<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
December 21, 1999
Dear Shareholder:
We are pleased to present the annual report to shareholders for Schroder
All-Asia Fund for the fiscal year ended October 31, 1999.
At the start of the fiscal year, the Asian markets, to varying degrees, were
still in the grip of the significant market and currency disruptions that were
the dominant theme of the prior fiscal year. Happily, the twelve months that
followed brought the beginning of economic recovery to many countries in which
the Fund invests. Stabilization in Asia was further supported by the recovery in
global growth and the sustained economic growth in the United States and
carefully managed U.S. monetary policy.
Developments in Japan were especially significant for the region as a whole.
Massive financial stimulus packages enacted by the Japanese government coupled
with the first serious corporate restructuring by some leading Japanese
companies such as SONY, NISSAN and NEC began to pull Japan out of a ten-year
economic decline. Investors reacted strongly to the signs of economic recovery
and helped drive the strong performance of the Japanese equity market.
Improving fundamentals coupled with microeconomic reform suggest that
earnings growth for many companies in the region should be strong in the
upcoming fiscal year. Schroders' investment process is based on detailed
fundamental research and is designed to highlight such opportunities for
long-term benefit of the Fund's shareholders.
We thank you for your continued support of the Schroder All-Asia Fund.
<TABLE>
<S> <C>
Sincerely,
/s/ Louise Croset
Louise Croset
PRESIDENT
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 1999)
PERFORMANCE
The total return of Schroder All-Asia Fund's Class A Shares was 54.92% (not
including the deduction of maximum applicable sales charges) for the fiscal year
ended October 31, 1999. Assuming the maximum applicable sales charge of 5.25%
had been paid, the Fund's return for Class A Shares would have been 46.69% for
the fiscal year ended October 31, 1999. The 50% MSCI Japan Index/50% MSCI All
Country Free ex-Japan Index returned 60.20% over the same period.
The Fund's underweight position in Japan detracted from performance,
relative to its benchmark, due to the strong recovery in this country during the
fiscal period. More positively, the Fund benefited from strong stock selection
in North Asian countries, specifically South Korea and Taiwan, and in Singapore
where corporate restructuring continued to gather momentum.
MARKET BACKGROUND
During the fiscal year, the Pacific Region's markets experienced a
significant recovery. The smaller regional markets, especially the Malaysian,
Korean and Indonesian markets, rose sharply, as their economies restructured in
response to the Asian crisis. Japan's market rose, due to corporate
restructuring, evidence of economic recovery and the prospect of earnings
upgrades.
Following the October 1998 reduction in interest rates worldwide, investors
shifted from defensive sectors, such as utilities, into the oversold interest
rate sensitive sectors, such as real estate and banking. Asian markets generally
responded well to strengthening currencies and lower interest rates in the early
part of 1999.
In the second half of the fiscal year, the markets continued to rally as the
broader economic environment in Asia showed significant improvement. Growth
estimates were steadily revised upwards. Intra-Asia trade rebounded, helped by a
more active Japanese economy. Consumer confidence returned and local investor
participation in stock markets became evident over the summer. Government-led
restructuring and corporate emphasis on shareholder returns continued across the
region.
Some market consolidation, however, took place in August and September, as
profit-taking occurred and Asian currencies weakened. During this period, Japan
significantly outperformed due to a strong rebound in the YEN.
PORTFOLIO REVIEW
In light of this increasingly buoyant economic picture, our investment
strategy for the Fund has been to re-emphasize growth sectors of the developed
economies in the region.
Within the Fund's asset allocation strategy, we were underweight Japan
primarily on the view that the prospects for growth were more pronounced in many
of the other Asian markets where we believe that prospects for growth are more
significant. Within Japan, the portfolio was significantly underweight the
Japanese banking sector which recovered sharply during the fiscal period. We
continue to maintain the underweight position primarily on the view that the
banking sector's chronic overcapacity and resultant poor loan spreads will put
even more pressure on the already comparatively lean cost base (which is
partially explained by the sector's under investment in technology). The major
changes to the Fund's Japanese holdings over the fiscal year were intra-
sectoral, for example we switched between pharmaceutical manufacturers TAKEDA
CHEMICAL and YAMANOUCHI PHARMACEUTICAL and electricity machinery manufacturers
MURATA and TDK. The Fund also invested for the first time in SUMITOMO ELECTRIC,
a semi-conductor manufacturer, as we believe the demand for optic fiber will
soon recover.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
We overweighted Hong Kong. In particular, we added to the Fund's position in
conglomerate HUTCHISON WHAMPOA, due to its exposure to growth areas such as
China ports and global cellular telecoms operations.
The Fund has been overweight in Singapore, in order to benefit from the
country's strong trade and continued restructuring progress. We have added to
the Fund's position in the real estate company, CITY DEVELOPMENTS, as we believe
that there will be a revival of the property sector.
We also raised the Fund's exposure to emerging markets issuers during the
fiscal year, in particular those in North Asia where economic recovery has been
strongest. The Fund benefited from its overweight position in Korea,
specifically its position in the Korean conglomerate, SAMSUNG ELECTRONICS, which
delivered excellent gains over the period. We also added to the Fund's position
in Taiwan. For example, we invested in TAIWAN SEMICONDUCTOR MANUFACTURING
COMPANY, a foundry electronics company, which we believe could benefit from the
trend for U.S. and Japanese companies to outsource production. We also bought
shares of steel producer CHINA STEEL, due to prospects of a domestic recovery in
Taiwan and rising steel prices.
OUTLOOK
In the near term, concerns over a tightening bias in the United States and
Year 2000 issues are anticipated to leave markets volatile. However, we believe
that the underlying trend for the region is positive, supported by economic data
and corporate earnings that continue to surprise on the upside.
After its recent strong run, the Japanese market has become polarized. While
restructuring progress should provide support to company valuations, rising
economic growth expectation will be less of a market catalyst going forward.
In Hong Kong, the successful disposal of part of the government's stock
holdings purchased during the crisis last year, is expected to support the
market in the short term. The broader economic picture in China is encouraging,
especially for exports. We believe that the steps towards admittance to the
World Trade Organization is to be viewed positively for the long term, as this
should ensure that further reform takes place in China's state owned sector.
We believe that Singapore will continue to benefit from the electronics
cycle and the government's emphasis on relative competitiveness within the
region. The re-inclusion of Malaysia into regional market indices is also
anticipated to provide support to the market in the longer term.
While the outlook for Asian emerging markets has improved, there remain a
number of local concerns, such as social instability in Indonesia. However, the
ongoing economic recovery and restructuring in Asia, should prove positive for
emerging markets. Going forward, we will continue to favor markets where
restructuring is a priority.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO
MANAGERS AS OF OCTOBER 31, 1999, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO
MANAGERS ON THE DATE THIS REPORT IS PUBLISHED OR ANY TIME THEREAFTER. THESE
VIEWS ARE INTENDED TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR
INVESTMENT 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
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF A
$10,000 INVESTMENT IN SCHRODER ALL-ASIA FUND
VS 50% MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI)
JAPAN / 50% MSCI ALL COUNTRY ASIA FREE EX-JAPAN (+ MALAYSIA) INDEX
AND THE MSCI ALL COUNTRY ASIA FREE EX-JAPAN INDEX
<S> <C> <C>
50% MSCI Japan Index/
All-Asia Fund 50% MSCI All Country Asia
Free ex-Japan (+ Malaysia) Index
12/93 10,000.00 10,000.00
1/94 9,764.00 10,465.95
2/94 9,628.28 10,480.29
3/94 8,907.12 9,693.39
4/94 9,228.67 10,085.81
5/94 9,464.00 10,386.16
6/94 9,278.51 10,467.66
7/94 9,371.29 10,551.68
8/94 9,963.56 11,008.55
9/94 9,649.70 10,766.20
10/94 9,878.40 10,998.07
11/94 9,192.84 10,235.99
12/94 9,156.99 10,151.71
1/95 8,265.10 9,334.27
2/95 8,522.14 9,498.74
3/95 8,636.34 9,932.58
4/95 8,500.75 10,106.30
5/95 9,228.41 10,361.48
6/95 9,142.59 10,033.21
7/95 9,499.15 10,526.98
8/95 9,249.32 10,073.12
9/95 9,291.87 10,176.11
10/95 9,006.61 9,804.32
11/95 8,828.28 9,983.37
12/95 9,284.70 10,485.59
1/96 9,998.69 10,824.42
2/96 9,969.70 10,787.26
3/96 9,983.66 11,017.32
4/96 10,369.02 11,529.07
5/96 10,233.19 11,167.91
6/96 10,197.37 11,114.54
7/96 9,640.60 10,455.38
8/96 9,747.61 10,379.84
9/96 9,805.12 10,649.04
10/96 9,384.48 10,191.05
11/96 9,719.50 10,529.09
12/96 9,805.04 10,147.15
1/97 9,740.32 9,700.08
2/97 9,761.75 9,854.98
3/97 9,304.90 9,414.51
4/97 9,133.69 9,515.10
5/97 9,804.10 10,255.63
6/97 10,217.84 10,826.71
7/97 10,024.72 10,707.32
8/97 8,248.34 9,293.76
9/97 8,155.96 9,202.87
10/97 6,664.23 7,751.36
11/97 6,243.05 7,247.99
12/97 6,050.14 6,905.57
1/98 5,672.01 6,915.19
2/98 6,471.20 7,666.44
3/98 6,207.17 7,349.49
4/98 5,843.43 7,012.64
5/98 5,158.58 6,285.07
6/98 4,808.83 5,976.63
7/98 4,701.59 5,861.65
8/98 4,152.45 5,105.48
9/98 4,402.01 5,288.95
10/98 4,958.42 6,307.13
11/98 5,286.67 6,706.16
12/98 5,465.36 6,939.87
1/99 5,386.66 6,917.79
2/99 5,222.37 6,805.69
3/99 5,808.31 7,631.24
4/99 6,615.67 8,542.53
5/99 6,579.95 8,256.62
6/99 7,465.61 9,274.80
7/99 7,567.14 9,626.49
8/99 7,766.91 9,767.51
9/99 7,402.64 9,696.21
10/99 7,680.98 10,316.77
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF A
$10,000 INVESTMENT IN SCHRODER ALL-ASIA FUND
VS 50% MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI)
JAPAN / 50% MSCI ALL COUNTRY ASIA FREE EX-JAPAN (+ MALAYSIA) INDEX
AND THE MSCI ALL COUNTRY ASIA FREE EX-JAPAN INDEX
<S> <C>
MSCI All Country Asia
Free ex-Japan Index
12/93 10,000.00
1/94 9,317.00
2/94 8,916.37
3/94 7,957.86
4/94 8,262.65
5/94 8,573.32
6/94 8,258.26
7/94 8,715.26
8/94 9,410.74
9/94 9,228.17
10/94 9,372.13
11/94 8,544.57
12/94 8,305.32
1/95 7,451.54
2/95 8,073.74
3/95 8,068.90
4/95 7,957.54
5/95 8,852.77
6/95 8,714.67
7/95 8,878.50
8/95 8,469.20
9/95 8,569.99
10/95 8,422.58
11/95 8,231.39
12/95 8,638.02
1/96 9,309.19
2/96 9,410.66
3/96 9,479.36
4/96 9,820.62
5/96 9,710.63
6/96 9,565.94
7/96 8,859.97
8/96 9,127.54
9/96 9,284.54
10/96 9,108.13
11/96 9,538.04
12/96 9,504.65
1/97 9,701.40
2/97 9,783.86
3/97 9,231.07
4/97 9,093.53
5/97 9,504.56
6/97 9,852.42
7/97 9,935.18
8/97 9,173.68
9/97 8,136.90
10/97 6,328.06
11/97 5,893.96
12/97 5,674.11
1/98 5,183.30
2/98 6,282.16
3/98 6,189.82
4/98 5,647.59
5/98 4,785.77
6/98 4,248.80
7/98 4,140.88
8/98 3,544.60
9/98 3,896.22
10/98 4,743.26
11/98 5,126.04
12/98 5,232.66
1/99 5,149.46
2/99 5,049.05
3/99 5,654.43
4/99 6,688.06
5/99 6,543.59
6/99 7,566.36
7/99 7,399.90
8/99 7,582.68
9/99 7,051.89
10/99 7,278.96
</TABLE>
The Morgan Stanley Capital International (MSCI) All Country Asia Free ex-Japan
Index is an unmanaged market capitalization index constructed by aggregating the
appropriate MSCI country indices; it represents 12 developed and emerging
markets of the Asia region but excludes Japan. The index reflects actual buyable
opportunities for the non-domestic investor by taking into account local market
restrictions on share ownership by foreigners.
The MSCI Japan Index is an unmanaged index that groups Japanese securities by
industry and the most "investable" stocks (as determined by size, long- and
short-term volume, and free float). The index reflects actual buyable
opportunities for the non-domestic investor by taking into account local market
restrictions on share ownership by foreigners. The 50% MSCI Japan Index/50% MSCI
All Country Asia Free ex-Japan (+ Malaysia) Index used by the investment adviser
represents an average of the returns of each Index and is intended to reflect a
hypothetical allocation between the Portfolios in which the Fund invests its
assets. Prior to December 1, 1998 the MSCI All Country Asia Free ex-Japan Index
included Malaysia. Since that time, when Malaysia was removed from the index,
the investment advisor has been including Malaysia in this benchmark. As of
October 31, 1999, the Fund had allocated 65.1% of its total assets to the
Schroder Asian Growth Fund Portfolio and the remaining 34.3% to the Schroder
Japan Portfolio. The investment adviser adjusts those percentages from time to
time in response to market and other factors.
The benchmarks are unmanaged and exclude the effect of any expenses and a 5.25%
sales charge, which have been deducted from the Fund's return. For periods prior
to March 20, 1998, the performance information includes data relating to
Schroder Asian Growth Fund, Inc.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION -- (a)
<TABLE>
<CAPTION>
ONE YEAR ENDED FIVE YEARS ENDED INCEPTION TO
OCTOBER 31, 1999 OCTOBER 31, 1999 OCTOBER 31, 1999*
----------------- ----------------- ------------------
<S> <C> <C> <C>
Schroder All-Asia Fund--Class A
Shares........................... 46.69% -5.92%(b) -5.29%
</TABLE>
(a) Performance information includes the effect of the 5.25% sales charge.
(b) Average annual total return.
*Average annual total return from commencement of Fund operations (December 31,
1993).
"TOTAL RETURN" IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE
RESULTS. THE VALUE OF AN INVESTMENT IN THE FUND AND THE RETURN ON INVESTMENT
WILL FLUCTUATE AND REDEMPTION PROCEEDS MAY BE HIGHER OR LOWER THAN AN INVESTOR'S
ORIGINAL COST.
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1999
COUNTRY WEIGHTINGS(C)
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS
<S> <C>
- -------------------------------------------------------------------
Japan 34.5%
Hong Kong 16.5
Singapore 10.1
Korea 9.7
Taiwan 8.7
Malaysia 7.9
India 5.7
Thailand 2.2
Indonesia 1.4
Philippines 1.1
China 0.7
Cash Equivalents and Other Net Assets 1.5
----------
Total 100.0%
==========
</TABLE>
- --------------
(C) Expressed as a percentage of the combined Schedules of Investments of the
Schroder Asian Growth Fund Portfolio and the Schroder Japan Portfolio.
TOP TEN HOLDINGS(C)
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
- -------------------------------------------------------------------
Samsung Electronic 2.9%
Hutchison Whampoa 2.7
Taiwan Semiconductor 2.6
Tenaga Nasional 2.2
Cheung Kong Holdings 2.2
Nippon Tel 2.1
Pohang Iron & Steel 2.0
DBS Group Holdings 1.7
Singapore Press 1.7
Singapore Airlines 1.5
---------
Total 21.6%
=========
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in Portfolios (Notes 1 and
2):
Schroder Asian Growth Fund Portfolio $ 29,604,814
Schroder Japan Portfolio 15,620,822
Receivable for Fund shares sold 246,878
Other assets 6,860
Receivable from Investment Adviser
(Note 3) 18,761
------------
Total Assets 45,498,135
------------
LIABILITIES:
Payable for Fund shares redeemed 65,383
Administration fee payable (Note 3) 1,894
Shareholder servicing fees payable
(Note 4) 9,469
Advisory fee payable (Note 3) 7,575
Accrued expenses and other liabilities 198,591
------------
Total Liabilities 282,912
------------
Net Assets $ 45,215,223
============
COMPONENTS OF NET ASSETS:
Paid-in capital $130,961,529
Undistributed (distributions in excess of)
net investment income 111,554
Accumulated net realized gain (loss) (92,272,190)
Net unrealized appreciation (depreciation)
on investments 6,414,330
------------
Net Assets $ 45,215,223
============
SHARES OF BENEFICIAL INTEREST 4,204,389
============
NET ASSET VALUE PER SHARE* $ 10.75
============
OFFERING PRICE PER SHARE** $ 11.35
============
</TABLE>
- --------------
* Redemption price per share is equal to net asset value.
** Based on maximum sales charge of 5.25%.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year
Ended
October 31, 1999
----------------
<S> <C>
NET INVESTMENT INCOME ALLOCATED FROM THE
PORTFOLIOS (NOTE 1):
Dividend income $ 631,149
Interest income 25,494
Net expenses (479,058)
Foreign Taxes withheld (34,933)
-----------
Total Income 142,652
-----------
EXPENSES:
Asset allocation (Note 3) 87,217
Shareholder services (Note 4) 109,021
Administration (Note 3) 21,804
Subadministration (Note 3) 34,446
Custody 19,821
Audit 16,963
Legal 32,478
Printing 43,258
Trustees 29,203
Transfer agency 61,941
Amortization of organization costs
(Note 2) 5,586
Registration 15,709
Miscellaneous 33,537
-----------
Total Expenses 510,984
Expenses borne by Investment Adviser (85,060)
Expenses waived (Note 3) (68,999)
-----------
Net Expenses 356,925
-----------
NET INVESTMENT INCOME (LOSS) (214,273)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS ALLOCATED FROM
THE PORTFOLIOS:
Net realized gain (loss) on investments
sold (a) 1,636,184
Net realized gain (loss) on foreign
currency transactions (127,283)
-----------
Net realized gain (loss)
on investments and
foreign currency
transactions 1,508,901
-----------
Change in net unrealized appreciation
(depreciation) on investments 17,731,045
Change in net unrealized appreciation
(depreciation) on foreign currency
transactions (141,694)
-----------
Net change in unrealized
appreciation
(depreciation) on
investments and foreign
currency transactions 17,589,351
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
ALLOCATED FROM THE PORTFOLIOS 19,098,252
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $18,883,979
===========
</TABLE>
- --------------
(a) Includes capital gains taxes for sales of Indian securities in the amount
of $87,146.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended October 31,
-------------------------------
1999 1998
-------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $ (214,273) $ 255,021
Net realized gain (loss) on
investments and foreign
currency transactions 1,508,901 (65,329,096)
Change in net unrealized
appreciation (depreciation) on
investments and foreign
currency transactions 17,589,351 34,752,866
----------- ------------
Net increase (decrease) in net
assets resulting from
operations 18,883,979 (30,321,209)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (67,142) --
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Sales of shares 7,503,533 497,253
Reinvestment of distributions 3,318 --
Fee charge on redemption of
shares (Note 5) -- 1,447,222
Redemptions of shares (23,895,566) (79,241,740)
----------- ------------
Net increase (decrease) from
capital share transactions (16,388,715) (77,297,265)
----------- ------------
Net increase (decrease) in net
assets 2,428,122 (107,618,474)
----------- ------------
NET ASSETS, BEGINNING OF PERIOD 42,787,101 150,405,575
----------- ------------
NET ASSETS, END OF PERIOD $45,215,223 $ 42,787,101
=========== ============
Undistributed (distributions in excess
of) net investment income $ 111,554 $ 65,941
=========== ============
SHARE TRANSACTIONS:
Sales of shares 828,540 72,790
Reinvestment of distributions 306 --
Redemption of shares (2,781,938) (10,022,409)
----------- ------------
Net increase (decrease) in shares (1,953,092) (9,949,619)
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES
Selected per share data and ratios for a Class A share outstanding
throughout each period: (a)
<TABLE>
<CAPTION>
For the Year Ended October 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 6.95 $ 9.34 $ 13.15 $ 12.62 $ 13.84
------- -------- -------- -------- --------
Investment Operations (b)
Net Investment Income
(Loss) (0.05) 0.02 (0.05) (0.03) 0.02
Net Realized and
Unrealized Gain
(Loss) on Investments
and Foreign Currency
Transactions 3.86 (2.57) (3.66) 0.56 (1.24)
------- -------- -------- -------- --------
Total from Investment
Operations 3.81 (2.55) (3.71) 0.53 (1.22)
------- -------- -------- -------- --------
Distributions From
Net Investment Income (0.01) -- (0.09) -- --
------- -------- -------- -------- --------
Tender Offer Costs
Charged to
Paid-in-Capital in
Excess of Par -- -- (0.01) -- --
------- -------- -------- -------- --------
Redemption Fee - Note 5 -- 0.16 -- -- --
------- -------- -------- -------- --------
Net Asset Value, End of
Period $ 10.75 $ 6.95 $ 9.34 $ 13.15 $ 12.62
======= ======== ======== ======== ========
Market Value, End of
Period N/A N/A $ 8.50 $ 12.00 $ 11.13
======= ======== ======== ======== ========
Total Investment Return
Based on:
Market Value N/A N/A (28.62)% 7.87% (7.29)%
======= ======== ======== ======== ========
Net Asset Value (c) 54.92%(e) (25.59)%(e) (28.43)% 4.20% (8.82)%
======= ======== ======== ======== ========
Ratios and Supplementary
Data:
Net Assets at End of
Period (in thousands) $45,215 $42,787 $150,406 $257,840 $247,490
Ratios to Average Net
Assets: (b)
Expenses including
reimbursement/ waiver
of fees 1.95% 1.90% 1.78% 1.57% 1.65%
Expenses excluding
reimbursement/ waiver
of fees 2.27% 2.13% 1.78% 1.57% 1.65%
Net investment income
(loss) including
reimbursement/waiver (0.49%) 0.28% (0.31%) (0.19%) 0.12%
Portfolio Turnover Rate N/A(d) N/A(d) 39% 35% 67%
</TABLE>
- --------------
(a) The Fund converted from Schroder Asian Growth Fund, Inc., a closed-end
fund, on March 20, 1998 (See Note 1). For information prior to March 20,
1998, data refers to shares of Schroder Asian Growth Fund.
(b) Includes the Fund's proportionate share of income, expenses and
gains/losses of the underlying Portfolios, Schroder Asian Growth Fund
Portfolio and Schroder Japan Portfolio, which commenced operations March
23, 1998.
(c) Total returns would have been lower had certain expenses not been reduced
during the periods shown (See Note 3).
(d) The Fund invests all of its investible assets in Schroder Asian Growth Fund
Portfolio and Schroder Japan Portfolio and did not have any direct
portfolio turnover for the periods after March 23, 1998. For the periods
shown, the portfolio turnover rates of Schroder Asian Growth Fund Portfolio
were 73% and 100% and of Schroder Japan Portfolio were 16% and 36%,
respectively. (See Note 1)
(e) Total returns do not reflect sales charges.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
NOTE 1. ORGANIZATION
Schroder Series Trust II (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, as amended (the "Act"), currently has one investment portfolio, the
Schroder All-Asia Fund (the "Fund"). The Fund is 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 of beneficial interest without par value.
MASTER-FEEDER ARRANGEMENT
The Fund currently seeks to achieve its investment objective by investing
all its investable assets in the Schroder Asian Growth Fund Portfolio and
Schroder Japan Portfolio (each, individually a "Portfolio", and, collectively,
the "Portfolios"). The Portfolios are separately managed, non-diversified
portfolios of Schroder Capital Funds ("Schroder Core"), each of which has the
same investment objective as the Fund and, in combination, substantially
similar investment policies as the Fund. 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 the
Portfolios 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 investments in each Portfolio as a partnership investment and
records daily its share of the Portfolios' income, expenses and realized and
unrealized gain or loss. The Portfolios' financial statements are included
elsewhere in this report and should be read in conjunction with the Fund's
financial statements. As of October 31, 1999, the Fund owned 99.81% and
99.54%, respectively, of the Schroder Asian Growth Fund Portfolio and the
Schroder Japan Portfolio and is deemed, for purposes of the Act, to control
the Portfolios.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by
the Trust which are in conformity with generally accepted accounting
principles:
VALUATION OF INVESTMENTS
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 is discussed in the Notes to
the Financial Statements of the Portfolios.
INVESTMENT INCOME AND EXPENSES
The Fund records daily its pro rata share of the Portfolios' income,
expenses and realized and unrealized gain and loss. In addition, the Fund
incurs its own expenses on an accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income and net capital gains, if any, are distributed to
shareholders at least annually and are recorded on the ex-dividend date.
Distributions are based on amounts calculated in accordance with
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
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 Portfolios, timing differences and differing characterizations of
distributions made by the Fund.
DEFERRED ORGANIZATION COSTS
Costs incurred by the Fund in connection with its organization were
amortized on a straight-line basis over a five-year period.
FEDERAL INCOME TAXES
It is the policy of the Trust for the Fund to qualify as a "regulated
investment company" by complying with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not
be subject to federal income taxes to the extent that, among other things, it
distributes substantially all of its taxable income, including capital gains,
for the fiscal year. In addition, as a result of distributing substantially
all of its net investment income during each calendar year, capital gains and
certain other amounts, if any, the Fund will not be subject to a federal
excise tax.
As of October 31, 1999, the Fund had a net tax basis capital loss
carryforward for Federal income tax purposes that may be applied against
taxable gains until its expiration as follows:
<TABLE>
<CAPTION>
Amount Expiring
- ----------- ----------
<S> <C>
$ 1,039,460 10/31/2003
26,048,489 10/31/2004
64,861,903 10/31/2006
</TABLE>
At October 31, 1999, the Fund reclassified $(541,457), $327,028 and
$214,429 between paid in capital, undistributed net investment income and
undistributed net realized gain/loss. These reclassifications had no impact on
the net asset value of the Fund and are designed to present the Fund's capital
accounts on a tax basis.
NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
The Fund currently invests all its investable assets in the Portfolios,
which retain Schroder Investment Management North America Inc. ("SIMNA") to
act as investment adviser pursuant to an Investment Advisory Agreement. See
Notes to the Financial Statements of each Portfolio. SIMNA also serves as
investment adviser to the Fund under an investment advisory and asset
allocation agreement with the Trust. Under this agreement, SIMNA is entitled
to receive a monthly 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.
Until July 1, 1999, Schroder Capital Management International Inc.
("SCMI") served as investment adviser to the Trust. On that date, SCMI merged
into SIMNA, a newly organized Delaware corporation. SCMI and SIMNA are both
wholly owned subsidiaries of Schroder U.S. Holdings Inc.
The administrator of the Fund is Schroder Fund Advisors Inc. ("Schroder
Advisors"), a wholly owned subsidiary of SIMNA. For its services, Schroder
Advisors is entitled to receive compensation at an annual rate, payable
monthly, of 0.05% of the Fund's average daily net assets. In addition, the
Fund has entered into a Sub-Administration Agreement with State Street Bank
and Trust Company ("State Street") and Schroder Advisors. Under the Agreement,
State Street is entitled to receive an annual fee from the Fund of $25,000,
payable monthly. Prior to June 1, 1999, the Fund paid subadministration fees
to Forum Administrative Services, LLC ("FAdS") at an annual rate, payable
monthly, of 0.05% of the average daily net assets of the Fund, subject to an
annual minimum fee of $25,000.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ALL-ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 1999
In order to limit the Fund's expenses, SIMNA and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) to the extent that the Fund's net expenses
attributable to Class A shares exceed 1.95% of the Fund's average daily net
assets attributable to such shares. For the year ended October 31, 1999, SIMNA,
Schroder Advisors and FAdS waived fees of $48,471, $18,063 and $2,465,
respectively.
For the period ended October 31, 1999, Schroder Advisors retained sales
commissions in the amount of $26,695.
NOTE 4. SHAREHOLDER SERVICING PLAN
The Fund adopted a Shareholder Service Plan (the "Plan") for the Class A
Shares under which Schroder Advisors, or other shareholder servicing
organizations, provide administrative support services to shareholders of the
Fund's Class A Shares. For providing for, or arranging for, the provision of
those shareholder services, Schroder Advisors receives compensation monthly at
an annual rate of up to 0.25% of the average daily net assets of the Fund
attributable to its Class A Shares. Schroder Advisors may pay shareholder
servicing organizations for those services at an annual rate of up to 0.25%.
NOTE 5. PURCHASE AND REDEMPTION FEES
Shares redeemed in connection with the conversion of Schroder Asian Growth
Fund, Inc. were subject to a redemption fee of 2.00% for the six-month period
following the conversion on March 20, 1998. Redemption fees collected by the
Fund during this six-month period totaled $1,447,222.
NOTE 6. BENEFICIAL INTEREST
As of October 31, 1999, the Fund had 2 shareholders each owning
beneficially or of record more than 5% of the Fund, totalling 39.55% of the
Fund's outstanding Class A shares.
NOTE 7. PORTFOLIO INVESTMENT RISK
For more complete risk disclosure, please refer to the Fund's current
prospectus.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Schroder Series Trust II and Shareholders of Schroder
All-Asia Fund:
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Schroder All-Asia Fund (a separately managed Portfolio of Schroder Series
Trust II) (the "Fund") at October 31, 1999, and the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated herein, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 17, 1999
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS - 97.0%
CHINA - 1.0%
11,400 Huaneng Power International,
Incorporated ADR $ 138,225
572,000 Yizheng Chemical Fibre Company
Limited (1) 156,445
-----------
294,670
-----------
HONG KONG - 25.2%
352,000 Amoy Properties Limited 303,545
176,000 ASM Pacific Technology Limited 207,272
127,200 Cable & Wireless HKT Limited 290,597
108,000 Cheung Kong (Holdings) Limited 983,459
217,000 China Everbright Limited 155,010
284,000 China Resources Enterprises Limited 363,703
190,000 China Telecom (Hong Kong) Limited (1) 649,268
80,000 Citic Pacific Limited 207,478
124,500 Dao Heng Bank Group Limited 565,653
860,000 Global Tech (Holdings) Limited 503,635
60,000 Henderson Land Development Company
Limited 274,736
269,260 Hong Kong & China Gas Company Limited 356,956
38,400 HSBC Holdings PLC 462,114
123,000 Hutchison Whampoa Limited 1,234,826
135,000 New World Infrastructure Limited (1) 156,380
82,000 Sun Hung Kai Properties Limited 664,906
19,000 Swire Pacific Limited "A" Shares 94,150
-----------
7,473,688
-----------
INDIA - 8.6%
9,000 ACC Limited (1) 41,816
30,400 Bajaj Auto Limited 308,624
26,600 Bharat Petroleum Corporation Limited 177,783
12,000 Castrol (India) Limited 94,307
8,500 Hindustan Lever Limited 455,413
25,000 Hindustan Petroleum Corporation Limited 92,763
12,500 Hindustan Petroleum Corporation
Limited (1) 46,382
8,000 ITC Limited 129,891
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
INDIA (CONTINUED)
26,500 Larsen & Toubro Limited $ 243,074
54,500 Mahanagar Telephone Nigam Limited 215,287
4,200 NIIT Limited 209,613
101,000 Reliance Industries Limited 543,640
31 Tata Engineering & Locomotive Company
Limited 172
-----------
2,558,765
-----------
INDONESIA - 2.1%
170,500 PT Astra International Tbk (1) 84,313
76,500 PT Gudang Garam Tbk 197,274
122,000 PT Indofood Sukses Makmur (1) 144,791
31,000 PT Indosat (Persero) Tbk 50,418
318,500 PT Telekomunikasi Indonesia 151,666
-----------
628,462
-----------
KOREA - 14.7%
37,438 Kookmin Bank 583,652
22,800 Korea Electric Power Corporation 667,178
5,500 Korea Telecom Corporation ADR (1) 193,875
400 Korea Telecom Corporation 26,911
7,210 Pohang Iron & Steel Company Limited 885,035
7,879 Samsung Electronics 1,313,714
24,000 Shinhan Bank 254,106
216 SK Telecom Company Limited 249,404
15,550 SK Telecom Company Limited ADR 203,122
-----------
4,376,997
-----------
MALAYSIA - 12.0%
222,000 Gamuda Berhad 446,923
171,500 Genting Berhad 613,791
648,000 Island & Peninsular Berhad 491,117
54,000 Malayan Banking Berhad 183,316
50,000 Malaysian Pacific Industries Berhad 217,106
95,000 Tanjong PLC 200,001
125,000 Telekom Malaysia Berhad 384,870
440,000 Tenaga Nasional Berhad 1,013,161
-----------
3,550,285
-----------
PHILIPPINES - 1.6%
189,000 Ayala Corporation 47,073
424,000 Ayala Land, Incorporated 108,244
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
PHILIPPINES (CONTINUED)
78,800 Manila Electric Company "B" Shares $ 215,890
3,940 Philippine Long Distance Telephone
Company 81,940
23,100 San Miguel Corporation "B" Shares 33,370
-----------
486,517
-----------
SINGAPORE - 15.4%
12,000 Chartered Semiconductor 24,180
85,000 City Developments Limited 439,344
27,000 Cycle and Carriage Limited 91,685
68,758 DBS Group Holdings Limited 776,906
164,000 Keppel Telecommunications &
Transportation Limited 173,478
23,300 Oversea-Chinese Banking Corporation
Limited 175,047
64,000 Singapore Airlines Limited 676,987
44,344 Singapore Press Holdings Limited 759,569
237,000 Singapore Telecommunications Limited 450,115
71,580 United Overseas Bank Limited 542,063
21,000 Venture Manufacturing (Singapore)
Limited 186,796
295,400 Wing Tai Holdings Limited 259,210
-----------
4,555,380
-----------
TAIWAN - 13.3%
220,800 Acer, Incorporated 420,870
33,635 Asustek Computer, Incorporated 352,881
166,750 Cathay Life Insurance Company Limited 430,797
550,200 China Steel Corporation 422,964
86,000 First Commercial Bank 110,277
176,000 Hua Nan Commercial Bank 249,527
291,064 Nan Ya Plastic Corporation 508,949
146,370 Siliconware Precision Industries Company 262,857
264,170 Taiwan Semiconductor Manufacturing
Company 1,173,533
-----------
3,932,655
-----------
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
THAILAND - 3.1%
16,000 Advanced Info Service Public Company
Limited (1) $ 186,528
19,000 Bangkok Bank Public Company Limited (1) 44,301
105,000 Electricity Generating Public Company
Limited 138,731
21,500 PTT Exploration and Production Public
Company Limited (1) 157,072
3,000 Siam Cement Public Company Limited (1) 77,720
329,000 TelecomAsia Corporaton Public Company
Limited (1) 253,568
42,000 Thai Farmers Bank Public Company
Limited (1) 59,301
-----------
917,221
-----------
Total Common Stocks
(cost $24,120,085) 28,774,640
PREFERRED STOCK - 0.2%
THAILAND - 0.2%
64,000 Siam Commercial Bank Public Company
Limited (1)
(cost $83,774) 72,539
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
REPURCHASE AGREEMENT - 1.6%
$ 470,000 State Street Bank and Trust Company,
4.25%, 11/01/1999 (2)
(cost $470,000) 470,000
-----------
Total Investments
(cost $24,673,859) - 98.8% 29,317,179
Other Assets Less Liabilities - 1.2% 343,628
-----------
Total Net Assets - 100% $29,660,807
===========
</TABLE>
- ------------------
(1) Denotes non-income producing security.
(2) The repurchase agreement, dated 10/29/99 with a repurchase price of
$470,166 is collateralized by a $480,000 United States Treasury Bond,
6.625%, due 2/15/27, valued at $484,200.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Note
2) $ 29,317,179
Cash 7,457
Foreign currency (Cost $541,660) 543,034
Dividends receivable 60,910
Interest receivable 167
Receivable for securities sold 1,192,134
Deferred organizational costs 2,578
Prepaid expenses 2,896
Due from Investment Adviser (Note 3) 2,623
------------
Total Assets 31,128,978
------------
LIABILITIES:
Payable for securities purchased 1,292,984
Payable for forward foreign currency
contracts purchased 32,133
Advisory fee payable (Note 3) 17,559
Administration fee payable (Note 3) 1,254
Accrued expenses and other liabilities 124,241
------------
Total Liabilities 1,468,171
------------
Net Assets $ 29,660,807
============
Cost of Securities $ 24,673,859
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year
Ended
October 31, 1999
----------------
<S> <C>
INVESTMENT INCOME:
Dividend income $ 509,605
Interest income 18,382
Foreign taxes (115,412)
-----------
Total Investment Income 412,575
-----------
EXPENSES:
Investment advisory fees (Note 3) 189,082
Administrative fees (Note 3) 13,506
Subadministration fees (Note 3) 27,730
Custodian fees 63,375
Audit fees 27,444
Legal fees 13,386
Trustees fees 14,915
Transfer agent fees 2,415
Amortization of organizational expenses 760
Insurance 489
Other 9,303
-----------
Total Expenses 362,405
Expenses borne by Investment Adviser (Note
3) (7,062)
Expenses waived (Note 3) (42,179)
-----------
Net Expenses 313,164
-----------
NET INVESTMENT INCOME (LOSS) 99,411
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments
sold 1,866,239
Net realized gain (loss) on foreign
currency transactions (24,235)
-----------
Net realized gain (loss)
on investments and
foreign currency
transactions 1,842,004
-----------
Change in net unrealized appreciation
(depreciation) on investments 10,091,068
Change in net unrealized appreciation
(depreciation) on foreign currency
transactions (31,183)
-----------
Net change in unrealized
appreciation
(depreciation) on
investments and foreign
currency transactions 10,059,885
-----------
NET GAIN (LOSS) 11,901,889
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $12,001,300
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the
Year Ended Period Ended
10/31/99 10/31/98 (a)
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $ 99,411 $ 571,616
Net realized gain (loss) on
investments and foreign
currency 1,842,004 (15,840,538)
Change in net unrealized
appreciation (depreciation) of
investments and foreign
currency 10,059,885 (4,115,849)
------------ ------------
Net increase (decrease) in net
assets resulting from
operations 12,001,300 (19,384,771)
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTEREST:
Contributions 8,033,360 93,722,315(b)
Withdrawals (12,905,279) (51,806,118)
------------ ------------
Net increase (decrease) in assets
from transactions in investors'
beneficial interest (4,871,919) 41,916,197
------------ ------------
Total increase (decrease) 7,129,381 22,531,426
NET ASSETS
Beginning of period 22,531,426 --
------------ ------------
End of period $ 29,660,807 $ 22,531,426
============ ============
</TABLE>
(a) For the period March 23, 1998 (commencement of operations) through
October 31, 1998 (See Note 1).
(b) Includes initial capital contribution from Master/Feeder structure
conversion of $85,862,089 (See Note 1).
- ------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the Year For the Period
Ended Ended
October 31, 1999 October 31, 1998 (a)
<S> <C> <C>
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver of fees 1.16% 1.16%(b)
Expenses, excluding waiver of fees 1.34% 1.27%(b)
Net investment income, including
waiver of fees 0.37% 2.51%(b)
Portfolio Turnover Rate 73% 100%
</TABLE>
- --------------
(a) For the period March 23, 1998 (commencement of operations) through
October 31, 1998 (See Note 1).
(b) Annualized.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
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, as amended (the "Act"), currently has three investment portfolios.
Included in this report is Schroder Asian Growth Fund Portfolio (the
"Portfolio"), which is a non-diversified portfolio that received assets from
Schroder Asian Growth Fund, Inc. in that Fund's master-feeder structure
conversion and commenced operations on March 23, 1998. The net assets received
as a result of the conversion amounted to $85,862,089, which included
unrealized depreciation of $1,248,006. Under its Trust Instrument, Schroder
Core is authorized to issue an unlimited number of interests without par
value. Interests in the Portfolio are sold without any sales charges in
private placement transactions 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 is a summary of significant accounting policies followed by
the Portfolio which are in conformity with generally accepted accounting
principles.
VALUATION OF INVESTMENTS
Portfolio securities listed on recognized stock exchanges are valued at
the last reported sales price on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges
where last sale prices are not available are valued at the mean of the closing
bid and ask prices ("mid-market price"), or, if none, the last sale price on
the preceding trading day. Securities traded in over-the-counter markets are
valued at the most recent reported mid-market price. Short-term investments
having a maturity of 60 days or less, are valued at amortized cost, which
approximates market value unless the investment adviser believes another
valuation is more appropriate. Prices used for valuation generally are
provided by independent pricing services. Other securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith using methods approved by the Schroder Core Board of
Trustees.
REPURCHASE AGREEMENTS
When entering into repurchase agreements, it is each Portfolio's policy
that the Portfolio take into its possession, through its custodian, the
underlying collateral and monitor the collateral's value at the time the
agreement is entered into and on a daily basis during the term of the
repurchase agreement to ensure that it equals or exceeds the repurchase price.
In the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
INVESTMENT TRANSACTIONS
Investment security transactions are recorded as of trade date. Realized
gains and losses on sales of investments are determined on the basis of
identified cost.
INVESTMENT INCOME
Dividend income is recorded on the ex-dividend date except that certain
foreign dividends are recorded as the Portfolio is informed of the ex-dividend
date. Dividend income is recorded net of unrecoverable
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
withholding tax. Interest income is recorded on an accrual basis. Foreign
dividend and interest income amounts and realized capital gains or losses are
converted to U.S. dollar equivalents using foreign exchange rates in effect at
the date of the transactions.
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.
FEDERAL INCOME TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and net capital gain because 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 Portfolio's interest
holders 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. The Portfolio
provides for taxes on realized gains on Indian securities sold and unrealized
appreciation on Indian securities held.
DEFERRED ORGANIZATION COSTS
Costs incurred by the Portfolio in connection with its organization are
amortized on a straight-line basis over a five-year period.
FOREIGN CURRENCY
Foreign currency amounts are translated into U.S. dollars at the mean of
the bid and asked prices of such currencies against U.S. dollars as follows:
(i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such transactions.
The portion of the results of operations arising from changes in the exchange
rates and the portion due to fluctuations arising from changes in the market
prices of securities are not isolated. Such fluctuations are included with the
net realized and unrealized gain or loss on investments.
The Portfolio may enter into transactions to purchase or sell forward
foreign currencies to protect the U.S. dollar value of the underlying
portfolio of securities against the effect of possible adverse movements in
foreign exchange rates. Principal risks associated with such transactions
include the movement in value of the foreign currency relative to the U.S.
dollar and the ability of the counterparty to perform. Fluctuations in the
value of such forward currency transactions are recorded daily as unrealized
gain or loss; realized gain or loss includes net gain or loss on transactions
that have terminated by settlement or by the Portfolio entering into
offsetting commitments.
NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
SIMNA is the investment adviser to the Portfolio. Pursuant to an
Investment Advisory Agreement, SIMNA is entitled to receive compensation at an
annual rate, payable monthly, of 0.70% of the Portfolio's average daily net
assets.
Until July 1, 1999, Schroder Capital Management International Inc.
("SCMI") served as investment adviser to the Portfolio. On that date, SCMI
merged into SIMNA, a newly organized Delaware corporation. SCMI and SIMNA are
both wholly owned subsidiaries of Schroder U.S. Holdings Inc.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 1999
The administrator of the Portfolio is Schroder Fund Advisors Inc. ("Schroder
Advisors"), a wholly owned subsidiary of SIMNA. Schroder Advisors is entitled to
receive compensation at an annual rate, payable monthly, of 0.05% of the
Portfolio's average daily net assets. In addition, Schroder Core has entered
into a Sub-Administration Agreement with State Street Bank and Trust Company
("State Street") and Schroder Advisors. Under that Agreement, the Portfolio,
together with other mutual funds managed by SIMNA and certain related entities,
pays fees to State Street based on the combined average daily net assets of all
of the funds in the Schroder complex, according to the following annual rates:
0.06% of the first $1.7 billion of such assets, 0.04% of the next $1.7 billion,
and 0.02% of assets in excess of $3.4 billion, subject to certain minimum
requirements. Prior to June 1, 1999, the Portfolio paid subadministration fees
to Forum Administrative Services, LLC ("FAdS") at an annual rate of 0.05% of the
average daily net assets of the Portfolio, subject to a minimum annual fee of
$25,000.
In order to limit the Portfolio's expenses, SIMNA and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Portfolio) to the extent that the Portfolio's net
expenses exceed 1.16% of the Portfolio's average daily net assets. For the year
ended October 31, 1999, SIMNA and FAdS waived fees of $34,572, and $7,607,
respectively.
NOTE 4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investments, excluding short-term
securities for the year ended October 31, 1999 were $19,129,409 and
$23,237,228, respectively.
At October 31, 1999, the identified cost for federal income tax purposes
of investments owned by the Portfolio was $24,979,287 with a net unrealized
appreciation of $4,337,892. Gross unrealized appreciation and depreciation
were $6,340,666 and $2,002,774, respectively.
NOTE 5. CONCENTRATION OF RISK
The Portfolio's investments in companies domiciled in Asian countries
other than Japan, including countries with limited or developing markets, may
cause the Portfolio to be more susceptible to political, social and economic
events adversely affecting the Asian countries in which it invests than
portfolios not so concentrated in a single region.
As of October 31, 1999, Schroder All-Asia Fund owned 99.81% of the
Portfolio.
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS
As of October 31, 1999, the Portfolio had open forward foreign currency
contracts which contractually obligates the Portfolio to deliver currencies at
a specified date as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
SOLD SETTLEMENT DATE COST VALUE DEPRECIATION
- -------------------- --------------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
14,000,000 HKD* 3/03/00 $1,769,129 $1,798,686 $(29,557)
3,750,000 HKD* 3/03/00 479,215 481,791 (2,576)
--------
$(32,133)
========
</TABLE>
*Hong Kong Dollar
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Schroder Capital Funds and Interestholders of Schroder Asian
Growth Fund Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Schroder Asian Growth Fund
Portfolio (the "Fund")(a separately managed portfolio of Schroder Capital Funds)
at October 31, 1999, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated herein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments at October 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 17, 1999
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS - 99.6%
APPLIANCES & HOUSEHOLD DURABLES - 7.6%
29,000 Matsushita Electric Industrial Company
Limited $ 609,956
3,700 Sony Corporation 576,485
-----------
1,186,441
-----------
AUTOMOBILES - 3.8%
17,000 Toyota Motor Corporation 588,060
-----------
BANKING - 2.2%
39,000 Asahi Bank Limited 346,052
-----------
BROADCASTING & PUBLISHING - 0.5%
9,000 Chubu-Nippon Broadcasting Company
Limited 85,378
-----------
BUSINESS & PUBLIC SERVICES - 2.9%
37,000 Toppan Printing Company Limited 453,459
-----------
CHEMICALS - 2.3%
27,000 Kuraray Company Limited 362,208
-----------
CONSTRUCTION & HOUSING - 4.0%
24,000 Daiwa House Industry Company Limited 219,394
13,000 National House Industrial Company
Limited 99,655
28,000 Sanki Engineering Company Limited 154,005
14,000 Sekisui House Limited 151,457
-----------
624,511
-----------
DATA PROCESSING & REPRODUCTION - 2.2%
7,000 Canon, Incorporated 197,872
5,000 Fujitsu Limited 150,441
-----------
348,313
-----------
ELECTRICAL & ELECTRONICS - 5.1%
39,000 Hitachi Limited 421,167
18,000 Omron Corporation 376,006
-----------
797,173
-----------
ELECTRONIC COMP. & INSTRUMENTS - 6.2%
4,000 Murata Manufacturing Company Limited 513,606
1,000 Rohm Company Limited 224,224
1,000 TDK Corporation 97,834
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
15,000 Yamatake Corporation $ 142,296
-----------
977,960
-----------
ENERGY SOURCES - 1.7%
4,000 Nippon Mitsubishi Oil Corporation 17,631
41,000 Showa Shell Sekiyu 246,330
-----------
263,961
-----------
FINANCIAL SERVICES - 4.8%
13,400 Credit Saison Company Limited 329,350
1,200 Nichiei Company Limited 62,093
22,000 Nomura Securities Company Limited 362,802
-----------
754,245
-----------
FOREST PRODUCTS & PAPER - 3.6%
49,000 Nippon Paper Industries Company Limited 380,318
27,000 Oji Paper Company Limited 190,159
-----------
570,477
-----------
HEALTH & PERSONAL CARE - 6.7%
8,000 Banyu Pharmaceutical Company Limited 146,340
11,000 Takeda Chemical Industries Limited 631,372
6,000 Yamanouchi Pharmaceutical Company
Limited 271,943
-----------
1,049,655
-----------
INDUSTRIAL COMPONETS - 4.8%
22,000 Bridgestone Corporation 605,021
11,000 Sumitomo Electric Industries 147,671
-----------
752,692
-----------
INSURANCE - 3.9%
30,000 Sumitomo Marine & Fire Insurance Company
Limited 231,411
56,000 Yasuda Fire & Marine Insurance Company
Limited 378,842
-----------
610,253
-----------
LEISURE & TOURISM - 1.0%
12,000 Japan Airport Terminal Company Limited 152,012
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MACHINERY & ENGINEERING - 1.9%
10,000 Amano Corporation $ 76,658
1,300 SMC Corporation 219,116
-----------
295,774
-----------
MERCHANDISING - 2.8%
6,200 Aoyamma Trading Company Limited 197,834
3,000 Ito-Yokado Company Limited 239,747
-----------
437,581
-----------
METALS-STEEL - 2.1%
31,000 Nittetsu Mining Company Limited 80,203
262,000 Sumitomo Metal Industries Limited (1) 256,075
-----------
336,278
-----------
MISC. MATERIALS & COMMODITIES - 1.5%
6,000 Nitto Denko Corporation 236,872
-----------
MULTI-INDUSTRY - 2.6%
33,000 Amada Metrecs Company Limited 208,700
52,000 Sakata Inx Corporation 204,293
-----------
412,993
-----------
REAL ESTATE - 4.6%
34,000 Airport Facilties Company Limited 179,513
76,000 KOA Fire & Marine Insurance Company
Limited 310,234
32,000 TOC Company Limited 231,813
-----------
721,560
-----------
RECREATION OTHER CONSUMER GOODS - 3.3%
16,000 Fuji Photo Film 513,607
-----------
TELECOMMUNICATIONS - 6.0%
61 Nippon Telegraph & Telephone Corporation 935,224
-----------
TEXTILE & APPAREL - 0.8%
8,000 Onward Kashiyama Company Limited 125,565
-----------
TRANSPORTATION - ROAD & RAIL - 2.6%
48 East Japan Railway Company 293,906
<CAPTION>
SHARES VALUE
- ----------- -----------
<C> <S> <C>
38,000 Hanshin Electric Railway Company Limited $ 112,878
-----------
406,784
-----------
WHOLESALE & INTERNATIONAL TRADE - 8.1%
4,000 Glory Limited 98,122
13,000 Inaba Denkisangyo Company Limited 196,818
35,000 Mitsubishi Corporation 251,533
52,000 Mitsui & Company Limited 384,170
26,000 Sumitomo Corporation 189,843
11,000 Trusco Nakayama Corporation 153,996
-----------
1,274,482
-----------
Total Common Stocks
(Cost $13,725,551) 15,619,570
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
REPURCHASE AGREEMENT - 1.0%
$ 160,000 State Street Bank and Trust Company,
4.250%, 11/01/1999 (Cost
$160,000) (2) 160,000
-----------
Total Investments
(Cost $13,885,551) - 100.6% 15,779,570
-----------
Liabilities in Excess of Other
Assets - (0.6%) (86,580)
-----------
Total Net Assets - 100% $15,692,990
===========
</TABLE>
- ------------------
(1) Denotes non-income producing security
(2) The repurchase agreement dated 10/29/99 with a repurchase price of $160,057
is collateralized by a $165,000 United States Treasury Bond, 6.625%, due
2/15/27, valued at $166,444.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(Note 2) $ 15,779,570
Cash 513
Dividends receivable 35,401
Interest receivable 57
Receivable for securities sold 70,405
Deferred organizational costs 2,958
Due from Investment Adviser (Note 3) 16,543
------------
Total Assets 15,905,447
------------
LIABILITIES:
Payable for securities purchased 45,147
Payable for forward foreign currency
contracts purchased 112,072
Advisory fee payable (Note 3) 7,244
Administration fee payable (Note 3) 659
Accrued expenses and other liabilities 47,335
------------
Total Liabilities 212,457
------------
Net Assets $ 15,692,990
============
Cost of Securities $ 13,885,551
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year
Ended
October 31, 1999
-----------------
<S> <C>
INVESTMENT INCOME:
Dividend income $ 119,589
Interest income 11,885
Foreign taxes withheld (6,692)
----------
Total Investment Income 124,782
----------
EXPENSES:
Investment advisory fees (Note 3) 93,606
Administrative fees (Note 3) 8,510
Subadministration Fees (Note 3) 21,091
Custodian fees 59,780
Audit fees 27,133
Legal fees 7,922
Trustees fees 2,378
Transfer agent fees 14,915
Amortization of organizational expenses 760
Insurance 451
Other 1,563
----------
Total Expenses 238,109
Expenses borne by Investment Adviser
(Note 3) (27,647)
Expenses waived (Note 3) (42,389)
----------
Net Expenses 168,073
----------
NET INVESTMENT INCOME (LOSS) (43,291)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments
sold (83,383)
Net realized gain (loss) on foreign
currency transactions (102,720)
----------
Net realized gain (loss)
on investments and
foreign currency
transactions (186,103)
----------
Change in net unrealized appreciation
(depreciation) on investments 7,622,767
Change in net unrealized appreciation
(depreciation) on foreign currency
transactions (111,412)
----------
Net change in unrealized
appreciation
(depreciation) on
investments and foreign
currency transactions 7,511,355
----------
NET GAIN (LOSS) 7,325,252
----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $7,281,961
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year For the
Ended Period Ended
October 31, 1999 October 31, 1998 (a)
---------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $ (43,291) $ 83,990
Net realized gain (loss) on
investments and foreign
currency (186,103) (3,009,159)
Change in net unrealized
appreciation (depreciation) of
investments and foreign
currency 7,511,355 1,192,952
------------ ------------
Net increase (decrease) in net
assets resulting from
operations 7,281,961 (1,732,217)
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTEREST:
Contributions 4,226,057 57,952,999(b)
Withdrawals (16,498,593) (35,537,217)
------------ ------------
Net increase (decrease) in assets
from transactions in investors'
beneficial interest (12,272,536) 22,415,782
------------ ------------
Total increase (decrease) (4,990,575) 20,683,565
NET ASSETS
Beginning of period 20,683,565 --
------------ ------------
End of period $ 15,692,990 $ 20,683,565
============ ============
</TABLE>
(a) For the period March 23, 1998 (commencement of operations) through
October 31, 1998 (See Note 1).
(b) Includes initial capital contribution from Master/Feeder structure
conversion of $55,886,917 (See Note 1).
- ------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For The Year For the Period
Ended Ended
October 31, 1999 October 31, 1998 (a)
<S> <C> <C>
- --------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses, including waiver of fees 0.99% 0.99%(b)
Expenses, excluding waiver of fees 1.40% 1.24%(b)
Net investment income (loss) including
waiver of fees (0.25)% 0.55%(b)
Portfolio Turnover Rate 16% 36%
</TABLE>
- --------------
(a) For the period March 23, 1998 (commencement of operations) through
October 31, 1998 (See Note 1).
(b) Annualized.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
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, as amended (the "Act"), currently has three investment portfolios.
Included in this report is Schroder Japan Portfolio (the "Portfolio"), which
is a non-diversified portfolio that received assets from Schroder Asian Growth
Fund, Inc. in that Fund's master-feeder structure conversion and commenced
operations on March 23, 1998. The net assets received as a result of the
conversion amounted to $55,886,917, which included unrealized depreciation of
$6,914,125. Under its Trust Instrument, Schroder Core is authorized to issue
an unlimited number of interests without par value. Interests in the Portfolio
are sold without any sales charges in private placement transactions 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 is a summary of significant accounting policies followed by
the Trust which are in conformity with generally accepted accounting
principles:
VALUATION OF INVESTMENTS
Portfolio securities listed on recognized stock exchanges are valued at
the last reported sales price on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges
where last sale prices are not available are valued at the mean of the closing
bid and ask price ("mid-market price"), or, if none, the last sale price on
the preceding trading day. Securities traded in over-the-counter markets are
valued at the most recent reported mid-market price. Short-term investments
having a maturity of 60 days or less, are valued at amortized cost, which
approximates market value, unless the investment adviser believes another
valuation is more appropriate. Prices used for valuation generally are
provided by independent pricing services. Other securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith using methods approved by the Schroder Core Board of
Trustees.
REPURCHASE AGREEMENTS
When entering into repurchase agreements, it is each Portfolio's policy
that the Portfolio take into its possession, through its custodian, the
underlying collateral and monitor the collateral's value at the time the
agreement is entered into and on a daily basis during the term of the
repurchase agreement to ensure that it equals or exceeds the repurchase price.
In the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
INVESTMENT TRANSACTIONS
Investment security transactions are recorded as of trade date. Realized
gains and losses on sales of investments are determined on the basis of
identified cost.
INVESTMENT INCOME
Dividend income is recorded on the ex-dividend date except that certain
foreign dividends are recorded as the Portfolio is informed of the ex-dividend
date. Dividend income is recorded net of unrecoverable
- --------------------------------------------------------------------------------
27
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
withholding tax. Interest income is recorded on an accrual basis. Foreign
dividend and interest income amounts and realized capital gains or losses are
converted to U.S. dollar equivalents using foreign exchange rates in effect at
the date of the transactions.
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.
FEDERAL INCOME TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and net capital gain because 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 Portfolio's interest
holders in proportion to their holdings in the Portfolio regardless of whether
such interest, dividends or gain have been distributed by the Portfolio.
DEFERRED ORGANIZATION COSTS
Costs incurred by the Portfolio in connection with its organization are
amortized on a straight-line basis over a five-year period.
FOREIGN CURRENCY
Foreign currency amounts are translated into U.S. dollars at the mean of
the bid and asked prices of such currencies against U.S. dollars as follows:
(i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such transactions.
The portion of the results of operations arising from changes in the exchange
rates and the portion due to fluctuations arising from changes in the market
prices of securities are not isolated. Such fluctuations are included with the
net realized and unrealized gain or loss on investments.
The Portfolio may enter into transactions to purchase or sell forward
foreign currencies to protect the U.S. dollar value of the underlying
portfolio of securities against the effect of possible adverse movements in
foreign exchange rates. Principal risks associated with such transactions
include the movement in value of the foreign currency relative to the U.S.
dollar and the ability of the counterparty to perform. Fluctuations in the
value of such forward currency transactions are recorded daily as unrealized
gain or loss; realized gain or loss includes net gain or loss on transactions
that have terminated by settlement or by the Portfolio entering into
offsetting commitments.
NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
SIMNA is the investment adviser to the Portfolio. Pursuant to an
Investment Advisory Agreement, SIMNA is entitled to receive compensation at an
annual rate, payable monthly, of 0.55% of the Portfolio's average daily net
assets.
Until July 1, 1999, Schroder Capital Management International Inc.
("SCMI") served as investment advisor to the Portfolio. On that date, SCMI
merged into SIMNA, a newly organized Delaware corporation. SCMI and SIMNA are
both wholly owned subsidiaries of Schroder U.S. Holdings Inc.
The administrator of the Portfolio is Schroder Fund Advisors Inc.
("Schroder Advisors"), a wholly owned subsidiary of SIMNA. Schroder Advisors
is entitled to receive compensation at an annual rate, payable monthly, of
0.05% of the Portfolio's average daily net assets. In addition, Schroder Core
has entered into a
- --------------------------------------------------------------------------------
28
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
Sub-Administration Agreement with State Street Bank and Trust Company ("State
Street") and Schroder Advisors. Under that Agreement, the Portfolio, together
with other mutual funds managed by SIMNA and certain related entities, pays
fees to State Street based on the combined average daily net assets of all of
the funds in the Schroder complex, according to the following annual rates:
0.06% of the first $1.7 billion of such assets, 0.04% of the next $1.7
billion, and 0.02% of assets in excess of $3.4 billion, subject to certain
minimum requirements.
Prior to June 1, 1999, the Portfolio paid subadministration fees to Forum
Administrative Services, LLC at an annual rate of 0.05% of the average daily
net assets of the Portfolio, subject to a minimum annual fee of $25,000.
In order to limit the Portfolio's expenses, SIMNA and Schroder Advisors
have voluntarily agreed to reduce their compensation (and, if necessary, to
pay certain expenses of the Portfolio) to the extent that the Portfolio's net
expenses exceed 0.99% of the Portfolio's average daily net assets. For the
year ended October 31, 1999, SIMNA and FAdS waived fees of $33,075 and $9,314,
respectively.
NOTE 4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investments, excluding short-term
securities for the year ended October 31, 1999 were $2,645,387 and
$14,250,014, respectively.
At October 31, 1999, the identified cost for federal income tax purposes
of investments owned by the Fund was $13,903,004 with a net unrealized
appreciation of $1,876,566. Gross unrealized appreciation and depreciation
were $3,576,708 and $1,700,142, respectively.
NOTE 5. CONCENTRATION OF RISK
The Portfolio's investments in companies domiciled in Japan may cause the
Portfolio to be more susceptible to political, social and economic events
adversely affecting Japanese companies than portfolios not so concentrated.
As of October 31, 1999, Schroder All-Asia Fund owned 99.54% of the
Portfolio.
- --------------------------------------------------------------------------------
29
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER JAPAN PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 1999
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS
As of October 31, 1999, the Portfolio had open forward foreign currency
contracts which contractually obligates the Portfolio to deliver currencies at
a specified date as follows:
<TABLE>
<CAPTION>
SOLD SETTLEMENT DATE COST VALUE DEPRECIATION
- ---------------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
162,202,000 JPY* 2/18/00 $1,122,244 $1,231,341 $(109,097)
67,333,000 JPY* 2/28/00 655,006 657,981 (2,975)
---------
$(112,072)
=========
</TABLE>
* Japanese Yen
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Schroder Capital Funds and Interestholders of Schroder Japan
Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Schroder Japan Portfolio (the
"Fund") (a separately managed portfolio of Schroder Capital Funds) at
October 31, 1999, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated herein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments at October 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 17, 1999
- --------------------------------------------------------------------------------
30
<PAGE>
INVESTMENT ADVISER
Schroder Investment Management
North America Inc.
787 Seventh Avenue, 34(th) floor
New York, NY 10019
TRUSTEES
Nancy A. Curtin, CHAIRMAN
Louise Croset, PRESIDENT
Peter E. Guernsey
John I. Howell
William L. Means
David M. Salisbury
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
CUSTODIAN
State Street Bank and Trust Company
TRANSFER & SHAREHOLDER
SERVICING AGENT
Boston Financial Data Services, Inc.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
COUNSEL
Ropes & Gray
The information contained in this report is
intended for the general information of the
shareholders of the Trust. This report is not
authorized for distribution to prospective
investors unless preceded or accompanied
by a current Trust prospectus which contains
important information concerning the Trust.
Schroder All-Asia Fund
P.O. Box 8507
Boston, MA 02266
800-464-3108
[SCHRODER LOGO]
------------------------------------------
Schroder
All-Asia
Fund
ANNUAL REPORT
October 31, 1999
SAAF1299AR Schroder Series Trust II
