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<PAGE>
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SCHRODER U.S. EQUITY 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 primary investment objective of the Fund is to seek growth of capital.
Income, while a factor in portfolio selection, is secondary to the principal
objective.
INVESTMENT ADVISER
Schroder Capital Management International Inc., (the 'Investment Adviser') is a
wholly-owned indirect subsidiary of Schroders plc, the London Stock Exchange
listed holding company parent of an investment banking and investment management
group of companies (the 'Schroder Group') that dates its origins to 1804. The
investment management operations of the Schroder Group are located in 18
countries worldwide. The Schroder Group has been managing investment portfolios
since the early years of this century. At 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.
December 22, 1996
Dear Shareholder:
The Schroder U.S. Equity Fund registered a total return of 19.5% in the
fiscal year ended October 31, 1996, compared with a 24.0% increase recorded by
the S&P 500 Index'r'. On October 31 the Fund's total net assets were
$17,186,636. Although the Fund underperformed the S&P 500 average for the fiscal
year, it did outperform the Lipper Growth Average, which rose only 18.5%. Over
the 5 and 10 year periods, the Fund produced annualized returns of 14.1% and
12.6% respectively while the S&P 500 average was 15.5% and 14.6% and the Lipper
Growth Average returned 13.4% and 12.8%.
As we look at the U.S. economic situation, we see no serious threat to the
current expansion. Imbalances such as significant inflation pressures and/or
excessive debt that normally herald recessions are absent. Real GDP growth is
forecast at about 2.5% in 1997 (Q4/Q4), and the consumer price index is
projected to advance by 3.4%. Nonetheless, there are likely to be some
challenges ahead.
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SCHRODER U.S. EQUITY FUND
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Capacity constraints are becoming evident in the labor market, and
employment costs are beginning to edge higher. We believe foreign demand for
U.S. products ought to strengthen in 1997 as Western Europe and Japan recover,
and this will further strain domestic resources. The Federal Reserve may begin
tightening monetary policy sometime in the first half of 1997, although the lack
of a pronounced inflation threat ought to keep the adjustment a modest one. We
strongly believe that the secular trend for both interest rates and inflation
remains downward, driven by demographic factors which will constrain nominal
growth and boost productivity. Furthermore, we expect this to cap any cyclical
increases in inflation and interest rates and will also act as a solid basis of
long run support for U.S. financial markets.
We thank you for your continued support and interest in the Fund.
Sincerely,
/s/ Hermann C. Schwab /s/ Jane P. Lucas
Hermann C. Schwab Jane P. Lucas
Chairman Portfolio Manager
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2
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MANAGEMENT'S DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 1996)
Stock market performance has been strong throughout the fiscal year,
evidencing little overall volatility. In this environment, the Fund has remained
consistently over 95% invested, and ends the fiscal year with 2.6% cash.
Our strategy has been based on the belief that economic fundamentals remain
sound in the U.S., and on the expectation of steady growth with a moderate
upturn in inflation in 1997. We do expect the next move in interest rates to be
a moderate increase, but see no immediate pressure for a rise. We also expect
rising costs to squeeze profit margins, and expect only a single digit rate of
growth in earnings next year. Hence, we continue to seek out companies likely to
sustain above average growth rates and have identified considerable potential in
certain capital goods sectors, particularly aerospace. We also see potential for
companies with significant international exposure to produce better than
expected earnings next year as overseas economies recover. Many technology
companies fall into this category. On the negative side of the ledger, we are
concerned that fairly high debt levels and, in the short term, higher heating
oil costs could restrain consumer demand and are therefore underweight consumer
cyclicals.
These are the themes likely to be pursued by the Fund in the coming months.
The healthcare sector, in which the Fund is well-represented, has been strong
recently and some of the leading pharmaceutical and hospital supply names are
beginning to look fairly richly valued; we will evaluate opportunities to switch
to some of the laggard names within the group. We remain underweight in the
basic industry sector, holding only special situations, because we do not expect
sufficiently robust worldwide demand to redress the supply/demand imbalances
affecting industries in this sector such as paper products and metals.
Our overall strategy will remain focused on the merits of individual stocks
with these broad themes, and in particular, on those where we have a high degree
of confidence in future earnings. Examples of stocks we believe offer this
potential include the following.
McDonnell Douglas Corp. is an aerospace manufacturer whose defense
businesses have the scope to grow internationally, while its commercial business
should experience rising demand and improving profitability as development
spending on new planes runs down. The company has excellent cash flow and above
average earnings growth forecast in 1997.
Another example is Sungard Data Systems, Inc. Sungard has two main business
areas -- processing and data record keeping for financial services and asset
management companies, and the provision of disaster recovery `hot sites'. Both
are experiencing accelerating demand and generate high repeat revenue leading to
good earnings visibility.
In addition, we believe international growth potential is very strong for
Viacom, Inc., a leading global entertainment company with interests primarily in
cable programming (MTV, Nickelodeon), Blockbuster video rental stores and
Paramount films. Blockbuster has had disappointing sales trends but these now
appear more than adequately reflected in the share price.
PORTFOLIO MANAGER Q & A
WHAT IS THE OUTLOOK FOR TECHNOLOGY STOCKS?
While many technology stocks have tended to rise and fall as a group, in
management's opinion there are very clear differences in the status of different
companies. We believe that certain hardware segments of the industry,
particularly memory semiconductor chips, are now essentially commodities and
driven most by worldwide supply and demand. Other areas, such as networking, are
still enjoying accelerating demand and are fields in which companies can clearly
differentiate their product and add value. Cisco Systems Inc. falls into the
latter category, as does Seagate Technology, Inc., the leading manufacturer of
storage media. The valuations of these stocks tend to be higher but so do their
long term growth rates.
DO `MOMENTUM' STOCKS HAVE A ROLE IN THE PORTFOLIO?
We do not believe that momentum, by which we mean a recent upsurge in
sponsorship and price, is necessarily a bad characteristic in a security,
provided it remains clearly linked to valuation. Improving fundamentals which
lead to a higher stock valuation from a reasonable base create the kind of
momentum that is desirable. A company such as James River Corporation of
Virginia, a paper manufacturer undergoing considerable restructuring and
focusing on improving its consumer brands is a good example of this type of
situation currently; earnings are exceeding expectations and estimates are
rising. We seek to avoid the type of `momentum' that becomes divorced from
fundamentals,
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3
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SCHRODER U.S. EQUITY FUND
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that relies on expectations pushed ever farther out into the future and that
typically is justified by high multiples of price to sales rather than earnings.
These stocks can become `faddish' and are vulnerable to dramatic corrections as
they have little reasonable valuation foundation.
WHAT CHARACTERISTICS ARE ESPECIALLY IMPORTANT IN AN ENVIRONMENT OF GENERALLY
SLOWER EARNINGS GROWTH?
We expect that unit labor costs in general will increase in 1997, and that
many companies will struggle to pass these cost increases on to their consumers.
With margins under pressure, revenue growth will therefore be especially
important in improving earnings. This will be increasingly driven by unit
growth, geographic expansion or market share gains. Above average revenue growth
will frequently translate into earnings growth which is better than the market
as a whole. We favor companies with these characteristics, as well as those
exposed to niche growth industries not much affected by the tone of the overall
economy, such as Amgen, Inc. and Genzyme Corporation, both involved in
biotechnology.
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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4
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SCHRODER U.S. EQUITY FUND
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INVESTMENT ADVISER'S REPORT -- COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT
The following chart compares a change in value of a $10,000 investment in
the Fund and the performance of the Standard & Poor's 500 ('S & P 500') Index.
The S & P 500 is a market weighted index composed of 500 large capitalization
companies.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. Past performance cannot predict nor guarantee future results.
SCHRODER U.S. EQUITY FUND VS STANDARD & POOR'S 500 INDEX
<TABLE>
<CAPTION>
INVESTMENT VALUE ON 10/31/96
<S> <C> <C> <C>
Schroder U.S. Equity Fund $32,685
S&P 500 Index $39,143
AVERAGE ANNUAL TOTAL RETURN ON 10/31/96
1 Year 5 Years 10 Years
------- ------- ---------
<S> <C> <C> <C>
Schroder U.S. Equity Fund 19.45% 14.13% 12.56%
S&P 500 Index 24.01% 15.51% 14.62%
</TABLE>
[GRAPH]
SCHRODER U.S.
EQUITY FUND S&P 500 INDEX
$10,000 $10,000
10,303 10,243
9,921 9,982
11,240 11,325
11,790 11,773
11,920 12,112
11,709 12,005
11,939 12,110
12,552 12,721
12,995 13,365
13,559 13,863
13,277 13,560
10,256 10,639
9,357 9,762
9,969 10,504
10,392 10,945
10,392 11,453
10,674 11,098
10,835 11,220
10,791 11,316
11,113 11,834
10,986 11,789
10,603 11,389
10,946 11,873
11,049 12,203
10,931 12,029
11,166 12,239
11,815 13,132
11,562 12,806
11,641 13,105
12,370 13,783
12,972 14,273
12,735 14,259
13,657 15,545
13,945 15,846
13,898 15,781
13,354 15,417
13,514 15,730
13,896 16,106
12,809 15,025
13,137 15,219
13,551 15,620
13,274 15,232
14,446 16,712
14,429 16,600
14,187 16,549
13,269 15,056
12,490 14,324
12,213 14,264
13,009 15,184
13,339 15,606
13,795 16,284
14,935 17,446
15,320 17,867
15,303 17,908
15,847 18,678
15,199 17,824
16,044 18,653
16,926 19,093
16,608 18,774
16,872 19,024
16,271 18,261
18,443 20,345
18,049 19,966
18,049 20,224
18,031 19,832
18,276 20,413
18,482 20,511
17,673 20,207
18,654 21,032
18,559 20,602
19,334 20,844
19,864 20,914
20,563 21,623
21,252 21,887
21,335 22,071
21,041 22,371
22,025 22,843
21,376 22,290
22,109 22,883
21,795 22,950
21,564 22,858
22,679 23,724
23,078 23,537
23,731 24,024
23,373 23,796
23,906 24,084
24,152 24,903
24,043 24,228
22,677 23,174
23,142 23,470
23,142 23,855
22,379 23,271
22,815 24,034
23,716 25,020
23,033 24,409
23,252 24,956
22,052 24,047
22,652 24,403
22,768 25,035
23,756 26,009
24,193 26,777
24,657 27,564
25,414 28,666
25,910 29,331
27,335 30,302
27,072 30,378
27,801 31,660
27,364 31,546
28,672 32,931
29,002 33,566
29,773 34,708
29,875 35,031
30,744 35,367
30,944 35,887
31,513 36,809
31,110 36,949
29,704 35,319
30,642 36,065
32,652 38,091
32,685 39,143
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5
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PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- --------------------------------------------------------
<S> <C>
Basic Materials 3.8%
Capital Goods/Construction 10.2%
Consumer Cyclicals 15.0%
Consumer Staples 12.2%
Energy 5.9%
Financial Services 14.7%
Healthcare 13.9%
Technology 19.2%
Telecommunications 2.5%
Cash 2.6%
---------------
Total 100.0%
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
- ---------------------------------------------------------
<S> <C>
BankAmerica Corporation 3.2%
General Electric Company 3.2%
International Business Machines
Corporation 3.2%
First Bank System, Inc. 3.0%
Chubb Corporation 2.9%
Pharmacia & Upjohn Inc. 2.9%
Rite Aid Corporation 2.8%
Wal-Mart Stores, Inc. 2.5%
Cisco Systems, Inc. 2.4%
Conagra, Inc. 2.4%
---------------
Total 28.5%
---------------
---------------
</TABLE>
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6
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SCHRODER U.S. EQUITY FUND
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SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCK - 97.4%
SHARES VALUE US$
------ ---------
<S> <C> <C>
BASIC MATERIALS - 3.8%
9,000 James River Corporation of
Virginia $ 283,500
4,700 Raychem Corporation 367,187
-----------
650,687
-----------
CAPITAL GOODS/CONSTRUCTION - 10.2%
6,300 Allied-Signal Inc. 412,650
5,600 General Electric Company 541,800
3,800 McDonnell Douglas Corporation 207,100
6,700 Rockwell International
Corporation 368,500
5,500 Sundstrand Corporation 221,375
-----------
1,751,425
-----------
CONSUMER CYCLICALS - 15.0%
2,000 Bristol-Myers Squibb Company 211,500
2,800 HFS Inc.* 205,100
5,966 Home Depot Inc. 326,638
15,600 La Quinta Inns Inc. 312,000
5,000 Readers Digest Association Inc. 178,125
14,000 Rite Aid Corporation 476,000
6,000 Staples Inc.* 111,750
10,000 Viacom Inc. Class B* 326,250
16,200 Wal-Mart Stores Inc. 431,325
-----------
2,578,688
-----------
CONSUMER STAPLES - 12.2%
7,000 Albertson's Inc. 240,625
3,200 CPC International Inc. 252,400
4,100 Colgate-Palmolive Company 377,200
8,400 Conagra Inc. 418,950
11,000 Eckerd Corporation* 305,250
3,200 Philip Morris Companies Inc. 296,400
2,200 Procter & Gamble Company 217,800
-----------
2,108,625
-----------
ENERGY - 5.9%
6,000 Amerada Hess Corporation 332,249
4,000 Amoco Corporation 303,000
6,000 Kerr-McGee Corporation 376,500
-----------
1,011,749
-----------
FINANCIAL SERVICES - 14.7%
6,000 BankAmerica Corporation 549,000
10,000 Chubb Corporation 500,000
7,800 First Bank System Inc. 514,800
7,800 North Fork Bancorporation Inc. 246,675
FINANCIAL SERVICES (CONCLUDED)
10,217 Union Planters Corporation $ 355,041
5,800 Unum Corporation 364,675
-----------
2,530,191
-----------
HEALTHCARE - 13.9%
7,000 Abbott Laboratories 354,375
4,000 Amgen Inc.* 245,250
2,700 Cardinal Health Inc. 211,950
10,000 Columbia HCA Healthcare
Corporation 357,500
6,000 Genzyme Corporation* 138,000
9,400 Invacare Corporation 263,200
7,500 Isis Pharmaceuticals Inc.* 121,875
4,000 Johnson & Johnson 197,000
13,800 Pharmacia & Upjohn Inc. 496,800
-----------
2,385,950
-----------
TECHNOLOGY - 19.2%
4,400 Adaptec Inc.* 267,850
11,300 Autodesk Inc. 258,488
4,800 Automatic Data Processing Inc. 199,800
6,800 Cisco Systems Inc.* 420,750
3,100 Intel Corporation 340,613
4,200 International Business Machines
Corporation 541,800
6,000 LSI Logic Corporation* 159,000
4,600 Linear Technology Corporation 154,100
745 Lucent Technologies Inc. 35,015
1,000 Microsoft Corporation* 137,250
27,000 Novell Inc.* 249,750
5,000 Seagate Technology Inc.* 333,750
4,600 Sungard Data Systems Inc.* 196,650
-----------
3,294,816
-----------
TELECOMMUNICATIONS - 2.5%
2,300 AT&T Corporation 80,213
13,800 MCI Communications Corporation 346,725
-----------
426,938
-----------
Total investments
(cost $12,748,010) 97.4% 16,739,069
Other Assets Less Liabilities,
2.6% 447,567
-----------
Total Net Assets 100.0% $17,186,636
-----------
-----------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
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7
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $12,748,010) (Note 2) $ 16,739,069
Cash 473,363
Receivable for dividends and interest 21,912
------------
Total Assets 17,234,344
------------
LIABILITIES:
Accrued advisory fees (Note 4) 5,179
Other payables and accrued expenses 42,529
------------
Total Liabilities 47,708
------------
Net Assets $ 17,186,636
------------
------------
NET ASSETS CONSIST OF:
Paid-in capital $ 9,505,831
Undistributed net investment income 41,186
Accumulated net realized gains on investments 3,648,560
Net unrealized appreciation of investments 3,991,059
------------
Net Assets $ 17,186,636
------------
------------
Net Asset Value per share ($17,186,636
divided by 1,761,071 shares
outstanding) $9.76
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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8
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SCHRODER U.S. EQUITY FUND
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STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 312,532
Interest income 28,722
-----------
Total Investment Income 341,254
-----------
EXPENSES:
Investment advisory fees (Note 4) 139,483
Transfer agent fees and expenses (Note 4) 29,335
Custodian fees 6,739
Accounting service fees (Note 4) 36,000
Other professional fees 24,958
Printing 17,094
Registration fees 3,146
Trustees fees and expenses 541
Other 7,851
-----------
Total Expenses 265,147
Fee waiver (Note 4) (4,355)
-----------
Net Expenses 260,792
-----------
NET INVESTMENT INCOME 80,462
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 3,648,561
Net change in unrealized appreciation of investments (368,123)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,280,438
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,360,900
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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9
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SCHRODER U.S. EQUITY FUND
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 80,462 $ 147,286
Net realized gain on investments 3,648,561 2,561,493
Net change in unrealized appreciation of
investments (368,123) 372,019
---------------- ----------------
Net increase in net assets resulting from
operations 3,360,900 3,080,798
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net realized gain on investments (2,560,576) (107,944)
Net investment income (158,133) (993,082)
---------------- ----------------
Total distributions to shareholders (2,718,709) (1,101,026)
---------------- ----------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6) (3,143,246) (774,884)
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS (2,501,055) 1,204,888
NET ASSETS:
Beginning of period 19,687,691 18,482,803
---------------- ----------------
End of period $ 17,186,636 $ 19,687,691
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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SCHRODER U.S. EQUITY FUND
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NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
SCHRODER U.S. EQUITY FUND (THE 'FUND') is a diversified portfolio of
Schroder Capital Funds (Delaware) (the 'Trust'), which is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company.
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 the 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
The value of securities traded on the New York Stock Exchange is based
on the last sale price, and the value of securities traded on any other
national stock exchange is based on the last sale price as of 4:00 p.m. in
New York as quoted by authoritative sources. In the absence of a recorded
sale, the average of the closing bid and asked prices is used. Securities
traded on other organized markets are valued at the average of the bid and
asked prices as of 4:00 p.m. in New York as available from authoritative
sources at the end of the business day. Other securities and assets for which
market quotations are not available are valued at fair value as determined in
good faith using methods approved by the Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on an accrual
basis.
Realized gains and losses from security transactions are determined on
the basis of identified cost.
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 relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per share allocation between net investment income and realized or
unrealized gain or loss. Undistributed net investment income and accumulated
undistributed net realized 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.
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 $10,061,088 and $15,475,105 respectively.
As of October 31, 1996, the aggregate cost of investment securities for
Federal income tax purposes was $12,748,010. The gross unrealized
appreciation of investments was $4,607,860 and gross unrealized depreciation
of investments was $616,801.
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11
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. RELATED PARTIES:
Schroder Capital Management International Inc. ('SCMI') acts as
investment adviser pursuant to an Investment Advisory Contract. The advisory
contract provides for an annual fee, payable monthly, of 0.75% on the first
$100,000,000 of average daily net assets and 0.50% on the average daily net
assets in excess of $100,000,000. SCMI voluntarily agreed to waive a portion
of its fee so that total expenses would not exceed certain expense
limitations. SCMI, at their discretion, may revise or discontinue the
voluntary fee waiver. For the year ended October 31, 1996, SCMI waived fees
totaling $4,355 with respect to the Fund.
Forum Financial Corp. serves as the Fund's transfer agent and dividend
disbursing agent and is compensated for those services by the Fund in the
amount of $12,000 per year plus certain shareholder account fees. Forum
Financial Corp. also performs portfolio accounting for the Fund and is
compensated for those services by the Fund in the amount of $36,000 per year,
plus certain amounts based upon the number and types of portfolio
transactions.
5. FEDERAL INCOME TAXES:
As it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders, no Federal income
tax provision is required.
6. CAPITAL SHARE TRANSACTIONS:
The Fund is authorized under the Trust's Trust Instrument to issue an
unlimited number of shares of beneficial interest without par value. At
October 31, 1996, the Fund had 1,761,071 shares outstanding. Transactions in
the Fund's capital shares for the years ended October 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
Year Ended October 31, Year Ended October 31,
1996 1995
- --------------------------------------------------------------------------------------------------------------
Number Number
of of
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 66,732 $ 613,444 10,529 $ 90,404
Shares issued for reinvestment of dividend and
distribution 207,563 1,811,255 111,954 866,525
-------- ----------- -------- -----------
274,295 2,424,699 122,483 956,929
Shares redeemed (605,228) (5,567,945) (199,081) (1,731,813)
-------- ----------- -------- -----------
Net decrease (330,933) $(3,143,246) (76,598) $ (774,884)
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
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12
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SCHRODER U.S. EQUITY FUND
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NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
7. FINANCIAL HIGHLIGHTS:
Selected per share data and ratios
<TABLE>
<CAPTION>
For the Years Ended October 31,
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period $ 9.41 $ 8.52 $11.28 $10.51 $ 9.56
------- ------ ------ ------ ------
Investment Operations:
Net investment income 0.04 0.07 0.04 0.05 0.02
Net realized and unrealized gain (loss) on
investments 1.62 1.33 (0.27) 1.86 1.61
------- ------ ------ ------ ------
Total from investment operations 1.66 1.40 (0.23) 1.91 1.63
------- ------ ------ ------ ------
Distributions:
From net investment income (0.07) (0.05) (0.01) (0.04) (0.04)
From net realized capital gains (1.24) (0.46) (2.52) (1.10) (0.58)
From paid-in capital -- -- -- -- (0.06)
------- ------ ------ ------ ------
Total distributions (1.31) (0.51) (2.53) (1.14) (0.68)
------- ------ ------ ------ ------
Net Asset Value, End of period $ 9.76 $ 9.41 $ 8.52 $11.28 $10.51
------- ------ ------ ------ ------
------- ------ ------ ------ ------
Total Return 19.45% 17.68% (2.01)% 19.49% 17.74%
Ratio/Supplementary Data:
Net Assets, End of period (thousands) $17,187 $19,688 $18,483 $21,865 $19,882
Ratio of expenses to average net assets 1.40%(b) 1.40% 1.31% 1.18% 1.40%
Ratio of net investment income to average
net assets 0.43%(b) 0.78% 0.41% 0.51% 0.42%
Portfolio turnover rate 56.8% 57.21% 27.43% 57.78% 31.33%
Average brokerage commission rate(a) $0.0599 N/A N/A N/A N/A
</TABLE>
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(a) Amount represents the average commission per share paid to brokers on the
purchase and sale of portfolio securities.
(b) During the year ended October 31, 1996, the investment adviser waived a
portion of its fee. Had such waiver not occurred, the ratio of expenses to
average net assets would have been 1.43% and the ratio of net investment
income to average net assets would have been 0.40%.
DISTRIBUTIONS (UNAUDITED)
During the fiscal year ended October 31, 1996, the Fund distributed
$1,933,335 in long term capital gain to shareholders.
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13
<PAGE>
<PAGE>
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SCHRODER U.S. EQUITY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Schroder U.S. Equity Fund:
We have audited the accompanying statement of assets and liabilities of
the Schroder U.S. Equity Fund (a separately managed portfolio of Schroder
Capital Funds (Delaware)), including the schedule of investments, as of
October 31, 1996, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 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 U.S. Equity Fund as of October 31, 1996, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 23, 1996
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14
<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.
Chase MetroTech Center
Brooklyn, New York 11245
TRANSFER AND DIVIDEND
DISBURSING AGENT
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
COUNSEL
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders
of the Schroder U.S. Equity Fund. Its use in connection
with any offering of the Fund's shares is authorized only
in case of a concurrent or prior delivery of the Fund's
current prospectus.
[Logo]
Schroder
U.S. Equity
Fund
ANNUAL REPORT
October 31, 1996
Schroder Capital Funds
(Delaware)
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as................ 'r'