<PAGE>
- --------------------------------------------------------------------------------
SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
Two Portland Square, Portland, Maine 04101
<TABLE>
<S> <C>
General Information (207) 879-6200
Account Information (800) 344-8332
Fax (207) 879-6050
</TABLE>
INVESTMENT OBJECTIVE
Long term capital appreciation through investment in U.S. common stock and
securities convertible into common stock.
INVESTMENT MANAGER
Schroder Capital Management International Inc., (the 'Investment Adviser') is a
wholly-owned indirect subsidiary of Schroders plc, the London Stock Exchange
listed holding company parent of an investment banking and investment management
group of companies (the 'Schroder Group') that dates its origins to 1804. The
investment management operations of the Schroder Group are located in 18
countries worldwide. The Schroder Investment Management Group has been managing
investment portfolios since the early years of this century. At October 31, 1995
the Schroder Investment Management Group had over $100 billion in assets under
management. At that date, the Investment Adviser, together with its U.K.
affiliate, Schroder Capital Management International Ltd., had over $15 billion
under management.
December 15, 1995
Dear Shareholder:
The Schroder U.S. Equity Fund registered a total return of 17.7% in the
fiscal year ended October 31, 1995, compared with a 26.4% increase recorded by
the S&P 500. Over the half year period to October 31, the Fund rose by 11.0% and
the S&P 500 by 14.5%. On October 31, the Fund's total net assets were
$19,687,691. The Fund's underperformance was a result of an overweighting of
retail stocks based on management's assessment that consumers are not as debt
burdened as many think and underweighting of technology stocks owing to their
extended valuations. Although this strategy has led to a disappointing year in
1995, we believe that the Fund is well positioned for 1996.
As we look at the economic situation, we remain optimistic that the current
economic cycle will endure at least through 1996, as imbalances that normally
herald recessions are notably absent. Inflation has been well controlled by a
proactive Federal Reserve Board and by fierce international competition in many
key industries. Importantly, we do not believe that consumer debt is nearly as
serious a problem as conventional wisdom would have it, with debt service costs
currently well below past peaks and broad measures of delinquency rates fairly
subdued. Real GDP growth is forecast at 2.5% to 3.0% in 1996, which should be
sufficiently moderate to
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<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
prevent a serious increase in inflation. Furthermore, the economic background
ought to be enhanced at some stage in the not too distant future by a budget
package that will put fiscal policy on a more sustainable path and that could
give the Federal Reserve room to implement another modest reduction in interest
rates. Against such a background the environment for U. S. equity investment
should remain positive.
We thank you for your continued support and interest in the Fund.
Sincerely,
<TABLE>
<S> <C>
HERMANN C. SCHWAB LAURA E. LUCKYN-MALONE
Hermann C. Schwab Laura E. Luckyn-Malone
Chairman President
</TABLE>
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2
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO STRATEGY
Stronger than expected corporate profits growth and substantial declines in
U.S. long bond yields led to a continuation of the strength in the U.S. equity
market seen in the first part of the year. The Schroder U.S. Equity Fund
registered a total return of 17.7% in the fiscal year ended October 31, 1995,
compared with a 26.4% increase recorded by the S&P 500. Over the half year
period to October 31, the Fund rose 11.0% and the S&P 500 by 14.5%.
Our investment policy for both the six month and full year periods has been
based on the premise that a `soft landing' in the economy would be achieved
successfully, and that, while the effect of interest rate increases in 1994
would moderate the rate of economic growth, it would not push the economy into
recession. We have therefore continued to look for an elongated economic cycle,
with continued low inflation. This had led us to maintain a somewhat cyclical
slant to the Fund's portfolio, although one less extreme than in earlier years
of the cycle as we do expect the rate of cyclical earnings growth to slow. In
particular we favor capital goods related issuers which we see as beneficiaries
both of improved corporate spending power and of investment around the world.
Following several years of aggressive restructuring we regard U.S. capital goods
companies such as Rockwell International Corporation and General Electric
Company as extremely competitive on a global basis. Technology companies should
also prosper in this environment, but we have been wary of their often excessive
valuations and consequent room for disappointment in 1996 and have therefore
maintained an underweight position in that sector. In the last six months,
concern over the impact of slower economic growth on corporate profits has
increased; in anticipation of this, the Fund modestly increased its exposure to
both consumer staples and energy, which we view as more defensive sectors, and
reduced exposure to some specialty consumer cyclical stocks.
The technology and financial sectors have been the best performing areas of
the market over both the six and twelve month periods, the former driven by
strong earnings momentum and the latter by a combination of lower interest rates
and consolidation within the sector. Consumer staples performed strongly in the
last six months as anticipation of slowing earnings momentum in other areas of
the market focused attention on more sustainable growth. The Fund's performance
benefited from an overweighting of financial services but was held back by our
cautious stance on technology. In the financial sector, stocks such as Unum
Corporation, in the long term disability market, appear to have further
appreciation potential, despite outperforming the market by nearly 15% this past
year. Moreover, Unum has demographic factors in its favor, as individuals
increasingly focus on disability coverage, and has scope for international
growth.
At year end the Fund was overweighted in consumer cyclicals and capital
goods compared to the S&P 500 and underweighted in technology and consumer
staples. Based on our expectations of a slowdown in corporate growth in 1996, we
believe our somewhat defensive stance positions the Fund well for the coming
year.
MANAGEMENT DISCUSSION
SHOULD WE BE CONCERNED ABOUT U.S. CONSUMER DEBT?
Not nearly to the extent that conventional wisdom would have it. Although
absolute levels of debt are high, total debt service costs relative to
disposable income are still moderate, as are overall delinquency rates. We view
debt as a neutral factor for the consumer, neither sufficiently onerous to
prompt a retrenchment nor modest enough to allow spending gains in excess of
income growth. Consumption growth is therefore forecast to be broadly in line
with the 2.5% to 3.0% gain in real disposable income that Schroder economists
foresee in 1996.
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3
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
DO COMPANIES WITH BELOW AVERAGE CAPITALIZATIONS APPEAR CHEAP RELATIVE TO THE
MARKET OVERALL?
Although our expectation is for continued economic growth in 1996 and 1997,
we do expect the rate of corporate earnings growth to slow. This is a reflection
both of high operating margins relative to history, and of a lack of pricing
power in the economy holding back nominal revenue growth for many companies. In
this environment we believe a premium will be paid for sustainable,
above-average growth in a wide range of sectors. These premiums are already
substantial in many large consumer multinational companies. They are much lower
in companies somewhat lower down the capitalization spectrum that have received
less attention, such as Eckerd Corporation or McKesson Corporation, and which
operate in attractive growth niche areas. Hence, stocks in these areas appear to
offer attractive relative value and are represented significantly in the Fund's
portfolio.
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4
<PAGE>
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SCHRODER U.S. EQUITY FUND
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INVESTMENT ADVISER'S REPORT -- COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT
The following chart reflects a comparison of a change in value of a $10,000
investment in Schroder U.S. Equity Fund, including reinvested dividends and
distributions, and the performance of the Standard & Poor's 500 Index.
Investment Return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Past performance is not predictive nor a guarantee of
future results.
SCHRODER U.S. EQUITY FUND
VS.
STANDARD & POOR'S 500 INDEX
VALUE ON 10/31/95
- -----------------
Schroder U.S. Equity Fund $118,904
S & P 500 Index $216,872
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------
U.S. Equity Fund S & P 500*
---------------------- ------------
One Year 17.68% 26.41%
Five Year 17.50% 17.22%
Ten Year 13.09% 15.45%
Since Inception 10.40% 12.39%**
on 6/23/70
[PERFORMANCE GRAPH]
SCHRODER S & P 500
--------- ------------
23-JUN-70 10000 10000
10490 11601
11450 13554
13929 16531
13179 11760
11900 11760
OCT-75 13302 14822
15057 17812
14266 16704
15472 17744
19671 20455
OCT-80 29747 26996
27375 27117
27944 31530
31355 40345
31409 42995
OCT-85 34648 51373
43459 68464
44566 72838
48015 83723
58022 105748
OCT-90 53059 98067
73308 130926
86311 143947
103128 165387
101044 171719
OCT-95 124590 216872
* The S&P 500 is a composite of the prices of 500 widely held U.S. stocks.
** Annualized return for the S&P 500 is based on an inception date of
6/30/70. Index return does not include expenses, which have been deducted from
the Fund's return.
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5
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1995
INVESTMENT BY INDUSTRY
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
- --------------------------------------------------------
<S> <C>
Basic Materials 5.9%
Capital Goods/Construction 11.8%
Consumer Cyclicals 14.9%
Consumer Products 1.0%
Consumer Staples 16.3%
Energy 9.6%
Financial 13.1%
Technology 7.0%
Transportation/Services/
Miscellaneous 8.8%
Utilities 7.5%
Cash and Other Net Assets 4.1%
-------
Total 100.0%
</TABLE>
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- --------------------------------------------------------
<S> <C>
Eckerd Corp. 2.7%
Exxon Corp. 2.6%
General Electric Co. 2.5%
Nellcor Puritan Bennett, Inc. 2.5%
BankAmerica Corp. 2.4%
Chubb Corp. 2.3%
Invacare Corp. 2.2%
Columbia HCA Healthcare Corp. 2.1%
Amoco Corp. 2.1%
ABC Rail Products Corp. 2.0%
------
Total 23.4%
</TABLE>
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6
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK - 95.9%
SHARES VALUE US$
---------- -----------
<S> <C> <C>
BASIC MATERIALS - 5.9%
8,400 Bowater, Inc. 371,700
6,000 International Paper Company 222,000
4,500 James River Corporation of
Virginia 144,562
12,000 LTV Corporation* 168,000
8,500 Lubrizol Corporation 244,375
-----------
1,150,637
-----------
CAPITAL GOODS/CONSTRUCTION - 11.8%
6,300 Allied-Signal, Inc. 267,750
6,400 Briggs & Stratton Corporation 258,400
7,900 General Electric Company 499,675
8,300 Ingersoll-Rand Company 293,612
5,600 Minnesota Mining &
Manufacturing Company 318,500
6,700 Rockwell International
Corporation 298,150
9,000 Tenneco, Inc. 394,875
-----------
2,330,962
-----------
CONSUMER CYCLICALS - 14.9%
5,000 Dillard Department Stores,
Inc. 135,626
8,600 Goodyear Tire & Rubber Company 326,800
5,966 Home Depot, Inc. 222,233
10,400 La Quinta Inns, Incorporated 267,800
6,000 Mattel, Inc. 172,500
6,600 McKesson Corporation 315,150
4,000 Pep Boys - Manny, Moe & Jack 87,500
10,000 Quiksilver Inc* 310,000
10,000 Rite Aid Corporation 270,000
5,000 River Oaks Furniture,
Incorporated* 40,000
7,200 Talbots, Inc. 174,600
4,400 Toys 'R' Us, Inc.* 96,250
3,000 Viacom, Inc., Class B* 150,000
6,200 Wal-Mart Stores, Inc. 134,075
10,000 Warnaco Group, Inc., Class A 232,500
-----------
2,935,034
-----------
CONSUMER STAPLES - 16.3%
5,000 Abbott Laboratories 198,750
9,030 Bergen Brunswig Corporation 187,373
8,600 Columbia HCA Healthcare
Corporation 422,475
8,400 Conagra, Inc. 324,450
13,500 Eckerd Corporation* 534,938
3,800 General Mills, Inc. 218,025
17,400 Invacare Corporation 439,350
2,800 Johnson & Johnson 228,200
CONSUMER STAPLES (CONCLUDED)
14,800 MCI Communications Corporation 369,075
5,300 PepsiCo, Inc. 279,575
-----------
3,202,211
-----------
CONSUMER PRODUCTS - 1.0%
6,400 Hasbro, Inc. 195,200
-----------
ENERGY - 9.6%
6,500 Amoco Corporation 415,187
5,800 Chevron Corporation 271,150
6,700 Exxon Corporation 511,712
17,500 Flores & Rucks, Inc.* 227,500
6,000 Kerr-McGee Corporation 330,750
7,400 Seagull Energy Corporation* 126,725
-----------
1,883,024
-----------
FINANCIAL - 13.1%
8,300 BankAmerica Corporation 477,250
10,000 Centura Banks, Incorporated 337,500
5,000 Chubb Corporation 449,376
4,800 First Bank System,
Incorporated 238,800
10,700 Leader Financial Corporation 381,188
16,000 TFC Enterprices Incorporated* 168,000
7,500 Union Planters Corp. 229,688
5,800 Unum Corporation 305,225
-----------
2,587,027
-----------
TRANSPORTATION/SERVICES/
MISCELLANEOUS - 8.8%
18,000 ABC Rail Products Corporation* 400,500
4,000 CSX Corporation 335,000
6,500 Factory Stores of America,
Incorporated 125,125
2,500 ITT Corporation 306,250
6,550 Illinois Central Corporation 250,538
17,550 TNT Freightways Corporation 315,900
-----------
1,733,313
-----------
TECHNOLOGY - 7.0%
8,000 AMP, Inc. 314,000
3,900 Automatic Data Processing,
Inc. 278,850
3,900 BMC Software Incorported 138,936
2,700 International Business
Machines Corporation 262,575
6,480 Lynx Therapeutics 2,430
11,000 Novell, Inc.* 181,500
4,500 Seagate Technology, Inc.* 201,375
-----------
1,379,666
-----------
UTILITIES - 7.5%
7,400 FPL Group, Incorporated 309,875
</TABLE>
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7
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK
SHARES VALUE US$
---------- -----------
<C> <S> <C>
UTILITIES (CONCLUDED)
8,500 Nellcor Puritan Bennett,
Incorporated* 488,750
12,000 Northeast Utilities 297,000
6,800 SBC Communications, Inc. 379,950
-----------
1,475,575
-----------
Total Investments
(Cost $14,513,467) 95.9% 18,872,649
-----------
Other Assets, Net 4.1% 815,042
-----------
Total Net Assets 100.0% $19,687,691
-----------
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
8
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at value (at cost, $14,513,467) (Note 1) $18,872,649
Cash and cash equivalents (Note 1) 859,816
Interest and dividends receivable 14,152
-----------
Total Assets 19,746,617
-----------
LIABILITIES:
Payables:
Accrued advisory fees (Note 3) 12,657
Accrued directors fees and expenses 185
Other payables and accrued expenses 46,084
-----------
Total Liabilities 58,926
-----------
Net Assets $19,687,691
-----------
NET ASSETS CONSIST OF:
Paid-in capital $12,649,077
Undistributed net investment income 118,857
Accumulated undistributed net realized gains on investments 2,560,575
Net unrealized appreciation of investments 4,359,182
-----------
Net Assets $19,687,691
-----------
-----------
Net asset value price per share
($19,687,691 divided by 2,092,004
shares outstanding) $9.41
------
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 356,954
Interest 53,153
----------
Total Income 410,107
----------
EXPENSES:
Investment advisory fees (Note 3) 140,988
Transfer agent fees and expenses (Note 3) 29,516
Custodian fees 6,710
Accounting services fees (Note 3) 38,000
Auditing fees 23,300
Other professional fees 1,085
Directors fees and expenses 1,749
Other 21,473
----------
Total Expenses 262,821
----------
NET INVESTMENT INCOME 147,286
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 2,561,493
Change in unrealized appreciation of investments 372,019
----------
NET GAIN ON INVESTMENTS 2,933,512
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,080,798
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 147,286 $ 79,515
Net realized gain on investments 2,561,493 992,164
Change in unrealized appreciation
(depreciation) of investments 372,019 (1,522,418)
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 3,080,798 (450,739)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (107,944) (25,419)
Net realized gain on investments (993,082) (4,844,627)
---------------- ----------------
Total distributions to shareholders (1,101,026) (4,870,046)
(DECREASE) INCREASE FROM CAPITAL SHARE
TRANSACTIONS (NOTE 5) (774,884) 1,938,691
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS 1,204,888 (3,382,094)
NET ASSETS:
Beginning of year 18,482,803 21,864,897
---------------- ----------------
End of the year (including undistributed
net investment income of $118,857 and
$79,515) $ 19,687,691 $ 18,482,803
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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11
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Schroder U.S. Equity Fund (the 'Fund') is a portfolio of Schroder
Capital Funds, Inc. The Fund is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company.
The following summarizes the significant accounting policies of the Fund.
SECURITY VALUATION
The value of securities traded on the New York Stock Exchange is based
on the last sale price, and the value of securities traded on any other
national stock exchange is based on the last sale price as of 4:00 p.m. in
New York as quoted by authoritative sources. In the absence of a recorded
sale, the average of the closing bid and asked prices is used. Securities
traded on other organized markets are valued at the average of the bid and
asked prices as of 4:00 p.m. in New York as available from authoritative
sources at the end of the business day.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis.
Realized gains and losses from security transactions are determined on
the basis of identified cost.
CASH EQUIVALENTS
The Fund considers all deposits and the related interest income in the
Chase Money Market account to be cash equivalents.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions are recorded on the ex-dividend date. Income and capital
gain distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. Permanent
book and tax basis differences relating to shareholder distributions will
result in reclassifications to paid in capital and may affect the per share
allocation between net investment income and realized or unrealized gain or
loss. Undistributed net investment income and accumulated undistributed net
realized gains or losses may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
2. PURCHASES AND SALES OF SECURITIES
The aggregate cost of securities purchased and the proceeds from sales
of securities or maturities for the year ended October 31, 1995 were
$10,155,765 and $12,286,438 respectively.
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12
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTIES:
Remunerations to related parties were paid or accrued in the following
amounts:
<TABLE>
<CAPTION>
For The Year Ended
October 31, 1995
- -------------------------------------------------------------------------------
<S> <C>
Schroder Capital Management International Inc. (investment
advisory fees) $140,988
Forum Financial Corp. (accounting and transfer agency
fees) 67,516
------------
$208,504
-------------
-------------
</TABLE>
The advisory contract provides for an annual fee, payable monthly, of
3/4 of 1% on the first $100,000,000 of average daily net assets and 1/2 of 1%
of the average daily net assets in excess of $100,000,000.
Forum Financial Corp. serves as the Fund's transfer agent and dividend
disbursing agent and is compensated for those services by the Fund in the
amount of $12,000 per year plus certain shareholder account fees. Forum
Financial Corp. also performs portfolio accounting for the Fund and is
compensated for those services by the Fund in the amount of $36,000 per year,
plus certain amounts based upon the number and types of portfolio
transactions.
4. FEDERAL INCOME TAXES:
Since it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders, no Federal income
tax provision is required.
5. CAPITAL SHARES:
At October 31, 1995, the Fund has one class of common shares ($0.01 par
value per share) of which 15,000,000 shares are authorized and 2,092,004
shares are outstanding. Transactions in the Fund's capital shares for the
years ended October 31, 1995 and October 31, 1994 were as follows:
<TABLE>
<CAPTION>
Year Ended October 31, Year Ended October 31,
1995 1994
- ---------------------------------------------------------------------------------------------------------------
Number of Number of
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares subscribed 10,529 $ 90,404 25,935 $ 270,516
Shares issued for dividend reinvestment 111,954 866,525 436,667 3,696,396
--------- ----------- --------- -----------
122,483 956,929 462,602 3,966,912
Shares redeemed (199,081) (1,731,813) (232,425) (2,028,221)
--------- ----------- --------- -----------
Net increase (decrease) in outstanding shares (76,598) $ (774,884) 230,177 $ 1,938,691
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. APPRECIATION OF INVESTMENTS
As of October 31, 1995, the aggregate cost of investment securities for
Federal income tax purposes was $14,513,467 and the gross unrealized
appreciation (depreciation) of investments was as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $4,922,471
Gross unrealized depreciation (563,289)
----------
Net unrealized appreciation $4,359,182
----------
----------
</TABLE>
7. FINANCIAL HIGHLIGHTS
Selected Per share Data and Ratios for the Years Ended:
<TABLE>
<CAPTION>
October 31,
1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year $ 8.52 $11.28 $10.51 $ 9.56 $ 7.05
------ ------ ------ ------ ------
Investment Operations:
Net investment income 0.07 0.04 0.05 0.02 0.09
Net realized and unrealized gain (loss) on
investments 1.33 (0.27) 1.86 1.61 2.57
------ ------ ------ ------ ------
Total from investment operations 1.40 (0.23) 1.91 1.63 2.66
------ ------ ------ ------ ------
Distributions:
From net investment income (0.05) (0.01) (0.04) (0.04) (0.11)
From realized capital gains (0.46) (2.52) (1.10) (0.58) --
From Capital Paid-In -- -- -- (0.06) (0.04)
------ ------ ------ ------ ------
Total distributions (0.51) (2.53) (1.14) (0.68) (0.15)
------ ------ ------ ------ ------
Net Asset Value, end of year $ 9.41 $ 8.52 $11.28 $10.51 $ 9.56
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return 17.68% (2.01)% 19.49% 17.74% 38.16%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Ratios/Supplementary Data:
Net assets, end of year (Thousands) 19,688 18,483 21,865 19,882 20,234
Ratio of expenses to average net assets 1.40% 1.31% 1.18% 1.40% 1.39%
Ratio of net investment income to average net
assets 0.78% 0.41% 0.51% 0.42% 1.30%
Portfolio turnover rate 57.21% 27.43% 57.78% 31.33% 29.98%
</TABLE>
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14
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
8. SUBSEQUENT EVENT
Shareholders of Schroder Capital Funds, Inc. (the 'Company') have
approved the reorganization of the Company from a Maryland corporation into a
Delaware business trust under the name Schroder Capital Funds (Delaware).
This reorganization occurred on December 11, 1995. As a Delaware business
trust, the Trust's operations will be governed by its Trust Instrument and
applicable Delaware law rather than by the Articles of Incorporation, By-Laws
and Maryland law which presently govern the Company's operations.
* * * *
SPECIAL MEETING OF SHAREHOLDER (UNAUDITED)
There was a special meeting of the shareholders of Schroder Capital
Funds, Inc. (the 'Company'), including shareholders of the Fund, on October
23, 1995. At the special meeting, shareholders of the Company re-elected the
current directors of the Company, approved the reorganization of the Company
as a Delaware business trust under the name Schroder Capital Funds (Delaware)
and approved the conversion of the Fund to a Core and Gateway'r' structure.
Of 2,099,909 shares outstanding of the Fund as of the record date for the
special meeting, 1,043,478 were present in person or by proxy.
The first matter about which the Fund's shareholders voted was the
reelection of the Company's directors: Peter E. Guernsey, Ralph E. Hansmann,
John I. Howell, Laura E. Luckyn-Malone, Clarence F. Michalis, Hermann C.
Schwab and Mark J. Smith. The Fund's shareholders voted with the other
shareholders of the Company with respect to this matter. The 1,043,478 shares
of the Fund present at the special meeting were voted about each director as
follows:
<TABLE>
<CAPTION>
Shares Shares Voted Shares Broker
Director Voted 'For' 'Against' Abstaining Non-Votes
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter E. Guernsey 1,038,184 0 0 5,294
Ralph A. Hansmann 1,038,730 0 0 4,748
John I. Howell 1,038,730 0 0 4,748
Laura E. Luckyn-Malone 1,038,916 0 0 4,562
Clarence F. Michalis 1,038,730 0 0 4,748
Hermann C. Schwab 1,038,730 0 0 4,748
Mark J. Smith 1,038,916 0 0 4,562
</TABLE>
The other matter about which the Fund's shareholders voted was the
reorganization of the Company from a Maryland corporation into a Delaware
business trust. The Fund's shareholders voted with the other shareholders of
the Company with respect to this matter. With respect to this matter, the
1,043,478 shares of the Fund present at the special meeting were voted as
follows:
<TABLE>
<CAPTION>
Shares Voted
- -----------------------------------------------------------------
<S> <C>
For 928,630
Against 80,525
Abstain 5,344
Broker Non-Vote 28,979
</TABLE>
DISTRIBUTIONS (UNAUDITED)
During the fiscal year ended October 31, 1995, the fund distributed
$993,082 in long-term capital gains to shareholders.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors of Schroder U.S. Equity Fund:
We have audited the accompanying statement of assets and liabilities of
the Schroder U.S. Equity Fund (a separately managed portfolio of Schroder
Capital Funds, Inc.), including the schedule of investments, as of October
31, 1995, and the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Schroder U.S. Equity Fund as of October 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
Boston, Massachusetts
December 27, 1995
- --------------------------------------------------------------------------------
16
<PAGE>
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- --------------------------------------------------------------------------------
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- --------------------------------------------------------------------------------
<PAGE>
DIRECTORS
Peter E. Guernsey
Ralph E. Hansmann
John I. Howell
Laura E. Luckyn-Malone
Clarence F. Michalis
Hermann C. Schwab
Mark J. Smith
OFFICERS
Hermann C. Schwab
Chairman of the Board
Laura E. Luckyn-Malone
President
Robert G. Davy
Vice President
Richard Foulkes
Vice President
John Y. Keffer
Vice President
Jane Lucas
Vice President
Catherine A. Mazza
Vice President
Mark J. Smith
Vice President
Fariba Talebi
Vice President
John Troiano
Vice President
Ira L. Unschuld
Vice President
Robert Jackowitz
Treasurer
Margaret H. Douglas-Hamilton
Secretary
Thomas G. Sheehan
Assistant Treasurer
Assistant Secretary
David I. Goldstein
Assistant Treasurer
Assistant Secretary
Gerardo Machado
Assistant Secretary
Barbara Gottlieb
Assistant Secretary
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors, Inc.
787 Seventh Avenue
New York, New York 10019
CUSTODIAN
The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, New York 11245
ACCOUNTING, TRANSFER AND DIVIDEND
DISBURSING AGENT
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
COUNSEL
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders
of the Schroder U.S. Equity 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.
[Logo]
Schroder
U.S. Equity
Fund
ANNUAL REPORT
October 31, 1995
Schroder Capital Funds, Inc.
