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Previous: CENTRAL VERMONT PUBLIC SERVICE CORP, 8-K, 1999-02-08 |
Next: SCHRODER CAPITAL FUNDS /DELAWARE/, N-30D, 1999-02-08 |
[Logo] SCHRODERS
SCHRODER
EMERGING MARKETS FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 1998
Schroder Capital Funds (Delaware)
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
Account Information (800) 344-8332
Fund Literature (800) 290-9826
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek long-term capital
appreciation.
INVESTMENT ADVISER
Schroder Capital Management International Inc. (the "Investment Adviser")
is a wholly owned indirect subsidiary of Schroders plc, the London Stock
Exchange listed holding company parent of an investment banking and investment
management group of companies (the "Schroder Group") that dates its origins to
1804. The investment management operations of the Schroder Group are located in
20 countries worldwide including 15 offices in emerging markets. The Schroder
Group has been managing international investment portfolios since the early
years of this century. As of June 30, 1998, the Schroder Group had over $195
billion in assets under management. As of September 30, 1998, the Investment
Adviser, together with its U.K. affiliate, Schroder Capital Management
International Ltd., had approximately $24 billion under management of which
approximately $5.2 billion was invested in dedicated emerging markets mandates.
January 18, 1999
Dear Shareholder:
We are pleased to present the semi-annual report for the Schroder
Emerging Markets Fund for the six months ended November 30, 1998. This past six
months saw markedly divergent performance among the world's markets, as well as
considerable volatility of performance within certain individual emerging
markets. A common theme was investors' rising level of risk aversion in response
to economic and financial shocks, including Russian debt default and increased
devaluation risk in some emerging markets. In general, in the first half of the
fiscal year, economic problems appeared largely contained within Asia and parts
of the broader emerging markets universe. In the last fiscal quarter, the
turmoil in the emerging markets spread to European and the U.S. markets and
these markets also experienced some volatility.
Looking forward, we expect global growth to be slower in 1999 than it was
in 1998, as the contagion from emerging markets continues to weigh on demand in
developed markets. We believe that this will trim, but not eradicate, growth in
continental Europe. Latin America is likely to be one of the emerging market
regions where growth is likely to slow most sharply next year. Within Asia,
which experienced a very sharp contraction in 1998, we believe that activity may
be stabilizing, but further structural reforms, especially within the banking
sector, are needed to sustain a significant recovery.
On a more positive note, monetary authorities like the Federal Reserve
and its global counterparts were quick to act to forestall future problems by
lowering interest rates. A growing number of companies, including many in Asia,
are increasing their emphasis on shareholder value. This should help to ease
investors' anxieties and to trim the risk premiums that have risen in many
markets, although we believe that it is unlikely to return them to levels seen
earlier in the fiscal year.
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
We expect further uncertainty and volatility in the year ahead.
Nevertheless, compelling values exist in many emerging equity markets after this
year's correction, and many high quality stocks have been sold indiscriminately.
We believe that as investors once again focus on the attractive value now
available and on the long-term potential for restructuring and improved
profitability we will see a revival of interest in emerging markets. Schroders'
investment approach stresses the rewards of identifying high quality franchises
with sustainable growth prospects at attractive valuations. The present
environment presents great scope for our extensive global research network to
identify such opportunities for the long-term benefit of our investors.
Thank you for your interest in the Schroder Emerging Markets Fund.
Sincerely
/s/ M. J. Smith
Mark J. Smith
President
2
<PAGE>
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SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of November 30, 1998) (Unaudited)
PERFORMANCE
For the six month period ended November 30, 1998, the Schroder Emerging
Markets Fund returned -12.71%. its benchmark, the Morgan Stanley Capital
International Emerging Markets Free (excluding Malaysia) Index, returned -15.26%
over the same period.
Country allocation contributed positively to the Fund's performance over
the period, specifically an overweight position in Korea and Eastern Europe and
an underweight position in the troubled Brazilian and Russian markets. Stock
selection on the whole detracted from performance. The Fund invests in larger
companies with solid, long-term fundamentals, and it was these more liquid
stocks that suffered dramatic sell-offs in the last six months as investors fled
the emerging markets. Stock selection in Taiwan and Thailand contributed
positively to performance and, in Poland, our underweight position in banks
benefited the Fund.
MARKET BACKGROUND
The rolling crisis in emerging markets, which began with the devaluation of
the Thai baht in mid-1997, has since spread to Russia, Latin America and Brazil.
As currency and economic expansion concerns gradually became global, investors
became increasingly risk averse. Capital was withdrawn, international lending
and borrowing declined and many economies in the asset class stalled or
contracted.
Greece and Portugal were least affected by the turbulence as their
economies were supported by falling inflation and low interest rates. Both
countries also benefited from their forthcoming participation in European
Monetary Union (EMU) (Portugal in 1999; Greece in 2000). The crisis in Russia
impacted other countries in Eastern Europe, resulting in a decline in investor
sentiment. Latin America's current account balances came under pressure as a
result of falling commodity prices and this was exacerbated by a downturn in
capital inflows.
September was a particularly volatile month for global markets, mainly due
to Brazil's huge budget deficits. However, emerging markets enjoyed a strong
recovery in October and November. A series of interest rate cuts by the U.S.
Federal Reserve reduced currency pressures in many emerging markets, triggering
a market rally. The rally continued through November as Brazil announced a
fiscal adjustment and a $41.5 billion IMF aid package. In Europe and the
Mediterranean, however, countries such as Israel and Turkey experienced reduced
capital flows for the first time.
PORTFOLIO REVIEW
Given the weakness in emerging stock markets, we maintained a defensive
position throughout the six month period. We held unusually high levels of cash,
reducing our cash position in early October as confidence in emerging markets
recovered. We focused on markets in which economic fundamentals remained strong,
such as Poland, Hungary, and Mediterranean Europe, and on those countries most
committed to restructuring. In particular, we favored Korea: it was already
showing signs of corporate restructuring and bank recapitalization, its interest
rates had fallen sharply and its currency was relatively stable. We were
underweight in countries with weak economic fundamentals, such as Brazil and
South Africa. At the height of the crisis in August, we purchased
U.S.$-denominated bonds in Korea, Mexico and Argentina as a further defensive
measure. We also hedged the Fund's exposure to the Hong Kong dollar, the Polish
zloty and the Brazilian real.
In the midst of these unsettled market conditions, we focused on companies
with strong balance sheets and sustainable cash flows, such as China Telecom and
Korea Electric Power.
3
<PAGE>
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SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (Unaudited) (concluded)
OUTLOOk
Looking ahead, we favor emerging Mediterranean Europe and Africa and Asia
over Latin America. We believe that weaker commodity prices and lower capital
flows into emerging markets will hit Latin America particularly hard due to its
huge current account deficits, whereas some Asian companies - and most companies
in Emerging Mediterranean Europe - will start to see a recovery in 1999. In
particular, we favor the prospects for Korea, however, we believe that further
restructuring and bank recapitalization is key to the future direction of its
stock market.
While the outlook for emerging markets has improved, we still have a number
of concerns: commodity prices in emerging markets remain weak, global growth is
expected to slow in 1999, and the capital available for emerging market
companies and governments is scarce. We believe that Brazil is key to the future
of emerging markets, with continued progress on fiscal reform and lower interest
rates essential if it is to avoid internal debt restructuring. On a more
positive note, emerging market companies are trading at a significant discount
relative to their developed market peers at the moment, representing what we
believe to be great opportunities for long-term investors.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO MANAGER AS
OF NOVEMBER 30, 1998, 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.
4
<PAGE>
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SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF NOVEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
TOP TEN HOLDINGS COUNTRY WEIGHTINGS
SECURITY % OF NET ASSETS COUNTRY % OF NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
Ssangyong Investment & Securities Co. Ltd. (Korea) 3.6 % Argentina 1.9 %
Telefonos de Mexico SA ADR (Mexico) 3.2 Botswana 0.3
Samsung Electronics Co. (Korea) 2.9 Brazil 12.4
Telecomunicacoes de Sao Paulo SA - Telesp (Brazil) 2.5 Chile 3.5
Teva Pharmaceutical Industries Ltd. ADR (Israel) 2.0 China 0.9
Companhia Energetica de Minas Gerais - 2.0 Czech Republic 1.0
CEMIG ADR (Brazil) Egypt 2.1
Samsung Display Devices Co. (Korea) 2.0 Greece 7.4
ITC Ltd. GDR (India) 1.9 Hong Kong 3.6
Nan Ya Plastics Corp., 1.75%, 7/19/01 (Taiwan) 1.8 Hungary 2.0
Hellenic Bottling Co. SA (Greece) 1.7 India 6.0
______
Indonesia 1.7
23.6 %
====== Israel 5.0
Korea, Republic of 13.6
Luxembourg 0.4
Mauritius 0.3
Mexico 8.9
Peru 2.3
Philippines 1.9
Poland 2.0
Russia 0.6
South 8.4
Africa
Taiwan 6.4
Thailand 1.9
Turkey 0.8
Zimbabwe 0.2
Cash and Other Assets 4.5
_________
100.0 %
=========
</TABLE>
5
<PAGE>
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SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
ASSETS:
Investments (Notes 1 and 2):
Investment in Schroder EM Core Portfolio (the "Portfolio") $ 540,332
Receivable from admimistrator (Notes 3 and 4)
29,618
Other receivables
305
--------------------
Total Assets
570,255
--------------------
LIABILITIES:
Payable to subadministrator (Note 3)
171
Accrued expenses and other liabilities
29,725
--------------------
Total Liabilities
29,896
--------------------
Net Assets $ 540,359
====================
COMPONENTS OF NET ASSETS:
Paid-in capital $ 612,471
Undistributed net investment income (loss)
1,300
Accumulated net realized gain (loss)
(76,713)
Net unrealized appreciation (depreciation) on investments
3,301
--------------------
Net Assets $ 540,359
====================
SHARES OF BENEFICIAL INTEREST
68,111
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER SHARE
(NET ASSETS / SHARES OF BENEFICIAL INTEREST) $ 7.93
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
NET INVESTMENT INCOME ALLOCATED FROM THE PORTFOLIO:
Dividend income (net of unrecoverable foreign withholding taxes of $208) $ 2,979
Interest income
Net expenses 2,091
(3,241)
--------------------
Net Investment Income Allocated from the Portfolio
1,829
--------------------
EXPENSES:
Administration (Note 3)
341
Subadministration (Note 3)
12,500
Transfer agency (Note 3)
6,060
Accounting (Note 3)
6,000
Legal
1,071
Audit
5,975
Registration
10,853
Trustees
17
Miscellaneous
39
--------------------
Total Expenses
42,856
Fees waived and expenses reimbursed (Note 4)
(42,288)
--------------------
Net Expenses
568
--------------------
NET INVESTMENT INCOME (LOSS)
1,261
--------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS ALLOCATED FROM THE PORTFOLIO:
Net realized gain (loss) on investments
(76,567)
Net realized gain (loss) on foreign currency transactions
771
--------------------
Net realized gain (loss) on investments and foreign
currency transactions
(75,796)
--------------------
Net change in unrealized appreciation (depreciation) on investments
5,979
Net change in unrealized appreciation (depreciation) on foreign
currency transactions
(488)
--------------------
Net change in unrealized appreciation (depreciation) on investments
and foreign currency transactions
5,491
--------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS ALLOCATED FROM THE PORTFOLIO
(70,305)
--------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (69,044)
====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, MAY 31, 1998
1998 (UNAUDITED) (NOTE 1)
-------------------- --------------------
NET ASSETS, BEGINNING OF PERIOD $ 17,827 $ -
-------------------- --------------------
OPERATIONS:
Net investment income (loss)
1,261 37
Net realized gain (loss) on investments
and foreign currency transactions
(75,796) (915)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions
5,491 (2,190)
-------------------- --------------------
Net increase (decrease) in net assets resulting from operations
(69,044) (3,068)
-------------------- --------------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares
674,565 20,895
Redemption of shares
(82,989)
-------------------- --------------------
Net increase (decrease) from capital share transactions
591,576 20,895
-------------------- --------------------
Net increase (decrease) in net assets
522,532 17,827
-------------------- --------------------
NET ASSETS, END OF PERIOD $ 540,359 $ 17,827
==================== ====================
(Including accumulated undistributed net investment
income (loss) of $1,300 and $39, respectively)
SHARE TRANSACTIONS:
Sale of shares
75,909 1,971
Redemption of shares
(9,769) -
-------------------- --------------------
Net increase (decrease) in shares
66,140 1,971
==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - INVESTOR SHARES
Selected per share data and ratios for an Investor share outstanding throughout
each period:
<TABLE>
<S> <C> <C> <C>
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, MAY 31,
1998 (UNAUDITED) 1998 (A)
------------------ -----------------
Net Asset Value, Beginning of Period $9.04 $10.00
------------------ -----------------
Investment Operations
Net Investment Income (Loss) - 0.02 (b)
Net Realized and Unrealized Gain (Loss) on Investments (1.11) (0.98)
------------------ -----------------
Total from Investment Operations (1.11) (0.96)
------------------ -----------------
Net Asset Value, End of Period $7.93 $9.04
================== =================
Total Return (c) (12.28)% (9.60)%
Ratio/Supplementary Data
Net Assets at End of Period (in thousands) $540 $18
Ratios to Average Net Assets:
Expenses including reimbursement/waiver of fees (b)(d) 1.68% 1.70%
Expenses excluding reimbursement/waiver of fees 22.00% (b)(d) - (e)
Net investment income (loss)including reimbursement/waiver of fees (b)(d) 0.55% 1.72%
Portfolio Turnover Rate (f) 75.15% 22.97%
</TABLE>
- --------------------------------------
(a) Investor Class shares were first issued on October 31, 1997.
(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 (Note 4). Total return calculations for a period of
less than one year are not annualized.
(d) Annualized.
(e) Amount is not meaningful due to short period of operations.
(f) Rate represents the turnover of the underlying Portfolio.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1998
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 nine investment portfolios. Included in this report is the
Schroder Emerging Markets Fund (the "Fund"), which is a non-diversified
portfolio that commenced operations on October 31, 1997. 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,
which have equal rights as to assets and voting privileges. As of November 30,
1998, only Investor Shares had been issued.
MASTER-FEEDER ARRANGEMENT
The Fund seeks to achieve its investment objective by investing all its
investable assets in Schroder EM Core Portfolio (the "Portfolio"), a separate
non-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 daily its share of the Portfolio's income,
expenses and realized and unrealized gain or loss. The Portfolio's financial
statements are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. As of November 30, 1998, the
Fund owned approximately 4.7% of the interests in the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles which require management to make 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 or decrease in net
assets from operations during the fiscal period. Actual results could differ
from those estimates.
The following represents the 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 is 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 or loss. In addition, the Fund accrues
its own expenses. Investment income, realized and unrealized gains or losses,
and the common expenses of the Fund are allocated as accrued on a pro rata basis
to each class of shares based on the relative net assets of each class of shares
to the total net assets of the Fund.
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
Portfolio, timing differences and differing characterizations of distributions
made by the Fund.
10
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FEDERAL TAXES
The Fund intends to qualify, and continue 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.
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 net assets. Expenses that are directly attributable to a class of shares
are allocated to that class.
ORGANIZATION COSTS
Costs incurred by the Fund 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
The Fund currently invests all 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 administrator of the Fund is Schroder Fund Advisors Inc. ("Schroder
Advisors") and the subadministrator is 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 the Fund's average
daily net assets. For its services, FAdS is entitled to receive compensation at
an annual rate, payable monthly, of 0.075% of the Fund's average daily net
assets, subject to a $25,000 minimum annual fee, plus a $12,000 charge per
class.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The transfer agent and dividend disbursing agent for the Fund is Forum
Shareholder Services, LLC ("FSS"). FSS is paid a transfer agent fee in the
amount of $12,000 per share class, per year, plus certain other charges.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ("FAcS") provides fund accounting services
to the Fund. For its services, FAcS is entitled to receive a fee of $12,000 per
year.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
To limit the Fund's expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) to the extent that the Fund's expenses exceed
1.70% of the Fund's average daily net assets attributable to Investor shares.
The expense limitations cannot be modified or withdrawn except by a majority
vote of the Trustees who are not affiliated persons (as defined in the Act) of
the Trust. SCMI, Schroder Advisors, FAdS, FSS and FAcS may voluntarily waive all
or a portion of their fees, from time to time. For the six months ended November
30, 1998, Schroder Advisors and FAdS waived fees of $341 and $12,329,
respectively, and Schroder Advisors reimbursed expenses of $29,618.
11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
NOTE 5. BENEFICIAL INTEREST
As of November 30, 1998, one affiliated shareholder was record owner of
approximately 95% of the total outstanding shares of the Fund.
12
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
_______________ ________
ARGENTINA (1.9%)
COMMON STOCK
1,000 Banco Rio De La Plata ADR
FINANCE $ 11,750
2,300 Disco SA ADR (a)
CONSUMER NON-DURABLES
47,581
14,000 Perez Companc SA
ENERGY
73,095
2,900 Telecom Argentina ADR
SERVICES
88,450
---------
220,876
---------
BOTSWANA (0.3%)
COMMON STOCK
26,700 Sechaba Breweries Ltd. (b)
CONSUMER NON-DURABLES
33,896
--------
BRAZIL (12.4%)
COMMON STOCK
9,069 Companhia Energetica de Minas Gerais - CEMIG ADR
ENERGY
229,565
6,000 Companhia Paranaense de Energia - Copel Stet.
ENERGY
58,500
868,000 Companhia Paulista de Forca e Luz-CPFL (a)
ENERGY
82,030
6,000 Companhia Vale do Rio Doce
ENERGY
87,430
2,100 Companhia Vale do Rio Doce
ENERGY
30,600
2,400 Embratel Participacoes SA (a)
SERVICES
38,400
485,000 Telecomunicacaoes do Parana SA - Telepar
SERVICES
100,554
1,000 Telesp Participacoes SA ADR (a)
SERVICES
26,750
1,040,000 Telesp Tel Sao (a)
SERVICES
38,275
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
_____________ _____________
BRAZIL (CONCLUDED)
PREFERRED STOCK
5,890,000 Banco Bradesco
FINANCE $ 42,667
50,000 Banco Itau SA
FINANCE
27,893
130,000 Companhia Cervejaria Brahma
CONSUMER NON-DURABLES
70,142
7,600,000 Gerdau SA
MATERIALS
74,671
890,000 Petrol Brasileiro Petrobras
ENERGY
126,719
8,940,000 Tele Centro Sul Participacoes SA (a)
SERVICES
104,213
1,690,000 Telecomunicacoes de Sao Paulo SA - Telesp
SERVICES
287,060
---------
1,425,469
---------
CHILE (3.5%)
COMMON STOCK
5,700 Banco Santander Chile ADR (a)
FINANCE
72,675
5,200 Chilectra SA ADR
ENERGY
116,457
4,000 Distribucion y Servicio D&S SA ADR
SERVICES
55,500
2,000 Embotella Andina ADR
CONSUMER NON-DURABLES
28,250
1,000 Enersis SA - ADR
ENERGY
23,375
900 Sociedad Quimica y Minera de Chile SA ADR
MATERIALS
34,650
3,300 Quinenco SA ADR
MULTI-INDUSTRY
31,350
1,500 Vina Concha Y Toro ADR
CONSUMER NON-DURABLES
42,188
-------
404,445
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
___________ __________
CHINA (0.9%)
CONVERTIBLE CORPORATE BONDS
US $ 70,000 Huaneng Power International, Inc., 1.75%, 5/21/04
ENERGY $ 65,975
US $ 128,000 Qingling Motors Ltd, 3.50%, 1/22/02
CAPITAL EQUIPMENT
40,960
-------
106,935
-------
CZECH REPUBLIC (1.0%)
COMMON STOCK
8,040 SPT Telecom AS (a)
SERVICES
118,630
-------
EGYPT (2.1%)
COMMON STOCK
13,560 Commercial International Bank GDR
FINANCE
102,717
6,270 Oriental Weavers Co.
CONSUMER DURABLES
134,057
--------
236,774
--------
GREECE (7.4%)
COMMON STOCK
1,140 Alpha Credit Bank
FINANCE
108,483
7,440 Hellenic Bottling Co. SA
CONSUMER NON-DURABLES
199,288
6,919 Hellenic Telecommunication Organization SA
SERVICES
173,137
3,100 Intracom SA
CAPITAL EQUIPMENT
159,518
764 National Bank of Greece SA
FINANCE
137,032
710 Panafon SA (a)
SERVICES
12,762
1,700 STET Hellas Telecommunications SA ADR (a)
SERVICES
59,075
-------
849,295
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
__________ ________
HONG KONG (3.6%)
COMMON STOCK
18,000 Cheung Kong Infrastructure Holdings
CAPITAL EQUIPMENT $ 43,123
159,000 China Resources Beijing Land (a)
FINANCE
43,123
13,000 China Resources Enterprises Ltd.
MULTI-INDUSTRY
18,972
63,000 China Telecom (Hong Kong) Ltd. (a)
SERVICES
125,707
29,000 Ng Fung Hong Ltd.
SERVICES
25,843
194,000 Shenzhen Expressway Co. Ltd. (a)
SERVICES
46,352
CONVERTIBLE CORPORATE BOND
US $ 155,000 Cosco Treasury Co. Ltd., 3.50%, 3/13/03
107,918
FINANCE --------
411,038
--------
HUNGARY (2.0%)
COMMON STOCK
340 Gedeon Richter RT
CONSUMER NON-DURABLES
13,133
4,600 Matav RT ADR
SERVICES
125,637
1,700 MOL Magyar Olajes-es Gazipari RT GDR
ENERGY
39,355
1,320 OTP Bank RT GDR
FINANCE
55,935
-------
234,060
-------
INDIA (6.0%)
COMMON STOCK
11,700 ITC Ltd. GDR
MULTI-INDUSTRY
224,055
10,500 Larsen & Toubro Ltd. GDR
MULTI-INDUSTRY
69,563
10,100 Mahanagar Telephone Nigam Ltd.
SERVICES
108,070
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
__________ _________
INDIA (CONCLUDED)
COMMON STOCK
26,400 Reliance Industries Ltd. GDS
MATERIALS $ 134,310
11,700 State Bank of India
FINANCE
92,137
5,500 Videsh Sanchar Nigam Ltd. GDR
SERVICES
56,650
-------
684,785
-------
INDONESIA (1.7%)
COMMON STOCK
6,000 Gulf Indonesia Resources Ltd. (a)
ENERGY
52,500
13,000 PT Gudang Garam
CONSUMER NON-DURABLES
16,808
10,000 PT HM Sampoerna (a)
CONSUMER NON-DURABLES
6,599
182,000 PT Indofoods Sukses Makmur (a)
CONSUMER NON-DURABLES
90,080
23,000 PT Indosat ADR
SERVICES
33,145
--------
199,132
--------
ISRAEL (5.0%)
COMMON STOCK
20,930 Bank Hapoalim Ltd.
FINANCE
40,146
51,060 Bank Leumi Le-Israel
FINANCE
70,775
17,240 Bezeq Israeli Telecommunication Corp. Ltd. (a)
SERVICES
50,302
10,970 Blue Square-Israel Ltd.
SERVICES
133,697
2,000 Formula Systems Ltd. ADR (a)
SERVICES
50,000
5,400 Teva Pharmaceutical Industries Ltd. ADR
CONSUMER NON-DURABLES
234,900
-------
579,820
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
____________ __________
KOREA, REPUBLIC OF (13.6%)
COMMON STOCK
5,900 Korea Electric Power Corp.
ENERGY $ 113,644
3,500 LG Chemical Ltd.
MULTI-INDUSTRY
29,494
17,608 LG Electronics
CONSUMER DURABLES
174,526
2,000 Pohang Iron & Steel Co. Ltd.
MATERIALS
113,559
2,510 SK Corp.
ENERGY
24,778
123 SK Telecom Co. Ltd.
SERVICES
87,659
6,226 Samsung Display Devices Co.
CONSUMER DURABLES
226,355
6,272 Samsung Electronics Co.
CONSUMER DURABLES
335,245
7,803 Samsung Heavy Industries (a)
CAPITAL EQUIPMENT
43,211
RIGHTS
3,637 Samsung Heavy Industries (a)
CAPITAL EQUIPMENT
4,028
168,634 Ssangyong Investment & Securities Co. Ltd. (a)
FINANCE
412,787
---------
1,565,286
---------
LUXEMBOURG (0.4%)
COMMON STOCK
5,000 Quilmes Industrial SA ADR
CONSUMER NON-DURABLES
47,187
------
MAURITIUS (0.3%)
COMMON STOCK
39,800 State Bank of Mauritius Ltd. (a)
FINANCE
28,583
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
___________ __________
MEXICO (8.9%)
COMMON STOCK
28,000 Cemex SA de CV
MATERIALS $ 67,836
64,800 Cifra SA de CV (a)
SERVICES
79,628
63,000 Controladora Comercial Mexicana SA de CV
SERVICES
40,282
56,000 Fomento Economico Mexica SA de CV
CONSUMER NON-DURABLES
129,516
22,500 Grupo Carso SA de CV
MULTI-INDUSTRY
71,257
32,100 Grupo Industrial Bimbo SA de CV
CONSUMER NON-DURABLES
50,670
17,400 Grupo Industrial Saltillo SA de CV
MATERIALS
46,240
9,100 Industrias Penoles SA
MATERIALS
27,910
21,500 Kimberly Clarke de Mexico SA de CV
SERVICES
57,780
7,800 Telefonos de Mexico SA ADR
SERVICES
363,188
13,000 Tubos de Acero de Mexico SA ADR
MATERIALS
91,812
---------
1,026,119
---------
PERU (2.3%)
COMMON STOCK
7,370 Credicorp Ltd.
FINANCE
81,070
2,900 Companhia Minas Buenaventura SA ADR
MATERIALS
36,794
44,000 Minsur SA
MATERIALS
73,251
5,100 Telefonica del Peru SA ADR
SERVICES
75,544
-------
266,659
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
<TABLE>
<S> <C> <C> <C>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
___________ __________
PHILIPPINES (1.9%)
COMMON STOCK
180,000 Ayala Corp.
MULTI-INDUSTRY $ 57,106
53,000 La Tondena Distillers, Inc.
CONSUMER NON-DURABLES
32,284
24,000 Manila Electric Co. "B" Shares
ENERGY
76,751
2,000 Metropolitan Bank & Trust Co. (a)
FINANCE
14,087
1,400 Philippine Long Distance Telephone Co.
SERVICES
36,599
-------
216,827
-------
POLAND (2.0%)
COMMON STOCK
20,250 Elektrim Spolka Akcyjna SA
MULTI-INDUSTRY
170,422
14,060 Telekomunikacja Polska (a)
SERVICES
62,216
--------
232,638
--------
RUSSIA (0.6%)
COMMON STOCK
9,110 Surgutneftegaz ADR
ENERGY
32,663
7,690 Unified Energy Systems GDR
ENERGY
31,302
------
63,965
------
SOUTH AFRICA (8.4%)
COMMON STOCK
12,000 ABSA Group Ltd.
FINANCE
57,786
3,640 Anglo American Corp. of South Africa Ltd.
FINANCE
116,685
2,500 Anglo American Industrial Corp. Ltd.
MULTI-INDUSTRY
44,376
20,137 Barlow Ltd.
MULTI-INDUSTRY
100,152
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
____________ ________
SOUTH AFRICA (CONCLUDED)
COMMON STOCK
15,100 Ellerine Holdings Ltd.
CONSUMER DURABLES $ 35,826
77,400 First Rand Ltd.
FINANCE
95,220
29,000 Illovo Sugar Ltd.
CONSUMER NON-DURABLES
29,561
1 LA Retail Stores Ltd.
CONSUMER NON-DURABLES
1
115,000 Malbak Ltd.
MATERIALS
52,548
105,400 Metro Cash and Carry Ltd.
SERVICES
70,390
13,000 Rembrandt Group Ltd.
MULTI-INDUSTRY
84,649
14,900 Sappi Ltd.
MATERIALS
68,346
16,600 Sasol Ltd.
MULTI-INDUSTRY
64,620
4,495 South African Breweries, Ltd.
SERVICES
76,080
14,800 South African Druggists Ltd.
MATERIALS
72,829
-------
969,069
-------
TAIWAN (6.4%)
COMMON STOCK
9,000 Asustek Computer, Inc. (a)
CAPITAL EQUIPMENT
76,316
25,000 Cathay Life Insurance Co.
SERVICES
90,962
165,000 China Steel Corp.
MATERIALS
107,351
36,000 Nan Ya Plastics Corp. (a)
MATERIALS
53,504
30,000 Siliconware Precision Industries Co. (a)
CAPITAL EQUIPMENT
57,815
56,000 Taiwan Semiconductor Manufacturing Co. (a)
CAPITAL EQUIPMENT
135,549
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
AS OF NOVEMBER 30, 1998
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
____________ ________
TAIWAN (CONCLUDED)
CONVERTIBLE CORPORATE BOND
US $ 185,000 Nan Ya Plastics Corp., 1.75%, 7/19/01
MATERIALS $ 210,438
-------
THAILAND (1.9%) 731,935
COMMON STOCK -------
5,000 Advanced Info Service Public Co. Ltd. (a)
SERVICES
29,086
19,000 Electricity Generating Public Co. Ltd. (a)
ENERGY
50,526
6,000 PTT Exploration & Production Public Co. Ltd. (a)
ENERGY
48,199
2,500 Siam Cement Public Co. Ltd. (a)
MATERIALS
52,355
15,000 Siam Makro Public Co. Ltd.
CONSUMER NON-DURABLES
31,163
10,000 TelecomAsia Corp. Public Co. Ltd. (a)
SERVICES
4,640
-------
215,969
-------
TURKEY (0.8%)
COMMON STOCK
1,528,375 Akbank T.A.S.
FINANCE
31,222
2,991,300 Dogan Yayin Holdings AS (a)
FINANCE
14,538
982,800 Netas Telekomunik (a)
CAPITAL EQUIPMENT
18,782
265,510 Vestel Elektronik Sanayi ve Ticanet AS (a)
CONSUMER NON-DURABLES
25,807
------
90,349
------
ZIMBABWE (0.2%)
COMMON STOCK
1,000,000 Econet Wireless Holdings (a)
SERVICES
24,226
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONCLUDED)
AS OF NOVEMBER 30, 1998 Value
--------
TOTAL INVESTMENTS (95.5%) (COST $11,052,557) $ 10,983,967
----------
OTHER ASSETS LESS LIABILITIES (4.5%)
519,604
----------
TOTAL NET ASSETS (100.0%) $ 11,503,571
==========
(a) Non-income producing security.
(b) Illiquid security.
ADR- American Depository Receipts.
GDR - Global Depository Receipts.
GDS - Global Depository Shares.
<TABLE>
<S> <C> <C> <C> <C>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
CONTRACTS TO SELL
CONTRACT UNDERLYING FACE APPRECIATION/
DATE CURRENCY AMOUNT OF VALUE (DEPRECIATION)
UNITS
- ----------------------------------------------------------------------------------------------------------------------------
2/5/99 Brazilian Cruzeiro 242,520 194,874 (6,874)
2/22/99 Hong Kong Dollar 1,400,000 180,600 (6,036)
12/15/98 Polish Zloty 151,400 43,948 (3,948)
-------------------------------------
419,422 (16,858)
-------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
ASSETS:
Investments (Note 2):
Investments at cost $ 11,052,557
Net unrealized appreciation (depreciation)
(68,590)
----------------------
Total Investments at value
10,983,967
Cash
349,662
Foreign currency (cost $96,462)
96,603
Receivable from administrator
34,535
Receivable for dividends and interest
61,274
Receivable for investments sold
141,083
Organization costs, net of amortization (Note 2)
762
----------------------
Total Assets
11,667,886
----------------------
LIABILITIES:
Payable for investments purchased
110,724
Payable for forward foreign currency contracts
16,858
Payable to subadministrator (Note 3)
708
Accrued expenses and other liabilities
36,025
----------------------
Total Liabilities
164,315
----------------------
Net Assets $ 11,503,571
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
INVESTMENT INCOME:
Dividend income (net of foreign withholding tax of $6,907) $ 98,853
Interest income
50,611
---------------------
Total Investment Income
149,464
---------------------
EXPENSES:
Investment advisory (Note 3)
63,973
Administration (Note 3)
6,397
Subadministration (Note 3)
12,500
Interestholder recordkeeping (Note 3)
6,125
Custody
55,750
Accounting (Note 3)
37,000
Legal
1,604
Audit
14,204
Pricing services
6,646
Trustees
758
Amortization of organization costs (Note 2)
97
Miscellaneous
446
---------------------
Total Expenses
205,500
Fees waived and expenses reimbursed (Note 6)
(112,607)
---------------------
Net Expenses
92,893
---------------------
NET INVESTMENT INCOME (LOSS)
56,571
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments
(4,836,204)
Net realized gain (loss) on foreign currency transactions
(41,171)
---------------------
Net realized gain (loss) on investments and foreign currency
transactions currency transactions
(4,877,375)
---------------------
Net change in unrealized appreciation (depreciation) on investments
2,261,068
Net change in unrealized appreciation (depreciation) on foreign
currency transactions
(25)
---------------------
Net change in unrealized appreciation (depreciation)
investments and foreign currency transactions
2,261,043
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
(2,616,332)
---------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,559,761)
=====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE PERIOD
MONTHS ENDED ENDED
NOVEMBER 30, MAY 31, 1998
1998 (UNAUDITED) (NOTE 1)
---------------------- ----------------------
NET ASSETS, BEGINNING OF PERIOD $26,730,035 $ -
---------------------- ----------------------
OPERATIONS:
Net investment income (loss)
56,571 210,351
Net realized gain (loss) on investments
(4,877,375) (518,984)
Net change in unrealized appreciation (depreciation) on investments
2,261,043 (2,346,562)
---------------------- ----------------------
Net increase (decrease) in net assets resulting from operations
(2,559,761) (2,655,195)
---------------------- ----------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions
3,165,981 39,419,804
Withdrawals
(15,832,684) (10,034,574)
---------------------- ----------------------
Net transactions from investors' beneficial interest
(12,666,703) 29,385,230
---------------------- ----------------------
Net increase (decrease) in net assets
(15,226,464) 26,730,035
---------------------- ----------------------
NET ASSETS, END OF PERIOD $ 11,503,571 $ 26,730,035
====================== ======================
FOR THE SIX FOR THE PERIOD
MONTHS ENDED ENDED
NOVEMBER 30, MAY 31, 1998
1998 (UNAUDITED) (NOTE 1)
---------------------- ----------------------
FINANCIAL HIGHLIGHTS
Portfolio performance for the following periods:
Net Assets at End of Period (in thousands) $11,504 $26,730
Ratios to Average Net Assets:
Expenses including reimbursement/waiver of fees (a) 1.45% 1.45%
Expenses excluding reimbursement/waiver of fees (a) 3.21% 2.38%
Net investment income (loss) including reimbursement/
waiver of fees (a) 0.88% 1.35%
Portfolio Turnover Rate 75.15% 22.97%
- ------------------------------
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1998
NOTE 1. ORGANIZATION
Schroder Capital Funds ("Schroder Core") was organized as a Delaware
business trust on September 7, 1995. Schroder Core, which is registered as an
open-end management investment company under the Investment Company Act of 1940
(the "Act"), currently has eight investment portfolios. Included in this report
is Schroder EM Core Portfolio (the "Portfolio"), which is a non-diversified
portfolio that commenced operations on October 30, 1997. Under its Trust
Instrument, Schroder Core is authorized to issue an unlimited number of
interests without par value. Interests in the Portfolio are sold without any
sales charge in private placement transactions 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 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 results could differ
from those estimates.
The following represents the 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 the mean of the closing bid and ask ("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, 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
Schroder Core's Board of Trustees. As of November 30, 1998, the Portfolio did
not hold a position in any fair valued securities.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Dividend
income is recorded on 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 is recorded as
earned. Identified cost of investments sold is used to determine realized 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 on
the date of the transactions.
Foreign currency amounts are translated into U.S. dollars at the mean of
the bid and asked prices of such currencies against U.S. dollars as follows: (i)
assets and liabilities at the rate of exchange at the end of the respective
period; and (ii) purchases and sales of securities and income and expenses at
the rate of exchange prevailing on the dates of such transactions. The portion
of the results of operations arising from changes in the exchange rates and the
portion due to fluctuations arising from changes in the market prices of
securities are not isolated. Such fluctuations are included with the net
realized and unrealized gain or loss on investments.
27
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Portfolio may enter into forward contracts to purchase or sell
foreign currencies. 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 portfolio. Expenses that are directly attributable to more
than one portfolio are allocated among the respective portfolios in proportion
to each portfolio's net assets.
ORGANIZATION COSTS
Costs incurred by the Portfolio in connection with its organization are
being 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 from Schroder EM Core Portfolio an annual
fee, payable monthly, of 1.00% of the Portfolio's average daily net assets.
ADMINISTRATOR AND SUBADMINISTRATOR
The administrator of the Portfolio is Schroder Fund Advisors Inc.
("Schroder Advisors") which entitles Schroder Advisors to receive compensation
at an annual rate, payable monthly, of 0.10% of the Portfolio's average daily
net assets. The subadministrator of the Portfolio is Forum Administrative
Services, LLC ("FAdS"). FAdS is entitled to receive compensation at an annual
rate, payable monthly, of 0.075% of the Portfolio's average daily net assets,
subject to an annual minimum of $25,000 for its services.
OTHER SERVICE PROVIDERS
Forum Accounting Services, LLC ("FAcS") performs portfolio accounting
services for the Portfolio and is entitled to receive compensation for its
services in the amount of $60,000 per year, plus certain other charges, based
upon the number and types of portfolio transactions. FAcS also provides
interestholder record keeping services to the Portfolio for which it receives
$12,000 per year, plus certain other charges.
28
<PAGE>
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SCHRODER EM CORE PORTFOLIO
- --------------------------------------------------------------------------------
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 period ended November 30,
1998, were $9,062,966 and $19,491,649, respectively.
For federal income tax purposes, the tax basis of investment securities
owned as of November 30, 1998, was $11,052,557, and the net unrealized
depreciation of investment securities was $68,590. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost was $1,486,041, and the aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value was $1,554,631.
NOTE 5. FEDERAL TAXES
The Portfolio is not required to pay federal income tax on its net
investment income and net capital gain because it is treated as a partnership
for federal income tax purposes. All interest, dividends, gain or loss of the
Portfolio is deemed to have been "passed through" to the Portfolio's
interestholders in proportion to their holdings of the Portfolio, regardless of
whether such interest, dividends or gain has been distributed by the Portfolio.
Under the applicable foreign tax law, a withholding tax may be imposed on
interest, dividends, and capital gains at various rates.
NOTE 6. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
For the period ended November 30, 1998, SCMI, Schroder Advisors, and FAdS
voluntarily waived fees of $63,973, $6,397, and $7,702, respectively. In
addition, Schroder Advisors reimbursed expenses in the amount of $34,535.
NOTE 7. CONCENTRATION OF RISK
The Portfolio may invest more than 25% of its total assets in issuers
located in any one country. To the extent that it does so, the Portfolio is
susceptible to a range of factors that could adversely affect that country,
including political and economic developments and foreign exchange-rate
fluctuations. As a result of investing substantially in one country, the value
of the Portfolio's assets may fluctuate more widely than the value of shares of
a comparable fund with a lesser degree of geographic concentration. The
Portfolio invests in countries with limited or developing capital markets.
Investments in these markets may involve greater risks than investments in more
developed markets.
29
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TRUSTEES
David N. Dinkins
Peter E. Guernsey
Sharon L. Haugh
John I. Howell
Peter S. Knight
Clarence F. Michalis
William L. Means
Hermann C. Schwab
Mark J. Smith
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
CUSTODIAN
The Chase Manhattan Bank N.A.
Chase MetroTech Center
Brooklyn, New York 11245
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services LLC
Two Portland Square
Portland, Maine 04101
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusettes 02110
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109
This report is for the information of the shareholders
of the Schroder Emerging Markets 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.
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