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SCHRODERS
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SCHRODER
EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
December 22, 1999
Dear Shareholder:
We are pleased to present the annual report for the Schroder Emerging Markets
Fund Institutional Portfolio for the fiscal year ending October 31, 1999. During
the twelve months ended October 31, 1999, emerging markets as measured by the
MSCI EMF Index rose 43.7% compared to the MSCI EAFE Index of developed markets
increase of 23.3%. While these returns show the strength of emerging markets in
general, they did not come without volatility.
The fiscal year began shortly after the currency crisis in Russia and the
imposition of severe currency controls in Malaysia. These dramatic events, and
lingering concerns about Brazil's fiscal health, were the most visible signs of
the generalized economic troubles which plagued most of the emerging markets to
varying degrees at the start of the fiscal year. As you will read in the Fund's
annual report, this weak beginning was followed by strong steps toward economic
recovery in many emerging markets countries. Although many challenges
remain--from social instability to earthquake recovery to more ordinary matters
of fiscal policy--the positive developments over the twelve-month period have
gotten the current fiscal year off to a more auspicious start than we enjoyed
one year ago.
We believe that the Fund is positioned to take advantage of this shift as the
outlook for many emerging markets economies and companies continues to be
positive. At the heart of Schroders' philosophy in emerging markets investment
is the belief that internal fundamental research is critical. Our network of
analysts located in thirteen emerging market countries add substantial value in
these under-researched markets and provide the foundation for successful
investing, given the lack of alternative information sources.
Thank you for your interest in the Schroder Emerging Markets Fund Institutional
Portfolio. We welcome your comments and look forward to servicing your
investment needs in the years to come.
Sincerely,
Alexandra Poe
President
2
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 1999)
PERFORMANCE
The Schroder Emerging Markets Fund Institutional Portfolio's Investor Shares had
a total return of 36.27% and Advisor Shares had a total return of 36.05% for the
fiscal year ended October 31, 1999, not including the deduction of the purchase
and redemption fees of 0.50%. Including the purchase and redemption fees, the
Fund's total returns for the year ended October 31, 1999, would have been 34.91%
for Investor Shares and 34.70% for Advisor Shares. The MSCI Emerging Markets
Free Index returned 43.74% over the same period.
Stock selection contributed positively to performance during the twelve months,
particularly due to the Fund's exposure to strong electronic stocks in Korea.
However, country selection was relatively weak, largely because of the Fund's
underweight position in Greece, which rose dramatically over the period.
MARKET BACKGROUND
Asia was the strongest performing emerging market region over the fiscal year.
The rally was initially driven by the reduction in interest rates across the
region, which was helped by the strength of the YEN and reductions in developed
market interest rates. Ongoing restructuring and economic recovery increasingly
supported the markets through the period. South Korea experienced significant
growth as its economy benefited from higher export growth and a successful start
to the restructuring of various conglomerates.
Latin America also rose strongly during the fiscal year. This rise largely
occurred in early 1999 as markets recovered from the devaluation of the
Brazilian currency, the REAL, in January. The Mexican market has been one of the
strongest in the region. While reduced capital flows and lower commodity prices
have led to weaker currencies and recessions in most of Latin America, Mexico,
although facing the same challenges, outperformed the rest of the region during
the fiscal year. Mexico benefited from the strength in oil prices, its close
links to the U.S. and its comparatively sound economic structures.
The emerging markets in central Europe mostly underperformed the MSCI Emerging
Markets Free Index during the fiscal year. Hungary and Poland experienced
moderate rises only, as their currencies suffered from concerns over deficit
levels and corporate earnings were affected by the slowdown in domestic and
European growth. Russia was the strongest performing emerging market in the
region during the fiscal year. Russia recovered sharply from the devaluation of
its currency in August 1998, mainly due to the recovery in the oil prices.
However, politics remain unpredictable and the Russian market has recently
reacted poorly to President Yeltsin's fifth change of Prime Minister in 18
months and allegations of money laundering.
In the context of other markets, the performance of Israel and South Africa has
been mediocre. The expected `peace dividend' has yet to emerge in Israel and the
wrangling between the Central Bank and the Government has led to currency
weakness and a reversal in the expected direction of interest rates. In South
Africa, the recovery in commodity prices and more stable capital flows have
stabilized external accounts and the RAND.
PORTFOLIO REVIEW
The Fund started the fiscal year underweighted in Latin America as a tight
credit environment inhibited economic growth. After the currency devaluation in
Brazil in January, the Fund increased its holdings in anticipation of economic
recovery there. In Europe, the Middle East and Africa, we steadily reduced the
Fund's exposure as the economic outlook deteriorated and further interest rate
cuts looked unlikely. We increased the Fund's exposure to Asia during the
period, as a sharp decline in local interest rates and signs of a turnaround in
economic growth in the region reinvigorated investors. Within Asia, the Fund
remained strongly committed to Korea, where the market rose dramatically as the
pace of the restructuring process accelerated. We reduced the Fund's cash
position over the fiscal year due to our improved outlook for emerging markets
and as risks within the asset class diminished.
3
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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OUTLOOK
Looking ahead, uncertainty about Western interest rates and the Year 2000 are of
concern, as are a number of local issues, for example reform in Brazil and
social instability in Indonesia. But with more balanced global growth, ongoing
economic recovery and restructuring in Asia and the potential for lower interest
rates in Latin America, our outlook for emerging markets remains positive.
Against this background, our strategy is cautious. The Fund remains committed to
Asia, due to ongoing economic recovery in the region. Within Latin America we
continue to have high hopes for Brazil, as we believe there is political will to
reform and valuations are attractive. Our view for Eastern Europe is also
positive because we expect the region to benefit from the nascent economic
recovery in Germany. Elsewhere, the Fund remains broadly neutral, in part,
reflecting our optimistic outlook for most emerging markets.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO MANAGER AS
OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO MANAGER ON
THE DATE THIS REPORT IS FIRST PUBLISHED OR ANY TIME THEREAFTER. THIS VIEW IS
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.
4
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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[CHART]
EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO - INVESTOR
SCHRODER FUNDS
SEC TOTAL RETURNS FIGURES
CURR LOAD
INITIAL INVEST
**AS ADJUSTED TO ELIMINATE ANNUALIZATION OF
SALES LOAD
<TABLE>
<CAPTION>
DATE FUND EMF EMF-xMalaysia
<S> <C> <C> <C>
3/31/95 10,000.00 10,000.00 10,000.00
4/30/95 10,320.00 10,449.00 10,570.00
10,930.00 11,004.89 11,007.63
10,960.00 11,037.90 11,087.79
11,270.00 11,285.15 11,338.54
10,940.00 11,018.82 11,150.33
11,000.00 10,967.03 11,128.83
10/31/95 10,630.00 10,547.00 10,740.06
10,420.00 10,359.26 10,507.23
10,766.67 10,819.21 10,944.33
11,910.56 11,588.46 11,797.72
11,619.57 11,404.20 11,488.81
11,629.60 11,493.15 11,445.11
4/30/96 12,091.18 11,952.88 11,871.80
12,281.83 11,899.09 11,908.65
12,151.38 11,972.86 11,988.73
11,388.78 11,155.12 11,150.21
11,599.50 11,440.69 11,366.53
11,649.67 11,540.22 11,447.70
10/31/96 11,097.79 11,232.10 11,042.16
11,268.37 11,420.80 11,175.40
11,619.96 11,472.19 11,214.10
12,333.03 12,254.60 12,096.04
12,815.10 12,779.09 12,611.83
12,584.11 12,443.00 12,350.96
4/30/97 12,825.14 12,465.40 12,629.37
13,327.30 12,821.91 13,006.49
14,110.67 13,507.88 13,868.29
14,422.01 13,709.15 14,300.72
12,885.40 11,965.35 12,799.45
13,347.39 12,296.79 13,281.95
10/31/97 11,127.85 10,278.88 11,154.23
10,826.55 9,903.70 10,908.64
11,014.04 10,142.38 11,192.05
10,308.66 9,347.22 10,338.22
11,044.27 10,323.07 11,167.68
11,487.65 10,771.09 11,717.62
4/30/98 11,538.04 10,653.69 11,724.03
9,966.04 9,194.13 10,146.46
9,038.97 8,229.67 9,157.75
9,431.97 8,490.55 9,514.28
6,781.75 6,035.93 6,757.90
7,053.82 6,418.61 7,225.86
10/31/98 7,829.74 7,094.49 7,987.12
8,212.66 7,684.75 8,598.52
8,228.37 7,573.32 8,473.91
8,218.25 7,451.39 8,337.19
8,167.64 7,523.67 8,418.29
9,149.38 8,515.29 9,527.74
4/30/99 10,171.60 9,568.63 10,706.52
10,070.39 9,513.13 10,644.23
11,254.55 10,592.87 11,852.26
10,983.24 10,304.74 11,530.29
10,983.24 10,398.52 11,635.20
10,507.03 10,047.05 11,241.44
10/31/99 10,668.84 10,260.98 11,480.80
</TABLE>
The MSCI EMF Index is an unmanaged, market capitalization index of companies
representative of the market structure of 25 emerging countries in Europe, Latin
America and the Pacific Basin. The Index represents actual buyable opportunities
for the non-domestic investor by taking into account local market restrictions
on share ownership by foreigners. The MSCI EMF ex-Malaysia Index is an
additional broad measure of market performance which includes investments in all
countries in the MSCI EMF Index, excluding investments in Malaysia, which may be
considered a developed market.
*The line shown presents performance information for Investor Shares only.
Performance of Advisor Shares of the Fund will be less than the line shown for
Investor Shares due to shareholder servicing fees paid by Advisor Shares.
5
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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PERFORMANCE INFORMATION - (a)
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1999 OCTOBER 31, 1999 (b)
---------------- --------------------
<S> <C> <C>
Schroder Emerging Markets Fund Institutional Portfolio
Investor Shares 34.91% 1.20%
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1999 OCTOBER 31, 1999 (c)
---------------- --------------------
<S> <C> <C>
Schroder Emerging Markets Fund Institutional Portfolio
Advisor Shares 34.70% 1.71%
</TABLE>
(a) Reflects the payment of purchase and redemption fees of 0.50% of the amount
purchased or redeemed.
(b) Average annual total return from commencement of Fund operations (March 31,
1995)
(c) Average annual total return from inception of Advisor Shares (November 21,
1996)
"TOTAL RETURN" IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE
RESULTS. THE VALUE OF AN INVESTMENT IN THE FUND AND THE RETURN ON INVESTMENT
WILL FLUCTUATE AND REDEMPTION PROCEEDS MAY BE HIGHER OR LOWER THAN AN INVESTOR'S
ORIGINAL COST.
6
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1999
<TABLE>
<CAPTION>
COUNTRY WEIGHTINGS TOP TEN HOLDINGS
COUNTRY % OF NET ASSETS SECURITY % OF NET ASSETS
- -------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Korea 12.7% Samsung Electronic 4.1%
Taiwan 12.0 Telefonos de Mexico SA 3.8
Mexico 11.5 Taiwan Semiconductor 3.2
Brazil 9.2 Alpha Credit Bank 1.6
India 8.7 Hindustan Lever 1.6
South Africa 8.6 Korea Electric Power 1.6
Greece 4.9 Hellenic Telecom 1.5
Turkey 3.4 Petroleo Brasileiro SA 1.3
Israel 3.4 Shinhan Bank 1.1
Thailand 3.3 Hon Hai Precision 1.1
Chile 2.6 -----
Indonesia 1.7 20.9%
Hungary 1.7 -----
Argentina 1.6 -----
Russia 1.6
Hong Kong 1.6
Philippines 1.5
Poland 1.4
Czech Republic 1.2
Peru 0.9
United States 0.8
Egypt 0.5
Zimbabwe 0.5
Malaysia 0.5
China 0.5
Sweden 0.5
United Kingdom 0.3
Mauritius 0.3
Botswana 0.3
Croatia 0.2
Cash Equivalents
and Other Net Assets 2.1
------
100.0%
------
------
</TABLE>
7
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 92.8%
ARGENTINA - 1.7%
28,800 Banco De Galicia Y Buenos
Aires SA de CV $ 608,400
45,000 Gas Natural Ban SA 83,741
163,514 Perez Companc SA 984,835
38,200 Quilmes Industrial SA (Quinsa)
ADR 398,713
71,500 Siderar S.A.I.C. 268,971
75,200 Telecom Argentina Stet -
France Telecom SA 413,802
53,100 Telefonica de Argentina SA
ADR 1,360,687
------------
4,119,149
------------
BOTSWANA - 0.3%
699,000 Sechaba Brewery Limited 712,246
------------
BRAZIL - 6.0%
43,500 Aracruz Celulose S A 891,750
175,300 Centrais Eletricas Brasileiras SA 1,567,077
34,300 Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar 750,312
43,800 Companhia Energetica de
Minas Gerais ADR 626,020
136,500 Companhia Paranaense
de Energia-Copel ADR 904,313
111,700 Companhia Vale Do Rio Doce 2,178,452
80,400 Embratel Participacoes SA 1,035,150
195,000 Petroleo Brasileiro SA ADR 3,116,743
32,800 Tele Celular Sul Participacoes SA 574,000
95,700 Tele Norte Leste Participacoes
SA (Telemar) ADR 1,614,937
11,800 Telecomunicacoes Brasileiras SA -
Telebras Sponsored Level II ADR 553
7,700,000 Telecomunicacoes Brasileiras
Telebras Stock NPV 399,982
33,600 Ultrapar Participacoes SA (1) 373,800
36,800 Uniao de Bancos Brasileiros
SA (Unibanco) GDS 851,000
------------
14,884,089
------------
CHILE - 2.5%
34,900 Banco Santander Chile 571,488
17,000 Banco Santiago ADR 340,000
32,300 Chilectra SA 574,378
79,825 CIA de Telecomunicaciones
de Chile SA ADR 1,332,080
27,700 Compania Cervecerias
Unidas SA (CCU) 604,206
35,900 Distribucion Y Servicio D&S SA 585,619
27,200 Embotelladora Andina SA
ADR 350,200
44,400 Empresa Nacional De
Electricidad SA (Endesa) 566,100
15,255 Enersis SA ADR 343,237
48,500 Quinenco SA 451,656
17,200 Sociedad Quimica Y
Minera De Chile SA 499,875
------------
6,218,839
------------
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
CHINA - 0.5%
2,406,000 Beijing Datang Power
Generation Company
Limited $ 501,668
44,400 Huaneng Power International,
Incorporated ADR 538,350
1,328,000 Zhejiang Expressway
Company Limited 203,400
------------
1,243,418
------------
CROATIA - 0.2%
51,450 Pliva D.D. 553,088
------------
CZECH REPUBLIC - 1.1%
6,640 Ceske Radiomunikace (1) 213,310
99,480 Ceska Sporitelna AS GDR (1) 557,088
136,360 Ceske Energeticke Zavody
AS (CEZ) (1) 352,865
11,666 Komercni Banka AS 294,621
2 Komercni Banka AS GDR (1) 17
92,316 SPT Telecom AS (1) 1,392,223
------------
2,810,124
------------
EGYPT - 0.5%
3,000 Commercial International Bank 36,750
23,060 EFG - Hermes Holding S.A.E. 279,026
25,370 Egyptian Company for
Mobile Services (MobilNil) (1) 654,441
21,020 Oriental Weavers Company 367,696
------------
1,337,913
------------
GREECE - 4.9%
57,593 Alpha Credit Bank 4,404,467
36,810 Hellenic Bottling Company SA 830,446
179,140 Hellenic Telecommunications
Organization SA (OTE) 3,796,004
28,370 National Bank Of Greece SA 2,034,015
32,510 Panafon Hellenic Telecom SA 429,910
32,120 STET Hellas
Telecommunications SA (1) 690,580
------------
12,185,422
------------
HONG KONG - 1.6%
372,000 Beijing Enterprises Holdings
Limited 605,675
758,000 China Merchants Holdings
International Company Limited 599,999
304,000 China Resources Enterprises
Limited 389,316
333,000 China Telecom (Hong Kong)
Limited (1) 1,137,928
884,000 Cosco Pacific Limited 659,912
477,000 New World China Land
Limited (1) 221,018
303,000 New World Infrastructure
Limited (1) 350,987
------------
3,964,835
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
HUNGARY - 1.7%
65,478 Matav Rt. ADR $ 1,886,585
45,190 MOL Magyar Olaj - Es
Gazipari Rt. 899,281
4,230 OTP Bank Limited (1) 173,345
27,570 OTP Bank Rt. GDR 1,241,339
------------
4,200,550
------------
INDIA - 8.7%
65,150 ACC Limited (1) 302,702
260,600 Associated Cement
Companies Limited 1,210,807
90,000 Bajaj Auto Limited 913,689
310,500 Bharat Heavy Electricals
Limited (BHEL) 1,917,814
192,000 Bharat Petroleum
Corporation Limited 1,283,244
200 BSES Limited 743
119,000 Castrol (India) Limited 935,215
47,500 Dr. Reddy's Laboratories Limited 1,165,878
2,000 Great Eastern Shipping Company 977
75,000 Hindustan Lever Limited 4,018,348
34,700 Hindustan Petroleum
Corporation Limited 128,755
17,350 Hindustan Petroleum
Corporation Limited (1) 64,378
1,700 Indian Hotels Company
Limited 14,434
76,992 ITC Limited 1,250,077
443,000 Mahanagar Telephone Nigam
Limited 1,749,946
2,000 Mahindra & Mahindra Limited 16,386
44,100 NIIT Limited 2,200,933
475,500 Reliance Industries Limited 2,574,208
250,000 State Bank Of India 1,420,257
16,800 Videsh Sanchar Nigam Limited 522,701
------------
21,691,492
------------
INDONESIA - 1.7%
320,000 H M Sampoerna (1) 745,493
20,627,000 PT Bank International Indonesia 453,340
263,000 PT Gudang Garam Tbk 678,212
723,000 PT Indofood Sukses Makmur (1) 858,065
2,956,820 PT Telekomunikasi Indonesia 1,408,007
------------
4,143,117
------------
ISRAEL - 3.4%
963,590 Bank Hapoalim Limited 2,290,904
978,560 Bank Leumi Le-Israel 1,725,292
150,310 Bezeq Israel Telecommunication
Corporation Limited (1) 612,461
62,760 Blue Square - Israel Limited 819,802
34,980 ECI Telecom Limited 1,018,793
32,000 Partner Communications
Company Limited (1) 504,000
30,220 Teva Pharmaceutical
Industries Limited 1,461,892
------------
8,433,144
------------
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
KOREA - 12.7%
55,307 Daewoo Securities Company $ 707,764
333,000 Hanvit Bank 1,235,390
130,000 Hanwha Chemical Corporation 1,175,906
108,680 Hyundai Electronics
Industries Company (1) 1,807,558
63,340 Hyundai Merchant Marine 570,298
175,085 Kookmin Bank 2,729,545
136,070 Korea Electric Power
Corporation 3,981,706
34,600 Korea Electric Power
Corporation ADR 544,950
483,565 Korea Exchange Bank (1) 2,257,577
29,500 Korea Telecom
Corporation ADR (1) 1,039,875
950 Korea Telecom Corporation 63,914
17,000 Pohang Iron & Steel
Company Limited 2,086,769
61,544 Samsung Electronics 10,261,608
267,900 Shinhan Bank 2,836,456
23,360 SK Telecom Company
Limited ADR 305,140
------------
31,604,456
------------
MALAYSIA - 0.5%
86,000 Resorts World Berhad 246,685
186,000 Tanjong PLC 391,580
244,000 Tenaga Nasional Berhad 561,844
------------
1,200,109
------------
MAURITIUS - 0.3%
1,230,000 State Bank Mauritius Limited 749,435
------------
MEXICO - 11.6%
332,400 Alfa SA 1,273,349
98,012 Cemex SA de CV ADR (1) 2,205,270
1,585,700 Cifra SA de CV (1) 2,419,906
648,900 Consorico Ara SA (1) 728,895
436,000 Controladora Comercial
Mexicana SA de CV 360,296
450,000 Embotelladoras Argos SA 419,516
578,400 Fomento Economico
Mexico SA de CV 1,873,454
550,326 Grupo Bimbo SA de CV 1,007,810
376,000 Grupo Continential SA 421,572
762,400 Grupo Financiero Banamex
Accival SA de CV (Banacci) (1) 1,903,523
259,100 Grupo Industrial Saltillo SA
de CV 673,807
120,000 Grupo Mexico SA 433,532
524,500 Grupo Modelo SA de CV 1,279,598
135,000 Grupo Sanborns SA (1) 196,210
51,700 Grupo Televisa SA ADR (1) 2,197,250
79,000 Hylsamex SA (1) 209,135
433,900 Kimberly - Clark de Mexico
SA de CV 1,387,396
111,100 Telefonos de Mexico SA ADR 9,499,050
18,000 Tubos de Acero de Mexico
SA (TAMSA) 196,875
------------
28,686,444
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
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SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PERU - 0.9%
971,518 Banco Continental $ 550,191
32,800 Compania de Minas
Buenaventura SA 557,600
98,700 Telefonica De Peru S.A.A. 1,141,219
------------
2,249,010
------------
PHILIPPINES - 1.5%
2,357,900 Ayala Corporation 587,272
1,269,011 Ayala Land, Incorporated 323,969
361,280 Manila Electric Company 989,807
118,800 Metropolitan Bank &
Trust Company 887,670
39,040 Philippine Long Distance
Telephone Company 811,915
86,000 San Miguel Corporation 124,234
593,000 SM Prime Holdings 104,864
------------
3,829,731
------------
POLAND - 1.4%
13,000 Bank Handlowy W
Warszawie 183,950
24,706 BRE Bank SA 673,268
115,100 Elektrim Spolka Akcyjna SA 995,533
51,000 KGHM Polska Miedz SA GDR 629,850
178,250 Telekomunikacja Polska SA
GDR 900,162
------------
3,382,763
------------
RUSSIA - 1.6%
54,195 LUKoil Holding ADR 1,716,898
20,000 OAO Gazprom 151,500
52,680 RAO Unified Energy Systems 305,017
221,500 Surgutneftegaz 1,772,000
------------
3,945,415
------------
SOUTH AFRICA - 8.6%
289,717 ABSA Group Limited 1,181,019
36,600 Anglo American Platinum
Corporation Limited 1,054,216
265,321 Barlow Limited 1,293,134
55,500 De Beers 1,515,515
244,300 Dimension Data Holdings
Limited 1,184,718
97,900 Fedsure Holdings Limited 655,583
1,799,150 FirstRand Limited 2,078,743
343,076 LA Retail Stores Limited 343,353
93,456 Liberty Life Association
of Africa Limited 866,876
904,000 Malbak Limited 654,642
1,468,803 Metro Cash and Carry Limited 1,219,014
260,000 Nampak Limited 698,124
710,400 Profurn Limited 618,489
160,800 Rembrandt Group Limited 1,202,394
1,072,781 Sanlam Limited 1,230,766
184,300 Sappi Limited 1,526,575
283,300 Sasol Limited 1,936,293
137,474 South African Breweries 1,203,588
245,850 Standard Bank Investment
Corporation Limited 840,165
------------
21,303,207
------------
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TAIWAN - 12.0%
1,315,600 Acer, Incorporated $ 2,507,679
271,215 Advanced Semiconductor
Engineering, Incorporated 833,127
239,908 Asustek Computer, Incorporated 2,516,992
567,000 Cathay Life Insurance
Company Limited 1,464,838
1,596,750 China Steel Corporation 1,227,494
1,732,980 Far Eastern Textile Limited 2,369,606
1,400,000 First Commercial Bank 1,795,210
903,250 Formosa Plastics Corporation 1,807,068
404,400 Hon Hai Precision Industry
Company Limited 2,764,800
1,039,000 Hua Nan Commercial Bank 1,473,061
1,157,038 Nan Ya Plastic Corporation 2,023,175
607,920 Siliconware Precision
Industries Company 1,091,727
1,803,999 Taiwan Semiconductor
Manufacturing Company 8,013,979
------------
29,888,756
------------
THAILAND - 2.7%
83,000 Advanced Info Service
Public Company
Limited (1) 967,616
201,000 Bangkok Bank Public
Company Limited (1) 468,652
682,000 Electricity Generating
Public Company Limited 901,087
155,000 PTT Exploration and Production
Public Company Limited (1) 1,132,382
47,200 Siam Cement Public
Company Limited (1) 1,222,797
732,000 TelecomAsia Corporation
Public Company Limited (1) 564,171
654,000 Thai Farmers Bank Public
Company Limited (1) 923,393
226,000 Total Access Communication
Public Company Limited 546,920
------------
6,727,018
------------
TURKEY - 3.4%
150,893,459 Akbank T.A.S. 2,353,934
21,900,000 Akcansa Cimento SA 296,088
1,343,000 Ege Biracilik Ve Malt Sanayii AS 45,393
5,337,990 Erciyas Biracilik ve Malt
Sanayii AS 111,030
26,300,000 Eregli Demir ve Celik
Fabrikalari T.A.S (Erdemir) 656,447
33,980,070 Haci Omer Sabanci holding AS 1,007,168
6,056,000 Koc Holding AS 610,928
3,015,660 Migros Turk T.A.S. 1,301,557
2,467,420 Vestel Electronik Sanayi
ve Ticaret AS (1) 302,801
127,777,363 Yapi ve Kredi Bankasi AS 1,860,435
------------
8,545,781
------------
UNITED KINGDOM - 0.3%
14,295 Anglo American PLC 760,689
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ZIMBABWE - 0.5%
8,976,000 Econet Wireless Holdings (1) $ 1,290,665
------------
TOTAL COMMON STOCKS
(Cost $207,966,431) 230,660,905
------------
WARRANTS - 1.6%
SWEDEN - 0.5%
20,000 UBS AG (1) 1,356,200
------------
THAILAND - 0.3%
552,000 Bangkok Bank Public
Company Limited (1) 529,611
343,000 Siam Commercial Bank (1)
Public Company Limited (1) 119,961
------------
649,572
------------
UNITED STATES - 0.8%
5,000 Merrill L Low (1) 606,000
1,105 Merrill Lynch and
Company, Incorporated (1) 1,288,646
------------
1,894,646
------------
TOTAL WARRANTS
(Cost $2,681,112) 3,900,418
------------
PREFERRED STOCK - 3.5%
BRAZIL - 3.2%
131,000,000 Banco Bradesco SA 640,894
8,650,000 Banco Itau SA 496,302
2,544,000 Companhia Cervejaria Brahma 1,622,550
4,300,000 Companhia Cimento
Portland Itau 424,044
8,175,360 Eletropaulo Metropolitana -
Electricidad de Sao Paulo SA (1) 372,742
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BRAZIL - (CONTINUED)
35,400,000 Gerdau SA $ 640,161
17,353 Itausa - Investimentos Itau SA 10,490
156,370,000 Tele Centro Sul Participacoes SA 1,867,270
15,120,062 Telecomunicacoes de Sao
Paulo SA 1,421,350
9,100,000 Telesp Celular SA 475,503
20,000 Usinas Siderurgicas de Minas
Gerais SA (Usiminas) 72,744
------------
8,044,050
------------
THAILAND - 0.3%
614,000 Siam Commercial Bank
Public Company
Limited (1) 695,919
------------
TOTAL PREFERRED STOCK
(Cost $9,382,516) 8,739,969
------------
<CAPTION>
PRINCIPAL
AMOUNT
------
<S> <C> <C>
REPURCHASE AGREEMENT - 1.0%
$2,500,000 State Street Bank and
Trust Company,
4.25%, 11/01/1999 2,500,000
(Cost $2,500,000) (2) ------------
TOTAL INVESTMENTS
(Cost $222,530,059) - 98.9% 245,801,292
------------
OTHER ASSETS LESS
LIABILITIES - 1.1% 2,694,674
------------
TOTAL NET
ASSETS - 100% $248,495,966
------------
------------
</TABLE>
(1) Denotes non-income producing security.
(2) The repurchase agreement, dated 10/29/99, with a repurchase price of
$2,500,885, is collateralized by a $2,530,000 United States Treasury
Bond, 6.625%, due 2/105/27, valued at $2,552,138.
ADR - American Depositary Receipts
GDR - Global Depository Receipts
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value - Note 2..... $ 245,801,292
Cash............................................. 24,843
Foreign currency, at value....................... 3,578,807
Dividends receivable............................. 960,790
Interest receivable.............................. 926
Receivable for securities sold................... 1,858,771
Receivable for Fund shares sold.................. 74
Deferred organizational costs.................... 5,006
Prepaid expenses................................. 205
Due from Investment Adviser - Note 3............. 64,724
---------------
TOTAL ASSETS.................................. 252,295,438
---------------
LIABILITIES
Payable for securities purchased................. 3,120,045
Payable for forward foreign currency purchased... 62,854
Advisory fee payable - Note 3.................... 207,547
Administration fee payable - Note 3.............. 62,614
Shareholder servicing fee payable - Note 4....... 34,567
Accrued expenses and other liabilities........... 311,845
---------------
TOTAL LIABILITIES............................ 3,799,472
---------------
NET ASSETS................................... $ 248,495,966
---------------
---------------
NET ASSETS
Capital paid-in.................................. $ 277,287,630
Undistributed net investment income.............. 2,216,973
Accumulated net realized loss on investments
and foreign currency transactions.............. (54,132,132)
Net unrealized appreciation of investments,
foreign currency transactions and other assets 23,123,495
---------------
NET ASSETS................................... $ 248,495,966
---------------
---------------
Investor Shares:
Net Assets..................................... $ 212,858,580
Net asset value, offering and redemption
price per share - Note 5..................... $ 10.53
Total shares outstanding at end of period........ 20,208,754
Advisor Shares:
Net Assets..................................... $ 35,637,386
Net asset value, offering and redemption
price per share - Note 5..................... $ 10.58
Total shares outstanding at end of period........ 3,367,425
Cost of securities............................... $ 222,530,059
Cost of foreign currency......................... $ 3,602,595
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
OCTOBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME - (NOTE 1)
Dividend income.................................. $ 3,772,920
Interest income.................................. 417,547
Foreign taxes.................................... (164,789)
Allocated expenses............................... (991,697)
---------------
TOTAL INVESTMENT INCOME...................... 3,033,981
---------------
EXPENSES
Investment advisory fees - Note 3................ 922,517
Shareholder servicing fees - Note 4.............. 70,375
Administrative fees - Note 3..................... 140,942
Subadministration Fees - Note 3.................. 136,009
Custodian fees................................... 17,710
Audit fees....................................... 47,661
Legal fees....................................... 93,226
Trustees fees.................................... 30,513
Transfer agent fees.............................. 54,132
Amortization of organizational expenses.......... 8,474
Registration fees................................ 17,778
Other............................................ 51,074
---------------
TOTAL EXPENSES............................... 1,590,411
Expenses borne by Investment Adviser - Note 3.... (108,146)
Expenses waived - Note 3......................... (14,163)
---------------
NET EXPENSES................................. 1,468,102
---------------
NET INVESTMENT INCOME........................ 1,565,879
---------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments sold............ (2,921,537)
Net realized gain on foreign currency transactions 317,790
Net realized (loss) on investments and foreign
currency transactions..................... (2,603,747)
---------------
Change in net unrealized appreciation on
investments.................................... 51,367,385
Change in net unrealized depreciation on
foreign currency transactions and other assets. (123,949)
---------------
Net change in unrealized appreciation (depreciation)
on investments and foreign currency transactions. 51,243,436
---------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS..................... 48,639,689
---------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........................ $ 50,205,568
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
10/31/99 10/31/98
-------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income........................... $ 1,565,879 $ 1,891,229
Net realized loss on investments
and foreign currency transactions........... (2,603,747) (33,857,609)
Change in net unrealized appreciation
(depreciation) of investments, foreign currency
transactions and other assets.............. 51,243,436 (30,037,143)
------------- ---------------
Net increase (decrease) in net assets
resulting from operations..................... 50,205,568 (62,003,523)
------------- ---------------
Distributions to shareholders from:
Net investment income - Investor Shares......... (754,552) (596,860)
Net investment income - Advisor Shares.......... (39,323) (26,384)
------------- ---------------
Total distributions to shareholders........... (793,875) (623,244)
------------- ---------------
Capital share transactions: (Notes 5 and 8)
Sale of shares - Investor Shares................ 84,184,243 32,111,369
Sale of shares - Advisor Shares................. 10,097,717 6,379,884
Reinvestment of distributions - Investor Shares. 310,385 355,423
Reinvestment of distributions - Advisor Shares.. 39,323 26,384
Redemption of shares - Investor Shares.......... (24,794,413) (46,569,811)
Redemption of shares - Advisor Shares........... (2,688,049) (2,457,177)
-------------- ---------------
Net increase (decrease) from
capital share transactions.................... 67,149,206 (10,153,928)
------------- ---------------
TOTAL INCREASE (DECREASE)....................... 116,560,899 (72,780,695)
Net Assets
Beginning of period............................. 131,935,067 204,715,762
------------- ---------------
End of period................................... $ 248,495,966 $ 131,935,067
------------- ---------------
------------- ---------------
Undistributed net investment income............... $ 2,216,973 $ 898,098
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO - INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - INVESTOR SHARES
Selected per share data and ratios for an Investor Share outstanding throughout
each period:
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED OCTOBER 31, OCTOBER 31,
----------------------------------------------- -----------
1999 1998 1997 1996 1995 (a)
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 7.77 $ 11.08 $ 11.06 $ 10.63 $ 10.00
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS: (b)
Net Investment Income.................. 0.06 0.12 0.06 0.02 0.02
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency.. 2.75 (3.39) (0.03) 0.43 0.61
-------- -------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS....... 2.81 (3.27) 0.03 0.45 0.63
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.05) (0.04) (0.01) (0.02) 0.00
-------- -------- ------- ------- -------
Total Distributions.................... (0.05) (0.04) (0.01) (0.02) 0.00
-------- -------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD............ $ 10.53 $ 7.77 $ 11.08 $ 11.06 $ 10.63
-------- -------- ------- ------- -------
-------- -------- ------- ------- -------
TOTAL RETURN (c) ........................... 36.27% (29.64)% 0.27% 4.22% 6.30%
RATIOS & SUPPLEMENTARY DATA
Net Assets at End of Period (000's).... $212,859 $111,463 $179,436 $167,570 $18,423
Ratios to Average Net Assets: (b)
Expenses including reimbursement/
waiver of fees ................ 1.27% 1.36% 1.41% 1.60% 1.58% (d)
Expenses excluding reimbursement/
waiver of fees ................ 1.33% 1.64% 1.62% 1.71% 2.45% (d)
Net investment income including
reimbursement/waiver of fees .. 0.85% 1.11% 0.51% 0.36% 0.46% (d)
Portfolio Turnover Rate (e) ........... 77% 67% 43% 103% 44%
</TABLE>
(a) For the period March 31, 1995 (Commencement of Operations) through
October 31, 1995. The Fund converted to a master/feeder structure on
November 1, 1995.
(b) From November 1, 1995 to May 31, 1999, the Fund recognized its
proportionate share of income, expenses and gains/losses of the underlying
portfolio, Schroder Emerging Markets Fund Institutional Portfolio
(Portfolio). Commencing June 1, 1999, income, expenses and gains/losses
were directly accrued to the Fund.
(c) Total return calculations do not reflect the payment of purchase or
redemption fees of 0.50%, respectively. Total returns would have been lower
had certain Fund expenses not been limited during the periods shown. (See
Note 3). Total return calculations for a period of less than one year are
not annualized.
(d) Annualized.
(e) The portfolio turnover rates for the years after October 31, 1995 through
October 31, 1998 represent the turnover of the underlying portfolio,
Schroder Emerging Markets Fund Institutional Portfolio (Portfolio). For the
year ending October 31, 1999, the rate represents a combination of the
portfolio turnover rate of the Portfolio for the period from November 1,
1998 through May 31, 1999, during which time the Fund invested in the
Portfolio, and the portfolio turnover rate of the Fund for the period
June 1, 1999 through October 31, 1999, during which time the Fund held
direct investments in a portfolio of securities.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO - ADVISOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - ADVISOR SHARES
Selected per share data and ratios for an Advisor Share outstanding throughout
each period:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
---------------------- OCTOBER 31,
1999 1998 1997 (a)
---- ---- --------
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...... $ 7.79 $ 11.11 $ 11.28
-------- -------- -------
INCOME FROM INVESTMENT OPERATIONS: (b)
Net Investment Income.................. 0.05 0.08 0.03
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency.. 2.75 (3.39) (0.19)
-------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS....... 2.80 (3.31) (0.16)
-------- -------- -------
LESS DISTRIBUTIONS:
From Net Investment Income............. (0.01) (0.01) (0.01)
-------- -------- -------
Total Distributions.................... (0.01) (0.01) (0.01)
-------- -------- -------
NET ASSET VALUE AT END OF PERIOD............ $ 10.58 $ 7.79 $ 11.11
-------- -------- -------
-------- -------- -------
TOTAL RETURN (c) ........................... 36.05% (29.81)% (1.42)%
RATIOS & SUPPLEMENTARY DATA
Net Assets at End of Period (000's).... $ 35,637 $ 20,472 $ 25,280
Ratios to Average Net Assets: (b)
Expenses including reimbursement/
waiver of fees ................ 1.52% 1.61% 1.66% (d)
Expenses excluding reimbursement/
waiver of fees ................ 1.60% 1.97% 2.03% (d)
Net investment income including
reimbursement/waiver of fees .. 0.70% 0.82% 0.27% (d)
Portfolio Turnover Rate (e)............ 77% 67% 43% (f)
</TABLE>
(a) Advisor Shares were first issued on November 21, 1996.
(b) Prior to June 1, 1999, the Fund recognized its proportionate share of
income, expenses and gains/losses of the underlying portfolio, Schroder
Emerging Markets Fund Institutional Portfolio (Portfolio). Commencing
June 1, 1999, income, expenses and gains/losses were directly accrued to
the Fund.
(c) Total return calculations do not reflect the payment of purchase or
redemption fees of 0.50%, respectively. Total returns would have been lower
had certain Fund expenses not been limited during the periods shown. (See
Note 3). Total return calculations for a period of less than one year are
not annualized.
(d) Annualized.
(e) The portfolio turnover rates for the periods through October 31, 1998
represent the turnover of the underlying portfolio, Schroder Emerging
Markets Fund Institutional Portfolio (Portfolio). For the year ending
October 31, 1999, the rate represents a combination of the portfolio
turnover of the Portfolio for the period from November 1, 1998 through
May 31, 1999, during which time the Fund invested in the Portfolio and the
portfolio turnover rate of the Fund for the period June 1, 1999 through
October 31, 1999, during which time the Fund held direct investments in a
portfolio of securities.
(f) Represents the Portfolio's portfolio turnover rate for the entire fiscal
year ended October 31, 1997.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
NOTE 1 - ORGANIZATION
Schroder Capital Funds (Delaware) (the "Trust"), is an open-end series
management investment company registered under the Investment Company Act of
1940, as amended. The Trust was organized as a Maryland corporation on July 30,
1969; reorganized as Schroder Capital Funds, Inc., a series company, on February
29, 1988; and reorganized on January 9, 1996, as a Delaware business trust. The
Trust has an unlimited number of authorized shares which are divided into eight
investment portfolios. Included in this report is the Schroder Emerging Markets
Fund Institutional Portfolio (the "Fund"), which is a non-diversified portfolio
that commenced operations on March 31, 1995. 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 October 31, 1999, the Fund had both Investor
Shares and Advisor Shares outstanding.
Through May 31, 1999, the Fund sought to achieve its investment objective by
investing all its investable assets in Schroder Emerging Markets Fund
Institutional Portfolio (the "Portfolio"), a separate non-diversified portfolio
of Schroder Capital Funds ("Schroder Core") that had the same investment
objective and substantially similar investment policies as the Fund. The Fund
accounted for its investment in the Portfolio as a partnership investment and
recorded daily its share of the Portfolio's income, expenses and realized and
unrealized gains and losses. Since June 1, 1999, the Fund has sought its
objective by investing directly in a portfolio of securities considered by
Schroder Investment Management North America Inc. ("SIMNA"); the Fund's
investment adviser, to be consistent with the Fund's investment objective and
policies, and has ceased to invest in its respective Schroder Core portfolio.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust which are in conformity with generally accepted accounting principles:
VALUATION OF INVESTMENTS: Portfolio securities listed on recognized stock
exchanges are valued at the last reported sales 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 mean
of the closing bid and ask prices ("mid-market price"), or if none, the last
sale price on the preceding trading day. Securities traded in over-the-counter
markets are valued at the most recent reported mid-market price. Short-term
investments having a maturity of 60 days or less, are valued at amortized cost,
which approximates market value unless the investment adviser believes another
valuation is more appropriate. Prices used for valuation generally are provided
by independent pricing services. 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.
REPURCHASE AGREEMENTS: When entering into repurchase agreements, it is the
Fund's policy that the Fund take into its possession, through its custodian, the
underlying collateral and monitor the collateral's value at the time the
agreement is entered into and on a daily basis during the term of the repurchase
agreement to ensure that it equals or exceeds the repurchase price. In the event
of default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
INVESTMENT TRANSACTIONS: Investment security transactions are recorded as of
trade date. Realized gains and losses on sales of investments are determined on
the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date except
that certain foreign dividends are recorded as the Fund is informed of the
ex-dividend date. Dividend income is recorded net of unrecoverable withholding
tax. Interest income is recorded on an accrual basis. Foreign dividend and
interest income amounts and realized capital gains or losses are converted to
U.S. dollar equivalents using foreign exchange rates in effect at the date of
the transactions. Dividend and interest income on the statement of operations
include the allocable portion of the Schroder Core portfolio for the period when
the Fund invested in the Portfolio.
EXPENSES: Expenses are recorded on an accrual basis. Most of the expenses of the
Trust can be directly attributable to a specific Fund and/or class of shares.
Expenses not directly attributable to a specific Fund and/or class of shares are
allocated among the Funds and/or classes of shares in such a manner as deemed
equitable by SIMNA or the Trustees.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders from net investment
income and common expenses and net realized capital gains are declared and
distributed at least annually. Distributions are recorded on the ex-dividend
date.
17
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
Investment income, common expenses of the Fund and gains/losses on investments
are allocated to both classes of the Fund based on the respective daily net
assets of each class. Shareholder servicing fees related to Advisor Shares are
charged directly to that class. Neither class has preferential dividend rights.
Income dividends, if any, paid by the Fund on its two classes of shares will
normally differ in amounts due to the differing expenses borne by each class.
DEFERRED ORGANIZATION COSTS: Costs incurred by the Fund in connection with its
organization are amortized on a straight-line basis over a five-year period,
although Funds organized in the future will treat such costs as current
expenses.
FEDERAL INCOME TAXES: It is the policy of the Trust for the Fund to qualify as a
"regulated investment company" by complying with the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund
will not be subject to federal income taxes to the extent that, among other
things, it distributes substantially all of its taxable income, including
capital gains, for the fiscal year. In addition, as a result of distributing
substantially all of its net investment income during each calendar year,
capital gains and certain other amounts, if any, the Fund will not be subject to
a federal excise tax.
As of October 31, 1999, the Fund had the following net tax basis capital loss
carryforwards for federal income tax purposes, that may be applied against
taxable gains until their expiration date as follows:
<TABLE>
<CAPTION>
Expiration Dates
Amount October 31,
------ -----------
<S> <C>
$ 159,533 2003
6,451,242 2004
6,742,150 2005
35,721,348 2006
2,676,279 2007
</TABLE>
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for passive foreign
investment companies, foreign currencies, losses deferred due to wash sales and
excise tax regulations.
At October 31, 1999, the Fund reclassified $531,223, $546,871 and $(1,078,094)
between paid in capital, undistributed net investment income and accumulated
undistributed net realized gain (loss), respectively. These reclassifications
had no impact on the net asset value of the Fund and is designed to present the
Fund's capital accounts on a tax basis.
FOREIGN CURRENCY: Foreign currency amounts are translated into U.S. dollars at
the mean of the bid and asked prices of such currencies against U.S. dollars as
follows: (i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such transactions.
The portion of the results of operations arising from changes in the exchange
rates and the portion due to fluctuations arising from changes in the market
prices of securities are not isolated. Such fluctuations are included with the
net realized and unrealized gain or loss on investments.
The Fund may enter into forward foreign currency contracts to protect the U.S.
dollar value of the underlying portfolio of securities against the effect of
possible adverse movements in foreign exchange rates. Principal risks associated
with such transactions 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 forward foreign currency contract transactions
are recorded daily as unrealized gain or loss; realized gain or loss includes
net gain or loss on transactions that have terminated by settlement or by the
Fund entering into offsetting commitments.
NOTE 3 - INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENTS
The Trust has entered into an investment advisory agreement with SIMNA. Under
this agreement, SIMNA provides investment management services and is entitled to
receive for its services compensation, payable monthly, at the annual rate of
1.00% of the Fund's average daily net assets. Prior to June 1, 1999, the Fund
invested all its assets in the Portfolio, which had retained Schroder Capital
Management International Inc. ("SCMI") to act as investment adviser pursuant to
an Investment Advisory Agreement and was also at the annual rate of 1.00% of the
Portfolio's average net assets..
Until July 1, 1999, SCMI served as investment adviser to the Fund. On that date,
SCMI merged into SIMNA, a newly organized Delaware corporation. SCMI and SIMNA
are both wholly owned subsidiaries of Schroder U.S. Holdings Inc.
The administrator of the Trust is Schroder Fund Advisors Inc. ("Schroder
Advisors"), a wholly owned subsidiary of SIMNA. For its services, Schroder
Advisors is entitled to receive compensation at an annual rate, payable monthly,
of 0.10% of the average daily net assets of the Fund. Prior to June 1, 1999,
Schroder Advisors was entitled to receive compensation at an annual rate,
payable monthly,
18
<PAGE>
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
of 0.05% of the Fund's average daily net assets. Schroder Advisors also received
fees from the Portfolio for providing administrative services at an annual rate
of 0.05% of the Portfolio's average daily net assets. In addition, effective
June 1, 1999, the Trust has entered into a Sub-Administration Agreement with
State Street Bank and Trust Company ("State Street") and Schroder Advisors.
Under that Agreement, the Fund, together with other mutual funds managed by
SIMNA and certain related entities, pays fees to State Street based on the
combined average daily net assets of all of the funds in the Schroder complex,
according to the following annual rates: 0.06% of the first $1.7 billion of such
assets, 0.04% of the next $1.7 billion, and 0.02% of assets in excess of $3.4
billion, subject to certain minimum requirements. Prior to June 1, 1999, the
Fund paid subadministration fees to Forum Administrative Services, LLC ("FAdS")
at an annual rate of 0.05% of the average daily net assets of the Fund.
In order to limit the Fund's expenses, SIMNA and Schroder Advisors are
contractually obligated to reduce their compensation (and, if necessary, to pay
certain other Fund expenses) until December 31, 1999, to the extent that the
Fund's net expenses attributable to its Investor and Advisor shares exceed 1.45%
and 1.70%, respectively (based on the Fund's average daily net assets). On June
1, 1999, SIMNA voluntarily reduced these to 1.18% and 1.43%, respectively, until
further notice. For the year ended October 31, 1999, Schroder Advisors and Forum
Shareholder Services, LLC waived fees of $7,163 and $7,000, respectively.
NOTE 4 - SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Service Plan (the "Plan") for its Advisor
Shares under which Schroder Advisors, or other shareholder servicing
organizations, provide administrative support services to shareholders of the
Fund's Advisor Shares. Providing for, or arranging for, the provision of these
shareholder services, Schroder Advisors receives compensation monthly at an
annual rate of up to 0.25% of the average daily net assets of the Fund
attributable to its Advisor Shares. Schroder Advisors may pay shareholder
servicing organizations for these services at an annual rate of up to 0.25%.
NOTE 5 - PURCHASE AND REDEMPTION FEES
Purchases and redemptions of Fund shares are subjected to a transaction fee of
0.50% of the amount invested and the net asset value redeemed, respectively.
These charges are designed to cover the transaction costs that the Fund incurs
(either directly or indirectly) as a result of its investment in, or sale of,
portfolio securities. These charges, which are not sales charges, are retained
by the Fund and not paid to Schroder Advisors or any other entity. The purchase
and redemption fees are included in the Statements of Changes in Net Assets
shares sold and shares redeemed amounts, respectively, and are included as part
of Capital Paid-in on the Statement of Assets and Liabilities. The purchase and
redemption fees paid to the Fund for each class were as follows:
<TABLE>
<CAPTION>
Investor Shares Advisor Shares
---------------------- -----------------------
For the Year Ended Purchase Redemption Purchase Redemption
------------------ -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
October 31, 1999 $ 448,181 $123,972 $ 55,691 $13,440
October 31, 1998 162,923 232,843 30,610 10,778
</TABLE>
NOTE 6 - TRANSACTIONS WITH AFFILIATES
TRUSTEES' FEES: The Trust pays no compensation to Trustees who are interested
persons of the Trust, SIMNA or Schroder Advisors. For their services as Trustees
of all open-end investment companies distributed by Schroder Fund Advisors Inc.,
with the exception of Schroder Series Trust II, trustees who are not interested
persons of the Trust, SIMNA or Schroder Fund Advisors Inc. will receive an
annual retainer of $11,000 and $1,250 per meeting attended in person or $500 per
meeting attended by telephone. Members of an Audit Committee for one year or
more of such investment companies receive an additional $1,000 per year. Payment
of the annual retainer will be allocated among the various Funds based on their
relative net assets.
NOTE 7 - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investments, excluding short-term
securities for the Fund, for the period from June 1, 1999 to October 31, 1999
were $171,753,633 and $161,823,665, respectively.
At October 31, 1999, the identified cost for federal income tax purposes of
investments owned by the Fund was $225,983,087 with net unrealized appreciation
of $19,818,205. Gross unrealized appreciation and depreciation were $43,874,581
and $24,056,376, respectively.
19
<PAGE>
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 1999
NOTE 8 - SHAREHOLDER TRANSACTIONS
Following is a summary of shareholder transactions for the Fund:
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1999 October 31, 1998
Shares Dollars Shares Dollars
---------------------- -----------------------
<S> <C> <C> <C> <C>
INVESTOR SHARES
Shares sold *.................. 8,380,380 $84,184,243 2,945,917 $32,111,369
Shares issued to shareholders in
reinvestment................... 33,627 310,385 32,460 355,423
Shares redeemed *.............. (2,552,689) (24,794,413) (4,830,885) (46,569,811)
---------- ----------- ---------- -----------
Net increase (decrease)........ 5,861,318 $59,700,215 (1,852,508) $(14,103,019)
--------- ----------- ----------- -------------
--------- ----------- ----------- -------------
<CAPTION>
Year Ended Year Ended
October 31, 1999 October 31, 1998
Shares Dollars Shares Dollars
---------------------- -----------------------
<S> <C> <C> <C> <C>
ADVISOR SHARES
Shares sold *.................. 1,018,456 $10,097,717 663,007 $6,379,884
Shares issued to shareholders in
reinvestment................... 4,849 39,323 2,414 26,384
Shares redeemed *.............. (283,137) (2,688,049) (314,314) (2,457,177)
-------- --------- -------- ----------
Net increase................... 740,168 $7,448,991 351,107 $3,949,091
------- ---------- ------- ----------
------- ---------- ------- ----------
</TABLE>
* Includes purchase and redemption fees (Note 5).
NOTE 9 - CONCENTRATION OF RISK
The Fund's investment in countries with limited or developing capital markets
may involve greater risks than investments in more developed markets and the
prices of such investments may be volatile. The consequences of political,
social or economic events in these countries may have disruptive effects on the
market prices of the Fund's investments.
For more complete risk disclosure, please refer to the Fund's current
prospectus.
NOTE 10 - BENEFICIAL INTEREST
The Fund had 4 Investor and 2 Advisor shareholders owning beneficially or of
record 81.79% and 96.6% of those classes of shares of the Fund, respectively.
NOTE 11 - FORWARD FOREIGN CURRENCY CONTRACTS
As of October 31, 1999, the Fund had open forward foreign currency contracts
which contractually obligates the Fund to deliver currencies at a specified date
as follows:
<TABLE>
<CAPTION>
Sold Settlement Date Cost Value Depreciation
---- --------------- ---- ----- ------------
<S> <C> <C> <C> <C>
19,223,000 HKD* 1/21/00 $2,408,686 $2,471,540 $(62,854)
</TABLE>
*Hong Kong Dollars
20
<PAGE>
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SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
- --------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
The Fund has designated $91,200 as foreign tax credits for federal income tax
purposes. These credits will affect only those shareholders of the Fund who are
holders on the dividend record date in December 1999. Accordingly, shareholders
will receive more detailed information along with their Form 1099-DIV in January
2000.
On December 13, 1999, the Fund made the following distributions to shareholders
of record December 10, 1999:
<TABLE>
<CAPTION>
INCOME DISTRIBUTIONS
CLASS PER SHARE
- ----- ---------
<S> <C>
Investor Shares....................... $0.117814
Advisor Shares........................ 0.094652
</TABLE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
To the Trustees of Schroder Capital Funds (Delaware) and Shareholders of
Schroder Emerging Markets Fund Institutional Portfolio:
In our opinion, the accompanying statement of assets and liabilities including
the schedule of investments and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Schroder Emerging Markets Fund
Institutional Portfolio (the "Fund") (a separately managed portfolio of Schroder
Capital Funds (Delaware)) at October 31, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated herein, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments at October 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 17, 1999
21
<PAGE>
INVESTMENT ADVISER
Schroder Investment Management North America Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRUSTEES
Nancy A. Curtin, CHAIRMAN
David N. Dinkins
Peter E. Guernsey
Sharon L. Haugh
John I. Howell
Peter S. Knight
William L. Means
Clarence F. Michalis
Hermann C. Schwab
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors, Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRANSFER & SHAREHOLDER SERVICING AGENT
Boston Financial Data Services, Inc.
CUSTODIAN
State Street Bank and Trust Company
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
COUNSEL
Ropes & Gray
Schroder Emerging Markets Fund Institutional Portfolio
P.O. Box 8507
Boston, MA 02266
800-464-3108
- --------------------------------------------------------------------------------
The information contained in this report is intended for the general information
of the shareholders of the Trust. This report is not authorized for distribution
to prospective investors unless preceded or accompanied by a current Trust
prospectus which contains important information concerning the Trust.
- --------------------------------------------------------------------------------
