- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
P.O. Box 8507, Boston, MA 02266
(800) 464-3108
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation through
investment primarily in equity securities of Asian companies.
INVESTMENT ADVISER
Schroder Capital Management International Inc. (the 'Investment Adviser') is a
wholly owned indirect subsidiary of Schroders plc, a 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 operations of the Schroder Group are located in 20 countries
worldwide including 12 offices in Asia. The Schroder Group has been managing
international investment portfolios since the early years of this century. As of
December 31, 1997, the Schroder Group had over $175 billion in assets under
management. As of March 31, 1998, the Investment Adviser, together with its U.K.
affiliate, Schroder Capital Management International Ltd., had over $29 billion
under management, of which approximately $8.5 billion was invested in the Asian
region.
June 15, 1998
Dear Shareholder,
On March 20, 1998, Schroder All-Asia Fund commenced operations by acquiring
the assets and liabilities of Schroder Asian Growth Fund, Inc., a closed-end
fund that had operated since December 30, 1993. This conversion to open-end
status gave shareholders the advantages of additional account services,
including daily pricing and liquidity. The conversion did not affect the Fund's
investment strategy, however, widespread market volatility in the region during
the first quarter of 1998 provided an especially challenging investment
environment in which to accomplish such transition.
Most Asian markets were volatile over the six months ended April 30, 1998
as investors responded to rapidly unfolding developments across the region. Late
last year, management's investment view was that currency stability was the key
ingredient to restoring investor confidence. We expected the outlook for the
region's markets to remain volatile as economies adjusted to slower growth. The
Fund's strategy was defensive and emphasized countries within the portfolio that
had the most favorable macroeconomic conditions. Over the first calendar quarter
of 1998, currency stability was restored as governments responded to
International Monetary Fund imposed conditions. As a result, regional stock
markets rallied broadly from their oversold levels.
Overall, the investment strategy of the portfolio remains defensive. In the
short-term, the region will continue to be impacted by external factors such as
a potential U.S. interest rate rise and the failure of Japan's government to
provide a satisfactory economic stimulus. Pressure on the Japanese yen should
also present additional difficulties to Asian exporters.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
Longer-term, management remains confident that the region can return to a
favorable growth environment. The current moves to reform the financial sector
look positive, the potential for export recovery remains, and the current tight
liquidity conditions are expected to improve towards the second half of the
fiscal year.
Thank you for your interest in the Schroder All-Asia Fund.
Sincerely,
/s/ I. Peter Sedgwick
I. Peter Sedgwick
Chairman
/s/ Louise Croset
Louise Croset
President
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of April 30, 1998) (unaudited)
Q: WITH THE FUND'S RECENT CONVERSION FROM A CLOSED-END TO AN OPEN-END FUND, HAS
ITS INVESTMENT MANAGEMENT STYLE CHANGED?
A : The investment style has not changed as a result of the recent conversion.
The Fund will continue to emphasize companies that are well-managed and of good
quality. Schroders has an extensive network of 12 offices based in the region,
where our research analysts are well placed to identify investment opportunities
appropriate for the Fund.
Q: WHAT ARE THE CHARACTERISTICS OF COMPANIES MANAGEMENT LOOKS FOR? WHY HAVE
THOSE COMPANIES FARED POORLY IN RECENT MONTHS?
A : Fund management seeks to invest in companies that, by the nature of their
business activity, will typically exhibit above average earnings growth relative
to the market and be in control of their pricing environment. Often they will be
market leaders in the relevant industry sector. Many of the companies exhibiting
these qualities tend to be at the larger, more liquid end of the capitalization
spectrum. In volatile markets, such as that which was witnessed during the Asian
crisis last year, these stocks were not insulated from market volatility.
Q: WHAT IS THE FUND'S CURRENT EXPOSURE TO ASIAN EMERGING MARKETS?
A : Having reduced the Fund's overall position in emerging markets towards the
end of the last calendar year, management raised the Fund's exposure to Korea
where the government showed commitment to International Monetary Fund
conditions. Within the emerging markets, management favors Northern Asian
Countries and India. Management has tended to underweight the Southeast Asian
emerging markets versus the benchmark as companies in these markets continue to
have poor fundamentals and need to raise high levels of capital. The weakness of
the financial sector in these countries is also cause for concern.
The Fund's largest position in emerging Asia continues to be India. Despite the
ongoing political uncertainty, the market still offers attractively valued
investment opportunities across a broad range of sectors. The Fund's weighting
in Taiwan remains high in absolute terms although it is underweight versus the
benchmark. Management will look to raise weightings in the smaller markets only
when valuations return to reasonable levels, and the prospect for corporate
earnings growth is brighter.
Q: WHAT IS THE FUND'S CURRENT POSITION IN THE DEVELOPED ASIAN MARKETS?
A : Within Hong Kong and Singapore, the Fund maintained its position in
defensive companies, despite a relaxation of interest rates that recently
favored financial and real estate companies. Although such companies are
financially sounder than others in the region, they should be adversely affected
by domestic economic developments in the short term.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO MANAGERS
AS OF APRIL 30, 1998, 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.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF APRIL 30, 1998 (UNAUDITED)
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- - ----------------------------------------------------------
Capital Equipment 21.4%
Construction 0.8%
Consumer Goods 5.2%
Energy 8.0%
Finance 15.4%
Machinery 0.7%
Materials 4.6%
Multi-Industry 10.1%
Real Estate 7.9%
Services 17.4%
Telecommunications 5.9%
Cash and other Net Assets 2.6%
---------------
Total 100.0%
---------------
---------------
TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
- - ----------------------------------------------------------
Singapore Press Holdings Ltd. (SGD) 3.09%
HSBC Banking Corp. (HK) 2.92%
Cheung Kong (HK) 2.76%
Hutchison Whampoa (HK) 2.66%
Matsushita Electric Ind. (JAP) 2.08%
Cheung Kong Infrastructure. Hldgs. (HK) 1.96%
United Overseas Bank Ltd. (HK) 1.96%
Henderson Land Dev. Co. Ltd. (HK) 1.95%
Takeda Chemical Inds. (JAP) 1.93%
New World Development Co. (HK) 1.93%
---------------
Total 23.24%
---------------
---------------
COUNTRY WEIGHTINGS
COUNTRY % OF NET ASSETS
- - ----------------------------------------------------------
Japan 34.4%
Hong Kong/China 26.8%
Singapore 11.5%
Malaysia 9.1%
India 4.3%
Korea 4.2%
Taiwan 3.2%
Philippines 1.7%
Indonesia 1.3%
Thailand 0.9%
Cash and Other Net Assets 2.6%
---------------
Total 100.0%
---------------
---------------
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Notes 1 and 2):
Investment in Schroder Asian Growth Fund Portfolio
and Schroder Japan Portfolio (the 'Portfolios') $ 87,949,147
Receivable for Fund shares redeemed 18,599
Other Receivables 12,030
Organization costs, net of amortization (Note 2) 22,716
------------
Total Assets 88,002,492
------------
LIABILITIES:
Payable for Fund shares redeemed 625,497
Payable to subadministrator (Note 3) 3,976
Accrued expenses and other liabilities 208,118
------------
Total Liabilities 837,591
------------
Net Assets $ 87,164,901
------------
------------
COMPONENTS OF NET ASSETS:
Paid-in capital $178,027,869
Undistributed net investment income (loss) (277,537)
Accumulated net realized gain (loss) (75,724,736)
Net unrealized appreciation (depreciation) on investments (14,860,695)
------------
Net Assets $ 87,164,901
------------
------------
SHARES OF BENEFICIAL INTEREST 10,643,640
NET ASSET VALUE OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS + SHARES OF BENEFICIAL INTEREST) $8.19
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD MARCH 23, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1998 (UNAUDITED)
---------------------------------
<S> <C>
NET INVESTMENT INCOME ALLOCATED FROM THE PORTFOLIO:
Dividend income (net of foreign withholding taxes of
$44,656) $ 756,621
Interest Income 614,809
Net expenses (126,955)
----------------
Net Investment Income allocated from the
Portfolio 1,244,475
----------------
EXPENSES:
Investment Advisory (Note 3) 536,538
Asset Allocation 21,796
Administration (Note 3) 139,584
Subadministration (Note 3) 5,449
Transfer agency (Note 3) 64,890
Shareholder Services (Note 3) 27,245
Custody 45,823
Accounting (Note 3) 1,290
Reporting 22,619
Registration 20,880
Audit 18,817
Amortization of organization costs (Note 2) 16,851
Legal 112,623
Insurance 29,306
Trustee 11,272
Miscellaneous 27,101
----------------
Total Expenses 1,102,084
Fees waived and expenses reimbursed (Note 4) (27,245)
----------------
Net expenses 1,074,839
----------------
NET INVESTMENT INCOME (LOSS) 169,636
----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS ALLOCATED FROM
THE PORTFOLIO:
Net realized gain (loss) on investments sold (A) (46,914,132)
Net realized gain (loss) on foreign currency
transactions (126,772)
----------------
Net realized gain (loss) on investments and
foreign currency transactions (47,040,904)
----------------
Net change in unrealized appreciation (depreciation) on
investments (B) 31,041,946
Net change in unrealized appreciation (depreciation) on
foreign currency transactions (4,612)
----------------
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions 31,037,334
----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS ALLOCATED FROM
THE PORTFOLIOS (16,003,570)
----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (15,833,934)
----------------
----------------
</TABLE>
(A) Net of Indian capital gain tax of $171,672. (B) Net of deferred Indian
capital gain tax of $29,858.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
PERIOD ENDED FOR THE YEAR
APRIL 30, 1998 ENDED
(UNAUDITED)* OCTOBER 31, 1997
-------------- ----------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $ 150,405,575 $257,844,712
-------------- ----------------
OPERATIONS:
Net investment income (loss) 169,636 (716,825)
Net realized gain (loss) on investments (47,040,904) 3,109,202
Net change in unrealized appreciation
(depreciation) on investments 31,037,334 (62,127,283)
-------------- ----------------
Net increase (decrease) in net assets resulting
from operations (15,833,934) (59,734,906)
-------------- ----------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income -- (1,826,573)
-------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 37,057 --
Reinvestment of distributions -- --
Redemption of shares (47,443,797) (45,877,658)
-------------- ----------------
Net increase (decrease) from capital share
transactions (47,406,740) (45,877,658)
-------------- ----------------
Net increase (decrease) in net assets (63,240,674) (107,439,137)
-------------- ----------------
NET ASSETS, END OF PERIOD (INCLUDING LINE A) 87,164,901 150,405,575
-------------- ----------------
-------------- ----------------
(A) Accumulated undistributed net investment income
(loss) $ (277,537) $ (245,643)
-------------- ----------------
-------------- ----------------
SHARE TRANSACTIONS:
Sale of shares 4,484 --
Redemption of shares (5,468,256) --
-------------- ----------------
Net increase (decrease) in shares (5,463,772) --
-------------- ----------------
-------------- ----------------
</TABLE>
* Schroder All-Asia Fund converted from Schroder Asian Growth Fund,
Inc., a closed-end fund, on March 20, 1998
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the Period
November 1, 1997 For the Period
through April 30, For the Year Ended October 31, December 30, 1993
1998 -------------------------------------------- to October 31,
(unaudited) (a) 1997 1996 1995 1994
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 9.34 $ 13.15 $ 12.62 $ 13.84 $ 14.01
------------------ ------------ ------------ ------------ -----------------
Investment Operations
Net Investment Income
(Loss) (0.01) (b) (0.05) (0.03) 0.02 (0.01) (b)
Net Realized and
Unrealized Gain (Loss)
on Investments (1.16) (3.66) 0.56 (1.24) (0.16)
------------------ ------------ ------------ ------------ -----------------
Total from Investment Operations (1.15) (3.71) 0.53 (1.22) (0.17)
------------------ ------------ ------------ ------------ -----------------
Distributions From
Net Investment Income -- (0.09) -- -- --
------------------ ------------ ------------ ------------ -----------------
Tender offer costs charged to
paid-in-capital in excess of
par -- (0.01) -- -- --
------------------ ------------ ------------ ------------ -----------------
Net Asset Value, End of
Period $ 8.19 $ 9.34 $ 13.15 $ 12.62 $ 13.84
------------------ ------------ ------------ ------------ -----------------
------------------ ------------ ------------ ------------ -----------------
Total Return (c) -12.31%(d) -28.62% 4.20% -8.82% -1.21%(d)
Ratio/Supplementary Data
Net Assets at End of Period
(in thousands) $ 87,165 $150,406 $257,840 $247,490 $ 271,420
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver 1.87%(b)(e) -- -- -- --
Expenses excluding
reimbursement/waiver 1.91%(b)(e) 1.78% 1.57% 1.65% 1.59%(e)
Net investment income
(loss) including
reimbursement/waiver 0.26%(b)(e) -0.31% -0.19% 0.12% -0.10%(e)
Average Commision Rate Per Share
(f) N/A $ 0.0142 $ 0.0224 N/A N/A
Portfolio Turnover Rate N/A 39.14% 34.71% 66.79% 1.98%
</TABLE>
- - ------------------
(a) The Fund commenced operations on March 23, 1998 (see Note 1). (b) Includes
the Fund's proportionate share of income and expenses of each of
the Portfolios.
(c) For periods prior to March 20, 1998, total return calculations reflect the
expenses for Schroder Asia Growth Fund, Inc. Had the Fund's expenses been
used, total returns would have been lower. For the period ended April 30,
1998, total return would have been lower had certain fees and expenses of
the Fund not been limited by SCMI (See Note 4).
(d) Not annualized.
(e) Annualized.
(f) For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commissions per share paid by the
Portfolios to brokers on the purchase and sale of equity securities on
which commissions are charged.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Series Trust II (Delaware) (the 'Trust') was organized as a
Delaware business trust on December 5, 1997. The Trust, which is registered
as an open-end, management investment company under the Investment Company
Act of 1940 (the 'Act'), currently has one investment portfolio. Included in
this report is the Schroder All-Asia Fund (the 'Fund'), a non-diversified
portfolio that was converted, as of March 20, 1998, from Schroder Asian
Growth Fund, Inc., a closed-end fund that commenced operations on December
30, 1993. Under its Trust Instrument, the Trust is authorized to issue an
unlimited number of the Fund's Class A Shares.
MASTER-FEEDER ARRANGEMENT
The Fund currently invests substantially all of its assets in Schroder
Asian Growth Fund Portfolio and Schroder Japan Portfolio (the 'Portfolios'
and each a 'Portfolio'). Each are seperately managed, non-diversified
investment portfolios of Schroder Capital Funds ('Schroder Core'). This is
commonly referred to as a master-feeder arrangement. Schroder Core also is
registered as an open-end, management investment company. The Fund may
withdraw its investment from a Portfolio at any time if the Trust's Board of
Trustees determines that it is in the best interest of the Fund and its
shareholders to do so. The Fund accounts for its investment in each Portfolio
as a partnership investment and records daily its share of each Portfolio's
income, expenses and realized and unrealized gain and loss. The Portfolio's
financial statements are included on pages 12 to 28 in this report and should
be read in conjunction with the Fund's financial statements. The Fund owns
approximately 99.9% and 99.8% of the Schroder Asian Growth Fund Portfolio and
the Schroder Japan Portfolio, respectively, and may be deemed under certain
circumstances, for purposes of the Act, to control the Portfolios.
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 Fund:
SECURITY VALUATION
The Trust determines the net asset value per share of the Fund as of
the close of trading on the New York Stock Exchange on each Fund business
day. Valuation of securities held in each Portfolio are discussed in the
Notes to the Financial Statements of the Portfolios.
INVESTMENT INCOME AND EXPENSES
The Trust records daily its pro rata share of the Portfolios' income,
expenses and realized and unrealized gain and loss. In addition, the Fund
accrues its own expenses.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and capital gain distributions, if any, are distributed to
shareholders at least annually. Distributions are based on amounts calculated
in accordance with applicable federal income tax regulations, which may
differ from generally accepted accounting principles. These differences are
due primarily to differing treatments of income and gain on various
investment securities held by the Fund, timing differences and differing
characterizations of distributions made by the Fund.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
FEDERAL TAXES
The Fund intends to qualify and continue to qualify each year as a
regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gain and certain other amounts, if any, the Fund
will not be subject to a federal excise tax. Therefore, no federal income or
excise tax provision is required.
Under the applicable foreign tax law, a withholding tax may be imposed
on interest, dividends, and capital gains at various rates. Indian tax
regulations require that taxes be paid on capital gains realized by the Fund.
At April 30, 1998, the Fund decreased net unrealized appreciation on
investments by the estimated tax liability attributable to Indian investments
of $29,858 and decreased net realized gains on investments by $171,672 for
taxes incurred on gains realized from Indian investments.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization are
being amortized on a straight line basis over a five year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISERS
The Fund currently invests all of its assets in the Portfolios, which
retain Schroder Capital Management International Inc. ('SCMI') to act as
investment adviser pursuant to an Investment Advisory Agreement. See Notes to
the Financial Statements of each Portfolio. SCMI also serves as investment
adviser to the Fund under an investment advisory and asset allocation
agreement with the Trust. Under this agreement, SCMI is entitled to receive a
monthly investment advisory fee for asset allocation services at an annual
rate of 0.20% of the Fund's average daily net assets with respect to assets
invested in the Portfolios.
ADMINISTRATOR AND SUBADMINISTRATOR
The administrator is Schroder Fund Advisors Inc. ('Schroder Advisors')
and the Subadministrator is Forum Administrative Services, LLC ('FAdS'). For
its services, Schroder Advisors is entitled to receive compensation at an
annual rate, payable monthly, of 0.05% of average daily net assets of the
Fund. For its services, FAdS is entitled to receive compensation at an annual
rate, payable monthly, of 0.05% of average daily net assets of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The transfer agent and dividend disbursing agent for the Fund is Boston
Financial Data Services (the 'Transfer Agent'). The Transfer Agent is paid a
minimum transfer agent fee in the amount of $12,500 per year, plus certain
other fees and expenses.
SHAREHOLDER SERVICE PLAN AND SERVICE ORGANIZATIONS
The Trust has adopted a Shareholder Service Plan (the 'Plan') for the
Class A Shares under which Schroder Advisors is authorized to pay service
organizations a servicing fee. Payments under the Plan may be for various
types of services. The maximum annual amount payable under the Plan is 0.25%
of the Fund's average net assets.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ('FAcS') is the Fund's fund accountant.
For its services to the Fund, FAcS is entitled to receive from the Fund a fee
of $12,000 per year.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Until October 31, 1998, SCMI, Schroder Advisors, and FAcS have
volunteered to waive their compensation (and, if necessary, SCMI and Schroder
Advisors have agreed to pay Fund expenses) to the extent that the Fund's
total expenses would otherwise exceed an annual rate of 1.95%. SCMI and FAcS
may continue to waive voluntarily all or a portion of their fees from time to
time. As of April 30, 1998, SCMI and Schroder Advisors waived fees of $21,796
and $5,449, respectively.
NOTE 5. PURCHASE AND REDEMPTION FEES
Shares received in connection with the conversion of Schroder Asian
Growth Fund, Inc. are subject to a redemption fee of 2.00% for the six-month
period following the conversion on March 20, 1998. As of April 30, 1998,
redemption fees for the Fund totalled $948,406. Redemption fees are retained
by the Fund.
NOTE 6. BENEFICIAL INTEREST
For the period ended April 30, 1998, there was one unaffiliated
shareholder owning more than 10% of the Fund's net assets totaling 26.44%.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998 (UNAUDITED)
SHARES VALUE US$
- --------- ------------
CHINA - (0.3%)
9,000 Huaneng Power International
Inc. ADR (cost 154,845)
Energy 198,000
------------
HONG KONG - (40.9%)
COMMON STOCK - (40.9%)
150,000 CLP Holdings Limited
Finance 720,363
1,115,000 Chen Hsong Holdings
Finance 285,008
328,000 Cheung Kong Holdings Ltd.
Capital Equipment 2,182,470
674,000 Cheung Kong Infrastructure
Holdings
Capital Equipment 1,709,777
574,000 China Telecom (Hong Kong)
Services 1,089,297
531,000 Citic Pacific Ltd.
Multi-Industry 1,631,505
994,000 Cosco Pacific Ltd.
Finance 673,694
85,200 HSBC Holdings plc
Finance 2,431,880
380,000 Henderson Land Development CO.
Ltd.
Finance 1,697,370
308,200 Hong Kong Telecom
Services 576,922
659,600 Hong Kong and China Gas
Company Ltd.
Energy 898,359
471,000 Hongkong Electric Holdings
Ltd.
Energy 1,447,154
340,000 Hutchison Whampoa Ltd.
Multi-Industry 2,102,712
590,000 New World Development Co. Ltd.
Finance 1,679,491
665,000 New World Infrastructure
Finance 1,429,397
248,000 Sun Hung Kai Properties Ltd.
Finance 1,472,741
120,000 Swire Pacific Ltd.
Multi-Industry 599,528
------------
22,627,668
------------
WARRANTS (0.0%)
35,800 Miscellaneous 0
------------
Total Hong Kong (cost
$26,463,629) 22,627,668
------------
INDIA - (6.7%)
COMMON STOCK (6.7%)
31,000 Bajaj Auto Ltd.
Services 465,020
99,000 Bharat Petroleum
Capital Equipment 997,105
SHARES VALUE US$
- --------- ------------
INDIA (CONCLUDED) 34,000 Hindustan Lever Ltd.
Multi-Industry 1,350,069
1,779 Ranbaxy Laboratories Ltd.
Consumer Durables 29,721
125,000 State Bank of India
Finance 908,032
77 Tata Engineering and
Locomotive Co.
Capital Equipment 539
------------
Total India (cost $3,145,718) 3,750,486
------------
INDONESIA - (2.1%)
COMMON STOCK (2.1%)
1,028,000 PT Hanjaya Mandala Sampoerna
Consumer Non-Durables 665,175
1,232,000 PT Telekomunikasi Indonesia
Services 480,593
------------
Total Indonesia (cost
$1,566,188) 1,145,768
------------
KOREA, REPUBLIC OF - (6.5%)
COMMON STOCK (6.5%)
146,000 Daewoo Heavy Industries
Capital Equipment 722,080
105,900 Kookmin Bank
Finance 669,551
29,700 Korea Electric Power Corp.
Energy 404,445
70,700 LG Electronics
Electrical Appliances 841,101
87 SK Telecom Co. Ltd.
Telecommunications 51,960
16,984 Samsung Electronics Co.
Capital Equipment 940,379
------------
3,629,516
------------
RIGHTS (0.0%)
1,351 Samsung Electronics
Capital Equipment 26,080
------------
Total Korea, Republic Of
(cost $4,127,727) 3,655,596
------------
MALAYSIA - (14.3%)
COMMON STOCK (14.3%)
481,000 Gamuda Berhad
Services 542,733
321,500 Genting Berhad
Services 1,065,936
890,000 Island & Peninsular Berhad
Multi-Industry 644,893
490,000 Magnum Corp. Berhad
Finance 327,540
108,000 Malayan Banking Berhad
Finance 317,647
313,000 Malaysia International
Shipping Bhd
Services 531,431
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
APRIL 30, 1998 (UNAUDITED)
SHARES VALUE US$
- --------- ------------
MALAYSIA (CONCLUDED)
151,000 Malaysian Assurance Alliance
Berhad
Finance 262,433
398,000 Petronaus Gas Berhad
Energy 957,755
208,000 RJ Reynolds Berhad
Consumer Non-Durables 330,909
82,000 Tanjong PLC
Finance 186,366
470,000 Telekom Malaysia Berhad
Services 1,407,486
688,000 Tenaga Nasional Berhad
Energy 1,370,480
------------
Total Malaysia (cost
$10,631,832) 7,945,609
------------
PHILIPPINES - (2.6%)
COMMON STOCK (2.6%)
468,000 Ayala Land Incorporated
Finance 183,585
172,300 Manila Electric Company 'B'
Shares
Energy 489,220
29,540 Philippine Long Distance
Telephone Company
Telecommunications 790,920
------------
Total Philippines (cost
$1,541,167) 1,463,725
------------
SINGAPORE - (18.0%)
COMMON STOCK (18.0%)
263,000 City Developments Ltd.
Finance 1,137,702
91,000 Development Bank of Singapore
Ltd.
Finance 603,410
408,000 Keppel Corp. Ltd.
Services 1,097,619
437,000 Keppel Land Ltd.
Services 518,825
207,000 NatSteel Ltd.
Multi-Industry 271,904
104,000 Overseas Union Bank
Finance 394,064
130,000 Singapore International
Airlines
Capital Equipment 845,595
SHARES VALUE US$
- --------- ------------
SINGAPORE (CONCLUDED)
243,727 Singapore Press Holdings Ltd.
Services 2,693,541
430,000 Singapore Telecommunications,
Ltd.
Services 738,617
360,880 United Overseas Bank Ltd.
Finance 1,709,250
------------
Total Singapore (cost
$12,798,510) 10,010,527
------------
TAIWAN - (4.7%)
COMMON STOCK (4.7%)
24,000 Asustek Computer, Inc.
Capital Equipment 495,000
59,500 ROC Taiwan Fund
Finance 505,750
44,600 Taiwan Fund Inc.
Finance 738,042
35,000 Taiwan Semiconductor
Manufacturing Co.
Energy 859,688
------------
Total Taiwan (cost $1,985,331) 2,598,480
------------
THAILAND - (1.5%)
COMMON STOCK (1.5%)
103,000 Bangkok Bank Public Company
Ltd.
Finance 258,332
180,000 Electricity Generating Public
Company Ltd.
Services 349,061
101,000 Thai Farmers Bank Public
Company Ltd.
Finance 231,115
------------
Total Thailand (cost $885,598) 838,508
------------
Total Investments (100.0%)
(cost $63,300,545) 54,234,367
------------
OTHER ASSETS LESS
LIABILITIES - (2.4%) 1,359,404
------------
55,593,404
------------
------------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $63,300,545
Net unrealized appreciation (depreciation) (9,066,178)
-----------
Total investments at value 54,234,367
Cash 363,396
Receivable for dividends, tax reclaims and interest 196,804
Receivable for investments sold 1,259,853
Organization costs, net of amortization (Note 2) 5,871
-----------
Total assets 56,060,291
-----------
LIABILITIES:
Payable for investments purchased 250,796
Payable to adviser (Note 3) 36,821
Payable to administrator (Note 3) 2,630
Payable to subadministrator (Note 3) 2,630
Accrued expenses and other liabilities 173,643
-----------
Total liabilities 466,520
-----------
Net Assets $55,593,771
-----------
-----------
COMPONENTS OF NET ASSETS:
Investors' capital $64,660,290
Net unrealized appreciation (depreciation) on investments (9,066,519)
-----------
Net Assets $55,593,771
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
March 23, 1998
(commencement of operations)
to April 30, 1998
(unaudited)
----------------------------
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $16,570) $ 229,198
Interest Income 73,661
---------------
Total investment income 302,859
---------------
EXPENSES:
Investment advisory (Note 3) 52,310
Administration (Note 3) 3,736
Subadministration (Note 3) 3,736
Transfer agency (Note 3) 1,298
Custody 7,473
Accounting (Note 3) 6,452
Legal 684
Audit 12,250
Amortization of organization costs (Note 2) 129
Miscellaneous 488
---------------
Total expenses 88,556
Fee waived and expenses reimbursed (Note 6) (1,613)
---------------
Net expenses 86,943
---------------
NET INVESTMENT INCOME (LOSS) 215,916
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments sold (A) (247,082)
Net realized gain (loss) on forward foreign currency transactions (4,302)
---------------
Net realized gain (loss) on investments and foreign
currency transactions (251,384)
---------------
Net change in unrealized appreciation (depreciation) on investments
(B) (9,096,034)
Net change in unrealized appreciation (depreciation) on forward
foreign currency transactions (342)
---------------
Net change in unrealized appreciation (depreciation)
on investments and foreign currency transactions (9,096,376)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS (9,347,760)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (9,131,844)
---------------
---------------
</TABLE>
(A) Net of Indian capital gain tax of $21,225. (B) Net of deferred Indian
capital gain tax of $29,857.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Period
March 23, 1998
(commencement of operations)
to April 30, 1998
(unaudited)
----------------------------
<S> <C>
NET ASSETS, BEGINNING OF PERIOD $ --
---------------
OPERATIONS:
Net investment income (loss) 215,916
Net realized gain (loss) on investments (251,384)
Net change in unrealized appreciation (depreciation) on investments (9,096,376)
---------------
Net increase (decrease) in net assets resulting from operations (9,131,844)
---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 94,612,178
Withdrawals (29,886,563)
---------------
Net transactions from investors' beneficial interest 64,725,615
---------------
Net increase (decrease) in net assets 55,593,771
---------------
NET ASSETS, END OF PERIOD $ 55,593,771
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following period:
<TABLE>
<CAPTION>
For the Period
March 23, 1998
through
April 30, 1998
(unaudited) (a)
<S> <C>
------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 1.16% (b)
Expenses excluding reimbursement/waiver 1.19% (b)
Net investment income including reimbursement/waiver 2.21% (b)
Average Commission Rate Per Share (c) $0.0120
Portfolio Turnover Rate 12.26%
</TABLE>
- ------------------
(a) The Portfolio commenced operations on March 23, 1998.
(b) Annualized.
(c) Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities on which commissions are charged.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds ('Schroder Core') was organized as a Delaware
business trust on September 7, 1995. Schroder Core, which is registered as an
open-end, management investment company under the Investment Company Act of
1940, currently has eight investment portfolios. Included in this report is
Schroder Asian Growth Fund Portfolio (the 'Portfolio'), a non-diversified
portfolio that commenced operations on March 23, 1998. 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 charges to qualified investors,
including open-end, management investment companies.
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. Domestic short-term investments having a maturity of 60
days or less are valued at amortized cost, which approximates market value.
Foreign short-term investments are valued at a current market price then
marked to market to recognize any gain or loss on the transaction. 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 Schroder Core's Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date except that certain dividends from
foreign securities where the ex-dividend date may have passed are recorded as
soon as the Portfolio is informed of the ex-dividend date. Dividend income is
recorded net of withholding tax. 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 on the date of the transactions.
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 the U.S. dollar value of the underlying
portfolio against the effect of possible adverse movements in foreign
exchange
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 daily as unrealized gain or loss; realized gain or loss includes net
gain or loss on contracts that have terminated by settlement or by the
Portfolio entering into offsetting commitments.
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements. The Portfolio,
through its custodian, receives delivery of the underlying collateral, whose
market value must always equal or exceed the repurchase price. The investment
adviser is responsible for determining the value of the underlying collateral
at all times. In the event of default, the Portfolio may have difficulties
with the disposition of any securities held as collateral.
EXPENSE ALLOCATION
Schroder Core accounts separately for the assets and liabilities and
operation of each of its portfolios. Expenses that are directly attributable
to more than one portfolio are allocated among the respective portfolios in
proportion to each portfolio's net assets.
ORGANIZATIONAL COSTS
Costs incurred by the Portfolio in connection with its 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
Schroder Capital Management International Inc. ('SCMI') is the
investment adviser to the Portfolio. Pursuant to an Investment Advisory
Agreement, SCMI is entitled to receive an annual fee, payable monthly, of
0.70% of the average daily net assets of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Schroder Core, on behalf of the Portfolio, has entered into an
Administration agreement with Schroder Fund Advisors Inc. ('Schroder
Advisors'). In addition, the Trust has entered into a Subadministration
agreement with Forum Administrative Services, LLC, ('FAdS'). Pursuant to
their agreements, Schroder Advisors and FAdS provide certain management and
administrative services to the Portfolio. For their services, each of
Schroder Advisors and FAdS is entitled to receive an annual fee, payable
monthly, of 0.05%, of the Portfolio's average daily net assets, subject to a
$25,000 minimum annual fee payable to FAdS for subadministration.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ('FAcS') also performs portfolio
accounting for the Portfolio and is entitled to receive compensation for
those services in the amount of $60,000 per year, plus certain amounts based
upon the number and types of portfolio transactions. FAcS also serves as the
Portfolio's transfer agent and is entitled to compensation for those services
from Schroder Core with respect to the Portfolio in the amount of $12,000 per
year plus certain other fees and expenses.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND 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 securities) for the period ended April 30,
1998 aggregated $70,638,777 and $6,337,662, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of April 30, 1998 was $64,068,683 and the net unrealized
depreciation of investment securities was $9,060,183. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost was $2,812,346, and the aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value was $11,872,529.
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and net capital gain as it is treated as a partnership for
federal income tax purposes. All interest, dividends, gain and loss in the
Portfolio are deemed to have been 'passed through' to the partners in
proportion to their holdings in the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
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
Portfolio. At April 30, 1998, the Portfolio decreased net unrealized
appreciation on investments by the estimated tax liability attributable to
Indian investments of $29,857 and decreased net realized gains on investments
by $21,225 for taxes incurred on gains realized from Indian investments.
NOTE 6. WAIVER OF FEES
SCMI, Schroder Advisors, FAdS and FAcS may waive voluntarily all or a
portion of their fees from time to time. For the period ended April 30, 1998,
FAcS waived fees of $1,613.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1998 (UNAUDITED)
COMMON STOCK - 91.6%
SHARES VALUE US$
- --------- ------------
CAPITAL EQUIPMENT - 23.9%
50,000 Amada Metrecs Co., Ltd. $ 292,136
64,000 Daiwa House Industry Co., Ltd. 518,278
27,000 Glory Ltd. 453,645
38,000 Inaba Denkisangyo Co. 402,634
6,000 Kyocera Corp. 315,144
15,000 Meiko Shokai 181,639
41,000 Murata Manufacturing Co., Ltd. 1,203,965
4,000 Rohm Co., Ltd. 452,282
7,700 SMC Corp. 641,035
28,000 Sanki Engineering 213,608
13,500 Sony Corp. 1,124,915
384,000 Sumitomo Metal Industries 636,774
42,000 Toyota Motor Corp. 1,096,647
20,000 Yamatake-Honeywell Co., Ltd. 221,146
------------
7,753,848
------------
CONSUMER DURABLES - 10.6%
111,000 Matsushita Electric Industrial
Co., Ltd. 1,765,550
59,000 Takeda Chemical Inds. 1,687,883
------------
3,453,433
------------
CONSUMER NON-DURABLES - 0.1%
2,000 Aoyamma Trading Co., Ltd. 45,747
------------
ENERGY - 1.5%
31,000 Nittetsu Mining Co., Ltd. 121,297
73,000 Showa Shell Sekiyu 370,168
------------
491,465
------------
ELECTRIC - 8.6%
39,000 Fuji Photo Film Co. 1,390,494
162,000 Hitachi Ltd. 1,163,536
88,000 Mitsubishi Electric Corp. 226,444
------------
2,780,474
------------
FINANCE - 10.2%
3,000 Aiful Corp. 198,895
17,000 Asahi Bank Ltd. 65,445
23,700 Credit Saison Co., Ltd. 514,788
91,000 Koa Fire & Marine Insurance
Co., Ltd. 389,124
64,000 Nomura Securities Co., Ltd. 782,260
SHARES VALUE US$
- --------- ------------
FINANCE (CONCLUDED)
103,000 Sumitomo Marine & Fire
Insurance Co. 615,053
162,000 Yasuda Fire & Marine Insurance
Co., Ltd. 735,639
------------
3,301,204
------------
MATERIALS - 9.7%
67,000 Bridgestone Corp. 1,533,499
67,000 Kuraray Co., Ltd. 566,911
87,000 Nippon Paper Industries Co. 390,456
73,000 Oji Paper Co., Ltd. 342,542
80,000 Sakata Inx Corp. 311,208
------------
3,144,616
------------
MULTI-INDUSTRY - 6.1%
143,000 Mitsui & Co., Ltd. 887,459
110,000 Sumitomo Corp. 632,710
32,960 TOC Co., Ltd. 306,825
11,000 Trusco Nakayama Corp. 142,361
------------
1,969,355
------------
SERVICES - 20.9%
88,000 Airport Facilities Co., Ltd. 266,404
26,000 Banyu Pharmaceutical Co., Ltd. 336,487
9,000 Chubu-Nippon Broadcast Co.,
Ltd. 98,767
216 East Japan Railway Co. 1,079,512
145,000 Hanshin Electric Railway 448,838
12,000 Ito-Yokado Co., Ltd. 622,115
24,000 Kinden Corp. 315,326
81,000 Mitsubishi Corp. 613,033
57,000 Omron Corp. 895,141
8,000 Secom 472,262
47,000 Sekisui House, Ltd. 367,804
106,000 Toppan Printing Co., Ltd. 1,261,924
------------
6,777,613
------------
Total Investments - 91.6%
(cost $36,419,108) 29,717,755
Other Assets Less
Liabilities - 8.4% 2,733,125
------------
Total Net Assets - 100.0% 32,450,880
------------
------------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $ 36,419,108
Net unrealized appreciation (depreciation) (6,701,353)
------------
Total investments at value 29,717,755
Cash 1,749,819
Receivable for dividends, tax reclaims and interest 138,570
Receivable for investments sold 928,880
Organization costs, net of amortization (Note 2) 5,871
------------
Total assets 32,540,895
------------
LIABILITIES:
Payable for investments purchased 52,926
Payable to adviser (Note 3) 9,090
Payable to administrator (Note 3) 1,448
Payable to subadministrator (Note 3) 1,448
Accrued expenses and other liabilities 25,103
------------
Total liabilities 90,015
------------
Net assets $ 32,450,880
------------
------------
COMPONENTS OF NET ASSETS:
Investors' capital $ 39,155,421
Net unrealized appreciation (depreciation) on investments (6,704,541)
------------
Net assets $ 32,450,880
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
March 23, 1998
(commencement of operations)
to April 30, 1998
(unaudited)
----------------------------
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $21,615) $ 125,628
Interest income 48,713
---------------
Total investment income 174,341
---------------
EXPENSES:
Investment advisory (Note 3) 22,313
Administration (Note 3) 2,028
Subadministration (Note 3) 2,028
Transfer agency (Note 3) 1,298
Custody 1,217
Accounting (Note 3) 6,452
Legal 371
Audit 12,250
Amortization of organization costs (Note 2) 129
Miscellaneous 509
---------------
Total expenses 48,595
Fees waived and expenses reimbursed (Note 6) (8,456)
---------------
Net expenses 40,139
---------------
NET INVESTMENT INCOME (LOSS) 134,202
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments sold (243,089)
Net realized gain (loss) on forward foreign currency transactions (99)
---------------
Net realized gain (loss) on investments and foreign currency
transactions (243,188)
---------------
Net change in unrealized appreciation (depreciation) on investments (6,701,352)
Net change in unrealized appreciation (depreciation) on foreign
currency transactions (3,189)
---------------
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions (6,704,541)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS (6,947,729)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,813,527)
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Period
March 23, 1998
(commencement of operations)
to April 30, 1998
(unaudited)
----------------------------
<S> <C>
NET ASSETS, BEGINNING OF PERIOD: $ --
----------------
OPERATIONS:
Net investment income (loss) 134,202
Net realized gain (loss) on investments (243,188)
Net change in unrealized appreciation (depreciation) on investments (6,704,541)
----------------
Net increase (decrease) in net assets resulting from operations (6,813,527)
----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 57,144,099
Withdrawals (17 ,879,692)
----------------
Net transactions from investors' beneficial interest 39,264,407
----------------
Net increase (decrease) in net assets 32,450,880
----------------
NET ASSETS, END OF PERIOD $ 32,450,880
----------------
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the Period
March 23, 1998
through
April 30, 1998
(unaudited)
(a)
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 0.99% (b)
Expenses excluding reimbursement/waiver 1.20% (b)
Net investment income including reimbursement/waiver 3.31% (b)
Average Commission Rate Per Share (c) $ 0.0426
Portfolio Turnover Rate 5.39%
</TABLE>
- ------------------
(a) The Portfolio commenced operations on March 23, 1998.
(b) Annualized.
(c) Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities on which commissions are charged.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds ('Schroder Core') was organized as a Delaware
business trust on September 7, 1995. Schroder Core, which is registered as an
open-end, management investment company under the Investment Company Act of
1940, currently has eight investment portfolios. Included in this report is
Japan Portfolio (the 'Portfolio'), a non-diversified portfolio that commenced
operations on March 23, 1998. 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 charges to qualified investors, including open-end, management
investment companies.
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 preceding 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. Domestic short-term investments having a maturity of 60
days or less generally are valued at amortized cost, which approximates
market value. Foreign short-term investments are valued at the current market
price then marked to market to recognize any gain or loss on the transaction.
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 Schroder Core's Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date except that certain dividends from
foreign securities where the ex-dividend date may have passed are recorded as
soon as the Portfolio is informed of the ex-dividend date. Dividend income is
recorded net of withholding tax. 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 on the date of the transactions.
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 the U.S. dollar value of the underlying
portfolio against the effect of possible adverse movements in foreign
exchange
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SCHRODER JAPAN PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 daily as unrealized gain or loss; realized gain or loss includes net
gain or loss on contracts that have terminated by settlement or by the
Portfolio entering into offsetting commitments.
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements. The Portfolio,
through its custodian, receives delivery of the underlying collateral, whose
market value must always equal or exceed the repurchase price. The investment
adviser is responsible for determining the value of the underlying collateral
at all times. In the event of default, the Portfolio may have difficulties
with the disposition of any securities held as collateral.
EXPENSE ALLOCATION
Schroder Core accounts separately for the assets and liabilities and
operation of each of its portfolios. Expenses that are directly attributable
to more than one portfolio are allocated among the respective portfolios in
proportion to each portfolio's net assets.
ORGANIZATIONAL COSTS
Costs incurred by the Portfolio in connection with its organization are
amortized on a straight line basis over a five-year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Schroder Capital Management International Inc. ('SCMI') is the
investment adviser to the Portfolio. Pursuant to an Investment Advisory
Agreement, SCMI is entitled to receive an annual fee, payable monthly, of
0.55% of the average daily net assets of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Schroder Core, on behalf of the Portfolio, has entered into an
Administration Agreement with Schroder Fund Advisors Inc. ('Schroder
Advisors'). In addition, the Trust has entered into a Subadministration
Agreement with Forum Administrative Services, LLC, ('FAdS'). Pursuant to
their agreements, Schroder Advisors and FAdS provide certain management and
administrative services to the Portfolio. For their services, each of
Schroder Advisors and FAdS is entitled to receive an annual fee, payable
monthly, of 0.05% of the Portfolio's average daily net assets, subject to a
minimum annual fee of $25,000 payable to FAdS for subadministration.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ('FAcS') also performs portfolio
accounting for the Portfolio and is entitled to receive compensation for
those services in the amount of $60,000 per year, plus certain amounts based
upon the number and types of portfolio transactions. FAcS also serves as the
Portfolio's transfer agent and is entitled to compensation for those services
from Schroder Core with respect to the Portfolio in the amount of $12,000 per
year plus certain other fees and expenses.
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27
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SCHRODER JAPAN PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 4. PURCHASES AND SALES OF SECURITIES
The cost of securities purchased and the proceeds from sales of
securities (excluding short-term securities) for the period ended April 30,
1998 aggregated $7,315,703 and $1,083,186, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of April 30, 1998 was $36,419,108 and the net unrealized
depreciation of investment securities was $6,701,353. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost was $380,049, and the aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value was $7,081,402.
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and net 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
SCMI voluntarily has waived a portion of its advisory fees and has
assumed certain expenses of the Portfolio. Schroder Advisors, FAdS and FAcS
may waive voluntarily all or a portion of their fees from time to time. For
the period ended April 30, 1998 SCMI and FAcS have waived fees of $6,843 and
$1,613, respectively.
NOTE 7. CONCENTRATION OF RISK
Because the Portfolio has substantially all of its portfolio securities
invested in companies domiciled in Japan, it may be more susceptible to
political, social and economic events adversely affecting Japanese companies
than portfolios not so concentrated.
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TRUSTEES
I. Peter Sedgwick, Chairman
Louise Croset, President
Peter E. Guernsey
John I. Howell
William L. Means
David M. Salisbury
OFFICERS
Louise Croset, President
Heather F. Crighton, Vice President
Catherine A. Mazza, Vice President
& Assistant Secretary
Mark J. Smith, Vice President
Donald H. Farquharson, Vice President
David M. Salisbury, Vice Chairperson
Margaret H. Douglas-Hamilton, Secretary
Fergal Cassidy, Treasurer
Alexandra Poe, Assistant Secretary
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRANSFER AGENT
Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
INDEPENDENT AUDITORS
Cooper & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110-2624
This report is for the information of the Shareholders of the Schroder All-Asia
Fund. Its use in connection with any offering of the Fund's shares is authorized
only in case of a concurrent or prior delivery of the Fund's current prospectus.
SAAFSEMI498
[LOGO] SCHRODERS
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Schroder
All-Asia
Fund
SEMI-ANNUAL REPORT
April 30, 1998
(Unaudited)
Schroder Series Trust II
