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[SCHRODERS LOGO]
SCHRODER
EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO
ANNUAL REPORT
OCTOBER 31, 2000
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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December 15, 2000
Dear Shareholder:
We are pleased to present the annual report to shareholders for
Schroder Emerging Markets Fund Institutional Portfolio for the fiscal year ended
October 31, 2000.
Volatility was the hallmark of the fiscal year under review. The
early part of the period was characterized by a soaring technology sector,
robust U.S. economic growth and higher interest rates in the U.S. and Europe.
That environment changed, however. Technology and other "new economy" stocks
lost much of their luster on the heels of poor earnings reports, and investors
began to rotate into more defensive "old economy" industries. At the same time,
global economic growth began to slow, and U.S. interest rates peaked. Indeed,
toward the end of the fiscal year, concern mounted about higher oil prices, a
weak euro, declining expectations for corporate profits in 2001, and the
vulnerability of some of the technology giants such as IBM, Lucent and Intel.
In general, developed markets performed better than emerging markets
during the period, and among the developed markets, those in Europe fared better
than those in Asia and the Pacific Rim, which were especially susceptible to the
weakness in technology. Emerging markets had been strong early in the period,
but suffered in the face of prospects for slower global economic growth.
Going forward, we expect the Federal Reserve to embark on a modest
easing path. In this setting, we continue to believe that strong fundamental
research around the globe is essential to successful investment management and
that times like these support the case for a disciplined, diversified investment
program.
This report includes performance information, the schedule of
investments, comments from portfolio managers, and other relevant information
for the Fund. We encourage you to read the report, and we thank you for making
Schroders part of your investment program.
Sincerely,
Alexandra Poe
PRESIDENT
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MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 2000)
PERFORMANCE
Schroder Emerging Markets Fund Institutional Portfolio's Investor
Shares had a total return of -12.07% and its Advisor Shares had a total return
of -12.47% for the fiscal year ended October 31, 2000, not including the
deduction of purchase and redemption fees of 0.50%. Including the purchase and
redemption fees, the Fund's total returns for the 12-month period were -12.95%
for Investor Shares and -13.34% for Advisor Shares. The Morgan Stanley Capital
International Emerging Markets Free Index returned -7.7% over the same period.
The Fund suffered from poor stock selection in Asia, particularly in
the technology sector in India and Korea. Stock selection in Turkey also hurt
performance. Our overweighted positions in Latin America, which experienced an
economic recovery, and in Russia, which benefited from high oil prices, only
partially offset the lackluster performance.
MARKET BACKGROUND
Following strong performance in the first half of the period,
emerging markets gave back their gains. In the 12 months through October 31,
emerging markets generally benefited from more balanced global growth, coupled
with continuing domestic economic recovery and company earnings upgrades.
However, concerns over a possible sharp slowdown in global economic growth, and
the consequent increase in investors' risk aversion, caused emerging markets to
underperform developed markets in the second half of the fiscal year. During the
first half of the period, the global strength of technology stocks drove those
markets with a high concentration of companies in this sector. During the second
half of the period, however, those same markets witnessed significant declines.
Latin America was the strongest emerging markets region over the
period, as equity markets responded to ongoing domestic improvements, Mexican
and Brazilian debt rating upgrades, falling interest rates, and reduced
political risk. The region benefited from its ongoing economic recovery,
although it suffered in the second half of the period from its close links with
the U.S. economy. There was also positive news on corporate activity in the form
of an announcement by TELEFONICA of Spain that it would buy out minority
investors in its Latin American subsidiaries at a 40% premium to the prevailing
share price. Recently, the region suffered from fears over the potential impact
of a crisis in Argentina.
Among the emerging markets, the Asian markets were some of the
poorest performers, mainly because of concerns over slowing export growth. More
specifically, social and political concerns and lack of progress on structural
reform dogged the markets of Southeast Asia. Although the region was helped by a
recovery in economic growth in the first half of the period, it subsequently
suffered from concerns over slowing U.S. economic growth, rising oil prices,
fears over weakening personal computer demand, and consequent moderating
expectations in the semiconductor sector. We anticipate that Asia will suffer
from a U.S. slowdown mainly because of its trade links. On average, exports
represent over one third of GDP and are sensitive to U.S. demand. Markets also
suffered from country-specific factors, including political instability in
Taiwan and the Philippines. Delays in corporate reform and fears of dilution
through equity issuance also hampered some markets.
Emerging market countries in Europe, the Middle East and Africa
(EMEA) were relatively strong in the second half of the period, as investors
switched into more defensive markets with improving fundamentals and relative
insulation from external events. The best-performing markets were those in which
economic recovery or reform stories protected them from global economic
uncertainty. This may be because their business cycles have lagged, or because
domestic restructuring has opened up new opportunities. Russia responded
positively both to the resignation of Yeltsin, given the improved potential for
much-needed structural reforms, and to higher oil prices, which provided
windfall tax revenues for the government and a substantial current account
surplus. Israel was boosted by strong economic fundamentals, falling interest
rates and its high concentration in the technology sector, although the latter
rendered it a victim of the shakeout in global technology stocks that followed.
Recently, Israel suffered from a breakdown in the peace process - a factor that
threatens domestic economic growth.
PORTFOLIO REVIEW
Our core investment philosophy for fiscal 2000 was based on our
expectation for a soft landing in the global economy. We therefore increased the
Fund's exposure to Latin America during the period, favoring Brazil relative to
Mexico, as interest rates were expected to fall further and valuations were
compelling. However, we recently trimmed the Fund's exposure to the region, in
light of concerns about the impact of a possible devaluation and default in
Argentina.
3
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Within Asia, the Fund benefited from an overweighted position in the
hardware-dominated markets of Taiwan and Korea, which were boosted by a global
shortage of components. We then reduced the Fund's exposure to these markets,
however, as they suffered from political uncertainty and concerns over a peak in
the semiconductor cycle. Elsewhere in Asia, we favored China, as economic growth
continued to strengthen and should be further bolstered by entry into the World
Trade Organization (WTO) later in 2000.
We retained our underweighted position in EMEA, particularly in
Greece and South Africa, although we favored Russia, which benefited from
domestic restructuring and a high oil price.
OUTLOOK
In the coming months, we believe that more benign economic data from
the U.S. should increase investors' risk tolerance, while local economic and
earnings data are expected to remain strong. Although emerging markets remain
vulnerable to any worsening in the global economic environment or further oil
price increases, we expect that oil price declines and a reduction in interest
rates could act as a catalyst for recovery.
In the longer term, we believe that low relative valuations and
generally positive momentum on reform should further support emerging markets.
We therefore believe that, notwithstanding short-term uncertainty, we can look
for the performance of emerging markets to improve, particularly in those
countries displaying a clear commitment to structural reform.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO MANAGER AS
OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO MANAGER ON
THE DATE THIS REPORT IS FIRST PUBLISHED OR ANY TIME THEREAFTER. THIS VIEW IS
INTENDED TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR INVESTMENT IN
THE FUND AND DOES NOT CONSTITUTE INVESTMENT ADVICE; INVESTORS SHOULD CONSULT
THEIR OWN INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL INVESTMENT PROGRAMS.
CERTAIN SECURITIES DESCRIBED IN THIS REPORT MAY NO LONGER BE HELD BY THE FUND
AND THEREFORE NO LONGER APPEAR IN THE SCHEDULE OF INVESTMENTS AS OF OCTOBER 31,
2000.
4
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO - INVESTOR SHARES* VS.
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EMERGING MARKETS FREE (EMF) INDEX
[GRAPH]
<TABLE>
Emerging Markets Fund
Institutional Portfolio -
03/31/95 Investor Shares* MSCI EMF Index
<S> <C> <C>
10,000.00 10,000.00
10,320.00 10,448.61
10,930.00 11,004.48
10,960.00 11,037.02
11,270.00 11,284.77
10,940.00 11,018.95
11,000.00 10,966.66
10/31/95 10,630.00 10,546.85
10,420.00 10,358.77
10,766.67 10,818.20
11,910.56 11,587.18
11,619.57 11,402.95
11,629.60 11,491.76
12,091.18 11,951.23
12,281.83 11,897.87
12,151.38 11,972.16
11,388.78 11,153.94
11,599.50 11,439.45
11,649.67 11,538.55
10/31/96 11,097.79 11,230.81
11,268.37 11,418.99
11,619.96 11,470.64
12,333.03 12,253.05
12,815.10 12,777.79
12,584.11 12,442.15
12,825.14 12,464.13
13,327.30 12,820.85
14,110.67 13,506.99
14,422.01 13,708.62
12,885.40 11,964.21
13,347.39 12,295.71
10/31/97 11,127.85 10,278.14
10,826.55 9,903.11
11,014.04 10,141.76
10,308.66 9,346.34
11,044.27 10,321.87
11,487.65 10,769.80
11,538.04 10,652.48
9,966.04 9,192.66
9,038.97 8,228.38
9,431.97 8,489.27
6,781.75 6,034.69
7,053.82 6,417.50
10/31/98 7,829.74 7,093.27
8,212.66 7,683.21
8,228.37 7,571.86
8,218.25 7,449.69
8,167.64 7,522.16
9,149.38 8,513.50
10,171.60 9,566.80
10,070.39 9,511.15
11,254.55 10,590.59
10,983.24 10,302.89
10,983.24 10,396.63
10,507.03 10,044.78
10/31/99 10,668.84 10,258.66
11,580.70 11,178.50
13,380.96 12,600.18
13,186.94 12,675.28
13,124.96 12,842.68
13,432.08 12,905.36
11,876.65 11,682.02
11,375.45 11,199.07
11,794.87 11,593.55
11,037.87 10,997.30
11,314.04 11,051.37
10,188.75 10,086.41
10/31/00 9,380.57 9,355.12
</TABLE>
The MSCI EMF Index is an unmanaged, market capitalization index of companies
representative of the market structure of 25 emerging countries in Europe, Latin
America and the Pacific Basin. The Index reflects actual buyable opportunities
for the non-domestic investor by taking into account local market restrictions
on share ownership by foreigners. For periods prior to November 30, 1998,
returns represent MSCI EMF (ex-Malaysia).
* The line shown presents performance information for Investor Shares only.
Performance of Advisor Shares of the Fund will be less than the line shown for
Investor Shares due to shareholder servicing fees paid by Advisor Shares.
PERFORMANCE INFORMATION - (a)
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS FROM
ENDED ENDED INCEPTION TO
OCTOBER 31, 2000 OCTOBER 31, 2000 (b) OCTOBER 31, 2000 (c)
---------------- -------------------- --------------------
<S> <C> <C> <C>
Schroder Emerging Markets Fund
Institutional Portfolio - Investor Shares -12.95% -2.66% -1.31%
Schroder Emerging Markets Fund
Institutional Portfolio - Advisor Shares -13.34 -2.83(d) -1.49(d)
</TABLE>
(a) Reflects the payment of a 0.50% purchase charge (based on the amount
purchased) at the time of investment and a 0.50% redemption charge (based
on the amount redeemed) deducted at the end of the period shown.
(b) Average annual total return.
(c) Average annual total return from commencement of Fund operations
(March 31, 1995).
(d) Performance for the Fund's Advisor Shares includes information for the
Fund's Investor Shares for the periods prior to the inception date of
Advisor Shares (November 21, 1996). Such prior performance has been
recalculated to reflect the actual fees and expenses attributable to
Advisor Shares.
"TOTAL RETURN" IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE
RESULTS. THE VALUE OF AN INVESTMENT IN THE FUND AND THE RETURN ON INVESTMENT
WILL FLUCTUATE AND REDEMPTION PROCEEDS MAY BE HIGHER OR LOWER THAN AN INVESTOR'S
ORIGINAL COST.
5
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 2000
<TABLE>
<CAPTION>
COUNTRY WEIGHTINGS TOP TEN HOLDINGS
COUNTRY % OF NET ASSETS SECURITY % OF NET ASSETS
-------------------------------------------------- --------------------------------------------------------
<S> <C> <C> <C>
Brazil 11.3% Telefonos de Mexico ADR 4.2%
Korea 10.8 China Unicom 3.5
Mexico 10.5 Samsung Electronics 3.5
Taiwan 9.2 China Telecom (Hong Kong) 3.4
South Africa 7.7 Korea Telecom 2.3
Hong Kong 7.6 Korea Electric Power (KEPCO) 2.1
Israel 5.8 Petroleo Brasileiro ADR 2.1
India 5.2 Taiwan Semiconductor Manufacturing 2.0
Turkey 4.2 Infosys Technologies 2.0
Russia 3.3 Check Point Software Technologies 2.0
Chile 3.0 ----
Malaysia 2.9 Total 27.1%
Greece 1.6 ====
Poland 1.4
Indonesia 1.3
Hungary 1.2
Thailand 1.2
China 1.1
Zimbabwe 1.0
Egypt 0.6
Philippines 0.5
Czech Republic 0.4
Peru 0.3
Argentina 0.2
Cash Equivalents
and Other Net Assets 7.7
-----
Total 100.0%
=====
</TABLE>
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ ------
<S> <C>
COMMON STOCKS -- 87.8%
ARGENTINA -- 0.2%
21,700 Quilmes Industrial
(Quinsa) ADR $ 179,025
---------------
BRAZIL -- 7.0%
32,300 Aracruz Celulose ADR 484,500
26,800 Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar ADR 954,750
94,300 Companhia Paranaense de
Energia-Copel ADR 854,594
28,200 Companhia Vale do Rio Doce 650,173
69,000 Embratel Participacoes ADR 1,116,937
84,300 Petroleo Brasileiro ADR 2,264,584
14,900 Tele Celular Sul
Participacoes ADR 375,294
35,247 Tele Norte Leste
Participacoes ADR 779,840
442 Telesp Celular Participacoes 4
27,700 Ultrapar Participacoes 278,731
---------------
7,759,407
---------------
CHILE -- 3.0%
29,500 Banco Santiago ADR 582,625
61,825 CIA de Telecomunicaciones
de Chile ADR 942,831
22,600 Compania Cervecerias Unidas 436,463
27,900 Distribucion y Servicio D&S ADR 498,712
36,768 Enersis ADR 652,632
15,000 Gener ADR 181,875
---------------
3,295,138
---------------
CHINA -- 1.1%
4,024,000 China Petroleum & Chemical
(Sinopec) (1) 789,440
13,500 Huaneng Power
International ADR 205,875
1,040,000 PetroChina 218,699
---------------
1,214,014
---------------
CZECH REPUBLIC -- 0.4%
2 Komercni Banka GDR (1) 14
33,366 SPT Telecom (1) 438,238
---------------
438,252
---------------
EGYPT -- 0.6%
15,870 Egyptian Company for Mobile
Services (MobilNil) (1) 313,968
26,800 Orascom
Telecommunications (1) 334,156
---------------
648,124
---------------
GREECE -- 1.6%
8,634 Alpha Bank 318,656
24,000 Cosmote (1) 179,669
1,400 Hellenic Bottling 19,110
62,500 Hellenic Telecommunications
Organization 1,090,181
14,580 STET Hellas
Telecommunications ADR (1) 211,410
---------------
1,819,026
---------------
HONG KONG -- 7.6%
594,000 China Mobile (Hong Kong) (1) 3,808,257
314,000 China Resources Enterprise 356,322
1,947,000 China Unicom (1) 3,907,061
318,000 Legend Holdings 269,117
---------------
8,340,757
---------------
HUNGARY -- 1.2%
40,578 Matav Rt. ADR 953,583
8,250 OTP Bank Rt. GDR 379,088
---------------
1,332,671
---------------
INDIA -- 5.2%
65,150 Associated Cement 129,998
57,000 Bharat Petroleum 210,555
99,500 HDFC Bank 533,262
155,010 Hindustan Lever 590,140
17,450 Hindustan Petroleum 39,849
14,600 Infosys Technologies 2,232,082
752 ITC 12,231
91,100 Mahanagar Telephone Nigam 274,272
31,000 Ranbaxy Laboratories 461,491
85,190 Reliance Industries 551,430
46,500 Satyam Computer Services 304,368
86,400 Videsh Sanchar Nigam 389,261
---------------
5,728,939
---------------
INDONESIA -- 1.3%
486,000 PT Hanjaya Mandala Sampoerna 571,173
4,375,000 PT Indofood Sukses Makmur (1) 362,259
1,825,380 PT Telekomunikasi Indonesia 468,062
---------------
1,401,494
---------------
ISRAEL -- 5.8%
522,160 Bank Hapoalim 1,321,215
313,210 Bank Leumi Le-Israel 615,389
28,610 Blue Square - Israel 264,642
13,800 Check Point Software
Technologies (1) 2,185,575
17,510 ECI Telecom 413,674
3,200 Gilat Satellite Networks (1) 163,800
5,370 Nice Systems (1) 251,047
3,700 Orbotech (1) 195,869
17,040 Teva Pharmaceutical Industries 1,007,490
---------------
6,418,701
---------------
KOREA -- 10.8%
61,505 Kookmin Bank 702,938
103,570 Korea Electric Power (KEPCO) 2,312,763
42,300 Korea Telecom Krw5000 2,491,602
30,444 Samsung Electronics Krw5000 (1) 3,813,994
9,030 Samsung Securities 163,538
66,100 Shinhan Bank 662,475
8,500 SK Telecom. Krw500 1,812,150
---------------
11,959,460
---------------
MALAYSIA -- 2.9%
154,000 AMMB Holdings 172,648
195,000 Genting 497,780
155,500 Malayan Banking 622,020
141,000 Resorts World 246,758
207,000 Telekom Malaysia 637,363
235,500 Tenaga Nasiona 762,301
183,000 United Engineers (Malaysia) 260,061
---------------
3,198,931
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C>
MEXICO -- 10.5%
41,733 Cemex ADR $ 881,610
153,400 Fomento Economico Mexico 583,452
593,100 Grupo Financiero Banamex
Accival (1) 920,927
320,000 Grupo Financiero BBVA
Bancomer (1) 197,948
307,500 Grupo Modelo 819,339
24,000 Grupo Televisa GDS (1) 1,299,000
133,800 Kimberly - Clark de Mexico 341,833
86,200 Telefonos de Mexico ADR 4,649,412
19,500 Tubos de Acero de Mexico
(TAMSA) ADR 296,595
721,900 Wal-Mart De Mexico (1) 1,644,418
---------------
11,634,534
---------------
PERU -- 0.3%
7,600 Compania de Minas
Buenaventura 97,850
32,400 Credicorp 236,925
---------------
334,775
---------------
PHILIPPINES -- 0.5%
254,936 Manila Electric "B" Shares 209,339
21,040 Philippine Long Distance
Telephone 318,798
---------------
528,137
---------------
POLAND -- 1.4%
62,100 Elektrim Towarz 491,842
30,800 KGHM Polska Miedz GDR 332,640
18,900 Polski Koncern Naftowy
Orlen GDR 145,530
11,800 Powszechny Bank
Kredytowy GDR 207,975
84,160 Telekomunikacja Polska GDR 422,904
---------------
1,600,891
---------------
RUSSIA -- 3.3%
27,405 LUKoil ADR 1,463,427
16,421 Mobile Telesystems ADR (1) 453,630
49,990 RAO Unified Energy
Systems GDR 632,374
17,400 Rostelecom ADR 152,250
74,870 Surgutneftegaz 962,079
---------------
3,663,760
---------------
SOUTH AFRICA -- 7.7%
699,600 African Bank Investments (1) 554,423
29,700 Anglo American Platinum 1,159,158
21,621 Barlow 112,989
35,300 De Beers 971,410
83,462 Dimension Data Holdings (1) 718,843
74,300 Fedsure Holdings 215,277
835,150 FirstRand 751,342
8,400 Johnnic Holdings 95,574
364,415 LA Group (1)(2) 63,882
SOUTH AFRICA -- (CONCLUDED)
260,800 Nampak $ 379,546
32,400 Naspers 240,905
913,293 Profurn 447,071
638,581 Sanlam 663,208
133,300 Sappi 913,533
156,500 Sasol 1,198,829
---------------
8,485,990
---------------
TAIWAN -- 9.0%
107,000 Advanced Semiconductor
Engineering 122,673
81,637 Ambit Microsystems 378,418
450,000 Chinatrust Commercial Bank 285,075
190,000 Compal Electronics 289,463
320,400 Compeq Manufacturing 1,207,940
179,000 Delta Electronics 569,749
1,111,000 Far Eastern Textile 913,248
83,900 Hon Hai Precision Industry 438,169
266,000 Siliconware Precision Industries 202,213
483,000 Taiwan Cellular (1) 1,007,497
738,160 Taiwan Semiconductor
Manufacturing 2,235,473
17,000 Taiwan Semiconductor
Manufacturing ADR 385,688
189,600 United Microelectronics 1,468,369
55,500 Via Technologies 397,900
---------------
9,901,875
---------------
THAILAND -- 1.2%
82,000 Advanced Info Service (1) 674,890
1,230,658 TelecomAsia (1) 602,198
---------------
1,277,088
---------------
TURKEY -- 4.2%
6,535,895 Anadolu Efes Biracilik ve
Malt Sanayii (1) 382,881
5,318,100 Arcelik 171,348
12,314,193 Dogan Yayin Holding 160,507
5,917,700 Eregli Demir ve Celik
Fabrikalari T.A.S (Erdemir) 186,333
3,165,700 Koc Holding 201,678
1,750,780 Migros Turk T.A.S. 241,023
5,000,000 Turkcell Iletisim Hizmetleri (1) 219,680
61,101,550 Turkiye Garanti Bankasi 626,397
57,745,500 Turkiye Is Bankasi (Isbank) 1,099,412
939,500 Vestel Electronik Sanayi
ve Ticaret 192,630
130,705,812 Yapi ve Kredi Bankasi 1,129,396
---------------
4,611,285
---------------
ZIMBABWE -- 1.0%
4,720,000 Econet Wireless
Holdings (1)(2) 1,121,000
---------------
TOTAL COMMON STOCKS
(Cost $106,950,562) 96,893,274
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
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SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C>
PREFERRED STOCK -- 4.3%
BRAZIL -- 4.3%
95,639,780 Banco Bradesco 591,356
9,360,000 Banco Itau 728,334
48,761,700 Brasil Telecom 374,833
3,930,000 Compania de Bebidas das
Americas (Ambev) 877,285
6,800,060 Eletropaulo Metropolitana -
Electricidad de Sao Paulo 381,263
85,297,000 Tele Centro Sul Participacoes 923,853
74,466,630 Telesp Celular Participacoes 881,078
---------------
(Cost $4,387,397) 4,758,002
---------------
WARRANTS -- 0.2%
MEXICO -- 0.0%
6,125 Cemex (1) 12,250
---------------
TAIWAN -- 0.2%
14,628 DBTEL (1) 11,337
733,055 Taiwan Semiconductor (1) 217,949
---------------
229,286
---------------
TOTAL WARRANTS
(Cost $391,146) 241,536
---------------
SHORT-TERM INVESTMENTS -- 5.1%
656,302 SSgA Money Market
Fund 6.280% (3) 656,302
4,975,572 SSgA U.S. Government Money
Market Fund 6.240% (3) 4,975,572
---------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $5,631,874) 5,631,874
---------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C>
REPURCHASE AGREEMENT -- 1.0%
$ 1,149,000 State Street Bank and Trust
Company, 5.25%, 11/01/2000,
repurchase agreement, dated 10/31/00
with a repurchase price of $1,149,168 is collateralized by a
$800,000 United States Treasury Bond, 14.000%, due 11/15/11,
valued at $1,173,000.
(Cost $1,149,000) $ 1,149,000
---------------
TOTAL INVESTMENTS
(Cost $118,509,979)-- 98.4% 108,673,686
OTHER ASSETS
LESS LIABILITIES-- 1.6% 1,754,754
----------------
TOTAL NET
ASSETS-- 100% $ 110,428,440
===============
</TABLE>
(1) Denotes non-income producing security.
(2) Deemed illiquid security.
(3) Interest rate shown is 7-day yield as of October 31, 2000.
ADR ___ American Depository Receipts
GDR ___ Global Depository Receipts
GDS ___ Global Depository Shares
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACT TO SELL
<TABLE>
<CAPTION>
UNDERLYING FACE UNREALIZED
CONTRACT DATE CURRENCY UNITS AMOUNT APPRECIATION*
------------- -------- ----- --------------- -------------
<S> <C> <C> <C> <C>
3/07/01 Mexican Peso 18,328,000 $ 1,890,498 $ 62,651
</TABLE>
* Does not include foreign currency spot contracts with unrealized
depreciation of $2,752.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value - Note 2 ............ $ 107,524,686
Repurchase agreement..................................... 1,149,000
Cash..................................................... 1,300,815
Foreign currency, at value............................... 319,710
Dividends and tax reclaims receivable.................... 186,699
Interest receivable...................................... 19,070
Receivable for securities sold........................... 913,865
Receivable for foreign currency contracts sold........... 62,684
Prepaid expenses......................................... 2,728
Due from Investment Adviser - Note 3..................... 243,116
------------------
TOTAL ASSETS.......................................... 111,722,373
------------------
LIABILITIES
Payable for securities purchased......................... 985,833
Payable for foreign currency contracts purchased......... 2,785
Payable for Fund shares redeemed......................... 19
Advisory fee payable - Note 3............................ 96,116
Administration fee payable - Note 3...................... 9,700
Shareholder servicing fee payable - Note 4............... 33,346
Accrued expenses and other liabilities................... 166,134
------------------
TOTAL LIABILITIES................................... 1,293,933
------------------
NET ASSETS.......................................... $ 110,428,440
==================
NET ASSETS
Capital paid-in.......................................... $ 149,752,546
Undistributed (distributions in excess of)
net investment income................................. (105,118)
Accumulated net realized loss on investments
and foreign currency transactions...................... (29,437,206)
Net unrealized depreciation on investments
and foreign currency translations.................... (9,781,782)
------------------
NET ASSETS.......................................... $ 110,428,440
==================
Investor Shares:
Net Assets............................................. $ 89,680,853
Net asset value, offering and redemption
price per share - Note 5............................ $ 9.17
Total shares outstanding at end of period.............. 9,784,938
Advisor Shares:
Net Assets............................................. $ 20,747,587
Net asset value, offering and redemption
price per share - Note 5............................ $ 9.19
Total shares outstanding at end of period.............. 2,257,333
Cost of securities including repurchase agreement........ $ 118,509,979
Cost of foreign currency................................. $ 321,268
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend income.......................................... $ 3,307,423
Interest income.......................................... 299,137
Foreign taxes............................................ (305,100)
------------------
TOTAL INVESTMENT INCOME............................. 3,301,460
------------------
EXPENSES
Investment advisory fees - Note 3........................ 2,557,756
Shareholder servicing fees - Note 4...................... 83,056
Administrative fees - Note 3............................. 255,776
Subadministration fees - Note 3.......................... 261,403
Custodian fees........................................... 928,030
Audit fees............................................... 119,813
Legal fees............................................... 151,831
Trustees fees............................................ 42,427
Transfer agent fees...................................... 30,721
Amortization of organizational expenses.................. 5,006
Printing fees............................................ 24,872
Registration fees........................................ 16,718
Other.................................................... 24,278
------------------
TOTAL EXPENSES...................................... 4,501,687
Expenses borne by Investment Adviser - Note 3............ (1,402,698)
Interest expense......................................... 4,105
------------------
NET EXPENSES........................................ 3,103,094
------------------
NET INVESTMENT INCOME............................... 198,366
------------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments sold (a)................ 25,955,442
Net realized loss on foreign currency transactions....... (652,354)
------------------
Net realized gain on investments and foreign
currency transactions................................ 25,303,088
------------------
Change in net unrealized depreciation on
investments............................................ (33,109,084)
Change in net unrealized appreciation on
foreign currency translations.......................... 203,807
------------------
Net change in unrealized depreciation on
investments and foreign currency translations.......... (32,905,277)
------------------
NET GAIN (LOSS)..................................... (7,602,189)
------------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................. $ (7,403,823)
==================
</TABLE>
(a) Includes capital gains taxes for sales of India securities in the amount
of $172,227.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income................................... $ 198,366 $ 1,565,879
Net realized gain (loss) on investments
and foreign currency transactions................... 25,303,088 (2,603,747)
Change in net unrealized appreciation (depreciation)
on investments and foreign currency translations... (32,905,277) 51,243,436
--------------- ------------------
Net increase (decrease) in net assets
resulting from operations............................. (7,403,823) 50,205,568
--------------- ------------------
Distributions to shareholders from:
Net investment income - Investor Shares................. (2,380,745) (754,552)
Net investment income - Advisor Shares.................. (312,080) (39,323)
--------------- ------------------
Total distributions to shareholders................... (2,692,825) (793,875)
--------------- -------------------
Capital share transactions: (Note 5)
Sale of shares - Investor Shares........................ 64,853,117 84,184,243
Sale of shares - Advisor Shares......................... 6,955,519 10,097,717
Reinvestment of distributions - Investor Shares......... 1,603,580 310,385
Reinvestment of distributions - Advisor Shares.......... 312,080 39,323
Redemption of shares - Investor Shares.................. (181,333,349) (24,794,413)
Redemption of shares - Advisor Shares................... (20,361,825) (2,688,049)
--------------- ------------------
Net increase (decrease) from capital share transactions. (127,970,878) 67,149,206
--------------- ------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ................ (138,067,526) 116,560,899
Net Assets
Beginning of period..................................... 248,495,966 131,935,067
--------------- ------------------
End of period........................................... $ 110,428,440 $ 248,495,966
=============== ==================
Undistributed (distributions in excess of)
net investment income................................... $ (105,118) $ 2,216,973
=============== ==================
CHANGES IN FUND SHARES
Investor Share transactions: (Note 5)
Sales of shares......................................... 5,346,171 8,380,380
Reinvestment of distributions........................... 131,982 33,627
Redemptions of shares................................... (15,901,969) (2,552,689)
--------------- ------------------
Net increase (decrease) in Investor Shares................. (10,423,816) 5,861,318
=============== ==================
Advisor Share transactions: (Note 5)
Sales of shares......................................... 556,634 1,018,456
Reinvestment of distributions........................... 25,518 4,849
Redemptions of shares................................... (1,692,244) (283,137)
--------------- ------------------
Net increase (decrease) in Advisor Shares.................. (1,110,092) 740,168
=============== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - INVESTOR SHARES
Selected per share data and ratios for an Investor Share outstanding throughout
each year:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD. $ 10.53 $ 7.77 $ 11.08 $ 11.06 $ 10.63
-------- -------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS: (a)
Net Investment Income (Loss)........ 0.01 (d) 0.06 0.12 0.06 0.02
Net Realized and Unrealized
Gain (Loss) on Investments and
Foreign Currency Transactions..... (1.25) 2.75 (3.39) (0.03) 0.43
-------- -------- -------- --------- --------
TOTAL FROM INVESTMENT OPERATIONS.... (1.24) 2.81 (3.27) 0.03 0.45
-------- -------- -------- --------- --------
LESS DISTRIBUTIONS:
From Net Investment Income.......... (0.12) (0.05) (0.04) (0.01) (0.02)
-------- -------- -------- --------- --------
Total Distributions................. (0.12) (0.05) (0.04) (0.01) (0.02)
-------- -------- -------- --------- --------
NET ASSET VALUE AT END OF PERIOD.......... $ 9.17 $ 10.53 $ 7.77 $ 11.08 $ 11.06
======== ======== ======== ========= ========
TOTAL RETURN (b) ........................ (12.07)% 36.27% (29.64)% 0.27% 4.22%
RATIOS & SUPPLEMENTARY DATA
Net Assets at End of Period (000's). $ 89,681 $212,859 $111,463 $ 179,436 $167,570
Ratios to Average Net Assets: (a)
Expenses including reimbursement/
waiver of fees ............. 1.18% 1.27% 1.36% 1.41% 1.60%
Expenses excluding reimbursement/
waiver of fees ............. 1.72% 1.33% 1.64% 1.62% 1.71%
Net investment income including
reimbursement/waiver of fees 0.11% 0.85% 1.11% 0.51% 0.36%
Portfolio Turnover Rate (c) ........ 126% 77% 67% 43% 103%
</TABLE>
(a) From November 1, 1995 to May 31, 1999, the Fund recognized its
proportionate share of income, expenses and gains/losses of its underlying
portfolio, Schroder Emerging Markets Fund Institutional Portfolio
(Portfolio). Since June 1, 1999, income, expenses and gains/losses were
directly accrued to the Fund.
(b) Total return calculations do not reflect the payment of purchase or
redemption fees of 0.50%, respectively. Total returns would have been lower
had certain Fund expenses not been limited during the periods shown. (See
Note 3).
(c) The portfolio turnover rates for the years through October 31, 1998
represent the turnover of its underlying portfolio, Schroder Emerging
Markets Fund Institutional Portfolio (Portfolio). For the year ending
October 31, 1999, the rate represents a combination of the portfolio
turnover rate of the Portfolio for the period from November 1, 1998 through
May 31, 1999, during which time the Fund invested in the Portfolio, and the
portfolio turnover rate of the Fund for the period June 1, 1999 through
October 31, 1999, during which time the Fund held direct investments in a
portfolio of securities.
(d) Based on average share method.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - ADVISOR SHARES
Selected per share data and ratios for an Advisor Share outstanding throughout
each period:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
-------------------------------------- OCTOBER 31,
2000 1999 1998 1997 (a)
----- ---- ---- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD.............. $ 10.58 $ 7.79 $ 11.11 $ 11.28
-------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS: (b)
Net Investment Income (Loss).................. (0.01) 0.05 0.08 0.03
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions................................ (1.29) 2.75 (3.39) (0.19)
-------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS.............. (1.30) 2.80 (3.31) (0.16)
-------- -------- -------- --------
LESS DISTRIBUTIONS:
From Net Investment Income.................... (0.09) (0.01) (0.01) (0.01)
-------- -------- -------- --------
Total Distributions........................... (0.09) (0.01) (0.01) (0.01)
-------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD.................... $ 9.19 $ 10.58 $ 7.79 $ 11.11
======== ======== ======== ========
TOTAL RETURN (c) ................................... (12.47)% 36.05% (29.81)% (1.42)%
RATIOS & SUPPLEMENTARY DATA
Net Assets at End of Period (000's)........... $ 20,748 $ 35,637 $ 20,472 $ 25,280
Ratios to Average Net Assets: (b)
Expenses including reimbursement/
waiver of fees ....................... 1.43% 1.52% 1.61% 1.66%(d)
Expenses excluding reimbursement/
waiver of fees ....................... 2.00% 1.60% 1.97% 2.03%(d)
Net investment income including
reimbursement/waiver of fees ......... (0.14)% 0.70% 0.82% 0.27%(d)
Portfolio Turnover Rate (e)................... 126% 77% 67% 43%(f)
</TABLE>
(a) Advisor Shares were first issued on November 21, 1996.
(b) Prior to June 1, 1999, the Fund recognized its proportionate share of
income, expenses and gains/losses of its underlying portfolio, Schroder
Emerging Markets Fund Institutional Portfolio (Portfolio). Since June 1,
1999, income, expenses and gains/losses were directly accrued to the Fund.
(c) Total return calculations do not reflect the payment of purchase or
redemption fees of 0.50%, respectively. Total returns would have been lower
had certain Fund expenses not been limited during the periods shown. (See
Note 3). Total return calculations for a period of less than one year are
not annualized.
(d) Annualized.
(e) The portfolio turnover rates for the periods through October 31, 1998
represent the turnover of its underlying portfolio, Schroder Emerging
Markets Fund Institutional Portfolio (Portfolio). For the year ending
October 31, 1999, the rate represents a combination of the portfolio
turnover of the Portfolio for the period from November 1, 1998 through May
31, 1999, during which time the Fund invested in the Portfolio and the
portfolio turnover rate of the Fund for the period June 1, 1999 through
October 31, 1999, during which time the Fund held direct investments in a
portfolio of securities.
(f) Represents the Portfolio's portfolio turnover rate for the entire fiscal
year ended October 31, 1997.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
NOTE 1 - ORGANIZATION
Schroder Capital Funds (Delaware) (the "Trust"), is an open-end series
management investment company registered under the Investment Company Act of
1940, as amended. The Trust was organized as a Maryland corporation on July 30,
1969; reorganized as Schroder Capital Funds, Inc., a series company, on February
29, 1988; and reorganized on January 9, 1996, as a Delaware business trust. The
Trust has an unlimited number of authorized shares, which are divided into seven
investment portfolios. Included in this report is the Schroder Emerging Markets
Fund Institutional Portfolio (the "Fund"), which is a non-diversified portfolio
that commenced operations on March 31, 1995. The Trust is authorized to issue an
unlimited number of the Fund's Investor Shares and Advisor Shares of beneficial
interest without par value. As of October 31, 2000, the Fund had both Investor
Shares and Advisor Shares outstanding.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust which are in conformity with accounting principles generally accepted in
the United States of America:
VALUATION OF INVESTMENTS: Portfolio securities listed on recognized stock
exchanges are valued at the last reported sales price on the exchange on which
the securities are principally traded. Listed securities traded on recognized
stock exchanges where last sale prices are not available are valued at the mean
of the closing bid and ask prices ("mid-market price"), or if none, the last
sale price on the preceding trading day. Securities traded in over-the-counter
markets are valued at the most recent reported mid-market price. Short-term
investments having a maturity of 60 days or less, are valued at amortized cost,
which approximates market value unless the investment adviser believes another
valuation is more appropriate. Prices used for valuation generally are provided
by independent pricing services. Other securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith using methods approved by the Trust's Board of Trustees ("Trustees").
REPURCHASE AGREEMENTS: When entering into repurchase agreements, it is the
Fund's policy that the Fund take into its possession, through its custodian, the
underlying collateral and monitor the collateral's value at the time the
agreement is entered into and on a daily basis during the term of the repurchase
agreement to ensure that it equals or exceeds the repurchase price. In the event
of default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
INVESTMENT TRANSACTIONS: Investment security transactions are recorded as of
trade date. Realized gains and losses on sales of investments are determined on
the basis of identified cost. Capital gain taxes on certain foreign countries
are accrued on realized gains and unrealized appreciation.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date except
that certain foreign dividends are recorded as the Fund is informed of the
ex-dividend date. Dividend income is recorded net of unrecoverable withholding
tax. Interest income is recorded on an accrual basis. Foreign dividend and
interest income amounts and realized capital gains or losses are converted to
U.S. dollar equivalents using foreign exchange rates in effect at the date of
the transactions.
EXPENSES: Expenses are recorded on an accrual basis. Most of the expenses of the
Trust can be directly attributable to a specific Fund and/or class of shares.
Expenses not directly attributable to a specific Fund and/or class of shares are
allocated among the Funds and/or classes of shares in such a manner as deemed
equitable by Schroder Investment Management North America Inc. ("SIMNA"), the
Fund's investment adviser, or the Trustees.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders from net investment
income and net realized capital gains are declared and distributed at least
annually. Distributions are recorded on the ex-dividend date.
15
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Investment income, common expenses of the Fund and gains/losses on investments
are allocated to both classes of the Fund based on the respective daily net
assets of each class. Shareholder servicing fees related to Advisor Shares are
charged directly to that class. Neither class has preferential dividend rights.
Dividends, if any, paid by the Fund on its two classes of shares will normally
differ in amounts due to the differing expenses borne by each class.
DEFERRED ORGANIZATION COSTS: Costs incurred by the Fund in connection with its
organization were amortized on a straight-line basis over a five-year period.
FEDERAL INCOME TAXES: It is the policy of the Trust for the Fund to qualify as a
"regulated investment company" by complying with the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund
will not be subject to federal income taxes to the extent that, among other
things, it distributes substantially all of its taxable income, including
capital gains, for the fiscal year. In addition, as a result of distributing
substantially all of its net investment income during each calendar year,
capital gains and certain other amounts, if any, the Fund will not be subject to
a federal excise tax.
As of October 31, 2000, the Fund had the following net tax basis capital loss
carryforwards for federal income tax purposes, that may be applied against
taxable gains until their expiration date as follows:
<TABLE>
<CAPTION>
Expiration Dates
Amount October 31,
------ -----------
<S> <C>
$22,336,473 2006
2,676,279 2007
1,960,786 2008
</TABLE>
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from accounting principles generally accepted
in the United States of America. These differences are primarily due to
differing treatments for passive foreign investment companies, foreign
currencies, losses deferred due to wash sales and excise tax regulations.
At October 31, 2000, the Fund reclassified $435,794, $172,368 and $(608,162)
between capital paid-in, undistributed net investment income and accumulated net
realized loss, respectively. These reclassifications had no impact on the net
asset value of the Fund and are designed to present the Fund's capital accounts
on a tax basis.
FOREIGN CURRENCY: Foreign currency amounts are translated into U.S. dollars at
the mean of the bid and asked prices of such currencies against U.S. dollars as
follows: (i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such transactions.
The portion of the results of operations arising from changes in the exchange
rates and the portion due to fluctuations arising from changes in the market
prices of securities are not isolated. Such fluctuations are included with the
net realized and unrealized gain or loss on investments.
The Fund may enter into forward foreign currency contracts to protect the U.S.
dollar value of the underlying portfolio of securities against the effect of
possible adverse movements in foreign exchange rates. Principal risks associated
with such transactions include the movement in value of the foreign currency
relative to the U.S. dollar and the ability of the counterparty to perform.
Fluctuations in the value of such forward foreign currency contract transactions
are recorded daily as unrealized gain or loss; realized gain or loss includes
net gain or loss on transactions that have terminated by settlement or by the
Fund entering into offsetting commitments.
NOTE 3 - INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENTS
The Trust has entered into an investment advisory agreement with SIMNA. Under
this agreement, SIMNA provides investment management services and is entitled to
receive for its services compensation, payable monthly, at the annual rate of
1.00% of the Fund's average daily net assets.
The administrator of the Trust is Schroder Fund Advisors Inc. ("Schroder
Advisors"), a wholly owned subsidiary of SIMNA. For its services, Schroder
Advisors is entitled to receive compensation at an annual rate, payable monthly,
of 0.10% of the average daily net assets of the Fund. In addition, the Trust has
entered into a Sub-Administration Agreement with State Street Bank and Trust
Company ("State Street") and Schroder Advisors. Under that Agreement, the Fund,
together with other mutual funds managed by SIMNA and certain related entities,
pays fees to State Street based on the combined average daily net assets of all
of the funds in the Schroder complex, according to the following annual rates:
0.06% of the first $1.7 billion of such assets, 0.04% of the next $1.7 billion,
and 0.02% of assets in excess of $3.4 billion, subject to certain minimum
requirements.
16
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In order to limit the Fund's expenses, SIMNA and Schroder Advisors are
contractually obligated to reduce their compensation (and, if necessary, to pay
certain other Fund expenses) until October 31, 2001, to the extent that the
Fund's net expenses attributable to its Investor and Advisor Shares exceed 1.18%
and 1.43%, respectively (based on each classes' average daily net assets).
NOTE 4 - SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Service Plan (the "Plan") for its Advisor
Shares under which Schroder Advisors, or other shareholder servicing
organizations, provide administrative support services to shareholders of the
Fund's Advisor Shares. For providing, or arranging for, the provision of these
shareholder services, Schroder Advisors receives compensation monthly at an
annual rate of up to 0.25% of the average daily net assets of the Fund
attributable to its Advisor Shares. Schroder Advisors may pay shareholder
servicing organizations for these services at an annual rate of up to 0.25%.
NOTE 5 - PURCHASE AND REDEMPTION FEES
Purchases and redemptions of Fund shares are subjected to a fee of 0.50% of the
amount invested and the net asset value redeemed, respectively. These charges
are designed to cover the transaction costs that the Fund incurs (either
directly or indirectly) as a result of its investment in, or sale of, portfolio
securities. These charges, which are not sales charges, are retained by the Fund
and not paid to Schroder Advisors or any other entity. The purchase and
redemption fees are included in the Statements of Changes in Net Assets shares
sold and shares redeemed amounts, respectively, and are included as part of
Capital Paid-in on the Statement of Assets and Liabilities. The purchase and
redemption fees paid to the Fund for each class were as follows for the periods
shown:
<TABLE>
<CAPTION>
Investor Shares Advisor Shares
------------------------- -------------------------
Purchase Redemption Purchase Redemption
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
For the Year Ended $317,715 $903,692 $ 34,857 $100,238
October 31, 2000
For the Year Ended 448,181 123,972 55,691 13,440
October 31, 1999
</TABLE>
NOTE 6 - TRANSACTIONS WITH AFFILIATES
TRUSTEES' FEES: The Trust pays no compensation to Trustees who are interested
persons of the Trust, SIMNA or Schroder Advisors. For their services as Trustees
of all open-end investment companies distributed by Schroder Advisors, with the
exception of Schroder Series Trust II, trustees who are not interested persons
of the Trust, SIMNA or Schroder Advisors will receive an annual retainer of
$11,000 and $1,250 per meeting attended in person or $500 per meeting attended
by telephone. Members of an Audit Committee for one or more of such Funds
receive an additional $1,000 per year. Payment of the annual retainer will be
allocated among the various Funds based on their relative net assets. Payment of
meeting fees will be allocated only among those Funds to which the meeting
relates.
NOTE 7 - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of non-government investments, excluding
short-term securities for the Fund, for the year ended October 31, 2000 were
$303,599,569 and $438,028,193, respectively.
At October 31, 2000, the identified cost for federal income tax purposes of
investments owned by the Fund was $121,061,585 with net unrealized depreciation
of $12,387,899. Gross unrealized appreciation and depreciation were $10,025,614
and $22,413,513, respectively.
NOTE 8 - CONCENTRATION OF RISK
The Fund's investment in countries with limited or developing capital markets
may involve greater risks than investments in more developed markets and the
prices of such investments may be volatile. The consequences of political,
social or economic events in these countries may have disruptive effects on the
market prices of the Fund's investments.
NOTE 9 - BENEFICIAL INTEREST
As of October 31, 2000, the Fund had 6 Investor and 1 Advisor shareholders
owning beneficially or of record 79% and 89% of those classes of shares of the
Fund, respectively.
17
<PAGE>
--------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 10 - LINE OF CREDIT
The Trust and other Schroder Funds managed by SIMNA (the "Participants"),
share in a $37.5 million unsecured revolving credit facility with State Street
for temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of securities.
The Participants are charged an annual commitment fee of 0.08%, which is
allocated, pro rata based upon net assets, among each of the Participants.
Interest is calculated based on the federal funds rate plus 0.50% at the time of
the borrowing. To the extent permitted by a Participant's investment policies
and to the extent amounts remain available for borrowing under that facility,
each Participant may borrow up to a maximum of 33 percent of its net assets
under the agreement. For the year ended October 31, 2000, the Fund borrowed
$5,855,709 under the facility at an average annualized interest rate of 7.07%,
and paid $4,105 in interest with respect to such borrowings.
--------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
On December 18, 2000, the Fund made the following distributions to shareholders
of record December 15, 2000:
<TABLE>
<CAPTION>
Income Distributions
Class Per Share
----- ---------
<S> <C>
Investor Shares................................ $0.015194
Advisor Shares................................. 0.000000
</TABLE>
--------------------------------------------------------------------------------
Report of Independent Accountants
To the Trustees of Schroder Capital Funds (Delaware) and Shareholders of
Schroder Emerging Markets Fund Institutional Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Schroder Emerging Markets Fund
Institutional Portfolio (the "Fund") (a separately managed portfolio of Schroder
Capital Funds (Delaware)) at October 31, 2000, the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 15, 2000
18
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<PAGE>
INVESTMENT ADVISER
Schroder Investment Management North America Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRUSTEES
Sharon L. Haugh, CHAIRMAN
Catherine A. Mazza, VICE CHAIRMAN
David N. Dinkins
Peter E. Guernsey
John I. Howell
Peter S. Knight
William L. Means
Clarence F. Michalis
Hermann C. Schwab
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRANSFER & SHAREHOLDER SERVICING AGENT
Boston Financial Data Services, Inc.
CUSTODIAN
State Street Bank and Trust Company
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
COUNSEL
Ropes & Gray
Schroder Emerging Markets Fund Institutional Portfolio
P.O. Box 8507
Boston, MA 02266
800-464-3108
--------------------------------------------------------------------------------
The information contained in this report is intended for the general information
of the shareholders of the Trust. This report is not authorized for distribution
to prospective investors unless preceded or accompanied by a current Fund
prospectus, which contains important information concerning the Fund.
--------------------------------------------------------------------------------
EMU1200AR
