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Schroder Emerging Markets Fund Institutional Portfolio (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 to achieve long-term capital appreciation through direct or
indirect investment in equity and debt securities of issuers domiciled or doing
business in emerging markets countries in regions such as Southeast Asia, Latin
America, and Eastern and Southern Europe. It is designed for investors who seek
the aggressive growth potential of emerging world markets and are willing to
bear the special risks of investing in these markets. Securities are selected on
the basis of potential for capital appreciation without regard for current
income. The Fund currently seeks to achieve its investment objective by
investing all of its investable assets in Schroder Emerging Markets Fund
Institutional Portfolio (the 'Portfolio'), a series of a registered open-end
investment company that has 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 including 10 offices in emerging markets. 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, of which approximately $3.8 billion
was invested in dedicated emerging markets mandates.
June 15, 1997
Dear Shareholder:
We are pleased to present the semi-annual report for Schroder Emerging
Markets Fund Institutional Portfolio for the six-month period ending April 30,
1997. Over the past six months the total return of the Fund was 15.6% compared
with the MSCI Emerging Markets Free Index (ex Malaysia)('MSCI Index') return of
14.4%. The outperformance came primarily from management's country weighting
decisions, relative to the MSCI Index, to overweight China and Eastern Europe
and underweight South Africa. The Fund's overweight position in the Philippines
detracted from overall performance.
Over the six months ended April 30, 1997, the top three performing markets
represented in the Fund were Hungary (+52.1%), China (+43.9%) and Brazil
(+38.4%) and the worst three were Thailand (-25.8%), Korea (-12.9%) and the
Philippines (-8.1%). Over the period, Latin American markets performed strongly,
as economic recovery and improved portfolio flows to the region bolstered
markets, while the Asian markets continued to experience mixed performance. The
direction of interest rates in both local markets and in the United States had a
major effect on investor sentiment. At the same time, slower than expected Asian
export growth remained a negative
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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factor, with the strength of the U.S. dollar continuing to be an issue for
regional competitiveness. Elsewhere in the world, the markets were generally
buoyant, with the marked exception of the Czech Republic (-6.2%) where the
growing trade deficit continued to worry investors.
We believe that the outlook for emerging markets globally currently remains
favorable with strong economic growth in most regions of the world. While parts
of Asia have been suffering a cyclical downturn, we still believe that the Asian
markets generally offer the best long-term growth prospects. Corporate earnings
growth is beginning to recover in Asia and generally appears strong across
emerging markets as economic growth rates continue to exceed those of the
developed markets. We continue to believe that the case for investing in
emerging economies remains as compelling as ever because the growing prosperity
and the vast populations in these countries will create huge marketplaces for a
variety of goods and services.
Thank you for your support and interest in the Fund.
Sincerely,
Hermann C. Schwab Mark J. Smith
Chairman President
2
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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MANAGEMENT DISCUSSION AND ANALYSIS (As of April 30, 1997)
As of April 30, 1997, the Fund was approximately 96.9% invested in equities
and 3.1% in cash and other assets. Over the last six months the Fund's weighting
in Asian markets has been reduced from 44.2% to 39.8%, while the weighting in
Latin America has risen from 30.6% to 33.7%. Within Asia, we have further
reduced our exposure to Thailand due to the economic crisis while we have
increased investments in Taiwan, which is benefiting from economic recovery and
strong liquidity. Elsewhere, we have added investments in South Africa following
last year's currency crisis in anticipation of lower interest rates and economic
recovery next year. We have also added investments in Portugal, which is
benefiting from an improving interest rate environment, and reduced the Fund's
exposure to Turkey, which is suffering from continued political uncertainty.
The Fund's approach is to target companies that offer sustainable growth.
We focus on companies that have professional management and a strong domestic
market share in their business or a powerful franchise. The primary attraction
of emerging markets is the high growth rates that they offer relative to the
developed world. We search for companies, for example, that will benefit from
rising living standards and increased infrastructure development. With our
extensive network of analysts located in 10 emerging market offices around the
world, we believe we can identify attractively priced securities across a broad
capitalization range.
REGIONAL REVIEW
LATIN AMERICA
In Latin America, economic recovery and improved portfolio flows to the
region provided the background for continuing outperformance. Against this
backdrop, the markets began to consolidate in March in anticipation of
tightening fiscal policy in the U.S. We do not anticipate that the impact of
tighter fiscal policy in the U.S. will be as severe as in 1994 because the
extent of U.S. interest rate hikes is not anticipated to be as great and
external deficits in most Latin American countries have been reduced.
ARGENTINA, the country most affected by the increase in U.S. rates, should
see the impact moderated by the presence of domestic pension funds, which, did
not exist in 1994, the strength of the economic recovery and a fairer valuation
of the peso. An addition to the portfolio over the period was YPF Sociedad
Anonima, the oil conglomerate, as a result of a positive meeting with its new
management and improving operating performance.
The BRAZILIAN market benefited from President Cardoso's standing for
reelection and a revaluation of state controlled companies in anticipation of
privatization. Telebras, the largest holding in the Fund, rose 54% during the
period. As long as momentum on the reform process and privatization continue,
the outlook for Brazil remains positive. MEXICO was initially helped by lower
domestic interest rates, but uncertainty over U.S. rates and a dispute with the
U.S. over drug certification led to a partial reversal. Declines in real wages
continue to pressure the consumer sector, however growth should be more apparent
during the second half of the year. In CHILE evidence of slower growth led to a
decline in interest rates and, in turn, strong market performance. However, the
seriousness of the drought has been a concern to the market, given the
importance of the electricity sector in Chile.
AFRICA
SOUTH AFRICA has seen a recovery both in the market and currency since the
lows reached in November. Following the currency depreciation, the current
account has begun to recover, and, with the domestic consumer weak, we expect
interest rates to begin to fall later this year. With this improving economic
picture we have been increasing our weighting to South Africa. Primedia, a small
emerging media company added last year rose 85% over the period. It is a
dominant player in radio, benefiting from privatization, as well as other
alternative advertising media that suit the country.
The Fund made its first investment in BOTSWANA during the period,
purchasing Sechaba. The company has a virtual monopoly of both beer and soft
drinks in the country and is benefiting from strong earnings growth.
3
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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EASTERN EUROPE
POLAND, weak at the end of 1996, rebounded in early 1997 following
continuing positive macro-economic news. Key performers include construction and
infrastructure related companies such as Bydgoska Fabryka Kabli SA and Gorazdze.
HUNGARY remained the strongest market in the region buoyed by improving domestic
demand and increasing demand from European Union and Central European countries.
The country's austerity package began to show results, with growth expected to
increase to 3% in 1997 and inflation falling to 17%. Gedeon Richter, the
pharmaceutical firm was particularly strong. The CZECH REPUBLIC remains the
laggard market in the region. Its growing trade deficit indicates that corporate
restructuring and the resulting increased competitiveness have yet to
materialize. Although the government has announced an austerity package, this
may be too little too late. The RUSSIAN market has been strong over the past six
months. The market has benefited from President Yelstin's cabinet shake-up where
reformists now far outnumber the conservatives.
MEDITERRANEAN EUROPE
TURKEY'S political crisis continues with the military taking a more
aggressive stance to ensure a secular government. As a result, the
macro-economic picture remains mixed. PORTUGAL has been strong following
increasingly good economic news. Strong performers include the cement
manufacturer Semapa and the retailer Jeronimo Martins. The GREEK market rallied
during the period, reacting to its significant underperformance over the
previous two years, which left the market cheap compared to its peers. Although
the macro-economic performance of Greece is improving, the high budget and
current account deficits remain a concern to investors.
EMERGING ASIA
Over the period, the best performing markets were Taiwan (+25.5%) and India
(+16.3%) in contrast to poor returns from Thailand (-25.8%) and Korea (-12.9%).
In INDIA, the government passed a budget which was well received by
investors. The recent political problems caused by the Congress Party's
withdrawal of support for the government have now been resolved with the
appointment of a new Prime Minister and the passing of the budget. Following
good performance in the PHILIPPINES at the beginning of the period, we have
reduced our weighting due to concerns about the health of the real estate
market. As a result, we sold our holding in SM Prime. Investor confidence failed
to return to THAILAND as fears of a Baht devaluation and a crisis in the banking
sector lowered sentiment further. In Thailand's General Election the New
Aspiration Party gained control but have had little success in bolstering the
country's faltering economy.
In KOREA, the recovery in global demand for electronics proved positive,
and we added to our holding of Samsung Electronics. Exports, however, were
impacted by the weakness of the won. Liquidity problems were eased somewhat by
the expansion of the foreign ownership limit to 23%. We maintained a large
weighting in CHINESE stocks over the period. As interest rates ease, economic
activity is beginning to recover. The market showed little reaction to the death
of Deng Xiaoping, with Jiang Zemin clearly seen as having consolidated his
position as president.
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.
4
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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PORTFOLIO CHARACTERISTICS AS OF APRIL 30, 1997 (UNAUDITED)
COUNTRY WEIGHTINGS
MSCI EMF
(EX-MALAYSIA)
COUNTRY % OF NET ASSETS INDEX
- -----------------------------------------------------------
Brazil 15.3% 17.2%
Mexico 9.8% 9.2%
India 8.4% 7.0%
China 7.8% 0.7%
South Africa 7.1% 13.2%
Indonesia 5.5% 5.8%
Philippines 5.3% 3.2%
Taiwan 5.2% 11.2%
Korea, Republic of 4.9% 4.7%
Argentina 4.6% 4.1%
Chile 3.9% 4.4%
Portugal 3.3% 2.4%
Thailand 2.6% 4.2%
Poland 2.6% 0.5%
Israel 2.1% 2.5%
Hungary 1.9% 0.6%
Turkey 1.4% 1.8%
Egypt 1.2% 0.0%
Peru 0.8% 1.3%
Croatia 0.8% 0.0%
Czech Republic 0.6% 1.2%
Botswana 0.4% 0.0%
Mauritius 0.4% 0.0%
Greece 0.4% 1.7%
Russia 0.4% 0.0%
Slovak Republic 0.2% 0.0%
Cash & Other Assets 3.1% 0.0%
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Total 100.0%
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INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- ----------------------------------------------------------
Services 18.1%
Finance 16.5%
Energy 14.0%
Materials 12.1%
Capital Equipment 11.0%
Telecommunications 8.4%
Multi-Industry 5.1%
Consumer Non-Durables 4.5%
Retail 4.4%
Consumer Durables 3.1%
Cash & Other Assets 2.8%
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Total 100.0%
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TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
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Telecomunicacoes Brasileiras SA (Bz)* 3.7%
Bharat Petroleum Corp. Ltd. (Ind) 2.2%
Mahanagar Telephone Nigam (Ind) 2.1%
Centrais Eletricas Brasileiras SA (Bz) 1.9%
Petroleo Brasileiro SA-Petrobras (Bz) 1.7%
Philipine Long Distance Telephone Co. (Phl) 1.6%
Bharat Heavy Electricals Ltd. (Ind) 1.6%
Anglo-American Corp. (S. Afr) 1.6%
Compania Naviera Perez Companc SA (Arg) 1.4%
Telecomunicacoes de Sao Paulo SA (Bz) 1.3%
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Total 19.1%
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* Includes Common and Preferred Stock
5
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
ASSETS:
Investments (Notes 1 and 2):
Investments in Schroder Emerging Markets Fund
Institutional Portfolio (the 'Portfolio')
(cost $197,956,640) $232,619,185
Interest, dividends and other receivables 39,939
Organization cost, net of amortization (Note 2) 17,533
------------
Total Assets 232,676,657
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LIABILITIES:
Payable to administrator (Note 3) 1,599
Payable to other related parties (Note 3) 9,495
Other payables and accrued expenses 28,591
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Total Liabilities 39,685
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Net Assets $232,636,972
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COMPONENTS OF NET ASSETS:
Paid-in capital $208,965,571
Undistributed net investment income (loss) 2,972
Accumulated net realized gain (loss) (10,192,363)
Net unrealized appreciation (depreciation)
on investments 33,860,792
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Net Assets $232,636,972
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NET ASSETS BY CLASS
Investor Class $215,090,184
Advisor Class 17,546,788
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Net Assets $232,636,972
------------
------------
SHARES OF BENEFICIAL INTEREST
Investor Class 16,839,211
Advisor Class 1,368,268
NET ASSET VALUE OFFERING AND REDEMPTION PRICE
PER SHARE (NET ASSETS DIVIDED BY SHARES OF
BENEFICIAL INTEREST)
Investor Class $12.77
Advisor Class $12.82
The accompanying notes are an integral part of the financial statements.
6
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
NET INVESTMENT INCOME ALLOCATED FROM
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
(PORTFOLIO):
Dividend income
(net of foreign withholding taxes of $146,046) $ 1,839,773
Interest income 217,336
Net expenses (1,875,839)
------------
Net Investment Income allocated from
the Portfolio 181,270
------------
EXPENSES:
Administration (Note 3) 102,766
Transfer agency (Note 3) 13,348
Shareholder services-Advisor Shares (Note 3) 16,097
Accounting (Note 3) 6,000
Legal 5,508
Audit 5,250
Registration 14,109
Reporting 17,030
Trustees 3,840
Miscellaneous 12,039
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Total Expenses 195,987
Fees waived and expenses reimbursed (Note 4) (26,261)
------------
Net Expenses 169,726
------------
NET INVESTMENT INCOME (LOSS) 11,544
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS ALLOCATED
FROM THE PORTFOLIO:
Net realized gain (loss) on investments sold (3,423,244)
Net realized gain (loss) on foreign currency
transactions (67,166)
------------
Net realized gain (loss) on investments
and foreign currency transactions (3,490,410)
------------
Net change in unrealized appreciation (depreciation)
on investments 32,182,256
Net change in unrealized appreciation (depreciation)
on foreign currency transactions 4,182
------------
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions 32,186,438
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
AND FOREIGN CURRENCY TRANSACTIONS ALLOCATED FROM THE
PORTFOLIO 28,696,028
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 28,707,572
------------
------------
The accompanying notes are an integral part of the financial statements.
7
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, 1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
-------------- ----------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $167,570,050 $ 18,423,256
------------ ------------
OPERATIONS:
Net investment income (loss) 11,544 425,357
Net realized gain (loss) on investments sold (3,490,410) (6,759,042)
Net change in unrealized appreciation
(depreciation) on investments 32,186,438 604,159
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Net increase (decrease) in net assets resulting
from operations 28,707,572 (5,729,526)
------------ ------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income - Investor Shares (150,511) (102,592)
Net investment income - Advisor Shares (10,884) --
------------ ------------
Total distributions to shareholders (161,395) (102,592)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares - Investor Class 25,532,978 156,323,036
Sale of shares - Advisor Class 15,937,193 --
Reinvestment of distributions - Investor Class 87,690 33,428
Reinvestment of distributions - Advisor Class 10,884 --
Redemption of shares - Investor Class (5,048,000) (1,377,552)
------------ ------------
Net increase (decrease) in capital transactions 36,520,745 154,978,912
------------ ------------
Net increase (decrease) in net assets 65,066,922 149,146,794
------------ ------------
NET ASSETS, END OF PERIOD (INCLUDING LINE A) $232,636,972 $167,570,050
------------ ------------
------------ ------------
(A) Accumulated undistributed net investment
income (loss) $ 2,972 $ 152,823
------------ ------------
------------ ------------
SHARE TRANSACTIONS
Sale of shares - Investor Class 2,083,247 13,540,103
Sale of shares - Advisor Class 1,367,389 --
Reinvestment of distributions in shares -
Investor Class 7,929 3,127
Reinvestment of distributions in shares -
Advisor Class 978 --
Redemption of shares - Investor Class (405,338) (123,180)
------------ ------------
Net increase (decrease) in shares 3,054,205 13,420,050
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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FINANCIAL HIGHLIGHTS--INVESTOR SHARES
Selected per share data and ratios for an Investor share outstanding
throughout each period:
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, Year Ended
1997 October 31,
(Unaudited) 1996(a) 1995(b)
---------------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.06 $ 10.63 $ 10.00
-------- -------- ---------
Investment Operations
Net Investment Income (Loss) -- 0.02(c) 0.02
Net Realized and Unrealized Gain (Loss) on Investments 1.72 0.43(d) 0.61
-------- -------- ---------
Total from Investment Operations 1.72 0.45 0.63
-------- -------- ---------
Distributions From
Net Investment Income (0.01) (0.02) --
-------- -------- ---------
Total Distributions (0.01) (0.02) --
-------- -------- ---------
Net Asset Value, End of Period $ 12.77 $ 11.06 $ 10.63
-------- -------- ---------
-------- -------- ---------
Total Return(e) 15.57%(f) 4.22% 6.30%
Ratio/Supplementary Data
Net Assets at End of Period (in thousands) $215,090 $167,570 $ 18,423
Ratios to Average Net Assets:
Expenses including reimbursement/waiver 1.54%(c)(g) 1.60% 1.58%(g)
Expenses excluding reimbursement/waiver 1.64%(c)(g) 1.71% 2.45%(g)
Net investment income (loss) including reimbursement/waiver 0.02%(c)(g) 0.36% 0.46%(g)
Average Commission rate(h) $ 0.0010 $ 0.0008 N/A
Portfolio turnover rate(i) 15.31% 102.70% 44.10%
</TABLE>
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(a) On May 17, 1996, the Fund began offering two classes of shares, Investor
Shares and Advisor Shares, and all then outstanding shares of the Fund were
converted to Investor Shares.
(b) The Fund commenced operations on March 31, 1995 and converted to Core and
Gatewayr on November 1, 1995.
(c) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(d) The amount shown for a share outstanding does not correspond with the
aggregate net gain (loss) on investments for the period ended due to the
timing of sales and repurchases of the Fund shares in relation to
fluctuating market values of the investments of the Fund.
(e) Total return calculation does not include the purchase or redemption fee of
0.50%, respectively.
(f) Not Annualized.
(g) Annualized.
(h) For the fiscal year beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid to brokers on the
purchase and sale of Portfolio's investment portfolio securities.
(i) Portfolio turnover represents the rate of portfolio activity. The rate after
October 31, 1995, represents the portfolio turnover rate of the Portfolio.
9
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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FINANCIAL HIGHLIGHTS--ADVISOR SHARES
Selected per share data and ratios for an Advisor share outstanding
throughout the period:
For the
Period Ended
April 30,
1997 (a)
(Unaudited)
Net Asset Value, Beginning of Period $ 11.28
--------
Investment Operations
Net Investment Income (Loss) (0.01)(b)
Net Realized and Unrealized Gain (Loss) on Investments 1.56
--------
Total from Investment Operations 1.55
--------
Distributions From
Net Investment Income (0.01)
--------
Total Distributions (0.01)
--------
Net Asset Value, End of Period $ 12.82
--------
--------
Total Return (c) 13.75%(d)
Ratio/Supplementary Data
Net Assets at End of Period (in thousands) $ 17,542
Ratios to Average Net Assets:
Expenses including reimbursement/waiver 1.79%(b)(e)
Expenses excluding reimbursement/waiver 2.04%(b)(e)
Net investment income (loss) including reimbursement/waiver (0.13)%(b)(e)
Average Commission rate (f) $ 0.0010
Portfolio turnover rate (g) 15.31%
- ------------------
(a) Advisor Class shares were first issued on November 21, 1996.
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(c) Total return calculation does not include the purchase or redemption fee of
0.50%, respectively.
(d) Not Annualized.
(e) Annualized.
(f) Amount represents the average commission per share paid to brokers on the
purchase and sale of Portfolio's investment portfolio securities.
(g) Portfolio turnover represents the rate of portfolio activity of the
Portfolio.
10
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Schroder Emerging Markets Fund Institutional Portfolio (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 Emerging Markets Fund Institutional Portfolio
(the 'Fund'), a non-diversified portfolio that commenced operations on March
31, 1995. 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, both Investor
Shares and Advisor Shares had been issued.
MASTER FEEDER ARRANGEMENT
Effective November 1, 1996, the Fund seeks to achieve its investment
objective by investing all of its investable assets in a separate
non-diversified portfolio, Schroder Emerging Markets Fund Institutional
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 14 to 25 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 Portfolios' 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.
11
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Schroder Emerging Markets Fund Institutional Portfolio (Fund)
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FEDERAL TAXES
The Fund intends to qualify and continue to qualify each year as a
regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gain and certain other amounts, if any, the Fund
will not be subject to a federal excise tax. Therefore, no federal income or
excise tax provision is required.
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.
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 'SCMI') to act as
investment adviser pursuant to an Investment Advisory Agreement. See Notes to
the Financial Statements of the Portfolio.
ADMINISTRATOR AND SUBADMINSTRATOR
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 0.05%
of the average daily net assets of the Fund. For its services, Forum is
entitled to receive compensation at annual fees payable monthly of 0.05% of
the average daily net assets of the Fund. Prior to November 26, 1996,
Schroder Advisors was entitled to compensation at an annual rate of 0.10% of
the average daily net assets and obligated to pay a fee to FFSI.
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.
SHAREHOLDER SERVICE PLAN AND SERVICE ORGANIZATIONS
The Trust has adopted a Shareh older Service Plan (the 'Plan') for the
Advisor Share Class under which Schroder Advisors is authorized to pay
Service Organizations a servicing fee. Payments under the Plan may be for
various types of services. The maximum annual amount payable under the Plan
is 0.25% of the Fund's average net assets attributable to the Advisor Shares.
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 $12,000 per year.
12
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio (Fund)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Schroder Advisors has voluntarily waived a portion of its fee and have
assumed certain expenses of the Portfolio so that its total expenses would
not exceed 1.60% on Investor Shares and 1.85% on Advisor Shares of the
respective share's average daily net assets. The expense limitations cannot
be modified or withdrawn except by a majority vote of the Trustees of the
Trust. SCMI, Forum and FFC may waive voluntarily all or a portion of their
fees, from time to time. For the six months ended April 30, 1997, fees waived
and expenses reimbursed by Schroder Advisors were $16,399 and $9,862,
respectively.
NOTE 5. PURCHASE AND REDEMPTION FEES
Purchases and redemptions of Fund shares are subjected to a fee 0.50%
of the amount invested and 0.50% of the net asset value redeemed,
respectively. These charges are designed to cover the transaction costs the
Fund incurs (either directly or indirectly as a result of its investment in
the Portfolio) as a result of investments or the redemption of Fund shares.
These charges, which are not a sales charge, are paid to the Fund, not
Schroder Advisors or any other entity. The purchase fee for the six months
ended April 30, 1997 and the year ended October 31, 1996 were $207,351 and
$787,563, respectively. The redemption fee for the six months ended April 30,
1997 and the year ended October 31, 1996 were $25,240 and $6,886,
respectively. The purchase and redemption fees are included in the Statement
of Changes shares sold and shared redeemed amounts, respectively, and are
included as part of Paid in Capital.
NOTE 6. FEDERAL INCOME TAXES
As of April 30, 1997, the Fund has capital loss carryovers available to
offset future capital gains as follows:
Carryovers expire on October 31, 2003................ $ 159,533
Carryovers expire on October 31, 2004................ 6,451,242
13
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997 (UNAUDITED)
STOCKS AND WARRANTS - 96.9%
SHARES VALUE US$
- ----------- ------------
ARGENTINA - 4.6%
COMMON STOCK
69,100 Banco de Galicia y Buenos
Aires SA de CV ADR
Finance $ 1,681,072
356,600 CIADEA SA
Capital Equipment 1,515,852
412,570 Compania Naviera Perez
Companc SA
Multi-Industry 3,321,851
200,000 Telecom Argentina
Stet - Frane Telecom SA
Services 1,000,200
489,000 Telefonica de Argentina SA
Services 1,618,913
30,300 Telefonica de Argentina SA
ADR
Services 1,007,475
22,600 YPF Sociedad Anonima ADR
Energy 624,325
------------
10,769,688
------------
BOTSWANA - 0.4%
COMMON STOCK
1,195,000 Sechaba Investment Trust(a)
Services 1,042,787
------------
1,042,787
------------
BRAZIL - 15.3%
COMMON STOCK
37,000,000 Companhia Energetica de
Minas Gerais
Services 1,683,874
13,600,000 Companhia Paulista de Forca
e Luz - CPFL
Energy 2,071,650
30,383,000 Telecomunicacoes Brasileiras
SA - Telebras
Telecommunications 3,265,423
------------
7,020,947
------------
PREFERRED STOCK
190,100,000 Banco Brasileiro de Decontos
SA
Finance 1,555,119
19,000,000 Banco Nacional SA(a)
Finance 0
9,641,000 Centrais Eletricas
Brasileiras SA -
Eletrobras
Energy 4,505,479
47,200 Companhia Vale do Rio Doce
Finance 1,198,308
SHARES VALUE US$
- ----------- ------------
BRAZIL (CONCLUDED)
1,180,250 IKPC - Industrias Klabin de
Papel e Celulose SA
Services $ 1,187,464
1,915,000 Itausa Investimentos Itau SA
Multi-Industry 1,620,592
1,558,055 Multibras Eletrodomesticos
SA
Capital Equipment 1,845,932
18,050,000 Petrol
Brasileiro - Petrobras
Energy 3,827,245
46,800 Telecomunicacoes Brasileiras
SA - Telebras ADR
Telecommunications 5,370,300
10,866,000 Telecomunicacoes de Sao
Paulo SA - TELESP
Services 3,085,596
7,500,000 Telecomunicacoes do Rio de
Janeiro SA - Telerj
Services 1,258,815
49,800,000 Uniao de Bancos Brasileiro
Finance 1,873,060
982,398,230 Usinas Siderurgicas de Minas
Gerais SA
Capital Equipment 1,200,862
------------
28,528,772
------------
35,549,719
------------
CHILE - 3.9%
COMMON STOCK
56,200 Administradora de Fondos de
Pensiones Provida SA ADR
Materials 1,011,600
120,000 Banco Santander Chile ADR
Finance 1,920,000
22,000 Chilgener SA
Energy 627,000
53,125 Compania de Telecomunicacion
de Chile SA ADR
Telecommunications 1,719,923
63,300 Maderas y Sinteticos
Sociedad Anonima SA ADR
Multi-Industry 1,012,800
23,500 Quimica y Minera Chile SA
ADR
Materials 1,392,375
56,900 Santa Isabel SA ADR
Retail 1,386,939
------------
9,070,637
------------
14
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ----------- ------------
CHINA, PEOPLES REPUBLIC
OF - 2.3%
COMMON STOCK
3,100,000 Beijing Datang Power
Generation, Co., Ltd.
Class H(a)
Energy $ 1,610,727
684,700 Guangdong Electric Power Co.
Energy 769,863
121,000 Huaneng Power International
Inc. ADR(a)
Energy 2,934,250
------------
5,134,840
------------
CROATIA - 0.8%
COMMON STOCK
120,060 Pliva DD GDR(a)
Consumer Durables 1,809,905
------------
1,809,905
------------
CZECH REPUBLIC - 0.6%
COMMON STOCK
6,420 SPT Telekom AS(a)
Services 678,300
2,430 Tabak AS
Consumer Non-Durables 630,543
------------
1,308,843
------------
EGYPT - 1.2%
COMMON STOCK
122,000 Commercial International
Bank GDR(a)
Finance 2,745,000
------------
2,745,000
------------
GREECE - 0.4%
COMMON STOCK
29,550 Hellenic Bottling Co. SA
Consumer Non-Durables 959,861
------------
959,861
------------
HONG KONG - 5.5%
COMMON STOCK
1,210,000 China Overseas Land &
Investment
Finance 683,373
1,304,000 China Resources Beijing Land
Finance 858,504
934,000 China Resources Enterprise
Ltd.
Finance 2,580,211
1,940,000 Cosco Pacific Ltd.
Services 2,717,228
1,534,000 Guangdong Investments
Services 1,435,680
SHARES VALUE US$
- ----------- ------------
HONG KONG (CONCLUDED)
850,000 Guangnan Holdings
Services $ 1,223,455
685,000 New World Infrastructure(a)
Finance 1,936,552
110,000 Shanghai Industrial
Holdings, Ltd.(a)
Multi-Industry 619,118
1,814,000 Zhenhai Refining & Chemical
Co. Ltd.
Energy 772,763
------------
12,826,884
------------
WARRANTS
121,428 Guangnan Holdings, Ltd.
Services 67,403
------------
12,894,287
------------
HUNGARY - 1.9%
COMMON STOCK
36,360 BorsodChem Rt.
Materials 1,308,960
29,200 Gedeon Richter RT(a)(b)
Consumer Durables 1,940,677
25,320 Pannonplast RT
Materials 1,262,151
------------
4,511,788
------------
INDIA - 8.4%
COMMON STOCK
166,000 BSES Ltd.
Energy 1,137,464
340,000 Bharat Heavy Electricals
Ltd.
Capital Equipment 3,741,854
485,000 Bharat Petroleum
Energy 5,222,347
591,000 Mahanagar Telephone Nigam
Ltd.
Services 4,904,201
48,000 Ranbaxy Laboratories Ltd.
Consumer Durables 872,605
322,000 State Bank of India
Finance 2,895,344
856,300 Steel Authority of India
Ltd.
Capital Equipment 515,382
5,300 Videsh Sanchar Nigam Ltd.
Services 178,025
------------
19,467,222
------------
INDONESIA - 5.5%
COMMON STOCK
188,000 London Sumatra Indonesia(a)
Energy 487,408
15
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ----------- ------------
INDONESIA (CONCLUDED)
635,000 PT Astra International
Capital Equipment $ 2,325,721
3,853,923 PT Bank Internasional
Indonesia
Finance 2,775,458
374,000 PT Gudang Garam
Consumer Non-Durables 1,569,876
105,000 PT Hanjaya Mandala Sampoerna
Consumer Non-Durables 422,377
967,200 PT Indofoods Sukses Makmur
Consumer Non-Durables 2,000,075
476,500 PT Jaya Real Property
Finance 618,298
228,000 PT Kalbe Farma
Consumer Durables 225,185
1,500,000 PT Telekomunikasi Indonesia
Services 2,175,925
------------
12,600,323
------------
WARRANTS
253,682 Bank International Indonesia
Finance 80,907
------------
12,681,230
------------
ISRAEL - 2.1%
COMMON STOCK
88,290 Osem Investment Ltd.
Consumer Non-Durables 478,503
491,400 Supersol Ltd.
Retail 1,467,230
65,000 Tadiran Telecommunications
Ltd.
Services 1,267,500
35,200 Teva Pharmaceutical ADR
Consumer Durables 1,786,400
------------
4,999,633
------------
KOREA, REPUBLIC OF - 4.9%
COMMON STOCK
40,000 Kookmin Bank GDR
Finance 703,000
87,010 Korea Electric Power Corp.
Energy 2,594,690
12,282 L.G. Information and
Communication Ltd.
Capital Equipment 1,211,677
26,000 Pohang Iron & Steel Co. Ltd.
Materials 1,835,739
2,009 SK Telecom Co. Ltd.
Telecommunications 1,602,155
24,636 Samsung Electronics Co.(a)
Capital Equipment 1,857,809
SHARES VALUE US$
- ----------- ------------
KOREA, REPUBLIC
OF (CONCLUDED)
107,000 Shinhan Bank
Finance $ 1,524,870
------------
11,329,940
------------
MAURITIUS - 0.4%
COMMON STOCK
1,566,670 State Bank of Mauritius Ltd.
Finance 991,322
------------
991,322
------------
MEXICO - 9.8%
COMMON STOCK
108,500 Bufete Industrial SA ADR(a)
Capital Equipment 2,075,064
781,720 Cemex SA de CV
Materials 2,595,085
170,741 Cifra SA de CV - Series A
Retail 255,494
1,396,000 Cifra SA de CV
Retail 2,124,060
586,000 Consorcio ARA SA(a)
Capital Equipment 1,989,563
507,000 Fomento Economico Mexicano
SA de CV
Services 2,384,382
286,400 Grupo Carso SA de CV
Multi-Industry 1,656,638
2,050,000 Grupo Financiero Bancomer SA
de CV Series B
Services 721,786
38,000 Grupo Televisa SA(a)
Services 878,750
381,000 Industrias Penoles(a)
Materials 1,787,022
332,500 Kimberly-Clark de Mexico SA
de CV
Consumer Non-Durables 1,220,874
263,300 Sanluis Corporacion SA de CV
Multi-Industry 1,523,017
46,900 Telefonos de Mexico SA ADS
Telecommunications 1,934,625
102,600 Tubos de Acero de Mexico SA
ADR(a)
Materials 1,680,076
------------
22,826,436
------------
PERU - 0.8%
COMMON STOCK
40,500 CPT Telefonica del Peru SA
ADS
Telecommunications 972,000
16
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ----------- ------------
PERU (CONCLUDED)
46,800 Credicorp Ltd.
Finance $ 982,800
------------
1,954,800
------------
PHILIPPINES - 5.3%
COMMON STOCK
3,539,844 Ayala Land Inc.
Finance 2,550,513
875,000 C & P Homes, Inc.
Finance 331,816
1,248,000 Fil-Estate Land Inc.
Finance 354,949
235,600 Manila Electric Co. 'B'
Shares
Energy 1,465,240
93,751 Metropolitan Bank & Trust
Co.
Finance 1,919,796
2,785,000 Petron Corp.
Energy 1,024,440
67,000 Philippine Long Distance
Telephone Co.
Telecommunications 3,823,853
292,000 San Miguel Corp. Class B
Consumer Non-Durables 841,562
------------
12,312,169
------------
POLAND - 2.6%
COMMON STOCK
33,080 Bank Rozwoju Eksportu SA(a)
Finance 789,661
208,330 Bydgoska Fabryka Kabli SA(a)
Capital Equipment 1,580,850
39,800 Gorazdze
Materials 1,333,880
48,850 Krosno SA
Materials 756,813
68,004 Zaklandy Metali Lekkich
Kety(a)
Materials 1,483,582
------------
5,944,786
------------
PORTUGAL - 3.3%
COMMON STOCK
35,902 Estabelecimentos Jeronimo
Martins & Filho(a)
Retail 2,149,016
32,640 Portugal Telecom SA
Telecommunications 1,203,253
135,100 Semapa - Sociedade de
Investimento e Gestao SGPS
SA
Materials 2,892,583
SHARES VALUE US$
- ----------- ------------
PORTUGAL (CONCLUDED)
17,000 Telecel-Comunicacaoes
Pessoais SA(a)
Services $ 1,464,732
------------
7,709,584
------------
WARRANTS
2,992 Estabelecimentos Jeronimo
Martins & Filho
Retail 54,245
------------
7,763,829
------------
RUSSIA - 0.4%
COMMON STOCK
54,000 Gazprom ADR(a)
Energy 842,400
------------
842,400
------------
SLOVAK REPUBLIC - 0.2%
COMMON STOCK
9,076 Nafta Gbely AS
Services 398,905
------------
398,905
------------
SOUTH AFRICA - 7.1%
COMMON STOCK
57,800 Anglo American Corp. of
South Africa Ltd.
Materials 3,691,713
243,000 Barlow Ltd.
Multi-Industry 2,677,838
56,777 Ellerine Holdings Ltd.
Services 357,527
45,649 Foodcorp Ltd.
Services 332,628
407,000 Malbak Ltd.
Multi-Industry 659,036
444,000 Nampak Ltd.
Services 1,907,208
153,695 New Clicks Holdings Ltd.
Services 176,284
250,000 Primedia Ltd.
Services 1,748,566
90,000 Sasol Ltd.
Energy 1,153,716
77,055 South African Breweries Ltd.
Consumer Non-Durables 2,270,146
67,114 South African Druggists Ltd.
Consumer Durables 562,242
728,249 Waltons Stationary Co. Ltd.
Retail 1,080,949
------------
16,617,853
------------
17
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ----------- ------------
TAIWAN - 5.2%
COMMON STOCK
113,000 Asia Cement Corp. GDS
Materials $ 2,048,125
106,600 China Steel Corp. GDS
Materials 2,451,800
47,100 Evergreen Marine Corp.(a)
Capital Equipment 858,398
125,000 ROC Taiwan Fund(a)
Finance 1,609,376
58,000 Siliconware Precision
Industries Co.(a)
Capital Equipment 1,093,300
36,000 Taiwan Fund Inc.
Finance 904,500
115,000 Teco Electric & Machinery
GDR(a)
Capital Equipment 2,392,000
56,000 Yang Ming Marine Transport
GDR(a)
Services 728,000
------------
12,085,499
------------
THAILAND - 2.6%
COMMON STOCK
38,000 Bangkok Bank Public Co. Ltd.
Finance 352,000
405,000 Electricity Generating
Public Co. Ltd.
Energy 1,085,167
204,000 Land & House Public Co. Ltd.
Finance 581,741
373,000 Siam Makro Public Co. Ltd.
Services 820,957
440,000 TelecomAsia Corp. Public Co.
Ltd.(a)
Telecommunications 669,472
199,000 Thai Farmers Bank Public Co.
Ltd.
Finance 1,203,522
SHARES VALUE US$
- ----------- ------------
THAILAND (CONCLUDED)
245,000 Total Access Communication
Public Co. Ltd.
Services $ 1,261,750
------------
5,974,609
------------
WARRANTS
11,750 Thai Farmers Bank Public
Co., Ltd.
Finance 8,545
------------
5,983,154
------------
TURKEY - 1.4%
COMMON STOCK
1,728,720 Migros Turk
Retail 1,753,461
5,223,720 Netas Telekomunik
Services 1,445,040
------------
Total Turkey 3,198,501
------------
TOTAL STOCKS AND WARRANTS 225,375,034
------------
TAIWAN - 0.3%
FIXED RATE BONDS - CORPORATE
700,000 Delta Electronic, 0.50%,
3/6/04
Capital Equipment 767,375
------------
REPURCHASE AGREEMENTS - 1.3%
3,000,000 Chase Securities, Inc.,
5.35%,
5/1/97, to be repurchased
at $3,000,446.
Collateralized by
$3,000,000 U.S. Treasury
Bonds, 10.625%, 8/15/15 3,000,000
------------
Total Investments - 98.5%
(cost $194,881,543) 229,142,409
Other Assets Less
Liabilities - 1.5% 3,476,776
------------
Total Net Assets - 100.0% $232,619,185
------------
------------
- ------------------
(a) Non-income producing security.
ADR - American Depositary Receipts
GDR - Global Depositary Receipts
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
ASSETS:
Investments (Note 2):
Investments at cost $194,881,543
Net unrealized appreciation (depreciation) 34,260,866
------------
Total Investments at value 229,142,409
Cash 4,413,118
Receivable for securities sold 698,759
Receivable for dividends, tax reclaims and interest 872,677
Organization costs, net of amortization (Note 2) 8,657
------------
Total Assets 235,135,620
------------
LIABILITIES:
Payable for securities purchased 1,705,853
Payable to investment adviser (Note 3) 161,391
Payable to administrator (Note 3) 36,405
Other payables and accrued expenses 612,786
------------
Total Liabilities 2,516,435
------------
Net Assets $232,619,185
------------
------------
COMPONENTS OF NET ASSETS:
Investors' capital $198,758,393
Net unrealized appreciation (depreciation)
on investments 33,860,792
------------
Net Assets $232,619,185
------------
------------
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME:
Dividend income (net of foreign withholding
taxes of $146,046) $ 1,839,773
Interest income 217,336
-----------
Total Investment Income 2,057,109
-----------
EXPENSES:
Investment advisory (Note 3) 1,024,883
Administration (Note 3) 153,732
Transfer agency (Note 3) 6,012
Custody 221,265
Accounting (Note 3) 37,000
Legal 6,892
Audit 18,500
Trustees 7,412
Taxes 448,091
Miscellaneous 34,704
-----------
Total Expenses 1,958,491
Fees waived and expenses reimbursed (Note 6) (82,653)
-----------
Net Expenses 1,875,838
-----------
NET INVESTMENT INCOME (LOSS) 181,271
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments sold (3,423,244)
Net realized gain (loss) on foreign currency
transactions (67,166)
-----------
Net realized gain (loss) on
investments and foreign currency
transactions (3,490,410)
-----------
Net change in unrealized appreciation (depreciation)
on investments 32,182,256
Net change in unrealized appreciation (depreciation)
on foreign currency transactions transactions 4,182
-----------
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions 32,186,438
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS 28,696,028
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $28,877,299
-----------
-----------
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
APRIL 30, FOR THE YEAR
1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
------------ ----------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $167,549,528 $ --
------------ ------------
OPERATIONS:
Net investment income (loss) 181,271 605,321
Net realized gain (loss) on investments sold (3,490,410) (6,759,042)
Net change in unrealized appreciation (depreciation) on
investments 32,186,438 1,674,354
------------ ------------
Net increase (decrease) in net assets resulting from operations 28,877,299 (4,479,367)
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 41,438,448 173,679,036
Withdrawals (5,246,090) (1,650,141)
------------ ------------
Net transactions in investors' beneficial interest 36,192,358 172,028,895
------------ ------------
Net increase (decrease) in net assets 65,069,657 167,549,528
------------ ------------
NET ASSETS, END OF PERIOD $232,619,185 $167,549,528
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
April 30, 1997 Ended
(Unaudited) October 31, 1996
-------------- ----------------
<S> <C> <C>
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 1.40%(a) 1.45%
Expenses excluding reimbursement/waiver 1.91%(a) 1.51%
Net investment income including reimbursement/waiver 0.61%(a) 0.52%
Average brokerage commission per share (b) $0.0010 $0.0008
Portfolio turnover rate 15.31% 102.70%
</TABLE>
- ------------------
(a) Annualized.
(b) Amount represents the average commission per share paid to brokers on the
purchase and sale of portfolio securities.
22
<PAGE>
- --------------------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds ('Schroder Core') was organized as a Delaware
business trust by on September 7, 1995. Schroder Core, which is registered as
an open-end, management investment company under the Investment Company Act
of 1940 (the 'Act'), currently has five investment portfolios. Included in
this report is Schroder Emerging Markets Fund Institutional Portfolio (the
'Portfolio'), a non-diversified portfolio that commenced operations on
November 1, 1995. Under its 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. Purchases and redemptions are subject to a subscription
transactions charge of 0.50% payable to the Portfolio to reimburse
transaction costs incurred with respect to the portfolio's purchase or sale
of portfolio investments.
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.
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.
23
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Schroder Emerging Markets Fund Institutional Portfolio
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
ORGANIZATIONAL COSTS
Costs incurred by the Portfolio in connection with this 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 1.00% 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 0.05%
of the average daily net assets of the Portfolio. For its services, Forum is
entitled to receive compensation at annual fees payable monthly of 0.10% of
the average daily net assets of the Portfolio. Prior to November 26, 1996,
Schroder Advisors was entitled to compensation at an annual rate of 0.15% of
the average daily net assets and obligated to pay a fee to FFSI.
TRANSFER AGENT
Forum Financial Corp.(Registered) ('FFC') serves as the Portfolio's
transfer agent and is entitled to receive compensation for those services
from the 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 receive compensation for those services by the Portfolio 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 investments) for the six months ended April
30, 1997 aggregated $68,002,794 and $30,114,410, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of April 30, 1997 was $194,881,543. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $49,595,073, and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market value
was $15,334,207.
24
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Schroder Emerging Markets Fund Institutional Portfolio
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and capital gain as it is treated as a partnership for
federal income tax purposes. All interest, dividends, gain and loss of the
Portfolio are deemed to have been 'passed through' to the partners in
proportion to their holdings of the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
NOTE 6. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
SCMI voluntarily has waived a portion of its advisory fee and has
assumed certain expenses of the Portfolio so that its total expenses would
not exceed 1.18% of the 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 by SCMI
were $82,653.
NOTE 7. CONCENTRATION OF CREDIT RISK
The Portfolio's investments in countries with limited or developing
capital markets may involve greater risks than investments in more developed
markets and the prices of such investments may be volatile. The consequences
of political, social or economic in these markets may have disruptive effects
on the market prices of the Portfolio's investments.
25
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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 Emerging
Markets Fund Institutions Portfolio. 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
Emerging
Markets Fund
Institutional
Portfolio
SEMI-ANNUAL REPORT
April 30, 1997
(Unaudited)
Schroder Capital Funds
(Delaware)
