<PAGE>
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Schroder U.S. Smaller Companies Fund
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Two Portland Square, Portland, Maine 04101
General Information (207) 879-6200
Account Information (800) 344-8332
Fund Literature (800) 290-9826
Fax (207) 879-6050
INVESTMENT OBJECTIVE
The Fund's investment objective is capital appreciation. The Fund currently
invests in the Portfolio, which seeks to achieve its investment objective by
investing primarily in equity securities of companies domiciled in the United
States that, at the time of purchase, have market capitalizations of $1.5
billion or less.
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 20
countries worldwide. As of September 30, 1997, the Schroder Group had over $175
billion in assets under management. At the same date, the Investment Adviser,
together with its U.K. affiliate, Schroder Capital Management International
Ltd., had over $28 billion under management.
January 20, 1998
Dear Shareholder:
For the six months ended November 30, 1997, the U.S. equity markets
experienced strong returns. For the same period, the Schroder U.S. Smaller
Companies Fund returned 14.48%, outperforming its benchmark, the Russell
2000(Registered) Index as well as the larger company market as measured by the
S&P 500(Registered) Index. Smaller and larger companies performed in line with
each other, the Russell 2000 Index was up 13.80% while the S&P 500 Index was up
13.59% for the same period.
Even though the equity markets were experiencing strong returns, the
overall environment was relatively volatile during this time. Smaller companies
outperformed larger companies during August and September, as investors began to
take advantage of the more favorable valuations of smaller companies relative to
those of larger companies. In October, equity investors world-wide reacted to
the Asian currency crisis. On October 27, the Russell 2000 Index lost 6.1%, the
fifth worst daily percentage decline in the history of the Russell 2000, while
the S&P 500 lost 6.8%. In the days and weeks following, larger companies
rebounded sharply. It was during this period that smaller companies lagged, as
investors sought the liquidity of larger companies during the market turbulence.
Stock selection drove most of the Fund's outperformance during the period.
Sector weightings, namely media, energy, financials and technology, were
positive contributors to performance. Media stocks were strong as a result of
continued consolidation and strong advertising rate growth. Energy stocks
outperformed as industry fundamentals benefited from a favorable supply-demand
situation. Financial stocks were up over 25% due to a period of declining
interest rates and consolidation in the industry. The Fund's holdings in
technology outperformed due to more conservative holdings and an underweight
position.
Thank you for your interest and support in the Schroder U.S. Smaller
Companies Fund.
Sincerely,
Mark J. Smith
President
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Schroder U.S. Smaller Companies Fund
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MANAGEMENT DISCUSSION AND ANALYSIS (As of November 30, 1997)
Q: Which sectors of the market performed well during the semi-annual period
ended November 30, 1997?
A: The strongest sectors for the Russell 2000 Index during the period included
companies in financials, energy, consumer staples and utilities. Financial
companies, led by Commercial Federal Corp. and North Fork Bancorp, were strong
during the period due to a declining interest rate environment. Varco
International Inc. and Cooper Cameron Corp., both energy companies, were strong
performers as the oil equipment industry continued to benefit from positive
supply-demand conditions. Consumer staples, led by Suiza Foods Corp., a dairy
consolidator, performed well during the period. Utility stocks outperformed
towards the end of the semi-annual period as investors preferred defensive
sectors during the turbulent months of October and November.
Q: The small capitalization universe staged a brief rebound before it pulled
back again in recent months. What does management see for the future of small
cap securities?
A: Management has seen underperformance of the small cap sector since the
problems in Asia increased market volatility. As small cap securities are often
less liquid, this is not unusual in such market circumstances. Fundamentals in
the small cap universe, however, have improved over the past several months.
More recently, smaller company earnings have looked better than larger company
earnings. Going forward, currently there is a positive environment for small
capitalization investors. Management will remain focused on its
research-intensive individual stock selection, concentrating on underfollowed
and misunderstood companies that can offer superior earnings growth.
Q: Were there any major changes in sectors during the semi-annual period?
A: Management lowered the Fund's technology weighting due to concerns about
industry over-capacity and weakening demand in Asian markets.
Q: What is management's economic outlook for the next six months?
A: Management believes that the economy is operating at a level at or near
capacity. There is not room to support an accelerating level of cyclical growth
without triggering accelerating inflation. However, management believes the
economy may remain at a slow growth phase, as recent data and Federal Reserve
Board decisions may suggest. Management believes that the current international
turmoil will likely slow domestic growth enough to avoid interest rate hikes. If
so, this would be beneficial for the equity markets, and in particular the small
cap market. We believe that profit growth has peaked and that higher growth
companies will be more attractive under slow, steady growth scenario.
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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2
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Schroder U.S. Smaller Companies Fund
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PORTFOLIO CHARACTERISTICS AS OF NOVEMBER 30, 1997
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- ----------------------------------------------------------
Consumer Cyclicals 23.5%
Financial 14.0%
Transportation, Service & Misc. 11.5%
Energy 9.4%
Capital Goods/Construction 7.7%
Health Care 7.1%
Technology 6.1%
Consumer Staples 5.1%
Basic Materials 2.6%
Cash and Other Net Assets 13.0%
---------------
Total 100.0%
---------------
---------------
TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
- ----------------------------------------------------------
Pillowtex Corp. 1.92%
Cooper Cameron Corp. 1.66%
Wesley Jessen VisionCare Inc. 1.56%
Petco Animal Supplies Inc. 1.51%
B.J. Service Co. 1.47%
Suiza Foods Corp. 1.46%
CHS Electronics Inc. 1.43%
Varco International Inc. 1.40%
CMAC Investment Corp. 1.35%
Commercial Federal Corp. 1.31%
---------------
Total 15.07%
---------------
---------------
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3
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Schroder U.S. Smaller Companies Fund
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STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Notes 1 and 2):
Investment in Schroder U.S. Smaller Companies Portfolio (the
'Portfolio') $40,419,336
Receivable for Fund shares sold 51,875
Organization costs, net of amortization (Note 2) 3,725
-----------
Total Assets 40,474,936
-----------
LIABILITIES:
Payable for Fund shares redeemed 12,493
Payable to administrator (Note 3) 5,656
Payable to subadministrator (Note 3) 2,480
Accrued expenses and other liabilities 23,025
-----------
Total Liabilities 43,654
-----------
Net Assets $40,431,282
-----------
-----------
COMPONENTS OF NET ASSETS:
Paid-in capital $31,438,019
Undistributed net investment income (loss) (93,719)
Accumulated net realized gain (loss) 3,365,100
Net unrealized appreciation (depreciation) on investments 5,721,882
-----------
Net Assets $40,431,282
-----------
-----------
NET ASSETS BY CLASS
Investor Class $39,378,295
Advisor Class 1,052,987
-----------
Net Assets $40,431,282
-----------
-----------
SHARES OF BENEFICIAL INTEREST
Investor Class 2,594,747
Advisor Class 69,544
NET ASSET VALUE OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY SHARES OF BENEFICIAL INTEREST)
Investor Class $15.18
Advisor Class $15.14
</TABLE>
The accompanying notes are an integral part of the financial statements.
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4
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Schroder U.S. Smaller Companies Fund
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STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six
Months Ended
November 30, 1997
(Unaudited)
-----------------
<S> <C>
NET INVESTMENT INCOME ALLOCATED FROM THE PORTFOLIO:
Dividend income $ 92,474
Interest income 60,276
Net expenses (136,318)
-----------------
Net Investment Income Allocated from the Portfolio 16,432
-----------------
EXPENSES:
Administration (Note 3) 43,095
Subadministration (Note 3) 12,928
Transfer agency (Note 3) 17,133
Shareholder services--Advisor Shares (Note 3) 782
Accounting (Note 3) 6,000
Legal 3,733
Audit 7,556
Registration 13,970
Reporting 13,101
Trustees 69
Amortization of organization costs (Note 2) 2,909
Miscellaneous 1,507
-----------------
Total Expenses 122,783
Fees waived and expenses reimbursed (Note 4) (11,745)
-----------------
Net Expenses 111,038
-----------------
NET INVESTMENT INCOME (LOSS) (94,606)
-----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments sold 1,856,877
Net change in unrealized appreciation (depreciation) on investments 1,871,374
-----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,728,251
-----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,633,645
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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5
<PAGE>
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Schroder U.S. Smaller Companies Fund
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the For the Year
November 30, 1997 Period Ended Ended
(Unaudited) May 31, 1997 October 31, 1996
----------------- ------------ ----------------
<S> <C> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $26,185,077 $ 13,742,555 $ 15,287,216
----------------- ------------ ----------------
OPERATIONS:
Net investment income (loss) (94,606) (42,527) (50,796)
Net realized gain (loss) on investments sold 1,856,877 1,749,974 4,597,614
Net change in unrealized appreciation
(depreciation) on investments 1,871,374 1,017,015 (843,435)
----------------- ------------ ----------------
Net increase (decrease) in net assets resulting
from operations 3,633,645 2,724,462 3,703,383
----------------- ------------ ----------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net realized gain on investments--Investor Class -- (4,517,569) (1,965,720)
----------------- ------------ ----------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares--Investor Class 13,188,432 14,779,822 1,697,351
Sale of shares--Advisor Class 1,446,962 129,171 --
Reinvestment of distributions--Investor Class -- 3,516,999 1,522,389
Redemption of shares--Investor Class (3,561,554) (4,133,899) (6,502,064)
Redemption of shares--Advisor Class (461,280) (56,464) --
----------------- ------------ ----------------
Net increase (decrease) from capital share
transactions 10,612,560 14,235,629 (3,282,324)
----------------- ------------ ----------------
Net increase (decrease) in net assets 14,246,205 12,442,522 (1,544,661)
----------------- ------------ ----------------
NET ASSETS, END OF PERIOD (INCLUDING LINE A) $40,431,282 $ 26,185,077 $ 13,742,555
----------------- ------------ ----------------
----------------- ------------ ----------------
(A) Accumulated undistributed net investment income (loss) $ (93,719) $ 887 $ --
----------------- ------------ ----------------
----------------- ------------ ----------------
SHARE TRANSACTIONS
Sale of shares--Investor Class 864,054 1,190,001 95,854
Sale of shares--Advisor Class 93,750 10,511 --
Reinvestment of distributions in shares--Investor
Class -- 296,293 106,834
Redemption of shares--Investor Class (238,323) (315,073) (414,456)
Redemption of shares--Advisor Class (30,304) (4,413) --
----------------- ------------ ----------------
Net increase (decrease) in shares 689,177 1,177,319 (211,768)
----------------- ------------ ----------------
----------------- ------------ ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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6
<PAGE>
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Schroder U.S. Smaller Companies Fund
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FINANCIAL HIGHLIGHTS--INVESTOR SHARES
Selected per share data and ratios for an Investor share outstanding
throughout each period:
<TABLE>
<CAPTION>
For the For the
Six Months Ended Period Ended For the Year Ended October 31,
November 30, May 31, --------------------------------------------
1997 (Unaudited) 1997 1996(a) 1995 1994 1993(b)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of
Period $ 13.26 $ 17.23 $ 15.14 $ 11.81 $ 10.99 $ 10.00
------- ------------ ------- ------- ------- -------
Investment Operations
Net Investment Income (Loss) (0.04)(c) (0.02)(c) (0.06)(c) (0.04) (0.07) (0.02)
Net Realized and Unrealized Gain
(Loss) on Investments 1.96 1.88 4.10 3.78 0.97 1.01
------- ------------ ------- ------- ------- -------
Total from Investment Operations 1.92 1.86 4.04 3.74 0.90 0.99
------- ------------ ------- ------- ------- -------
Distributions From
Net Realized Gain on Investments 0.00 (5.83) (1.95) (0.41) (0.08) --
------- ------------ ------- ------- ------- -------
Net Asset Value, End of Period $ 15.18 $ 13.26 $ 17.23 $ 15.14 $ 11.81 $ 10.99
------- ------------ ------- ------- ------- -------
------- ------------ ------- ------- ------- -------
Total Return 14.48%(d)(e) 14.73%(d)(e) 29.35% 32.84% 8.26% 9.90%
Ratio/Supplementary Data
Net Assets at End of Period
(in thousands) $ 39,378 $ 26,104 $13,743 $15,287 $13,324 $12,489
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver of fees 1.43%(c)(f) 1.49%(c)(f) 1.49%(c)(f) 1.49% 1.45% 2.03%(f)
Expenses excluding
reimbursement/waiver of fees 1.43%(c)(f) 1.87%(c)(f) N/A N/A N/A N/A
Net investment income (loss)
including reimbursement/waiver
of fees (0.54)%(c)(f) (0.42)%(c)(f) (0.35)%(c)(f) (0.30)% (0.58)% (0.99)%(f)
Average Commission Rate Per
Share(g) $ 0.0588 $ 0.0584 $0.0583 N/A N/A N/A
Portfolio Turnover Rate(h) 28.71% 34.45% 58.50% 92.68% 70.82% 12.58%
</TABLE>
- ------------------
(a) On May 17, 1996, the Fund began offering two classes of shares Investor
Shares and Advisor Shares, and all then outstanding shares of the Fund were
designated as Investor Shares.
(b) The Fund commenced operations on August 6, 1993 and converted to Core and
Gateway(Registered) on August 15, 1996.
(c) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(d) Not annualized.
(e) Total returns would have been lower had certain expenses not been reduced
during the period shown (See Note 4).
(f) Annualized.
(g) For the fiscal year beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid by the Portfolio to
brokers on the purchase and sale of equity securities on which commissions
are charged.
(h) Portfolio turnover represents the rate of portfolio activity. The rate after
October 31, 1995 represents the portfolio turnover rate of the Portfolio.
The accompanying notes are an integral part of the financial statements.
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7
<PAGE>
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Schroder U.S. Smaller Companies Fund
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FINANCIAL HIGHLIGHTS--ADVISOR SHARES
Selected per share data and ratios for an Advisor share outstanding
throughout each period:
<TABLE>
<CAPTION>
For the For the
Six Months Ended Period Ended
November 30, May 31,
1997 (Unaudited) 1997(a)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 13.24 $ 11.89
----------------- ------------
Investment Operations
Net Investment Income (Loss) (0.04)(b) (0.03)(b)
Net Realized and Unrealized Gain (Loss) on Investments 1.94 1.38
----------------- ------------
Total from Investment Operations 1.90 1.35
----------------- ------------
Net Asset Value, End of Period $ 15.14 $ 13.24
----------------- ------------
----------------- ------------
Total Return(c) 14.35%(d) 11.35%(d)
Ratio/Supplementary Data
Net Assets at End of Period (in thousands) $ 1,053 $ 81
Ratios to Average Net Assets:
Expenses including reimbursement/waiver of fees 1.65%(b)(e) 1.74%(b)(e)
Expenses excluding reimbursement/waiver of fees 5.41%(b)(e) 57.02%(b)(e)
Net investment income (loss) including reimbursement/waiver of
fees (0.82)%(b)(e) (0.67)%(b)(e)
Average Commission Rate Per Share(f) $ 0.0588 $ 0.0584
Portfolio Turnover Rate(g) 28.71% 34.45%
</TABLE>
- ------------------
(a) Advisor Class shares were first issued on December 23, 1996.
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(c) Total returns would have been lower had certain expenses not been reduced
during the period shown (See Note 4).
(d) Not annualized.
(e) Annualized.
(f) Amount represents the average commissions per share paid by the Portfolio to
brokers on the purchase and sale of equity securities on which commissions
are charged.
(g) Portfolio turnover represents the rate of portfolio activity of the
Portfolio.
The accompanying notes are an integral part of the financial statements.
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8
<PAGE>
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Schroder U.S. Smaller Companies Fund
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION
Schroder Capital Funds (Delaware) (the 'Trust') was organized as a
Maryland corporation on July 30, 1969; reorganized as a series company on
February 29, 1988, as Schroder Capital Funds, Inc.; and reorganized on
January 9, 1996, as a Delaware business trust. The Trust, which is registered
as an open-end, management investment company under the Investment Company
Act of 1940 (the 'Act'), currently has eight investment portfolios. Included
in this report is the Schroder U.S. Smaller Companies Fund (the 'Fund'), a
diversified portfolio that commenced operations on August 6, 1993. 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 November 30, 1997, both Investor Shares and Advisor Shares had
been issued.
Effective May 31, 1997, the Fund changed its fiscal year end to May 31
from October 31.
MASTER FEEDER ARRANGEMENT
Effective August 15, 1996, the Fund seeks to achieve its investment
objective by investing all of its investable assets in a separate diversified
portfolio, Schroder U.S. Smaller Companies Portfolio (the 'Portfolio'), of
Schroder Capital Funds ('Schroder Core') that has the same investment
objective and substantially similar investment policies as the Fund. This is
commonly referred to as a master-feeder arrangement. Schroder Core also is
registered as an open-end, management investment company. The Fund may
withdraw its investment from the Portfolio at any time if the Trust's Board
of Trustees determines that it is in the best interest of the Fund and its
shareholders to do so. The Fund accounts for its investment in the Portfolio
as a partnership investment and records daily its share of the Portfolio's
income, expenses and realized and unrealized gain and loss. The Portfolio's
financial statements are included on pages 12 to 19 in this report and should
be read in conjunction with the Fund's financial statements. The Fund owns
approximately 18.31% 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
the close of trading on the New York Stock Exchange 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.
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9
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Schroder U.S. Smaller Companies Fund
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and capital gain distributions, if any, are distributed to
shareholders at least annually. Distributions are based on amounts calculated
in accordance with applicable federal income tax regulations, which may
differ from generally accepted accounting principles. These differences are
due primarily to differing treatments of income and gain on various
investment securities held by the Fund, timing differences and differing
characterizations of distributions made by the Fund.
FEDERAL TAXES
The Fund intends to qualify and continue to qualify each year as
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.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and
initial registration are being amortized on a straight line basis over a five
year period.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Fund currently invests all of its assets in the Portfolio, which
retains Schroder Capital Management International Inc. ('SCMI') to act as
investment adviser pursuant to an Investment Advisory Agreement. See Notes to
the Financial Statements of the Portfolio.
ADMINISTRATION
On behalf of the Fund, the Trust has entered into an Administration
Agreement with Schroder Fund Advisors Inc. ('Schroder Advisors') under which
Schroder Advisors is entitled to receive an annual fee, payable monthly, at
the rate of 0.25% of the Fund's average daily net assets. In addition, the
Trust has entered into a Subadministration Agreement with Forum
Administrative Services, LLC ('Forum') under which Forum is entitled to
receive an annual fee, payable monthly, at the rate of 0.075% of the Fund's
average daily net assets. Previous subadministration agreements in effect
with Forum Financial Services, Inc. during the period were identical in all
material terms including fees.
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.
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10
<PAGE>
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Schroder U.S. Smaller Companies Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
SHAREHOLDER SERVICE PLAN AND SERVICE ORGANIZATIONS
The Trust has adopted a Shareholder Service Plan ('the Plan') for the
Advisor Share Class under which Schroder Advisors is authorized to pay
service organizations a servicing fee. Payments under the Plan may be for
various types of services. The maximum annual amount payable under the Plan
is 0.25% of the Fund's average daily net assets attributable to the Advisor
Shares.
OTHER SERVICE PROVIDERS
FFC is the Fund's fund accountant. 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 REIMBURSEMENTS
Schroder Advisors voluntarily has assumed certain expenses of the Fund
so that its total expenses would not exceed 1.49% on Investor Shares and
1.74% on Advisor Shares of the respective share's average daily net assets.
The expense limitations cannot be modified or withdrawn except by a majority
vote of the Trustees of the Trust. Forum and FFC may waive voluntarily all or
a portion of their fees, from time to time. For the period ended November 30,
1997, expenses reimbursed by Schroder Advisors were $6,085 and fees waived by
FFC were $5,660.
---------------------
SUPPLEMENTAL INFORMATION (UNAUDITED)
A meeting of the Shareholders of the Schroder Capital Funds (Delaware)
was held on December 9, 1997 at the offices of the Investment Adviser (SCMI),
787 Seventh Avenue, New York, NY.
PROXY VOTE
The proxy had one proposal of which the following relate to the fund in
this report.
PROPOSAL 1.
Election of Trustees. (For Shareholders of all Funds)
Each nominee was elected by shareholders. The vote is listed below:
% OF TRUST
FOR VOTED
----------- ----------
Hon. David N. Dinkins 14,626,220 42.12%
Mr. Peter S. Knight 14,626,220 42.12%
Ms. Sharon L. Haugh 14,626,220 42.12%
The Trustees have approved a change in the calculation of fees payable
to the Trustees of the Trust effective November 1, 1997. Fees will be
calculated and payable as follows. Trustees will receive an annual retainer
of $11,000 for their services as Trustees of all open end investment
companies distributed by Schroder Fund Advisors, Inc., and $1,250 per meeting
attended in person or $500 per meeting attended by telephone. Members of an
Audit Committee for one or more of the investment companies will receive an
additional $1,000 per year. Payment of the annual retainer will be allocated
among the various investment companies based on their relative net assets.
Payment of meeting fees will be allocated only among those investment
companies to which the meeting relates.
- --------------------------------------------------------------------------------
11
<PAGE>
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Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
AS OF NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK - 87.0%
SHARES VALUE US$
- ------- ------------
<S> <C> <C>
BASIC MATERIALS - 2.6%
53,500 AMCOL International Corp. $ 1,284,000
54,400 Ball Corp. 2,094,400
67,800 Calgon Carbon Corp. 745,800
41,400 Ferro Corp. 1,586,142
------------
5,710,342
------------
CAPITAL GOODS/
CONSTRUCTION - 7.7%
49,600 Aeroquip-Vickers Inc. 2,532,702
98,500 Aftermarket Technology Corp.(a) 2,019,250
53,500 Donaldson Co. Inc. 2,568,000
68,200 Essex International Inc.(a) 2,203,713
37,600 Harsco Corp. 1,489,902
55,100 NS Group Inc.(a) 1,033,125
68,900 Tracor Inc.(a) 1,933,508
52,900 Triangle Pacific Corp.(a) 1,699,415
45,600 USA Waste Services Inc.(a) 1,507,652
------------
16,987,267
------------
CONSUMER CYCLICALS - 23.5%
85,600 800-JR CIGAR Inc.(a) 2,354,000
59,892 Accustaff Inc.(a) 1,770,559
68,200 American Italian Pasta Co.(a) 1,611,225
74,600 Bally Total Fitness Holding
Corp.(a) 1,389,425
25,600 Barnett Inc.(a) 521,605
5,000 Beringer Wine Estates Holdings
Inc.(a) 162,500
27,000 Consolidated Cigar Holdings
Inc.(a) 744,188
50,938 Consolidated Stores Corp.(a) 2,476,814
88,600 Interface Inc. 2,658,000
95,000 Knoll Inc.(a) 2,861,878
94,200 Logan's Roadhouse Inc.(a) 1,677,938
27,800 Nautica Enterprises(a) 780,138
110,600 Paul Harris Stores Inc.(a) 2,336,426
113,300 Petco Animal Supplies Inc.(a) 3,342,350
109,200 Pier 1 Imports Inc. 2,443,352
159,700 Pillowtex Corp. 4,232,050
48,300 Promus Hotel Corp.(a) 2,004,450
78,050 Regal Cinemas Inc.(a) 1,990,275
45,650 Robert Half International
Inc.(a) 1,783,205
59,900 Ross Stores Inc. 2,336,100
83,000 ShoLodge Inc.(a) 1,328,000
34,850 Sonic Corp.(a) 963,819
59,800 Stage Stores Inc.(a) 2,519,076
25,900 Tiffany & Co. 987,440
89,200 Trendwest Resorts Inc.(a) 2,207,700
66,800 WestPoint Stevens Inc.(a) 2,663,654
57,600 Wet Seal Inc. Class A(a) 1,702,804
------------
51,848,971
------------
<CAPTION>
SHARES VALUE US$
- ------- ------------
<S> <C> <C>
CONSUMER STAPLES - 5.1%
63,300 Compdent Corp.(a) $ 1,289,744
70,700 Foodmaker Inc.(a) 1,095,850
40,600 Henry Schein Inc.(a) 1,431,150
80,900 International Home Foods Inc.(a) 1,941,600
23,400 Physician Sales & Service
Inc.(a) 532,350
60,100 Richfood Holdings Inc. 1,641,481
55,400 Suiza Foods Corp.(a) 3,223,587
------------
11,155,762
------------
ENERGY - 9.4%
32,600 Atwood Oceanics Inc.(a) 1,607,589
45,200 B.J. Service Co.(a) 3,245,928
60,200 Cooper Cameron Corp.(a) 3,668,443
34,400 Forcenergy Inc.(a) 1,068,550
68,700 Kuhlman Corp. 2,425,972
32,500 Ocean Energy Inc.(a) 1,817,970
53,200 Tosco Corp. 1,732,327
70,300 United Meridian Corp.(a) 2,113,393
60,200 Varco International Inc.(a) 3,081,492
------------
20,761,664
------------
FINANCIAL - 14.0%
68,900 AmerUs Life Holdings Inc. 2,239,250
134,100 BA Merchant Services Inc. Class
A(a) 2,187,509
52,800 Bank United Corp. 2,217,600
63,300 Bay View Capital Corp. 2,136,375
57,400 CMAC Investment Corp. 2,981,218
1 Charter One Financial Inc. 59
60,050 Commercial Federal Corp. 2,886,154
47,300 Cullen/Frost Bankers Inc. 2,512,818
35,200 FBL Financial Group Inc. Class A 1,390,400
35,600 Fremont General Corp. 1,637,600
136,200 Inkeepers USA Trust 2,187,716
57,400 Mutual Risk Management Ltd. 1,603,613
83,100 North Fork BanCorp Inc. 2,524,164
82,639 Patriot American Hospitality
Inc. 2,582,476
71,610 UST Corp. 1,902,142
------------
30,989,094
------------
HEALTH CARE - 7.1%
112,500 Coventry Corp.(a) 1,680,472
22,700 Express Scripts Inc. Class A(a) 1,339,300
50,800 Genzyme Corp.(a) 1,362,078
1,188 Genzyme Corp. (Tissue Repair)(a) 9,059
111,400 Haemonetics Corp.(a) 1,636,189
59,400 Health Care and Retirement
Corp.(a) 2,338,879
104,200 Invacare Corp. 2,409,635
78,500 Isis Pharmaceuticals Inc.(a) 1,162,783
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
AS OF NOVEMBER 30, 199 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE US$
- ------- ------------
<S> <C> <C>
HEALTH CARE (CONCLUDED)
62,000 Matria Healthcare Inc.(a) $ 317,752
112,300 Wesley Jessen VisionCare Inc.(a) 3,453,225
------------
15,709,372
------------
TECHNOLOGY - 6.1%
19,300 Antec Corp.(a) 294,325
51,800 EG&G Inc. 1,016,579
25,500 Evans & Sutherland Computer
Corp.(a) 790,500
55,300 Exabyte Corp.(a) 539,175
101,200 INTERSOLV(a) 1,612,880
15,400 Intergraph Corp.(a) 162,664
52,400 MAPICS Inc.(a) 582,954
22,850 Marcam Solutions Inc.(a) 205,650
39,100 MicroTouch Systems Inc.(a) 811,325
75,500 Molecular Dynamics Inc.(a) 1,519,444
56,100 Symbol Technologies Inc. 2,191,409
37,700 System Software Associates
Inc.(a) 499,525
29,400 Thomas & Betts Corp. 1,334,029
88,500 Wang Laboratories Inc.(a) 1,958,069
------------
13,518,528
------------
TRANSPORTATION/SERVICES/
MISCELLANEOUS - 11.5%
43,400 CCA Prison Realty Trust 1,546,128
167,500 CHS Electronics Inc.(a) 3,161,563
<CAPTION>
SHARES VALUE US$
- ------- ------------
<S> <C> <C>
TRANSPORTATION/SERVICES/
MISCELLANEOUS (CONCLUDED)
51,600 CNF Transportation Inc. $ 2,244,600
86,650 Comair Holdings Inc. 1,917,133
83,400 Cornell Corrections Inc.(a) 1,459,500
23,000 Galileo International Inc. 616,688
35,100 INSpire Insurance Solutions
Inc.(a) 666,900
400 ITC DeltaCom Inc.(a) 5,650
82,200 Ivex Packaging Corp.(a) 1,644,000
55,000 Jacor Communications Inc.(a) 2,406,250
10,000 Mac-Gray Corp.(a) 147,500
98,000 Manufactured Home Communities
Inc. 2,670,500
82,200 RemedyTemp Inc. Class A(a) 1,931,700
114,600 Select Appointments Holdings
Public Ltd. Co. 2,206,050
78,500 StaffMarkInc.(a) 2,737,532
------------
25,361,694
------------
Total Investments - 87.0%
(cost $170,633,649) 192,042,694
Other Assets Less
Liabilities - 13.0% 28,698,889
------------
Total Net Assets - 100.0% $220,741,583
------------
------------
</TABLE>
- ------------------
(a) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $170,633,649
Net unrealized appreciation (depreciation) 21,409,045
------------
Total Investments at value 192,042,694
Cash and Cash Equivalents (Note 2) 29,153,751
Receivable for investments sold 1,797,894
Receivable for dividends and interest 107,592
Organization costs, net of amortization (Note 2) 18,586
------------
Total Assets 223,120,517
------------
LIABILITIES:
Payable for investments purchased 2,209,562
Payable to investment adviser (Note 3) 107,361
Payable to subadministrator (Note 3) 13,420
Accrued expenses and other liabilities 48,591
------------
Total Liabilities 2,378,934
------------
Net Assets $220,741,583
------------
------------
COMPONENTS OF NET ASSETS:
Investors' capital $199,332,538
Net unrealized appreciation (depreciation) on investments 21,409,045
------------
Net Assets $220,741,583
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six
Months Ended
November 30,
1997
(Unaudited)
------------
<S> <C>
INVESTMENT INCOME:
Dividend income $ 449,403
Interest income 300,663
------------
Total Investment Income 750,066
------------
EXPENSES:
Investment advisory (Note 3) 510,390
Subadministration (Note 3) 63,799
Transfer agency (Note 3) 6,031
Custody 12,717
Accounting (Note 3) 18,000
Legal 5,892
Audit 20,700
Trustees 527
Amortization of organization costs (Note 2) 2,509
Miscellaneous 30,715
------------
Total Expenses 671,280
------------
NET INVESTMENT INCOME (LOSS) 78,786
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments sold 6,149,644
Net change in unrealized appreciation (depreciation) on investments 10,377,117
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 16,526,761
------------
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,605,547
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the For the Period
Months Ended Period August 15, 1996
November 30, 1997 Ended through
(Unaudited) May 31, 1997 October 31, 1996
----------------- ------------ ----------------
<S> <C> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $ 103,385,258 $ 28,929,477 $ --
----------------- ------------ ----------------
OPERATIONS:
Net investment income (loss) 78,786 77,349 22,137
Net realized gain (loss) on investments sold 6,149,644 2,311,789 735,049
Net change in unrealized appreciation
(depreciation) on investments 10,377,117 8,079,833 2,952,095
----------------- ------------ ----------------
Net increase (decrease) in net assets
resulting from operations 16,605,547 10,468,971 3,709,281
----------------- ------------ ----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 103,197,618 69,106,539 26,247,304
Withdrawals (2,446,840) (5,119,729) (1,027,108)
----------------- ------------ ----------------
Net increase (decrease) in net assets from
transactions in investors' beneficial
interest 100,750,778 63,986,810 25,220,196
----------------- ------------ ----------------
Net increase (decrease) in net assets 117,356,325 74,455,781 28,929,477
----------------- ------------ ----------------
NET ASSETS, END OF PERIOD $ 220,741,583 $103,385,258 $ 28,929,477
----------------- ------------ ----------------
----------------- ------------ ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the
Six Months Ended For the Period For the Period
November 30, 1997 Ended Ended
(Unaudited) May 31, 1997 October 31, 1996(a)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ratio to Average Net Assets:
Expenses including reimbursement/waiver of fees 0.79%(b) 0.85%(b) 0.85%(b)
Expenses excluding reimbursement/waiver of fees N/A 0.95%(b) 1.31%(b)
Net investment income including
reimbursement/waiver of fees 0.09%(b) 0.22%(b) 0.50%(b)
Average Commission Rate Per Share(c) $ 0.0588 $ 0.0584 $ 0.0562
Portfolio Turnover Rate 28.71% 34.45% 17.30%
</TABLE>
- ------------------
(a) For the period from August 15, 1996, commencement of operations, to October
31, 1996.
(b) Annualized.
(c) Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities on which commissions are charged.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Schroder Capital Funds ('Schroder Core') was organized as a Delaware
business trust on September 7, 1995. Schroder Core, which is registered as an
open-end, managment investment company under the Investment Company Act of
1940 (the 'Act'), currently has six investment portfolios. Included in this
report is Schroder U.S. Smaller Companies Portfolio (the 'Portfolio'), a
diversified portfolio that commenced operations on August 15, 1996. Under its
Trust Instrument, Schroder Core is authorized to issue an unlimited number of
interests without par value. Interests in the Portfolio are sold in private
placement transactions without any sales charges to qualified investors,
including open-end, management investment companies.
Effective May 31, 1997, the Portfolio changed its fiscal year end to
May 31 from October 31.
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.
CASH EQUIVALENTS
The Portfolio considers all deposits and the related interest income in
the Chase Money Market Account to be cash equivalents.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized
gain and loss from investment transactions are determined on the basis of
identified cost. Dividend income is recorded on the ex-dividend date.
Interest income is recorded on an accrual basis.
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.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
Schroder U.S. Smaller Companies Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Schroder Capital Management International Inc. ('SCMI') is the
investment adviser to the Portfolio. Pursuant to an Investment Advisory
Agreement, SCMI is entitled to receive an annual fee, payable monthly, of
0.60% of the average daily net assets of the Portfolio.
ADMINISTRATION
On behalf of the Portfolio, the Trust has entered into an
Administration Agreement with Schroder Fund Advisors Inc. In addition, the
Trust has entered into a Subadministration Agreement with Forum
Administrative Services, LLC ('Forum') under which Forum is entitled to
receive an annual fee, payable monthly, at the rate of 0.075% of the average
daily net assets of the Portfolio. Previous subadministration agreements in
effect with Forum Financial Services, Inc. during the period were identical
in all material terms including fees.
TRANSFER AGENT
Forum Financial Corp.(Registered) ('FFC') serves as the Portfolio's
transfer agent and is entitled to receive compensation for those services
from the Schroder Core with respect to the Portfolio in the amount of $12,000
per year plus certain other fees and expenses.
OTHER SERVICE PROVIDERS
FFC also performs portfolio accounting for the Portfolio and is
entitled to receive compensation for those services in the amount of $36,000
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
November 30, 1997 aggregated $123,264,025 and $42,983,853, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of November 30, 1997 was $170,633,649 and the net unrealized
appreciation of investment securities was $21,409,045. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost was $30,283,741, and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value was $8,874,696.
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.
- --------------------------------------------------------------------------------
19
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
TRUSTEES
Hermann C. Schwab
Peter E. Guernsey
John I. Howell
Clarence F. Michalis
Mark J. Smith
David N. Dinkins
Peter S. Knight
Sharon L. Haugh
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 P. 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
Fergal Cassidy
Treasurer
<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
Chase MetroTech Center
Brooklyn, New York 11245
TRANSFER AND DIVIDEND
DISBURSING AGENT
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
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.
Smaller Companies Fund. Its use in connection with any offering of the Fund's
shares is authorized only in case of a concurrent or prior delivery of the
Fund's current prospectus.
SCHRODERS
Schroder
U.S. Smaller
Companies
Fund
SEMI-ANNUAL REPORT
November 30, 1997
(Unaudited)
Schroder Capital Funds (Delaware)
