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SCHRODER SERIES TRUST
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INVESTMENT MANAGER
Schroder Capital Management Inc. ("SCM", formerly Schroder Wertheim Investment
Services, Inc.), is an indirect wholly owned subsidiary of Schroders plc. The
firm, is a part of the Schroder Investment Management Group, which manages in
excess of $175 billion for clients globally. At the end of the last calendar
quarter, SCM had over $4 billion in assets under management.
December 15, 1997
Dear Shareholder:
We are pleased to present the annual report for Schroder Series Trust for the
fiscal year ended October 31, 1997. U.S. financial market returns were strong
over the course of the last fiscal year; although there was a pick up in
volatility, especially in the equity market. In general, markets recovered
swiftly from their weak periods. Most of the strength came from a benign U.S.
economic environment with stronger growth and lower than anticipated inflation.
Consumer spending was supported by sizable employment growth and consequent
buoyant income, capital spending was propelled by strong demand for
high-technology goods and exports were driven by an increase in shipments to
Canada, Mexico and Western Europe. Inflation remained low despite an extremely
tight labor market as a strong U.S. dollar had a significant downward influence
on import prices. Stronger than expected economic activity resulted in positive
corporate profit growth.
Looking ahead, we anticipate that the U.S. economy will encounter a more
challenging environment in 1998. Economic problems in Asia are well documented,
while Brazil and Argentina also face tough times. But domestic economic activity
remains formidable, lower interest rates are providing a stimulative backdrop,
and conditions in Western Europe seem to be improving. In addition, it appears
that demand for U.S. goods from Canada and Mexico will remain strong. However,
import penetration should continue to soar as a result of a strong U.S. dollar
and heightened efforts from economically devastated Asian nations to sell goods
to the U.S. Indeed, we believe that a wider net export deficit will take a full
percentage point off economic growth during 1998, and we look for real GDP to
expand by just over 2% in the year, fourth quarter over fourth quarter,
following an estimated 3.8% gain in 1997.
Inflation is expected to increase only fractionally in 1998 as the U.S. dollar
proves to be more of a neutral factor than it was in 1997 and pricing
flexibility is further constrained by heightened competition from Asia. Any
upward inflation pressure which does appear should emanate from the labor
market. Corporate profits are likely to prove particularly disappointing as
margins are compressed by a combination of more rapid labor cost increases and
the aforementioned brutally competitive pricing environment.
The U.S. economy does not currently exhibit the pressures nor do we see the
market excesses that would usually precede a material correction. Nevertheless,
we are aware that after the gains of recent years and the higher valuations
being placed on some investments, the risks associated with any disappointing
news are increased. In the investment process, SCM pays close attention to the
expectations already reflected in the prices of securities, looking for both
attractive valuations as
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SCHRODER SERIES TRUST
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well as favorable return prospects. This discipline should help to protect the
funds within the Trust from the setbacks that often occur when overly optimistic
expectations are not matched.
Although the environment for U.S. financial markets is likely to become more
challenging as the economic cycle ages, we do believe that U.S. companies today
are well-positioned competitively and are becoming increasingly focused on the
efficient use of capital. This should result in their nimble response to
changing economic circumstances and should position them well for the future. In
combination with favorable secular trends for interest rates and inflation,
based on demographics, we believe that this bodes well for the longer term
outlook for U.S. financial assets.
Sincerely,
/s/ Ashbel C. Williams, Jr.
Ashbel C. Williams, Jr.
President
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2
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SCHRODER LARGE CAPITALIZATION EQUITY FUND
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MANAGEMENT DISCUSSION AND ANALYSIS (As of December 3, 1997)
Q: How did the Schroder Large Capitalization Equity Fund perform relative to its
benchmark, the S&P 500(R) Index, for the fiscal year ended October 31, 1997?
A: For the fiscal year ending October 31, 1997, the Fund posted a strong
absolute gain of 26.18%, but trailed its benchmark, the unmanaged S&P 500(R)
Index, which returned 32.11% over the same period. For the six months ended
October 31, 1997, the Fund returned 10.87% while its benchmark returned
15.17% for the same period.
Q: What factors contributed to performance over the fiscal year?
A: Declining long-term interest rates and robust corporate profits against a
background of subdued inflation were the driving factors to the strong
absolute performance. The Fund's cash position, though moderate, detracted
1.5% from relative performance and continued to be the single biggest
constraint on relative performance in the rapidly rising market. Stock
selection in the capital goods and healthcare sectors hurt relative
performance as did overweights to the capital goods and consumer staples
sectors. Strong stock selection in consumer staples, financials, and
technology boosted performance as did an underweight position in utilities.
In the last three months of the fiscal year, large cap stocks fell out of
favor relative to small cap stocks which negatively impacted performance
since the Fund focuses its investments in the larger issues.
Q: What is management's market outlook for the next six months?
A: Management's view is that near-term U.S. GDP growth will remain strong.
Nevertheless, the disinflationary bias of a stronger dollar and softer Asian
economies will outweight the inflationary implications of a capacity
constrained U.S. economy. While previously it appeared that higher interest
rates would ultimately be necessary to reign in U.S. economic growth, a much
wider trade deficit with Asia combined with limited pricing power for the
U.S. companies could well exert a similar effect on U.S. growth and thereby
obviate the need for the Federal Reserve to tighten monetary policy. Higher
labor costs, however and the above noted limited pricing power due to
weakness in developing market economies may well pressure corporate margins.
Management expects that 1998 growth will significantly lag what was seen this
year.
Q: How do you anticipate the portfolio will be structured?
A: Due to concerns regarding 1998 earnings growth, we expect that the Fund will
continue to emphasize industries where positive business trends may offset
the pressures on corporate profitability and focus on companies that we
believe have the wherewithal to maintain consistent earnings. The Fund has no
exposure to the telecommunications or utility sectors where deregulation is
spurring large capital commitments in increasingly competitive environments.
The Fund remains underweighted in the technology sector where many valuations
still appear to be extended against a fundamental backdrop of pricing
pressures and above average sensitivity to slowing Asian economies. In the
energy sector, management expects that the emphasis will be on the services
companies. This industry is in the
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3
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SCHRODER LARGE CAPITALIZATION EQUITY FUND
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middle of a very powerful cyclical and secular up-trend, which we believe
should offer good visibility to earnings and drive growth at a pace well
above that of the market's.
Q: Are there particular sectors management expects to concentrate on?
A: The Fund's largest overweight position relative to the benchmark is in the
consumer staples sector. In general, the companies in this sector should
provide earnings visibility, less sensitivity to cyclical pressures, and
superior growth rates. Notably absent from our concentration here is a
position in the beverage industry where we foresee severe pricing pressure as
competitors seek to defend and increase market share. Fund holdings are
diversified across the food, tobacco, consumer products, and pharmaceutical
retailing industries with particular emphasis on food and consumer products
where earnings should outpace the market. CPC International Inc., for
example, is well diversified by product and geography. We believe the company
offers excellent financial management with the disciplined reinvestment of
cash into potentially highly profitable products and countries. The company's
prospects and its relative valuation should be buoyed by the year-end
spin-off of its corn processing division that has muted earnings growth over
the past six quarters.
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4
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SCHRODER LARGE CAPITALIZATION EQUITY FUND
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<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Large Cap Equity Fund S&P 500 Monthly
<S> <C> <C>
Feb-94 10000 10000
Measurement Period
(Fiscal Year Covered) 9960 9901
Measurement Period
(Fiscal Year Covered) 9450 9469
Apr 9510 9591
Measurement Period
(Fiscal Year Covered) 9730 9748
Measurement Period
(Fiscal Year Covered) 9400 9509
Jul 9700 9821
Measurement Period
(Fiscal Year Covered) 9980 10224
Measurement Period
(Fiscal Year Covered) 9490 9974
Oct 9450 10199
Measurement Period
(Fiscal Year Covered) 9080 9827
Measurement Period
(Fiscal Year Covered) 9214 9973
Jan-95 9426 10231
Measurement Period
(Fiscal Year Covered) 9890 10630
Measurement Period
(Fiscal Year Covered) 10051 10944
Apr 10313 11265
Measurement Period
(Fiscal Year Covered) 10575 11716
Measurement Period
(Fiscal Year Covered) 10787 11988
Jul 11200 12386
Measurement Period
(Fiscal Year Covered) 11331 12417
Measurement Period
(Fiscal Year Covered) 11522 12941
Oct 11210 12894
Measurement Period
(Fiscal Year Covered) 11825 13460
Measurement Period
(Fiscal Year Covered) 11820 13720
Jan-96 12227 14186
Measurement Period
(Fiscal Year Covered) 12468 14318
Measurement Period
(Fiscal Year Covered) 12656 14456
Apr 12788 14668
Measurement Period
(Fiscal Year Covered) 12876 15047
Measurement Period
(Fiscal Year Covered) 12744 15104
Jul 12228 14436
Measurement Period
(Fiscal Year Covered) 12503 14741
Measurement Period
(Fiscal Year Covered) 13107 15571
Oct 13383 16001
Measurement Period
(Fiscal Year Covered) 14492 17210
Measurement Period
(Fiscal Year Covered) 14180 16870
Jan-97 15044 17924
Measurement Period
(Fiscal Year Covered) 16125 18064
Measurement Period
(Fiscal Year Covered) 14635 17319
Apr 15229 18353
Measurement Period
(Fiscal Year Covered) 16163 19464
Measurement Period
(Fiscal Year Covered) 16746 20336
Jul 18123 21955
Measurement Period
(Fiscal Year Covered) 16840 20725
Measurement Period
(Fiscal Year Covered) 17470 21861
Oct-97 16886 22591
</TABLE>
The S&P 500 Index is a composite of the prices of 500 widely held U.S. stocks.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1997 OCTOBER 31, 1997*
---------------- -----------------
<S> <C> <C>
Schroder Large Capitalization Equity Fund................. 26.18% 15.17%*
</TABLE>
*Average annual total return from commencement of operations (February 16, 1994)
"Total Return" is calculated including reinvestment of all dividends and
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on investment
both will fluctuate and redemption proceeds may be higher or lower than an
investor's original cost.
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5
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SCHRODER LARGE CAPITALIZATION EQUITY FUND
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Portfolio Characteristics as of October 31, 1997
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Cisco Systems Inc. 4.9%
General Electric Co. 3.8%
Textron Inc. 3.8%
Mobil Corp. 3.7%
BankAmerica Corp. 3.7%
American International Group
Inc. 3.5%
Allied Signal Inc. 3.5%
Wal Mart Stores Inc. 3.4%
Philip Morris Cos. 3.2%
Allstate Corp. 3.1%
-------
Total 36.6%
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Basic Industry 3.9%
Capital Goods 15.2%
Consumer Cyclical 8.7%
Consumer Staples 17.7%
Energy 10.4%
Financial Services 19.2%
Healthcare 10.8%
Technology 8.6%
Transportation 2.0%
Cash Equivalents and Other Net
Assets 3.5%
-----
Total 100%
</TABLE>
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6
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SCHRODER SMALL CAPITALIZATION VALUE FUND
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MANAGEMENT DISCUSSION AND ANALYSIS (As of December 3, 1997)
Q: How did the Schroder Small Capitalization Value Fund perform, relative to its
benchmark, the Russell 2000(R) Index, for the six and twelve month periods
ended October 31, 1997?
A: For the twelve month period ended October 31, 1997, the Schroder Small
Capitalization Value Fund Investor Shares rose 48.46%, well exceeding its
benchmark the unmanaged Russell 2000 Index gain of 29.33% for the same
period. For the six month period ended October 31, 1997, the Fund returned
28.30%. By comparison, its benchmark was up 27.29% for the same period.
Q: What factors contributed to performance over the fiscal year?
A: The Fund's significant market outperformance over the last twelve months was
broadly based among holdings and industry sectors. After the sharp correction
in June and July of 1996, management had an opportunity to reposition the
portfolio into the best small-cap names in the universe it follows.
Specifically during the fiscal year we were significantly over-weighted in
the energy sector. EVI Inc., an oil service company, appreciated 192% over
the twelve month period followed by Tuboscope Vetco Inc. up 140%. Each of our
energy holdings outperformed during the year. Since fiscal year end, we have
reduced our exposure to this sector. We were moderately overweighted during
the year in technology. Symantec Corporation (+101%) and Policy Management
Systems Corp. (+70%) contributed significantly to our outperformance. We have
also reduced our technology exposure since fiscal year end. We also had a
strong representation in financial services during the year. Vesta Insurance
Group Inc. (+127%) led performance in this sector but each of our holdings in
banks, insurance, asset gatherers and REITS outperformed. We are currently
overweighted in financial services.
Currently, large cap indices are trading at the high end of their historic
multiple ranges while small-cap indices are trading 12% beneath their
average historic multiple. Large cap profit growth should slow while small
cap profit growth should accelerate. These trends result in heightened
merger and acquisition activity. Using their fully valued equities as
currency, large companies can buy smaller companies to enhance their growth
rates. Three Fund holdings were acquired at substantial premiums to cost
basis in the last two weeks of September: Beacon Properties, Western
National Corp. and Amvestors Financial Corp. A fourth holding, Parker &
Parsley merged with Mesa Petroleum to form Pioneer Natural Resources in
August. Pioneer is a $3 billion enterprise. The Fund's original investment
in Parker & Parsley more than doubled at the time of sale and proceeds from
Pioneer were redeployed into smaller-sized opportunities.
Q: What type of investment strategy is applied to the Schroder Small
Capitalization Value Fund?
A: The Small Capitalization Value investment approach is based on Fund
management's "relative value" discipline. Management's goal is to buy high
quality companies with above-average earnings growth prospects when they are
attractively priced relative to similar companies, to the equity markets
overall, and to their own normal market valuations. This approach results in
a focused portfolio which contains about 40 small capitalization stocks.
Sector weightings are continually monitored to prevent undesirable
concentrations and to ensure reasonable diversification.
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7
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SCHRODER SMALL CAPITALIZATION VALUE FUND
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Small-cap companies historically have not attracted substantial coverage by
Wall Street analysts or a sizable institutional following. For these
reasons, many investors have not recognized the full values of small cap
companies or their potential for earnings growth. During the research
process, management typically meets directly with senior members of
companies that we look to invest in as well as interviews suppliers,
competitors and other key industry contacts. Management's goal is to utilize
Schroders' proprietary research to discover value before it is generally
recognized in the marketplace. This value may be in the form of
significantly undervalued assets, a new product line, a new management team
or some other catalyst for change. We believe that this approach may create
superior returns for clients.
Q: Are you still able to find good investment ideas in the current market
environment?
A: The initial small capitalization value universe researched totals over 2000
names. After screening for desirable financial characteristics, the Fund's
eligible investment universe includes over 700 companies. Our focused
investment style requires only 40 company stocks with significantly greater
reward than risk at any given time. Management believes that the
underfollowed, underloved nature of the small-cap value marketplace leads to
chronic price inefficiencies. Our job requires that we know our universe well
enough to take advantage of price inefficiencies as they occur. At this time,
management does not currently lack good investment ideas for the portfolio.
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8
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SCHRODER SMALL CAPITALIZATION VALUE FUND
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<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Small Cap Value Fund Russell 2000 Index
<S> <C> <C>
Feb-94 10000 10000
Measurement Period
(Fiscal Year Covered) 9880 9982
Measurement Period
(Fiscal Year Covered) 9660 9455
Apr 9800 9511
Measurement Period
(Fiscal Year Covered) 9690 9404
Measurement Period
(Fiscal Year Covered) 9460 9084
Jul 9520 9233
Measurement Period
(Fiscal Year Covered) 9800 9748
Measurement Period
(Fiscal Year Covered) 9810 9716
Oct 9770 9678
Measurement Period
(Fiscal Year Covered) 9300 9287
Measurement Period
(Fiscal Year Covered) 9490 9537
Jan-95 9210 9418
Measurement Period
(Fiscal Year Covered) 9540 9808
Measurement Period
(Fiscal Year Covered) 9743 9977
Apr 10023 10188
Measurement Period
(Fiscal Year Covered) 10383 10374
Measurement Period
(Fiscal Year Covered) 10643 10812
Jul 11194 11541
Measurement Period
(Fiscal Year Covered) 11354 11780
Measurement Period
(Fiscal Year Covered) 11384 11880
Oct 10774 11454
Measurement Period
(Fiscal Year Covered) 11374 11935
Measurement Period
(Fiscal Year Covered) 11711 12251
Jan-96 11621 12237
Measurement Period
(Fiscal Year Covered) 12172 12618
Measurement Period
(Fiscal Year Covered) 12322 12880
Apr 13242 13589
Measurement Period
(Fiscal Year Covered) 13593 14104
Measurement Period
(Fiscal Year Covered) 12783 13524
Jul 11742 12343
Measurement Period
(Fiscal Year Covered) 12603 13081
Measurement Period
(Fiscal Year Covered) 13043 13571
Oct 13062 13362
Measurement Period
(Fiscal Year Covered) 14054 13913
Measurement Period
(Fiscal Year Covered) 14512 14278
Jan-97 15038 14583
Measurement Period
(Fiscal Year Covered) 15072 14211
Measurement Period
(Fiscal Year Covered) 14589 13540
Apr 15116 13578
Measurement Period
(Fiscal Year Covered) 16603 15088
Measurement Period
(Fiscal Year Covered) 17573 15735
Jul 18680 18467
Measurement Period
(Fiscal Year Covered) 19459 18844
Measurement Period
(Fiscal Year Covered) 20413 18077
Oct-97 19382 17233
</TABLE>
The Russell 2000 Index is a broad based measure of small capitalization U.S.
equity market performance.
*The line shown presents performance information for Investor Shares only.
Performance of Advisor Shares of the Fund will be less than the line shown for
Investor Shares due to the shareholder servicing fees paid by Advisor Shares.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1997 OCTOBER 31, 1997**
---------------- ------------------
<S> <C> <C>
Schroder Small Capitalization Value Fund -- Investor
Share.................................................. 48.46% 19.56%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION TO
OCTOBER 31, 1997***
-------------------
<S> <C> <C>
Schroder Small Capitalization Value Fund -- Advisor
Shares................................................ -3.39%
</TABLE>
**Average annual total return from commencement of operations (February 16,
1994)
***Total return from commencement of operations (September 26, 1997)
"Total Return" is calculated including reinvestment of all dividends and
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on investment
both will fluctuate and redemption proceeds may be higher or lower than an
investor's original cost.
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9
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SCHRODER SMALL CAPITALIZATION VALUE FUND
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Portfolio Characteristics as of October 31, 1997
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Tuboscope Vetco Inc. 4.1%
EVI Inc. 3.8%
Harman International Industries
Inc. 3.6%
Symantaec Corp. 3.4%
Liberty Financial Companies
Inc. 3.3%
Protective Life Corp. 3.2%
Policy Management Systems 3.2%
Westpoint Stevens Inc. 3.1%
OM Group Inc. 3.1%
Aptar Group Inc. 3.1%
-------
Total 33.9%
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Consumer Discretionary 13.3%
Consumer Staples 1.0%
Energy 12.9%
Financial Services 24.9%
Health Care 7.5%
Materials and Processing 8.8%
Producer Durables 13.8%
Technology 10.9%
Cash Equivalents & Other Net
Assets 6.9%
-----
Total 100%
</TABLE>
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10
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SCHRODER MIDCAP VALUE FUND
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MANAGEMENT DISCUSSION AND ANALYSIS (As of October 31, 1997)
Q: How did the Schroder MidCap Value Fund perform for the fiscal year ended
October 31, 1997?
A: The Schroder MidCap Value Fund appreciated 3.60% for the three month period
ended October 31, 1997. The Fund commenced operations on August 1, 1997. This
performance compared favorably with its unmanaged benchmark, the S&P MidCap
400(R) Index, which was up 1.03% for the same period.
Q: What is the investment strategy for the Schroder MidCap Value Fund?
A: Schroder's mid-cap value investment approach is based on Fund management's
"relative value" discipline. Management's goal is to buy high quality
companies with above-average earnings growth prospects when they are
attractively priced relative to similar companies, to the equity markets
overall, and to their own normal market valuations. This approach results in
a focused portfolio which contains 30-35 stocks with market capitalizations
ranging from $750 million to $5 billion. Sector weightings are continually
monitored to prevent undesirable concentrations and to ensure reasonable
diversification.
Mid-cap companies, like small-cap companies, historically have not attracted
substantial coverage by Wall Street analysts or a sizable institutional
following. For these reasons, many investors have not recognized the full
values of mid-cap companies or their potential for earnings growth. During
the research process, management typically meets directly with senior
company management and interviews suppliers, competitors and other key
industry contacts. Management's goal is to utilize Schroders' proprietary
research to discover value before it is generally recognized in the
marketplace. This value may be in the form of significantly undervalued
assets, a new product line, a new management team or some other catalyst for
change.
Q: What is the outlook for the mid-cap sector of the market for the next six
months?
A: Current mid-cap valuation measures are attractive when compared to large-cap
valuations. The companies currently owned in the Fund sell at a discount to
their projected three year earnings growth rates. This compares quite
favorably with both the S&P MidCap 400 Index and the S&P 500 Index both of
which sell at premiums to their projected earnings growth rates. Unlike a
number of large-cap companies, mid-cap companies generally do not have
significant emerging markets exposure. Therefore, earnings growth in the
mid-cap sector should be impacted less by international economic factors. For
this reason, mid-cap earnings growth should outpace that of large-cap
companies. While markets may well exhibit volatility over the next six
months, management believes that over time investors will be attracted to the
faster earnings growth of mid-cap companies and that the sector will produce
superior returns over a full market cycle.
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11
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SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) MidCap Value Fund S&P MidCap 400(R) Index
<S> <C> <C>
Aug-97 10000 10000
Aug-97 10320 9868
Sep-97 10090 9461
Oct 10236 9516
</TABLE>
The S&P MidCap 400 Index is a market weighted composite of 400 stocks in the
middle capitalization sector of the U.S. equities market.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
INCEPTION TO
OCTOBER 31, 1997*
-----------------
<S> <C>
Schroder MidCap Value Fund............................................... 3.60%
</TABLE>
*Total return from commencement of operations (August 1, 1997)
"Total Return" is calculated including reinvestment of all dividends and
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on investment
both will fluctuate and redemption proceeds may be higher or lower than an
investor's original cost.
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12
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SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1997
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Wyman Gordon Co. 3.7%
Symantec Corp. 3.5%
Ceridian Corp 3.3%
Claire's Stores Inc. 3.3%
OfficeMax Inc. 3.3%
Protective Life Corp 3.3%
Tosco Corp. 3.3%
AmerUs Life Holdings 3.2%
Sovereign Bancorp Inc. 3.2%
Cytec Industries Inc. 3.2%
-----
Total 33.3%
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Basic Industry 7.4%
Banks & Finance 11.6%
Capital Goods 6.4%
Consumer Cyclical 5.2%
Consumer Staples 15.0%
Energy 15.7%
Insurance 12.6%
Real Estate 1.9%
Technology 16.1%
Transportation 3.1%
Cash Equivalents & Other Net
Assets 5.0%
-----
Total 100%
</TABLE>
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13
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SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of December 3, 1997)
Q: How did the Schroder Investment Grade Income Fund perform for the 6- and
12-month periods ended October 31, 1997?
A: The Schroder Investment Grade Income Fund returned 7.68% for the fiscal year
ended October 31, 1997, compared to its unmanaged benchmark, the Lehman
Brothers Government/Corporate Index(R), which returned 8.81% over the same
period. For the six months ending October 31, 1997, the Fund returned 6.59%
compared to its benchmark which returned 7.42%
Q: How has the Fund positioned itself over the fiscal year?
A: During the fiscal year ended October 31, 1997, the Fund's sector allocations
were modestly adjusted. The changes are shown below.
<TABLE>
<CAPTION>
OCTOBER 31, 1996 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
Corporate Notes............................ 35.2% 31.2%
Mortgage-Backed Securities................. 14.6% 20.1%
U.S. Government Agencies................... 12.0% 6.2%
U.S. Treasury Issues....................... 31.5% 38.4%
</TABLE>
Sector allocation and security selections contributed positively to the
Fund's fiscal year performance. Spread relationships among corporate issues
remained broadly unchanged during this period. Specific holdings in the
Fund, however, did perform well and their yields tightened versus U.S.
Treasury issues. Mortgage-backed securities performed well as the economy's
strength improved the backdrop to the housing market. Corporate yield
spreads have widened recently but remain near their historic lows compared
to U.S. Treasury issues, while mortgage spreads narrowed versus U.S.
Treasury Notes and are near their long-term average. As absolute yield
levels declined, the quantity of new issue offerings surged including a
number of first time issuers. They were each extensively analyzed and some
were selectively added to the portfolio. One such purchase was a "Yankee"
issue, whereby a British company, Enterprise Oil, issued dollar-denominated
debt in the U.S. Our U.S. credit team worked with the London-based Schroder
analyst of the issue to determine its value as a new holding. Management
will continue to search the investable universe for additional new ideas
while maintaining the current maturity and sector profiles.
Q: What is management's outlook on interest rates over the next six months?
A: Economic theory and historical data suggest a strong correlation between
excessive growth rates and inflation. As the economy surpasses the
non-inflationary trend growth rate of GDP, inflation is likely to accelerate.
Recent data continues to depict an economy with strong domestic growth but
little inflation. The recent problems in South East Asian economies will
marginally impact the U.S. economy. Management's forecasts of economic growth
and inflation have been trimmed. The slower forecast growth will reduce the
need to firm monetary policy in 1998. Management's longer-term strategic
objective changed to return the portfolio to a neutral duration posture
during
- --------------------------------------------------------------------------------
14
<PAGE> 15
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
the upcoming fiscal year. The Federal budget deficit, in the fiscal year just
ended, was less than $30 billion. The fiscal 1998 budget is projected to be
balanced. Over $200 billion of foreign cash has come into the U.S. markets in
each of the last two years. These market technical factors have created
short-term extreme, positive sentiment, but we believe the fundamentals will
eventually take control. Therefore, the Fund's tactical shorter-than
-benchmark duration policy remains in place.
- --------------------------------------------------------------------------------
15
<PAGE> 16
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Measurement Period Investment Grade Lehman Brothers
(Fiscal Year Covered) Income Fund Gov't/Corp Index
<S> <C> <C>
Feb-94 10000 10000
Measurement Period
(Fiscal Year Covered) 9968 9945
Measurement Period
(Fiscal Year Covered) 9708 9701
Apr 9578 9621
Measurement Period
(Fiscal Year Covered) 9548 9604
Measurement Period
(Fiscal Year Covered) 9502 9581
Jul 9696 9773
Measurement Period
(Fiscal Year Covered) 9689 9777
Measurement Period
(Fiscal Year Covered) 9526 9629
Oct 9511 9619
Measurement Period
(Fiscal Year Covered) 9492 9601
Measurement Period
(Fiscal Year Covered) 9587 9666
Jan-95 9727 9850
Measurement Period
(Fiscal Year Covered) 9983 10079
Measurement Period
(Fiscal Year Covered) 10047 10146
Apr 10185 10288
Measurement Period
(Fiscal Year Covered) 10626 10720
Measurement Period
(Fiscal Year Covered) 10700 10805
Jul 10643 10763
Measurement Period
(Fiscal Year Covered) 10771 10901
Measurement Period
(Fiscal Year Covered) 10859 11012
Oct 10996 11174
Measurement Period
(Fiscal Year Covered) 11188 11368
Measurement Period
(Fiscal Year Covered) 11319 11525
Jan-96 11398 11597
Measurement Period
(Fiscal Year Covered) 11161 11351
Measurement Period
(Fiscal Year Covered) 11089 11255
Apr 10974 11178
Measurement Period
(Fiscal Year Covered) 10931 11159
Measurement Period
(Fiscal Year Covered) 11058 11307
Jul 11072 11333
Measurement Period
(Fiscal Year Covered) 11049 11305
Measurement Period
(Fiscal Year Covered) 11236 11506
Oct 11477 11774
Measurement Period
(Fiscal Year Covered) 11673 11991
Measurement Period
(Fiscal Year Covered) 11549 11868
Jan-97 11563 11872
Measurement Period
(Fiscal Year Covered) 11581 11897
Measurement Period
(Fiscal Year Covered) 11441 11755
Apr 11594 11927
Measurement Period
(Fiscal Year Covered) 11687 12035
Measurement Period
(Fiscal Year Covered) 11611 12182
Jul 12131 12555
Measurement Period
(Fiscal Year Covered) 12012 12415
Measurement Period
(Fiscal Year Covered) 12178 12610
Oct-97 12358 12811
</TABLE>
The Lehman Brothers Government/Corporate Index is a composite of investment
grade issues with maturities greater than one year.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1997 OCTOBER 31, 1997*
---------------- -----------------
<S> <C> <C>
Schroder Investment Grade Income Fund..................... 7.68% 5.91%
</TABLE>
*Average annual total return from commencement of operations (February 22, 1994)
"Total Return" is calculated including reinvestment of all dividends and
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on investment
both will fluctuate and redemption proceeds may be higher or lower than an
investor's original cost.
- --------------------------------------------------------------------------------
16
<PAGE> 17
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1997
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ----------------------------------------------
<S> <C>
U.S. Treasury Note 7.9%
6.500% 10/15/06
U.S. Treasury Note 6.7%
6.500% 05/31/02
U.S. Treasury Note 6.6%
6.125% 05/15/98
U.S. Treasury Note 4.3%
7.250% 08/15/04
U.S. Treasury Note 3.8%
6.375% 05/15/00
U.S. Treasury Note 3.7%
7.500% 10/31/99
FNMA Note 2.4%
6.250% 08/12/03
U.S. Treasury Note 2.4%
6.750% 08/15/26
FNMA PC# 303909 2.3%
7.000% 05/01/26
FNMA PC# 250030 2.3%
7.000% 05/01/24
----
Total 42.4%
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Corporate Notes 31.2%
Mortgage Backed Securities 20.1%
U.S. Government Agencies 6.2%
U.S. Treasury Issues 38.4%
Cash Equivalents and Other Net
Assets 4.1%
----
Total 100%
</TABLE>
CREDIT QUALITY
<TABLE>
<CAPTION>
RATING % OF MARKET VALUE OF INVESTMENTS
- ----------------------------------------------
<S> <C> <C>
U.S. Treasury Issues 38.9%
U.S. Government Agencies 26.5%
AAA 0%
AA 5.5%
A 23.2%
Baa 5.9%
-----
Total 100%
</TABLE>
- --------------------------------------------------------------------------------
17
<PAGE> 18
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of December 3, 1997)
Q: How did the Schroder Short-Term Investment Fund perform, relative to its
benchmark, the 90 day U.S. Treasury Bill, for the annual and semi-annual
periods ended October 31, 1997?
A: The Schroder Short-Term Investment Fund had a total return of 4.74% for the
fiscal year ended October 31, 1997, compared to its benchmark, the 90 day
U.S. Treasury Bill's return of 5.28% over the same period. For the six month
period ended October 31, 1997, the Fund returned 2.54% while its benchmark
returned 2.60%.
Q: How have yields in alternative money market instruments moved, relative to
each other, and what has been management's response?
A: During the fiscal year ended October 31, 1997, yield relationships changed
dramatically. For short-term corporate notes, certificates of deposit and
bankers acceptances, spreads widened versus U.S. Treasury Bills. This
occurred partly as the result of a greater quantity of new issue securities
within the sector. The Fund responded to these changes and the portfolio
sector allocations and security holdings were altered to take advantage of
more attractive opportunities. The sector changes are highlighted below.
<TABLE>
<CAPTION>
OCTOBER 31, 1996 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
Asset & Mortgage Backed Issues............. 8% 8%
Commercial Paper........................... 29% 25%
Corporate Notes............................ 5% 27%
U.S. Government Agency Discount Notes...... 52% 2%
U.S. Treasury Bills & Notes................ 5% 16%
Certificates of Deposit & Bankers
Acceptances.............................. 1% 22%
</TABLE>
Q: What is management's view of the economic outlook for the next six months?
A: Management's forecast for real GDP growth in 1998 is 2.2% (fourth quarter
over fourth quarter). First half growth is anticipated to be about 3%. A
combination of accelerating wages and low inflation will boost consumer
spending. Capital spending will be helped by continuing falls in the price of
high technology goods. The foreign trade deficit should widen but cheaper
imports may help to keep inflation lower than suggested by labor market
conditions alone. The CPI is forecast to increase by 2.0% (fourth quarter
over fourth quarter) in 1998, and it is anticipated that the Federal Reserve
will not firm monetary policy in 1998.
- --------------------------------------------------------------------------------
18
<PAGE> 19
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Measurement Period Short-Term Investment 90 Day U.S. Treasury
(Fiscal Year Covered) Fund Bill
<S> <C> <C>
Jan-94 10015 10018
Measurement Period
(Fiscal Year Covered) 9995 10045
Measurement Period
(Fiscal Year Covered) 9998 10075
Apr 9957 10107
Measurement Period
(Fiscal Year Covered) 10006 10144
Measurement Period
(Fiscal Year Covered) 10047 10180
Jul 10067 10218
Measurement Period
(Fiscal Year Covered) 10114 10257
Measurement Period
(Fiscal Year Covered) 10143 10298
Oct 10183 10340
Measurement Period
(Fiscal Year Covered) 10203 10387
Measurement Period
(Fiscal Year Covered) 10246 10436
Jan-95 10292 10489
Measurement Period
(Fiscal Year Covered) 10348 10541
Measurement Period
(Fiscal Year Covered) 10382 10593
Apr 10445 10645
Measurement Period
(Fiscal Year Covered) 10497 10697
Measurement Period
(Fiscal Year Covered) 10538 10747
Jul 10672 10798
Measurement Period
(Fiscal Year Covered) 10625 10847
Measurement Period
(Fiscal Year Covered) 10656 10896
Oct 10695 10945
Measurement Period
(Fiscal Year Covered) 10736 10995
Measurement Period
(Fiscal Year Covered) 10779 11044
Jan-96 10832 11091
Measurement Period
(Fiscal Year Covered) 10859 11137
Measurement Period
(Fiscal Year Covered) 10900 11184
Apr 10927 11235
Measurement Period
(Fiscal Year Covered) 10966 11283
Measurement Period
(Fiscal Year Covered) 11006 11333
Jul 11058 11383
Measurement Period
(Fiscal Year Covered) 11100 11432
Measurement Period
(Fiscal Year Covered) 11140 11482
Oct 11193 11531
Measurement Period
(Fiscal Year Covered) 11234 11581
Measurement Period
(Fiscal Year Covered) 11266 11630
Jan-97 11308 11680
Measurement Period
(Fiscal Year Covered) 11347 11730
Measurement Period
(Fiscal Year Covered) 11379 11782
Apr 11432 11831
Measurement Period
(Fiscal Year Covered) 11476 11883
Measurement Period
(Fiscal Year Covered) 11531 11933
Jul 11576 11984
Measurement Period
(Fiscal Year Covered) 11622 12036
Measurement Period
(Fiscal Year Covered) 11872 12086
Oct-97 11723 12137
</TABLE>
The 90 Day U.S. Treasury Bill return is a four week average return of the 90 day
U.S. Treasury Bills.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1997 OCTOBER 31, 1997*
---------------- -----------------
<S> <C> <C>
Schroder Short-Term Investment Fund....................... 4.74% 4.28%
</TABLE>
*Average annual total return from commencement of operations (January 11, 1994)
"Total Return" is calculated including reinvestment of all dividends and
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on investment
both will fluctuate and redemption proceeds may be higher or lower than an
investor's original cost.
- --------------------------------------------------------------------------------
19
<PAGE> 20
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1997
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Merrill Lynch Note 5.5%
6.520% 06/22/98
FHLB Note 5.5%
5.990% 02/09/98
Allstate Corp. Note 5.5%
5.875% 06/15/98
Travelers Group Note 5.5%
5.750% 04/15/98
Carnival Corp. Note 5.5%
5.750% 03/15/98
FNMA Floating Rate Note 5.5%
5.950% 04/14/00
Norwest Financial Group CP 5.4%
Due 02/23/98
General Motors Acceptance Corp.
CP 5.4%
Due 02/24/98
Household Finance Corp. CP 5.4%
Due 04/03/98
FHLMC PC# 1386-B 5.0%
6.000% 12/15/05
----
Total 54.2%
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
- ----------------------------------------------
<S> <C>
Asset and Mortgage Backed
Issues 8.0%
Certificates of Deposit and
Bankers Acceptances 21.9%
Commercial Paper 25.5%
Corporate Notes 26.8%
U.S. Government Agency Discount
Notes 2.2%
U.S. Treasury Notes and
Government Agencies 14.7%
Cash Equivalents and Other Net
Assets 0.9%
----
Total 100%
</TABLE>
CREDIT QUALITY
<TABLE>
<CAPTION>
% OF MARKET VALUE
RATING OF INVESTMENTS
- ----------------------------------------------
<S> <C>
U.S. Government Issues 26%
AAA/A1/P1 74%
----
Total 100%
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE> 21
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997*
------------------ -------------------
<S> <C> <C>
Schroder Large Capitalization Equity Fund............. 33.27% 16.64%
Schroder Small Capitalization Value Fund -- Investor
Shares.............................................. 56.51% 21.77%
Schroder Small Capitalization Value -- Advisor
Shares.............................................. -- 1.75%
Schroder MidCap Value Fund............................ -- 8.80%
Schroder Investment Grade Income Fund................. 8.38% 5.62%
Schroder Short-Term Investment Fund................... 4.77% 4.26%
</TABLE>
*From commencement of operations (February 16, 1994 for Schroder Large
Capitalization Equity Fund, and Schroder Small Capitalization Value
Fund -- Investor shares; September 26, 1997 for Schroder Small Capitalization
Value Fund -- Advisor shares; August 1, 1997 for Schroder MidCap Value Fund;
February 22, 1994 for Schroder Investment Grade Income Fund and January 11, 1994
for Schroder Short-Term Investment Fund).
"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 a 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 each Fund's portfolio manager
as of the dates specified, and may not reflect the views of the portfolio
managers on the date this report is first published or any time thereafter.
These views are intended to assist shareholders of each 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.
- --------------------------------------------------------------------------------
21
<PAGE> 22
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
COMMON STOCKS
BASIC INDUSTRY - (3.9%)
16,100 duPont E I de Nemours &
Company 915,688
13,900 Reynolds Metals Company 847,031
-----------
1,762,719
CAPITAL GOODS - (15.2%)
43,900 Allied Signal,
Incorporated 1,580,400
9,200 Caterpillar, Incorporated 471,500
29,400 General Electric Company 1,898,137
4,833 Meritor Automotive,
Incorporated (1) 107,844
4,800 Minnesota Mining &
Manufacturing Company 439,200
14,500 Rockwell International
Corporation 710,500
29,800 Textron, Incorporated 1,722,813
-----------
6,930,394
CONSUMER CYCLICAL - (8.7%)
18,400 GAP, Incorporated 978,650
20,400 McDonald's Corporation 914,175
8,200 Mcgraw-Hill Companies,
Incorporated 536,075
43,700 Wal Mart Stores,
Incorporated 1,534,963
-----------
3,963,863
CONSUMER STAPLES - (17.7%)
17,900 Colgate Palmolive Company 1,159,025
23,200 ConAgra, Incorporated 698,900
13,200 CPC International,
Incorporated 1,306,800
9,500 Kimberly Clark
Corporation 493,406
20,700 Newell Company 794,363
37,100 Philip Morris Companies,
Incorporated 1,470,087
18,100 Procter & Gamble Company 1,230,800
15,600 Rite Aid Corporation 926,250
-----------
8,079,631
<CAPTION>
Shares Value $
- -------- -----------
<C> <S> <C>
ENERGY - (10.4%)
10,100 Amoco Corporation 926,044
16,100 Baker Hughes,
Incorporated 739,594
23,300 Mobil Corporation 1,696,531
15,800 Schlumberger Limited 1,382,500
-----------
4,744,669
FINANCIAL SERVICES - (19.2%)
17,300 Allstate Corporation 1,434,819
15,800 American International
Group, Incorporated 1,612,587
23,300 BankAmerica Corporation 1,665,950
8,000 Citicorp 1,000,500
6,400 General Reinsurance
Corporation 1,262,000
16,700 Travelers Group,
Incorporated 1,169,000
2,000 Wells Fargo & Company 582,750
-----------
8,727,606
HEALTHCARE - (10.8%)
18,200 Abbott Laboratories 1,115,887
14,300 American Home Products
Corporation 1,059,987
14,600 Bristol-Myers Squibb
Company 1,281,150
13,500 Johnson & Johnson 774,563
7,800 Merck & Company,
Incorporated 696,150
-----------
4,927,737
TECHNOLOGY - (8.6%)
27,300 Cisco Systems,
Incorporated (1) 2,239,453
13,000 Intel Corporation 1,001,000
20,100 Sun Microsystems,
Incorporated (1) 688,425
-----------
3,928,878
TRANSPORTATION - (2.0%)
25,600 Ryder Systems,
Incorporated 896,000
-----------
TOTAL COMMON STOCKS
(Cost $33,198,813) - 96.5% 43,961,497
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
22
<PAGE> 23
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- ----------
<C> <S> <C>
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT - (3.5%)
1,593,000 State Street Bank and
Trust Company
5.000% 11/03/1997 (2)
(Cost $1,593,000) - 3.5% 1,593,000
----------
TOTAL INVESTMENTS
(Cost
$34,791,813) - 100.0% 45,554,497
LIABILITIES IN EXCESS OF
OTHER ASSETS - 0.0% (2,257)
-----------
NET ASSETS - 100.0% $45,552,240
===========
</TABLE>
(1) Non-income producing security.
(2) The repurchase agreement, dated 10/31/97, with a repurchase price of
$1,593,664, is collateralized by a $1,595,000 United States Treasury Note,
6.00%, 12/31/97.
See notes to financial statements.
- --------------------------------------------------------------------------------
23
<PAGE> 24
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
COMMON STOCKS
AEROSPACE/DEFENSE - (3.0%)
121,000 Wyman Gordon Company (1) 2,919,125
-----------
AGRICULTURAL MACHINERY - (2.5%)
105,000 Valmont Industries,
Incorporated 2,401,875
-----------
BANKS - (6.3%)
25,400 Bank United Corporation 1,066,800
20,700 GBC Bancorp 1,117,800
22,400 InterWest Bancorp,
Incorporated 856,800
38,100 Prime Bancshares,
Incorporated (1) 726,281
129,000 Sovereign Bancorp,
Incorporated 2,289,750
-----------
6,057,431
BRANDED CONSUMER
PRODUCTS - (5.9%)
104,000 K2, Incorporated 2,632,500
74,000 WestPoint Stevens,
Incorporated (1) 3,034,000
-----------
5,666,500
BUILDING CONSTRUCTION - (2.7%)
2,900 Jacobs Engineering Group,
Incorporated (1) 78,300
54,000 Stone & Webster,
Incorporated 2,504,250
-----------
2,582,550
BUSINESS SERVICES - (3.2%)
50,000 Policy Management Systems
Corporation (1) 3,062,500
-----------
CAPITAL EQUIPMENT - (4.0%)
138,000 Gerber Scientific,
Incorporated 2,863,500
58,600 Kollmorgen Corporation 1,054,800
-----------
3,918,300
CHEMICALS - (5.8%)
63,000 Minerals Technologies,
Incorporated 2,606,625
78,700 OM Group, Incorporated 2,970,925
-----------
5,577,550
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
COMPUTERS & BUSINESS
EQUIPMENT - (4.3%)
150,000 Data General Corporation
(1) 2,887,500
35,800 Stratus Computer,
Incorporated (1) 1,266,425
-----------
4,153,925
CONSUMER ELECTRONICS - (3.6%)
64,000 Harman International
Industries, Incorporated 3,456,000
-----------
DRUGS & HEALTH CARE - (8.3%)
95,400 Alpharma, Incorporated 2,104,762
64,000 Integrated Health
Services, Incorporated 2,032,000
56,000 Medical Manager
Corporation (1) 980,000
50,000 R. P. Scherer Corporation
(1) 2,943,750
-----------
8,060,512
FINANCIAL SERVICES - (6.4%)
83,000 AmVestors Financial
Corporation 1,670,375
35,700 Eaton Vance Corporation 1,289,663
62,000 Liberty Financial
Companies, Incorporated 3,224,000
-----------
6,184,038
INSURANCE - (11.2%)
31,000 Chartwell Re Corporation 1,003,625
53,000 Delphi Financial Group,
Incorporated 2,186,250
48,000 Horace Mann Educators
Corporation 2,700,000
58,000 Protective Life
Corporation 3,066,750
33,000 Vesta Insurance Group,
Incorporated 1,918,125
-----------
10,874,750
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
24
<PAGE> 25
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
COMMON STOCKS
MANUFACTURING - (1.6%)
56,500 Roper Industries,
Incorporated 1,507,844
-----------
OIL & GAS EXPLORATION - (5.1%)
157,900 Patina Oil & Gas
Corporation (1) 1,539,525
55,000 Plains Resources,
Incorporated (1) 1,100,000
103,000 Snyder Oil Corporation 2,278,875
-----------
4,918,400
PACKAGING - (3.1%)
54,000 Aptargroup, Incorporated 2,966,625
-----------
PETROLEUM SERVICES - (7.8%)
57,000 EVI, Incorporated (1) 3,658,687
124,000 Tuboscope Vetco,
Incorporated (1) 3,937,000
-----------
7,595,687
PUBLISHING - (1.8%)
60,000 Valassis Communications,
Incorporated (1) 1,770,000
-----------
REAL ESTATE - (3.0%)
42,000 MGI Properties,
Incorporated 966,000
112,200 Sunstone Hotel Investors,
Incorporated 1,970,513
-----------
2,936,513
SOFTWARE - (3.4%)
152,000 Symantec Corporation (1) 3,325,000
-----------
TOTAL COMMON STOCKS
(Cost $67,315,247) - 93.0%
89,935,125
RIGHTS
DRUGS & HEALTH CARE - (0.1%)
15,766 Alpharma, Incorporated
(1)
(Cost $0) - 0.1% 88,684
-----------
Principal
Amount $
- ---------
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT - (6.6%)
6,415,000 State Street Bank and
Trust Company
5.000% 11/03/1997 (2)
(Cost $6,415,000) - 6.6% 6,415,000
-----------
<CAPTION>
Principal
Amount $
- --------- -----------
<C> <S> <C>
TOTAL INVESTMENTS
(Cost
$73,730,247) - 99.7% 96,438,809
OTHER ASSETS LESS
LIABILITIES - 0.3% 326,409
-----------
NET ASSETS - 100.0% $96,765,218
===========
</TABLE>
(1) Non-income producing security.
(2) The repurchase agreement, dated 10/31/97, with a repurchase price of
$6,417,673 is collateralized by a $6,410,000 United States Treasury Note,
6.00%, 12/31/97.
See notes to financial statements.
- --------------------------------------------------------------------------------
25
<PAGE> 26
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
COMMON STOCKS
AEROSPACE/DEFENSE - (3.7%)
15,500 Wyman Gordon Company (1) 373,937
-----------
BANKS - (11.5%)
10,500 Colonial BancGroup,
Incorporated 311,719
6,400 Commercial Federal
Corporation 310,400
5,300 Peoples Heritage
Financial Group,
Incorporated 208,687
18,200 Sovereign Bancorp,
Incorporated 323,050
-----------
1,153,856
BUSINESS SERVICES - (6.1%)
9,900 Comdisco, Incorporated 312,469
5,000 Policy Management Systems
Corporation (1) 306,250
-----------
618,719
CHEMICALS - (6.2%)
6,600 Cytec Industries,
Incorporated (1) 321,750
8,000 OM Group, Incorporated 302,000
-----------
623,750
COMPUTERS & BUSINESS
EQUIPMENT - (6.3%)
8,600 Ceridian Corporation (1) 335,937
15,600 Data General Corporation (1) 300,300
-----------
636,237
DRUGS & HEALTH CARE - (6.1%)
9,700 Integrated Health
Services, Incorporated 307,975
5,200 R. P. Scherer Corporation (1) 306,150
-----------
614,125
FINANCIAL SERVICES - (6.3%)
8,600 H&R Block, Incorporated 318,200
6,000 Liberty Financial
Companies, Incorporated 312,000
-----------
630,200
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
INSURANCE - (9.4%)
10,400 AmerUs Life Holdings,
Incorporated 323,050
6,200 Protective Life
Corporation 327,825
8,800 Provident Companies,
Incorporated 293,700
-----------
944,575
LODGING - (1.9%)
11,000 La Quinta Inns,
Incorporated 196,625
-----------
MANUFACTURING - (2.6%)
9,700 Roper Industries,
Incorporated 258,869
-----------
OIL & GAS EXPLORATION -(6.2%)
7,800 Pioneer Natural Resources
Company 312,488
12,800 Seagull Energy
Corporation (1) 312,800
-----------
625,288
PETROLEUM SERVICES - (6.1%)
4,300 Cooper Cameron
Corporation (1) 310,675
4,700 EVI, Incorporated (1) 301,681
-----------
612,356
PUBLISHING - (3.2%)
9,400 Meredith Corporation 320,188
-----------
REAL ESTATE - (1.8%)
4,400 Beacon Properties
Corporation 185,350
-----------
REFINING - (3.3%)
10,000 Tosco Corporation 330,000
-----------
RETAIL STORES - (6.6%)
15,100 Claire's Stores,
Incorporated 334,087
24,600 OfficeMax, Incorporated
(1) 329,025
-----------
663,112
SOFTWARE - (3.5%)
16,000 Symantec Corporation (1) 350,000
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
26
<PAGE> 27
- --------------------------------------------------------------------------------
SCHRODER MICCAP VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Shares Value $
- --------- -----------
<C> <S> <C>
COMMON STOCKS
TRANSPORTATION - (4.2%)
5,000 C.H. Robinson Worldwide,
Incorporated (1) 110,000
10,000 Wisconsin Central
Transportation
Corporation (1) 311,250
-----------
421,250
-----------
TOTAL COMMON STOCKS
(Cost $9,500,090) - 95.0% 9,558,437
-----------
Principal
Amount $
- --------- SHORT TERM INVESTMENT
REPURCHASE AGREEMENT - (4.9%)
494,000 State Street Bank and
Trust Company
5.000% 11/03/1997 (2)
(Cost $494,000) - 4.9% 494,000
-----------
TOTAL INVESTMENTS
(Cost
$9,994,090) - 99.9% 10,052,437
OTHER ASSETS LESS
LIABILITIES - 0.1% 13,079
-----------
NET ASSETS - 100.0% $10,065,516
===========
</TABLE>
(1) Non-income producing security.
(2) The repurchase agreement, dated 10/31/97, with a repurchase price of
$494,206, is collateralized by a $495,000 United States Treasury Note,
6.00%, 12/31/97.
See notes to financial statements.
- --------------------------------------------------------------------------------
27
<PAGE> 28
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -----------
<C> <S> <C>
GOVERNMENT AND AGENCY
SECURITIES
FEDERALLY CHARTERED - (6.2%)
Federal National
Mortgage Association
650,000 6.250% 08/12/2003 645,892
500,000 6.320% 12/23/2003 497,945
500,000 6.400% 09/27/2005 510,820
-----------
1,654,657
U. S. GOVERNMENT
SECURITIES - (38.4%)
United States Treasury
Bonds
600,000 6.750% 08/15/2026 643,968
500,000 7.125% 02/15/2023 555,845
United States Treasury
Notes
1,755,000 6.125% 05/15/1998 1,761,178
1,000,000 6.375% 05/15/2000 1,015,920
1,750,000 6.500% 05/31/2002 1,799,228
2,025,000 6.500% 10/15/2006 2,104,177
200,000 7.000% 07/15/2006 214,358
1,075,000 7.250% 08/15/2004 1,158,764
950,000 7.500% 10/31/1999 982,528
-----------
10,235,966
TOTAL GOVERNMENT AND AGENCY
SECURITIES
(Cost
$11,455,941) - 44.6% 11,890,623
-----------
MORTGAGE BACKED
SECURITIES
COLLATERALIZED MORTGAGE
OBLIGATIONS - (7.9%)
Federal Home Loan
Mortgage Corporation
250,000 Series 1698 Class 1698
G 6.000% 05/15/2008 249,565
500,000 Series 1543 Class 1543
PJ 7.000% 10/15/2022 513,175
Federal National
Mortgage Association
575,000 1996 53 Class M 6.500%
02/18/2004 583,579
250,000 1996 53 Class M 6.500%
12/18/2011 247,930
<CAPTION>
Principal
Amount $ Value $
- --------- -----------
<C> <S> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS - (CONTINUED)
500,000 Series 1997 25 Class VB
7.000% 09/18/2012 517,960
-----------
2,112,209
MORTGAGE PASS-THROUGH
SECURITIES - (12.2%)
522,530 Federal Home Loan
Mortgage Corporation
Pool # G00432 8.000%
01/01/2026 541,801
Federal National
Mortgage Association
534,158 Pool # 303945 7.000%
12/01/2010 541,337
620,725 Pool # 250030 7.000%
05/01/2024 622,668
622,223 Pool # 303909 7.000%
05/01/2026 624,170
Government National
Mortgage Association
551,671 Pool # 780350 6.500%
05/15/2009 556,498
363,582 Pool # 423825 8.000%
06/15/2026 377,445
-----------
3,263,919
TOTAL MORTGAGE BACKED
SECURITIES
(Cost $5,194,060) - 20.1% 5,376,128
-----------
CORPORATE BONDS
COMMUNICATION SERVICES - (1.6%)
410,000 WorldCom, Incorporated
7.750% 04/01/2007 435,822
-----------
FINANCE & BANKING - (15.6%)
Associates Corporation
of North America
200,000 5.960% 05/15/2037 202,258
350,000 6.400% 10/20/2002 353,381
400,000 Case Credit Corporation
6.750% 10/21/2007 405,184
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
28
<PAGE> 29
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -----------
<C> <S> <C>
CORPORATE BONDS
FINANCE & BANKING - (CONTINUED)
500,000 Citicorp 7.125%
09/01/2005 518,550
500,000 Dean Witter Discover &
Company
6.875% 03/01/2003 510,280
500,000 Ford Motor Credit
Company 6.250%
12/08/2005 493,730
General Motors
Acceptance Corporation
300,000 6.750% 07/18/2003 305,913
250,000 6.750% 10/06/2003 255,098
400,000 Merrill Lynch & Company,
Incorporated
6.640% 09/19/2002 408,440
100,000 NCNB Corporation
10.200% 07/15/2015 131,792
550,000 Sears Roebuck Acceptance
Corporation
6.950% 05/15/2002 567,253
-----------
4,151,879
INDUSTRIALS - (2.7%)
320,000 Nabisco, Incorporated
7.050% 07/15/2007 329,686
395,000 Nike, Incorporated
6.375% 12/01/2003 396,647
-----------
726,333
INSURANCE - (0.8%)
200,000 Old Republic
International
Corporation
7.000% 06/15/2007 207,478
-----------
LEISURE TIME - (3.0%)
495,000 Royal Caribbean Cruises
Limited
8.250% 04/01/2005 537,966
250,000 Time Warner,
Incorporated 8.180%
08/15/2007 273,185
-----------
811,151
<CAPTION>
Principal
Amount $ Value $
- --------- -----------
<C> <S> <C>
OIL - (2.4%)
265,000 Chevron Corporation
8.110% 12/01/2004 283,834
350,000 Enterprise Oil
6.700% 09/15/2007 354,490
-----------
638,324
RETAIL STORES - (2.3%)
600,000 GAP, Incorporated
6.900% 09/15/2007 618,528
-----------
TECHNOLOGY - (2.8%)
500,000 Lucent Technologies,
Incorporated
7.250% 07/15/2006 531,015
200,000 Xerox Corporation
5.545% 07/22/2037 200,518
-----------
731,533
TOTAL CORPORATE BONDS
(Cost $8,060,585) - 31.2% 8,321,048
-----------
SHORT TERM INVESTMENT
REPURCHASE AGREEMENT - (3.2%)
843,000 State Street Bank and
Trust Company
5.000% 11/03/1997 (1)
(Cost $843,000) - 3.2% 843,000
-----------
TOTAL INVESTMENTS
(Cost
$25,553,586) - 99.1% 26,430,799
OTHER ASSETS LESS
LIABILITIES - 0.9% 252,137
-----------
NET ASSETS - 100.0% $26,682,936
===========
</TABLE>
(1) The repurchase agreement, dated 10/31/97, with a repurchase price of
$843,351 is collateralized by a $845,000 United States Treasury Note, 6.00%,
12/31/97.
See notes to financial statements.
- --------------------------------------------------------------------------------
29
<PAGE> 30
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -----------
<C> <S> <C>
ASSET BACKED SECURITY
AUTO LOAN - (0.0%)
10,630 General Motors Acceptance
Corporation
Grantor Trust
Series 1993-A Class A
4.150% 03/16/1998
(Cost $10,612) - 0.0% 10,591
GOVERNMENT AND AGENCY
SECURITIES
COLLATERALIZED MORTGAGE
OBLIGATIONS - (8.0%)
Federal Home Loan
Mortgage PC Guaranteed
1,362,823 Series 1386 Class 1386 B
6.000% 12/15/2005 1,359,048
839,863 Series 1479 Class 1479 D
6.000% 02/15/2013 838,452
2,197,500
FEDERAL AGENCIES - (11.4%)
200,000 Federal Farm Credit Bank
Discount Note
5.170% 11/17/1997 199,540
Federal Home Loan Bank
Consolidated Discount
Notes
1,000,000 5.310% 11/30/1998 997,780
415,000 5.510% 11/03/1997 414,810
1,500,000 5.990% 02/09/1998 1,503,270
3,115,400
FEDERALLY CHARTERED - (5.5%)
1,500,000 Federal National Mortgage
Association
Medium Term Note
5.950% 04/14/2000 1,498,800
TOTAL GOVERNMENT
AND AGENCY SECURITIES
(Cost $6,807,462) - 24.9% 6,811,700
<CAPTION>
Principal
Amount $ Value $
- --------- -----------
<C> <S> <C>
CORPORATE BONDS
FINANCIAL SERVICES - (21.3%)
1,500,000 Allstate Corporation
5.875% 06/15/1998 1,503,225
1,300,000 Chrysler Financial
Corporation
6.500% 06/15/1998 1,306,669
1,500,000 Merrill Lynch & Company,
Incorporated
6.520% 06/22/1998 1,508,205
1,500,000 Travelers Group,
Incorporated
5.750% 04/15/1998 1,502,160
5,820,259
LEISURE TIME - (5.5%)
1,500,000 Carnival Corporation
5.750% 03/15/1998 1,499,910
TOTAL CORPORATE BONDS
(Cost
$7,300,818) - 26.8% 7,320,169
COMMERCIAL PAPER
FINANCIAL
SERVICES - (25.5%)
1,300,000 American Express Company
5.500% 01/21/1998 1,283,678
1,500,000 General Motors Acceptance
Corporation
5.570% 02/24/1998 1,473,406
1,500,000 Household Finance
Corporation
5.520% 04/03/1998 1,464,619
1,500,000 Norwest Financial,
Incorporated
5.500% 02/23/1998 1,474,100
1,300,000 Prudential Funding
Corporation
5.520% 02/17/1998 1,278,355
-----------
TOTAL COMMERCIAL PAPER
(Cost $6,974,379) - 25.5% 6,974,158
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
30
<PAGE> 31
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- ---------
<C> <S> <C>
BANKERS ACCEPTANCE - (3.6%)
1,000,000 Citibank
5.480% 12/30/1997 990,888
(Cost $991,019) - 3.6% -----------
CERTIFICATES OF
DEPOSIT - (18.3%)
1,000,000 Banque National de Paris 999,417
5.700% 02/05/1998
1,000,000 Credit Agricole Indosuez
de New York 999,847
5.670% 03/27/1998
1,000,000 Landesbank Hessen
Thuringen 999,742
5.800% 01/16/1998
1,000,000 Societe Generale
6.100% 03/25/1998 1,000,820
1,000,000 Westpac Banking
Corporation
5.970% 03/23/1998 1,003,372
TOTAL CERTIFICATES OF -----------
DEPOSIT
(Cost
$5,000,454) - 18.3% 5,003,198
TOTAL INVESTMENTS
(Cost
$27,084,744) - 99.1% 27,110,704
OTHER ASSETS LESS
LIABILITIES - 0.9% 235,602
-----------
NET ASSETS - 100.0% $27,346,306
===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
31
<PAGE> 32
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<CAPTION>
LARGE SMALL
CAPITALIZATION CAPITALIZATION MIDCAP INVESTMENT SHORT-TERM
EQUITY VALUE VALUE GRADE INCOME INVESTMENT
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value -
Note 2................ $ 45,554,497 $ 96,438,809 $10,052,437 $26,430,799 $27,110,704
Cash..................... 205 758 72 10,936 27,689
Dividends receivable..... 46,150 30,052 2,666 0 0
Interest receivable...... 221 891 69 352,317 365,769
Receivable for securities
sold.................. 0 1,762,824 0 0 0
Receivable for trust
shares sold........... 10,399 174,921 152,454 2,623 70,535
Deferred organizational
costs................. 15,786 15,786 27,848 16,126 13,692
Prepaid expenses......... 10,134 12,367 1,080 7,815 8,619
Due from Schroder Capital
Management Inc. - Note
3..................... 0 0 14,701 4,341 3,632
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS........ 45,637,392 98,436,408 10,251,327 26,824,957 27,600,640
LIABILITIES
Payable for securities
purchased............. 0 1,450,499 110,684 0 0
Payable for trust shares
redeemed.............. 0 72,878 0 72,163 192,273
Advisory fee payable -
Note 3................ 30,563 81,856 7,677 11,222 10,022
Shareholder servicing fee
payable - Note 4...... 0 10 0 0 0
Accounts payable and
accrued expenses...... 54,589 65,947 67,450 57,148 51,444
Dividends payable........ 0 0 0 1,488 595
------------ ------------ ----------- ----------- -----------
TOTAL LIABILITIES... 85,152 1,671,190 185,811 142,021 254,334
------------ ------------ ----------- ----------- -----------
NET ASSETS.......... $ 45,552,240 $ 96,765,218 $10,065,516 $26,682,936 $27,346,306
============ ============ =========== =========== ===========
NET ASSETS
Capital paid-in.......... $ 26,363,022 $ 59,268,666 $10,151,544 $25,855,504 $27,428,330
Undistributed
(distributions in
excess of) net
investment income..... 235,504 (23) 0 (4,305) 977
Accumulated net realized
gain (loss) on
investments........... 8,191,030 14,788,013 (144,375) (45,476) (108,961)
Net unrealized
appreciation of
investments........... 10,762,684 22,708,562 58,347 877,213 25,960
------------ ------------ ----------- ----------- -----------
NET ASSETS.......... $ 45,552,240 $ 96,765,218 $10,065,516 $26,682,936 $27,346,306
============ ============ =========== =========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
32
<PAGE> 33
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
LARGE SMALL
CAPITALIZATION CAPITALIZATION MIDCAP INVESTMENT SHORT-TERM
EQUITY VALUE VALUE GRADE INCOME INVESTMENT
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investor Class:
Net Assets............... $ 45,552,240 $ 96,709,032 $10,065,516 $26,682,936 $27,346,306
Net asset value, offering
and redemption price
per share............. $ 14.48 $ 17.67 $ 10.36 $ 9.77 $ 9.87
Total shares outstanding at
end of period............ 3,145,970 5,471,619 971,577 2,732,067 2,771,195
Advisor Class:
Net Assets............... -- $ 56,186 -- -- --
Net asset value, offering
and redemption price
per share............. -- $ 17.67 -- -- --
Total shares outstanding at
end of period............ -- 3,180 -- -- --
Cost of securities......... $ 34,791,813 $ 73,730,247 $ 9,994,090 $25,553,586 $27,084,744
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
33
<PAGE> 34
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
LARGE SMALL
CAPITALIZATION CAPITALIZATION MIDCAP INVESTMENT SHORT-TERM
EQUITY VALUE VALUE GRADE INCOME INVESTMENT
FUND FUND FUND (1) FUND FUND
---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income............. $ 832,183 $ 592,112 $ 8,057 $ 0 $ 0
Interest income............. 123,691 154,200 5,794 1,604,546 1,762,538
------------ ------------ --------- ---------- ---------
TOTAL INCOME........... 955,874 746,312 13,851 1,604,546 1,762,538
EXPENSES
Investment advisory
fees - Note 3............ 386,744 738,419 14,908 119,887 124,475
Shareholder servicing
fee - Note 4............. 0 10 0 0 0
Administrative fees - Note 3 72,691 105,797 6,938 37,328 46,312
Custodian fees.............. 41,699 44,708 12,041 38,999 32,999
Audit fees.................. 15,200 15,159 15,000 15,200 15,200
Legal fees.................. 16,500 16,447 3,400 16,500 16,500
Printing expenses........... 6,000 5,984 3,000 6,000 6,000
Trustees fees - Note 5...... 9,800 9,773 2,200 9,800 9,800
Transfer agent fees......... 55,000 57,742 9,000 50,000 50,000
Organizational expenses..... 9,647 9,647 4,612 9,647 9,647
Registration fees........... 11,771 11,792 0 11,771 11,932
Insurance................... 4,990 6,789 0 2,343 3,280
Other....................... 2,294 2,712 950 1,836 2,146
Expenses borne by Schroder
Capital Management
Inc. -
Note 3................... 0 0 (49,518) (51,045) (8,528)
----------- ----------- --------- ---------- ---------
TOTAL EXPENSES......... 632,336 1,024,979 22,531 268,266 319,763
----------- ----------- --------- ---------- ---------
NET INVESTMENT INCOME
(LOSS).............. 323,538 (278,667) (8,680) 1,336,280 1,442,775
----------- ----------- --------- ---------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
investments.............. 8,236,625 15,073,103 (144,375) (45,129) (4,609)
Change in net unrealized
appreciation of
investments.............. 3,525,651 13,740,928 58,347 535,056 8,461
------------ ------------ --------- ---------- ---------
NET GAIN (LOSS)............. 11,762,276 28,814,031 (86,028) 489,927 3,852
------------ ------------ --------- ---------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 12,085,814 $ 28,535,364 $ (94,708) $1,826,207 $1,446,627
============ ============ ========= ========== ==========
</TABLE>
(1) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997
See notes to financial statements.
- --------------------------------------------------------------------------------
34
<PAGE> 35
(This page has been left blank intentionally)
- --------------------------------------------------------------------------------
35
<PAGE> 36
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
LARGE CAPITALIZATION SMALL CAPITALIZATION
EQUITY FUND VALUE FUND
----------- ----------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/97 10/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss).... $ 323,538 $ 400,366 $ (278,667) $ (169,856)
Net realized gain (loss) on
investments................... 8,236,625 2,347,661 15,073,103 5,532,400
Change in net unrealized
appreciation (depreciation) of
investments................... 3,525,651 4,535,784 13,740,928 4,106,542
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations.................... 12,085,814 7,283,811 28,535,364 9,469,086
Net equalization (debits)
credits......................... 0 0 0 0
Dividends and distributions to
Investor Shareholders:
From net investment income...... (386,573) (443,762) 0 0
In excess of net investment
income........................ 0 0 0 0
From net realized capital
gains......................... (2,294,529) (2,980,634) (5,368,195) (28,662)
Dividends and distributions to
Advisor Shareholders:
From net investment income...... -- -- 0 0
In excess of net investment
income........................ -- -- 0 0
From net realized capital
gains......................... -- -- 0 0
Net increase (decrease) from
trust share transactions...... (6,757,731) 957,494 24,983,865 (8,755,194)
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE)....... 2,646,981 4,816,909 48,151,034 685,230
Net Assets
Beginning of period............. 42,905,259 38,088,350 48,614,184 47,928,954
----------- ----------- ----------- -----------
End of period................... $45,552,240 $42,905,259 $96,765,218 $48,614,184
=========== =========== =========== ===========
Including undistributed
(distributions in excess of) net
investment income.................. $ 235,504 $ 297,494 $ (23) $ 0
</TABLE>
(1) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997
See notes to financial statements.
- --------------------------------------------------------------------------------
36
<PAGE> 37
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
MIDCAP VALUE(1) INVESTMENT GRADE SHORT-TERM
FUND INCOME FUND INVESTMENT FUND
---- ----------- ---------------
PERIOD YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/97 10/31/97 10/31/96 10/31/97 10/31/96
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ (8,680) $ 1,336,280 $ 1,409,904 $ 1,442,775 $ 1,483,189
(144,375) (45,129) 246,670 (4,609) (1,966)
58,347 535,056 (654,055) 8,461 3,256
----------- ----------- ----------- ----------- -----------
(94,708) 1,826,207 1,002,519 1,446,627 1,484,479
0 2,056 (7,265) 0 0
0 (1,335,618) (1,404,178) (1,442,734) (1,506,838)
0 0 0 0 (30,276)
0 (246,670) (306,566) 0 0
-- -- -- -- --
-- -- -- -- --
10,160,224 2,729,362 719,126 (3,184,155) (3,356,675)
----------- ----------- ----------- ----------- -----------
10,065,516 2,975,337 3,636 (3,180,262) (3,409,310)
0 23,707,599 23,703,963 30,526,568 33,935,878
----------- ----------- ----------- ----------- -----------
$10,065,516 $26,682,936 $23,707,599 $27,346,306 $30,526,568
=========== =========== =========== =========== ===========
$ 0 $ (4,305) $ (8,068) $ 977 $ (53)
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
37
<PAGE> 38
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED OCTOBER 31, ENDED
-------------------------- OCTOBER 31,
1997 1996 1995 1994 (1)
---- ---- ---- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............. $ 12.18 $ 11.12 $ 9.45 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (2)........................ 0.10 0.11 0.11 0.06
Net Realized and Unrealized Gain (Loss) on
Investments................................... 3.04 1.92 1.63 (0.61)
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS................. 3.14 2.03 1.74 (0.55)
------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income....................... (0.11) (0.13) (0.07) 0.00
From Net Realized Capital Gains.................. (0.73) (0.84) 0.00 0.00
------- ------- ------- -------
Total Distributions.............................. (0.84) (0.97) (0.07) 0.00
------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD................... $ 14.48 $ 12.18 $ 11.12 $ 9.45
======= ======= ======= =======
TOTAL RETURN....................................... 26.18% 19.30% 18.63% (5.50)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).............. $45,552 $42,905 $38,088 $21,309
Ratio of Operating Expenses to Average Net Assets
(2)........................................... 1.23% 1.26% 1.40% 1.30%(4)
Ratio of Net Investment Income to Average Net
Assets........................................ 0.63% 0.94% 1.27% 1.37%(4)
Portfolio Turnover Rate.......................... 64.91% 56.83% 83.15% 102.56%(3)
Average Commission per Share (5)................. $ 0.06 $ 0.06 - -
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust'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 - $0.10 and 1.23%, 1996 - $0.11 and 1.26%, 1995 - $0.11 and 1.45%;
1994 - $0.02 and 2.17%, respectively.
(3) Not annualized.
(4) Annualized.
(5) For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for trades on which
commissions are charged. This rate does not reflect mark-ups, mark-downs or
spreads on shares traded on a principal basis.
See notes to financial statements.
- --------------------------------------------------------------------------------
38
<PAGE> 39
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND - INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED OCTOBER 31, ENDED
-------------------------- OCTOBER 31,
1997 1996 1995 1994 (2)
---- ---- ---- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............. $ 13.05 $ 10.77 $ 9.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (2)................. (0.05) (0.05) (0.03) 0.00
Net Realized and Unrealized Gain (Loss) on
Investments................................... 5.65 2.34 1.03 (0.23)
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS................. 5.60 2.29 1.00 (0.23)
------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains.................. (0.98) (0.01) 0.00 0.00
------- ------- ------- -------
Total Distributions.............................. (0.98) (0.01) 0.00 0.00
------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD................... $ 17.67 $ 13.05 $ 10.77 $ 9.77
======= ======= ======= =======
TOTAL RETURN....................................... 48.46% 21.17% 10.27% (2.30)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).............. $96,709 $48,614 $47,929 $21,193
Ratio of Operating Expenses to Average Net Assets
(2)........................................... 1.32% 1.43% 1.56% 1.45%(4)
Ratio of Net Investment Income to Average Net
Assets........................................ (0.36)% (0.34)% (0.29)% 0.17%(4)
Portfolio Turnover Rate.......................... 77.48% 81.63% 45.74% 18.53%(3)
Average Commission per Share (5)................. $ 0.06 $ 0.06 - -
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust'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 - $(0.05) and 1.32%, 1996 - $(0.05) and 1.43%, 1995 - $(0.03) and
1.62%; 1994 - $(0.04) and 3.15%, respectively.
(3) Not annualized.
(4) Annualized.
(5) For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for trades on which
commissions are charged. This rate does not reflect mark-ups, mark-downs or
spreads on shares traded on a principal basis.
See notes to financial statements.
- --------------------------------------------------------------------------------
39
<PAGE> 40
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND - ADVISOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
ENDED
OCTOBER 31,
1997 (1)
--------
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...................................... $ 18.29
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (2).......................................... (0.01)
Net Realized and Unrealized (Loss) on Investments......................... (0.61)
-------
TOTAL FROM INVESTMENT OPERATIONS.......................................... (0.62)
-------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains........................................... 0.00
-------
Total Distributions....................................................... 0.00
-------
NET ASSET VALUE AT END OF PERIOD............................................ $ 17.67
=======
TOTAL RETURN................................................................ (3.39)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)....................................... $ 56
Ratio of Operating Expenses to Average Net Assets (2)..................... 1.46%(4)
Ratio of Net Investment Income to Average Net Assets...................... 0.63%(4)
Portfolio Turnover Rate................................................... 77.48%(3)
Average Commission per Share (5).......................................... $ 0.06
</TABLE>
(1) For the period September 26, 1997 (commencement of investment operations)
through October 31, 1997.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust'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 - ($0.01) and 1.46%
(3) Not annualized.
(4) Annualized.
(5) For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for trades on which
commissions are charged. This rate does not reflect mark-ups, mark-downs or
spreads on shares traded on a principal basis.
See notes to financial statements.
- --------------------------------------------------------------------------------
40
<PAGE> 41
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
ENDED
OCTOBER 31,
1997 (1)
--------
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...................................... $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (2).......................................... 0.00
Net Realized and Unrealized Gain on Investments........................... 0.36
-------
TOTAL FROM INVESTMENT OPERATIONS.......................................... 0.36
-------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains........................................... 0.00
-------
Total Distributions....................................................... 0.00
-------
NET ASSET VALUE AT END OF PERIOD............................................ $ 10.36
=======
TOTAL RETURN................................................................ 3.60%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)....................................... $10,066
Ratio of Operating Expenses to Average Net Assets (2)..................... 1.35%(4)
Ratio of Net Investment Income to Average Net Assets...................... (0.13)%(4)
Portfolio Turnover Rate................................................... 11.96%(3)
Average Commission per Share (5).......................................... $ 0.06
</TABLE>
(1) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust'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 - $(0.06) and 4.33%
(3) Not annualized.
(4) Annualized.
(5) For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for trades on which
commissions are charged. This rate does not reflect mark-ups, mark-downs or
spreads on shares traded on a principal basis.
See notes to financial statements.
- --------------------------------------------------------------------------------
41
<PAGE> 42
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
-------------------------- OCTOBER 31,
1997 1996 1995 1994 (1)
---- ---- ---- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 9.70 $ 9.93 $ 9.14 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (2)....................... 0.49 0.53 0.59 0.34
Net Realized and Unrealized Gain (Loss) on
Investments.................................. 0.16 (0.11) 0.79 (0.83)
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS................ 0.65 0.42 1.38 (0.49)
------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income...................... (0.49) (0.53) (0.59) (0.34)
From Net Realized Capital Gains................. (0.09) (0.12) 0.00 0.00
Tax Return of Capital........................... 0.00 0.00 0.00 (0.03)
------- ------- ------- -------
Total Distributions............................. (0.58) (0.65) (0.59) (0.37)
------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD.................. $ 9.77 $ 9.70 $ 9.93 $ 9.14
======= ======= ======= =======
TOTAL RETURN...................................... 7.68% 4.38% 15.62% (4.90)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)............. $26,683 $23,708 $23,704 $ 12,905
Ratio of Operating Expenses to Average Net
Assets (2)................................... 1.12% 1.12% 1.06% 0.87%(4)
Ratio of Net Investment Income to Average Net
Assets....................................... 5.58% 5.46% 6.35% 6.39%(4)
Portfolio Turnover Rate......................... 43.65% 68.76% 113.50% 115.63%(3)
</TABLE>
(1) For the period February 22, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust'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 -- $0.47 and 1.33%, 1996 -- $0.52 and 1.24%, 1995 -- $0.56 and 1.50%;
1994 -- $0.21 and 3.98%, respectively.
(3) Not annualized.
(4) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
42
<PAGE> 43
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
-------------------------- OCTOBER 31,
1997 1996 1995 1994 (1)
---- ---- ---- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 9.87 $ 9.88 $ 9.88 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (2)....................... 0.46 0.45 0.49 0.30
Net Realized and Unrealized Gain (Loss) on
Investments.................................. (0.00) 0.00 0.00 (0.12)
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS................ 0.46 0.45 0.49 0.18
------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income...................... (0.46) (0.45) (0.49) (0.30)
In Excess of Net Investment Income.............. 0.00 (0.01) 0.00 0.00
------- ------- ------- -------
Total Distributions............................. (0.46) (0.46) (0.49) (0.30)
------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD.................. $ 9.87 $ 9.87 $ 9.88 $ 9.88
======= ======= ======= =======
TOTAL RETURN...................................... 4.74% 4.63% 5.02% 1.83%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)............. $27,346 $30,527 $33,936 $ 30,771
Ratio of Operating Expenses to Average Net
Assets (2)................................... 1.03% 1.00% 0.95% 0.78%(4)
Ratio of Net Investment Income to Average Net
Assets....................................... 4.64% 4.50% 4.91% 4.48%(4)
Portfolio Turnover Rate......................... 65.57% 154.66% 27.86% 71.38%(3)
</TABLE>
(1) For the period January 11, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust'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 -- $0.46 and 1.05%, 1996 -- $0.45 and 1.00%, 1995 -- $0.47 and 1.08%;
1994 -- $0.24 and 1.66%, respectively.
(3) Not annualized.
(4) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
43
<PAGE> 44
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE 1 -- ORGANIZATION
Schroder Series Trust (the "Trust", formerly WSIS Series Trust) is a diversified
open-end series management investment company registered under the Investment
Company Act of 1940, as amended. The Trust was organized as a business trust
under the laws of The Commonwealth of Massachusetts on May 6, 1993. The Trust
has an unlimited number of authorized shares, which are divided into five
separate investment portfolios -- Schroder Large Capitalization Equity Fund
(formerly Schroder Equity Value Fund, formerly Wertheim Equity Value Fund),
Schroder Small Capitalization Value Fund (formerly Wertheim Small Capitalization
Value Fund), Schroder MidCap Value Fund, Schroder Investment Grade Income Fund
(formerly Wertheim Investment Grade Income Fund) and Schroder Short-Term
Investment Fund (formerly Wertheim Short-Term Investment Fund) (collectively,
the "Funds"). The Funds (except Schroder Short-Term Investment Fund) are
presently authorized to issue two classes of shares -- "Investor Shares" and
"Advisor Shares." As of October 31, 1997, only Schroder Small Capitalization
Value Fund had issued Advisor Shares. Schroder Short-Term Investment Fund issues
only Investor Shares.
Effective September 8, 1997, Schroder Equity Value Fund changed its name to
Schroder Large Capitalization Equity Fund. 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 Funds.
Schroder High Yield Income Fund was liquidated on June 16, 1997.
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
Funds which are in conformity with generally accepted accounting principles.
VALUATION OF INVESTMENTS: Equity securities traded on a national securities
exchange are valued at their last reported sale price on the principal exchange,
or, if traded in the over-the-counter market or on a national securities
exchange for which no sales took place on the day of valuation, at the last
available bid price. 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.
- --------------------------------------------------------------------------------
44
<PAGE> 45
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
REPURCHASE AGREEMENTS: Funds enter into repurchase agreements with approved
institutions. Repurchase agreements are collateralized by U.S. Government
securities. The Trust'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 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. ("SCM"),
investment adviser to the Trust, 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, a 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 such a manner as
deemed equitable by SCM or the Trustees.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders from net
investment income are declared and distributed at least annually for Schroder
Large Capitalization Equity Fund, Schroder Small Capitalization Value Fund and
Schroder MidCap Value Fund; declared and distributed monthly for Schroder
Investment Grade Income Fund; and declared daily and distributed monthly for
Schroder Short-Term Investment 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 Funds paid by SCM and
its affiliates in connection with the organization of the Funds and the initial
public offering of their shares have been deferred by the Funds 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.
SCM has agreed with respect to each of the Funds that, if any of the initial
shares of a 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. For this
purpose, SCM has specified that its initial investment in the Schroder MidCap
Value fund was in the amount of $100,000.
EQUALIZATION: Schroder Investment Grade Income Fund follows an accounting
practice known as equalization by which a portion of the proceeds from sales and
costs of redemptions of Fund shares are 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.
- --------------------------------------------------------------------------------
45
<PAGE> 46
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
FEDERAL INCOME TAXES: It is the policy of the Trust for each 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 Funds will 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 their net investment
income, capital gains and certain other amounts, if any, the Funds will not be
subject to a federal excise tax.
As of October 31, 1997, the Funds listed had net tax basis capital loss
carryforwards, for Federal income tax purposes, that may be applied against
taxable gains until their expiration date as follows.
<TABLE>
<CAPTION>
EXPIRATION
DATES
FUND AMOUNT OCTOBER 31,
----------------------------------------------------- -------- -----------
<S> <C> <C>
Schroder MidCap Value Fund........................... $144,374 2005
Schroder Investment Grade Income Fund................ 45,129 2005
Schroder Short - Term Investment Fund................ 104,408 2004
Schroder Short - Term Investment Fund................ 4,553 2005
</TABLE>
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for market discount,
losses deferred due to wash sales and excise tax regulations.
At October 31, 1997, the Trust reclassified the following amounts between paid
in capital, accumulated undistributed net realized gain (loss) and accumulated
undistributed net investment income:
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
INCREASE ACCUMULATED
(DECREASE) UNDISTRIBUTED NET REALIZED
PAID-IN CAPITAL INVESTMENT INCOME GAIN/(LOSS)
--------------- ----------------- ------------------
<S> <C> <C> <C>
Schroder Large Capitalization Equity $(1,045) $ 1,045 $ 0
Fund..................................
Schroder Small Capitalization Value (1,045) 278,644 (277,599)
Fund..................................
Schroder MidCap Value Fund.............. (8,680) 8,680 0
Schroder Investment Grade Income Fund... (1,045) 1,045 0
Schroder Short-Term Investment Fund..... (1,046) 989 57
</TABLE>
These reclassifications had no impact on the net asset value of the Funds and
are designated to present each Fund's capital accounts on a tax basis.
- --------------------------------------------------------------------------------
46
<PAGE> 47
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
NOTE 3 -- INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENT
The Trust has entered into investment advisory agreements with SCM. Under the
agreements, SCM provides investment management services, and receives for its
services monthly compensation at the following annual rates based on average
daily net assets of each Fund taken separately: 0.75% for Schroder Large
Capitalization Equity Fund; 0.95% for Schroder Small Capitalization Value Fund;
0.90% for Schroder MidCap Value Fund; 0.50% for Schroder Investment Grade Income
Fund; and 0.40% for Schroder Short-Term Investment 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 each Fund taken separately: 0.08% of the first
$125 million of each Fund's average daily net assets, 0.06% of the next $125
million of each Fund's average daily net assets and 0.04% of each Fund's average
daily net assets in excess of $250 million, subject to certain minimum
requirements.
SCM has voluntarily agreed to reduce its compensation and, if necessary, to pay
certain expenses of each of the Funds until October 31, 1998, to the extent that
a Fund's expenses (other than SCM's compensation, brokerage, interest, taxes,
deferred organizational expenses, shareholder servicing fees, and extraordinary
expenses) exceed the following annual rates: 0.80% of average daily net assets
of Schroder Large Capitalization Equity Fund; 0.75% of average daily net assets
of Schroder Small Capitalization Value Fund; 0.45% of average daily net assets
of Schroder MidCap Value Fund; 0.62% of average daily net assets of Schroder
Investment Grade Income Fund; and 0.63% of average daily net assets of Schroder
Short-Term Investment Fund. The Trust pays all expenses not assumed by SCM,
including Trustees' fees, auditing, legal, custodial, and shareholder servicing
and shareholder reporting expenses.
NOTE 4 -- SHAREHOLDER SERVICING PLAN
The Trust has adopted a shareholder servicing plan for the Advisor Shares of
each Fund. Under the plan, Schroder Fund Advisors Inc. or Service Organizations
provide administrative support services to their customers who hold a Fund's
Advisor Shares. For these shareholder services, Schroder Fund Advisors Inc.
receives compensation monthly at an annual rate of up to 0.25% of the average
daily net assets of each Fund attributable to its Advisor Shares.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES
TRUSTEES' FEES: The Trust pays no compensation to Trustees who are employees of
SCM. Trustees who are not SCM employees received an annual retainer of $5,000
and an additional fee of $1,500 for each Trustees meeting attended for fiscal
1997. In connection with the shareholders meeting held on December 8, 1997, the
Trustees' compensation was changed. See Note 10.
- --------------------------------------------------------------------------------
47
<PAGE> 48
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
NOTE 6 -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Fund, for the period ended October 31, 1997 were
as follows:
<TABLE>
<CAPTION>
NON- NON-
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
PURCHASES PURCHASES SALES SALES
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Schroder Large Capitalization Equity
Fund................................ $31,150,915 $ 0 $40,379,829 $ 0
Schroder Small Capitalization Value
Fund................................ 71,688,613 0 57,675,389 0
Schroder MidCap Value Fund............ 10,593,519 0 949,054 0
Schroder Investment Grade Income
Fund................................ 5,106,122 8,259,431 4,752,549 5,242,921
Schroder Short-Term Investment Fund... 7,296,739 6,888,622 4,500,000 1,494,258
</TABLE>
The identified cost for federal income tax purposes of investments owned by each
Fund and their respective gross unrealized appreciation and depreciation at
October 31, 1997 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED COST APPRECIATION (DEPRECIATION) APPRECIATION
--------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Schroder Large Capitalization
Equity Fund................... $34,836,655 $11,432,774 $ (714,932) $ 10,717,842
Schroder Small Capitalization
Value Fund.................... 73,760,493 23,485,568 (807,252) 22,678,316
Schroder MidCap Value Fund...... 9,994,090 383,588 (325,241) 58,347
Schroder Investment Grade Income
Fund.......................... 25,565,191 865,608 0 865,608
Schroder Short-Term Investment
Fund.......................... 27,084,744 31,179 (5,219) 25,960
</TABLE>
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48
<PAGE> 49
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SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
NOTE 7 -- SHAREHOLDERS' TRANSACTIONS
Following is a summary of shareholder transactions for each Fund:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
SHARES DOLLARS SHARES DOLLARS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
SCHRODER LARGE CAPITALIZATION EQUITY
FUND INVESTOR CLASS
Shares sold......................... 1,127,960 $ 15,235,730 810,872 $ 9,343,159
Shares issued to shareholders in
reinvestment..................... 215,393 2,664,515 314,407 3,383,017
Shares redeemed..................... (1,720,780) (24,657,976) (1,027,306) (11,768,682)
---------- ------------ ---------- ------------
Net (decrease) increase............. (377,427) $ (6,757,731) 97,973 $ 957,494
========== ============ ========== ============
SCHRODER SMALL CAPITALIZATION VALUE
FUND INVESTOR CLASS
Shares sold......................... 3,086,934 $ 46,850,624 992,874 $ 12,163,446
Shares issued to shareholders in
reinvestment..................... 405,502 5,332,355 2,425 28,367
Shares redeemed..................... (1,744,917) (27,257,461) (1,719,678) (20,947,007)
---------- ------------ ---------- ------------
Net increase (decrease)............. 1,747,519 $ 24,925,518 (724,379) $ (8,755,194)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 26, 1997
TO OCTOBER 31, 1997
SHARES DOLLARS
---------- ------------
<S> <C> <C>
SCHRODER SMALL CAPITALIZATION VALUE
FUND ADVISOR CLASS
Shares sold......................... 3,180 $ 58,347
Shares issued to shareholders in
reinvestment..................... 0 0
Shares redeemed..................... (0) (0)
---------- ------------
Net increase........................ 3,180 $ 58,347
========== ============
</TABLE>
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49
<PAGE> 50
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SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
FOR THE PERIOD AUGUST 1,
1997
TO OCTOBER 31, 1997
SHARES DOLLARS
---------- ------------
<S> <C> <C>
SCHRODER MIDCAP VALUE FUND INVESTOR
CLASS
Shares sold......................... 1,017,450 $ 10,654,297
Shares issued to shareholders in
reinvestment..................... 0 0
Shares redeemed..................... (45,873) (494,073)
---------- ------------
Net increase........................ 971,577 $ 10,160,224
========== ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
SHARES DOLLARS SHARES DOLLARS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
SCHRODER INVESTMENT GRADE INCOME FUND
INVESTOR CLASS
Shares sold......................... 733,026 $ 7,008,432 790,360 $ 7,818,847
Shares issued to shareholders in
reinvestment..................... 162,500 1,557,874 169,595 1,652,197
Shares redeemed..................... (607,125) (5,839,000) (904,441) (8,759,183)
Income equalization paid............ 0 2,056 0 7,265
---------- ------------ ---------- ------------
Net increase........................ 288,401 $ 2,729,362 55,514 $ 719,126
========== ============ ========== ============
SCHRODER SHORT-TERM INVESTMENT FUND
INVESTOR CLASS
Shares sold......................... 1,733,819 $ 17,100,221 946,514 $ 9,335,247
Shares issued to shareholders in
reinvestment..................... 143,695 1,417,451 154,582 1,524,331
Shares redeemed..................... (2,200,190) (21,701,827) (1,440,993) (14,216,253)
---------- ------------ ---------- ------------
Net decrease........................ (322,676) $ (3,184,155) (339,897) $ (3,356,675)
========== ============ ========== ============
</TABLE>
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50
<PAGE> 51
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SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
NOTE 8 -- BENEFICIAL INTEREST
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders.
<TABLE>
<CAPTION>
5% OF GREATER
SHAREHOLDERS
-------------------------
NUMBER % OF FUND HELD
------ --------------
<S> <C> <C>
Schroder Large Capitalization Equity Fund -- Investor............. 2 21.45%
Schroder Large Capitalization Equity Fund -- Advisor.............. 0 0.0%
Schroder Small Capitalization Value Fund -- Investor.............. 3 24.40%
Schroder Small Capitalization Value Fund -- Advisor............... 3 95.67%
Schroder Mid-Cap Value Fund -- Investor........................... 3 60.16%
Schroder Mid-Cap Value Fund -- Advisor............................ 0 0.0%
Schroder Investment Grade Income Fund -- Investor................. 2 56.62%
Schroder Investment Grade Income Fund -- Advisor.................. 0 0.0%
Schroder Short-Term Investment Fund -- Investor................... 1 5.11%
</TABLE>
NOTE 9 -- TAX INFORMATION NOTICE
For Federal income tax purposes, the following information is furnished with
respect to the distributions of the Trust for its fiscal year ended October 31,
1997:
Schroder Large Capitalization Equity Fund, Schroder Small Capitalization Value
Fund and Schroder MidCap Value Fund had 99.66%, 75.22% and 79.93% of 1997
dividends qualify for corporate dividends received deduction, respectively.
Schroder Large Capitalization Equity Fund and Schroder Small Capitalization
Value Fund designated $1,423,852 and $3,483,070 as capital gains dividends for
the purpose of the dividend paid deduction, respectively. The dividends paid by
both funds are taxed at a rate of 28%.
- --------------------------------------------------------------------------------
51
<PAGE> 52
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SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
NOTE 10 -- SUBSEQUENT EVENT
A meeting of the Shareholders of Schroder Series Trust was held on December 8,
1997 at the offices of the Trust, 787 Seventh Avenue, New York, New York. The
matter voted upon by Shareholders and the resulting votes are presented below:
1. ELECTION OF TRUSTEES
<TABLE>
<CAPTION>
NUMBER OF VOTES
-------------------------------
TRUSTEE FOR WITHHELD
- --------------------------------------------------------------- ---------------- -----------
<S> <C> <C>
David N. Dinkins............................................... 11,280,759.5890 3,631.7790
Peter E. Guernsey.............................................. 11,283,996.2460 395.1220
Sharon L. Haugh................................................ 11,283,996.2460 395.1220
John I. Howell................................................. 11,282,238.0040 2,153.3640
Peter S. Knight................................................ 11,281,966.9700 2,424.3980
Clarence F. Michalis........................................... 11,283,996.2460 395.1220
Hermann C. Schwab.............................................. 11,283,996.2460 395.1220
Mark J. Smith.................................................. 11,283,996.2460 395.1220
</TABLE>
The Trustees have approved a change in the calculation of fees payable to the
Trustees of the Trust effective November 1, 1997. Fees will be calculated and
payable as follows: Trustees will receive an annual retainer of $11,000 for
their services as Trustees of all open end investment companies distributed by
Schroder Fund Advisors Inc., and $1,250 per meeting attended in person or $500
per meeting attended by telephone. Members of an Audit Committee for one or more
of the investment companies will receive an additional $1,000 per year. Payment
of the annual retainer will be allocated among the various investment companies
based on their relative net assets. Payment of meeting fees will be allocated
only among those investment companies to which the meeting relates.
- --------------------------------------------------------------------------------
52
<PAGE> 53
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and
Board of Trustees of Schroder Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Schroder Series Trust (a Massachusetts business
trust comprising, respectively, the Schroder Large Capitalization Equity Fund,
Schroder Small Capitalization Value Fund, Schroder MidCap Value Fund, Schroder
Investment Grade Income Fund and Schroder Short-Term Investment Fund) as of
October 31, 1997 and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended, and for the period ended October 31, 1994. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting Schroder Series Trust as of October 31,
1997 the results of their operations, for the year then ended, the changes in
their net assets for each of the two years in the period then ended and
financial highlights for each of the three years in the period then ended, and
for the period ended October 31, 1994 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
December 12, 1997
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53
<PAGE> 54
(This page has been left blank intentionally)
<PAGE> 55
INVESTMENT MANAGER
Schroder Capital Management Inc.
OFFICERS
Mark J. Smith, Chairman
Ashbel C. Williams Jr., President
David Gibson, Vice President
Jane P. Lucas, Vice President
Catherine A. Mazza, Vice President
Fergal Cassidy, Assistant Treasurer
Alexandra Poe, Clerk
Barbara Gottlieb, Assistant Clerk
TRUSTEES
David N. Dinkins
Peter E. Guernsey
Sharon L. Haugh
John I. Howell
Peter S. Knight
Clarence F. Michalis
Hermann C. Schwab
Mark J. Smith
TRANSFER AND SHAREHOLDER SERVICING AGENT
Boston Financial Data Services, Inc.
CUSTODIAN
State Street Bank and Trust Company
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
- --------------------------------------------------------------------------------
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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<PAGE> 56
Schroder Series Trust
P.O. Box 8507
Boston, Mass. 02266
1-800-464-3108
1097WS
[SCHRODERS LOGO]
----------------------------------------------
SCHRODER SERIES TRUST
Schroder Large
Capitalization Equity
Fund
Schroder Small
Capitalization Value Fund
Schroder MidCap
Value Fund
Schroder Investment
Grade Income Fund
Schroder Short-Term
Investment Fund
ANNUAL REPORT
October 31, 1997
