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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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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 provide long term capital appreciation primarily through
direct or indirect investments in equity and debt securities of issuers
domiciled or doing business in emerging markets countries. 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 registered open-end management
investment company with substantially the same investment objective and policies
as the Fund. The enclosed annual report includes the 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 12 offices in emerging markets. The Schroder
Group has been managing international investment portfolios since the early
years of this century. As of October 31, 1996 the Schroder Group had over $130
billion in assets under management. At that date, the Investment Adviser,
together with its U.K. affiliate, Schroder Capital Management International
Ltd., had over $20 billion under management, of which approximately $4.2 billion
was invested in the emerging markets.
December 2, 1996
Dear Shareholder:
We are pleased to present the annual report for Schroder Emerging Markets
Fund -- Institutional Portfolio for the period ending October 31, 1996. Over the
year, the total return of the Fund was 4.2% compared with the MSCI Emerging
Markets Free Index (ex Malaysia) return of 2.8%. Your Fund was designed to
compliment an international EAFE portfolio and therefore, unlike many other
emerging market funds in the Lipper Universe, does not include Malaysia in its
investment universe, as that market is also included in developed market
indices, and given the relatively small size of its economy, does not warrant
inclusion in both developed and emerging funds. The country's wealth
characteristics and the long established nature of its stockmarket are allowing
it to move rapidly towards developed country status. When Malaysia performs
strongly, however, as over this fiscal year (+26.6%), your Fund may well
underperform the Lipper Emerging Markets Funds average.
In the past year, the top three performing markets represented in the Fund
were Poland (+42.1%), Taiwan (+38.3%) and Argentina (+33.2%) and the worst three
were South Korea ( - 36.2%), Thailand ( - 29.5%) and India ( - 9.6%). Over the
year, Latin American markets performed strongly, as confidence that the region
was recovering from the aftermath of the Mexican bailout led to renewed investor
optimism. Asia, in the meantime, was challenged by local cyclical pressures
which resulted in severe ongoing weakness in Korea and Thailand in particular as
a result of widening Current Account deficits. The Fund's strategy, to be
overweight in emerging Asia, underweight in Latin America and gradually adding
to the rest of the world, therefore, led to very modest outperformance versus
the index as good stock picking offset to a modest extent the regional
allocations.
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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Despite the slow pace of fiscal reform in Latin America, investors have
been rewarded for concluding that there is no real alternative. Governments
there continue to support stock market developments and promote the creation of
private pension plans which will help to address that region's chronically low
rate of domestic savings. However, entrenched wealth inequalities and rising
crime, particularly in Mexico, do not provide long term investor comfort,
contrary to trends in Asia. Asia continues to receive larger long term direct
investment flows which provide for the next years' exports. Also, Asia is now
facing the challenge of improving the education and productivity of its
workforce. The potential for long term success remains promising but
ameliorating trade balances is essential to realizing the possibility of
sustainable growth.
In the rest of the world, Poland and Portugal stand out. Poland, following
a politically turbulent year in 1995, stabilized in 1996. November elections
resulting in the defeat of Lech Walesa led to uncertainty among investors in the
early part of the year. Newly elected President Kwasniewki, however, has proven
an able leader and advocate of market economics despite his Social-Democrat
affiliation. Kwasniewski's willingness to adhere to reform reassured investors,
pushing the Polish market to all time highs. Schroders believes that
privatization and the increasing popularity of initial public offerings should
ensure that attractive investment opportunities continue to exist in Poland. In
Portugal, the government's commitment to conforming to the European Monetary
Union (EMU) convergence criteria led to a strengthening economy. The budget
deficit is falling and is expected to be below 4.2% of GDP in 1996, dropping to
2.9% of GDP in 1997. Market sentiment remains positive following additional cuts
in interest rates and the government's obvious commitment to privatization of
industry.
This has been a difficult year for emerging market investing. Nevertheless,
we believe the case for investing in emerging economies remains as compelling as
ever because the growing prosperity of 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 LAURA E. LUCKYN-MALONE
Hermann C. Schwab Laura E. Luckyn-Malone
Chairman President
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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MANAGEMENT'S DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 1996)
At the end of October 1996, the Fund was approximately 96.8% invested in
equities and 3.2% in cash and other assets. Over the last year the Fund's
weighting in Asian markets has been reduced, to reflect the cyclical turndown in
economies in the region. Asia now represents 44% of the Fund compared to 41% of
the Morgan Stanley Capital International Emerging Markets Free (ex Malaysia)
Index. The Latin American weighting has increased and we have gradually added to
other markets including some new markets such as Russia and Israel. However, we
continue to believe that the Asian markets offer the best long term growth.
Earnings growth should recover in Asia in 1997 and generally remain strong
across emerging markets as economic growth rates continue to exceed those of the
developed world. We believe the Fund is well positioned for 1997 with a
portfolio of quality growth companies.
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 therefore search for companies, for example, that will
benefit from rising living standards and increased infrastructure development.
With our extensive network of analysts located in 12 emerging market offices
around the world, we believe we can identify attractively priced securities
across a broad capitalization range.
In Asia we have added to our holdings in China and India over the last
year. With inflation now under control and interest rates falling, the prospects
for economic recovery in China next year are excellent and we expect strong
earnings growth. The Fund's weighting in Thailand has however been cut as the
outlook for earnings particularly in the key banking sector has deteriorated. In
Latin America, the economic recovery has gained momentum this year and we expect
this to continue into 1997. Inflation remains under control; however, Latin
America remains sensitive to the outlook for U.S. interest rates. Elsewhere we
continue to remain positive on Eastern Europe, particularly Poland and are
maintaining our underweight position in South Africa.
REGION REVIEW
LATIN AMERICA
In Latin America, continued optimism over positive news on the economic
front has resulted in strong performance during the past 12 months as the region
has outperformed its emerging market peers. This has all happened against a
backdrop of political tension and uncertainty over the direction of U.S.
interest rates. ARGENTINA is a case in point, as the return of bank deposits to
levels seen prior to the Mexican devaluation, coupled with positive developments
on fiscal and labor reform issues, have helped the economy and the market move
in an upward direction. Of concern, however, has been the country's sensitivity
to U.S. financial markets and the firing of Economy Minister Cavallo by
President Menem, which was absorbed by the market with much less fanfare than
had been originally expected.
The BRAZILIAN market has been the beneficiary of falling interest rates,
lower than expected levels of inflation, good corporate results and the gaining
of momentum with respect to privatization. The elimination of the inflation tax
and the increase of purchasing power, especially among the lower classes, has
resulted in increased purchases of durable goods. We have positioned ourselves
for this by investing in Multibras Eletrodomesticos SA, a manufacturer of
household appliances with positive growth prospects and record sales during the
year.
In MEXICO, austere government policies have led to falling inflation and
domestic interest rates which have provided the backdrop for the more recent
positive GDP growth. We believe that the domestic economy is beginning to show
signs of recovery and have begun to focus on companies that should benefit such
as the construction firm Bufet Industrial, SA and the beer and soft-drink
producer Fomento Economico Mexicano SA de CV (FEMSA). FEMSA has positioned
itself to be a direct beneficiary of the historically high correlation between
the consumption of beer and soft-drinks as the economy and disposable income
begin to increase.
The strength of the Mexican peso was also a concern for the year, resulting
in pressure on exporters who have been at the forefront of the economic
recovery. However, the 6% devaluation of the currency seen during October is
expected to move these companies to a higher level of competitiveness.
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CHILE has been the weakest market in the region during the year. The high
interest rate environment has had an adverse effect on the economy and on
corporate earnings. Consumption remains strong and, given the government's
commitment to bring inflation into single digits, the outlook for lower interest
rates in the immediate future does not look promising.
AFRICA
SOUTH AFRICA has been a poor performer in 1996, primarily due to the
currency crisis that began in February. Since that time, the currency has fallen
almost 30% against the U.S. dollar. This has been caused by a reversal of
capital flows, and a balance of payments deficit and lack of foreign reserves.
With exchange controls still in place the risk remains on the downside, despite
fundamentals which have improved. As a result of the currency crisis, real
interest rates have remained very high which is affecting the domestic economy
and putting pressure on industrial earnings growth. Anglo American Corporation,
a leading South African mining company is an example of a company we believe
will benefit from the recent depreciation in the South African currency, given
that most of its earnings are U.S. dollar based. It is also benefiting from
various new projects in South Africa.
The Fund made its first investment in MAURITIUS during the year, purchasing
the State Bank of Mauritius. We believe this company is undervalued and will
benefit from the strong economic growth in a country with sound government
policies and solid economic fundamentals.
EASTERN EUROPE
As the POLISH political picture cleared following the November 1995
presidential elections and the release of solid corporate earnings figures,
investors have poured money into the market, pushing the WIG (stock market) to
an all time high. For the year to date, the Polish MSCI index was up 48.7% in
U.S. dollar terms. Key performers included Bydgoska Fabryka Kabli SA, the Polish
cable manufacturer that is taking advantage of significant infrastructure
investment. The solid macro-economic performance continued in the CZECH
REPUBLIC, although signs of weakening began to appear. At the end of the Fund's
fiscal year, the trade deficit was at an all time high, and although tourism
revenues do compensate somewhat, they cannot hide the fundamental fact that many
Czech companies are not competing effectively. Despite falling real wages and an
unhappy electorate, the HUNGARIAN government has adhered to its International
Monetary Fund (IMF) established austerity package. Government debt is falling as
a percentage of GDP, inflation has decreased and output has improved. This
brought about a renewed confidence in the market as the Budapest exchange soared
107% in U.S. dollar terms as of the end of October. Strong earnings figures from
bluechips such as Gedeon Richter and EGIS Rt. also contributed to the rise in
the market. Although SLOVAKIA attained the highest growth and lowest inflation
in the region in 1995 and the first part of 1996, the market failed to perform
to expectations. Earnings have been poor and restructuring has been slow.
MEDITERRANEAN EUROPE
TURKEY'S political woes continued with the election of the Islamic
Fundamentalist Party, Refah, to power. As of October 31, 1996, it was difficult
to see how the government's projected zero budget deficit will be achieved with
fiscal spending increasing and no reasonable privatization program in place.
Despite this, the market increased by 31% in U.S. dollar terms at the end of
October, led by bluechips such as Migros Turk TAS, the food retailer. The
PORTUGUESE market was up 28.8% at the end of October, driven by a strengthening
bond market as inflation fell significantly, enhancing the possibilities of
Portugal joining the European Monetary Union (EMU). This provided a positive
environment for the introduction of several privatization stocks to the market.
GREECE continues to flounder with stagnant growth and high inflation. Elections
in August resulted in a majority government that is expected to introduce the
reform policies necessary to bring the country in line with EMU convergence
targets. Investments in ISRAEL were initiated in 1996. Interest rates there
increased sharply in the first half in order to cool down the overheating
economy. The current government, although facing setbacks with the peace
process, is expected to implement the structural reforms necessary to turn the
economy around.
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4
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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EMERGING ASIA
The Asian markets produced mixed returns over the year as both political
and economic factors dominated headlines. The best performance in the region
came from INDONESIA which rose 19.3% in U.S. dollar terms, as strong macro data
and good corporate results boosted the stock market. Political issues continued
to be a sensitive issue as the chances of a smooth succession to President
Suharto were called into question. The PHILIPPINES rose 16.9% in U.S. dollar
terms over the last year. The strong performance was supported by robust
corporate earnings that, with the economy continuing to accelerate, bodes well
for 1997. With corporate profits forecast to reach 26%, the Fund has increased
its exposure to companies such as Ayala Land Inc. which is geared to the rising
standards of living in the country.
Rising real rates and a sharp fall-off in exports, exacerbated by a weaker
Japanese yen, led the KOREAN economy into decline. The market produced the worst
return in the region, falling 36.2% in U.S. dollar terms as earnings growth
expectations were revised sharply downward. In INDIA, the stock market has
proven extremely volatile, falling 9.6% in U.S. dollar terms over the year. This
has been due to increasing interest and depreciation charges, leading to a
downgrade in earnings expectations. However, we believe further liberalization
and privatization looks set to provide excellent future opportunities for
investment. As such, the Fund has added holdings such as Ranbaxy Laboratories
Ltd., a pharmaceutical company that looks set to benefit from the increasing
affluence of the Indian nation. The Indian company, Mahanagar Telephone Nigam
Ltd., the fixed-line telephone operator for Delhi and Banbay, is another example
of the type of company we believe will benefit from infrastructure improvements
and growing consumer demand. Telephone lines in India are still well below the
average compared to the developed world both in terms of market penetration and
quality, a fact India is working to redress and which provides real growth
potential for Mahanagar.
THAILAND'S economy continued to slow throughout the year as export growth
plunged. The prolonged downturn in the economy has caused further problems for
property developers which has in turn adversely affected the banking and finance
sectors. Sentiment was further weakened by the loss of confidence in Prime
Minister Banharn Silpa-archa and the dissolution of Parliament late in the year
leading to a forced general election. The outcome of the election remained
unclear as of October 31, 1996, as a coalition government had yet to be formed.
PORTFOLIO MANAGERS' Q&A
IS MEXICO ON THE ROAD TO RECOVERY?
The Mexican government has done a very credible job in the face of
adversity. After the devaluation of the peso in December of 1994 and the ensuing
crisis which followed for much of 1995, recent news on the economic front would
lead one to believe that Mexico is on the road to recovery. The fundamentals for
the currency remain sound, the Current Account deficit is small, inflation is
gradually declining and economic recovery is spreading to more sectors. As an
example, GDP growth for the third quarter of 1996 was up a resounding 7.2%.
Additionally, we believe that the growth momentum in this economy should show
further strength in 1997. The recovery has been mostly export driven, however,
we are beginning to see an improvement in domestic demand which reflects a
recovery in disposable income.
WHY DOES THE FUND MAINTAIN AN OVERWEIGHTED POSITION IN POLAND RELATIVE TO THE
MSCI EMERGING MARKETS (EX-MALAYSIA) INDEX?
We remain overweight Poland given the improving macro-economic picture and
continued political stability. Although the coalition has been somewhat shaky
following a key tax vote which brought to a head the coalition's differing
views, real political crisis is not likely. Growth of over 5.5% is expected
through 1997 and the government is dedicated to privatization.
Slower-than-expected earnings in 1996 did not dampen the mood of the market. We
expect strong earnings in 1997 combined with a stream of new issues and positive
macro-economic results to push the market further.
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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WHY DOES THE FUND MAINTAIN AN UNDERWEIGHTED POSITION IN SOUTH AFRICA COMPARED TO
THE INDEX?
There are three key reasons for this. First, we do not find the outlook for
sustainable growth in South Africa in the medium term to be as attractive as in
other emerging markets. Unless there are major policy changes, we do not believe
the sustainable growth of the economy is much more than 3%. This is because of
the low savings rate of 17% (compared to over 30% in some Asian countries), lack
of direct foreign investment, and poor labor productivity and flexibility.
Second, with exchange controls in place, the lack of foreign reserves and a
current account deficit, we believe there is further downside risk to the
currency. Finally, given the large cross holdings between companies and high
weighting of unattractive commodity companies, in our view the index exaggerates
the opportunities available.
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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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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INVESTMENT ADVISER'S REPORT -- COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT
The following Chart compares a change in value of a $10,000 investment in the
Fund and the performance of the Morgan Stanley Capital International ('MSCI')
Emerging Markets Free ('EMF') Index. The MSCI EMF Index is a market
capitalization index of companies representative of the market structure of 26
emerging countries in Europe, Latin America, and the Pacific Basin. The MSCI EMF
Index excludes closed markets and those shares which are not purchasable by
foreigners in otherwise free markets. The MSCI EMF Ex-Malaysia Index is a
benchmark used by the Fund's Adviser to exclude investments in Malaysia, which
may be considered a developed market. Malaysia represented between 15.5% and
18.2% of the MSCI EMF Index during the period reported. The Index excludes the
effect of any fees or sales charges. Total return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Total return for
the Fund assumes reinvestment of dividends and distributions and does not
reflect the deduction of the purchase or redemption fees of 0.50%, respectively,
imposed by the Fund. Past performance cannot predict nor guarantee future
results.
Schroder Emerging Markets Fund-Institutional Portfolio vs Morgan Stanley
EMF Index
<TABLE>
<S> <S> <S>
Investment Value on 10/31/96
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Schroder Emerging Markets Fund-Institutional Portfolio $11,078
MSCI EMF Index $11,231
MSCI EMF ex-Malaysia Index $11,020
Average Annual Total Return on 10/31/96 1 Year Since Inception on 03/31/95
- --------------------------------------- ------ ---------------------------
Schroder Emerging Markets Fund-Institutional Portfolio 4.22% 6.66%
MSCI EMF Index 6.47% 7.58%
MSCI EMF ex-Malaysia Index 2.80% 6.40%
</TABLE>
[GRAPH]
<TABLE>
<CAPTION>
SCHRODER EMERGING MARKETS FUND-
INSTITUTIONAL PORTFOLIO MSCI EMF INDEX MSCI EMF EX-MALAYSIA INDEX
<S> <C> <C>
$10,000 $10,000 $10,000
10,320 10,449 10,570
10,930 11,005 11,003
10,959 11,038 11,080
11,270 11,285 11,324
10,929 11,019 11,132
10,999 10,967 11,109
10,630 10,547 10,721
10,389 10,359 10,485
10,707 10,819 10,925
11,839 11,588 11,777
11,529 11,403 11,471
11,539 11,492 11,425
11,990 11,952 11,848
12,261 11,898 11,883
12,131 11,972 11,967
11,370 11,154 11,129
11,580 11,440 11,340
11,630 11,539 11,420
11,078 11,231 11,020
</TABLE>
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7
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1996 (UNAUDITED)
COUNTRY WEIGHTINGS
<TABLE>
<CAPTION>
MSCI EMF
EX-MALAYSIA
COUNTRY % OF NET ASSETS INDEX
- ---------------------------------------------------------
<S> <C> <C>
Brazil 13.5% 14.4%
Mexico 8.3% 9.3%
India 7.4% 6.9%
Indonesia 7.3% 6.0%
China/Hong Kong 7.2% 0.5%
Philippines 6.8% 3.9%
Korea, Republic of 6.8% 6.2%
Thailand 5.8% 6.5%
South Africa 5.6% 13.4%
Chile 4.6% 4.9%
Argentina 4.1% 3.8%
Taiwan 3.0% 10.2%
Poland 2.6% 0.6%
Turkey 2.2% 1.6%
Portugal 2.1% 2.4%
Israel 2.0% 2.3%
Hungary 1.3% 0.4%
Russia 1.2% 0.0%
Croatia 1.1% 0.0%
Egypt 1.0% 0.0%
Czech Republic 1.0% 1.5%
Greece 0.8% 1.5%
Peru 0.5% 1.3%
Mauritius 0.3% 0.0%
Slovak Republic 0.3% 0.0%
Cash & Other Assets 3.2% 0.0%
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Total 100.0%
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</TABLE>
<TABLE>
<CAPTION>
INVESTMENT BY INDUSTRY
<S> <C>
INDUSTRY % OF NET ASSETS
- --------------------------------------------------------
Capital Equipment 7.2%
Consumer Durables 6.6%
Consumer Non-durables 6.3%
Energy 13.8%
Finance 13.7%
Materials 12.8%
Multi-Industry 8.0%
Retail 2.9%
Services 24.3%
Other 1.2%
Cash & Other Assets 3.2%
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Total 100.0%
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</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C>
SECURITY % OF NET ASSETS
- ---------------------------------------------------------
Telecomunicacoes Brasileriras SA (Bz)* 3.4%
Philipine Long Distance Telephone Co.
(Phl) 2.4%
Mahanagar Telephone Nigam (Ind) 2.3%
Centrais Eletricas Brasileiras SA (Bz) 1.9%
Bharat Petroleum Corp. Ltd. (Ind) 1.7%
P.T. Kalbe Farma (Indo) 1.6%
Anglo-American Corp. (S.Afr) 1.6%
Compania Naviera Perez Companc SA (Arg) 1.6%
Korea Electric Power Corporation (Kor) 1.5%
United Communications Industry (Thai) 1.5%
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Total 19.5%
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* Includes Common and Preferred Stock
</TABLE>
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investment in Schroder Emerging Markets Fund Institutional
Portfolio (Portfolio) (cost $165,875,174) (Note 2) $167,549,528
Other receivables 8,217
Deferred organizational expense (Note 2) 20,533
------------
Total Assets 167,578,278
------------
LIABILITIES:
Payables and accrued expenses 8,228
------------
Total Liabilities 8,228
------------
Net Assets $167,570,050
------------
------------
NET ASSETS CONSIST OF:
Paid-in capital (Note 5) $172,444,826
Undistributed net investment income 152,823
Accumulated net realized loss on investments and foreign
currency transactions (6,701,953)
Net unrealized appreciation of investments and foreign
currency transactions 1,674,354
------------
Net Assets $167,570,050
------------
------------
Net Asset Value per share
($167,570,050 divided by
15,153,374 shares outstanding) $11.06
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME ALLOCATED FROM SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO (PORTFOLIO):
Dividend income (net of foreign withholding taxes of $142,824) $ 1,908,010
Interest income 426,473
Expenses (1,729,162)
-----------
Net Investment Income from Schroder
Emerging Markets Fund Institutional
Portfolio (Portfolio) 605,321
-----------
EXPENSES:
Administration fees (Note 3) 116,870
Transfer agent fees and expenses (Note 3) 13,916
Accounting service fees (Note 3) 12,000
Other professional fees 25,933
Registration fees 15,718
Other 3,241
Printing 37,005
Trustees fees and expenses 2,883
Amortization of organizational costs (Note 2) 6,000
-----------
Total Expenses 233,566
Fee waiver (Note 3) (53,602)
-----------
Net Expenses 179,964
-----------
NET INVESTMENT INCOME 425,357
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ALLOCATED FROM SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO (PORTFOLIO):
Net realized loss on investments (6,542,420)
Net realized loss on foreign currency transactions (216,622)
-----------
Net realized loss on investments and
foreign currency transactions (6,759,042)
-----------
Net change in unrealized appreciation of investments 607,803
Net change in unrealized depreciation of foreign currency
transactions (3,644)
-----------
Net change in unrealized appreciation of
investments and foreign currency
transactions 604,159
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (6,154,883)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(5,729,526)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MARCH 31, 1995 TO
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 425,357 $ 49,989
Net realized loss on investments and
foreign currency transactions (6,759,042) (178,203)
Net change in unrealized appreciation of
investments and foreign currency
transactions 604,159 1,070,195
---------------- -------------------
Net increase (decrease) in net assets
resulting from operations (5,729,526) 941,981
---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (102,592) --
---------------- -------------------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS (NOTE
5) 154,978,912 17,481,275
---------------- -------------------
INCREASE IN NET ASSETS 149,146,794 18,423,256
NET ASSETS:
Beginning of period 18,423,256 --
---------------- -------------------
End of period $167,570,050 $18,423,256
---------------- -------------------
---------------- -------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO (THE 'FUND'),
which commenced operations on March 31, 1995, is a separately managed,
non-diversified portfolio of Schroder Capital Funds (Delaware) (the 'Trust'),
an open-end management investment company under the Investment Company Act of
1940 (the 'Act'). On November 1, 1996, the Fund contributed substantially all
its investable assets to the Schroder Emerging Markets Fund -- Institutional
Portfolio (the 'Portfolio') in exchange for an interest in the Portfolio. The
Fund currently seeks to achieve its investment objective by holding , as its
only investment security, an interest in the Portfolio, a separate portfolio
of a registered open-end management investment company having the same
investment objective and policies as the Fund. The Fund's investment in the
Portfolio is in the form of a non-transferable beneficial interest. As of the
date of this report, the Fund is the only institutional investor that has
invested in the Portfolio. The Portfolio may permit other investment
companies or institutional investors to invest in it. All investors will
invest on the same terms and conditions as the Fund and will pay a
proportionate share of the Portfolio's expenses. The financial statements of
the Portfolio, including the Schedule of Investments, are included elsewhere
in this report and should be read in conjunction with the Fund's financial
statements.
On May 17, 1996, the Fund began offering two classes of shares
('Investor Shares' and 'Advisor Shares'). On May 17, 1996, all existing
shares of the Fund were converted to Investor Shares. As of October 31, 1996,
the Fund has not sold any Advisor Shares.
2. SIGNIFICANT ACCOUNTING POLICIES:
The Fund's financial statements are prepared in accordance with
generally accepted accounting principles based upon the following significant
accounting policies. The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from these estimates.
SECURITY VALUATION
The Fund records its investment in the Portfolio at value. Valuation of
securities held by the Portfolio is discussed in the Portfolio Notes to the
Financial Statements which are included elsewhere in this report.
INVESTMENT INCOME AND EXPENSES
The Fund records daily its prorata share of the Portfolio's income,
expenses and realized and unrealized gain and loss. In addition, the Fund
accrues its own expenses.
ORGANIZATIONAL COSTS
Cost incurred by the Fund in connection with its organization and
initial registration are being amortized on the straight line basis over a
five year period.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. Permanent book and tax basis differences, such as passive foreign
investment companies, relating to shareholder distributions will result in
reclassifications to paid in capital and may affect the per share allocation
between net investment income and realized and unrealized gain or loss.
Undistributed net investment income and accumulated undistributed net
realized gain or loss may include temporary book and tax basis differences
that will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
- --------------------------------------------------------------------------------
12
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTIES:
The Fund currently invests all of its assets in the Portfolio, which
retains Schroder Capital Management International Inc. ('SCMI') as investment
adviser pursuant to an Investment Advisory Contract. SCMI manages the
investment and reinvestment of the assets included in the Portfolio and
continuously reviews, supervises and administers the Portfolio's investments.
It is the responsibility of SCMI to make decisions relating to the
Portfolio's investments and to place purchase and sale orders regarding such
investments with brokers or dealers selected at its discretion. For its
services as investment adviser to the Portfolio, SCMI receives a monthly fee
equal on an annual basis to 1.00% of the average daily net assets of the
Portfolio.
The Fund may, at any time, withdraw its investment from the Portfolio
if the Board of Trustees determines that it is in the best interests of the
Fund and its shareholders to do so. Accordingly, the Fund has retained SCMI
as its investment adviser to manage the Fund's assets in the event the Fund
so withdraws its investment. SCMI will not receive an investment advisory fee
with respect to the Fund so long as the Fund remains completely invested in
the Portfolio or any other investment company.
On behalf of the Fund , the Trust has entered into an Administrative
Services Contract with Schroder Fund Advisors Inc. ('Schroder Advisors'). In
addition, the Trust and Schroder Advisors have entered into a
Sub-Administration Agreement with Forum Financial Services, Inc. ('Forum').
Pursuant to their agreements, Schroder Advisors and Forum provide certain
management and administrative services necessary to the Fund's operations
other than the investment management and administrative services provided to
the Fund by SCMI pursuant to the Investment Advisory Contract. For these
services, Schroder Advisors receives from the Fund, a fee payable monthly at
an annual rate of 0.10% of the average daily net assets of the Fund. Payment
for Forum's services is made by Schroder Advisors and is not a separate
expense of the Fund. Schroder Advisors and Forum provide similar services to
the Portfolio, for which Schroder Advisors is separately compensated at an
annual rate of 0.15% of the average daily net assets of the Portfolio, a
portion of which Forum receives for its services with respect to the
Portfolio. SCMI and Schroder Advisors have voluntarily undertaken to waive a
portion of their fees and assume certain expenses of the Fund during the
current fiscal year to the extent that total expenses exceed 1.60% of the
Fund's average daily net assets attributable to Investor Shares. This
undertaking cannot be withdrawn except by a majority vote of the Board of
Trustees. For the year ended October 31, 1996, Schroder Advisors waived a
portion of its fees totaling $53,602 with respect to the Fund.
Forum Financial Corp. ('FFC') , an affiliate of Forum, performs
portfolio accounting services for the Fund pursuant to a Fund Accounting
Agreement with the Trust. Under its agreement, FFC prepares and maintains
books and records of the Fund on behalf of the Trust that are required to be
maintained under the Act, calculates the net asset value per share of the
Fund, calculates dividend and capital gain distributions and prepares
periodic reports to the shareholders and the Securities and Exchange
Commission. For its services, FFC receives from the Trust, with respect to
the Fund, a fee of $12,000 per year.
FFC is also the Fund's transfer agent and dividend disbursing agent and
is compensated for those services by the Fund in the amount of $12,000 per
year, plus certain shareholder account fees.
4. FEDERAL INCOME TAXES:
As it is the Fund's policy to comply with requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders, no Federal income tax
provision is required.
As of October 31, 1996, the Fund has capital loss carryovers available
to offset future capital gains as follows:
<TABLE>
<S> <C>
Carryovers expire on October 31, 2003............................................... $ 159,533
Carryovers expire on October 31, 2004............................................... $6,451,242
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARE TRANSACTIONS:
The Fund is authorized under the Trust's Trust Instrument to issue an
unlimited number of Investor Shares and Advisor Shares of beneficial interest
without par value. At October 31, 1996, the Fund had issued only one class of
shares, Investor Shares, of which there were 15,153,374 shares outstanding.
Transactions in the Fund's capital shares for the year ended October 31, 1996
and the period ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
Period from
March 31, 1995
Year Ended October 31, to
1996 October 31, 1995
- ------------------------------------------------------------------------------------------------------------
Number Number
of of
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 13,540,103 $156,323,036 1,733,324 $17,481,275
Shares issued for reinvestment of dividend and
distribution 3,127 33,428 -- --
---------- ------------ --------- -----------
13,543,230 156,356,464 1,733,324 17,481,275
Shares redeemed (123,180) (1,377,552) -- --
---------- ------------ --------- -----------
Net increase 13,420,050 $154,978,912 1,733,324 $17,481,275
---------- ------------ --------- -----------
---------- ------------ --------- -----------
</TABLE>
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 year ended
October 31, 1996 and the period ended October 31, 1995 were $787,563 and $0,
respectively. The redemption fee for the year ended October 31, 1996 and the
period ended October 31, 1995 were $6,886 and $0, respectively. The purchase
and redemption fees are included in the above shares sold and shares redeemed
amounts, respectively, and are included as part of Paid in Capital.
6. CONCENTRATION OF RISK
As described in the Portfolio's Notes to Financial Statements, 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 changes in these markets may have disruptive
effects on the market prices of the Portfolio's investments.
- --------------------------------------------------------------------------------
14
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. FINANCIAL HIGHLIGHTS:
Selected per share data and ratios:
<TABLE>
<CAPTION>
Year
Ended March 31, 1995(a)
October 31, Through
1996(f) October 31, 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of period $10.63 $ 10.00
-------- --------
Investment Operations:
Net investment income 0.02(d) 0.02
Net realized and unrealized gain on investments 0.43(e) 0.61
-------- --------
Total from investment operations 0.45 0.63
-------- --------
Distributions to shareholders from net investment income (0.02) --
-------- --------
Net Asset Value, End of period $11.06 $ 10.63
-------- --------
-------- --------
Total Return(g) 4.22% 6.30%
Ratios/Supplementary Data:
Net Assets, End of period (thousands) $167,570 $18,423
Ratio of expenses to average net assets net of fee waivers 1.60%(d) 1.58%(b)
Ratio of net investment income to average net assets net of fee
waivers 0.36%(d) 0.46%(b)
Ratio of expenses to average net assets excluding fee waivers 1.71%(d) 2.45%(b)
Ratio of net investment income (loss) to average net assets exclud-
ing fee waivers 0.25%(d) (0.41)%(b)
Portfolio turnover rate(c) N/A 44.10%
</TABLE>
(a) Commencement of operations.
(b) Annualized.
(c) Portfolio turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred substantially all of
its investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
(d) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(e) 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 Fund shares in relation to fluctuating
market values of the investments of the Fund
(f) On May 17, 1996, the Fund began offering two classes of shares Investor
Shares and Advisor Shares, and all existing shares of the Fund were
converted to Investor Shares.
(g) Total return calculation does not include the purchase or redemption fee of
0.50%, respectively.
* * * *
- --------------------------------------------------------------------------------
15
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
SPECIAL 1996 TAX INFORMATION (UNAUDITED)
The Fund intends to elect to pass through the credit for taxes paid in
foreign countries during its fiscal year ended October 31, 1996. In
accordance with current tax laws, the foreign income and foreign tax per
share (for a share outstanding October 31, 1996) is as follows:
<TABLE>
<CAPTION>
COUNTRY DIVIDENDS FOREIGN TAX
- ----------------------- --------- -----------
<S> <C> <C>
Argentina $ 0.0053 $0.0000
Austria 0.0015 0.0000
Brazil 0.0325 0.0024
Chile 0.0053 0.0004
China 0.0037 0.0000
Czech Republic 0.0040 0.0006
Greece 0.0038 0.0000
Hong Kong 0.0041 0.0000
India 0.0041 0.0004
Indonesia 0.0088 0.0013
Korea, Republic of 0.0036 0.0004
Mauritius 0.0003 0.0000
<CAPTION>
COUNTRY DIVIDENDS FOREIGN TAX
- ----------------------- --------- -----------
<S> <C> <C>
Mexico $ 0.0130 $0.0000
Peru 0.0008 0.0000
Philippines 0.0049 0.0012
Poland 0.0014 0.0002
Portugal 0.0048 0.0008
Slovak Republic 0.0003 0.0000
South Africa 0.0079 0.0000
Taiwan 0.0004 0.0000
Thailand 0.0156 0.0016
Turkey 0.0085 0.0000
--------- -----------
Total $ 0.1346 $0.0093
--------- -----------
--------- -----------
</TABLE>
The pass through of foreign tax credit will affect only those
shareholders of the Fund who are holders on the dividend record date in
December 1996. The foreign taxes paid or withheld per share represent taxes
incurred by the Fund on interest and dividends received by the Fund from
foreign sources. Foreign taxes paid or withheld should be included in gross
income for U.S. federal income tax purposes with an offsetting deduction from
gross income or a credit for taxes paid to foreign governments. You should
consult your tax counsel or other tax advisors regarding the appropriate
treatment of foreign taxes paid. The allocation of foreign taxes will be
reflected in your 1996 Form 1099-Div.
- --------------------------------------------------------------------------------
16
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Schroder Emerging Markets
Fund -- Institutional Portfolio (the Fund):
We have audited the accompanying statement of assets and liabilities of
the Schroder Emerging Markets Fund -- Institutional Portfolio (a separately
managed portfolio of Schroder Capital Funds (Delaware)), as of October 31,
1996, and the related statement of operations for the year then ended, the
statements of changes in net assets and the financial highlights for the year
then ended and for the period March 31, 1995 (commencement of operations) to
October 31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Schroder Emerging Markets Fund -- Institutional Portfolio as
of October 31, 1996, the results of its operations for the year then ended,
the changes in its net assets and financial highlights for the year ended
October 31, 1996 and for the period March 31, 1995 (commencement of
operations) to October 31, 1995, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 23, 1996
- --------------------------------------------------------------------------------
17
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1996
STOCKS AND WARRANTS - 96.8%
<TABLE>
<CAPTION>
SHARES VALUE US$
------ ---------
<S> <C> <C>
ARGENTINA - 4.1%
COMMON STOCK
118,800 Banco Frances del Rin de
la Plata SA
Finance $ 1,042,085
310,600 CIADEA SA
Consumer Durables 1,382,447
412,570 Compania Naviera Perez
Companc SA
Multi-Industry 2,599,712
112,710 Quilmes Industrial SA ADR
Consumer Non-Durables 1,183,455
369,000 Telefonica de Argentina SA
Services 845,180
------------
7,052,879
------------
BRAZIL - 13.5%
COMMON STOCK
13,530,000 Companhia Paulista de
Forca e Luz - CPFL*
Energy 1,251,179
30,383,000 Telecomunicacoes
Brasileiras
SA - Telebras
Services 1,827,771
PREFERRED STOCK
190,100,000 Banco Brasileiro de
Decontos SA
Finance 1,628,425
19,000,000 Banco Nacional SA(a)
Finance --
9,641,000 Centrais Eletricas
Brasileiras
SA - Eletrobras
Energy 3,143,907
970,250 IKPC - Industrias Klabin
de Papel e Celulose SA
Materials 953,911
1,915,000 Itausa Investimentos Itau
SA
Multi-Industry 1,528,571
1,558,055 Multibras Eletrodomesticos
SA
Capital Equipment 2,532,806
15,300,000 Petrol
Brasileiro - Petrobras
Energy 1,958,480
52,200 Telecomunicacoes
Brasileiras
SA - Telebras ADR
Services 3,888,900
8,616,000 Telecomunicacoes de Sao
Paulo SA - TELESP
Services 1,576,763
34,800,000 Uniao de Bancos Brasileiro
Finance 965,444
1,362,300,000 Usinas Siderurgicas de
Minas Gerais SA
Materials 1,326,097
------------
22,582,254
------------
CHILE - 4.6%
COMMON STOCK
44,600 Administradora de Fondos
de Pensiones Provida SA
ADR
Materials $ 1,036,950
120,000 Banco Santander Chile ADR
Finance 1,695,001
12,500 Compania de
Telecomunicacion de Chile
SA ADR
Services 1,232,814
63,300 Maderas y Sinteticos
Sociedad Anonima SA ADR
Materials 896,670
20,700 Quimica y Minera Chile SA
ADR*
Materials 1,190,250
56,900 Santa Isabel SA ADR*
Retail 1,600,314
------------
7,651,999
------------
CHINA, PEOPLES REPUBLIC OF - 2.0%
COMMON STOCK
2,440,000 Guangdong Electric Power
Company
Energy 1,688,241
121,000 Huaneng Power
International Inc. ADR*
Energy 1,845,250
------------
3,533,491
------------
CROATIA - 1.1%
COMMON STOCK
38,000 Pliva DD GDR*
Consumer Durables 1,852,500
------------
1,852,500
------------
CZECH REPUBLIC - 1.0%
COMMON STOCK
9,400 SPT Telekom AS*
Services 1,006,793
3,052 Tabak AS
Consumer Non-Durables 726,667
------------
1,733,460
------------
EGYPT - 1.0%
COMMON STOCK
122,000 Commercial International
Bank GDR*
Finance 1,769,000
------------
1,769,000
------------
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE US$
------ ---------
<S> <C> <C>
GREECE - 0.8%
COMMON STOCK
40,050 Hellenic Bottling Company
SA
Consumer Non-Durables $ 1,290,631
------------
1,290,631
------------
HONG KONG - 5.2%
COMMON STOCK
1,340,000 China Resources Enterprise
Ltd.
Finance 1,507,702
251,000 Citic Pacific Ltd.
Multi-Industry 1,220,542
1,940,000 Cosco Pacific Ltd.
Multi-Industry 1,856,627
2,550,000 Guangdong Investments
Multi-Industry 1,830,310
850,000 Guangnan Holdings
Consumer Non-Durables 577,126
685,000 New World Infrastructure*
Capital Equipment 1,705,347
------------
8,697,654
------------
HUNGARY - 1.3%
COMMON STOCK
29,200 Gedeon Richter RT
Consumer Durables 1,576,880
16,600 Pannonplast RT
Services 543,124
------------
2,120,004
------------
INDIA - 7.4%
COMMON STOCK
166,000 BSES Ltd.
Energy 906,938
54,000 BSES Ltd. GDR
Energy 1,026,000
175,000 Bharat Heavy Electricals
Ltd.
Capital Equipment 904,494
360,000 Bharat Petroleum
Energy 2,897,698
117,000 Crompton Greaves Ltd. GDR*
Capital Equipment 507,195
75,000 Industrial Credit &
Investment Corporation of
India Ltd.* GDR
Finance 656,250
591,000 Mahanagar Telephone Nigam
Ltd.
Services 3,786,715
48,000 Ranbaxy Laboratories Ltd.*
Consumer Durables 842,697
25,000 Videsh Sanchar Nigam Ltd.
Services 793,539
------------
12,321,526
------------
INDONESIA - 7.3%
COMMON STOCK
856,177 PT Bank Internasional
Indonesia
Finance $ 1,378,855
332,000 PT Dankos Laboratories
Consumer Durables 278,033
304,000 PT Gudang Garam
Consumer Non-Durables 1,214,172
468,000 PT Indocement Tunggal
Prakarsa
Capital Equipment 708,482
666,000 PT Indofoods Sukses Makmur
Consumer Non-Durables 1,401,503
73,000 PT Indosat ADR
Services 2,199,126
2,330,000 PT Kalbe Farma
Consumer Durables 2,751,772
1,500,000 PT Telekomunikasi Indonesia
Services 2,238,565
------------
12,170,508
------------
ISRAEL - 2.0%
COMMON STOCK
88,290 Osem Investment Ltd.*
Consumer Non-Durables 467,296
15,840 Supersol Ltd.*
Services 354,287
55,000 Tadiran Telecommunications
Ltd.*
Services 1,265,000
30,700 Teva Pharmaceutical ADR
Consumer Durables 1,285,563
------------
3,372,146
------------
KOREA, REPUBLIC OF - 6.8%
COMMON STOCK
14,000 Kookmin Bank GDR
Finance 296,100
87,010 Korea Electric Power
Corporation
Energy 2,556,487
1,689 Korea Mobile
Telecommunications(a)
Services 1,732,296
66,880 Korean Air(a)
Services 1,357,411
10,000 L.G. Information and
Communication Ltd.
Services 1,015,658
2,282 L.G. Information and
Communication Ltd. New
Shares*
Services 220,737
</TABLE>
- --------------------------------------------------------------------------------
19
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE US$
------ ---------
<S> <C> <C>
KOREA, REPUBLIC OF (CONCLUDED)
15,000 Pohang Iron & Steel Company
Ltd.(a)
Materials $ 973,262
11,554 Samsung Electronics Company
Consumer Durables 819,782
3,482 Samsung Electronics Company
1st New*
Consumer Durables 240,251
107,000 Shinhan Bank(a)
Finance 2,125,058
------------
11,337,042
------------
MAURITIUS - 0.3%
COMMON STOCK
1,340,000 State Bank of Mauritius
Ltd.
Finance 564,901
------------
564,901
------------
MEXICO - 8.3%
COMMON STOCK
97,500 Bufete Industrial SA ADR*
Capital Equipment 1,584,375
721,720 Cemex SA de CV
Materials 2,399,794
905,000 Cifra SA de CV*
Services 1,156,528
448,000 Consorcio ARA SA
Finance 959,794
246,300 Corporacion Industrial
Sanluis SA de CV
Capital Equipment 1,277,353
391,000 Fomento Economico Mexicano
SA de CV
Consumer Non-Durables 1,176,411
174,400 Grupo Carso SA de CV
Services 784,378
352,000 Industrias Penoles
Materials 1,397,537
51,500 Kimberly-Clark de Mexico SA
de CV
Consumer Non-Durables 978,895
32,600 Telefonos de Mexico SA ADS
Services 994,300
102,600 Tubos de Acero de Mexico SA
ADR*
Capital Equipment 1,140,862
------------
13,850,227
------------
PERU - 0.5%
COMMON STOCK
37,900 CPT Telefonica del Peru SA
ADS
Services 781,688
------------
781,688
------------
PHILIPPINES - 6.8%
COMMON STOCK
1,696,875 Ayala Land Inc.
Finance $ 1,807,932
624,000 Fil-Estate Land Inc.
Finance 581,735
277,350 Manila Electric Company 'B'
Shares
Energy 2,036,854
73,750 Metropolitan Bank & Trust
Company
Finance 1,627,663
67,000 Philippine Long Distance
Telephone Company
Services 4,015,412
263,700 Pilipino Telephone
Corporation*
Services 233,296
1,644,880 SM Prime Holdings
Finance 350,506
7,801,600 Southeast Asia Cement
Holdings Inc.
Materials 742,160
------------
11,395,558
------------
POLAND - 2.6%
COMMON STOCK
239,000 Bydgoska Fabryka Kabli SA
Capital Equipment 1,666,452
24,200 Gorazdze
Materials 641,373
48,850 Krosno SA
Materials 921,042
15,601 Zaklady Metali Lekkich
Kety*
Materials 1,165,496
------------
4,394,363
------------
PORTUGAL - 2.1%
COMMON STOCK
17,950 Estabelecimentos Jeronimo
Martins & Filho
Retail 1,638,111
122,050 Semapa - Sociedade de
Investimento e Gestao SGPS
SA
Materials 1,827,119
------------
3,465,230
------------
RUSSIA - 1.2%
COMMON STOCK
104,000 Gazprom ADR*
Energy 1,950,000
------------
1,950,000
------------
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
AS OF OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE US$
------ ---------
<S> <C> <C>
SLOVAK REPUBLIC - 0.3%
COMMON STOCK
9,076 Nafta Gbely AS
Energy $ 552,582
------------
552,582
------------
SOUTH AFRICA - 5.6%
COMMON STOCK
43,800 Anglo American Corporation
of South Africa Ltd.
Multi-Industry 2,634,254
199,000 Barlow Ltd.
Multi-Industry 1,734,306
444,000 Nampak Ltd.
Materials 1,750,266
250,000 Primedia Ltd.
Services 894,950
61,555 South African Breweries
Ltd.
Consumer Non-Durables 1,600,193
448,249 Waltons Stationary Company
Ltd.
Services 754,564
------------
9,368,533
------------
TAIWAN - 3.0%
COMMON STOCK
55,000 Asia Cement Corporation GDS
Materials 1,100,000
104,000 China Steel Corporation GDS
Materials 1,988,480
125,000 ROC Taiwan Fund*
Other 1,218,750
36,000 Taiwan Fund Inc.
Other 769,500
------------
5,076,730
------------
THAILAND - 5.8%
COMMON STOCK
102,000 Bangkok Bank Public Company
Ltd.
Finance 1,087,787
452,000 Electricity Generating
Public Company Ltd.
Energy 1,311,430
158,500 Krung Thai Bank Public
Company Ltd.
Finance 428,798
209,000 Land & House Public Company
Ltd.
Finance 1,737,226
THAILAND (CONCLUDED)
130,500 Siam Makro Public Company
Ltd.(a)
Services $ 547,481
94,000 Thai Farmers Bank Public
Company Ltd.
Finance 718,683
193,800 Total Access Communication
Public Company Ltd.
Services 1,337,220
305,000 United Communication
Industry
Services 2,535,189
WARRANTS
11,750 Thai Farmers Bank Public
Company Ltd.*(a)
Finance 11,517
------------
9,715,331
------------
TURKEY - 2.2%
COMMON STOCK
19,912,920 Adana Cimento Sanayii
Materials 1,096,162
1,685,800 Migros Turk
Retail 1,698,406
3,623,720 Netas Telekomunik
Services 875,070
------------
3,669,638
------------
PAR
-----
REPURCHASE AGREEMENTS -
6.6%
$11,000,000 Chase Securities, Inc.,
5.47%,
due 11/1/96,
to be repurchased at
$11,001,671.39.
Collateralized by
$11,000,000 U.S. Treasury
Notes, 7.50% due 1/31/97. 11,000,000
------------
Total investments 103.4%
(cost $171,590,943) 173,269,875
Other Assets Less
Liabilities (3.4%) (5,720,347)
------------
Total Net Assets 100% $167,549,528
------------
------------
</TABLE>
* Non-income producing security.
(a) Valued pursuant to methodology approved by the Board of Trustees.
ADR - American Depositary Receipts
GDR - Global Depositary Receipts
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
21
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $171,590,943) (Note 2) $173,269,875
Cash 4,145,240
Receivable for investments sold 999,264
Receivable for dividends and interest 256,140
Deferred organizational expense (Note 2) 9,894
------------
Total Assets 178,680,413
------------
LIABILITIES:
Payable for investments purchased 10,893,946
Accrued investment advisory and administration fees (Note 4) 118,215
Other payables and accrued expenses 118,724
------------
Total Liabilities 11,130,885
------------
Net Assets $167,549,528
------------
------------
NET ASSETS CONSIST OF:
Investor's capital $165,875,174
Net unrealized appreciation of investments and foreign
currency transactions 1,674,354
------------
Net Assets $167,549,528
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
22
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $142,824) $ 1,908,010
Interest income 426,473
-----------
Total Investment Income 2,334,483
-----------
EXPENSES:
Investment advisory fees (Note 4) 1,166,884
Administration fees (Note 4) 175,033
Transfer agent fees and expenses (Note 4) 12,028
Custodian fees 276,450
Accounting service fees (Note 4) 61,000
Other professional fees 39,235
Other 60,362
Amortization of organizational costs (Note 2) 2,473
-----------
Total Expenses 1,793,465
Fee waivers (Note 4) (64,303)
-----------
Net Expenses 1,729,162
-----------
NET INVESTMENT INCOME 605,321
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized loss on investments (6,542,420)
Net realized loss on foreign currency transactions (216,622)
-----------
Net realized loss on investments and
foreign currency transactions (6,759,042)
-----------
Net change in unrealized appreciation of investments 1,678,932
Net change in unrealized depreciation of foreign currency
transactions (4,578)
-----------
Net change in unrealized appreciation of
investments and foreign currency
transactions 1,674,354
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (5,084,688)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(4,479,367)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
23
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
OCTOBER 31, 1996
----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 605,321
Net realized loss on investments and foreign currency
transactions (6,759,042)
Net change in unrealized appreciation of investments and
foreign currency transactions 1,674,354
----------------
Net decrease in net assets resulting from operations (4,479,367)
----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 173,679,036
Withdrawals (1,650,141)
----------------
Net Transactions in Investors' Beneficial Interests 172,028,895
----------------
INCREASE IN NET ASSETS 167,549,528
NET ASSETS:
Beginning of period --
----------------
End of period $167,549,528
----------------
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
24
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO (THE
'PORTFOLIO') is a separately managed, non-diversed portfolio of Schroder
Capital Funds, a registered open-end management investment company. The
Portfolio invests in securities of issuers domiciled or doing business in
emerging market countries in regions such as Southeast Asia, Latin America,
and Eastern and Southern Europe, which may subject it to risks not normally
associated with investing in securities of United States corporations.
2. SIGNIFICANT ACCOUNTING POLICIES:
The Portfolio's financial statements are prepared in accordance with
generally accepted accounting principles based upon the following significant
accounting policies. The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
SECURITY VALUATION
Portfolio securities listed on the 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
mid-market prices. Securities traded in over-the-counter markets, or listed
securities for which no sale is reported on the valuation date, are valued at
the most recent reported 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 Board of Trustees. Board valued
securities represented approximately 3.9% of the total investments.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date or upon receipt of notification of
the dividend and verification of its effective date. Interest income,
including amortization of discount or premium, is recorded as earned.
Identified cost of investments sold is used to determine gains and losses for
both financial statement and Federal income tax purposes. Foreign dividend
and interest income amounts and realized capital gains and losses 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: assets and liabilities at the rate of exchange at the end of the
respective period, 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 is 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 includes net gain
or loss on contracts which have terminated by settlement or by the Portfolio
entering into offsetting commitments.
- --------------------------------------------------------------------------------
25
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements. The Portfolio,
through its custodian, receives delivery of the underlying securities, whose
market value must always equal or exceed the repurchase price. The investment
adviser (SCMI) is responsible for determining the value of the underlying
securities at all times. In the event of default, the Portfolio may have
difficulties with the disposition of such securities.
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.
3. PURCHASES AND SALES OF SECURITIES:
The cost of securities purchased and the proceeds from sales (including
maturities) of securities (excluding short-term investments) for the year
ended October 31, 1996, aggregated $199,252,488 and $116,371,686
respectively.
For Federal income tax purposes, the tax basis of investment securities
owned at October 31, 1996 was $171,690,684. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $36,693,487 and aggregate gross unrealized depreciation for
all securities in which there was an excess of tax cost over market value was
$35,114,296.
4. RELATED PARTIES:
For the year ended October 31, 1996, remunerations to related parties
were paid or accrued in the following amounts:
<TABLE>
<CAPTION>
EARNED WAIVED NET
---------- ------- ----------
<S> <C> <C> <C>
Schroder Capital Management International Inc.
(Investment Adviser) $1,166,884 $51,560 $1,115,324
Schroder Fund Advisors Inc.
(Administrator) 175,033 12,743 162,290
Forum Financial Corp.
(Fund Accountant and Transfer Agent) 73,028 -- 73,028
</TABLE>
The Portfolio retains Schroder Capital Management International Inc.
('SCMI') to act as investment adviser pursuant to an Investment Advisory
Contract. SCMI manages the investment and reinvestment of the assets included
in the Portfolio and continuously reviews, supervises and administers the
Portfolio's investments. It is the responsibility of SCMI to make decisions
relating to the Portfolio's investments and to place purchase and sale orders
regarding such investments with brokers or dealers selected at its
discretion. For its services as investment adviser to the Portfolio, SCMI is
entitled to receive a monthly fee equal on an annual basis to 1.00% of the
average daily net assets of the Portfolio.
The Portfolio has entered into an Administrative Services Contract with
Schroder Fund Advisors Inc. ('Schroder Advisors'). In addition, the
Portfolio and Schroder Advisors have entered into a Sub-Administration
Agreement with Forum Financial Services, Inc. ('Forum'). Pursuant to their
agreements, Schroder Advisors and Forum provide certain management and
administrative services necessary to the Portfolio's operations other than
the investment management and administrative services provided to the
Portfolio by SCMI pursuant to the Investment Advisory Contract. Schroder
Advisors is entitled to compensation for these services at an annual rate of
0.15% of the average daily net assets of the Portfolio, a portion of which
Forum receives for its services
- --------------------------------------------------------------------------------
26
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
with respect to the Portfolio. SCMI and Schroder Advisors have voluntarily
undertaken to waive a portion of their fees and assume certain expenses of
the Fund during the fiscal year.
Forum Financial Corp. ('FFC') , an affiliate of Forum, performs
portfolio accounting services for the Portfolio pursuant to a Fund Accounting
Agreement with Schroder Capital Funds. For its services, FFC receives a fee
of $60,000 per year plus additional surcharges based upon total assets or
security positions.
FFC is also the Portfolio's transfer agent pursuant to a Transfer
Agency Agreement between Schroder Capital Funds and FFC. FFC is entitled to
compensation for those services in the amount of $12,000 per year, plus
certain interestholder account fees.
5. FEDERAL INCOME 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 gains have been distributed by the Portfolio.
6. CONCENTRATION OF 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 changes in these markets may have disruptive
effects on the market prices of the Portfolio's investments.
7. FINANCIAL HIGHLIGHTS:
Portfolio performance for the year ended October 31, 1996.
<TABLE>
<S> <C>
Ratio of expenses to average net assets net of fee waivers 1.45%
Ratio of net investment income to average net assets net of fee waivers 0.52%
Ratio of expenses to average net assets excluding fee waivers 1.51%
Ratio of net investment income to average nets excluding fee waivers 0.46%
Portfolio turnover rate 102.70%
Average brokerage commission per share (a) $0.0008
</TABLE>
- ------------
(a) Amount represents the average commission per share paid to brokers on the
purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
27
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND -- INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Investors and Trustees of Schroder Emerging Markets
Fund -- Institutional Portfolio (the Portfolio):
We have audited the accompanying statement of assets and liabilities of
the Schroder Emerging Markets Fund -- Institutional Portfolio (a separate
portfolio of Schroder Capital Funds), including the schedule of investments,
as of October 31, 1996, and the related statement of operations, the
statements of changes in net assets and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Schroder Emerging Markets Fund -- Institutional Portfolio as
of October 31, 1996, the results of its operations, the changes in its net
assets and financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 23, 1996
- --------------------------------------------------------------------------------
28
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- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
TRUSTEES
Laura E. Luckyn-Malone
Hermann C. Schwab
Peter E. Guernsey
Ralph E. Hansmann (Honorary)
John I. Howell
Clarence F. Michalis
Mark J. Smith
OFFICERS
Hermann C. Schwab
Chairman of the Board
Laura E. Luckyn-Malone
President
John Troiano
Vice President
Mark J. Smith
Vice President
Robert G. Davy
Vice President
Richard Foulkes
Vice President
Fariba Talebi
Vice President
Ira L. Unschuld
Vice President
John Y. Keffer
Vice President
Catherine A. Mazza
Vice President
Jane Lucas
Vice President
Robert Jackowitz
Treasurer
Margaret H. Douglas-Hamilton
Secretary
Thomas G. Sheehan
Assistant Treasurer
Assistant Secretary
David I. Goldstein
Assistant Treasurer
Assistant Secretary
Gerardo Machado
Assistant Secretary
Barbara Gottlieb
Assistant Secretary
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
CUSTODIAN
The Chase Manhattan Bank, N.A.
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
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders
of the Schroder Emerging Markets Fund -- Institutional
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]
Schroder
Emerging
Markets Fund --
Institutional
Portfolio
ANNUAL REPORT
October 31, 1996
Schroder Capital Funds
(Delaware)
