[SCHRODERS EMBLEM] SCHRODERS
SCHRODER
INTERNATIONAL BOND
PORTFOLIO
SEMI-ANNUAL REPORT
June 30, 1997
(Unaudited)
Schroder Capital Funds II
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
Two Portland Square, Portland, Maine 04101
General Information (207) 879-6200
Account Information (800) 344-8332
Fund Literature (800) 290-9826
Fax (207) 879-6050
INVESTMENT OBJECTIVE
The Portfolio's investment objective is to seek a high rate of total return. It
seeks to achieve its investment objective by investing at least 65%, and
normally intends to invest substantially all, of its assets in non-U.S. debt
securities and debt-related investments, which may be denominated in foreign or
U.S. currency.
INVESTMENT ADVISER
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. The Schroder Group has been managing international
investment portfolios since the early years of this century. As of June 30,
1997, the Schroder Group had over $150 billion in assets under management. At
that same date, the Investment Adviser, together with its U.K. affiliate,
Schroder Capital Management International Ltd., had over $28 billion under
management.
August 25, 1997
Dear Shareholder:
We are pleased to present the semi-annual report for the Schroder International
Bond Portfolio for the six month period ending June 30, 1997. Over the period,
the total return of the Portfolio was -3.50% compared with the Salomon Brothers
World Government Bond Index ex-U.S., which returned -3.13%.
The first six months of 1997 was characterized by sluggish growth and subdued
inflation in Japan, Australia and most continental European economies while the
United Kingdom experienced above-trend growth. As a consequence, monetary policy
remained on hold in Europe and Japan and was actually eased in Australia as the
economy slowed further. However, the recently independent Bank of England, under
the new Labour government, raised short term interest rates in the U.K.
Inflationary pressures were largely absent across all major industrialized
countries helped by weak commodity prices, high unemployment rates in many
countries, intense global competition and excess capacity in many emerging
economies. This economic backdrop was positive for bond markets globally and all
markets provided positive returns in local currency terms.
In the U.K., while economic activity gathered pace and short term interest rates
were raised, bond yields were able to fall as the decision to make the Bank of
England independent increased the inflation-fighting credibility of U.K.
authorities enormously and the strength of sterling kept inflation expectations
at bay. Consequently, the U.K. was the best performing market over the period in
local currency terms and second only to Japan in U.S. dollar terms.
Australia almost matched the U.K. in performance terms as further interest rate
cuts caused yields along the entire maturity spectrum to fall and weak commodity
prices helped keep inflation subdued despite rising wage pressures.
<PAGE>
Within Europe, a growing belief that European Monetary Union will begin on time
on January 1, 1999 due to the strong political will within Germany and France
caused all European bond yields to move towards convergence with Germany. Italy
and Spain performed best among continental European markets due to the upgrading
of their chances of being initial members of EMU and the wide yield
differentials that existed at the beginning of the year.
The strength of the U.S. economy, in contrast to continental Europe, drove the
dollar higher as bond yield differentials rose in the U.S. relative to Germany.
In addition, concerns over potential weakness in the new "Euro" currency after
its introduction in January 1999 led to a sell-off in the Deutschemark against
all its major counterparts including the dollar. This resulted in negative bond
market returns in U.S. dollar terms for all continental European markets while
the Japanese market was the top performer in dollar terms after a huge rally by
the Yen in the second quarter.
Sincerely,
Hermann C. Schwab
Chairman
2
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS.
The Portfolio's return was slightly lower than its benchmark, the Salomon
Brothers World Government Bond Index, for the six months ending June 30 after
being ahead for most of that time frame. Currency exposure made a positive
contribution to performance while the short duration stance proved to be
premature as yields fell sharply towards the end of the period.
The Portfolio has been invested defensively throughout the six months with a
duration exposure that is significantly lower than the index. This is due to
management's belief that global yields have fallen to levels which fully
discounted both the low inflation and sluggish growth environment in Europe and
Japan. Indeed, we expect global growth to recover in the second half of 1997
spearheaded by the U.S., but also expect Europe and Japan to experience a
pick-up in economic activity in response to the easy monetary policy that has
existed for so long. In such an environment, bond yields are likely to rise
globally and we have positioned the portfolio toward short maturity instruments
with a low duration.
The Portfolio has significantly underweighted Japan this year as the bond market
is expensive in an historical context and the level of running yield is very low
compared to other global markets. Within Europe, a significantly overweight
allocation was made to Germany as it is close to fair value given recent
declines in inflation and sluggish economic growth. Peripheral markets such as
Spain, Italy and Sweden have moved to record low yield spreads. We feel these
markets have become speculative in nature and much riskier, particularly if the
nascent signs of growth translate into stronger activity as we expect.
The Portfolio has remained consistently overweight in the dollar-bloc currencies
against Europe as the U.S. economic cycle continues to outshine that in Europe.
However, after the Yen's 50% fall since its high in April 1995 it became
excessively cheap and so the Portfolio moved to an overweight position and
benefited significantly from the sharp rise that occurred in May and June.
The markets in Europe have assumed that European Monetary Union on January 1,
1999 is virtually a foregone conclusion given the political will of the major EU
partners. However, given the poor state of public finances in Europe, neither
Germany nor France is likely to meet the 3% budget deficit criteria in 1997.
Therefore, the risk of a delay and the resulting negative consequences for the
peripheral bond markets and currencies of Spain and Italy should not be ruled
out. Should this occur, capital would move back into Germany given its
credentials as a safe haven market in times of crisis and its history of sound
economic management.
At present, sentiment is bearish towards the Deutschemark and speculators have
regarded it as a one-way bet having accumulated the largest short position at
any time over the past decade. Should a catalyst cause a liquidation of these
positions, a rally in the Deutschemark would be inevitable. The Bundesbank has
mentioned their concern over the recent rapid decline of the Mark and may nudge
money market rates higher particularly as embryonic signs of inflation are
beginning to emerge. Management will be watching this situation closely in the
coming months as it could materially alter the investment landscape and lead to
a significant adjustment in both international bond markets and the value of the
respective currencies.
The views expressed in this report were those of the Portfolio's portfolio
managers as of the dates specified and may not reflect the views of the
portfolio managers on the dates this report is first published or any time
thereafter. These views are intended to assist shareholders of the Portfolio in
understanding their investment in the Portfolio and do not constitute investment
advice; investors should consult their own investment professionals as to their
individual investment programs.
3
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
AS OF JUNE 30, 1997 (UNAUDITED)
<TABLE>
FIXED INCOME INVESTMENTS - 92.3%
<S> <C> <C>
CURRENCY FACE VALUE US$
-------- ---- ---------
BELGIUM - 4.7%
BEF 14,000,000 Kingdom of Belgium, 9.00%, 3/28/03 $ 472,455
---------------------------
DENMARK - 6.6%
DKK 3,900,000 Kingdom of Denmark, 8.00%, 11/15/01 663,334
---------------------------
FRANCE - 4.3%
FRF 2,500,000 Government of France, 4.75%, 3/12/02 429,448
---------------------------
GERMANY - 33.7%
DEM 4,050,000 German Federal Government, 5.00%, 12/17/98 2,382,078
1,500,000 German Federal Government, 8.38%, 5/21/01 992,405
---------------------------
3,374,483
---------------------------
ITALY - 4.5 %
ITL 685,000,000 Republic of Italy, 10.50%, 7/15/00 449,816
---------------------------
JAPAN - 12.2%
JPY 137,000,000 International Bank for Research & Development, 4.50%, 12/22/97 1,220,675
---------------------------
NETHERLANDS - 7.0%
NLG 825,000 Government of Netherlands, 7.50%, 11/15/99 458,750
NLG 200,000 Government of Netherlands, 8.75%, 9/15/01 120,187
200,000 Government of Netherlands, 8.25%, 6/15/02 118,258
---------------------------
697,195
---------------------------
SWEDEN - 5.5%
SEK 3,300,000 Kingdom of Sweden, 13.00%, 6/15/01 546,746
---------------------------
UNITED KINGDOM - 13.8%
GBP 750,000 United Kingdom Treasury, 9.75%, 8/27/02 1,385,428
---------------------------
TOTAL FIXED INCOME INVESTMENTS (COST $9,541,739) 9,239,580
---------------------------
</TABLE>
4
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SCHRODER INTERNATIONAL BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
FOREIGN CURRENCY - 0.1% VALUE US$
---------
CURRENCY FACE
-------- ----
GBP 6,838 British Pound Sterling 11,380
---------------------------
TOTAL FOREIGN CURRENCY (COST $11,267) 11,380
---------------------------
Total Investments - 92.4% (cost $9,553,006) 9,250,960
Other Assets Less Liabilities - 7.6% 763,081
---------------------------
Total Net Assets - 100.0% $ 10,014,041
===========================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACTS TO SELL
<S> <C> <C> <C> <C> <C>
CONTRACT DATE CURRENCY UNITS US DOLLARS UNREALIZED GAIN (LOSS)
------------- -------- ----- ---------- ----------------------
7/16/97 DEM 2,353,610 1,373,408 $21,380
7/16/97 SEK 3,700,000 483,091 4,331
8/15/97 GBP 325,000 508,247 (31,934)
8/15/97 ITL 450,000,000 263,466 3,955
10/15/97 NLG 900,000 466,926 4,201
---------------------------
1,933
===========================
CONTRACTS TO BUY
CONTRACT DATE CURRENCY UNITS US DOLLARS UNREALIZED GAIN (LOSS)
------------- -------- ----- ---------- ----------------------
7/16/97 - 8/15/97 JPY 254,434,000 2,075,749 $155,308
8/15/97 DEM 724,110 438,367 (21,517)
8/15/97 ITL 450,000,000 263,466 (6,091)
---------------------------
127,700
===========================
</TABLE>
- ------------------------------------------------------
ABBREVIATIONS
BEF - Belgian Franc
DEM - German Deutsche Mark
DKK - Danish Krone
FRF - French Franc
GBP - British Pound
ITL - Italian Lira
JPY - Japanese Yen
NLG - Dutch Guilder
SEK - Swedish Krona
5
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $ 9,553,006
Net unrealized appreciation (depreciation) (302,046)
----------------------
Total Investments at value 9,250,960
Cash 442,808
Receivable for forward foreign currency contracts 129,633
Receivable for dividends and interest 212,411
Organization costs, net of amortization (Note 2) 7,444
----------------------
Total Assets 10,043,256
----------------------
LIABILITIES:
Accrued expenses and other liabilities 29,215
----------------------
Total Liabilities 29,215
----------------------
Net Assets $ 10,014,041
======================
COMPONENTS OF NET ASSETS:
Investors' capital $ 10,190,813
Net unrealized appreciation (depreciation) on investments (176,772)
----------------------
Net Assets $ 10,014,041
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
INVESTMENT INCOME:
<S> <C>
Interest income (net of foreign withholding taxes of $1,183) $ 250,843
-----------------------
EXPENSES:
Investment advisory (Note 3) 20,330
Administration (Note 3) 7,116
Transfer agency (Note 3) 6,059
Custody 1,220
Accounting (Note 3) 31,000
Legal 1,250
Audit 9,950
Trustees 1,037
Amortization of organization costs (Note 2) 827
Miscellaneous 1,001
-----------------------
Total Expenses 79,790
Fees waived and expenses reimbursed (Note 6) (48,812)
-----------------------
Net Expenses 30,978
-----------------------
NET INVESTMENT INCOME (LOSS) 219,865
-----------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments sold (16,931)
Net realized gain (loss) on forward foreign currency contracts and
foreign currency transactions (12,221)
-----------------------
Net realized gain (loss) on investments, forward foreign
currency contracts and foreign currency transactions (29,152)
-----------------------
Net change in unrealized appreciation (depreciation) on investments (302,159)
Net change in unrealized appreciation (depreciation) on forward
foreign currency contracts and foreign currency transactions 125,387
-----------------------
Net change in unrealized appreciation (depreciation) on investments,
forward foreign currency contracts and foreign currency transactions (176,772)
-----------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS (205,924)
-----------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 13,941
=======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
NET ASSETS, BEGINNING OF PERIOD $ 3,000,100
----------------------------
OPERATIONS:
Net investment income (loss) 219,865
Net realized gain (loss) on investments sold (29,152)
Net change in unrealized appreciation (depreciation) on investments (176,772)
----------------------------
Net increase (decrease) in net assets resulting from operations 13,941
----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 7,000,000
Withdrawals -
----------------------------
Net transactions from investors' beneficial interest 7,000,000
----------------------------
Net increase (decrease) in net assets 7,013,941
----------------------------
NET ASSETS, END OF PERIOD $ 10,014,041
============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C>
Portfolio performance for the following periods: For the
Period Ended
June 30, 1997
(Unaudited) (a)
-------------------------
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 0.75%(b)
Expenses excluding reimbursement/waiver 1.96%(b)
Net investment income including reimbursement/waiver 5.41%(b)
Portfolio turnover rate 62.93%
</TABLE>
- --------------------------------------------------
(a) For the period from December 31, 1996, commencement of operations, to June
30, 1997.
(b) Annualized.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds II ("Schroder Core") was organized on December
27, 1996 as a Delaware business trust. Schroder Core, which is registered as an
open-end, management investment company under the Investment Company Act of 1940
(the "Act"), currently has one investment portfolio. Under the Trust Instrument,
Schroder Core is authorized to issue an unlimited number of interests without
par value. Interests in the Portfolio are sold in private placement transactions
without any sales or transaction charges to institutional clients, including
open-end, management investment companies. The Portfolio commenced operations on
December 31, 1996.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates.
The following represent significant accounting policies of the
Portfolio:
SECURITY VALUATION
Portfolio securities listed on recognized stock exchanges are valued at the last
reported sale 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 last sale price on the proceeding
trading day or at closing mid-market prices. Securities traded in
over-the-counter markets, or listed securities for which no trade is reported on
the valuation date, are valued at the most recent reported mid-market price.
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 Schroder Core Board of Trustees.
Trading in securities on non-U.S. exchanges and over-the-counter
markets may not take place on every day that the New York Stock Exchange is open
for trading. Furthermore, trading takes place in various foreign markets on days
on which the Portfolio's net asset value is not calculated. If events materially
affecting the value of foreign securities occur between the time when their
price is determined and the time when net asset value is calculated, such
securities will be valued at fair value as determined in good faith by using
methods approved by the Schroder Core Board. All assets and liabilities of the
Portfolio denominated in foreign currencies are valued in U.S. dollars based on
the exchange rate last quoted by a major bank prior to the time when the net
asset value of the Portfolio is calculated.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Interest income, including amortization of
discount or premium, is recorded as earned. Identified cost of investments sold
is used to determine gain and loss for both financial statement and federal
income tax purposes. Foreign dividend and interest income amounts and realized
capital gain and loss are converted to U.S. dollar equivalents using foreign
exchange rates in effect at the date of the transactions.
10
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 Portfolio may enter into forward contracts to purchase or
sell foreign currencies to protect against the effect on the U.S. dollar value
of the underlying portfolio of possible adverse movements in foreign exchange
rates. Risks associated with such contracts include the movement in value of the
foreign currency relative to the U.S. dollar and the ability of the counterparty
to perform. Fluctuations in the value of such contracts are recorded as
unrealized gain or loss; realized gain or loss include net gain or loss on
contracts that have terminated by settlement or by the Portfolio entering into
offsetting commitments.
ORGANIZATIONAL COSTS
Cost incurred by the Portfolio in connection with this organization and
initial registration are being amortized on a straight line basis over a
five-year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser to the Portfolio is Schroder Capital Management
International Inc. ("SCMI"). Pursuant to an Investment Advisory Agreement, SCMI
is entitled to receive an annual fee, payable monthly, of 0.50% of the average
daily net assets of the Portfolio.
ADMINISTRATOR
The administrator of the Portfolio is Schroder Fund Advisors Inc.
("Schroder Advisors"). In addition, the Portfolio has entered into a
Subadministration Agreement with Forum Administrative Services, Limited
Liability Company ("Forum"). For these services, Schroder Advisors is entitled
to receive an annual fee, payable monthly, of 0.10% of the average daily net
assets of the Portfolio. For its services, Forum is entitled to receive an
annual fee, payable monthly, of 0.075% of the average daily net assets of the
Portfolio.
TRANSFER AGENT
Forum Financial Corp.(R) ("FFC") serves as the Portfolio's transfer
agent and is entitled to receive compensation for those services by Schroder
Core with respect to the Portfolio in the amount of $12,000 per year plus
certain other fees and expenses.
OTHER SERVICE PROVIDERS
FFC also performs portfolio accounting for the Portfolio and is
entitled to receive compensation for those services by the Portfolio in the
amount of $60,000 per year, plus certain amounts based upon the number and types
of portfolio transactions.
11
<PAGE>
SCHRODER INTERNATIONAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
NOTE 4. PURCHASES AND SALES OF SECURITIES
The cost of securities purchased and the proceeds from sales of
securities (excluding short-term investments) for the period ended June 30, 1997
aggregated $14,311,620 and $4,711,882 respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of June 30, 1997 was $9,553,006. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $46,304, and the aggregate gross unrealized depreciation for
all securities in which there was an excess of tax cost over market value was
$348,350.
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and capital gain, as it is treated as a partnership for
federal income tax purposes. All interest, dividends, gain and loss of the
Portfolio are deemed to have been "passed through" to the partners in proportion
to their holdings of the Portfolio, regardless of whether such interest,
dividends or gain have been distributed by the Portfolio.
NOTE 6. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
SCMI and Schroder Advisors voluntarily have waived a portion of their
fees and have assumed certain expenses of the Portfolio so that its total
expenses would not exceed certain limitations. The expense limitations cannot be
modified or withdrawn except by a majority vote of the Trustees of Schroder
Core. Forum and FFC may waive voluntarily all or a portion of their fees, from
time to time. For the period ended June 30, 1997, fees waived and expenses
reimbursed were as follows:
WAIVED REIMBURSED
- --------------------------------------------------------------------------------
SCMI $20,330 $2,307
Schroder Advisors 4,066 -
Forum 3,050 -
FFC 19,059 -
NOTE 7. GEOGRAPHIC CONCENTRATION
The Portfolio may invest more than 25% of its total assets in any one
country. As of the date of this Semi-Annual Report, the Portfolio has 33.7% of
its net assets invested in Germany. To the extent that it invests in issuers
located in one country, the Portfolio is susceptible to factors adversely
affecting that country, including political, social and economic developments.
As a result of investing substantially in one country, the value of the
Portfolio's assets may fluctuate more widely than the value of shares of a
comparable fund with a lesser degree of geographic concentration.
12
<PAGE>
TRUSTEES OFFICERS
Hermann C. Schwab Hermann C. Schwab
Peter E. Guernsey Chairman of the Board
John I. Howell Mark J. Smith
Clarence F. Michalis President
Mark J. Smith Mark Astley
Vice President
Robert G. Davy
Vice President
Margaret H. Douglas-Hamilton
Vice President
Richard Foulkes
Vice President
John Y. Keffer
Vice President
Jane Lucas
Vice President
Catherine A. Mazza
Vice President
Michael Perelstein
Vice President
Fariba Talebi
Vice President
John A. Troiano
Vice President
Ira L. Unschuld
Vice President
Alexandra Poe
Vice President
Secretary
Thomas G. Sheehan
Assistant Treasurer
Assistant Secretary
Catherine S. Wooledge
Assistant Treasurer
Assistant Secretary
Barbara Gottlieb
Assistant Secretary
Mary Kunkemueller
Assistant Secretary
Geraldo Machado
Assistant Secretary
13
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
CUSTODIAN
The Chase Manhattan Bank
Global Custody Division
Woolgate House, Coleman Street
London EC2P 2HD, United Kingdom
TRANSFER AGENT
Forum Financial Corp.(R)
Two Portland Square
Portland, Maine 04101
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders of the Schroder
International Bond Portfolio. Its use in connection with any offering of the
Portfolio's shares is authorized only in case of a concurrent or prior delivery
of the Portfolio's current prospectus.
