<PAGE>
- ------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
787 Seventh Avenue, New York, New York 10019
(800) 730-2932
INVESTMENT OBJECTIVE
Long-term capital appreciation through investment primarily in equity
securities of Asian companies.
INVESTMENT MANAGER
Schroder Capital Management International Inc. (the "Investment Adviser") is
a wholly-owned indirect subsidiary of Schroders plc, the London Stock Exchange
listed holding company parent of an investment banking and investment management
group of companies (the "Schroder Group") that dates its origins to 1804. The
investment management operations of the Schroder Group are located in 18
countries worldwide, including ten in Asia. The Schroder Investment Management
Group has been managing international investment portfolios since the early
years of this century. At October 31, 1996 the Schroder Investment Management
Group had over $130 billion in assets under management. At that date, the
Investment Adviser, together with its U.K. affiliate, Schroder Capital
Management International Ltd., had over $20 billion under management, of which
approximately $9.8 billion was invested in the Asian region.
December 2, 1996
Dear Shareholder,
On October 31, 1996 the Fund's net asset value per share was $13.15 and the
closing price on the New York Stock Exchange was $12.00. Over the fiscal year,
the Fund's total return was 4.2% while the share price was up by 7.9%.
On October 14, 1996, the Fund announced that, consistent with the Fund's
Prospectus, the Board of Directors had fixed the 12 consecutive calendar weeks
beginning on November 11, 1996 and ending on January 31, 1997 as the measurement
period for the purpose of determining the average trading price of the Fund's
shares. If the average of the Fund's closing price per share on the Fund's
valuation day in each week during the measurement period represents a discount
of three percent or more from the Fund's average net asset value as determined
on the same days, a tender offer for shares of the Fund will be conducted during
the first calendar quarter of 1997. Once the measurement period has expired, the
Board of Directors will be in a position to take appropriate action, if
required, such as establishing the extent of any tender offer.
Three years ago, management of your Fund was preparing to invest the
proceeds of the Fund's initial public offering upon the Fund's commencement of
operations on December 30, 1993. The proceeds had been raised during a time of
extraordinary investor euphoria about emerging markets in general and Asia in
particular. At that time, management cautioned that the Fund should be
considered a long-term investment vehicle, not as a complete investment program,
and that the heady returns of 1993 should not be projected into the future.
However, a series of unforeseeable and independent external events, taken
together, drained liquidity from Asian markets and undermined investor
confidence towards foreign stock investment. A number of factors potentially
impacted investor appetite for overseas investment, namely (i) the hike in U.S.
interest rates in February 1994 which fed through immediately to a number of
Asian markets, (ii) the Mexican crisis in December 1994, which reminded
investors that the greater potential for returns in emerging markets is
accompanied by a higher degree of risk, and (iii) the slowdown in U.S. import
growth in the first half of 1996, which resulted in a sharp slowdown in the
growth of exports from Asia and greater pressure on a number of countries'
deteriorating current account deficits.
Today, however, as much as three years ago, management believes that all
investors should have a portion of their investments diversified
internationally. Because markets do not move in lockstep, but react to local
cyclical factors, such diversification spreads investment risk and provides the
potential for downturns in one geographic market to be offset by the growth in
another. Although the U.S. market, represented by the S&P 500
Index-Registered Trademark-, has outperformed international markets represented
by the MSCI EAFE Index, by 16% over the past three years over the past twenty
years, the roles were reversed with the EAFE Index up 1,009% versus the S&P 500
Index up 585%. (See Table I)
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1
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
TABLE I
S&P 500 VS. MSCI EAFE
1976 - 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DATE EAFE S&P DATE EAFE S&P
<S> <C> <C> <C> <C> <C> <C>
12/75 117.235 90.19 12/75
03/76 119.289 102.77 03/76
06/76 116.354 104.28 06/76
09/76 111.958 105.24 09/76
10/76 104.441 102.9 10/76 0.00% 0.00%
12/76 116.809 107.46 12/76 11.84% 4.43%
03/77 117.883 98.42 03/77 12.87% -4.35%
06/77 122.314 100.48 06/77 17.11% -2.35%
09/77 128.266 96.53 09/77 22.81% -6.19%
12/77 133.879 95.1 12/77 28.19% -7.58%
03/78 145.718 89.21 03/78 39.52% -13.30%
06/78 152.821 95.53 06/78 46.32% -7.16%
09/78 173.008 102.54 09/78 65.65% -0.35%
12/78 172.59 96.11 12/78 65.25% -6.60%
03/79 175.089 101.59 03/79 67.64% -1.27%
06/79 172.174 102.91 06/79 64.85% 0.01%
09/79 184.391 109.32 09/79 76.55% 6.24%
12/79 175.723 107.94 12/79 68.25% 4.90%
03/80 162.171 102.09 03/80 55.28% -0.79%
06/80 195.379 114.24 06/80 87.07% 11.02%
09/80 205.885 125.46 09/80 97.13% 21.92%
12/80 209.132 135.76 12/80 100.24% 31.93%
03/81 208.775 136 03/81 99.90% 32.17%
06/81 204.948 131.25 06/81 96.23% 27.55%
09/81 179.568 116.18 09/81 71.93% 12.91%
12/81 198.987 122.55 12/81 90.53% 19.10%
03/82 174.436 111.91 03/82 67.02% 8.76%
06/82 167.972 109.61 06/82 60.83% 6.52%
09/82 163.468 120.42 09/82 56.52% 17.03%
12/82 189.778 140.64 12/82 81.71% 36.68%
03/83 199.335 152.96 03/83 90.86% 48.65%
06/83 212.964 168.11 06/83 103.91% 63.37%
09/83 216.755 166.07 09/83 107.54% 61.39%
12/83 229.467 164.93 12/83 119.71% 60.28%
03/84 263.088 159.18 03/84 151.90% 54.69%
06/84 230.793 153.18 06/84 120.98% 48.86%
09/84 230.86 166.1 09/84 121.04% 61.42%
12/84 240.985 167.24 12/84 130.74% 62.53%
03/85 262.577 180.66 03/85 151.41% 75.57%
06/85 278.328 191.85 06/85 166.49% 86.44%
09/85 318.107 182.08 09/85 204.58% 76.95%
12/85 368.643 211.28 12/85 252.97% 105.33%
03/86 476.653 238.9 03/86 356.38% 132.17%
06/86 516.248 250.84 06/86 394.30% 143.77%
09/86 593.676 231.32 09/86 468.43% 124.80%
12/86 614.894 242.17 12/86 488.75% 135.34%
03/87 755.779 291.7 03/87 623.64% 183.48%
06/87 806.924 304 06/87 672.61% 195.43%
09/87 850.018 321.83 09/87 713.87% 212.76%
12/87 757.452 247.08 12/87 625.24% 140.12%
03/88 870.168 258.89 03/88 733.17% 151.59%
06/88 829.333 273.5 06/88 694.07% 165.79%
09/88 832.021 271.91 09/88 696.64% 164.25%
12/88 959.398 277.72 12/88 818.60% 169.89%
03/89 959.226 294.87 03/89 818.44% 186.56%
06/89 897.302 317.98 06/89 759.15% 209.02%
09/89 1005.498 349.15 09/89 862.74% 239.31%
12/89 1047.862 353.4 12/89 903.31% 243.44%
03/90 837.736 339.94 03/90 702.11% 230.36%
06/90 914.295 358.02 06/90 775.42% 247.93%
09/90 717.243 306.05 09/90 586.74% 197.42%
12/90 788.981 330.22 12/90 655.43% 220.91%
03/91 843.884 375.22 03/91 708.00% 264.65%
06/91 794.462 371.16 06/91 660.68% 260.70%
09/91 858.847 387.86 09/91 722.33% 276.93%
12/91 869.354 417.09 12/91 732.39% 305.34%
03/92 762.615 403.69 03/92 630.19% 292.31%
06/92 774.892 408.14 06/92 641.94% 296.64%
09/92 782.444 417.8 09/92 649.17% 306.03%
12/92 748.613 435.71 12/92 616.78% 323.43%
03/93 834.605 451.67 03/93 699.12% 338.94%
06/93 914.939 450.53 06/93 776.03% 337.83%
09/93 972.073 458.93 09/93 830.74% 346.00%
12/93 976.896 466.45 12/93 835.36% 353.30%
03/94 1007.545 445.76 03/94 864.70% 333.20%
06/94 1055.281 444.27 06/94 910.41% 331.75%
09/94 1052.513 462.71 09/94 907.76% 349.67%
12/94 1037.861 459.27 12/94 893.73% 346.33%
03/95 1052.885 500.71 03/95 908.11% 386.60%
06/95 1056.166 544.75 06/95 911.26% 429.40%
09/95 1095.8 584.41 09/95 949.20% 467.94%
12/95 1135.634 615.93 12/95 987.35% 498.57%
03/96 1163.955 645.5 03/96 1014.46% 527.31%
06/96 1177.854 670.63 06/96 1027.77% 551.73%
09/96 1171.647 687.31 09/96 1021.83% 567.94%
10/96 1158.107 705.27 10/96 1008.86% 585.39%
</TABLE>
The Morgan Stanley Capital International ("MSCI") EAFE Index is a market
capitalization index composed of companies representative of the market
structure of 20 developed market countries in Europe, Australasia and the Far
East.
Outside the U.S., Asia represents approximately 43% of total market
capitalization. Asia ex-Japan in particular has been a rapidly expanding portion
of the universe. In 1986 the total market capitalization (in US$) of Malaysia,
the Philippines and Singapore grew from $15.1, $2.0 and $16.6 billion
respectively, to $222.7, $58.8 and $148.0 billion, respectively in 1995.
The Asian region, as shown in Table II is diverse, containing developing,
newly industrialized and mature economies, providing a wide spectrum of
investment choice and opportunity.
TABLE II
DIVERSE ASIAN ECONOMIES
[CHART]
Source: World Development Report 1996
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2
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
We believe a portion of investments within an international diversification
program should be dedicated to Asia. Its economic fundamentals, as shown in
Table III, are strong: consistently high rates of economic growth have been
achieved over a prolonged time period, along with the maintenance of
macroeconomic stability. This growth has been supported by a shift from
employment in agriculture into industry and services, with the result that the
industrialization of Asia is now well under way as detailed in Table IV. This
shift into higher paying forms of employment, and the relentless relocation of
the population into metropolises, has underpinned the creation of an emerging
urban middle class with increasing taste, sophistication and spending power.
Income gains, as reflected in the GNP per capita statistics shown in Table V,
are outstanding in the case of Malaysia, Thailand and Singapore.
TABLE III
COMPOUND GDP GROWTH
%, 1988-1997
[CHART]
Source: Jardine Fleming
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3
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SCHRODER ASIAN GROWTH FUND, INC.
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TABLE IV
THE PERCENTAGE WORKING IN INDUSTRY AND SERVICES INCREASES
[CHART]
Source: World Development Report 1996
TABLE V
GNP PER CAPITA - RELATIVE TO THE U.S.
PURCHASING POWER PARITY BASIS
[CHART]
Source: World Bank
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4
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
The Fund's investments reflect management's view that Asian domestic
marketplaces are poised to offer sustainable growth. Thus the Fund's portfolio
emphasizes companies providing goods and services reflective of aspirations to
the good life - better housing, convenience food, modern retailing, affordable
pharmaceuticals, modern roadways and bridges, reliable electrical supply and a
reasonably priced, working telephone system. Over the past three years, many of
these companies have seen Earnings Per Share ("EPS") growth on average of 20%.
P.T. GUDANG GARAM, a cigarette manufacturer in Indonesia has seen average EPS
growth of 33.8% for the past 3 years; ISLAND & PENINSULAR BERHAD, a real estate
developer in Malaysia, 29.5%; UNITED OVERSEAS BANK LTD, a commercial bank in
Singapore, 24.1%; and THAI FARMERS BANK LTD., a commercial bank in Thailand,
25.7%. Yet, despite this growth in corporate profits, market returns have been
disappointing.
Management believes the downturn in Asian markets' performance is
predominantly cyclical. Since 1994, a majority of countries in the regions have
tightened economic policy in order to check incipient inflationary pressures and
rising external deficits. The rising interest rates made investors cautious and
produced softer economic activity, resulting in weak Asian stock market
performance. External factors previously mentioned have also played a part. In
management's view, the economic backdrop for the region's stock markets is now
gradually improving. Softness in economic activity, alongside much lower
inflation, is expected to pave the way for easier monetary policy and lower
interest rates. External deficits appear to have peaked. The Schroder Group's
economics team believes that U.S. economic activity will stay robust in 1997,
which would improve the outlook for exports from the Asia-Pacific region.
Management anticipates that barring any unforeseen events, stronger overall
economic growth in the Asia-Pacific region ought to resume from mid-1997
onwards. Stock valuations are at the lower end of their ten year range and,
except in Hong Kong, there is little euphoria in the markets now - in some only
acute pessimism. Management believes these are the conditions in which a few
sparks of positive news can lead to a reappraisal.
We thank our investors for their patience and continued support of the Fund.
Management will continue to adhere to its philosophy of building from the bottom
up a portfolio of high quality, fast growing Asian companies which we believe
should form part of an investor's global portfolio.
Please note that the views expressed in this report were those of the Fund's
portfolio managers as of the dates specified, and may not reflect the views of
the portfolio managers on the date this report is first published or any time
thereafter. These views are intended to assist shareholders of the Fund in
understanding their investments in the Fund and do not constitute investment
advice; investors should consult their own investment professionals as to their
individual investment programs.
Respectfully,
[SIGNATURE] [SIGNATURE]
Laura E. Luckyn-Malone I. Peter Sedgwick
President Chairman
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5
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
INVESTMENT REVIEW (FOR THE 12 MONTHS ENDED OCTOBER 31, 1996)
JAPAN
- Dull performance as stock market fell 0.8% over the fiscal year, including
a fall of 7.8% over the 4th fiscal quarter.
- Yen weakened 10.6% against U.S.$ over the fiscal year ending October 31,
1996, closing at 114.07 Y/$.
- Economic expectations raised for 4th quarter 1996; consensus still
cautious on growth for 1997.
Notwithstanding a series of downgrades to earnings estimates for the current
year in the basic materials, semiconductor-related and securities sectors,
Japanese companies, in aggregate, have so far surpassed their mid-year
projections for calendar 1996. Over the next few years, management believes the
benefits of restructuring, an improvement in cashflow and a greater emphasis by
companies on profitability should ensure a prolonged profits upswing. Market
average return on equity was a mere 2% for the last fiscal year against a long
term average of around 9%, demonstrating the scope for improvement over coming
years. Also, with bond yields back below 3% and prospective earnings improving,
management believes the Japanese market has returned to levels of undervaluation
lower than those of last summer, when it rebounded sharply. This view is the
basis for the amount of assets allocated to Japan which has the second highest
country weighting in the Fund.
HONG KONG/CHINA
- Stock market, +28.0% over last fiscal year including +15.0% in the last
fiscal quarter, continues to outperform other markets in the region.
- Recovery in real estate market and relaxation of austerity measures in
China boosted profitability.
- President Jiang Zemin consolidated his political position.
The Hong Kong economy and real estate market bottomed in late 1995 and
throughout 1996 have provided a positive background for the stock market. In
addition, a slowing Chinese economy (GDP growth is forecast to be 10.0% for 1996
and inflation has fallen to 4.7%) has allowed the austerity measures put in
place in 1993 to be relaxed, thus substantially improving the profitability
outlook for Chinese companies. This, in combination with the mainland's more
conciliatory tone towards Hong Kong, has encouraged the management of the Fund
to increase the weighting in Hong Kong by 2.8% over the last quarter. Hong
Kong/China is the largest country weighting in the Fund and the more positive
outlook for China is reflected in the Fund's exposure to stocks such as CITIC
PACIFIC LTD. - a diversified Chinese conglomerate, which was the largest stock
position in the Fund as of October 31, 1996.
MALAYSIA
- Strong market performance, climbing 26.8% over the fiscal year, 9.4% over
the 4th fiscal quarter.
- Economic outlook encouraging as tight monetary policy takes effect with
money supply and loan growth slowing.
- Attractive long term stock opportunities as government promotes
infrastructure development and income per capita continues to rise.
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6
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SCHRODER ASIAN GROWTH FUND, INC.
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Throughout the fiscal year, the slowing of the Malaysian economy has removed
fears of a continued deterioration in the Current Account deficit and has
relieved upward pressure on interest rates. Against this background, the
government has continued to emphasize infrastructure as a priority and
Malaysia's manufacturing sector has benefitted from the rising per capita
income. The Fund's management believes there are attractive long term
opportunities in consumer related companies. The Fund is focused in these areas
of strong growth through companies such as UNITED ENGINEERS (MALAYSIA) LTD., a
well-managed construction and engineering company; and ISLAND AND PENINSULAR
BERHAD, a property company specializing in the development of houses for
first-time buyers.
SINGAPORE
- Lackluster performance as the stock market fell 3.1% for the fiscal year,
1.4% over the last fiscal quarter.
- Decline in competitiveness an ongoing concern.
- Portfolio emphasis reflects high spending power of Singapore consumers.
Weak exports due to a combination of both cyclical and structural factors
were behind the weakening Singapore economy this year. The continued decline in
competitiveness of large sectors such as ship repair has kept corporate profits
growth subdued and the outlook dull. The Fund has allocated its holdings
primarily in the financial services and real estate sectors through companies
such as OVERSEAS UNION BANK LTD. and CITY DEVELOPMENTS LTD., as management
believes these companies will continue to benefit from the powerful spending
capacity of Singapore's consumers and Singapore's status as a safe financial hub
for Asia.
THAILAND
- Slower growth has depressed corporate profits and caused the market to
decline 29.5% over the fiscal year, 17.9% in the last fiscal quarter.
- Further loss of confidence in government led Prime Minister Banharn
Silpa-archa to resign. General election was held on November 17 and
General Chavalit, the leader of the New Aspiration Party, now heads the
coalition government.
- Slow recovery expected in 1997.
Thailand's economy continued to slow down throughout the year as export
growth plunged to 2.4% in the first nine months of 1996, producing a current
account deficit in excess of 8% of GDP. The prolonged downturn in the economy
caused further problems for property developers which, in turn, adversely
affected the banking and finance sectors as non-performing loans rose. The
dissolution of parliament in October upon the fall of Prime Minister Banharn
Silpa-archa's coalition government further weakened market sentiment. With
earnings growth expectations for the market downgraded to -4.0% in 1996 after
only 4.0% growth in 1995, the stock market reacted by falling sharply. Much of
the bad news is now reflected in the market and the outlook for 1997 should
improve with interest rates expected to ease and exports to recover. However,
Fund management believes a slump in the property sector and rising bad debts in
the finance and banking companies still encourage a cautious stance over the
coming months.
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7
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SCHRODER ASIAN GROWTH FUND, INC.
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INDONESIA
- Stock market rose 19.3% over the fiscal year, 9.7% over the 4th fiscal
quarter, led by the property and banking sectors.
- Political uncertainty grew as a President Suharto's succession is still an
issue and "first family" influence grows.
- Firm oil prices aid trade position.
Despite relatively strong macroeconomic and stockmarket data, the Fund has
reduced its exposure to Indonesia throughout this period as political issues
dominated the headlines and called into question, yet again, the chances of a
smooth succession to President Suharto.
Inflation rates are expected to remain at current levels; as a consequence,
interest rates are likely to remain high, dampening expectations for the stock
market in 1997. However, the Fund continues to believe that the long-term
outlook is positive, supported by favorable demographics and the rising
affluence of the population. Consequently, the portfolio emphasizes companies
such as P.T. GUDANG GARAM, the kretek cigarette producer, and P.T. TELKOMUNIDASI
INDONESIA, the local fixed-line telephone operator, which are expected to
benefit from these long-term trends.
INDIA
- Stock market fell 9.6% over the fiscal year, 11.9% over the last fiscal
quarter, as earnings were downgraded.
- Program of deregulation continues under new government.
- Further liberalization and privatization of equity ownership anticipated.
A downgrade in earnings expectations for fiscal year 1997 due to increasing
interest and depreciation charges caused a volatile market this fiscal year.
However, the Fund used market weakness to build up its position to the current
10% of the Fund's portfolio, as the management of the Fund continues to believe
in the long-term development of the Indian stockmarket and economy. The Fund has
added to its holdings of MAHANAGAR TELEPHONE NIGAM LTD., the domestic provider
of telephone services for the Bombay and Delhi areas, with a three year earnings
growth forecast of 20% per annum; and continues to hold companies such as
RANBAXY LABORATORIES LTD., a pharmaceutical company, and HINDUSTAN LEVER LTD., a
health and household products company, which are expected to benefit from the
wealth created by the industrialization of India.
KOREA
- Worst performing market in Asia for fiscal 1996: down 36.2% over the
fiscal year, 12.3% over the last fiscal quarter.
- Weak exports, particularly in electronics sector, lead stock market
downward.
- Earnings per share decline of -30% forecast by Schroders for 1996.
Rising real interest rates combined with a sharp fall-off in exports,
exacerbated by a weaker yen, led the Korean economy into a decline in the last
year. This was reflected in the stockmarket as earnings growth
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8
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
expectations were revised substantially downward. The Fund reduced its exposure
earlier this year to 5.4% as of October 31, 1996. However, the emerging
expectation of falling rates and an anticipated revival in the export sector has
brightened the outlook for the market in the coming year.
THE PHILIPPINES
- Market rose 16.9% over the fiscal year, but fell 4.4% over the last fiscal
quarter.
- Economy enjoyed higher growth prospects as reforms put the Philippines on
sustainable growth path comparable to its Asian neighbors.
The strong performance from the Filipino stock market was tied to robust
corporate earnings this year. The economy continued to accelerate with the GDP
forecast to grow at 5.5% for 1996 and further acceleration expected in 1997.
The Fund increased its weighting in stocks such as AYALA LAND, INC 'B', a
property investor and developer which is geared to the rising standards of
living in the Philippines, and added a new holding, METROPOLITAN BANK & TRUST
CO., which provides the Fund with general exposure to the accelerating economic
growth.
DIVIDEND REINVESTMENT PLAN
The Fund offers you a plan for the reinvestment of your dividends and
capital gains distributions in shares of the Fund. We have included a detailed
description of the plan at the end of this report. If you wish to participate
please contact the plan agent, State Street Bank and Trust Company, at
1-800-426-5523.
OTHER INFORMATION
The Fund's net asset value is published every Monday in THE WALL STREET
JOURNAL under the heading "Closed End Funds". The Fund's net asset value is also
published in THE NEW YORK TIMES and BARRON'S.
In addition, the Fund publishes a newsletter in the middle of each month,
detailing country weightings and providing a market update. You can request a
copy of this by calling toll-free 1-800-730-2932.
During the fiscal year ended October 31, 1996, there have been (i) no
material changes in the Fund's investment objectives or policies that have not
been approved by the shareholders; (ii) no changes in the Fund's Articles or
Bylaws, (iii) no changes in the principal risk factors associated with
investment in the Fund, and (iv) Laura Luckyn-Malone, the President of the Fund,
and Heather F. Crighton, a Vice President of the Fund, were the persons
primarily responsible for the day-to-day management of the Fund.
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9
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1996
INVESTMENT BY INDUSTRY
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
- -------------------------------------------------
Services 24.8%
Real Estate 14.1%
Capital Equipment 12.6%
Finance 12.3%
Multi-Industry 11.2%
Energy 9.7%
Consumer Goods 9.3%
Insurance 2.5%
Materials 1.3%
Cash 2.2%
- -------------------------------------------------
Total 100.0%
</TABLE>
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
- ---------------------------------------------------
Citic Pacific Ltd. (HK) 4.2%
Sun Hung Kai Properties Ltd.
(HK) 3.5%
Hutchison Whampoa (HK) 2.9%
Ayala Land Inc. 'B' (Phil) 2.8%
Island & Peninsular Berhad (Mal) 2.7%
DCB Holdings Berhad (Mal) 2.6%
Mahanagar Telephone Nigam Ltd.
(Ind) 2.5%
Swire Pacific Ltd. 'A' (HK) 2.3%
Glory Ltd. (Jpn) 2.2%
Malayan Banking Berhad (Mal) 2.2%
- ---------------------------------------------------
Total 27.9%
</TABLE>
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
COUNTRY WEIGHTINGS
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS
<S> <C>
- -------------------------------------------------
Hong Kong & China 23.0%
Japan 16.9%
Malaysia 15.5%
India 10.0%
Singapore 9.5%
Philippines 7.0%
Korea 5.4%
Indonesia 5.3%
Thailand 5.2%
Cash 2.2%
- -------------------------------------------------
Total 100.0%
</TABLE>
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10
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SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS - 97.2%
CHINA - 2.7%
SHARES VALUE US$
- --------- ------------
2,832,000 SERVICES - 0.5%
Chiwan Wharf Holdings Ltd. 'B'
(1)
1,234,410
------------
375,000 UTILITIES ELECTRICAL & GAS - 2.2%
Huaneng Power International,
Ltd.(a)*
TOTAL CHINA
(COST $7,969,618)
HONG KONG - 20.3%
5,718,750
------------
6,953,160
------------
3,160,000 CHEMICALS - 0.7%
Chen Hsong Holdings Ltd.
1,818,793
------------
7,000,000 HOLDING COMPANY - 2.0%
Guangdong Investments
5,024,898
------------
3,240,000 LEISURE & TOURISM - 2.5%
2,000,000 Cathay Pacific Airways
Shun Tak Holdings Ltd.
5,070,685
1,319,278
------------
6,389,963
------------
4,600,000 MULTI-INDUSTRY - 8.5%
2,234,000 China Resources Development
672,000 Enterpirses
Citic Pacific Ltd.
Swire Pacific Ltd. 'A'
5,176,227
10,864,438
5,932,096
------------
21,972,761
------------
800,000 REAL ESTATE - 3.5%
Sun Hung Kai Properties Ltd.
9,105,607
------------
1,070,000 SERVICES - 2.9%
Hutchison Whampoa
7,473,324
------------
1,250,000 TRANSPORTATION - RAIL - 0.2%
Guangshen Railway Co. Ltd.,
'H'*
TOTAL HONG KONG
(COST $36,331,419)
INDIA - 10.0%
464,819
------------
52,250,165
------------
130,000 AUTOMOBILE - 1.4%
Bajaj Auto Ltd.
3,497,183
------------
222,000 ENERGY - 0.7%
Bharat Petroleum Corporation
Ltd.
1,791,947
------------
148,000 HEALTH & PERSONAL CARE - 1.0%
Ranbaxy Laboratories Ltd.
2,605,634
------------
HOUSEHOLD PRODUCTS - 1.1%
Hindustan Lever Ltd.
COMMON STOCKS
2,922,963
132,000 ------------
SHARES VALUE US$
- --------- ------------
<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 $12,148,844) 13,746,321
------------
JAPAN - 16.3%
BUILDING & CONSTRUCTION - 1.1%
188,000 Higashi Nihon House 2,710,506
------------
ELECTRICAL EQUIPMENT - 1.0%
117,000 Inaba Denkisangyo Co. 2,478,857
------------
INDUSTRIAL COMPONENTS - 4.3%
225,000 Glory Ltd. 5,795,604
104,000 Mabuchi Motors Co., Ltd. 5,302,857
------------
11,098,461
------------
INSURANCE - 1.5%
656,000 Koa Fire & Marine Insurance
Co., Ltd. 3,846,611
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- ------------
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 $14,690,691) 18,064,678
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- --------- -----------
<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.
- --------------------------------------------------------------------------------
13
<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.
- --------------------------------------------------------------------------------
14
<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.
- --------------------------------------------------------------------------------
15
<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.
- --------------------------------------------------------------------------------
16
<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.
- --------------------------------------------------------------------------------
17
<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
- --------------------------------------------------------------------------------
18
<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 $88,968,172, respectively.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FORWARD FOREIGN CURRENCY CONTRACTS AS OF OCTOBER 31, 1996:
<TABLE>
<CAPTION>
CURRENCY TO SETTLEMENT IN EXCHANGE UNREALIZED
DELIVER DATE FOR VALUE ($) 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.
- --------------------------------------------------------------------------------
20
<PAGE>
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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.
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21
<PAGE>
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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.
- --------------------------------------------------------------------------------
22
<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
- --------------------------------------------------------------------------------
23
<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.
- --------------------------------------------------------------------------------
24
<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
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25
<PAGE>
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<PAGE>
[This page has been left blank intentionally.]
<PAGE>
DIRECTORS
Madelon DeVoe Talley
Peter E. Guernsey
John I. Howell
Laura E. Luckyn-Malone, President
William L. Means
David Salisbury
I. Peter Sedgwick, Chairman
OFFICERS
Laura E. Luckyn-Malone
President
Heather F. Crighton
Vice President
Catherine A. Mazza
Vice President and Assistant Secretary
Mark J. Smith
Vice President
Margaret H. Douglas-Hamilton
Secretary
Robert Jackowitz
Treasurer
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, NY 10019
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, NY 10019
NYSE Symbol: SHF
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
This report is sent to the shareholders of the Fund for their information. It is
not a prospectus, circular or representation intended for use in the purchase or
sale of shares of the Fund or of any securities mentioned in the report.
<PAGE>
SCHRODER
ASIAN GROWTH FUND, INC.
[PHOTO] [PHOTO]
[PHOTO]
[PHOTO] ANNUAL REPORT
OCTOBER 31, 1996
[PHOTO]
