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Schroder International Fund
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Two Portland Square, Portland, Maine 04101
General Information (207) 879-6200
Account Information (800) 344-8332
Fund Literature (800) 290-9826
Fax (207) 879-6050
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation through investment in securities
markets outside the United States. It is intended for long-term investors
seeking international diversification and willing to accept the risks of foreign
investing. 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
International Equity Fund (the 'Portfolio'), a series of a registered open-end
investment company with substantially the same investment objective and policies
as the Fund. This semi-annual report includes the unaudited financial statements
of both the Fund and the Portfolio.
INVESTMENT ADVISER
Schroder Capital Management International Inc. (the 'Investment Adviser') is a
wholly owned indirect subsidiary of Schroders plc, the London Stock Exchange
listed holding company parent of an investment banking and investment management
group of companies (the 'Schroder Group') that dates its origins to 1804. The
investment management operations of the Schroder Group are located in 18
countries worldwide. The Schroder Group has been managing international
investment portfolios since the early years of this century. As of March 31,
1997, the Schroder Group had over $150 billion in assets under management. At
that same date, the Investment Adviser, together with its U.K. affiliate,
Schroder Capital Management International Ltd., had over $23 billion under
management.
June 15, 1997
Dear Shareholder:
We are pleased to present the semi-annual report for the Schroder
International Fund for the six-month period ending April 30, 1997. Over the
period, the total return of the Fund was 6.4% compared with the Morgan Stanley
Capital International EAFE Index (the 'Index') which was up only 1.7%.
Signs of accelerating economic growth are increasingly apparent in many of
the developed international economies. The stock markets of Europe, in
particular, have enjoyed a strong six months (in local currency terms) and at
the time of this writing many of them stand at new highs. Within Asia, market
returns have been patchier. Japan has wrestled with uncertainty about the
sustainability of its recovery in the face of fiscal tightening, as well as a
spate of set backs in the financial sector. Several southeast Asian economies
have continued to suffer from weak exports at the same time as it has been
necessary to rein in speculation in the property sector. In general,
international markets have not matched the returns of the U.S. market over the
period (for example the S&P 500 returned 14.7%), in part because their
currencies have weakened against the U.S. dollar. They nevertheless appear to be
positioned quite well for the future. The cyclical recovery in many
international markets appears to be continuing and now shows signs of extending
to South East Asia as excess electronics inventories are worked off and export
orders start to rebound. Business surveys in both Germany and France have
steadily improved, pointing to renewed vigor in the manufacturing sector even if
the consumer remains subdued. In Japan, consumer spending appears to be holding
up in the face of the recent tax increase, and the export sector is buoyant
again. Moreover,
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Schroder International Fund
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the adoption by many European and some Japanese companies of more
shareholder-friendly policies, which focus on restructuring businesses and the
efficient use of capital, is creating a wide range of attractive investment
opportunities. This is occurring at a time when U.S. earnings growth appears
likely to slow further and hence raises the appeal of such situations.
We remain optimistic about the prospects for major international markets.
Many international markets are in an earlier stage of economic expansion than is
the case in the U.S., and the corporate profits profile is also better, with
many companies likely to deliver earnings growth of 15-20%.
We thank you for your continuing support and interest in the Fund.
Sincerely,
Hermann C. Schwab Mark J. Smith
Chairman President
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Schroder International Fund
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MANAGEMENT DISCUSSION AND ANALYSIS (As of April 30, 1997)
The Schroder International Fund's outperformance relative to the Index came
from the multiple ways we endeavour to add value--country allocation, stock
selection and currency management. Country allocation decisions relative to the
Index over the past six months which benefited the portfolio were to underweight
Japanese equities, and to overweight emerging markets equities. Detracting from
performance was our underweighting in Continental European equity markets,
particularly Germany. Stock selection contributed to outperformance in a variety
of markets. In Japan, we added value by focusing on Japanese industrial
companies with earnings visibility, at the expense of bank stocks. In
Continental Europe, our stock choices in the Netherlands and Switzerland, which
identified companies that are restructuring in order to generate shareholder
value, performed particularly well. With regard to currency management, our
hedging of European currency risk added value during a period of substantial
declines in foreign currencies against the U.S. dollar.
Our expectation of real GDP growth in Japan exceeds the consensus forecast,
and earnings growth there is likely to be the fastest of the developed
countries. Much controversy has surrounded the probable impact of an increase in
the rate of consumption tax on the economy, with several commentators expecting
it to undermine growth. We do not share this view and believe that recent
consumption data, while volatile, remains quite robust, helped by a favorable
employment market. Meanwhile, exports are responding to the currency weakness of
the past year with a somewhat lagged effect, and recent corporate profits
reports were encouraging, particularly for Japanese multinationals. We will
probably not get any clear indication of consistent economic trends until the
second half of the year when the distortions created by the tax hike are absent.
In the meantime the market is likely to remain volatile, particularly if more
difficulties in the financial sector surface. Our policy remains to underweight
the market, primarily due to continued avoidance of bank stocks. Although the
banks have not performed as well as the market as a whole they still appear
expensive and we have little confidence in their earnings forecasts. Our
preference had been for stocks with significant international and export
exposure, such as Fuji Photo Film Co. or SMC Corp., a manufacturer of pneumatic
machinery. We have recently taken profits in some of the export oriented stocks
redeploying the proceeds into stocks such as Daiwa House Industry Co., Ltd.
which is more domestically oriented, as we believe that the yen is unlikely to
weaken further.
Continental Europe appears similarly well positioned to benefit from a
cyclical upturn, and many companies offer significant restructuring benefits as
well. We do not expect the cyclical recovery in Europe to be robust, as some
fiscal drag is likely to result from countries striving to control budget
deficits. The prospects for monetary union, due to commence in early 1999, are
appearing murkier then before, although a delay rather than the abandonment of
the objective is most likely. The Mediterranean markets of Spain and Italy are
the ones that have benefited most from EMU convergence (i.e. the tendency of
markets and interest rates to move closer together) and are probably most
vulnerable if the process fails. We are underweight in Italy primarily because
we believe that corporate earnings could be disappointing and find fewer high
quality growth stocks there. Our policy in Europe, currently, is to highlight
individual stocks rather than emphasize particular countries. Recent purchases
such as Philips Electronics NV in the Netherlands or Accor SA, a French hotel
chain, typify the companies we seek as they appear to offer good operational
efficiency gains and are leveraged to a better economic environment. We have
continued to find particularly attractive opportunities in the Netherlands and
Switzerland.
The United Kingdom, by contrast, is farther along in its cycle and interest
rates have already risen there. More rate increases are likely and corporate
profits will probably show slower growth. Recent sterling strength has hurt some
of the export and manufacturing related stocks in the portfolio, such as
Pilkington Brothers plc, while financial stocks have been much sought after as
their representation in the equity index has increased through new listings.
Many now sell on quite expensive valuations. We remain underweight in the U.K.,
seeing better opportunities elsewhere in Europe but see no reason for a
significant market correction.
During the past six months we reduced our exposure in selected Asian
markets such as Malaysia and Thailand, which were likely to follow the U.S.
Federal Reserve in tightening monetary policy. Many of the Asian markets were
weak in the period, partly as exports remained lackluster, and partly due to
specific domestic political anxieties or currency problems in certain markets.
We expect exports to recover with better worldwide GDP
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Schroder International Fund
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growth, a somewhat stronger and therefore less competitive yen, and the working
off of excess electronics inventories. Hong Kong was volatile in response to
attempts to cool property speculation, which we do not expect to undermine the
market, and from which it subsequently recovered, and Malaysia also weakened on
tighter credit controls. We continue to believe in the very favorable long term
growth prospects of Asia, especially from some of its emerging markets, but in
the shorter term see competing merits in parts of Europe, where U.S. interest
rates are tracked less closely. Accordingly, we have slightly increased our
exposure to the area. Emerging markets remain an area of strategic investment
for the Fund. The Latin American markets in particular have enjoyed a strong six
months, benefiting from the expectation of broader economic growth and from
continued privatization, particularly in Brazil.
The last six months have seen fairly modest changes in the orientation of
the fund. We have reduced our hedge position in Europe. We believe that the
currency risk embedded in international investing is diminished today, as the
foreign currency decline over the past two years has gone a long way towards
eliminating the overvaluation of foreign currencies evident in 1994-1995.
We are encouraged by the improvement in cyclical economic indicators
internationally and by the increasing shareholder friendliness of many
companies; our universe of attractive companies is therefore quite large,
although it remains important to focus on the managements who are most motivated
to improve returns. Such situations could command increasing attention if the
main impetus for worldwide growth starts to shift away from the U.S. as the year
progresses.
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 International Fund
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PORTFOLIO CHARACTERISTICS AS OF APRIL 30, 1997 (UNAUDITED)
COUNTRY WEIGHTINGS
COUNTRY % OF NET ASSETS MSCI EAFE INDEX
- -----------------------------------------------------------
Developed Markets 88.3%
Japan 25.5% 30.0%
United Kingdom 14.3% 19.7%
Netherlands 11.3% 5.0%
Switzerland 8.0% 6.4%
France 7.7% 7.2%
Germany 5.8% 8.9%
Hong Kong 4.6% 3.6%
Singapore 2.5% 1.2%
Sweden 2.3% 2.4%
Malaysia 2.0% 2.4%
Australia 1.2% 3.1%
Spain 1.0% 2.4%
Canada 0.7% 0.0%
Denmark 0.6% 0.9%
Austria 0.5% 0.4%
Italy 0.3% 3.2%
Emerging Markets 9.0%
Portugal 2.2% 0.0%
Brazil 1.3% 0.0%
Korea, Republic of 1.3% 0.0%
Indonesia 1.3% 0.0%
Philippines 1.2% 0.0%
Chile 0.5% 0.0%
Thailand 0.5% 0.0%
Argentina 0.4% 0.0%
Mexico 0.3% 0.0%
Cash & Other Assets 2.7% 0.0%
---------------
Total 100.0%
===============
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- ----------------------------------------------------------
Capital Equipment 23.1%
Services 19.8%
Finance 18.2%
Materials 7.4%
Consumer Durables 7.3%
Multi-Industry 6.3%
Consumer Non-Durables 5.5%
Telecommunications 5.0%
Energy 4.7%
Cash & Other Assets 2.7%
---------------
Total 100.0%
===============
TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
- ----------------------------------------------------------
Novartis (Swtz) 3.9%
Int'l Nederlanden Group NV (Neth) 3.7%
Takeda Chemical Industies (Jpn) 2.5%
Philips electronics NV (Ger) 2.0%
Ito-Yakado Company Ltd (Jpn) 2.0%
Fuji Photo Film Company (Jpn) 1.8%
Murata Manufacturing (Jpn) 1.7%
ABB Asea Brown Boveri Ltd. (Swtz) 1.5%
Heineken NV (Neth) 1.5%
SMC Corp. (Jpn) 1.5%
-------
Total 22.1%
=======
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Schroder International Fund
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
ASSETS:
Investments (Notes 1 and 2):
Investments in International Equity Fund (the 'Portfolio')
(cost $155,902,047) $189,128,725
Receivable for Fund shares sold 1,200,090
------------
Total Assets 190,328,815
------------
LIABILITIES:
Payable for Fund shares redeemed 159,003
Payable to administrator (Note 3) 4,917
Payable to other related parties (Note 3) 7,755
Other payables and accrued expenses 37,148
------------
Total Liabilities 208,823
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Net Assets $190,119,992
============
COMPONENTS OF NET ASSETS:
Paid-in capital $147,501,033
Undistributed net investment income (loss) 239,541
Accumulated net realized gain (loss) 9,152,740
Net unrealized appreciation (depreciation) on investments 33,226,678
------------
Net Assets $190,119,992
============
SHARES OF BENEFICIAL INTEREST 10,541,225
NET ASSET VALUE OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY SHARES OF BENEFICIAL INTEREST) $18.04
The accompanying notes are an integral part of the financial statements.
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6
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Schroder International Fund
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STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
NET INVESTMENT INCOME ALLOCATED FROM
THE PORTFOLIO:
Dividend income (net of foreign withholding taxes of $202,069) $ 1,235,169
Interest income 123,752
Net expenses (718,244)
-----------
Net Investment Income allocated from
the Portfolio 640,677
-----------
EXPENSES:
Administration (Note 3) 190,926
Transfer agency (Note 3) 20,446
Accounting (Note 3) 6,000
Legal 6,296
Audit 5,250
Registration 12,951
Reporting 16,315
Trustees 4,252
Miscellaneous 12,324
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Total Expenses 274,760
Fees waived and expenses reimbursed (Note 4) (45,824)
-----------
Net Expenses 228,936
-----------
NET INVESTMENT INCOME (LOSS) 411,741
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD
FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS
ALLOCATED FROM THE PORTFOLIO:
Net realized gain (loss) on investments sold 7,320,128
Net realized gain (loss) on forward foreign currency
contracts and foreign currency transactions 1,860,445
-----------
Net realized gain (loss) on investments,
forward foreign currency contracts and
foreign currency transactions 9,180,573
-----------
Net change in unrealized appreciation (depreciation)
on investments 2,394,939
Net change in unrealized appreciation (depreciation) on
forward foreign currency contracts and foreign
currency transactions (158,519)
-----------
Net change in unrealized appreciation
(depreciation) on investments, forward
foreign currency contracts and foreign
currency transactions 2,236,420
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD
FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS
ALLOCATED FROM THE PORTFOLIO 11,416,993
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $11,828,734
===========
The accompanying notes are an integral part of the financial statements.
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7
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Schroder International Fund
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, 1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
-------------- ----------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $ 202,735,202 $212,329,579
-------------- ----------------
OPERATIONS:
Net investment income (loss) 411,741 1,876,713
Net realized gain (loss) on investments sold 9,180,573 29,130,476
Net change in unrealized appreciation
(depreciation) on investments 2,236,420 (10,183,473)
-------------- ----------------
Net increase (decrease) in net assets resulting
from operations 11,828,734 20,823,716
-------------- ----------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (4,570,768) (5,164,431)
Net realized gain on investments (26,130,027) (23,782,759)
-------------- ----------------
Total distributions to shareholders (30,700,795) (28,947,190)
-------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 31,417,639 48,286,814
Reinvestment of distributions 17,731,934 13,346,133
Redemption of shares (42,892,722) (63,103,850)
-------------- ----------------
Net increase (decrease) in capital transactions 6,256,851 (1,470,903)
-------------- ----------------
Net increase (decrease) in net assets (12,615,210) (9,594,377)
-------------- ----------------
NET ASSETS, END OF PERIOD (INCLUDING LINE A) $ 190,119,992 $202,735,202
============== ================
(A) Accumulated undistributed net investment income
(loss) $ 239,541 $ 4,398,568
============== ================
SHARE TRANSACTIONS
Sale of shares 1,756,037 2,432,723
Reinvestment of distributions in shares 1,033,932 702,811
Redemption of shares (2,382,756) (3,155,010)
-------------- ----------------
Net increase (decrease) in shares 407,213 (19,476)
============== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
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Schroder International Fund
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FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each
period:
<TABLE>
<CAPTION>
For the
Six Months Ended
April 30,
1997 For the Year Ended October 31,
(Unaudited) 1996(a) 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
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Net Asset Value, Beginning of Period $ 20.01 $ 20.91 $ 23.17 $ 20.38 $ 15.15 $ 16.22
---------------- -------- -------- -------- -------- --------
Investment Operations
Net Investment Income (Loss) 0.05(b) 0.15(b) 0.46 0.18 0.08 0.25
Net Realized and Unrealized Gain
(Loss) on Investments 1.07 1.74 (0.18) 2.69 5.27 (1.04)
---------------- -------- -------- -------- -------- --------
Total from Investment Operations 1.12 1.89 0.28 2.87 5.35 (0.79)
---------------- -------- -------- -------- -------- --------
Distributions From
Net Investment Income (0.46) (0.47) -- (0.08) (0.12) (0.23)
Net Realized Gain on Investments (2.63) (2.32) (2.54) -- -- (0.05)
---------------- -------- -------- -------- -------- --------
Total Distributions (3.09) (2.79) (2.54) (0.08) (0.12) (0.28)
---------------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 18.04 $ 20.01 $ 20.91 $ 23.17 $ 20.38 $ 15.15
================ ======== ======== ======== ======== ========
Total Return 6.38%(c) 10.05% 2.08% 14.10% 35.54% (4.93)%
Ratio/Supplementary Data
Net Assets at End of Period (in
thousands) $190,120 $202,735 $212,330 $500,504 $320,550 $159,556
Ratios to Average Net Assets:
Expenses including 0.99%(b)
reimbursement/waiver (d) 0.99%(b) 0.91% 0.90% 0.91% 0.93%
Expenses excluding 1.04%(b)
reimbursement/waiver (d) 1.04%(b) N/A N/A N/A N/A
Net investment income (loss) 0.43%(b)
including reimbursement/waiver (d) 0.86%(b) 0.99% 0.94% 0.87% 1.62%
Average Commission rate (e) $ 0.0305 $ 0.0256 N/A N/A N/A N/A
Portfolio turnover rate (f) 20.01% 56.20% 61.26% 25.17% 56.05% 49.42%
</TABLE>
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(a) On November 1, 1995 the Fund converted to Core and Gateway (Registered). On
May 16, 1996, the Fund began offering two classes of shares, Investor Shares
and Advisor Shares, and then all outstanding shares of the Fund were
converted to Investor Shares.
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(c) Not annualized.
(d) Annualized.
(e) For the fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid to brokers on the
purchase and sale of Portfolio's investment portfolio securities.
(f) Portfolio turnover represents the rate of portfolio activity. The rate after
October 31, 1995, represents the portfolio turnover rate of the Portfolio.
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Schroder International Fund
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds (Delaware) (the 'Trust') was organized as a
Maryland corporation on July 30, 1969; reorganized as a series company on
February 29, 1988, as Schroder Capital Funds, Inc.; and reorganized on
January 9, 1996, as a Delaware business trust. The Trust, which is registered
as an open-end, management investment company under the Investment Company
Act of 1940 (the 'Act'), currently has six investment portfolios. Included in
this report is the Schroder International Fund (the 'Fund'), a diversified
portfolio that commenced operations on December 19, 1985. Under its Trust
Instrument, the Trust is authorized to issue an unlimited number of the
Fund's Investor Shares and Advisor Shares of beneficial interest without par
value. As of April 30, 1997, only Investor Shares had been issued.
MASTER FEEDER ARRANGEMENT
Effective November 1, 1996, The Fund currently seeks to achieve its
investment objective by investing all of its investable assets in a separate
diversified portfolio, International Equity Fund (the 'Portfolio'), of
Schroder Capital Funds ('Schroder Core') that has the same investment
objective and substantially similar investment policies as the Fund. This is
commonly referred to as a master-feeder arrangement. Schroder Core also is
registered as an open-end, management investment company. The Fund may
withdraw its investment from the Portfolio at any time if the Trust's Board
of Trustees determines that it is in the best interest of the Fund and its
shareholders to do so. The Fund accounts for its investment in the Portfolio
as a partnership investment and records its share of the Portfolio income,
expense and realized and unrealized gain and loss daily. The financial
statements of the Portfolio are included on pages 12 to 22 in this report,
and should be read in conjunction with the Fund's financial statements. The
Fund owns substantially all of the interests in the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates.
The following represent significant accounting policies of the Fund:
SECURITY VALUATION
The Trust determines the net asset value per share of the Fund as of
4:00 p.m., Eastern time, on each Fund business day. Valuation of securities
held in the Portfolio are discussed in the Notes to the Financial Statements
of the Portfolio.
INVESTMENT INCOME AND EXPENSES
The Trust records daily its pro rata share of the Portfolio's income,
expenses and realized and unrealized gain and loss. In addition, the Fund
accrues its own expenses.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and net capital gain, if any, are distributed to shareholders
at least annually. Distributions are based on amounts calculated in
accordance with applicable federal income tax regulations.
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
FEDERAL TAXES
The Fund intends to qualify and continue to qualify each year as a
regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gain and certain other amounts, if any, the Fund
will not be subject to a federal excise tax. Therefore, no federal income or
excise tax provision is required.
EXPENSE ALLOCATION
The Trust accounts separately for the assets and liabilities and
operation of each Fund. Expenses that are directly attributable to more than
one Fund are allocated among the respective Funds. Expenses that are directly
attributable to a class are allocated to that class.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Fund currently invests all of its assets in the Portfolio, which
retains Schroder Capital Management International Inc. (the 'Adviser') to act
as investment adviser pursuant to an Investment Advisory Agreement. See Notes
to the Financial Statements of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Effective November 26, 1996 and February 1, 1997, the Fund has entered
into Administration and Subadministration Agreements with Schroder Fund
Advisors Inc. ('Schroder Advisors') and Forum Administrative Services,
Limited Liability Company ('Forum'). From November 26, 1996 through January
31, 1997 the Fund had a Subadministration Agreement with Forum Financial
Services, Inc. ('FFSI') that was identical in all material terms to the
February 1, 1997 Agreement with Forum. For these services, Schroder Advisors
is entitled to receive compensation at annual fees payable monthly of 0.15%
of the average daily net assets of the Fund. For its services, Forum is
entitled to receive compensation at annual fees payable monthly of 0.05% of
the average daily net assets of the Fund. Prior to November 26, 1996,
Schroder Advisors was entitled to compensation at an annual rate of 0.20% of
the average daily net assets and obligated to pay a fee to FFSI.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The transfer agent and dividend disbursing agent for the Fund is Forum
Financial Corp.(Registered) ('FFC'). The Transfer Agent is paid a transfer
agent fee in the amount of $12,000 per year, plus certain other fees and
expenses.
OTHER SERVICE PROVIDERS
The fund accountant of the Fund is FFC. For its services to the Fund,
FFC is entitled to receive from the Trust a fee of $12,000 per year.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Schroder Advisors voluntarily has waived a portion of its fees and has
assumed certain expenses of the Fund so that its total expenses would not
exceed 0.99% of the Fund's average daily net assets on an annual basis. The
expense limitation cannot be modified or withdrawn except by a majority vote
of the Trustees of the Trust. Forum and FFC may waive voluntarily all or a
portion of their fees, from time to time. For the six months ended April 30,
1997, fees waived for Schroder Advisors were $45,824.
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11
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International Equity Fund (Portfolio)
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SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997 (UNAUDITED)
STOCKS AND WARRANTS - 96.7%
SHARES VALUE US$
- ------- ------------
ARGENTINA - 0.4%
COMMON STOCK
101,222 Compania Naviera Perez Companc
SA
Multi-Industry $ 815,000
------------
815,000
------------
AUSTRALIA - 1.9%
COMMON STOCK
105,000 Australia & New Zealand Banking
Group Ltd.
Finance 672,151
30,000 Brambles Inds. Ltd.
Materials 544,005
116,000 Broken Hill Proprietary Co. Ltd.
Multi-Industry 1,639,268
60,000 Woodside Petroleum Ltd.
Energy 478,349
------------
3,333,773
------------
BRAZIL - 1.3%
COMMON STOCK
21,500 Telecomunicacoes Brasileiras
SA - Telebras ADR
Services 2,467,125
------------
2,467,125
------------
CANADA - 0.7%
COMMON STOCK
19,100 Alcan Aluminum, Ltd.
Materials 647,736
32,000 Noranda, Inc.
Materials 675,395
------------
1,323,131
------------
CHILE - 0.5%
COMMON STOCK
29,750 Compania de Telecomunicacion de
Chile SA ADR
Services 963,157
------------
963,157
------------
DENMARK - 0.6%
COMMON STOCK
40,300 ISS International Service System
A/S (a)
Services 1,192,272
------------
1,192,272
------------
FRANCE - 7.7%
COMMON STOCK
12,340 Accor SA
Services 1,769,683
SHARES VALUE US$
- ------- ------------
FRANCE (CONCLUDED)
8,600 Canal Plus
Services $ 1,553,080
14,156 Compagnie Generale des Eaux
Multi-Industry 1,971,906
28,500 Elf Aquitaine
Energy 2,763,862
39,000 METALEUROP, SA. (a)
Materials 467,754
38,301 Michelin(Cie Gle Des Etabl.)
Capital Equipment 2,140,010
12,120 Primagaz (Cie Des Gaz Petrole)
Energy 1,187,828
12,530 SGS-Thomson Microelectronics
N.V.
Capital Equipment 966,093
15,500 Societe Generale
Finance 1,736,859
WARRANTS
1,256 Primagaz (Cie Des Gaz
Petrole)(a)
Energy 23,565
------------
14,580,640
------------
GERMANY - 5.8%
COMMON STOCK
13,080 Adidas AG
Consumer Non-Durables 1,355,812
53,500 Bayer AG
Materials 2,128,013
3,500 Mannesmann AG
Capital Equipment 1,376,797
43,235 Veba AG
Multi-Industry 2,243,267
62 Wella AG
Consumer Non-Durables 36,913
PREFERRED STOCK
6,485 GEA AG
Services 2,198,242
7,400 SAP AG
Services 1,362,742
596 Wella AG
Consumer Non-Durables 362,067
------------
11,063,853
------------
HONG KONG - 4.6%
COMMON STOCK
105,100 Cheung Kong Holdings Ltd.
Finance 922,584
388,000 Citic Pacific Ltd.
Multi-Industry 2,098,651
270,400 Hutchison Whampoa Ltd.
Finance 2,007,101
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ------- ------------
HONG KONG (CONCLUDED)
122,000 Sun Hung Kai Properties Ltd.
Finance $ 1,322,920
78,400 Swire Pacific Ltd.
Multi-Industry 604,712
460,000 Wharf (Holdings) Ltd.
Finance 1,739,883
------------
8,695,851
------------
INDONESIA - 1.3%
COMMON STOCK
344,520 PT Indofoods Sukses Makmur
Consumer Non-Durables 712,433
578,000 PT Telekomunikasi Indonesia
Services 838,457
42,490 PT Unilever Indonesia
Services 830,566
------------
2,381,456
------------
ITALY - 1.1%
COMMON STOCK
26,000 Gucci Group
Consumer Non-Durables 1,803,750
177,455 Telecom Italia SpA
Energy 466,994
------------
2,270,744
------------
JAPAN - 24.7%
COMMON STOCK
82,000 Amada Metrecs Co. Ltd.
Capital Equipment 743,047
61,000 Arcland Sakamoto
Services 586,399
118,000 Bridgestone Corp.
Materials 2,510,441
85,100 Credit Saison Co. Ltd.
Finance 1,636,151
60,000 Dai-Dan Co. Ltd.
Capital Equipment 590,969
321,000 Dai-Tokyo Fire & Marine
Insurance Co.
Finance 1,504,964
85,000 Daiwa House Industry Co., Ltd.
Capital Equipment 951,068
300 East Japan Railway Co.
Services 1,297,770
90,000 Fuji Photo Film Co.
Capital Equipment 3,439,445
29,000 Glory Ltd.
Capital Equipment 525,568
206,000 Hanshin Electric Railway (a)
Services 673,626
SHARES VALUE US$
- ------- ------------
JAPAN (CONCLUDED)
243,000 Hitachi Ltd.
Capital Equipment $ 2,201,954
43,000 Ito-Yokado Co. Ltd.
Services 2,067,545
62,000 Japan Airport Terminal Co.
Services 635,096
907,000 Kobe Steel Ltd (a)
Materials 1,650,910
15,000 Kyocera Corp.
Capital Equipment 898,275
32,000 Mabuchi Motor Co.
Capital Equipment 1,621,306
9,000 Meiko Shokai
Capital Equipment 319,833
130,000 Mitsubishi Corp.
Services 1,218,974
391,000 Mitsubishi Electric Corp.
Capital Equipment 2,141,242
86,000 Murata Manufacturing Co. Ltd.
Capital Equipment 3,171,382
22,400 Nagaileben Co. Ltd.
Consumer Durables 748,376
82,000 Omron Corp.
Capital Equipment 1,550,704
38,700 SMC Corp.
Capital Equipment 2,835,947
17,000 Secom
Services 1,011,347
208,000 Takeda Chemical Inds.
Consumer Durables 4,802,143
9,300 Toho Co.
Services 1,245,765
208,000 Tokio Marine & Fire Insurance
Co.
Finance 2,032,310
70,000 Toyota Motor Corp.
Capital Equipment 2,029,785
------------
46,642,342
------------
KOREA, REPUBLIC OF - 1.3%
COMMON STOCK
19,000 Korea Electric Power Corp.
Energy 566,592
7,250 Pohang Iron & Steel Co. Ltd.
Materials 511,889
618 SK Telecom Co. Ltd.
Services 492,847
6,000 Samsung Electronics Co.
Capital Equipment 452,462
29,957 Shinhan Bank
Finance 426,920
------------
2,450,710
------------
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ------- ------------
MALAYSIA - 2.0%
COMMON STOCK
668,000 DCB Holdings Berhad
Finance $ 2,169,005
193,000 Tenaga Nasional Berhad
Energy 891,952
100,000 United Engineers (Malaysia) Ltd.
Capital Equipment 709,163
------------
3,770,120
------------
MEXICO - 0.3%
COMMON STOCK
166,000 Cemex SA de CV
Materials 551,072
------------
551,072
------------
NETHERLANDS - 10.4%
COMMON STOCK
123,000 Elsevier NV
Services 1,969,919
62,400 Getronics NV
Capital Equipment 1,889,841
17,100 Heineken NV
Consumer Non-Durables 2,865,946
178,805 ING Groep NV
Finance 7,021,500
17,438 Oce-Van Der Grinten NV
Capital Equipment 2,109,818
72,190 Philips Electronics N.V.
Capital Equipment 3,768,658
PREFERRED STOCK
4,800 ING Groep NV (a)
Finance 24,516
------------
19,650,198
------------
PHILIPPINES - 1.2%
COMMON STOCK
864,921 Ayala Land, Inc.
Finance 623,190
24,771 Manila Electric Co. GDR (b)
Energy 848,407
7,000 Philippine Long Distance
Telephone Co.
Services 399,507
6,550 Philippine Long Distance
Telephone Co. ADR
Services 365,163
------------
2,236,267
------------
PORTUGAL - 2.2%
COMMON STOCK
75,750 Portugal Telecom
Services 2,792,478
SHARES VALUE US$
- ------- ------------
PORTUGAL (CONCLUDED)
67,970 Semapa - Sociedade de
Investimento e Gestao SGPS SA
Materials $ 1,455,283
------------
4,247,761
------------
SINGAPORE - 2.5%
COMMON STOCK
182,000 City Developments Ltd.
Finance 1,472,308
96,750 Development Bank of Singapore
Ltd.
Finance 1,150,591
57,420 Singapore Press Holdings Ltd.
Services 1,063,996
110,000 United Overseas Bank Ltd.
Finance 1,034,364
------------
4,721,259
------------
SPAIN - 1.0%
COMMON STOCK
5,800 Banco Popular Espanol SA
Finance 1,230,874
35,800 Centros Comerciales Pryca SA
Services 622,502
------------
1,853,376
------------
SWEDEN - 2.3%
COMMON STOCK
96,800 Atlas Copco AB
Capital Equipment 2,399,796
61,000 Telefonaktiebolaget LM Ericsson
'B' Shares
Services 1,928,238
------------
4,328,034
------------
SWITZERLAND - 8.0%
COMMON STOCK
2,400 ABB Asea Brown Boveri Ltd.
Capital Equipment 2,907,561
5,700 Adecco SA
Multi-Industry 1,903,352
5,663 Ciba Specialty Chemicals AG (a)
Materials 488,123
5,663 Novartis
Consumer Durables 7,464,061
290 Roche Holding AG
Consumer Non-Durables 2,450,455
------------
15,213,552
------------
THAILAND - 0.5%
COMMON STOCK
48,000 Bangkok Bank Public Co. Ltd. (b)
Finance 444,631
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
AS OF APRIL 30, 1997 (UNAUDITED)
SHARES VALUE US$
- ------- ------------
THAILAND (CONCLUDED)
36,000 Land & House Public Co. Ltd.
Finance $ 102,660
70,400 Thai Farmers Bank Public Co.
Ltd. (b)
Finance 425,769
WARRANTS
16,300 Thai Farmers Bank Public Co.
Ltd. (b)
Finance 11,855
------------
984,915
------------
UNITED KINGDOM - 14.4%
COMMON STOCK
126,700 Airtours plc
Services 1,882,101
214,000 Asda Group plc
Services 399,318
44,500 Barclays plc
Finance 828,192
110,000 Blue Circle Inds. plc
Materials 747,850
97,000 British Airways plc
Services 1,111,179
138,800 British Land Co. plc
Finance 1,303,994
388,500 British Steel plc
Capital Equipment 898,284
130,000 Cable & Wireless plc
Services 1,003,002
108,000 Cadbury Schweppes plc
Consumer Non-Durables 897,225
381,000 David S. Smith Holdings plc
Services 1,384,780
58,000 De La Rue plc
Services 516,664
100,773 Enterprise Oil plc
Energy 991,706
53,000 Johnson Matthey plc
Capital Equipment 430,415
76,800 Kingfisher plc
Services 832,426
327,000 LASMO plc
Energy $ 1,183,206
SHARES VALUE US$
- ------- ------------
UNITED KINGDOM (CONCLUDED)
143,400 Lloyds TSB Group plc
Finance 1,309,982
257,000 LucasVarity plc (a)
Capital Equipment 773,544
312,400 MFI Furniture plc
Services 691,913
284,000 Pilkington Brothers plc
Materials 511,504
141,835 Prudential Corp. plc
Finance 1,381,988
64,000 RTZ Corp. plc
Materials 1,017,686
137,000 Rank Group plc
Services 942,528
165,750 Tesco plc
Services 962,818
75,000 Tibbett and Britten Group plc
Services 756,328
127,352 United News & Media plc
Services 1,558,062
312,200 Vodafone Group plc
Services 1,398,137
116,100 Williams Holdings plc
Multi-Industry 626,371
29,500 Zeneca Group plc
Consumer Durables 890,074
------------
27,231,277
------------
Total Investments - 96.7%
(cost $149,743,754) 182,967,885
Other Assets Less
Liabilities - 3.3% 6,160,840
------------
Total Net Assets - 100.0% $189,128,725
============
- ------------------
(a) Non-income producing security.
(b) Valued pursuant to methodology approved by the Board of Trustees.
ADR - American Depositary Receipts
GDR - Global Depositary Receipts
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACTS TO SELL
CONTRACT DATE CURRENCY UNITS US DOLLARS UNREALIZED GAIN
- -------------- --------- ---------- ----------- ----------------
Swiss
6/17/97 Francs 4,200,000 $2,891,367 $25,203
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
ASSETS:
Investments (Note 2):
Investments at cost $149,743,754
Net unrealized appreciation (depreciation) 33,224,131
------------
Total Investments at value 182,967,885
Cash 2,284,699
Net receivable for forward foreign currency contracts 25,203
Receivable for dividends, tax reclaims and interest 797,585
Receivable for securities sold 3,266,328
Organization costs, net of amortization (Note 2) 8,657
------------
Total Assets 189,350,357
------------
LIABILITIES:
Payable for securities purchased 91,561
Payable to investment adviser (Note 3) 56,740
Payable to administrator (Note 3) 23,260
Accrued fees and other expenses 50,071
------------
Total Liabilities 221,632
------------
Net Assets $189,128,725
============
COMPONENTS OF NET ASSETS:
Investors' capital $155,902,047
Net unrealized appreciation (depreciation) on investments 33,226,678
------------
Net Assets $189,128,725
============
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $202,069) $ 1,235,169
Interest income 123,752
-----------
Total Investment Income 1,358,921
-----------
EXPENSES:
Investment advisory (Note 3) 430,742
Administration (Note 3) 143,580
Transfer agency (Note 3) 6,012
Custody 66,478
Accounting (Note 3) 36,000
Legal 4,832
Audit 18,000
Trustees 8,723
Miscellaneous 30,452
-----------
Total Expenses 744,819
Fees waived and expenses reimbursed (Note 6) (26,575)
-----------
Net Expenses 718,244
-----------
NET INVESTMENT INCOME (LOSS) 640,677
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) on investments sold 7,320,128
Net realized gain (loss) on forward foreign currency
contracts and foreign currency transactions 1,860,445
-----------
Net realized gain (loss) on investments,
forward foreign currency contracts and
foreign currency transactions 9,180,573
-----------
Net change in unrealized appreciation (depreciation) on
investments 2,394,939
Net change in unrealized appreciation (depreciation) on
forward foreign currency contracts and foreign currency
transactions (158,519)
-----------
Net change in unrealized appreciation
(depreciation) on investments, forward
foreign currency contracts and foreign
currency transactions 2,236,420
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS 11,416,993
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $12,057,670
===========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
APRIL 30, FOR THE YEAR
1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
------------ ----------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $202,743,299 $ --
------------ ----------------
OPERATIONS:
Net investment income (loss) 640,677 2,401,723
Net realized gain (loss) on investments sold 9,180,573 29,130,476
Net change in unrealized appreciation (depreciation) on
investments 2,236,420 30,990,258
------------ ----------------
Net increase (decrease) in net assets resulting from operations 12,057,670 62,522,457
------------ ----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 22,894,930 201,091,364
Withdrawals (48,567,174) (60,870,522)
------------ ----------------
Net transactions in investors' beneficial interest (25,672,244) 140,220,842
------------ ----------------
Net increase (decrease) in net assets (13,614,574) 202,743,299
------------ ----------------
NET ASSETS, END OF PERIOD $189,128,725 $202,743,299
------------ ----------------
------------ ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
April 30, 1997 Ended
(Unaudited) October 31, 1996
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 0.75%(a) 0.75%
Expenses excluding reimbursement/waiver 0.78%(a) 0.77%
Net investment income including reimbursement/waiver 0.67%(a) 1.10%
Average brokerage commission per share (b) $ 0.0305 $ 0.0256
Portfolio turnover rate 20.01% 56.20%
</TABLE>
- ------------------
(a) Annualized.
(b) Amount represents the average commission per share paid to brokers on the
purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds ('Schroder Core') was organized as a Delaware
business trust on September 7, 1995. Schroder Core, which is registered as an
open-end, management investment company under the Investment Company Act of
1940 (the 'Act'), currently has five investment portfolios. Included in this
report is International Equity Fund (the 'Portfolio'), a diversified
portfolio that commenced operations on November 1, 1995. Under the Trust
Instrument, Schroder Core is authorized to issue an unlimited number of
interests without par value. Interests in the Portfolio are sold in private
placement transactions without any sales charges to institutional clients,
including open-end, management investment companies.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates.
The following represent significant accounting policies of the
Portfolio:
SECURITY VALUATION
Portfolio securities listed on recognized stock exchanges are valued at
the last reported sale price on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges
where last sale prices are not available are valued at the last sale price on
the proceeding trading day or at closing mid-market prices. Securities traded
in over-the-counter markets, or listed securities for which no trade is
reported on the valuation date, are valued at the most recent reported
mid-market price. Other securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith
using methods approved by the Schroder Core Board of Trustees. Board valued
securities represented approximately 0.90% 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. Interest income, including
amortization of discount or premium, is recorded as earned. Identified cost
of investments sold is used to determine gain and loss for both financial
statement and federal income tax purposes. Foreign dividend and interest
income amounts and realized capital gain and loss are converted to U.S.
dollar equivalents using foreign exchange rates in effect at the date of the
transactions.
Foreign currency amounts are translated into U.S. dollars at the mean
of the bid and asked prices of such currencies against U.S. dollars as
follows: (i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such
transactions. The portion of the results of operations arising from changes
in the exchange rates and the portion due to fluctuations arising from
changes in the market prices of securities are not isolated. Such
fluctuations are included with the net realized and unrealized gain or loss
on investments.
The Portfolio may enter into forward contracts to purchase or sell
foreign currencies to protect against the effect on the U.S. dollar value of
the underlying portfolio of possible adverse movements in foreign exchange
rates. Risks associated with such contracts include the movement in value of
the foreign currency relative to the U.S. dollar and the ability of the
counterparty to perform. Fluctuations in the value of such contracts are
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
recorded as unrealized gain or loss; realized gain or loss include net gain
or loss on contracts that have terminated by settlement or by the Portfolio
entering into offsetting commitments.
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements. The Portfolio,
through its custodian, receives delivery of the underlying collateral, whose
market value must always equal or exceed the repurchase price. The investment
adviser is responsible for determining the value of the underlying collateral
at all times. In the event of default, the Portfolio may have difficulties
with the disposition of any securities held as collateral.
ORGANIZATIONAL COSTS
Costs incurred by the Portfolio in connection with this organization
and initial registration are being amortized on a straight line basis over a
five-year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser to the Portfolio is Schroder Capital Management
International, Inc. ('SCMI'). Pursuant to an Investment Advisory Agreement,
SCMI is entitled to receive an annual fee, payable monthly, of 0.45% of the
average daily net assets of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Effective November 26, 1996 and February 1, 1997, the Portfolio has
entered into Administration and Subadministration Agreements with Schroder
Fund Advisors Inc. ('Schroder Advisors') and Forum Administrative Services,
Limited Liability Company ('Forum'). From November 26, 1996 through January
31, 1997 the Portfolio had a Subadministration Agreement with Forum Financial
Services, Inc. ('FFSI') that was identical in all material terms to the
February 1, 1997 Agreement with Forum. For these services, Schroder Advisors
is entitled to receive compensation at annual fees payable monthly of 0.075%
of the average daily net assets of the Portfolio. For its services, Forum is
entitled to receive compensation at annual fees payable monthly of 0.075% of
the average daily net assets of the Portfolio. Prior to November 26, 1996,
Schroder Advisors was entitled to compensation at an annual rate of 0.15% of
the average daily net assets and obligated to pay a fee to FFSI.
TRANSFER AGENT
Forum Financial Corp.(Registered) ('FFC') serves as the Portfolio's
transfer agent and is entitled to receive compensation for those services by
the Schroder Core with respect to the Portfolio in the amount of $12,000 per
year plus certain other fees and expenses.
OTHER SERVICE PROVIDERS
FFC also performs portfolio accounting for the Portfolio and is
entitled to receive compensation for those services by the Portfolio in the
amount of $60,000 per year, plus certain amounts based upon the number and
types of portfolio transactions.
NOTE 4. PURCHASES AND SALES OF SECURITIES
The cost of securities purchased and the proceeds from sales of
securities (excluding short-term securities) for the six months ended April
30, 1997 aggregated $35,624,050 and $56,268,590, respectively.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund (Portfolio)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
For federal income tax purposes, the tax basis of investment securities
owned as of April 30, 1997 was $149,743,754. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $44,456,033, and the aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value was $11,231,902.
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income taxes on its net
investment income and net capital gain as it is treated as a partnership for
federal income tax purposes. All interest, dividends, gain and loss of the
Portfolio are deemed to have been 'passed through' to the partners in
proportion to their holdings of the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
NOTE 6. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
SCMI voluntarily has waived a portion of its advisory fees and has
assumed certain expenses of the Portfolio so that its total expenses would
not exceed 0.75% of the Portfolio's average daily net assets. Schroder
Advisors, Forum and FFC may waive voluntarily all or a portion of their fees
from time to time. For the period ended April 30, 1997, fees waived by SCMI
were $26,575.
NOTE 7. CONCENTRATION OF CREDIT RISK
The Portfolio has a relatively large concentration of portfolio
securities invested in companies domiciled in Japan. The Portfolio may be
more susceptible to political, social and economic events adversely affecting
Japanese companies than portfolios not so concentrated.
- --------------------------------------------------------------------------------
22
<PAGE>
TRUSTEES
Hermann C. Schwab
Peter E. Guernsey
John I. Howell
Clarence F. Michalis
Mark J. Smith
OFFICERS
Hermann C. Schwab
Chairman of the Board
Mark J. Smith
President
Mark Astley
Vice President
Robert G. Davy
Vice President
Margaret H. Douglas-Hamilton
Vice President
Richard Foulkes
Vice President
John Y. Keffer
Vice President
Jane Lucas
Vice President
Catherine A. Mazza
Vice President
Michael Perelstein
Vice President
Fariba Talebi
Vice President
John A. Troiano
Vice President
Ira L. Unschuld
Vice President
Alexandra Poe
Vice President
Secretary
Robert Jackowitz
Treasurer
Thomas G. Sheehan
Assistant Treasurer
Assistant Secretary
Catherine S. Wooledge
Assistant Treasurer
Assistant Secretary
Barbara Gottlieb
Assistant Secretary
Mary Kunkemueller
Assistant Secretary
Gerardo Machado
Assistant Secretary
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
CUSTODIAN
The Chase Manhattan Bank
Global Custody Division
Woolgate House, Coleman Street
London EC2P 2HD, United Kingdom
TRANSFER AND DIVIDEND
DISBURSING AGENT
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110-2624
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders of the Schroder
International Fund. Its use in connection with any offering of the Fund's shares
is authorized only in case of a concurrent or prior delivery of the Fund's
current prospectus.
[Logo] SCHRODERS
Schroder
International
Fund
SEMI-ANNUAL REPORT
April 30, 1997
(Unaudited)
Schroder Capital Funds
(Delaware)
