
<PAGE>
SCHRODER ASIAN GROWTH FUND, INC.
787 Seventh Avenue, 34th Floor
New York, New York 10019
Dear Shareholder:
As you requested, we are enclosing a copy of the Schroder Asian Growth Fund,
Inc. (the "Fund") Offer to Purchase (the "Offer to Purchase") 3,500,000 shares
of its issued and outstanding common stock, par value $0.01 per share (the
"Shares"), for cash at a price equal to their net asset value ("NAV") determined
as of the close of the regular trading session of the New York Stock Exchange
("NYSE") on March 21, 1997, subject to the terms and conditions set forth in the
Offer to Purchase dated February 19, 1997 and the related Letter of Transmittal
(which together constitute the "Offer"). THE OFFER EXPIRES AT 5:00 P.M., NEW
YORK CITY TIME, ON MARCH 20, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). If
the Offer is extended beyond March 20, 1997, the purchase price for Shares will
be their NAV determined as of the close of the regular trading session of the
NYSE on the Expiration Date, as extended.
If, after reviewing the information set forth in the Offer to Purchase and
Letter of Transmittal, you wish to tender Shares for purchase by the Fund,
please contact your broker, dealer or other nominee to effect the tender for you
or, if you are the record owner of the Shares, you may follow the instructions
contained in the Offer to Purchase and Letter of Transmittal. You must tender,
or cause the tender of, all Shares actually or constructively owned by you
pursuant to Section 318 of the Internal Revenue Code of 1986, as amended, as of
the date of purchase of Shares pursuant to the Offer. You should consult your
tax adviser as to the application of the constructive ownership rules of Section
318. Shareholders are not required to pay a service charge to the Fund or to
State Street Bank and Trust Company, the Depositary, in connection with their
tender of Shares, but may be charged a fee by a broker, dealer or other
institution for processing the tender requested.
Neither the Fund nor its Board of Directors is making any recommendation to
any holder of Shares as to whether to tender Shares. Each shareholder is urged
to consult his or her broker, investment adviser or tax adviser before deciding
whether to tender any Shares.
The Fund's NAV on February 13, 1997 was $13.62 per Share. The Fund publishes
its NAV each week in THE WALL STREET JOURNAL under the heading "Closed End
Funds." The Fund's NAV is also published in THE NEW YORK TIMES and BARRON'S.
During the pendency of the Offer, you may obtain current NAV quotations for
the Fund by calling State Street Bank and Trust Company, the Depositary, at
1-800-426-5523 between the hours of 9:00 a.m. and 5:00 p.m., New York City time,
Monday-Friday (except holidays). Requests for additional copies of the Offer to
Purchase, the Letter of Transmittal and any other tender offer documents may
also be directed to the Depositary.
Should you have any other questions on the enclosed material, please do not
hesitate to contact your broker, dealer or other nominee, or call the Depositary
at the number set forth immediately above.
Yours truly,
SCHRODER ASIAN GROWTH FUND, INC.
<PAGE>
DEPOSITARY AGREEMENT
Dated: as of February 18, 1997
State Street Bank and Trust Company
C/O Boston EquiServe
150 Royall Street
Mail Stop 45-02-53
Canton, Massachusetts 02021
Gentlemen:
Schroder Asian Growth Fund, Inc. a Maryland corporation (the "Company"), is
making a tender offer (hereinafter referred to, together with any amendment or
extensions thereof, as the "Tender Offer") to purchase outstanding shares of
Common Stock, par value of $0.01 per share (the "Shares"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February 19,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal
("Letter of Transmittal"), including the instructions set forth therein.
Definitive copies of each document being distributed by the Company to its
stockholders in connection with the Tender Offer have been or will be delivered
to you.
The Tender Offer is being made on February 19, 1997, and will expire at 5:00
p.m., New York City time, on March 20, 1997, unless extended by the Company as
provided in the Tender Offer (the last date to which the Tender Offer is
extended and on which it expires is herein referred to as the "Expiration
Date").
This will confirm our agreement with you to act as the Depositary in
connection with the Tender Offer. In such capacity you will receive and make
payment for, on behalf of the Company, Shares tendered pursuant to the terms of
the Tender Offer. In carrying out your duties as the Depositary in connection
with the Tender Offer, you are to act in accordance with the following
instructions:
1. You shall examine the Letters of Transmittal, the certificates for Shares
and the other documents delivered or mailed to you in connection with tenders of
Shares to ascertain whether they are completed and executed in accordance with
the instructions set forth in the Letters of Transmittal. In the event any
Letter of Transmittal has been improperly completed or executed, or the
certificates for Shares accompanying such Letter of Transmittal are not in
proper form for transfer (as required by the aforesaid instructions), or if some
other irregularity in connection with any tender of Shares exists, you shall
endeavor to cause such action to be taken as is necessary to correct such
irregularity. Determination of all questions as to the validity, form,
eligibility (including timeliness of receipt) and acceptance of any Shares
tendered or delivered shall be determined by you on behalf of the Company in the
first instance, but final decisions on all such matters shall be made by the
Company. The Company will reserve in the Tender Offer the absolute right to
reject any or all tenders of any particular Shares not in appropriate form or
the acceptance of which would, in the opinion of the Company's counsel, be
unlawful and to waive any of the conditions of the Tender Offer or any defect or
irregularity in the tender of any Shares, and the Company's interpretation of
the terms and conditions of the Tender Offer will be final. Tendering
shareholders are required to tender all shares actually and constructively owned
as of the date of purchase of Shares by the Company pursuant to the Tender Offer
("complete position tender"). Tenders that are not complete position tenders
shall be considered invalid and, if not corrected by the Expiration Date, shall
be rejected.
2. All Shares must be tendered in accordance with the terms and conditions
set forth in the Tender Offer. Payment for Shares tendered and purchased
pursuant to the Tender Offer shall be made only after deposit, with you of the
certificates therefor, the Letter of Transmittal and any other required
documents.
3. A tendering stockholder may withdraw Shares tendered as set forth in
Section 3 of the Offer to Purchase, in which event you shall, as promptly as
possible after notification of such withdrawal, return such Shares to, or in
accordance with the instruction of, such stockholder and such Shares shall no
longer be considered properly tendered. All questions as to the form and
validity of notices of withdrawal,
<PAGE>
including timeliness of receipt, shall be determined by the Company, whose
determination shall be final and binding.
4. On each business day up to and including the Expiration Date (as defined
in Section 1 of the Offer to Purchase), you shall advise by facsimile
transmission, not later than 5:00 p.m., Boston time, the Company and such other
persons as the Company may direct, of the number of Shares which have been duly
tendered on such day, stating separately the number of Shares tendered by
Guarantees of Delivery pursuant to Section 2 of the Offer to Purchase, the
number of Shares tendered about which you have questions concerning validity and
the cumulative number of Shares tendered through time of such facsimile
transmission. You shall also inform the Company, and such other persons as may
be designated by the Company, upon request made from time to time, of such other
information as the Company may request, including, without limitation, the names
and addresses of registered holders of tendered Shares.
5. Letters of Transmittal or facsimile transmissions submitted in lieu
thereof pursuant to Section 2 of the Offer to Purchase shall be stamped by you
as of the date and time of receipt thereof and preserved by you as permanent
records until you are otherwise instructed by the Company. You are to match
Guarantees of Delivery submitted pursuant to Section 2 of the Offer to Purchase
with the Share(s) tendered pursuant thereto. If so instructed by the Company,
you shall telephone Eligible Institutions (as defined in Section 2 of the Offer
to Purchase) which have tendered a significant number of shares by means of the
aforementioned procedures to ascertain information in connection therewith.
6. The Company will notify you of, and confirm in writing, any extension or
amendment of the Tender Offer.
7. You shall follow and act upon any amendments, modifications or
supplements to these instructions, and upon any further instructions in
connection with the Tender Offer, any of which may be given to you by the
Company or such other persons as it may authorize.
8. The Company will from time to time deposit or cause to be deposited with
you, as agent for tendering holders of Shares, within a reasonable time after
the Company's acceptance for purchase of tendered Shares, an amount equal to the
aggregate purchase price of all Shares to be purchased which you then hold. The
Company will deposit with you or cause to be deposited with you an amount equal
to the total stock transfer taxes, if any, payable by the Company pursuant to
the provisions of Instruction 6 of the Letter of Transmittal in respect of the
transfer of all the Shares to be purchased which you hold. You shall thereupon,
as promptly as possible, (a) purchase and affix appropriate stock transfer tax
stamps, (b) cause the tendered Shares which have been thus paid for to be
transferred and delivered to the Company by you, and (c) send a check for the
purchase price (less the amount, if any, of any stock transfer taxes which under
Instruction 6 of the Letter of Transmittal are to be deducted from the purchase
price and, if applicable, adjusted in accordance with the provisions of the
Tender Offer) of the Shares purchased to, or in accordance with the instruction
of, each of the stockholders who has tendered Shares deposited with you.
9. If, pursuant to the provisions of Instruction 4 of the Letter of
Transmittal, fewer than all the Shares evidenced by any certificate submitted to
you are purchased pursuant to the Tender Offer, you shall, promptly after the
Expiration Date, return or cause to be returned a new certificate for the
remainder of Shares not being tendered to, or in accordance with the instruction
of, each of such stockholders who has made a partial tender of Shares deposited
with you.
10. If, pursuant to the Tender Offer, the Company does not accept the
receipt of instructions from a tendering stockholder, you shall return the
certificates for such shares to, or in accordance with the instructions of, the
persons who deposited the same, together with a letter of notice, in form
satisfactory to the Company, explaining why the deposited Shares are being
returned, and return to the Company any surplus funds deposited by the Company
with you.
11. As Depositary you:
2
<PAGE>
(a) shall have no obligation to make payment for any tendered Shares
unless the Company shall have provided the necessary funds to pay in full
all amounts due and payable with respect thereto;
(b) shall have no duties or obligations other than those specifically
set forth herein or as may subsequently be requested of you by the Company
with respect to the Tender Offer;
(c) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of
any stock certificates or the Shares represented thereby deposited with you
pursuant to the Tender Offer and will not be required and will make no
representations as to the validity, value or genuineness of the Tender
Offer;
(d) shall not initiate any legal action hereunder without written
approval of the Company and then only upon such reasonable indemnity as you
may request;
(e) may rely on and shall be protected in acting upon any certificate,
instrument, opinion, notice, letter, facsimile transmission, telegram or
other document, or any security delivered to you, and reasonably believed by
you to be genuine and to have been signed by the proper party or parties;
(f) may rely on and shall be protected in acting upon written or oral
instructions with respect to any matter relating to your acting as
Depositary specifically covered by this Depositary Agreement, or
supplementing or qualifying any such action, of the Company; or
(g) may consult with counsel satisfactory to you (including counsel for
the Company) and the written advice or opinion of such counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by you hereunder in good faith and in accordance with
such advice or opinion of such counsel;
(h) shall arrange for insurance protecting the Company and yourself
against any liability arising out of the loss, destruction or non-delivery
of checks or certificates for any cause; and
(i) shall not at any time advise any person as to the wisdom of making
any tender pursuant to the Tender Offer, the value of the Shares or as to
any other financial or legal aspect of the Tender Offer or any transaction
related thereto.
12. It is understood and agreed that the securities, money, assets or
property (the "Property") to be deposited with or received by you as Depositary
from the Company constitute a special, segregated account, held solely for the
benefit of the Company and stockholders tendering Shares, as their interests may
appear, and the Property shall not be commingled with the securities, money,
assets or properties of you or any other person, firm or corporation. You hereby
waive any and all rights of lien, attachment or set-off whatsoever, if any,
against the Property so to be deposited, whether such rights arise by reason of
statutory or common law, by contract or otherwise.
13. For services rendered as Depositary hereunder, you shall be entitled to
payment of a $6,000 Flat Fee, which does not include out of pocket expenses,
such as, but not limited to postage, form cost, printing, and envelopes. Out of
pocket expenses will be billed to the Company as incurred.
14. The Company covenants and agrees to indemnify and to hold you harmless
against any costs, expenses (including reasonable fees of your legal counsel),
losses or damages, which may be paid, incurred or suffered by or to which you
may become subject, arising from or out of, directly or indirectly, any claims
or liability resulting from your actions as Depositary pursuant hereto; PROVIDED
that such covenant and agreement does not extend to, and you shall not be
indemnified with respect to, such costs, expenses, losses and damages incurred
or suffered by you as a result of, or arising out of, your negligence, bad
faith, or willful failure to perform any of your obligations hereunder. In no
case will the Company be liable under this indemnity with respect to any claim
against you unless, promptly after you have received any written assertion of a
claim or have been served with summons or other first legal process giving
information as to the nature and basis of the claim, you notify the Company, by
letter or by cable or telex confirmed by letter,
3
<PAGE>
of the written assertion of such claim against you or of any action commenced
against you or of the service of any summons on you, or other first legal
process giving information as to nature and basis of the claim. The Company will
be entitled to participate as its own expense in the defense of any such claim.
If the Company so elects at any time after receipt of such notices and agrees in
writing that such claim is a claim for which you are entitled to be indemnified
and held harmless hereunder or if you in such notice request and the Company
agrees, the Company will assume the defense of any suit brought to enforce any
such claim. In the event the Company assumes the defense of any such suit, the
Company may select counsel of its own choosing for such purpose and the Company
will not be liable for the fees and expenses of any additional counsel
thereafter retained by you.
15. This Depositary Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts and shall inure to
the benefit of and the obligations created hereby shall be binding upon the
successors and assigns of the parties hereto. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns.
16. This Depositary Agreement may be executed in separate counterparts, each
of which when executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
If the foregoing is acceptable to you, please acknowledge receipt of this
letter and confirm the arrangements herein provided by signing and returning the
enclosed copy.
Very truly yours,
By: /s/ Alexandra Poe
Assistant Secretary
ACCEPTANCE AS OF THE DATE HEREOF:
By: /s/ Barbara Cummings
Title: Administration Manager
4
<PAGE>
INVESTMENT ADVISORY AGREEMENT
Agreement, dated and effective as of May 15, 1996, between Schroder Asian
Growth Fund, Inc., a Maryland corporation (herein referred to as the "Fund") and
Schroder Capital Management International Inc., a New York corporation (herein
referred to as the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund is a non-diversified closed-end management company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act");
WHEREAS, the Investment Adviser provides investment advice and is registered
with the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
is registered with the United Kingdom Investment Management Regulatory
Organisation ("IMRO");
WHEREAS, the Fund has previously retained the Investment Adviser to render
investment advisory services to or on behalf of the Fund pursuant to an
Investment Advisory Agreement dated and effective as of December 21, 1993 (the
"Agreement"); and
WHEREAS, the Fund and the Investment Adviser desire to amend the Agreement
in order to revise the provisions relating to the compensation of the Investment
Adviser;
NOW, THEREFORE, in consideration of the promises and covenants hereinafter
contained, the Fund and the Investment Adviser hereby agree as follows:
1. ENGAGEMENT OF THE INVESTMENT ADVISER. The Fund hereby employs the
Investment Adviser to act as the investment adviser to the Fund and to provide
the investment advisory services described below, subject to the supervision of
the Board of Directors of the Fund, for the period and on the terms and
conditions set forth in this Agreement. The Investment Adviser hereby accepts
such employment and agrees during such period to render such services and to
assume the obligations herein set forth for the compensation provided for
herein. The Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority hereunder to act for or represent the Fund in any
way or otherwise be deemed an agent of the Fund.
2. INVESTMENT ADVISORY SERVICES. Subject always to the Fund's Articles of
Incorporation, its Bylaws and its registration statement filed on Form N-2 with
the SEC, as such registration statement may be amended from time to time (the
"Registration Statement"), the Investment Adviser shall act as investment
adviser to the Fund and as such shall furnish continuously an investment program
for the Fund consistent with the Fund's investment objective, policies and
restrictions. In the performance of its duties hereunder, the Investment Adviser
shall:
(a) determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held in the
various securities and assets in which the Fund invests or in cash;
(b) make decisions for the Fund with respect to foreign currency matters and
foreign exchange contracts, having regard to foreign exchange controls, if any;
(c) advise the Fund in connection with policy decisions to be made by its
Board of Directors or any committee thereof with respect to its investments and,
as requested, furnish the Fund with research, economic and statistical data in
connection with its investments and investment policies;
(d) submit such reports relating to the valuation of the Fund's securities
as the Fund's Board of Directors or the Fund's administrator may reasonably
request;
(e) place orders for the purchase, sale or exchange of portfolio assets for
the Fund's accounts with brokers or dealers selected by the Investment Adviser;
provided, however, that in connection with the placing of such orders and the
selection of such brokers or dealers the Investment Adviser shall seek to
<PAGE>
obtain execution and pricing within the policy guidelines established by the
Fund's Board of Directors and set forth in the Registration Statement of the
Fund as in effect from time to time;
(f) provide information in the possession of the Investment Adviser to the
Fund's administrator as the Fund's administrator may request to maintain and
preserve the records required by the Investment Company Act;
(g) obtain and evaluate such information relating to economies, industries,
businesses, securities markets and securities as the Investment Adviser may deem
necessary or useful in the discharge of its duties hereunder; and
(h) from time to time, or at any time requested by the Fund's Board of
Directors, make reports to the Fund concerning its performance of the foregoing
services and furnish advice and recommendations with respect to other aspects of
the business and affairs of the Fund.
3. ALLOCATION OF CHARGES AND EXPENSES.
(a) The Investment Adviser shall pay for maintaining its staff and personnel
necessary to perform its obligations under this Agreement and shall, at its own
expense, maintain the office space, facilities, equipment and personnel that are
reasonably necessary to carry out its obligations hereunder. In addition, the
Investment Adviser shall pay the reasonable salaries, fees and expenses of such
of the Fund's officers and employees (including the Fund's share of payroll
taxes) and any fees and expenses of such of the Fund's directors as are
directors, officers or employees of the Investment Adviser, provided, however,
that the Fund, and not the Investment Adviser, shall bear out-of-pocket travel
expenses of directors and officers of the Fund who are directors, officers or
employees of the Investment Adviser to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Fund or any committees
thereof.
(b) The Fund assumes and shall pay or cause to be paid fees to the
Investment Adviser and the Fund's administrator and all other expenses of the
Fund including, without limitation: (i) charges and expenses of any custodian,
subcustodian or depositary appointed by the Fund for the safekeeping of its
cash, securities or property and fees and expenses of any transfer agent,
dividend paying agent and registrar for the Fund; (ii) charges and expenses of
accounting and auditing; (iii) expenses and fees associated with registering and
qualifying securities issued by the Fund for sale with the SEC and in various
states and foreign jurisdictions and expenses of preparing share certificates
and other expenses in connection with the issuance, offering or underwriting of
securities issued by the Fund, including stock exchange listing fees and freight
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; (iv) expenses of stationery, preparing, printing and
distributing reports, notices and dividends and other documents to the Fund's
shareholders, including, without limitation, expenses of tender offers for and
repurchases of securities issued by the Fund, in each case, to the extent not
borne by the Fund's administrator; (v) interest on any indebtedness of the Fund;
(vi) governmental fees and taxes of the Fund, including any stock transfer tax
payable on a portfolio security of the Fund; (vii) brokerage commissions and
other expenses incurred in acquiring or disposing of the Fund's portfolio
securities; (viii) costs of directors' and officers' insurance and fidelity
bonds; (ix) compensation and expenses of the directors who are not interested
persons of the Investment Adviser, including out-of-pocket travel expenses; (x)
costs and expenses incidental to holding meetings of the Board of Directors, or
any committees thereof, or meetings of shareholders including out-of-pocket
travel expenses of directors and officers of the Fund who are directors,
officers or employees of the Investment Adviser to the extent that such expenses
relate to attendance at such meetings; (xi) fees for legal, auditing and
consulting services and litigation expenses, including settlement or arbitration
costs; (xii) dues and expenses incurred in connection with membership in
investment company organizations and expenses relating to investor and public
relations; and (xiii) costs, expenses and fees incurred in connection with
obtaining, maintaining, refinancing or repaying indebtedness. It is understood
that the organizational, offering and marketing
2
<PAGE>
expenses, including accounting, legal and printing expenses and registration
fees incurred by the Investment Adviser on behalf of the Fund in connection with
the initial public offering of the Fund's securities will be reimbursed to the
Investment Adviser by the Fund within the limitations set forth in the
Prospectus of the Fund contained in the Fund's Registration Statement.
4. COMPENSATION OF THE INVESTMENT ADVISER.
(a) For the services rendered, the equipment and facilities furnished and
expenses assumed by the Investment Adviser, commencing on the date of
effectiveness hereof, the Fund shall pay in arrears to the Investment Adviser as
of the end of each calendar month a fee in U.S. dollars at an annual rate of (i)
1.00% of the Fund's average weekly net assets (I.E., the average weekly value of
the total assets of the Fund minus the sum of liabilities of the Fund) up to and
including $300 million; and (ii) 0.85% of the Fund's average weekly net assets
in excess of $300 million. For purposes of this calculation, average weekly net
assets is determined at the end of each month on the basis of the average net
assets of the Fund for each week during the month. The net assets for each
weekly period are determined by averaging the net assets at the last business
day of such weekly period with the net assets at the last business day of the
immediately preceding weekly period. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month that this Agreement is in
effect shall be subject to a pro rata adjustment based on the number of days
elapsed in the relevant month as a percentage of the total number of days in
such month in order to permit the fee to be calculated in a manner consistent
with the calculation of the fee as set forth above. During any period when the
determination of net asset value is suspended by the Board of Directors of the
Fund, the average net asset value of a share for the last week prior to such
suspension shall for this purpose be deemed to be the average net asset value at
the close of each succeeding week until it is again determined.
(b) EXPENSE LIMITATIONS. In the event the operating expenses of the Fund,
including amounts payable to the Investment Adviser pursuant to subsection (a)
hereof, for any fiscal year of the Fund ending on a date on which this Agreement
is in effect, exceed the expense limitations applicable to the Fund imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Investment Adviser shall reduce
its management fee by the extent of such excess and, if required pursuant to any
such laws or regulations, will reimburse the Fund in the amount of such excess;
provided, however, to the extent permitted by law, there shall be excluded from
such expenses the amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs, including settlement or arbitration costs, and
any indemnification related thereto) paid or payable by the Fund. Whenever the
expenses of the Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such limitations shall
be applicable as an offset against the monthly payment of the management fee due
to the Investment Adviser. Should two or more such expense limitations be
applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Investment Adviser's
fee shall be applicable.
5. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER.
(a) The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the execution and management of the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder. As used
in this Section 5, the term "Investment Adviser" shall include any affiliates of
the Investment Adviser performing services for the Fund contemplated hereby and
directors, officers and employees of the Investment Adviser as well as that
corporation itself.
(b) The Investment Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot, or damage
caused by nature or due to other events for which it is not
3
<PAGE>
responsible (E.G., strike, lock-out or losses caused by the imposition of
foreign exchange controls, expropriation of assets or other acts of domestic or
foreign authorities).
(c) The presence of exculpatory language in this Agreement shall not be
deemed by the Fund, the Investment Adviser or any other party appointed pursuant
to this Agreement, including without limitation any custodian, as in any way
limiting causes of action and remedies which may, notwithstanding such language,
be available to the Fund either under common law or statutory law principles
applicable to fiduciary relationships or under the federal securities laws.
6. OTHER ACTIVITIES OF THE INVESTMENT ADVISER AND ITS AFFILIATES.
(a) Nothing herein contained shall prevent the Investment Adviser or any of
its affiliates from engaging in any other business or from acting as investment
adviser or investment manager for any other person or entity, whether or not
having investment policies or portfolios similar to that of the Fund; and it is
specifically understood that officers, directors and employees of the Investment
Adviser and its affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or not
registered, and to other investment advisory clients. When other clients of the
Investment Adviser desire to purchase or sell a security at the same time such
security is purchased or sold for the Fund, such purchases and sales will, to
the extent feasible, be allocated among the Fund and such clients in a manner
believed by the Investment Adviser to be equitable to the Fund and such clients.
(b) The Investment Adviser reserves the right to grant the use of the name
"SCHRODER," or any derivative thereof, to any other investment company or
business enterprise. The Investment Adviser reserves the right to withdraw from
the Fund the use of the name "SCHRODER" and the use of its registered service
mark; at such time of withdrawal of the right to use the name "SCHRODER," the
Investment Adviser agrees that the question of continuing this Agreement may be
submitted to a vote of the Fund's shareholders. In the event of such withdrawal
or the termination of this Agreement, for any reason, the Fund will, on the
written request of the Investment Adviser, take such action as may be necessary
to change its name and eliminate all reference to the word "SCHRODER" in any
form, and will no longer use such registered service mark.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain
in force until the second anniversary of the effective date of this Agreement
first set forth above and from year to year thereafter, but only so long as such
continuance is approved at least annually by (a) the vote of a majority of the
directors of the Fund who are not parties to the Agreement or interested persons
of the Investment Adviser or interested persons of any such party (other than as
directors of the Fund), cast in person at a meeting called for the purpose of
voting on such approval, and (b) the vote of either (i) the Board of Directors
of the Fund or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time, without payment of any penalty, by
the Fund either by the vote of the Board of Directors of the Fund or by the vote
of a majority of the outstanding voting securities of the Fund on sixty (60)
days' written notice to the Investment Adviser, and by the Investment Adviser on
sixty (60) days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment by either party. In interpreting the
provisions of this Section 7, the definitions contained in Section 2(a) of the
Investment Company Act (particularly the definitions of "assignment,"
"interested person" and "voting security") shall be applied.
8. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by the vote of: (a) the Board of Directors, including a majority of the
directors who are not parties to the Agreement or interested persons of the
Investment Adviser or interested persons of any such party (other than as
directors of the Fund), cast in person at a meeting called for the purpose of
voting on such approval and (b) a majority of the outstanding voting securities
of the Fund.
4
<PAGE>
9. NOTICE. Any notice or other communication required to be given pursuant
to this Agreement shall be in writing or by fax, with hard copy to follow, and
shall be effective upon receipt. Notices and communications shall be given: (a)
to the Fund at c/o Schroder Capital Management International Inc., 787 Seventh
Avenue, 34th Floor, New York, New York l00l9, Attention: Laura E. Luckyn Malone
and (b) to the Investment Adviser at the same address.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the
Investment Company Act. To the extent the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable provisions
of the Investment Company Act, the latter shall control.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The Investment Adviser confirms that the Fund is a "business Customer" as
defined by IMRO and is being treated with the same standard of care as an
employee benefit plan subject to regulation under the Employment Retirement
Income Security Act of 1974, as amended.
The Fund confirms that it has been provided with independent legal advice on
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SCHRODER ASIAN GROWTH FUND, INC.
By: /s/ LAURA E. LUCKYN-MALONE
-----------------------------------------
Name:
Title: President
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
By: /s/ DAVID GIBSON
-----------------------------------------
Name:
Title: Senior Vice President and Director
5
