<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT MANAGER
Schroder Capital Management Inc. ("SCM"), is a wholly owned subsidiary of
Schroder plc. SCM or its affiliates have been investment managers since
Wertheim & Co. was founded in 1927. The firm was renamed in 1995 following
its integration with the Schroder Investment Management Group which manages
in excess of $150 billion for clients globally. The new organization now has
an expanded capital base as well as total global representation in financial
markets. As of March 31, 1997, SCM had over $4 billion in assets under
management.
MANAGEMENT DISCUSSION AND ANALYSIS AS OF APRIL 30, 1997
As of April 30, 1997, the net assets of the Schroder High Yield Income Fund
were $14,249,337. Over the six month period, the Fund returned 0.05%
compared with its benchmark, the Salomon Brothers High Yield Market Index,
which returned 4.91%. During this period of general market strength the
Fund's underperformance was due primarily to material price declines in a
small group of investments which suffered from specific negative events such
as Heartland Wireless Commerce, Inc. announcing a material downward revision
in its subscriber count followed by the resignation of the senior management
team, along with its generally more conservative profile than the Index.
During the six month period, exposure to the gaming and cable and media
sectors was reduced due to management's perception of weak fundamentals in
those areas. Exposure to the building products and home building sectors was
reduced in anticipation of the negative impact on consumer demand as a result
of management's forecast of higher interest rates. The Fund also reduced its
holdings in the healthcare and airline sectors as these areas are more
interest sensitive, due their high average credit quality. During the most
recent quarter, the Fund increased its exposure to the food and beverage and
utility sectors, increasing the exposure to non-cyclical investments as well
as adding exposure to the leisure sector to capitalize on the growth in
personal income.
The Schroder High Yield Income Fund dissolved on June 16, 1997. At that
date, all existing investments in the Fund were sold and assets were
distributed to shareholders.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of April 30, 1997
TOP TEN HOLDINGS
SECURITY % OF NET ASSETS
- --------------------------------------------------------------------------------
Energy Ventures
NOTE 10.25% 3/15/04 3.8%
Veritas DGC Inc.
NOTE 9.75% 10/15/03 3.5%
Owens Illinois Inc.
DEBENTURE 11.00% 12/01/03 3.3%
Host Marriott Travel Plaza
NOTE 9.50% 5/15/05 3.2%
Guess, Inc.
NOTE 9.50% 8/15/03 3.2%
Teleport Communications
NOTE 9.875% 7/1/06 3.1%
Carbide/Graphite Group
NOTE 11.50% 9/01/03 3.1%
Freeport McMoran
NOTE 8.75% 2/15/04 3.0%
Videotron Group
NOTE 10.625% 2/15/03 3.0%
Plains Resources
NOTE 10. 25% 3/15/06 2.9%
------
Total 32.1%
INVESTMENT BY INDUSTRY
INDUSTRY % OF NET ASSETS
- --------------------------------------------------------------------------------
Basic Industry 10.7%
Capital Goods 2.3%
Consumer Cyclical 5.7%
Consumer Staples 9.9%
Energy 13.2%
Financial Services 2.2%
Media 10.2%
Transportation 2.2%
Utilities 10.4%
Short Term Commercial Paper 30.8%
Cash Equivalents and Other Net Assets 2.4%
------
Total 100.0%
CREDIT QUALITY
RATING % OF MARKET VALUE OF INVESTMENTS
- --------------------------------------------------------------------------------
A1/P1 (C/P) 27.6%
BB 29.7%
B 42.7%
CCC 0.0%
NR 0.0%
------
Total 100.0%
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO ONE YEAR ENDED INCEPTION TO
MARCH 31, 1997 MARCH 31, 1997* APRIL 30, 1997 APRIL 30, 1997*
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Schroder High Yield Income Fund... 4.79% 3.63% 4.60% 3.66%
</TABLE>
* From commencement of operations (February 16, 1994)
"TOTAL RETURN" IS CALCULATED INCLUDING REINVESTMENT OF ALL INCOME DIVIDENDS.
RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS. THE
VALUE OF AN INVESTMENT IN THE FUND AND THE RETURN ON INVESTMENT BOTH WILL
FLUCTUATE AND REDEMPTION PROCEEDS MAY BE HIGHER OR LOWER THAN AN INVESTOR'S
ORIGINAL COST.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO MANAGER AS
OF THE DATES SPECIFIED, 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
INVESTMENTS IN THE FUND AND DO NOT CONSTITUTE INVESTMENT ADVICE: INVESTORS
SHOULD CONSULT THEIR OWN INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL
INVESTMENT PROGRAMS.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
SHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
Principal
Amount $ Value $
- --------- -------
CORPORATE BONDS
AEROSPACE/DEFENSE - (2.2%)
325,000 Tracor, Incorporated
8.500% 03/01/2007 (1) 319,313
---------
BASIC INDUSTRY - (6.4%)
400,000 Carbide/Graphite Group,
Incorporated
11.500% 09/01/2003 435,000
425,000 Owens Illinois, Incorporated
11.000% 12/01/2003 473,344
---------
908,344
CABLE AND MEDIA - (10.9%)
425,000 Heartland Wireless Commerce,
Incorporated
13.000% 04/15/2003 159,375
150,000 TCI Communications, Incorporated
6.875% 02/15/2006 137,768
425,000 Teleport Communications Group,
Incorporated
9.875% 07/01/2006 444,125
150,000 Time Warner, Incorporated
7.750% 06/15/2005 151,411
385,000 Videotron Group Limited
10.625% 02/15/2005 422,537
350,000 Wireless One, Incorporated
13.000% 10/15/2003 231,000
---------
1,546,216
CHEMICALS - (3.0%)
425,000 Freeport McMoran Resource, LP
8.750% 02/15/2004 431,375
---------
CONSUMER/NON-DURABLES - (2.1%)
275,000 Coty, Incorporated
10.250% 05/01/2005 291,500
---------
Principal
Amount $ Value $
- -------- -------
ENERGY - (13.2%)
500,000 Energy Ventures, Incorporated
10.250% 03/15/2004 537,500
350,000 Flores & Rucks, Incorporated
13.500% 12/01/2004 413,000
400,000 Plains Resources, Incorporated
10.250% 03/15/2006 418,000
500,000 Veritas DGC, Incorporated
9.750% 10/15/2003 505,000
---------
1,873,500
ENTERTAINMENT - (2.4%)
350,000 AMC Entertainment,
Incorporated
9.500% 03/15/2009 (1) 347,375
---------
FINANCE - (2.2%)
325,000 DVI, Incorporated
9.875% 02/01/2004 317,688
---------
FINANCIAL SERVICES - (4.9%)
700,000 General Motors Acceptance
Corporation
5.520% 05/15/1997 698,505
---------
HEALTHCARE - (1.9%)
275,000 Universal Health Services,
Incorporated
8.750% 08/15/2005 276,375
---------
MANUFACTURING - (7.0%)
175,000 Buckeye Cellulose Corporation
8.500% 12/15/2005 171,062
375,000 Envirodyne Industries,
Incorporated
10.250% 12/01/2001 369,375
450,000 Guess, Incorporated
9.500% 08/15/2003 454,500
---------
994,937
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 1997 (UNAUDITED)
Principal
Amount $ Value $
- --------- -------
CORPORATE BONDS
PUBLISHING - (2.1%)
275,000 K-III Communications
Corporation
10.250% 06/01/2004 292,188
-----------
SERVICES - (3.2%)
450,000 Host Marriott Travel Plazas,
Incorporated
9.500% 05/15/2005 461,250
-----------
TRANSPORTATION - (2.2%)
300,000 CHC Helicopter Corporation
11.500% 07/15/2002 309,000
-----------
UTILITIES - (7.6%)
375,000 Intermedia Communications of
Florida, Incorporated
13.500% 06/01/2005 414,375
525,000 MFS Communications Company,
Incorporated
8.114% 01/15/2006 (2) 404,722
50,000 PanAmSat Corporation
9.750% 08/01/2000 52,438
200,000 Texas New Mexico Power
Company
10.750% 09/15/2003 214,152
-----------
1,085,687
-----------
TOTAL CORPORATE
BONDS
(Cost $10,391,368) - 71.3% 10,153,253
-----------
COMMERCIAL PAPER
ENTERTAINMENT - (4.9%)
700,000 Disney, Walt Company
5.420% 05/12/1997 698,841
-----------
Principal
Amount $ Value $
- -------- -------
FINANCIAL SERVICES - (19.6%)
700,000 Ford Motor Credit Company
5.420% 05/09/1997 699,157
700,000 General Electric Capital
Corporation
5.490% 05/12/1997 698,826
700,000 John Deere Capital Corporation
5.490% 05/14/1997 698,612
700,000 Sears Roebuck Acceptance
Corporation
5.480% 05/09/1997 699,147
----------
2,795,742
----------
TOTAL COMMERCIAL
PAPER
(Cost $3,494,583) - 24.5% 3,494,583
----------
OTHER SHORT TERM INVESTMENT
Repurchase Agreement - (2.6%)
374,000 State Street Bank and Trust
Company
5.000% 05/01/1997 (3)
(Cost $374,000) - 2.6% 374,000
----------
TOTAL INVESTMENTS
(Cost $14,259,951) - 98.4% 14,021,836
OTHER ASSETS LESS
LIABILITIES - 1.6% 227,501
----------
NET ASSETS - 100.0% $14,249,337
----------
----------
(1)Pursuant to Rule 144A of the Securities Act of 1933, these securities may be
resold in transactions exempt from registration, normally to qualified
institutional buyers. At April 30, 1997, these securities aggregated $666,688
or 4.7% of the net assets of the Fund.
(2)Zero coupon bond. Coupon amount represents the yield to maturity.
(3)The repurchase agreement, dated 4/30/97, with a repurchase price of $374,052,
is collateralized by a $355,000 United States Treasury Note, 8.75%, 8/15/00.
See notes to financial statments.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investments in securities, at value - Note 2 . . . . . . . $14,021,836
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Interest receivable. . . . . . . . . . . . . . . . . . . . 234,469
Deferred organizational costs. . . . . . . . . . . . . . . 20,649
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 12,091
Due from Schroder Capital Management Inc. - Note 3 . . . . 6,400
-----------
TOTAL ASSETS 14,295,553
LIABILITIES
Advisory fee pyable - Note 3 . . . . . . . . . . . . . . . 10,631
Accounts payable and accrued expenses. . . . . . . . . . . 33,922
Dividends payable. . . . . . . . . . . . . . . . . . . . . 1,663
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . 46,216
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $14,249,337
-----------
-----------
NET ASSETS
Capital paid-in. . . . . . . . . . . . . . . . . . . . . . $15,969,309
Distributions in excess of net investment income . . . . . (16,400)
Accumulated net realized loss on investments . . . . . . . (1,465,457)
Net unrealized depreciation of investments . . . . . . . . (238,115)
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $14,249,337
-----------
-----------
Net asset value, offering and redemption
price per share . . . . . . . . . . . . . . . . . . . . $ 8.30
Total shares outstanding at end of period. . . . . . . . . 1,717,782
Cost of securities . . . . . . . . . . . . . . . . . . . . $14,259,951
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME
Interest income. . . . . . . . . . . . . . . . . . . . . $ 744,642
---------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . 744,642
EXPENSES
Investment advisory fees - Note 3. . . . . . . . . . . . 66,411
Administrative fees - Note 3 . . . . . . . . . . . . . . 13,064
Custodian fees . . . . . . . . . . . . . . . . . . . . . 20,529
Audit fees . . . . . . . . . . . . . . . . . . . . . . . 7,538
Legal fees . . . . . . . . . . . . . . . . . . . . . . . 6,447
Printing expenses. . . . . . . . . . . . . . . . . . . . 2,976
Trustees fees - Note 4 . . . . . . . . . . . . . . . . . 4,860
Transfer agent fees. . . . . . . . . . . . . . . . . . . 20,446
Organizational expenses. . . . . . . . . . . . . . . . . 4,784
Registration fees. . . . . . . . . . . . . . . . . . . . 4,478
Insurance. . . . . . . . . . . . . . . . . . . . . . . . 94
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 440
Expenses borne by Schroder Capital Management
Inc. - Note 3. . . . . . . . . . . . . . . . . . . . . (37,693)
---------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . 114,374
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . 630,268
---------
REALIZED AND UNREALIZED
(LOSS) ON INVESTMENTS
Net realized loss on investments . . . . . . . . . . . . (135,536)
Change in net unrealized appreciation/(depreciation)
of investments . . . . . . . . . . . . . . . . . . . . (515,966)
---------
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . (651,502)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . $(21,234)
---------
---------
See notes to financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
APRIL 30, 1997
SIX MONTHS YEAR
ENDED ENDED
4/30/97 10/31/96
-------- --------
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income . . . . . . . . . . . . . $ 630,268 $ 1,570,825
Net realized gain (loss) on investments. . . . . (135,536) 381,591
Change in net unrealized depreciation of
investments. . . . . . . . . . . . . . . . . . (515,966) (233,227)
----------- -----------
Net increase (decrease) in net assets resulting
from operations. . . . . . . . . . . . . . . . (21,234) 1,719,189
Net equalization credits (debits). . . . . . . . . 2,164 (6,424)
Dividends and distributions to
Shareholders:
From net investment income . . . . . . . . . . . (761,838) (1,659,875)
Net decrease from trust share transactions . . . . (424,012) (5,087,578)
----------- -----------
TOTAL DECREASE . . . . . . . . . . . . . . . . (1,204,920) (5,034,688)
Net Assets
Beginning of period. . . . . . . . . . . . . . . 15,454,257 20,488,945
----------- -----------
End of period (a). . . . . . . . . . . . . . . . $14,249,337 $15,454,257
----------- -----------
----------- -----------
(a) Including undistributed (distributions in
excess of) net investment income . . . . . . . $ (16,400) $ 113,006
----------- -----------
----------- -----------
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
SIX MONTHS PERIOD
ENDED YEAR ENDED OCTOBER 31, ENDED
APRIL 30, ---------------------- OCTOBER 31,
1997 (1) 1996 1995 1994 (2)
------- ---- ---- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD . . . . . . . . $ 8.73 $ 8.72 $ 8.79 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (3) . . . . . . . . . . . . 0.37 0.77 0.84 0.48
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . . . . . . . . . (0.36) 0.07 (0.07) (1.14)
---------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . . 0.01 0.84 0.77 (0.66)
---------- ------- ------- ------
LESS DISTRIBUTIONS:
From Net Investment Income . . . . . . . . . . . . (0.44) (0.83) (0.84) (0.47)
In Excess of Net Investment Income . . . . . . . . 0.00 0.00 0.00 (0.01)
Tax Return of Capital. . . . . . . . . . . . . . . 0.00 0.00 0.00 (0.07)
---------- ------- ------- ------
Total Distributions. . . . . . . . . . . . . . . . (0.44) (0.83) (0.84) (0.55)
---------- ------- ------- ------
NET ASSET VALUE AT END OF PERIOD . . . . . . . . . . . $ 8.30 $ 8.73 $ 8.72 $8.79
---------- ------- ------- ------
---------- ------- ------- ------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . 0.05%(4) 9.98% 9.16% (6.60)%(4)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's). . . . . . . . $ 14,249 $15,454 $ 20,489 $ 15,956
Ratio of Operating Expenses to
Average Net Assets (3) . . . . . . . . . . . . . . 1.55%(5) 1.55% 1.48% 1.30%(5)
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . . 8.57%(5) 8.80% 9.67% 9.67%(5)
Portfolio Turnover Rate. . . . . . . . . . . . . . 40.66%(4) 99.45% 149.58% 59.30%(4)
</TABLE>
(1) Unaudited.
(2) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(3) Net Investment Income is after reimbursement of certain expenses by
Schroder Capital Management Inc. (See Note 3 to the Fund's financial
statements.) Had the Investment Adviser not undertaken to pay or reimburse
expenses related to the Fund, the Net Investment Income per share and Ratio
of Operating Expenses to Average Net Assets would have been as follows:
1997 - $0.35 and 2.06%, 1996 - $0.74 and 1.89%, 1995 - $0.80 and 1.96%,
1994 - $0.44 and 3.59%, respectively.
(4) Not annualized.
(5) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
NOTE 1 -- ORGANIZATION
Schroder High Yield Income Fund (the "Fund", formerly Wertheim High Yield Income
Fund), is a diversified open-end management investment portfolio of Schroder
Series Trust (the "Trust", formerly WSIS Series Trust) registered under the
Investment Company Act of 1940, as amended. The Fund will be liquidated on
June 16, 1997. The termination is subject to, and will be effected only after
compliance with, applicable regulatory requirements.
The Trust was organized as a business trust under the laws of The Commonwealth
of Massachusetts on May 6, 1993. The Trust is a diversified open-end series
management investment company and has four other active portfolios, which are
covered in a separate report.
Effective March 1, 1997, the Trust changed its name from WSIS Series Trust to
Schroder Series Trust. Also, the name "Schroder" replaced "Wertheim" in the
name of the Fund.
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 disclosure 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
Fund which are in conformity with generally accepted accounting principles.
VALUATION OF INVESTMENTS: Debt securities are valued on the basis of valuations
provided by pricing services that determine valuations for normal institutional
size trading units of debt securities, or through obtaining independent quotes
from market makers. Short-term debt instruments with a remaining maturity of 60
days or less are valued at amortized cost, which approximates market value.
Securities for which current market quotations are not readily available are
valued at fair value as determined in accordance with procedures approved by the
Trustees.
REPURCHASE AGREEMENTS: The Fund enters into repurchase agreements with approved
institutions. The repurchase agreements are collateralized by U.S. Government
securities. The Fund's custodian takes possession of the underlying securities,
the market value of which at the time of purchase at least equals the resale
price, principal amount plus interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1997 (UNAUDITED)
day, the value of the underlying securities is marked-to-market on a daily basis
to ensure the adequacy of the underlying securities. Schroder Capital
Management Inc. ("Schroder"), investment adviser to the Fund, is responsible for
determining that the value of the underlying securities is at all times at least
equal to the resale price. In the event of default by the seller to repurchase
the securities, the Fund could realize a loss on the sale of the underlying
securities to the extent that the proceeds of sale, including accrued interest,
is less than the resale price of the repurchase agreement. If the seller should
be involved in bankruptcy or insolvency proceedings, realization and/or
retention of the underlying securities, or proceeds 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.
Interest income is recorded on an accrual basis.
EXPENSES: Expenses are recorded on an accrual basis. Most of the expenses of
the Trust can be directly attributed to a specific Fund. Expenses not directly
attributed to a specific Fund are allocated among the Funds in a manner deemed
equitable.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders from net
investment income are declared and distributed monthly for the Fund.
Distributions from net realized capital gains, if any, are declared and
distributed at least annually. Distributions are recorded on the ex-dividend
date.
DEFERRED ORGANIZATION COSTS: Costs and expenses of the Trust paid by Schroder
and its affiliates in connection with the organization of the Fund and the
initial public offering of its shares have been deferred by the Fund and are
being amortized on a straight-line basis from the date operations commenced over
a period that it is expected a benefit will be realized, not to exceed five
years.
Schroder has agreed with respect to the Fund that, if any of the initial shares
of the Fund are redeemed during such amortization period by any holder thereof,
the redemption proceeds will be reduced for any unamortized organization
expenses in the same ratio as the number of shares redeemed bears to the number
of initial shares held at the time of redemption.
EQUALIZATION: The Fund follows an accounting practice known as equalization by
which a portion of the proceeds from sales and costs of redemptions of Fund
shares equivalent, on a per share basis, to the amount of undistributed net
investment income on the date of the transaction is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales and redemptions of the Fund's shares.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER HIGH YIELD INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1997 (UNAUDITED)
FEDERAL INCOME TAXES: It is the intention 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 would not be subject to federal income taxes to the extent
that, among other things, they distribute substantially all of their taxable
income, including realized capital gains, for the fiscal year. In addition, by
distributing during each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, the Fund would not be
subject to a federal excise tax.
As of October 31, 1996, the Fund had a $1,328,390 realized capital loss
carryforward, for Federal income tax purposes, available to be used to offset
future realized capital gains. The carryforward expires on October 31, 2004.
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 market discount,
losses deferred due to wash sales and excise tax regulations.
NOTE 3 -- INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENT
The Trust has entered into an investment advisory agreement with Schroder.
Under the agreement, Schroder provides investment management services, and
receives for its services compensation monthly at the annual rate of 0.90% based
on average daily net assets of the Fund.
The Trust has also entered into an Administration Agreement with State Street
Bank and Trust Company ("State Street"). Under the Administration Agreement,
the Trust pays compensation to State Street at the following annual rates based
on the average daily net assets of the Fund: 0.08% of the first $125 million of
the Fund's average daily net assets, 0.06% of the next $125 million of the
Fund's average daily net assets and 0.04% of the Fund's average daily net assets
in excess of $250 million, subject to certain minimum requirements.
Schroder has voluntarily agreed to reduce its compensation and, if necessary, to
pay certain expenses of the Fund until October 31, 1997, to the extent that the
Fund's expenses (other than Schroder's compensation, brokerage, interest, taxes,
deferred organizational expenses, and extraordinary expenses) exceed the annual
rate of 0.65% of average daily net assets. The Fund pays all expenses not
assumed by Schroder, including Trustees' fees, auditing, legal, custodial, and
investor servicing and shareholder reporting expenses.
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12
<PAGE>
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SCHRODER HIGH YIELD INCOME FUND
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1997 (UNAUDITED)
NOTE 4 - TRUSTEES FEES
The Trust pays no compensation to Trustees who are employees of Schroder.
Trustees who are not Schroder employees receive an annual fee of $5,000 and an
additional fee of $1,500 for each Trustees' meeting attended.
NOTE 5 -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the period ended April 30, 1997 were
$5,392,272 and $10,072,182, respectively. The identified cost for federal
income tax purposes of investments owned by the Fund at April 30, 1997 was
$14,259,951. Gross unrealized appreciation and depreciation at April 30, 1997
were $172,415 and $410,530, respectively, resulting in net unrealized
depreciation of $238,115 at April 30, 1997. The aggregate cost of the Fund's
investments was substantially the same for book and federal income tax purposes
at April 30, 1997.
NOTE 6 -- SHAREHOLDERS' TRANSACTIONS
Following is a summary of shareholder transactions for the Fund:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1996 October 31, 1996
(Unaudited)
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold. . . . . . . . . . . . . . . 223,041 $ 1,941,512 371,174 $ 3,273,455
Shares issued to shareholders in
reinvestment . . . . . . . . . . . . . . 85,660 735,651 182,836 1,596,001
Shares redeemed. . . . . . . . . . . . . (360,462) (3,099,011) (1,134,160) (9,963,458)
Income equalization (received) paid. . . 0 (2,164) 0 6,424
Net decrease . . . . . . . . . . . . . . (51,761) $ (424,012) (580,150) $ (5,087,578)
</TABLE>
NOTE 7 -- BENEFICIAL INTEREST
At April 30, 1997, four shareholders each held 5% or more of the Fund and the
total percentage of the Fund held by such shareholders was 47.10%.
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13
<PAGE>
INVESTMENT MANAGER
Schroder Capital Management Inc.
OFFICERS
Ashbel C. Williams, Jr., President
David Gibson, Vice President
Jane P. Lucas, Vice President
Catherine A. Mazza, Vice President
Mark J. Smith, Vice President
Robert Jackowitz, Treasurer
Alexandra Poe, Clerk
Barbara Gottlieb, Assistant Clerk
TRUSTEES
Madelon DeVoe Tally
David N. Dinkins
David Gibson
John I. Howell
Peter S. Knight
TRANSFER AND SHAREHOLDER SERVICING AGENT
Boston Financial Data Services, Inc.
CUSTODIAN
State Street Bank and Trust Company
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
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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.
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