<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation
through investment in equity securities of Asian countries.
INVESTMENT ADVISER
Schroder Capital Management International Inc. (the "Investment Adviser")
is a wholly owned indirect subsidiary of Schroder plc, the London Stock Exchange
listed holding company parent of an investment banking and investment management
group of companies (the "Schroder Group") that dates its origins to 1804. The
investment management operations of the Schroder Group are located in 22
countries worldwide. As of December 31, 1998, the Schroder Group had over
$195 billion in assets under management. As of March 31, 1999, the Investment
Adviser, together with its U.K. affiliate, Schroder Capital Management
International Ltd., had approximately $28 billion under management.
June 3, 1999
Dear Shareholder:
We are pleased to present the semi-annual report for the Schroder All-Asia
Fund for the six months ended April 30, 1999. During the last six months, the
Asian crisis has lessened dramatically. In Asian economies outside Japan,
economic recovery is broadening out from the export sectors to areas of domestic
demand. A number of economies in the region have experienced upgrades in their
GDP forecasts for 1999 and many remain on course with restructuring programs. In
Japan, although the risks of deflation remain high and there are few signs of
economic recovery, pockets of apparent stability have formed and there is a more
widespread commitment to structural reform. We are closely monitoring economic
policy decisions in China as the Government seeks to address slowing growth. In
the short term, we recognize that policies to reflate the economy may be
beneficial to China-related companies. However, longer-term questions about
reform and recapitalization of the banking system and state owned enterprises
remain.
Looking ahead, we believe there remain areas of compelling value in many
emerging and Asian equity markets. While the global interest rate environment
might provide less support for stock prices than it has done, corporate earnings
should continue to benefit from the effect of previous interest rate cuts.
Opportunities exist for Asian companies that distinguish themselves through
improving internal operations and learning to use capital more efficiently. We
are encouraged by this trend, and believe that the benefits of such
restructuring activity is likely to be a positive influence on companies'
profitability for an extended period of time. Schroders' investment process,
based on detailed fundamental research and carried out globally, is designed to
highlight such opportunities for the long-term benefit of our investors.
As you may already know, Schroder Capital Management International Inc.,
and its sister company responsible for investing in domestic markets, will be
merging into a newly created corporation called Schroder Investment Management
North America Inc. This change will allow us to simplify our corporate structure
and to integrate our global equity and fixed income management services for U.S.
clients into one corporate entity. We can assure you that no changes in Fund
management are planned or anticipated in connection with the merger. We expect
the merger to be effective on or about July 1, 1999.
Thank you for your interest in the Schroder All-Asia Fund.
Sincerely,
/s/ Nancy A. Curtin /s/ Louise Croset
- ---------------------------- ----------------------------
Nancy A. Curtin Louise Croset
Chairman President
1
<PAGE>
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Schroder All-Asia Fund
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MANAGEMENT DISCUSSION AND ANALYSIS (As Of April 30, 1999) (Unaudited)
HOW DID THE FUND PERFORM FOR THE SIX MONTHS ENDED APRIL 30, 1999?
The Schroder All-Asia Fund's Class A Shares returned 33.41% (not including
the deduction of maximum applicable sales charges) for the six months ending
April 30, 1999. Assuming the maximum applicable sales charge of 5.25% had been
paid, the Fund's return would have been 26.33% for the six-month period ended
April 30, 1999. Its benchmark, the 50% MSCI Japan Index/50% MSCI All Country
Asia Free ex-Japan (+ Malaysia) Index returned 35.44% over the same period.
WHAT WAS THE FUND'S INVESTMENT STRATEGY IN JAPAN DURING THE SIX-MONTH PERIOD?
WHICH AREAS OF THE JAPANESE MARKET DO YOU FAVOR AND WHAT FACTORS DO YOU SEE
DRIVING JAPAN'S ECONOMIC RECOVERY?
The Fund was underweight in Japan during the six months and we reduced its
position in this country as the period progressed. Although Japan is making
significant efforts to restructure its economy, we believe that other economies
within the Pacific region will stage a stronger recovery from their low points
of the last few months. However, over the period, we did emphasize specific
sectors which we believed would be beneficial going forward. At the end of the
period, the Fund's largest overweight positions in the Japanese market were in
the manufacturing and wholesale sectors, as these sectors have shown the
clearest signs of restructuring. Many Japanese manufacturing companies have
strong international businesses which we believe should recover once demand
stabilizes, and wholesale businesses should benefit from improving trends in
industrial production and commodity prices. In our view, corporate restructuring
remains a major driving force behind economic recovery in Japan. Using our
disciplined bottom-up investment process, we identified several financially
strong Japanese companies undergoing restructuring. For example, we invested in
Daiwa House, a leading housing company which was one of the first Japanese
companies to drive down costs and buy back its shares, and Sony which started
consolidating its operations over the period by, in part, reducing the size of
its manufacturing workforce. Despite the uncertain macroeconomic picture in
Japan, we still believe there are some individual stocks which have strong
earnings growth prospects. Two companies which met our investment criteria were
Oji Paper, a paper manufacturer, and Showa Shell, a major oil distributor, which
cut costs by reducing production capacity. Both companies are in industries
which have already witnessed some consolidation over the past few years.
THERE HAVE BEEN SIGNS OF RECOVERY IN THE EMERGING MARKETS IN THE PAST FEW
MONTHS. WHICH MARKETS IN YOUR VIEW OFFER THE MOST ATTRACTIVE INVESTMENT
OPPORTUNITIES AND HOW IS THE FUND POSITIONED TO TAKE ADVANTAGE OF THESE
OPPORTUNITIES?
We increased the Fund's exposure to the emerging markets, particularly in
Korea and Thailand, where we believe the governments have shown the greatest
enthusiasm for restructuring. The Fund is overweight in these two markets, but
is also well positioned for a broader recovery within the region. Reform
continues throughout Asia and we believe that emerging markets will benefit from
improving industrial production and consumer demand. The passage of foreclosure
laws in Thailand was an added signal that reform programs within the region are
being implemented. Going forward, we continue to favor Thailand and Korea.
Momentum in reforming Thailand's banking sector is building with a large
increase in the number of loans being restructured. In Korea, economic data has
continued to show a moderate pick up in the domestic economy led by corporate
inventory rebuilding. The recovery of semiconductor prices has also helped
Korean export revenues. Indications that both external and domestic demand may
be strengthening have helped to shift consensus 1999 GDP forecasts from negative
to positive growth. The recent sale of two of Korea's largest banks to foreign
investors is a positive sign of ongoing restructuring in the banking sector.
With bank restructuring under way, the government is expected to increase
pressure on large corporations to follow suit.
- --------------------------------------------------------------------------------
2
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
WHAT IS YOUR OUTLOOK FOR HONG KONG AND HOW IS THE FUND POSITIONED IN THIS
TERRITORY?
We are positive in our outlook for Hong Kong. Government measures to
support the real estate sector, together with falling mortgage rates, have led
to a recovery in the residential real estate market. There are also signs that
consumer confidence is returning. According to recent data, the economy is close
to bottoming, which is leading to forecast upgrades. In view of this, we
increased the Fund's position in Hong Kong, with exposure to real estate through
companies such as Sun Hung Kai Properties and Henderson Land. Both these
companies are financially strong and should benefit from improved consumer
confidence. China remains a concern and in our view the largest threat to the
Hong Kong market. Comments by Prime Minister Zhu during his recent trip to the
U.S. suggest that the Chinese government will continue to support the Hong Kong
economy and work towards membership of the World Trade Organization.
WHAT ARE YOUR VIEWS ON THE FUTURE OF THE PACIFIC REGION AS A WHOLE?
We are positive in our outlook, encouraged by recent events within the
Pacific region. The Asian crisis, which started in 1997, resulted in significant
disruption to the region's markets and economies. However, in the past six
months, there have been signs of stabilizaton within the region as interest
rates have been lowered, exchange rates have appreciated and trade balances have
turned from deficits to surpluses. As a result, the region should start to
recover and provide long-term investors with attractive returns. Investors
should be aware that the Fund continues to carry relatively high levels of risk
associated with its investment within the Pacific region, for example the risk
of political and social instability and currency risk. Looking ahead, not all
countries will recover or embrace reform at the same pace and there is the risk
of further volatility including market setbacks. External events, such as
potentially higher interest rates in the U.S. may affect currencies within the
region, in particular the Hong Kong currency which is linked to the dollar. In
light of these risks, investments in the Fund carry significant risk and should
be viewed as only part of a complete investment program.
The views expressed in this report were those of the Fund's portfolio
manager as of April 30, 1999, and may not reflect the views of the portfolio
manager 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
investment in the Fund and do not constitute investment advice; investors should
consult their own investment professionals as to their individual investment
programs.
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3
<PAGE>
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Schroder All-Asia Fund
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PORTFOLIO CHARACTERISTICS AS OF APRIL 30, 1999 (UNAUDITED)
COUNTRY WEIGHTINGS*
COUNTRY %
- ----------------------------------------------------------
Japan 35.05%
Hong Kong 19.82
Korea 10.29
Singapore 10.06
Malaysia 7.82
Taiwan 5.07
India 4.85
Thailand 2.87
Philippines 2.07
China 1.21
Indonesia 0.89
-------
Total 100.00%
-------
-------
TOP TEN HOLDINGS*
SECURITY %
- ----------------------------------------------------------
Sun Hung Kai Properties Ltd. 2.78%
Pohang Iron & Steel Co. Ltd. 2.77
Samsung Electronics Co. 2.74
Cheung Kong Holdings Ltd. 2.68
Hutchison Whampoa Ltd. 2.44
Singapore Press Holdings Ltd. 2.17
Kookmin Bank 2.16
Bank of East Asia Ltd. 1.89
Hong Kong Telecommunications Ltd. 1.87
Korea Electric Power Corp. 1.80
-----
Total 23.30%
-----
-----
- ------------------------------------------------------------------------
* Expressed as a percentage of the combined Schedules of Investments of the
Schroder Asian Growth Portfolio and the Schroder Japan Portfolio.
- --------------------------------------------------------------------------------
4
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in Portfolios (Notes 1 and 2):
Schroder Asian Growth Fund Portfolio $ 28,723,222
Schroder Japan Portfolio 15,731,606
Receivable for Fund shares sold 2,455
------------
Total Assets 44,457,283
------------
LIABILITIES:
Payable for Fund shares redeemed 197,461
Payable to investment adviser (Note 3) 1,768
Payable to administrator (Note 3) 1,768
Accrued expenses and other liabilities 105,447
------------
Total Liabilities 306,444
------------
Net Assets $ 44,150,839
------------
------------
COMPONENTS OF NET ASSETS:
Paid-in capital $137,363,327
Undistributed net investment loss (122,905)
Accumulated net realized loss (96,306,801)
Net unrealized appreciation on investments 3,217,218
------------
Net Assets $ 44,150,839
------------
------------
SHARES OF BENEFICIAL INTEREST 4,769,011
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY SHARES OF BENEFICIAL INTEREST) $9.26
OFFERING PRICE PER SHARE (NAV DIVIDED BY (1-MAXIMUM SALES LOAD)) $9.77
MAXIMUM SALES LOAD 5.25%
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME ALLOCATED FROM THE PORTFOLIOS (NOTE 1):
Dividend income (net of foreign withholding taxes of $32,264) $ 249,456
Interest income 16,800
Net expenses (223,408)
------------
Net Investment Income Allocated from the Portfolios 42,848
------------
EXPENSES:
Asset allocation (Note 3) 40,985
Administration (Note 3) 10,246
Subadministration (Note 3) 12,500
Shareholder services (Note 3) 51,228
Transfer agency (Note 3) 38,911
Accounting (Note 3) 6,000
Reporting 21,148
Registration 14,575
Audit 5,975
Amortization of organization costs (Note 2) 5,586
Legal 12,686
Trustees 16,955
Miscellaneous 3,743
------------
Total Expenses 240,538
Fees waived (Note 4) (64,774)
------------
Net Expenses 175,764
------------
NET INVESTMENT LOSS (132,916)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS ALLOCATED
FROM THE PORTFOLIOS:
Net realized loss on investments sold (a) (2,281,614)
Net realized loss on foreign currency transactions (29,667)
------------
Net change in realized loss on investments
and foreign currency transactions (2,311,281)
------------
Net change in unrealized appreciation on investments 14,394,513
Net change in unrealized depreciation on
foreign currency transactions (2,274)
------------
Net change in unrealized appreciation on investments
and foreign currency transactions 14,392,239
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS ALLOCATED
FROM THE PORTFOLIOS 12,080,958
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,948,042
------------
------------
</TABLE>
- ------------------------------------------------------------------------
(a) Includes capital gains tax paid for sales of Indian securities in the amount
of $13,813.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, 1999 Year Ended
(unaudited) October 31, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
NET ASSETS, BEGINNING OF PERIOD $ 42,787,101 $ 150,405,575
-------------- --------------
OPERATIONS:
Net investment income (loss) (132,916) 255,021
Net realized loss on investments and foreign
currency transactions (2,311,281) (65,329,096)
Net change in unrealized appreciation on
investments and foreign currency
transactions 14,392,239 34,752,866
-------------- --------------
Net increase (decrease) in net assets
resulting from operations 11,948,042 (30,321,209)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (55,930) --
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 2,949,909 497,253
Redemption Fees (Note 5) -- 1,447,222
Redemption of shares (13,478,283) (79,241,740)
-------------- --------------
Net decrease from capital share
transactions (10,528,374) (77,297,265)
-------------- --------------
Net increase (decrease) in net assets 1,363,738 (107,618,474)
-------------- --------------
NET ASSETS, END OF PERIOD (A) $ 44,150,839 $ 42,787,101
-------------- --------------
-------------- --------------
SHARE TRANSACTIONS
Sale of shares 386,580 72,790
Redemption of shares (1,775,050) (10,022,409)
-------------- --------------
Net decrease in shares (1,388,470) (9,949,619)
-------------- --------------
-------------- --------------
</TABLE>
- ------------------------------------------------------------------------
(a) Includes undistributed net investment income of $65,941 for the period ended
October 31, 1998, and distributions in excess of net investment income of
$122,905 for the six months ended April 30, 1999.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each
period:
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, For the Year Ended October 31, Period Ended
1999 ------------------------------------------- October 31,
(unaudited) 1998 (g) 1997 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.95 $ 9.34 $ 13.15 $ 12.62 $ 13.84 $ 14.01 (h)
-------- -------- -------- -------- -------- --------
Investment Operations
Net Investment Income (Loss) (b) (0.02) 0.02 (0.05) (0.03) 0.02 (0.01)
Net Realized and Unrealized Gain
(Loss) on Investments and Foreign
Currency Transactions 2.34 (2.57) (3.66) 0.56 (1.24) (0.16)
-------- -------- -------- -------- -------- --------
Total from Investment Operations 2.32 (2.55) (3.71) 0.53 (1.22) (0.17)
-------- -------- -------- -------- -------- --------
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 -- 0.16 -- -- -- --
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 9.26 $ 6.95 $ 9.34 $ 13.15 $ 12.62 $ 13.84
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Market Value, End of Period N/A N/A $ 8.50 $ 12.00 $ 11.13 $ 12.00
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total investment return based on (c):
Market Value N/A N/A (28.62)% 7.87% (7.29)% (20.00)%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Net Asset Value 33.41% (d) (25.59)%(d) (28.43)% 4.20% (8.82)% (1.21)%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratio/Supplementary Data:
Net Assets at End of Period
(in thousands) $ 44,151 $ 42,787 $150,406 $257,840 $247,490 $271,420
Ratios to Average Net Assets (b):
Expenses, including
reimbursement/waiver of fees 1.95% (e) 1.90% 1.78% 1.57% 1.65% 1.59% (e)
Expenses, excluding
reimbursement/waiver of fees 2.62% (e) 2.13% 1.78% 1.57% 1.65% 1.59% (e)
Net investment income (loss), including
reimbursement/waiver of fees (0.65)% (e) 0.28% (0.31)% (0.19)% 0.12% (0.10)% (e)
Portfolio Turnover Rate N/A (f) N/A (f) 39% 35% 67% 20%
</TABLE>
- ------------------------------------------------------------------------
(a) For the period December 30, 1993 (commencement of operations) through
October 31, 1994 (See Note 1).
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolios, which commenced operations on March 23, 1998.
(c) Total returns would have been lower had certain expenses not been reduced
during the periods shown (See Note 4).
(d) Total return does not include sales charge.
(e) Annualized.
(f) Investment securities were not held directly by the Fund (See Note 1).
Portfolio turnover rate is not applicable.
(g) The Fund converted from Schroder Asian Growth Fund, Inc., a closed-end fund,
on March 20 1998 (See Note 1).
(h) Net of $0.09 offering expenses per share.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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.
Included in this report is the Schroder All-Asia Fund (the "Fund"), which 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 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") that
have the same investment objective and 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 Portfolio's 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 April 30, 1999, the Fund owned 99.8% and 99.6%,
respectively, of the Schroder Asian Growth Fund Portfolio and the Schroder
Japan Portfolio, respectively, and is deemed, 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 certain
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 amounts could
differ from those estimates.
The following represent the 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 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.
- --------------------------------------------------------------------------------
9
<PAGE>
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Schroder All-Asia Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 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.
FEDERAL TAXES
The Fund intends to qualify each year as a regulated investment company
and distribute all its taxable income. In addition, by distributing in each
calendar year substantially all its net investment income, capital gain and
certain other amounts, if any, the Fund will not be subject to federal excise
tax. Therefore, no federal income or excise tax provision is required.
ORGANIZATION COSTS
Costs incurred by the Fund in connection with its organization were
amortized on a straight-line basis over a five-year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Fund currently invests all its investable 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 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.
SCMI has informed the Trust that it expects on or about July 1, 1999 to
be merged into Schroder Investment Management North America Inc., a newly
organized Delaware corporation. SCMI and Schroder Investment Management North
America Inc. are both wholly owned subsidiaries of Schroder U.S. Holdings,
Inc.
ADMINISTRATOR AND SUBADMINISTRATOR
The administrator of the Fund is Schroder Fund Advisors Inc. ("Schroder
Advisors"). 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 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.
For the period ended April 30, 1999, Schroder Advisors retained sales
commissions in the amount of $3,336.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
Schroder All-Asia Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
SHAREHOLDER SERVICE 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 4. WAIVER OF FEES
In order to limit the Fund's expenses, SCMI 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
exceed 1.95% of the Fund's average daily net assets. For the period ended
April 30, 1999, SCMI, Schroder Advisors and FAdS waived fees of $40,983,
$21,538 and $2,253, respectively.
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 $1,447,222.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
Schroder Asian Growth Fund Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
STOCKS AND WARRANTS - 100.6%
SHARES VALUE US$
- ---------- ----------
CHINA - 1.9%
COMMON STOCK -
142,000 Citic Pacific Ltd. $ 384,764
11,400 Huaneng Power International, Inc., ADR (a) 153,188
----------
537,952
----------
HONG KONG - 30.7%
COMMON STOCK -
347,000 Bank of East Asia Ltd. (a) 843,972
131,000 Cheung Kong Holdings Ltd. 1,191,646
284,000 China Resources Enterprises Ltd. 478,207
300,000 China Telecom (Hong Kong) Ltd. (a) 685,143
105,000 Henderson Land Development Co. Ltd. 635,403
34,000 Hong Kong Electric Holdings Ltd. 108,358
308,800 Hong Kong Telecommunications Ltd. 830,750
12,800 HSBC Holdings plc 475,652
121,000 Hutchison Whampoa Ltd. 1,085,069
242,000 Kerry Properties Ltd. 270,096
206,000 South China Morning Post Holdings Ltd. 124,261
141,000 Sun Hung Kai Properties Ltd. 1,237,129
86,000 Swire Pacific Ltd. 482,697
WARRANTS -
269,260 Hong Kong and China Gas Co. Ltd. 378,691
35,800 Hong Kong and China (a) 5,959
----------
8,833,033
----------
INDIA - 7.5%
COMMON STOCK -
3,600 Associated Cement Cos. Ltd. 117,900
30,400 Bajaj Auto Ltd. 364,520
51,700 Bharat Petroleum Corp. Ltd. 204,909
12,000 Castrol (India) Ltd. 232,265
12,500 Hindustan Lever Ltd. 603,250
8,000 ITC Ltd. 179,136
48,000 Mahanagar Telephone Nigam Ltd. 176,162
4,200 NIIT Ltd. 163,764
9,000 Ranbaxy Laboratories Ltd. 119,930
77 Tata Engineering and Locomotive Co. Ltd. 257
----------
2,162,093
----------
INDONESIA - 1.4%
COMMON STOCK -
70,000 PT Gudang Garam Tbk 126,844
99,000 PT Indofood Sukses Makmur Tbk (a) 78,370
59,000 PT Indosat (Persero) Tbk (a) 113,844
173,000 PT Telekomunikasi Indonesia 77,033
----------
396,091
----------
SHARES VALUE US$
- ---------- ----------
KOREA, REPUBLIC OF - 15.9%
COMMON STOCK -
70,521 Kookmin Bank (a) $ 961,276
27,800 Korea Electric Power Corp. 799,992
10,650 Pohang Iron and Steel Co. Ltd. 922,416
12,100 Pohang Iron and Steel Co. Ltd., ADR (b) 311,575
15,880 Samsung Electronics Co. 1,221,269
176 SK Telecom Co. Ltd. (b) 193,028
12,670 SK Telecom Co. Ltd., ADR 175,796
----------
4,585,352
----------
MALAYSIA - 12.1% (B)
COMMON STOCK -
222,000 Gamuda Berhad 271,079
171,500 Genting Berhad 433,273
648,000 Island & Peninsular Berhad 405,180
313,000 Malaysia International Shipping Berhad 395,377
151,000 Malaysian Assurance Alliance Berhad 156,408
174,000 Petronas Gas Berhad 324,197
208,000 RJ Reynolds Berhad 181,293
95,000 Tanjong plc 159,004
175,000 Telekom Malaysia Berhad 412,641
440,000 Tenaga Nasional Berhad 745,701
----------
3,484,153
----------
PHILIPPINES - 3.2%
COMMON STOCK -
157,500 Ayala Corp. 56,954
715,000 Ayala Land, Inc. 263,256
120,300 Manila Electric Co., "B" 458,752
3,940 Philippine Long Distance Telephone Co. 127,452
7,000 San Miquel Corp. 14,912
----------
921,326
----------
SINGAPORE - 15.6%
COMMON STOCK -
175,000 Allgreen Properties (a) 106,436
85,000 City Developments Ltd. 567,169
303,000 Courts (Singapore) Ltd. 161,028
19,000 Cycle & Carriage Ltd. 113,316
58,000 Development Bank Singapore Ltd. 616,476
56,000 Natsteel Electronics Ltd. 188,486
49,000 Singapore Airlines Ltd. 451,374
65,344 Singapore Press Holdings Ltd. 964,631
260,000 Singapore Telecommunications Ltd. 482,077
82,880 United Overseas Bank Ltd. 641,116
35,000 Venture Manufacturing (Singapore) Ltd. 192,206
----------
4,484,315
----------
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
Schroder Asian Growth Fund Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
APRIL 30, 1999 (UNAUDITED)
SHARES VALUE US$
- ---------- ----------
TAIWAN - 7.9%
COMMON STOCK -
24,000 Asustek Computer, Inc. (a) $ 251,017
145,000 Cathay Life Insurance Co. (a) 518,823
524,000 China Steel Corp. 416,649
160,419 Nan Ya Plastic Corp. (a) 255,108
119,000 Siliconware Precision Industries Co. (a) 212,896
179,000 Taiwan Semiconductor Manufacturing Co.
(a) 604,896
----------
2,259,389
----------
THAILAND - 4.4%
COMMON STOCK -
16,000 Advanced Info Service Public Co. Ltd. 169,853
19,000 Bangkok Bank Public Co. Ltd. (a) 56,825
105,000 Electricity Generating Public Co. Ltd.
(a) 233,404
21,500 PTT Exploration and Production Public
Co. Ltd. (a) 198,120
3,000 Siam Cement Public Co. Ltd. (a) 88,593
437,000 TelecomAsia Corp. Public Co. Ltd. (a) 376,787
SHARES VALUE US$
- ---------- ----------
THAILAND (CONCLUDED)
21,000 Thai Farmers Bank Public Co. Ltd. (a) $ 58,280
15,000 Total Access Communication Public Co.
Ltd. 51,000
PREFERRED STOCK -
64,000 Siam Commercial Bank (a) 45,283
----------
1,278,145
----------
Total Investments--100.6%
(cost $25,349,403) 28,941,849
Other Assets, Less Liabilities--(0.6)% (167,453)
-----------
Total Net Assets--100.0% $28,774,396
-----------
-----------
- ------------------
(a) Non-income producing security.
(b) Valued pursuant to methodology approved by the Board of Trustees.
ADR--American Depository Receipts
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACT TO SELL
<TABLE>
<CAPTION>
UNDERLYING FACE
AMOUNT OF UNREALIZED
CONTRACT DATE CURRENCY UNITS VALUE DEPRECIATION
- ------------- --------------------------------------- ----------- --------------- ------------
<S> <C> <C> <C> <C>
3/03/2000 Hong Kong Dollar 17,750,000 $ 2,275,145 $ 26,801
----------- --------
----------- --------
</TABLE>
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, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments, at cost $ 25,349,403
Net unrealized appreciation 3,592,446
--------------
Total Investments, at value 28,941,849
Cash 390,984
Foreign currency (cost $75,012) 75,886
Receivable for dividends and interest 50,377
Receivable for investments sold 185,092
Organization costs, net of amortization (Note 2) 2,958
Prepaid expenses 1,716
--------------
Total Assets 29,648,862
--------------
LIABILITIES:
Payable for investments purchased 783,829
Payable for forward foreign currency contracts 26,801
Payable to investment adviser (Note 3) 11,325
Payable to administrator (Note 3) 1,102
Payable to subadministrator (Note 3) 1,102
Accrued expenses and other liabilities 50,307
--------------
Total Liabilities 874,466
--------------
Net Assets $ 28,774,396
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
Schroder Asian Growth Fund Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $19,269) $ 175,816
Interest income 8,702
------------
Total Investment Income 184,518
------------
EXPENSES:
Investment advisory (Note 3) 80,157
Administration (Note 3) 5,725
Subadministration (Note 3) 12,500
Interest holder recordkeeping (Note 3) 6,038
Custody 9,173
Accounting (Note 3) 31,000
Legal 2,307
Audit 14,870
Pricing 2,727
Trustees 1,205
Amortization of organization costs (Note 2) 380
Miscellaneous 1,739
------------
Total Expenses 167,821
Fees waived (Note 6) (35,454)
------------
Net Expenses 132,367
------------
NET INVESTMENT INCOME 52,151
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments sold (a) (1,018,460)
Net realized loss on foreign currency transactions (35,447)
------------
Net realized loss on investments and
foreign currency transactions (1,053,907)
------------
Net change in unrealized appreciation on investments 8,996,638
Net change in unrealized appreciation on foreign currency transactions 4,192
------------
Net change in unrealized appreciation on investments and foreign
currency transactions 9,000,830
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS 7,946,923
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,999,074
------------
------------
</TABLE>
- ------------------------------------------------------------------------
(a) Includes capital gains tax paid for sales of Indian securities in the amount
of $13,813.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
Schroder Asian Growth Fund Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, 1999 Period Ended
(unaudited) October 31, 1998 (a)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $ 22,531,426 $ --
------------ ------------
OPERATIONS:
Net investment income 52,151 571,616
Net realized loss on investments and foreign currency transactions (1,053,907) (15,840,538)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions 9,000,830 (4,115,849)
------------ ------------
Net increase (decrease) in net assets resulting from
operations 7,999,074 (19,384,771)
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 4,481,821 93,722,315 (b)
Withdrawals (6,237,925) (51,806,118)
------------ ------------
Net increase (decrease) in net assets from
transactions in investors' beneficial interest (1,756,104) 41,916,197
------------ ------------
Net increase in net assets 6,242,970 22,531,426
------------ ------------
NET ASSETS, END OF PERIOD $ 28,774,396 $ 22,531,426
------------ ------------
------------ ------------
</TABLE>
- ------------------------------------------------------------------------
(a) For the period March 23, 1998 (commencement of operations) through October
31, 1998 (See Note 1).
(b) Includes initial contribution from Core and Gateway(Registered) structure
conversion of $85,862,089 (See Note 1).
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, 1999 Period Ended
(unaudited) October 31, 1998 (a)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ratio to Average Net Assets (b):
Expenses, including waiver of fees 1.16% 1.16%
Expenses, excluding waiver of fees 1.47% 1.27%
Net investment income, including waiver of fees 0.19% 2.51%
Portfolio Turnover Rate 40% 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.
- --------------------------------------------------------------------------------
16
<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, as amended (the "Act"), currently has eight 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 Core and Gateway(Registered)
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 represent the significant accounting policies of the
Portfolio:
INVESTMENT VALUATION
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 last sale price on
the preceding day or at the mean of the closing bid and ask prices
("mid-market price"). 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 current market price, then marked to market to recognize any gain
or loss on the transaction. 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.
As of April 30, 1999, the Portfolio held 12 fair valued securities with an
aggregate market value of $3,988,756, representing 13.9% of the total net
assets of the Portfolio.
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 unrecoverable withholding tax. Interest income, including
accretion of discount, is recorded as earned. Identified cost of investments
sold is used to determine gain and loss for both financial statement and
federal income tax purposes. Foreign dividend and interest income amounts and
realized capital gain and loss are converted to U.S. dollar equivalents using
foreign exchange rates in effect at the date of the transactions.
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
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
Schroder Asian Growth Fund Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 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.
ORGANIZATION 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 compensation at an annual rate,
payable monthly, of 0.70% of the Portfolio's average daily net assets.
SCMI has informed the Trust that it expects on or about July 1, 1999 to
be merged into Schroder Investment Management North America Inc., a newly
organized Delaware corporation. SCMI and Schroder Investment Management North
America Inc. are both wholly owned subsidiaries of Schroder U.S. Holdings,
Inc.
ADMINISTRATOR AND SUBADMINISTRATOR
The administrator of the Portfolio is Schroder Fund Advisors Inc.
("Schroder Advisors"). 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, the Trust has entered into a Sub-Administration
Agreement with State Street Bank and Trust Company and Schroder Advisors.
Under that Agreement, the Portfolio, together with other mutual funds managed
by SCMI 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
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
Schroder Asian Growth Fund Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
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. Pursuant to a separate agreement, the Portfolio pays State
Street fees for accounting services at the following annual rates: 0.02% of
the first $100 million of net assets, 0.015% of the next $100 million; 0.005%
of the next $300 million, and 0.0025% of assets in excess of $300 million,
subject to certain minimum requirements. Prior to June 1, 1999, the Portfolio
paid (i) subadministration fees to Forum Administrative Services, LLC
("FAdS") at an annual rate of 0.05% of the average daily net assets of the
Fund, subject to a minimum annual fee of $25,000, and (ii) paid accounting
fees and interest holder recordkeeping services to Forum Accounting Services,
LLC at annual rates of $60,000 and $12,000, respectively.
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,
1999, aggregated $8,972,000 and $9,054,140, respectively.
NOTE 5. FEDERAL 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.
NOTE 6. WAIVER OF FEES
In order to limit the Portfolio's expenses, SCMI is contractually
obligated to reduce its compensation (and, if necessary, to pay certain other
portfolio expenses) until December 31, 1999, to the extent that the
Portfolio's net expenses exceed 1.16% of the Portfolio's average daily net
assets. For the period ended April 30, 1999, SCMI and FAdS waived fees of
$28,680, and $6,774, respectively.
NOTE 7. CONCENTRATION OF RISK
The Portfolio's investments in companies domiciled in Asian countries
other than Japan, including countries with limited or developing markets, may
cause the Portfolio to be more susceptible to political, social and economic
events adversely affecting the Asian countries in which it invests than
portfolios not so concentrated.
Effective September 1, 1998, the Malaysian government implemented a tax
structure related to the sale of all Malaysian securities until at least
September 1, 1999. The value of the Portfolio's Malaysian holdings have been
calculated as of April 30, 1999, using the local price quotations converted
to U.S. dollars at a discounted exchange rate determined in accordance with
the Portfolio's fair value pricing procedures.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
Schroder Japan Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
COMMON STOCK - 99.0%
SHARES VALUE US$
- ------- ------------
CAPITAL EQUIPMENT - 21.3%
41,000 Amada Metrics Co. Ltd. $ 241,477
24,000 Daiwa House Industry Co. Ltd. 286,525
4,000 Glory Ltd. 86,293
16,000 Inaba Denkisangyo Co. Ltd. 172,250
9,000 Murata Manufacturing Co. Ltd. 514,991
1,000 Rohm Co. Ltd 120,642
28,000 Sanki Engineering Co. Ltd. 200,332
2,000 SMC Corp. 184,482
6,000 Sony Corp. 560,483
262,000 Sumitomo Metal Industries Ltd. 349,007
16,000 Toyota Motor Corp. 454,418
20,000 Yamatake Corp. 189,844
------------
3,360,744
------------
CONSUMER DURABLES - 8.7%
33,000 Matsushita Electric Industrial
Co. Ltd. 627,590
17,000 Takeda Chemical Industries 739,184
------------
1,366,774
------------
CONSUMER NON-DURABLES - 1.6 %
6,200 Aoyamma Trading Co. Ltd. 172,451
6,000 Onward Kashiyama Co. Ltd. 73,391
------------
245,842
------------
ELECTRIC - 9.5%
6,000 Canon, Inc. 146,781
19,000 Fuji Photo Film Co. 717,904
88,000 Hitachi Ltd. 642,888
------------
1,507,573
------------
ENERGY - 2.5%
31,000 Nittetsu Mining Co. Ltd. 103,886
49,000 Showa Shell Sekiyu 293,520
------------
397,406
------------
FINANCE - 10.7%
44,000 Asahi Bank Ltd. 232,606
16,900 Credit Saison Co. Ltd. 345,472
91,000 KOA Fire & Marine Insurance Co.
Ltd. 285,897
25,000 Nomura Securities Co. Ltd. 269,769
30,000 Sumitomo Marine & Fire Insurance
Co. Ltd. 203,584
64,000 Yasuda Fire & Marine Insurance
Co. Ltd. 354,956
------------
1,692,284
------------
SHARES VALUE US$
- ------- ------------
MATERIALS - 13.4%
25,000 Bridgestone Corp. $ 670,234
35,000 Kuraray Co. Ltd. 398,789
49,000 Nippon Paper Industries Co. 258,626
19,000 Nitto Denko Corp. 361,340
27,000 Oji Paper Co. Ltd. 161,736
80,000 Sakata Inx Corp. 262,061
------------
2,112,786
------------
MULTI-INDUSTRY - 7.7%
65,000 Mitsui & Co. Ltd. 476,495
13,000 National House Industrial Co.
Ltd. 100,091
32,000 Sumitomo Corp. (a) 236,458
32,000 TOC Co. Ltd. 264,876
11,000 Trusco Nakayama Corp. 134,642
------------
1,212,562
------------
SERVICES - 22.4%
56,000 Airport Facilities Co. Ltd. 258,040
8,000 Banyu Pharmaceutical Co. Ltd. 147,451
9,000 Chubu-Nippon Broadcast Co. Ltd. 79,171
56 East Japan Railway Co. 330,760
61,000 Hanshin Electric Railway Co.
Ltd. 189,090
4,000 Ito-Yokado Co. Ltd. 245,641
19,000 Japan Airport Terminal Co. Ltd. 200,567
27,000 Mitsubishi Corp. 178,701
41 NTT Corp. 446,543
5 NTT Mobile Communications
Network, Inc. 293,227
27,000 Omron Corp. 372,105
2,000 Secom Co. Ltd. 195,373
14,000 Sekisui House Ltd. 156,819
37,000 Toppan Printing Co. Ltd. 445,135
------------
3,538,623
------------
TRANSPORTATION SERVICES - 1.2%
15,000 Yusen Air & Sea Service Co. Ltd. 187,247
Total Investments - 99.0%
(cost $15,941,155) 15,621,841
Other Assets Less
Liabilities - 1.0% 167,736
------------
Total Net Assets - 100.0% $ 15,789,577
------------
------------
- ------------------
(a) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
Schroder Japan Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments, at cost $ 15,941,155
Net unrealized depreciation (319,314)
------------
Total Investments, at value 15,621,841
Cash 56,765
Receivable for dividends and interest 70,675
Receivable for investments sold 69,709
Organization costs, net of amortization (Note 2) 2,958
Prepaid expenses 1,588
------------
Total Assets 15,823,536
------------
LIABILITIES:
Payable to investment adviser (Note 3) 632
Payable to administrator (Note 3) 682
Payable to subadministrator (Note 3) 682
Accrued expenses and other liabilities 31,963
------------
Total Liabilities 33,959
------------
Net Assets $ 15,789,577
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
Schroder Japan Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $13,086) $ 74,186
Interest income 8,139
------------
Total Investment Income 82,325
------------
EXPENSES:
Investment advisory (Note 3) 50,972
Administration (Note 3) 4,634
Subadministration (Note 3) 12,500
Interest holder recordkeeping (Note 3) 6,038
Custody 2,697
Accounting (Note 3) 30,000
Legal 1,838
Audit 14,402
Pricing 2,826
Trustees 1,049
Amortization of organization costs (Note 2) 380
Miscellaneous 1,608
------------
Total Expenses 128,944
Fees waived (Note 6) (37,410)
------------
Net Expenses 91,534
------------
NET INVESTMENT LOSS (9,209)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments sold (1,248,832)
Net realized gain on foreign currency transactions 6,475
------------
Net realized loss on investments
and foreign currency transactions (1,242,357)
------------
Net change in unrealized appreciation on investments 5,409,434
Net change in unrealized depreciation on
foreign currency transactions (7,218)
------------
Net change in unrealized appreciation on investments
and foreign currency transactions 5,402,216
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS 4,159,859
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,150,650
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
Schroder Japan Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, 1999 Period Ended
(unaudited) October 31, 1998 (a)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $ 20,683,565 $ --
------------ ------------
OPERATIONS:
Net investment income (loss) (9,209) 83,990
Net realized loss on investments
and foreign currency transactions (1,242,357) (3,009,159)
Net change in unrealized appreciation on investments
and foreign currency transactions 5,402,216 1,192,952
------------ ------------
Net increase (decrease) in net assets
resulting from operations 4,150,650 (1,732,217)
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 720,425 57,952,999 (b)
Withdrawals (9,765,063) (35,537,217)
------------ ------------
Net increase (decrease) in net assets from
transactions in investors' beneficial interest (9,044,638) 22,415,782
------------ ------------
Net increase (decrease) in net assets (4,893,988) 20,683,565
------------ ------------
NET ASSETS, END OF PERIOD $ 15,789,577 $ 20,683,565
------------ ------------
------------ ------------
</TABLE>
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(a) For the period March 23, 1998 (commencement of operations) through October
31, 1998.
(b) Includes initial contribution from Core and Gateway(Registered) structure
conversion of $55,886,917 (See Note 1).
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, 1999 Period Ended
(unaudited) October 31, 1998 (a)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ratio to Average Net Assets(b):
Expenses, including waiver of fees 0.99 % 0.99%
Expenses, excluding waiver of fees 1.39 % 1.24%
Net investment income, including waiver of fees (0.10)% 0.55%
Portfolio Turnover Rate 7% 36%
</TABLE>
- ------------------------------------------------------------
(a) For the period March 23, 1998 (commencement of operations) through
October 31, 1998.
(b) Annualized.
The accompanying notes are an integral part of the financial statements.
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23
<PAGE>
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Schroder Japan Portfolio
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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, as amended (the "Act"), currently has eight 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 Core and Gateway(Registered) 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 represent the significant accounting policies of the
Portfolio:
INVESTMENT VALUATION
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 last sale price on
the preceding day or at the mean of the closing bid and ask prices
("mid-market price"). 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 current market price, then marked to market to recognize any gain
or loss on the transaction. 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.
As of April 30, 1999, the Portfolio did not hold a position in fair valued
securities.
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 unrecoverable withholding tax. Interest income, including
accretion of discount, is recorded as earned. Identified cost of investments
sold is used to determine gain and loss for both financial statement and
federal income tax purposes. Foreign dividend and interest income amounts and
realized capital gain and loss are converted to U.S. dollar equivalents using
foreign exchange rates in effect at the date of the transactions.
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
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
Schroder Japan Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 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.
ORGANIZATION 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 compensation at an annual rate,
payable monthly, of 0.55% of the Portfolio's average daily net assets.
SCMI has informed the Trust that it expects on or about July 1, 1999 to
be merged into Schroder Investment Management North America Inc., a newly
organized Delaware corporation. SCMI and Schroder Investment Management North
America are both wholly owned subsidiaries of Schroder U.S. Holdings, Inc.
ADMINISTRATOR AND SUBADMINISTRATOR
The administrator of the Portfolio is Schroder Advisors Inc. ("Schroder
Advisors"). 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, the Trust has entered into a Sub-Administration
Agreement with State Street Bank and Trust Company and Schroder Advisors.
Under that Agreement, the Portfolio, together with other mutual funds managed
by SCMI 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.
Pursuant to a separate agreement, the Portfolio pays State Street fees for
accounting services at the following annual rates: 0.02% of the first
$100 million of net assets, 0.015% of the
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25
<PAGE>
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Schroder Japan Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
next $100 million; 0.005% of the next $300 million, and 0.0025% of assets in
excess of $300 million, subject to certain minimum requirements. Prior to
June 1, 1999, the Portfolio paid (i) subadministration fees to Forum
Administrative Services, LLC at an annual rate of 0.05% of the average daily
net assets of the Fund, subject to a minimum annual fee of $25,000, and
(ii) paid accounting fees and interest holder recordkeeping services to Forum
Accounting Services, LLC at annual rates of $60,000 and $12,000,
respectively.
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,
1999, aggregated $1,335,181 and $9,558,756, respectively.
NOTE 5. FEDERAL 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.
NOTE 6. WAIVER OF FEES
In order to limit the Portfolio's expenses, SCMI is contractually
obligated to reduce its compensation (and, if necessary, to pay certain other
portfolio expenses) until December 31, 1999, to the extent that the
Portfolio's net expenses exceed 0.99% of the Portfolio's average daily net
assets. For the period ended April 30, 1999, SCMI and FAdS waived fees of
$29,544 and $7,866, respectively.
NOTE 7. 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.
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26
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<PAGE>
TRUSTEES
Nancy A. Curtin, Chairman
Peter E. Guernsey
John I. Howell
William L. Means
David M. Salisbury
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
CUSTODIAN
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
TRANSFER AGENT
Boston Financial Data Services Inc.
Two Heritage Drive
North Quincy, MA 02171
(800) 464-3108
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
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.
SAAF/Semi0499
[Schroders Logo]
Schroder
All-Asia
Fund
SEMI-ANNUAL REPORT
APRIL 30, 1999
(Unaudited)
Schroder Series Trust II
