<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of April 30, 1999) (unaudited)
Performance
The Schroder Greater China Fund commenced operations on January 4, 1999. From
the date of its inception to April 30, 1999, the Fund's Investor Shares
returned 18.40%, while its benchmark, the MSCI China Free Index, returned
12.08% over the same period.
Market Background
The Chinese equity market had a weak start to the year, due to negative
economic news, large capital outflows and the relentless deflationary spiral.
The Chinese government's announcement that foreign loans would not receive
preferential treatment in the wind up of the troubled Guangdong International
Trust and Investment Company further damaged investor sentiment. However, in
February, signs of a turnaround in Asia's fortunes helped boost cyclical
stocks, and expectations of increased demand from a recovery in Japan combined
with stabilizing commodity prices spurred a rally in petrochemical stocks. In
addition, the clampdown on smuggling in China initiated in the latter half of
1998 and government pledges to reduce excess capacity led to price increases in
domestic petrochemical products. Progress in China's negotiations with the
World Trade Organization (WTO) also helped sentiment, as investors anticipated
freer trade between China and the U.S. and increased pressure to reform China's
banking sector and state owned enterprises.
Investment Policy
Given the negative economic outlook at the start of the year, we adopted a
cautious approach for the Fund. The Fund held high levels of cash and was
defensively positioned in infrastructure and power stocks, as these were key
beneficiaries of government spending. In February, we took advantage of the low
valuations of cyclical stocks and invested in petrochemical companies, such as
Zhenhai Refining and Yizheng Chemical, which benefited from stabilized global
commodity prices and domestic industry restructuring. The Fund held no mainland
stocks which also helped performance, as these stocks suffered from a lack of
liquidity.
Outlook
We do not anticipate increasing the Fund's bias towards cyclical stocks until
the outlook for growth and China's entry into the WTO is clearer. WTO
negotiations between the U.S. and China have suffered a series of setbacks, in
particular the bombing of the Chinese Embassy in Belgrade. The U.S. Congress
was reluctant to accept China's concessions for WTO entry but, in light of the
bombing, China has shifted negotiations onto a more political platform and
retracted its initial offers. Although we expect the delay is temporary, the
benefits from membership should emerge only over the longer term. In addition,
we are concerned about a possible devaluation of the Chinese renminbi which is
likely to depress stock prices. The Fund remains defensively positioned in
infrastructure and power stocks, as these stocks should continue to benefit
from the Chinese government's fiscal spending policies. We anticipate adding to
the Fund's steel holdings, due to the upturn in global steel prices and reduced
capacity in China.
In light of the risks associated with investing in China's equity markets,
investments in the Schroder Greater China Fund should only be viewed as part of
a complete investment program.
The views expressed in this report were those of the Fund's portfolio manager
as of April 30, 1999, and may not reflect the views of the portfolio manager on
the date this report is first published or any time thereafter. These views are
intended to assist shareholders of the Fund in understanding their investment
in the Fund and do not constitute investment advice; investors should consult
their own investment professionals as to their individual investment programs.
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Portfolio Characteristics as of April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Country Weightings Top Ten Holdings
Country % of Net Assets Security % of Net Assets
- -------------------------------------------- --------------------------------------------------
<S> <C> <C> <C>
China 51.84 % Zhenhai Refining &
Hong Kong 45.77 Chemical Co. Ltd. 13.97 %
Cash and Other Net Assets 2.39 Yizheng Chemical Fibre Co. Ltd. 9.81
------------- Shanghai Petrochemical Co. Ltd. 5.72
Total 100.00 % China Shipping Development Co. Ltd. 5.07
============= Ng Fung Hong Ltd. 5.07
Yanzhou Coal Mining Co. Ltd. 5.04
Guangdong Kelon Electrical
Holdings Co. Ltd. 4.81
Beijing Datang Power
Generation Co. Ltd. 4.56
China Resource Enterprises Ltd. 4.55
Legend Holdings Ltd. 4.53
--------------
Total 63.13 %
==============
</TABLE>
2
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Schedule of Investments
April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Common Stock - 97.6%
Shares Value US$ Shares Value US$
- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
China - 51.8 % Hong Kong - continued
500,000 Angang New Steel Co. Ltd. 26,000 China Merchants Holdings
Materials $50,321 International Co. Ltd.
490,000 China Shipping Services $ 18,283
Development Co. Ltd. (a) 32,000 China Resource Enterprises Ltd.
Services 60,063 Finance 53,882
63,000 Guangdong Kelon Electrical 18,000 China Telecom
Holdings Co. Ltd. (Hong Kong) Ltd. (a)
Consumer Durables 56,902 Services 41,109
3,500 Huaneng Power 78,000 Cosco Pacific Ltd.
International, Inc., ADR (a) Finance 52,837
Energy 47,031 204,000 Jiangsu Expressway Co. Ltd.
362,000 Shanghai Petrochemical Co. Ltd. Services 44,484
Materials 67,727 104,000 Legend Holdings Ltd.
804,000 Yizheng Chemical Consumer Durables 53,676
Fibre Co. Ltd. (a) 62,000 Ng Fung Hong Ltd.
Materials 116,188 Consumer Non-Durables 59,998
302,000 Zhejiang Expressway Co. Ltd. 190,000 Quingling Motors Co.
Services 50,267 Consumer Durables 29,664
754,000 Zhenhai Refining & 234,000 Shenzhen Expressway Co. Ltd.
Chemical Co. Ltd. Services 48,007
Energy 165,389 254,000 Yanzhou Coal Mining Co. Ltd.
------------ Materials 59,647
613,888 ------------
------------ 541,908
------------
Hong Kong - 45.8%
180,000 Beijing Datang Power Total Investments - 97.6% 1,155,796
Generation Co. Ltd. (cost $932,799)
Energy 53,999 Other Assets Less Liabilities- 2.4% 28,367
------------
80,000 Cafe de Coral Holdings Ltd. 26,322 Net Assets 100.0% $1,184,163
============
</TABLE>
- ---------------------------------------------------------
(a) Non-income producing security.
ADR - American Depository Receipts
Forward Foreign Currency Contracts
Contracts to Sell
<TABLE>
<CAPTION>
Underlying Face
Amount of Unrealized
Contract Date Currency Units Value Depreciation
- ------------------- -------------------- ------------- ------------------- -----------------
<S> <C> <C> <C> <C>
1/13/00 Hong Kong Dollar 4,260,000 $ 547,128 $ 13,094
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities
April 30, 1999 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments (Note 2):
Investments, at cost $ 932,799
Net unrealized appreciation 222,997
--------------
Total Investments, at value 1,155,796
Cash 35,835
Receivable for investments sold 38,366
Receivable for tax withheld 76
Receivable for interest, dividends and other receivables 8,883
Receivable from investment adviser (Note 5) 34,925
--------------
Total Assets 1,273,881
--------------
Liabilities:
Payable for forward foreign currency contracts 13,094
Payable for investments purchased 39,632
Payable to subadministrator (Note 3) 300
Accrued expenses and other liabilities 36,692
--------------
Total Liabilities 89,718
--------------
Net Assets $ 1,184,163
==============
Components of Net Assets:
Paid-in capital $ 1,000,000
Undistributed net investment income 4,656
Accumulated net realized loss on investments
and foreign currency transactions (30,396)
Net unrealized appreciation on investments
and foreign currency transactions 209,903
--------------
Net Assets $ 1,184,163
==============
Shares of Beneficial Interest 100,000
Net Asset Value, Offering, and Redemption Price Per Share $11.84
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
- --------------------------------------------------------------------------------
Schroder Greater China Fund
- --------------------------------------------------------------------------------
Statement of Operations
For the Period Ended April 30, 1999 (unaudited) (a)
<TABLE>
<S> <C>
Investment Income:
Dividend income (net of foreign withholding tax of $26) $ 9,495
Interest income 1,157
------------------
Total Investment Income 10,652
------------------
Expenses:
Investment advisory (Note 3) 2,697
Administration (Note 3) 749
Subadministration (Note 3) 8,132
Transfer agency (Note 3) 4,045
Custodian 3,928
Accounting (Note 3) 21,000
Legal 88
Audit 10,516
Registration 950
Trustees 28
Miscellaneous 66
------------------
Total Expenses 52,199
Fees waived and expenses reimbursed (Note 5) (46,203)
------------------
Net Expenses 5,996
------------------
Net Investment Income 4,656
------------------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments sold (30,396)
Net change in unrealized appreciation on investments 209,903
------------------
Net Realized and Unrealized Gain on Investments 179,507
------------------
Net Increase in Net Assets Resulting from Operations $ 184,163
==================
</TABLE>
- ------------------------------------------------------------------------
(a) For the period January 4, 1999 (commencement of operations) through April
30, 1999.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Period Ended
April 30, 1999 (a)
(unaudited)
- ----------------------------------------------------------------------------------
<S> <C>
Net Assets, Beginning of Period $ -
-----------------
Operations:
Net investment income 4,656
Net realized loss on investments (30,396)
Net change in unrealized appreciation on investments 209,903
-----------------
Net increase in net assets resulting from operations 184,163
-----------------
Capital Share Transactions:
Sale of shares 1,000,000
-----------------
Net increase in net assets 1,184,163
-----------------
Net Assets, End of Period (b) $ 1,184,163
=================
Share Transactions:
Sale of shares 100,000
=================
</TABLE>
- -------------------------------------------------------------
(a) For the period January 4, 1999 (commencement of operations) through April
30, 1999.
(b) Includes accumulated undistributed net investment income of
$4,656 for the period ended April 30, 1999.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Financial Highlights
Selected per share data and ratios for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the
Period Ended
April 30, 1999 (a)
(unaudited)
- ----------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
----------------
Investment Operations
Net Investment Income 0.05
Net Realized and Unrealized Gain on Investments
and Foreign Currency Transactions 1.79
----------------
Total from Investment Operations 1.84
----------------
Net Asset Value, End of Period $11.84
================
Total Return 18.40%
Ratio/Supplementary Data:
Net Assets at End of Period (in thousands) $1,184
Ratios to Average Net Assets:
Expenses, including
reimbursement/waiver of fees 2.00% (b)
Expenses, excluding
reimbursement/waiver of fees 17.42% (b)
Net investment income, including
reimbursement/waiver of fees 1.55% (b)
Portfolio Turnover Rate 137%
</TABLE>
- ------------------------------------------------------------------------
(a) For the period January 4, 1999 (commencement of operations) through April
30, 1999.
(b) Annualized.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
Note 1. Organization
Schroder Capital Funds (Delaware) (the "Trust") was organized as a
Maryland corporation on July 30, 1969; reorganized as Schroder Capital Funds,
Inc., a series company, on February 29, 1988; 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, as amended (the "Act"), currently has nine investment portfolios.
Included in this report is the Schroder Greater China Fund (the "Fund"), which
commenced operations on January 4, 1999. 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, 1999,
only Investor Shares had been issued.
Note 2. Significant Accounting Policies
These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make certain
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 amounts could differ
from those estimates.
The following represent the significant accounting policies of the Fund:
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 the mean of the closing bid and ask prices
("mid-market price"). Securities traded in over-the-counter markets, or listed
securities for which no trade is reported on the valuation date, are valued at
the most recent reported mid-market price. Prices used for valuations generally
are provided by independent pricing services. Domestic short-term investments,
having a maturity of 60 days or less, generally 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 the Trust's Board of Trustees. As of April 30, 1999,
the Fund did not hold a position in fair valued securities.
Security Transactions and Investment Income
Investment transactions are accounted for on 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 Fund is informed of the ex-dividend date. Dividend income is recorded net
of unrecoverable withholding tax. Interest income 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 or loss are converted to U.S.
dollar equivalents using foreign exchange rates in effect at the date of the
transactions.
Foreign currency amounts are translated into U.S. dollars at the mean of
the bid and asked prices of such currencies against U.S. dollars as follows:
(i) assets and liabilities at the rate of exchange at the end of the
8
<PAGE>
- --------------------------------------------------------------------------------
Schroder Greater China Fund
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
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 transactions to purchase or sell foreign
currencies 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 currency
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.
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 in proportion to each fund's
average net assets.
Distributions to Shareholders
Net investment income and net capital gain, if any, are distributed to
shareholders at least annually and are recorded on the ex-dividend date.
Distributions are based on amounts calculated in accordance with applicable
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are due primarily to differing
treatments of income and gain on various investment securities held by the
Fund, timing differences and differing characterizations of distributions made
by the Fund.
Federal Taxes
The Fund intends to qualify each year as a regulated investment company
and distribute all its taxable income. In addition, by distributing in each
calendar year substantially all its net investment income, capital gain and
certain other amounts, if any, the Fund will not be subject to federal excise
tax. Therefore, no federal income or excise tax provision is required.
Note 3. Investment Advisory and Other Services
Investment Adviser
The investment adviser to the Fund is Schroder Capital Management
International Inc. ("SCMI"). Pursuant to an Investment Advisory Agreement, SCMI
is entitled to receive compensation at an annual rate, payable monthly, of
0.90% of the Fund's average daily net assets.
SCMI has informed the Trust that it expects on or about July 1, 1999 to be
merged into Schroder Investment Management North America Inc., a newly
organized Delaware corporation. SCMI and Schroder Investment Management North
America Inc. are both wholly owned subsidiaries of Schroder U.S. Holdings, Inc.
9
<PAGE>
- -------------------------------------------------------------------------------
Schroder Greater China Fund
- -------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (concluded)
Administrator and Subadministrator
The administrator of the Fund is Schroder Fund Advisors Inc. ("Schroder
Advisors"). For its services, Schroder Advisors is entitled to receive
compensation at an annual rate, payable monthly, of 0.25% of the average daily
net assets of the Fund. In addition, the Trust has entered into a
Sub-Administration Agreement with State Street Bank and Trust Company and
Schroder Advisors. Under that Agreement, the Fund, together with other mutual
funds managed by SCMI 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.
Pursuant to a separate agreement, the Fund pays State Street fees for
accounting services at the following annual rates: 0.02% of the first $100
million of net assets, 0.015% of the next $100 million; 0.005% of the next $300
million, and 0.0025% of assets in excess of $300 million, 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 0.10%
of the average daily net assets of the Fund, subject to a minimum annual fee of
$25,000, and paid accounting fees to Forum Accounting Services, LLC at an
annual rate of $36,000.
Note 4. Purchases and Sales of Securities
The cost of securities purchased and the proceeds from sales of securities
(excluding short-term investments) for the period ended April 30, 1999,
aggregated $1,417,315 and $454,124, respectively.
Note 5. Waiver of Fees and Reimbursement of Expenses
In order to limit the Fund's expenses, SCMI and Schroder Advisors are
contractually obligated to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) until December 31, 1999, to the extent that the
Fund's net expenses exceed the annual rate of 2.00% of the Fund's average daily
net assets. For the period ended April 30, 1999, SCMI, Schroder Advisors, and
FAdS waived fees of $2,697, $749 and $7,832, respectively. SCMI reimbursed
expenses of $34,925.
Note 6. Concentration of Risk
The Fund's investments in companies domiciled in China and Hong Kong may
cause the Fund to be more susceptible to political, social and economic events
adversely affecting Asian countries in which it invests than funds not so
concentrated.
Note 7. Shareholder Meeting
On May 10, 1999, the sole shareholder of the Fund voted to change the
Fund's sub-classification from a diversified to a non-diversified investment
company.
10
<PAGE>
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
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
CUSTODIAN
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
TRANSFER AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services
Two Heritage Drive
North Quincy, MA 02171
(800) 464-3108
COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
This report is for the information of the
shareholders of the Schroder Greater China
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.
<PAGE>
[LOGO] Schroders
Schroder
Greater China
Fund
SEMI-ANNUAL REPORT
APRIL 30, 1999
(Unaudited)
Schroder Capital Funds (Delaware)
