<PAGE>
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Schroder International Fund
- --------------------------------------------------------------------------------
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 investment objective of the Fund is long-term capital appreciation through
investment in securities markets outside the United States.
INVESTMENT ADVISER
Schroder Capital Management International Inc. (the 'Investment Adviser') is a
wholly owned indirect subsidiary of Schroders plc, a 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 December 31, 1997, the Schroder Group had over $175
billion in assets under management. As of March 31, 1998, the Investment
Adviser, together with its U.K. affiliate, Schroder Capital Management
International Ltd., had over $29 billion under management.
June 15, 1998
Dear Shareholder:
For the six-month period ended April 30, 1998, the Schroder International
Fund rose 15.5%, as markets rebounded from the Asian crisis in October 1997.
This performance was in line with the Fund's benchmark, the Morgan Stanley
Capital International ('MSCI') EAFE(Registered) Index, which also returned 15.5%
over the same period, although below the Lipper International Universe average
return of 17.2%, among its international peers.
The Fund entered the six-month period with a defensive stance due to
concerns over extended valuations and the fallout from the Asian crisis. As
Asian markets stabilized, market sentiment in western markets improved and
equities benefited accordingly. During January and February 1998, the Fund's
cash position was reduced and positions in continental Europe were increased.
The continental European positions clearly delivered the most value-added.
Within the region, the Fund's investments in the Mediterranean markets of Italy,
Spain and Portugal were particularly rewarding, as these markets rose as a
result of their economies having met the entry criteria for joining the European
Economic and Monetary Union.
During the period, the Fund's modest exposure to emerging markets, which
generally lagged the developed markets over the past six months, was a positive
contribution to absolute returns. The Fund's holdings in Japan continued to
disappoint relative to those in Europe. In developed Asian markets, the Fund
benefited from having no exposure in Hong Kong, a market which performed poorly.
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<PAGE>
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Schroder International Fund
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With regard to stock selection, management kept pace with continental
Europe's strong bull run. The European financial sector, which is benefiting
from consolidation, and the utility sector, which is benefiting from
restructuring and low interest rates, both added value. In the U.K., the Fund
trailed the market performance, due to a lack of exposure in the pharmaceutical
sector. The Fund's core holdings in the mid-cap and industrial sectors hurt
performance early in the quarter, but the market upturn broadened out to include
these stocks in March. In Japan, exposure to small capitalization companies
outperformed the market, as did holdings in the domestic sectors. Management's
underweighting of Japanese bank stocks also helped performance.
Thank you for your interest in the Schroder International Fund.
Sincerely,
Mark J. Smith
-------------
Mark J. Smith
President
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2
<PAGE>
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Schroder International Fund
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MANAGEMENT DISCUSSION AND ANALYSIS (As of April 30, 1998)(unaudited)
Q: How does management anticipate European Economic and Monetary Union (EMU)
convergence will affect the participating countries?
A: Management believes the EMU project will have a beneficial effect for equity
investors in Europe from both a top-down and bottom-up perspective. From the
top-down view, which drives country and currency decisions, the impact of EMU
has already been partly discounted by markets. EMU has resulted in inflation and
bond yield convergence across the participating members. As a result, there has
been what may be a once-in-a-lifetime decline in bond yields in the peripheral
European markets such as Finland, Ireland, Spain, Italy and Portugal. This
decline has in turn prompted an asset allocation shift among Europeans away from
bonds and towards equity investments, particularly in the Southern European
markets. This drop in interest rates has driven the outperformance of the
smaller European markets in 1998.
From the bottom-up perspective, the EMU will further reduce trade barriers in
the region. Companies are now under pressure to become more competitive and
efficient. Over the past couple of years, numerous European companies have
restructured and streamlined. Shareholders clearly benefit from these trends.
The EMU has also sparked an interest in mergers, particularly in the financial
and pharmaceutical sectors, to capture economies of scale and to capture market
share across national boundaries.
Q: In Japan, export demand has been low and Asia's recovery from the crisis last
Fall has been slow. What is Fund management's outlook on Japan?
A: From a purely domestic perspective, management believes Japanese equities
offer interesting value, particularly since the alternative fixed income assets
in Japan have such low yields. The 10-year long bond in Japan offered a yield of
1.3%, the lowest yield quoted this century across the world. From a foreign
investor's perspective, the value is less compelling, since alternative
investments are not Japanese fixed income instruments, but equity and bond
assets in other regions. Clearly Japan's economic cycle and profit outlook is
discouraging for international investors, who can find better cyclical and
profit environments in other areas such as Europe. The Japanese government has
announced several stimulus packages in recent months to jump-start the economy.
Management believes that these packages are positive, but not positive enough to
ensure a self-sustaining expansion in Japan. As a result, management has been
scaling back investments in Japan in the past year, focusing on high-quality
companies with visible earnings growth primarily in the efficient exporting
sector.
Q: What is the Fund's position in emerging markets?
A: Over the past twelve months, and particularly in the second half of 1997,
management reduced the Fund's exposure in emerging markets. Asian emerging
markets were clearly vulnerable to the currency and interest rate turmoil that
engulfed the region. Management completely moved out of Indonesia and the
Philippines, and reduced positions in Thailand while maintaining a positive view
on Korea, which we believe will be among the first economies in the region to
turn from recession to recovery. In Korea, unlike the other Asian emerging
markets, it is easy to find exporting companies that will benefit from a
weak-currency production base.
The Fund moved out of the leading Latin American markets of Mexico, Brazil and
Argentina. These markets are dependent on capital inflow from foreign investors,
particularly westerners. Management believes that in the current environment,
western investors are less likely to invest in the emerging markets,
particularly since their home markets (the U.S., the U.K. and continental
Europe) have been so profitable.
The views expressed in this report were those of the Fund's portfolio managers
as of April 30, 1998, 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 investments
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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3
<PAGE>
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Schroder International Fund
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PORTFOLIO CHARACTERISTICS AS OF APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY WEIGHTINGS
COUNTRY % OF NET ASSETS MSCI EAFE INDEX
- ----------------------------------------------------------
<S> <C> <C>
Australia 2.38% 2.50%
Austria 0.94% 0.40%
Belgium 1.61% 1.50%
Chile 0.74% 0.00%
Denmark 1.04% 1.00%
France 11.22% 8.80%
Germany 7.69% 10.30%
Italy 3.94% 4.70%
Japan 16.00% 22.00%
Korea, Republic of 0.86% 0.00%
Malaysia 0.33% 0.80%
Netherlands 12.01% 5.80%
Portugal 1.99% 0.70%
Singapore 1.81% 0.80%
Spain 2.77% 3.40%
Sweden 3.32% 3.20%
Switzerland 8.37% 7.80%
United Kingdom 16.21% 21.70%
Cash & Other Net
Assets 6.77% 0.00%
--------------- ---------------
Total 100.0%
---------------
---------------
<CAPTION>
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- ----------------------------------------------------------
<S> <C>
Capital Equipment 17.07%
Consumer Durables 5.82%
Consumer Non-Durables 7.35%
Energy 8.56%
Finance 22.54%
Materials 6.02%
Multi-Industry 3.50%
Services 18.90%
Telecommunications 3.47%
Cash & Cash Equivalents 6.77%
---------------
Total 100.0%
---------------
---------------
<CAPTION>
TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
- ----------------------------------------------------------
<S> <C>
Internationale Nederlanden Group NV (Net) 4.29%
Novartis (Swtz) 3.26%
Philips Electronics NV (Net) 2.75%
Telecom Italia SpA (Ita) 2.09%
Heineken NV (Net) 1.90%
Banca di Roma (Ita) 1.84%
Accor SA (Fra) 1.60%
Societe Generale (Fra) 1.58%
Zurich Versicherungs (Swtz) 1.57%
Endesa SA (Spa) 1.56%
---------------
Total 22.44%
---------------
---------------
</TABLE>
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4
<PAGE>
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Schroder International Fund
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Notes 1 and 2):
Investment in International Equity Fund (the 'Portfolio') $185,824,077
Receivable for Fund shares sold 2,801,226
------------
Total Assets 188,625,303
------------
LIABILITIES:
Payable for Fund shares redeemed 125,231
Payable to administrator (Note 3) 6,183
Payable to subadministrator (Note 3) 7,697
Accrued expenses and other liabilities 35,632
------------
Total Liabilities 174,743
------------
Net Assets $188,450,560
------------
------------
COMPONENTS OF NET ASSETS:
Paid-in capital $135,746,519
Undistributed net investment income (loss) 453,266
Accumulated net realized gain (loss) 6,597,967
Net unrealized appreciation (depreciation) on investments 45,652,808
------------
Net Assets $188,450,560
------------
------------
NET ASSETS BY CLASS:
Investor Class 188,446,660
Advisor Class 3,900
------------
Net Assets $188,450,560
------------
------------
SHARES OF BENEFICIAL INTEREST:
Investor Class 9,907,267
Advisor Class 205
NET ASSET VALUE OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY SHARES OF BENEFICIAL INTEREST):
Investor Class $19.02
Advisor Class $19.02
</TABLE>
The accompanying notes are an integral part of the financial statements.
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5
<PAGE>
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Schroder International Fund
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STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
Ended April
30, 1998
(unaudited)
--------------
<S> <C>
NET INVESTMENT INCOME ALLOCATED FROM THE PORTFOLIO:
Dividend income (net of foreign withholding taxes of $187,692) $ 1,038,431
Interest income 527,118
Net expenses (672,149)
--------------
Net Investment Income Allocated from the Portfolio 893,400
--------------
EXPENSES:
Administration (Note 3) 134,512
Subadministration (Note 3) 44,837
Transfer agency (Note 3) 19,092
Accounting (Note 3) 6,000
Legal 6,391
Audit 7,145
Registration 23,029
Reporting 3,757
Trustees 4,184
Miscellaneous 13,962
--------------
Total expenses 262,909
Fee waived (Note 4) (47,688)
--------------
Net expenses 215,221
--------------
NET INVESTMENT INCOME (LOSS) 678,179
--------------
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 5,805,337
Net realized gain (loss) on forward foreign currency contracts and foreign
currency transactions 880,908
--------------
Net realized gain (loss) on investments, forward foreign
currency contracts and foreign currency transactions 6,686,245
--------------
Net change in unrealized appreciation (depreciation) on investments 18,321,269
Net change in unrealized appreciation (depreciation) on forward foreign
currency contracts and foreign currency transactions (77,640)
--------------
Net change in unrealized (depreciation) appreciation on
investments, forward foreign currency contracts and
foreign currency transactions 18,243,629
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS ALLOCATED FROM THE PORTFOLIO 24,929,874
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 25,608,053
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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6
<PAGE>
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Schroder International Fund
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
Period Ended For the Year
April 30, 1998 Ended
(unaudited) October 31, 1997
-------------- ----------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $ 191,219,133 $202,735,202
-------------- ----------------
OPERATIONS:
Net investment income (loss) 678,179 1,318,131
Net realized gain (loss) on investments sold 6,686,245 17,315,084
Net change in unrealized appreciation (depreciation) on investments 18,243,629 (3,581,079)
-------------- ----------------
Net increase (decrease) in net assets resulting from operations 25,608,053 15,052,136
-------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income-Investor Class (3,140,556) (4,570,768)
Net realized gain on investments-Investor Class (15,603,343) (26,130,027)
-------------- ----------------
Total distributions to shareholders (18,743,899) (30,700,795)
-------------- ----------------
CAPITAL TRANSACTIONS IN DOLLARS:
Sale of shares-Investor Class 37,535,652 67,836,994
Sale of shares-Advisor Class 3,500 --
Reinvestment of distributions-Investor Class 12,794,795 17,731,934
Redemption of shares-Investor Class (59,966,674) (81,436,338)
-------------- ----------------
Net increase (decrease) from capital share transactions (9,632,727) 4,132,590
-------------- ----------------
Net increase (decrease) in net assets (2,768,573) (11,516,069)
-------------- ----------------
NET ASSETS, END OF PERIOD (INCLUDING LINE A) $ 188,450,560 $191,219,133
-------------- ----------------
-------------- ----------------
(A) Accumulated undistributed net investment income (loss) $ 453,266 $ 2,915,645
-------------- ----------------
-------------- ----------------
CAPITAL TRANSACTIONS IN SHARES:
Sale of shares-Investor Class 2,138,583 3,607,984
Sale of shares-Advisor Class 205 --
Reinvestment of distributions-Investor Class 788,008 1,033,932
Redemption of shares-Investor Class (3,430,116) (4,365,136)
-------------- ----------------
Net increase (decrease) in shares (503,320) 276,780
-------------- ----------------
-------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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7
<PAGE>
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Schroder International Fund
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FINANCIAL HIGHLIGHTS - INVESTOR SHARES
Selected per share data and ratios for an Investor share outstanding
throughout each period:
<TABLE>
<CAPTION>
For the
Six Months Ended For the Year Ended October 31,
April 30, 1998 ------------------------------------------------------
(unaudited) 1997 1996 (a) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 18.37 $ 20.01 $ 20.91 $ 23.17 $ 20.38 $ 15.15
-------- -------- -------- -------- -------- --------
Investment Operations:
Net Investment Income (Loss) 0.06 0.14(b) 0.15(b) 0.46 0.18 0.08
Net Realized and Unrealized
Gain (Loss) on Investments 2.43 1.31 1.74 (0.18) 2.69 5.27
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 2.49 1.45 1.89 0.28 2.87 5.35
-------- -------- -------- -------- -------- --------
Distributions From:
Net Investment Income (0.29) (0.46) (0.47) -- (0.08) (0.12)
Net Realized Gain on
Investments (1.55) (2.63) (2.32) (2.54) -- --
-------- -------- -------- -------- -------- --------
Total Distributions (1.84) (3.09) (2.79) (2.54) (0.08) (0.12)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 19.02 $ 18.37 $ 20.01 $ 20.91 $ 23.17 $ 20.38
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total Return (c) 15.48% 8.33% 10.05% 2.08% 14.10% 35.54%
Ratio/Supplementary Data
Net Assets at End of Period (in
thousands) $188,447 $191,219 $202,735 $212,330 $500,504 $320,550
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver 0.99%(b)(d) 0.99%(b) 0.99%(b) 0.91% 0.90% 0.91%
Expenses excluding
reimbursement/waiver 1.05%(b)(d) 1.06%(b) 1.04%(b) N/A N/A N/A
Net investment income (loss)
including
reimbursement/waiver 0.76%(b)(d) 0.67%(b) 0.86%(b) 0.99% 0.94% 0.87%
Average Commission Rate Per
Share (e) $ 0.0244 $ 0.0280 $ 0.0256 N/A N/A N/A
Portfolio Turnover Rate (f) 20.25% 36.22% 56.20% 61.26% 25.17% 56.05%
</TABLE>
- ------------------
(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. At that time, all outstanding shares of the Fund were
designated as Investor Shares.
(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) Annualized.
(e) For the fiscal years 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.
(f) 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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8
<PAGE>
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Schroder International Fund
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FINANCIAL HIGHLIGHTS--ADVISOR SHARES
Selected per share data and ratios for an Advisor share outstanding
throughout the period:
<TABLE>
<CAPTION>
For the Period
Ended
April 30, 1998
(unaudited)(a)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.35
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.04(b)
Net Realized and Unrealized Gain (Loss) on Investments 2.63
--------------
Total from Investment Operations 2.67
--------------
DISTRIBUTIONS FROM
Net Investment Income --
Net Realized Gain on Investments --
--------------
Total Distributions --
--------------
NET ASSET VALUE, END OF PERIOD $ 19.02
--------------
--------------
Total Return (c) 16.33%
Ratio/Supplementary Data
NET ASSETS AT END OF PERIOD (IN THOUSANDS) $ 4
Ratios to Average Net Assets:
Expenses including reimbursement/waiver 1.24%(b)(d)
Expenses excluding reimbursement/waiver 673.02%(b)(d)
Net investment income (loss) including reimbursement/waiver 1.74%(b)(d)
Average Commission Rate Per Share (e) $ 0.0244
Portfolio Turnover Rate (f) 20.25%
</TABLE>
- ------------------
(a) Advisor Class shares were first issued on January 21, 1998.
(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) Annualized.
(e) 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.
(f) 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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9
<PAGE>
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Schroder International Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (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 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, 1998, both Investor Shares and Advisor Shares had been
issued.
MASTER-FEEDER ARRANGEMENT
Effective November 1, 1996, the Fund seeks to achieve its investment
objective by investing all of its investable assets in International Equity
Fund (the 'Portfolio'), a separate diversified 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's income,
expenses and realized and unrealized gain and loss daily. The Portfolio's
financial statements 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
approximately 89.01% of the interests in the Portfolio, and is deemed, for
purposes of the Act, to control 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.
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 a fund.
- --------------------------------------------------------------------------------
10
<PAGE>
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Schroder International Fund
- --------------------------------------------------------------------------------
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 of its funds. Expenses that are directly attributable to
more than one fund are allocated among the respective funds.
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.
ADMINISTRATOR AND SUBADMINISTRATOR
The Trust, on behalf of the Fund, entered into Administration and
Subadministration Agreements with Schroder Fund Advisors Inc. ('Schroder
Advisors') and Forum Administrative Services, LLC ('FAdS'). For its services,
Schroder Advisors is entitled to receive compensation at an annual rate,
payable monthly, of 0.15% of average daily net assets of the Fund. For its
services, FAdS is entitled to receive compensation at an annual rate, payable
monthly, of 0.05% of average daily net assets of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The transfer agent and dividend disbursing agent for the Fund is Forum
Shareholder Services, LLC ('FSS'). The transfer agent is paid a transfer
agent fee in the amount of $12,000 per year, plus certain other charges.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ('FAcS') is the Fund's fund accountant.
For its services to the Fund, FAcS 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 chargeable to
Investor and Advisor Shares, including indirect expenses borne by the Fund as
a result of investing in the Portfolio, would not exceed an annual rate of
0.99% and 1.24%, respectively, of the Fund's average daily net assets
attributable to Investor and Advisor shares, respectively. The expense
limitation cannot be modified or withdrawn except by a majority vote of the
Trustees of the Trust who are not affiliated persons (as defined in the Act)
of the Trust. FAdS, FSS and FAcS may waive voluntarily all or a portion of
their fees, from time to time. For the six months ended April 30, 1998,
Schroder Advisors waived and reimbursed fees of $42,280 and $5,408,
respectively.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
STOCKS AND WARRANTS - 93.2%
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
AUSTRALIA - 2.4%
COMMON STOCK
198,500 Australia & New Zealand
Banking Group Ltd.
Finance $ 1,385,152
74,600 Brambles Industries Ltd.
Materials 1,537,427
118,035 Broken Hill Proprietary Co.
Ltd.
Multi-Industry 1,154,339
86,000 Telstra Corp.
Services 201,852
108,000 Woodside Petroleum Ltd.
Energy 706,246
------------
4,985,016
------------
AUSTRIA - 1.0%
PREFERRED STOCK
13,890 Bank Austria AG
Finance 1,079,909
11,440 Bank Austria AG (a)
Finance 884,174
------------
1,964,083
------------
BELGIUM - 1.6%
COMMON STOCK
3,300 B.M.T. NV
Materials 712,878
27,340 IPSO-Industrial Laundry Group
N.V.
Capital Equipment 1,698,000
36,000 Xeikon N.V. (a)
Services 963,000
------------
3,373,878
------------
CHILE - 0.7%
COMMON STOCK
61,950 Compania de Telecomunicacion
de Chile SA ADR
Services 1,552,622
------------
DENMARK - 1.0%
COMMON STOCK
40,300 International Service
System A/S
Services 2,178,951
------------
FRANCE - 11.2%
COMMON STOCK
12,290 Accor SA
Services 3,347,288
8,790 Canal Plus
Services 1,526,397
20,740 Compagnie Financiere de
Paribas
Finance 2,205,723
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
FRANCE (CONCLUDED)
14,219 Compagnie Generale des Eaux
Energy $ 2,641,637
20,200 Elf Aquitaine
Energy 2,648,444
10,020 Groupe Danone
Consumer Non-Durables 2,364,386
9,300 Legrand SA
Capital Equipment 2,457,210
30,037 Michelin (Cie Gle Des Etabl.)
Capital Equipment 1,891,226
12,120 Primagaz (Cie Des Gaz Petrole)
Energy 1,045,280
15,914 Societe Generale
Finance 3,310,899
WARRANTS
14,156 Compagnie Generale de Eaux (a)
Multi-Industry 20,583
1,256 Primagaz (Cie Des Gaz Petrole)
(a)
Energy 15,007
------------
23,474,080
------------
GERMANY - 7.7%
COMMON STOCK
6,280 Allianz AG
Finance 1,931,770
40,210 Bayer AG
Materials 1,788,107
28,900 Deutsche Bank AG
Finance 2,224,068
3,400 Mannesmann AG
Capital Equipment 2,698,022
74,770 Tarkett AG
Materials 2,583,304
29,505 Veba AG
Multi-Industry 1,950,010
62 Wella AG
Consumer Non-Durables 53,207
PREFERRED STOCK
5,710 SAP AG
Services 2,847,840
------------
16,076,328
------------
ITALY - 4.0%
COMMON STOCK
2,094,130 Banca di Roma (a)
Finance 3,858,649
585,385 Telecom Italia SpA
Energy 4,377,297
------------
8,235,946
------------
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
JAPAN - 16.0%
COMMON STOCK
106,000 Amada Metrecs Co. Ltd.
Capital Equipment $ 619,328
61,000 Arcland Sakamoto
Services 337,017
19,000 Asahi Bank Ltd.
Finance 72,837
64,000 Bridgestone Corp.
Materials 1,464,930
21,100 Credit Saison Co., Ltd.
Finance 458,314
60,000 Dai-Dan Co., Ltd.
Capital Equipment 374,631
321,000 Dai-Tokyo Fire & Marine
Insurance Co.
Finance 1,178,272
138,000 Daiwa House Industry Co., Ltd.
Capital Equipment 1,117,536
168,000 Daiwa Securities Co., Ltd.
Finance 635,738
211 East Japan Railway Co.
Services 1,054,392
38,000 Fuji Photo Film Co.
Capital Equipment 1,354,575
29,000 Glory Ltd.
Capital Equipment 487,248
264,000 Hanshin Electric Railway
Services 817,195
189,000 Hitachi Ltd.
Capital Equipment 1,357,459
24,000 Ito-Yokado Co. Ltd.
Services 1,244,532
92,000 Japan Airport Terminal Co.
Services 577,917
655,000 Kobe Steel Ltd.
Materials 515,553
7,400 Kyocera Corp.
Capital Equipment 388,678
7,300 Mabuchi Motor Co.
Capital Equipment 423,204
106,000 Matsushita Electric Industrial
Co., Ltd.
Consumer Durables 1,701,785
18,000 Meiko Shokai
Capital Equipment 217,967
130,000 Mitsubishi Corp.
Services 983,879
240,000 Mitsubishi Electric Corp.
Capital Equipment 617,574
150,000 Mitsui & Co., Ltd.
Multi-Industry 930,901
53,000 Mitsui Fudosan Co., Ltd.
Finance 484,553
44,000 Murata Manufacturing Co., Ltd.
Capital Equipment 1,292,060
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
JAPAN (CONCLUDED)
26,000 Nagaileben Co., Ltd.
Consumer Durables $ 491,940
159,000 Oji Paper Co., Ltd.
Materials 746,083
76,000 Omron Corp.
Services 1,194,161
10,800 SMC Corp.
Capital Equipment 901,688
11,000 Secom
Services 649,360
85,000 Showa Shell Sekiyu
Energy 431,014
13,000 Sony Corp
Capital Equipment 1,083,251
64,000 Takeda Chemical Inds.
Consumer Durables 1,834,948
190,000 Teijin Ltd.
Materials 543,556
10,200 Toho Co.
Services 1,072,263
104,000 Tokio Marine & Fire Insurance
Co.
Finance 1,133,429
124,000 Toppan Printing Co., Ltd.
Services 1,476,213
40,000 Toyota Motor Corp.
Capital Equipment 1,047,739
------------
33,313,720
------------
KOREA, REPUBLIC OF - 0.8%
COMMON STOCK
42,000 Daewoo Heavy Industries
Capital Equipment 207,722
32,000 Korea Electric Power Corp.
Energy 435,765
52,000 LG Electronics
Capital Equipment 618,631
9 SK Telecom Co. Ltd.
Services 5,375
8,300 Samsung Electronics Co.
Capital Equipment 459,559
RIGHTS
660 Samsung Electronics Co. (a)
Capital Equipment 12,741
------------
1,739,793
------------
MALAYSIA - 0.3%
COMMON STOCK
74,000 Petronas Gas Berhad
Energy 178,075
58,000 Tanjong PLC
Finance 131,818
193,000 Tenaga Nasional Berhad
Energy 384,452
------------
694,345
------------
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
NETHERLANDS - 12.0%
COMMON STOCK
123,000 Elsevier NV
Services $ 1,856,719
55,410 Gucci Group NV-NY Shares
Consumer Non-Durables 2,580,029
17,100 Heineken NV
Consumer Non-Durables 3,965,880
137,989 Internationale Nederlanden
Group NV
Finance 8,967,065
13,010 Oce-Van Der Grinten NV
Capital Equipment 1,963,852
65,190 Philips Electronics NV
Capital Equipment 5,743,044
PREFERRED STOCK
4,800 Internationale Nederlanden
Group NV
Finance 23,519
------------
25,100,108
------------
PORTUGAL - 2.0%
COMMON STOCK
49,720 Portugal Telecom (a)
Services 2,671,822
50,665 Semapa - Sociedade de
Investimento e Gestao SGPS
SA
Materials 1,481,802
------------
4,153,624
------------
SINGAPORE - 1.8%
COMMON STOCK
194,000 City Developments Ltd.
Finance 839,218
143,975 Development Bank of Singapore
Ltd. (a)
Finance 954,681
143,000 Keppel Corp. Ltd.
Services 384,704
89,996 Singapore Press Holdings Ltd.
Services 994,587
126,000 United Overseas Bank Ltd.
Finance 596,779
------------
3,769,969
------------
SPAIN - 2.8%
COMMON STOCK
23,200 Banco Popular Espanol SA
Finance 1,902,700
35,800 Centros Comerciales Pryca SA
Services 630,667
134,430 Endesa S.A.
Energy 3,263,399
------------
5,796,766
------------
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
SWEDEN - 3.3%
COMMON STOCK
79,400 Atlas Copco AB
Capital Equipment $ 2,339,277
47,340 Svenska Handelsbanken (a)
Finance 2,147,147
46,790 Telefonaktiebolaget LM
Ericsson 'B' Shares
Services 2,466,832
------------
6,953,256
------------
SWITZERLAND - 8.4%
COMMON STOCK
1,600 Asea Brown Boveri Ltd.
Capital Equipment 2,624,176
4,370 Adecco SA
Multi-Industry 1,908,361
4,123 Novartis
Consumer Durables 6,817,147
198 Roche Holding AG
Consumer Non-Durables 2,007,194
5,250 The Selectra Group (a)
Consumer Non-Durables 882,059
5,380 Zurich
Versicherungs-Gesellschaft
Finance 3,278,432
------------
17,517,369
------------
UNITED KINGDOM - 16.2%
COMMON STOCK
189,530 Airtours plc
Services 1,659,695
104,190 Allied Domecq plc
Consumer Non-Durables 1,071,340
202,690 Asda Group plc
Services 678,627
26,200 Barclays plc
Finance 755,643
90,771 Blue Circle Industries plc
Materials 539,148
128,210 British Airways plc
Services 1,335,476
98,900 British Energy plc
Energy 901,195
121,050 British Land Co. plc
Finance 1,511,860
100,000 British Sky Broadcasting Group
plc
Services 727,303
112,140 Cable & Wireless plc
Services 1,284,332
81,700 Cadbury Schweppes plc
Consumer Non-Durables 1,191,145
381,000 David S. Smith Holdings plc
Services 1,433,289
58,000 De La Rue plc
Services 277,829
</TABLE>
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
AS OF APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
UNITED KINGDOM (CONCLUDED)
123,130 EMI Group plc
Consumer Non-Durables $ 1,250,652
95,453 Enterprise Oil plc
Energy 879,361
29,300 HSBC Holdings plc
Finance 924,412
50,200 Johnson Matthey plc
Capital Equipment 508,631
64,470 Kingfisher plc
Services 1,170,614
259,180 LASMO plc (a)
Energy 1,138,598
100,276 Lloyds TSB Group plc
Finance 1,501,374
214,440 Lucas Varity plc
Capital Equipment 958,186
312,400 MFI Furniture plc
Services 475,312
9,490 National Westminster Bank plc
Finance 189,927
268,990 Pilkington Brothers plc
Materials 564,425
91,455 Prudential Corp. plc
Finance 1,295,141
129,760 Rank Group plc
Services 839,610
166,700 Rolls-Royce plc
Capital Equipment 778,100
85,349 Standard Chartered plc
Finance 1,307,127
70,255 Tesco plc
Services 657,796
<CAPTION>
SHARES VALUE US$
- --------- ------------
<S> <C> <C>
UNITED KINGDOM (CONCLUDED)
91,150 Tibbett and Britten Group plc
Services $ 847,340
101,422 United News & Media plc
Services 1,375,242
159,550 Vodafone Group plc
Services 1,747,282
109,970 Williams Holdings plc
Multi-Industry 843,940
25,100 Zeneca Group plc
Consumer Durables 1,081,050
------------
33,701,002
------------
Total Stocks and Warrants
(cost $145,280,836) 194,580,856
REPURCHASE AGREEMENTS - 4.8%
Chase Securities, Inc., 5.45%,
5/1/98, to be repurchased at
$10,001,514. Collateralized
by $6,415,000 U.S. Treasury
Bonds, 14.00%, 11/15/11. 10,000,000
------------
Total Investments - 98.0%
(cost $155,280,836) 204,580,856
Other Assets Less
Liabilities - 2.0% 4,181,846
------------
Total Net Assets - 100.0% $208,762,702
------------
------------
</TABLE>
- ------------------
(a) Non-income producing security.
ADR - American Depositary Receipts
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $145,280,836
Repurchase agreements at cost 10,000,000
Net unrealized appreciation (depreciation) 49,300,020
------------
Total investments at value 204,580,856
Cash 4,438,800
Net receivable for forward foreign currency contracts 251,073
Receivable for dividends, tax reclaims and interest 651,429
Receivable for investments sold 1,137,352
Organization costs, net of amortization (Note 2) 6,183
------------
Total assets 211,065,693
------------
LIABILITIES:
Payable for investments purchased 2,151,166
Payable to investment adviser (Note 3) 74,990
Payable to administrator (Note 3) 12,988
Payable to subadministrator (Note 3) 12,988
Accrued fees and other liabilities 50,859
------------
Total liabilities 2,302,991
------------
Net Assets $208,762,702
------------
------------
COMPONENTS OF NET ASSETS:
Investors' capital $159,174,667
Net unrealized appreciation (depreciation) on investments 49,588,035
------------
Net Assets $208,762,702
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
Ended
April 30, 1998
(unaudited)
--------------
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $211,555) $ 1,170,484
Interest Income 590,686
--------------
Total investment income 1,761,170
--------------
EXPENSES:
Investment advisory (Note 3) 453,251
Administration (Note 3) 75,524
Subadministration (Note 3) 75,524
Transfer agency (Note 3) 6,178
Custody 59,886
Accounting (Note 3) 36,000
Legal 7,474
Audit 19,336
Amortization of organization costs (Note 2) 1,237
Trustees 4,578
Pricing 10,775
Miscellaneous 17,716
--------------
Total expenses 767,479
Fees waived (Note 6) (13,187)
--------------
Net expenses 754,292
--------------
NET INVESTMENT INCOME (LOSS) 1,006,878
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments sold 5,172,138
Net realized gain (loss) on forward foreign currency contracts and foreign
currency transactions 914,495
--------------
Net realized gain (loss) on investments, forward foreign
currency contracts and foreign currency transactions 6,086,633
--------------
Net change in unrealized appreciation (depreciation) on investments 22,193,836
Net change in unrealized appreciation (depreciation) on forward foreign currency
contracts and foreign currency transactions (11,584)
--------------
Net change in unrealized appreciation (depreciation) on
investments, forward foreign currency contracts and
foreign currency transactions 22,182,252
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS 28,268,885
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,275,763
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended
April 30, 1998 October 31,
(unaudited) 1997
-------------------- ------------------
<S> <C> <C>
NET ASSETS, BEGINNING OF PERIOD $211,683,857 $202,743,299
-------------------- ------------------
OPERATIONS:
Net investment income (loss) 1,006,878 1,793,152
Net realized gain (loss) on investments sold 6,086,633 17,268,916
Net change in unrealized appreciation (depreciation) on
investments 22,182,252 (3,584,475)
-------------------- ------------------
Net increase (decrease) in net assets resulting from operations 29,275,763 15,477,593
-------------------- ------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 21,783,475 70,336,827
Withdrawals (53,980,393) (76,873,862)
-------------------- ------------------
Net transactions from investors' beneficial interest (32,196,918) (6,537,035)
-------------------- ------------------
Net increase (decrease) in net assets (2,921,155) 8,940,558
-------------------- ------------------
NET ASSETS, END OF PERIOD $208,762,702 $211,683,857
-------------------- ------------------
-------------------- ------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended October 31,
April 30, 1998 ------------------------------
(unaudited) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ratio to Average Net Assets:
Expenses including reimbursement/waiver 0.75% (a) 0.75% 0.75%
Expenses excluding reimbursement/waiver 0.76% (a) 0.77% 0.75%
Net investment income including reimbursement/waiver 1.00% (a) 0.90% 1.10%
Average Commission Rate Per Share (b) $ 0.0244 $ 0.0280 $ 0.0256
Portfolio Turnover Rate 20.25% 36.22% 56.20%
</TABLE>
- ------------------
(A) Annualized.
(B) 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.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (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, currently has eight 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 qualified investors, 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 preceding 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, generally are valued at the most recent
reported mid-market price. Domestic short-term investments having a maturity
of 60 days or less are valued at amortized cost, which approximates market
value. Foreign short-term investments are valued at the current market price,
then marked to market to recognize any gain or loss on the transaction. 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 Schroder Core's Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date except that certain dividends from
foreign securities where the ex-dividend date may have passed are recorded as
soon as the Portfolio is informed of the ex-dividend date. Dividend income is
recorded net of unrecoverable withholding tax. 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 on the date of the
transactions. There were no fair valued securities as of April 30, 1998.
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.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Portfolio may enter into forward contracts to purchase or sell
foreign currencies to protect the U.S. dollar value of the underlying
portfolio against the effect of possible adverse movements in foreign
exchange rates. Risks associated with such contracts include the movement in
value of the foreign currency relative to the U.S. dollar and the ability of
the counterparty to perform. Fluctuations in the value of such contracts are
recorded daily as unrealized gain or loss; realized gain or loss includes 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.
EXPENSE ALLOCATION
Schroder Core accounts separately for the assets and liabilities and
operation of each of its portfolios. Expenses that are directly attributable
to more than one portfolio are allocated among the respective portfolios.
ORGANIZATIONAL COSTS
Costs incurred by the Portfolio in connection with its organization are
amortized on a straight line basis over a five-year period.
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
0.45% of the average daily net assets of the Portfolio.
ADMINISTRATOR AND SUBADMINISTRATOR
Schroder Core, on behalf of the Portfolio, has entered into
Administration and Subadministration Agreements with Schroder Fund Advisors
Inc. ('Schroder Advisors') and Forum Administrative Services, LLC ('FAdS'),
respectively. Pursuant to their agreements, Schroder Advisors and FAdS
provide certain management and administrative services to the Portfolio. For
their services, each of Schroder Advisors and FAdS is entitled to receive an
annual fee, payable monthly, of 0.075% of the Portfolio's average daily net
assets, subject to an annual minimum of $25,000 payable to FAdS for
subadministration services.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ('FAcS') performs portfolio accounting
for the Portfolio and is entitled to receive compensation for those services
in the amount of $60,000 per year, plus certain amounts based upon the number
and types of portfolio transactions. FAcS also serves as the Portfolio's
transfer agent and is entitled to compensation for those services from
Schroder Core with respect to the Portfolio in the amount of $12,000 per year
plus certain other charges.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
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, 1998 aggregated $34,478,987 and $41,100,252, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of April 30, 1998 was $155,280,836 and the net unrealized
appreciation of investment securities was $49,300,020. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost was $65,535,693, and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over market value was $16,235,673.
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
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, FAdS, and FAcS may waive voluntarily all or a portion of their fees
from time to time. For the six months ended April 30, 1998, SCMI waived fees
of $13,187.
- --------------------------------------------------------------------------------
22
<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 R. 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, 34th Floor
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
CUSTODIAN
The Chase Manhattan Bank
Global Custody Division
125 London Wall
London EC2Y 5AJ, United Kingdom
TRANSFER AND DIVIDEND
DISBURSING AGENT
Forum Shareholder Services, LLC
Two Portland Square
Portland, Maine 04101
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
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.
[SCHRODERS LOGO]
Schroder
International
Fund
SEMI-ANNUAL REPORT
April 30, 1998
(Unaudited)
Schroder Capital Funds (Delaware)
