<PAGE>
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Schroder International Smaller Companies Fund
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Two Portland Square, Portland, Maine 04101
General Information (207) 879-6200
Account Information (800) 344-8332
Fund Literature (800) 290-9826
Fax (207) 879-6050
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation through investment in securities
markets outside the United States. It is intended for long-term investors
seeking international diversification and willing to accept the risks associated
with investments in smaller companies of foreign markets. Securities are
selected on the basis of potential for capital appreciation without regard for
current income and, at the time of purchase, have market capitalizations of $1.5
billion or less at the time of investment. The Fund currently seeks to achieve
its investment objective by investing all of its investable assets in Schroder
International Smaller Companies Portfolio (the 'Portfolio'), a series of a
registered open-end investment company with substantially the same investment
objective and policies as the Fund. This semi-annual report includes the
unaudited financial statements of both the Fund and the Portfolio.
INVESTMENT ADVISER
Schroder Capital Management International Inc. (the 'Investment Adviser') is a
wholly owned indirect subsidiary of Schroders plc, the London Stock Exchange
listed holding company parent of an investment banking and investment management
group of companies (the 'Schroder Group') that dates its origins to 1804. The
investment management operations of the Schroder Group are located in 18
countries worldwide. The Schroder Group has been managing international
investment portfolios since the early years of this century. As of March 31,
1997, the Schroder Group had over $150 billion in assets under management. At
that same date, the Investment Adviser, together with its U.K. affiliate,
Schroder Capital Management International Ltd., had over $23 billion under
management.
June 15, 1997
Dear Shareholder:
We are pleased to present the semi-annual report for the Schroder
International Smaller Companies Fund for the period from inception on November
4, 1996 through April 30, 1997. Over this timeframe, the total return of the
Fund was -6.4%, compared with the Salomon Brothers Extended Market Index, which
returned -4.5%.
The period since the launch of this Fund has not been a rewarding one for
small companies internationally, and in many markets over the period small
company returns have failed to match their larger counterparts. Small companies
in the Japanese market have fared especially poorly where pessimism about the
economic outlook has continued, arguably unduly, and where a weak yen has
focused attention primarily on companies with significant foreign earnings. In
the very recent past, particularly in the Japanese market, there have been signs
of change and the relative valuations of small companies now appear quite
compelling. We are therefore quite optimistic about the prospects for better
relative performance from this area. Economic recovery in the developed markets
of Europe and Japan, to which the Fund is primarily exposed, should further
boost this effect. In addition, the recent weakness in some of the southeast
Asian markets is presenting selective opportunities in areas where secular
growth prospects are among the most attractive in the world.
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Schroder International Smaller Companies Fund
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The investment strategy of this Fund relies heavily on the identification
of inefficiently researched and under valued securities. We tend to focus
heavily on bottom-up stock selection, with an appropriate long-term view over
which these companies' growth prospects are expected to become more highly
recognized. There are, however, certain general market conditions that can be
especially conducive to outperformance by this group. In Japan, where the Fund
is overweight, accelerating economic activity, with an increasing focus on
domestic as opposed to export recovery, should work in tandem with cheap
valuations, to help to improve sentiment, which has been depressed. There is
some indication of this in the vigorous rally of Japanese small stocks in May.
In Continental Europe, where small companies have performed better, the
valuations are not as immediately compelling, but an increasingly shareholder
friendly business environment bodes well for the long term prospects of the
group. In the U.K. small companies tend to lag large in the economic cycle, so
there is some further scope for performance.
We are therefore excited, by both the wealth of investment opportunities
presented by a program of active research, and also the long term strategic
merits of international smaller company exposure. We see early signs of their
increasing favor in a more buoyant worldwide economic climate.
Thank you for your support and interest in the Fund.
Sincerely,
Hermann C. Schwab Mark J. Smith
Chairman President
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2
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Schroder International Smaller Companies Fund
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MANAGEMENT DISCUSSION AND ANALYSIS (As of April 30, 1997)
The Schroder International Smaller Companies Fund's underperformance of
nearly 2% versus the index largely reflects poor returns from Japan and the
Pacific region, where the Fund was overweight. The Fund's positions in Hong Kong
and Japan reduced total returns by 1% and 2% respectively. However, the European
portion of the portfolio added almost 2% to performance, mainly due to strong
stock selection in France, Denmark and the United Kingdom (although an
underweight position in Switzerland and the Netherlands proved costly). On an
optimistic note, Japan's TSE Second Section started showing signs of recovery in
April.
A weak finish in 1996 was followed by a strong start this year in
Continental European markets. As a whole, they rose almost 4% in U.S. dollar
terms despite their currencies falling over 11% against the dollar over the same
time period. Unfortunately, thus far, most of this performance has been limited
to larger companies. Small capitalization stock returns have been modest in the
U.K. as well, due to the threat of interest rate rises and the sterling's
strength. Meanwhile, Japan's poor showing over the six months ending April 30
reflects a lack of confidence in domestic equities, partially caused by the weak
financial sector, the nervous state of its economy and the threat of fiscal
tightening.
The recent increase in the Fund's Japanese weighting is due to overall
improved performance of the markets there. Optimism is rubbing off on smaller
companies from the initial recovery of larger stocks, where the benefits of
restructuring and a weaker currency have been most pronounced. Smaller companies
should also gain as the recovery broadens out and as sentiment towards domestic
growth improves. Management intends to remain overweight in Japan, but we are
not as confident elsewhere in the Pacific region and aim to stay underweight in
Malaysia.
The views expressed in this report were those of the Fund's portfolio
managers as of the dates specified and may not reflect the views of the
portfolio managers on the date this report is first published or any time
thereafter. These views are intended to assist shareholders of the Fund in
understanding their 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
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Schroder International Smaller Companies Fund
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PORTFOLIO CHARACTERISTICS AS OF APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY WEIGHTINGS
SALOMON EAFE
COUNTRY % OF NET ASSETS INDEX
- -----------------------------------------------------------
<S> <C> <C>
Japan 29.6% 26.5%
United Kingdom 20.5% 23.9%
Germany 9.9% 7.2%
France 9.3% 5.6%
Italy 5.1% 2.2%
Denmark 4.7% 0.8%
Hong Kong 3.7% 4.3%
Switzerland 3.5% 7.5%
Finland 2.1% 0.9%
Spain 1.7% 1.9%
Malaysia 1.5% 2.4%
Sweden 1.5% 2.7%
Netherlands 1.1% 5.9%
Singapore 1.1% 1.0%
Cash & Other Assets 4.7% 0.0%
---------------
Total 100.0%
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- ----------------------------------------------------------
<S> <C>
Capital Equipment 23.5%
Services 17.0%
Materials 11.4%
Consumer Durables 10.7%
Finance 9.7%
Retail 9.7%
Machinery 9.0%
Consumer Non-Durables 4.3%
Cash & Other Assets 4.7%
---------------
Total 100.0%
---------------
---------------
</TABLE>
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
- ----------------------------------------------------------
Konecranes International (Fin) 2.1%
Lapeyre (Fra) 1.9%
Gewiss SpA (Ity) 1.8%
Marschollek Laut Und Part (Ger) 1.7%
InWear Group AS (Den) 1.7%
AEA Technology (UK) 1.6%
IONA Technologies (UK) 1.6%
Bang & Olufsen Holding (Den) 1.6%
Canon Copier Sales Co. (Jpn) 1.5%
Cardo AB (Swe) 1.5%
-------
Total 17.0%
-------
-------
</TABLE>
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4
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Schroder International Smaller Companies Fund
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Notes 1 and 2):
Investments in Schroder International Smaller Companies
Portfolio (the 'Portfolio') (cost $7,545,638) $6,987,844
Organization costs, net of amortization (Note 2) 13,599
----------
Total Assets 7,001,443
----------
LIABILITIES:
Other payables and accrued expensed 11,286
----------
Total Liabilities 11,286
----------
Net Assets $6,990,157
----------
----------
COMPONENTS OF NET ASSETS:
Paid-in capital $7,454,784
Undistributed net investment income (loss) (7,149)
Accumulated net realized gain (loss) 100,316
Net unrealized appreciation (depreciation) on investments (557,794)
----------
Net Assets $6,990,157
----------
----------
SHARES OF BENEFICIAL INTEREST 747,540
NET ASSET VALUE OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY SHARES OF BENEFICIAL INTEREST) $9.35
</TABLE>
The accompanying notes are an integral part of the financial statements.
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5
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Schroder International Smaller Companies Fund
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STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 4, 1996 THROUGH APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME ALLOCATED FROM
THE PORTFOLIO:
Dividend income (net of foreign withholding taxes of $5,659) $ 34,670
Interest income 14,069
Net expenses (40,368)
---------
Net Investment Income allocated from
the Portfolio 8,371
---------
EXPENSES:
Administration (Note 3) 5,883
Transfer agency (Note 3) 6,364
Accounting (Note 3) 5,867
Audit 4,500
Amortization of organization costs (Note 2) 1,511
Trustees 118
Miscellaneous 560
---------
Total Expenses 24,803
Fees waived and expenses reimbursed (Note 4) (14,710)
---------
Net Expenses 10,093
---------
NET INVESTMENT INCOME (LOSS) (1,722)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ALLOCATED FROM THE PORTFOLIO:
Net realized gain (loss) on investments sold 100,617
Net realized gain (loss) on foreign currency transactions (301)
---------
Net realized gain (loss) on investments and
foreign currency transactions 100,316
---------
Net change in unrealized appreciation (depreciation) on investments (557,427)
Net change in unrealized appreciation (depreciation) on foreign
currency transactions (367)
---------
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions (557,794)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ALLOCATED FROM THE PORTFOLIO (457,478)
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(459,200)
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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6
<PAGE>
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Schroder International Smaller Companies Fund
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD NOVEMBER 4, 1996 THROUGH APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
NET ASSETS, BEGINNING OF PERIOD $ --
----------
OPERATIONS:
Net investment income (loss) (1,722)
Net realized gain (loss) on investments 100,316
Net change in unrealized appreciation (depreciation) on investments (557,794)
----------
Net increase (decrease) in net assets resulting from operations (459,200)
----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (5,427)
CAPITAL SHARE TRANSACTIONS:
Sale of shares 7,454,784
----------
Net increase (decrease) in net assets 6,990,157
----------
NET ASSETS, END OF PERIOD (INCLUDING LINE A) $6,990,157
----------
----------
(A) Accumulated undistributed net investment income (loss) $ (7,149)
----------
----------
SHARE TRANSACTIONS
Sale of shares 747,540
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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7
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Schroder International Smaller Companies Fund
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FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the Period
November 4,
1996
through
April 30, 1997(a)
(Unaudited)
<S> <C>
- --------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
-------
Investment Operations
Net Realized and Unrealized Gain (Loss) on Investments (0.64)
-------
Distributions From
Net Investment Income (0.01)
-------
Net Asset Value, End of Period $ 9.35
-------
-------
Total Return (6.43)%(b)
Ratio/Supplementary Data
Net Assets at End of Period (in thousands) $6,990
Ratios to Average Net Assets:
Expenses including reimbursement/waiver 1.47%(c)(d)
Expenses excluding reimbursement/waiver 1.90%(c)(d)
Net investment income (loss) including reimbursement/waiver (0.05)%(c)(d)
Average Commision Rate (e) $0.0366
Portfolio turnover rate (f) 8.64%
</TABLE>
- ------------------
(a) The Fund commenced operations on November 4, 1996.
(b) Not annualized.
(c) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(d) Annualized.
(e) Amount represents the average commission per share paid to brokers on the
purchase and sale of the Portfolio's investment portfolio securities.
(f) Portfolio turnover rate represents the rate of portfolio activity of the
Portfolio.
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8
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Schroder International Smaller Companies Fund
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds (Delaware) (the 'Trust') was organized as a
Maryland corporation on July 30, 1969; reorganized as a series company on
February 29, 1988, as Schroder Capital Funds, Inc.; and reorganized on
January 9, 1996, as a Delaware business trust. The Trust, which is registered
as an open-end, management investment company under the Investment Company
Act of 1940 (the 'Act'), currently has six investment portfolios. Included in
this report is the Schroder International Smaller Companies Fund (the
'Fund'), a diversified portfolio that commenced operations on November 4,
1996. Under its Trust Instrument, the Trust is authorized to issue an
unlimited number of the Fund's Investor Shares and Advisor Shares of
beneficial interest without par value. As of April 30, 1997, only Investor
Shares had been issued.
MASTER FEEDER ARRANGEMENT
The Fund currently seeks to achieve its investment objective by
investing all of its investable assets in a separate diversified portfolio,
Schroder International Smaller Companies Portfolio (the 'Portfolio') of
Schroder Capital Funds ('Schroder Core') that has 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 Portfolio at any time if the Trust's Board
of Trustees determines that it is in the best interest of the Fund and its
shareholders to do so. The Fund accounts for its investment in the Portfolio
as a partnership investment and records its share of the Portfolio income,
expense and realized and unrealized gain and loss daily. The financial
statements of the Portfolio are included on pages 11 to 20 in this report,
and should be read in conjunction with the Fund's financial statements. The
Fund owns substantially all of the interests in the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates.
The following represent significant accounting policies of the Fund:
SECURITY VALUATION
The Trust determines the net asset value per share of the Fund as of
4:00 p.m., Eastern time, on each Fund business day. Valuation of securities
held in the Portfolio are discussed in the Notes to the Financial Statements
of the Portfolio.
INVESTMENT INCOME AND EXPENSES
The Trust records daily its pro rata share of the Portfolio's income,
expenses and realized and unrealized gain and loss. In addition, the Fund
accrues its own expenses.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and net capital gain, if any, are distributed to shareholders
at least annually. Distributions are based on amounts calculated in
accordance with applicable federal income tax regulations.
FEDERAL TAXES
The Fund intends to qualify and continue to qualify each year as a
regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
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9
<PAGE>
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Schroder International Smaller Companies Fund
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
investment income, capital gain and certain other amounts, if any, the Fund
will not be subject to a federal excise tax. Therefore, no federal income or
excise tax provision is required.
EXPENSE ALLOCATION
The Trust accounts separately for the assets and liabilities and
operation of each Fund. Expenses that are directly attributable to more than
one Fund are allocated among the respective Funds. Expenses that are directly
attributable to a class are allocated to that class.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and
initial registration are being amortized on a straight line basis over a five
year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Fund currently invests all of its assets in the Portfolio, which
retains Schroder Capital Management International Inc. (the 'Adviser') to act
as investment adviser pursuant to an Investment Advisory Agreement. See Notes
to the Financial Statements of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Effective November 26, 1996 and February 1, 1997, the Fund has entered
into Administration and Subadministration Agreements with Schroder Fund
Advisors Inc. ('Schroder Advisors') and Forum Administrative Services,
Limited Liability Company ('Forum'). From November 26, 1996 through January
31, 1997 the Fund had a Subadministration Agreement with Forum Financial
Services, Inc. ('FFSI') that was identical in all material terms to the
February 1, 1997 Agreement with Forum. For these services, Schroder Advisors
is entitled to receive compensation at annual fees payable monthly of 0.10%
of the average daily net assets of the Fund. For its services, Forum is
entitled to receive compensation at annual fees payable monthly of 0.075% of
the average daily net assets of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The transfer agent and dividend disbursing agent for the Fund is Forum
Financial Corp.(Registered) ('FFC'). The Transfer Agent is paid a transfer
agent fee in the amount of $12,000 per year, plus certain other fees and
expenses.
OTHER SERVICE PROVIDERS
The fund accountant of the Fund is FFC. For its services to the Fund,
FFC is entitled to receive from the Trust a fee of $12,000 per year.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Schroder Advisors voluntarily has waived a portion of its fee and has
assumed certain expenses of the Fund so that the Fund's total expenses would
not exceed 1.50% of the Fund's average daily net assets on an annual basis.
The expense limitation cannot be modified or withdrawn except by a majority
vote of the Trustees of the Trust. Forum and FFC may waive voluntarily all or
a portion of their fees, from time to time. For the period ended April 30,
1997, fees waived and expenses reimbursed by Schroder Advisors were $3,362
and $11,348, respectively.
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10
<PAGE>
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Schroder International Smaller Companies Portfolio
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SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
STOCKS - 95.3%
SHARES VALUE US$
- ------- ----------
<S> <C> <C>
DENMARK - 4.7%
COMMON STOCK
1,900 Bang & Olufsen Holding AS - B
Capital Equipment $ 109,540
2,000 Carli Gry International AS
Consumer Durables 100,437
2,700 InWear Group AS(a)
Consumer Durables 117,156
----------
327,133
----------
FINLAND - 2.1%
COMMON STOCK
3,800 KCI Konecranes International
Machinery 146,053
----------
146,053
----------
FRANCE - 9.3%
COMMON STOCK
300 Altran Technologies SA
Services 104,345
250 Galeries Lafayette(a)
Retail 100,233
900 GasCogne SA
Materials 76,640
1,500 Genset SA(a)
Consumer Durables 74,018
2,200 Lapeyre SA
Materials 132,685
3,000 Servant Soft SA
Capital Equipment 80,700
2,200 Sommer Allibert
Capital Equipment 79,158
----------
647,779
----------
GERMANY - 10.0%
COMMON STOCK
70 Hugo Boss AG
Consumer Durables 89,334
600 Jungheinrich AG
Machinery 83,502
500 KSB AG
Machinery 98,170
600 Marschollek Lautenschlaeger und
Partner AG
Finance 121,268
1,900 Moebel Walther AG
Consumer Durables 87,775
700 Rhoen-Klinikum AG
Consumer Durables 90,143
200 Sto Ag-Vorzug
Materials 71,606
<CAPTION>
SHARES VALUE US$
- ------- ----------
<S> <C> <C>
GERMANY (CONCLUDED)
3,000 Tarkett AG
Materials $ 53,704
----------
695,502
----------
HONG KONG - 3.7%
COMMON STOCK
110,000 Chen Hsong Holdings
Materials 59,285
52,000 HKR International Ltd.
Finance 64,106
35,000 Varitronix International Ltd.
Capital Equipment 48,796
83,000 YGM Trading Ltd.
Retail 85,716
----------
257,903
----------
ITALY - 5.1%
COMMON STOCK
5,520 Brembo SpA
Capital Equipment 59,654
70,000 Finanziaria Autogrill SpA(a)
Retail 98,138
9,500 Gewiss SpA
Machinery 127,638
5,000 SAES Getters SpA
Capital Equipment 70,975
----------
356,405
----------
JAPAN - 29.7%
COMMON STOCK
5,000 Aichi Toyota Motor Co. Ltd.
Capital Equipment 59,097
13,000 Airport Facilities Co. Ltd.
Services 69,143
8,000 Amada Metrecs Co. Ltd.
Machinery 72,493
5,000 Arcland Sakamoto
Retail 48,065
11,000 Canon Copyer Sales Co.
Capital Equipment 106,612
6,000 Charle Co.
Retail 63,824
200 Chubu-Nippon Broadcast Co. Ltd.
Services 3,876
14,000 Daidoh Ltd.
Materials 77,220
8,000 Diamond City Co.
Finance 44,126
6,000 Eiden Sakakiya Co. Ltd.
Retail 48,223
</TABLE>
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11
<PAGE>
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Schroder International Smaller Companies Portfolio
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SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE US$
- ------- ----------
<S> <C> <C>
JAPAN (CONCLUDED)
3,000 Glory Ltd.
Machinery $ 54,369
11,000 Hitachi Transport System
Services 83,815
12,000 Idec Izumi
Machinery 87,936
4,000 Inaba Denkisangyo Co.
Capital Equipment 62,092
9,000 Inabata & Co.
Consumer Durables 54,465
5,000 Kansai Kosaido Co. Ltd.
Capital Equipment 57,915
5,500 Mandom Corp.
Consumer Non-Durables 54,606
6,000 Maruzen Co. Ltd.
Capital Equipment 34,796
3,450 Mirai Industry Co. Ltd.
Materials 68,505
1,000 Nagaileben Co. Ltd.
Consumer Durables 33,410
9,000 Nippon Cable System
Capital Equipment 78,010
6,000 Nishio Rent All Co.
Capital Equipment 68,080
16,800 Nissan Fire & Marine Insurance
Finance 57,584
8,000 Sanki Engineering
Capital Equipment 64,297
5,500 Santen Pharmaceutical
Consumer Durables 98,810
12,000 Tachibana Shokai
Services 85,099
14,000 Tokyo Soir
Retail 42,471
13,000 Toyo Shutter
Capital Equipment 55,622
3,500 TrusCo Nakayama Corp.
Services 54,881
7,000 Tsubaki Nakashima Co. Ltd.
Capital Equipment 55,158
3,000 Tsutsumi Jewelry Co. Ltd.
Services 61,224
11,000 Yodogawa Steel Works
Materials 62,233
6 Yoshinoya D&C Co. Ltd.
Retail 58,152
7,000 Yushiro Chemical Industry
Materials 47,711
----------
2,073,920
----------
<CAPTION>
SHARES VALUE US$
- ------- ----------
<S> <C> <C>
MALAYSIA - 1.5%
COMMON STOCK
28,000 Nylex (Malaysia) Berhad
Machinery $ 55,331
26,000 Sime UEP Properties Berhad
Finance 51,793
----------
107,124
----------
NETHERLANDS - 1.1%
COMMON STOCK
4,550 Beter Bed Holding NV
Retail 79,644
----------
79,644
----------
SINGAPORE - 1.0%
COMMON STOCK
19,000 Clipsal Industries Ltd.
Capital Equipment 74,480
----------
74,480
----------
SPAIN - 1.6%
COMMON STOCK
1,700 Cortefiel SA
Retail 54,698
2,500 Vallehermoso SA
Finance 61,612
----------
116,310
----------
SWEDEN - 1.5%
COMMON STOCK
3,500 Cardo AB
Capital Equipment 104,837
----------
104,837
----------
SWITZERLAND - 3.5%
COMMON STOCK
35 Bobst SA
Machinery 50,977
5 Lindt & Spruengli AG
Consumer Non-Durables 91,964
500 Safra Republic Holdings SA
Finance 99,000
----------
241,941
----------
UNITED KINGDOM - 20.5%
COMMON STOCK
14,100 AEA Technology plc
Services 111,990
9,900 Bespak plc
Services 99,996
22,800 Blagden Inds. plc
Services 62,892
</TABLE>
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12
<PAGE>
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Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
AS OF APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE US$
- ------- ----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
5,250 Bodycote International plc
Capital Equipment $ 61,760
8,000 Candover Investments plc
Finance 88,593
17,500 W. Canning plc
Materials 86,605
17,600 Devro plc
Consumer Non-Durables 88,956
170,000 Gardiner Group plc
Services 78,614
7,700 IONA Technologies plc - ADR(a)
Services 111,650
1,667 Lanica Trust (b)
Finance 5,410
5,700 Logica plc
Services 80,233
14,300 London Clubs International plc
Services 89,796
<CAPTION>
SHARES VALUE US$
- ------- ----------
<S> <C> <C>
UNITED KINGDOM (CONCLUDED)
8,450 Oriflame International SA
Services $ 65,058
86,000 Rutland Trust plc
Finance 81,284
10,500 Servisair plc
Services 79,734
85,500 Taylor Nelson AGB plc
Services 74,568
16,000 Ultra Electronics Holdings plc(a)
Capital Equipment 72,562
9,100 Whatman plc
Capital Equipment 93,023
----------
1,432,724
----------
Total Investments - 95.3%
(Cost $7,219,179) 6,661,755
Other Assets Less Liabilities -
4.7% 326,089
----------
Total Net Assets - 100.0% $6,987,844
----------
----------
</TABLE>
- ------------------
(a) Non-income producing security.
(b) Valued pursuant to methodology approved by the Board of Trustees.
ADR - American Depositary Receipts
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $7,219,179
Net unrealized appreciation (depreciation) (557,424)
----------
Total Investments at value 6,661,755
Cash 220,814
Receivable for dividends, tax reclaims and interest 23,955
Receivable for securities sold 83,830
Organization costs, net of amortization (Note 2) 13,599
----------
Total Assets 7,003,953
----------
LIABILITIES:
Accrued fees and other expenses 16,109
----------
Total Liabilities 16,109
----------
Net Assets $6,987,844
----------
----------
COMPONENTS OF NET ASSETS:
Investors' capital $7,545,638
Net unrealized appreciation (depreciation) on investments (557,794)
----------
Net Assets $6,987,844
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 4, 1996 THROUGH APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $5,659) $ 34,670
Interest income 14,069
---------
Total Investment Income 48,739
---------
EXPENSES:
Investment advisory (Note 3) 25,213
Administration (Note 3) 7,564
Transfer agency (Note 3) 5,881
Custody 1,593
Accounting (Note 3) 29,333
Legal 1,004
Audit 7,000
Pricing 4,623
Trustees 241
Amortization of organization costs (Note 2) 1,511
Miscellaneous 988
---------
Total Expenses 84,951
Fees waived and expenses reimbursed (Note 6) (44,583)
---------
Net Expenses 40,368
---------
NET INVESTMENT INCOME (LOSS) 8,371
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) on investments sold 100,617
Net realized gain (loss) on foreign currency transactions (301)
---------
Net realized gain (loss) on investments and
foreign currency transactions 100,316
---------
Net change in unrealized appreciation (depreciation) on investments (557,427)
Net change in unrealized appreciation (depreciation) on foreign
currency transactions (367)
---------
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions (557,794)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (457,478)
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(449,107)
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD NOVEMBER 4, 1996 THROUGH APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
NET ASSETS, BEGINNING OF PERIOD $ --
------------
OPERATIONS:
Net investment income (loss) 8,371
Net realized gain (loss) on investments 100,316
Net change in unrealized appreciation (depreciation) on investments (557,794)
------------
Net increase (decrease) in net assets resulting from operations (449,107)
------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 7,454,784
Withdrawals (17,833)
------------
Net transactions in investors' beneficial interest 7,436,951
------------
Net increase (decrease) in net assets 6,987,844
------------
NET ASSETS, END OF PERIOD $6,987,844
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the period:
<TABLE>
<CAPTION>
For the Period
November 4, 1996
through
April 30, 1997(a)
(Unaudited)
<S> <C>
- --------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 1.20%(b)
Expenses excluding reimbursement/waiver 2.53%(b)
Net investment income including reimbursement/waiver 0.25%(b)
Average brokerage commission per share (c) $ 0.0366
Portfolio turnover rate 8.64%
</TABLE>
- ------------------
(a) The Portfolio commenced operations on November 4, 1996.
(b) Annualized.
(c) Amount represents the average commission per share paid to brokers on the
purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies 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, managment investment company under the Investment Company Act of
1940 (the 'Act'), currently has five investment portfolios. Included in this
report is Schroder International Smaller Companies Portfolio (the
'Portfolio'), a diversified portfolio that commenced operations on November
4, 1996. Under the Trust Instrument, Schroder Core is authorized to issue an
unlimited number of interests without par value. Interests in the Portfolio
are sold in private placement transactions without any sales charges to
institutional clients, including open-end, management investment companies.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates.
The following represent significant accounting policies of the
Portfolio:
SECURITY VALUATION
Portfolio securities listed on recognized stock exchanges are valued at
the last reported sale price on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges
where last sale prices are not available are valued at the last sale price on
the proceeding trading day or at closing mid-market prices. Securities traded
in over-the-counter markets are valued at the most recent reported mid-market
price. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith using
methods approved by the Schroder Core Board of Trustees. Board valued
securities represented approximately 0.08% of the total investmetnts.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income, including
amortization of discount or premium, is recorded as earned. Identified cost
of investments sold is used to determine gain and loss for both financial
statement and federal income tax purposes. Foreign dividend and interest
income amounts and realized capital gain and loss are converted to U.S.
dollar equivalents using foreign exchange rates in effect at the date of the
transactions.
Foreign currency amounts are translated into U.S. dollars at the mean
of the bid and asked prices of such currencies against U.S. dollars as
follows: (i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such
transactions. The portion of the results of operations arising from changes
in the exchange rates and the portion due to fluctuations arising from
changes in the market prices of securities are not isolated. Such
fluctuations are included with the net realized and unrealized gain or loss
on investments.
The Portfolio may enter into forward contracts to purchase or sell
foreign currencies to protect against the effect on the U.S. dollar value of
the underlying portfolio of possible adverse movements in foreign exchange
rates. Risks associated with such contracts include the movement in value of
the foreign currency relative to the U.S. dollar and the ability of the
counterparty to perform. Fluctuations in the value of such contracts are
recorded as unrealized gain or loss; realized gain or loss include net gain
or loss on contracts that have terminated by settlement or by the Portfolio
entering into offsetting commitments.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
ORGANIZATIONAL COSTS
Costs incurred by the Portfolio in connection with its organization and
initial registration are being amortized on a straight line basis over a five
year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser to the Portfolio is Schroder Capital Management
International Inc. ('SCMI'). Pursuant to an Investment Advisory Agreement,
SCMI is entitled to receive an annual fee, payable monthly, of 0.85% of the
average daily net assets of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Effective November 26, 1996 and February 1, 1997, the Portfolio has
entered into Administration and Subadministration Agreements with Schroder
Fund Advisors Inc. ('Schroder Advisors') and Forum Administrative Services,
Limited Liability Company ('Forum'). From November 26, 1996 through January
31, 1997 the Portfolio had a Subadministration Agreement with Forum Financial
Services, Inc. ('FFSI') that was identical in all material terms to the
February 1, 1997 Agreement with Forum. For these services, Schroder Advisors
is entitled to receive compensation at annual fees payable monthly of 0.15%
of the average daily net assets of the Portfolio. For its services, Forum is
entitled to receive compensation at annual fees payable monthly of 0.075% of
the average daily net assets of the Portfolio.
TRANSFER AGENT
Forum Financial Corp.(Registered) ('FFC') serves as the Portfolio's
transfer agent and dividend disbursing agent and is entitled to compensation
for those services from Schroder Core with respect to the Portfolio in the
amount of $12,000 per year plus certain other fees and expenses.
OTHER SERVICE PROVIDERS
FFC also performs portfolio accounting for the Portfolio and is
entitled to compensation for those services in the amount of $60,000 per
year, plus certain amounts based upon the number and types of portfolio
transactions.
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 six months ended April
30, 1997 aggregated $7,616,564 and $498,003, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of April 30, 1997 was $7,219,179. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $453,141, and the aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market value
was $1,010,565.
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and net capital gain as it is treated as a partnership for
federal income tax purposes. All interest, dividends, gain and loss of the
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Smaller Companies Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
Portfolio are deemed to have been 'passed through' to the partners in
proportion to their holdings of the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
NOTE 6. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
SCMI voluntarily has waived a portion of its advisory fees and has
assumed certain expenses of the Portfolio so that its total expenses would
not exceed 1.20% Portfolio's average daily net assets. Schroder Advisors,
Forum and FFC may waive voluntarily all or a portion of their fees from time
to time. For the period ended April 30, 1997, fees waived and expenses
reimbursed were as follows:
<TABLE>
<CAPTION>
Waived Reimbursed
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
SCMI $25,213 $ --
Schroder Advisors 5,043 14,327
</TABLE>
NOTE 7. CONCENTRATION OF CREDIT RISK
The Portfolio has a relatively large concentration of portfolio
securities invested in companies domiciled in Japan. The Portfolio may be
more susceptible to political, social and economic events adversely affecting
Japanese companies than portfolios not so concentrated.
- --------------------------------------------------------------------------------
20
<PAGE>
TRUSTEES
Hermann C. Schwab
Peter E. Guernsey
John I. Howell
Clarence F. Michalis
Mark J. Smith
OFFICERS
Hermann C. Schwab
Chairman of the Board
Mark J. Smith
President
Mark Astley
Vice President
Robert G. Davy
Vice President
Margaret H. Douglas-Hamilton
Vice President
Richard Foulkes
Vice President
John Y. Keffer
Vice President
Jane Lucas
Vice President
Catherine A. Mazza
Vice President
Michael Perelstein
Vice President
Fariba Talebi
Vice President
John A. Troiano
Vice President
Ira L. Unschuld
Vice President
Alexandra Poe
Vice President
Secretary
Robert Jackowitz
Treasurer
Thomas G. Sheehan
Assistant Treasurer
Assistant Secretary
Catherine S. Wooledge
Assistant Treasurer
Assistant Secretary
Barbara Gottlieb
Assistant Secretary
Mary Kunkemueller
Assistant Secretary
Gerardo Machado
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
Global Custody Division
Woolgate House, Coleman Street
London EC2P 2HD, United Kingdom
TRANSFER AND DIVIDEND
DISBURSING AGENT
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110-2624
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders of the Schroder
International Smaller Companies 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] SCHRODERS
Schroder
International
Smaller
Companies
Fund
SEMI-ANNUAL REPORT
April 30, 1997
(Unaudited)
Schroder Capital Funds
(Delaware)
