<PAGE> 1
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
December 15, 1998
Dear Shareholder:
We are pleased to present the annual report for Schroder Series Trust for the
fiscal year ended October 31, 1998. For most of the fiscal year, U.S. financial
markets proved quite resilient to economic shocks elsewhere in the world and,
towards the end of this period, to weaker corporate profits at home. While the
U.S. markets were not immune to these problems, especially in October, their
immediate impact was short-lived. The concerns have at times seemed numerous,
ranging from political uncertainties to hedge fund and banking sector
difficulties, but both Treasury and stock markets ended the fiscal year showing
positive returns. Within these more volatile markets, however, quality and
liquidity were increasingly prized; lower-rated credits and corporate bond
spreads widened significantly over Treasuries, while large cap stocks
outperformed smaller ones for most of the period.
The U.S. economy delivered another solid performance in 1998, with real gross
domestic product (GDP) growing by an estimated 3.7%, after a 3.9% gain in 1997.
This year's outcome was particularly impressive given that the U.S. trade
deficit increased dramatically following the collapse of many emerging market
economies. Domestic demand grew at almost a 5% pace over the year, driven by
consumer spending and a significant gain in capital spending, led by the high-
tech industry. Inflation continued to fall, as the lagged effects of the
dollar's appreciation -- together with global overcapacity in many
industries -- outweighed the impact of a tight domestic labor market. The
Federal Reserve responded to global financial turmoil, and to early indications
of weakening U.S. growth, by reducing interest rates twice prior to the end of
the fiscal year.
Looking ahead, we anticipate that U.S. economic growth will slow in the coming
year. Corporate profits are being squeezed and corporations are beginning to
reduce costs aggressively. We believe that consumer and capital spending, which
have been the two main engines of U.S. growth in 1998, will expand far more
slowly in 1999. At the present time, we are anticipating a slowdown in real GDP
growth in 1999. We expect inflation rates to remain broadly unchanged from those
of 1998 and corporate profits to decline during 1999. In addition, we believe
that interest rates are likely to continue to fall.
On a brighter note, markets have been encouraged lately by moves by the Federal
Reserve and its global counterparts to offset pressures, by lowering interest
rates and issuing public statements that acknowledge the need to address
international pressure points before they become major problems. Although there
are clearly challenges ahead, lower interest rates in the U.S. should help
soften the impact of weaker earnings in the domestic equity market, while the
absence of inflationary pressures and some unusually cheap valuations in parts
of the market present some interesting opportunities for bond investors.
We thank you for your support of Schroder Series Trust. We welcome your comments
and look forward to servicing your investment needs in the years to come.
Sincerely,
/s/ Mark J. Smith
- ----------------------
Mark J. Smith
Chairman
- --------------------------------------------------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of October 31, 1998)
PERFORMANCE
For the fiscal year ending October 31, 1998, the Schroder Large Capitalization
Equity Fund delivered strong gains, outperforming its benchmark by approximately
2%. The Fund appreciated 23.91% while its benchmark, the S&P 500 Index, rose
21.99%.
Strong stock selection in the technology, capital goods and financial services
sectors contributed positively to the performance of the Fund, whereas our
consumer cyclical holdings contributed negatively. Among our best performers
over the period were Lucent Technologies, General Electric, Cisco Systems,
American International Group and Abbott Laboratories. In terms of sector
allocation, an overweighting in financials and an underweighting in
telecommunications detracted from performance.
MARKET BACKGROUND
Compared to recent years, global markets have been extremely volatile over the
past 12 months. In the U.S., larger stocks significantly outperformed all other
segments of the stock market. The large cap benchmark, the S&P 500 Index, gained
21.99%, while the S&P MidCap 400 Index rose only 6.71% and a small cap index,
the Russell 2000, fell 11.84%. We believe that this disparity in performance was
primarily due to the lack of liquidity in all capital markets caused by the
various international financial crises throughout the period. In an effort to
shield the U.S. economy from this turmoil, between the end of September and
October 31, the Federal Reserve reduced short-term interest rates twice, from
5.5% to 5%.
INVESTMENT POLICY
Throughout the fiscal year, the Fund remained diversified across most industry
sectors. Our investment process leads us to look for companies with solid
long-term growth rates. During the period, we added to our financial services
and consumer holdings as we believe that these sectors have strong earnings
potential. We also added selectively to our position in technology, specifically
computer-related stocks. The basic industry, utilities and transportation
sectors, in our view, have less certain growth prospects and their presence in
the S&P 500 is comparatively small.
The Fund uses a market capitalization-weighted strategy to determine the
weighting of individual stocks within the portfolio, so that the larger a
company's market capitalization, the larger its weighting in the portfolio. This
concentration on large capitalization stocks boosted returns over the period
and, at the end of the fiscal year, the Fund's largest holding was General
Electric at 10.3% of the Fund's total assets. Other large holdings included IBM,
Philip Morris, AT&T, Bristol Myers, Johnson & Johnson and American International
Group. We believe that these companies are global competitors with world-class
management and unique assets. IBM, Philip Morris and AT&T are currently managing
challenging transitions in their businesses and appear to have strong earnings
potential. In August we further diversified the Fund's portfolio by increasing
the total number of holdings in the portfolio from 50 to 80. This should help
minimize the Fund's overall risk exposure during more volatile periods.
OUTLOOK
We will continue to focus on high quality, large cap stocks. In particular, we
look for visible earnings growth, skilled management teams and attractively
priced securities relative to the relevant peer group or the overall market.
These criteria are crucial to our stock selection process.
Looking ahead, we believe that the equity market is susceptible to a short-term
correction; the recent market rally has left the equity market overbought and,
until prices come down to more attractive levels, there will be fewer buyers in
the marketplace. However, against a backdrop of falling interest rates and low
inflation, we believe that any correction will be modest. Going forward,
corporate profitability is crucial to provide a solid base for the stock market
in the year ahead.
- --------------------------------------------------------------------------------
2
<PAGE> 3
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
[Comparison Chart]
<TABLE>
<CAPTION>
LARGE CAP EQUITY
FUND S & P 500 INDEX
<S> <C> <C>
Feb-94 $10000 $10000
$ 9960 $ 9901
$ 9450 $ 9469
Apr $ 9510 $ 9591
$ 9730 $ 9748
$ 9400 $ 9509
Jul $ 9700 $ 9821
$ 9980 $10224
$ 9490 $ 9974
Oct $ 9450 $10199
$ 9080 $ 9827
$ 9214 $ 9973
Jan-95 $ 9426 $10231
$ 9890 $10630
$10051 $10944
Apr $10313 $11265
$10575 $11716
$10787 $11988
Jul $11200 $12386
$11331 $12417
$11522 $12941
Oct $11210 $12894
$11825 $13460
$11820 $13720
Jan-96 $12227 $14186
$12458 $14318
$12656 $14456
Apr $12788 $14668
$12876 $15047
$12744 $15104
Jul $12228 $14436
$12503 $14741
$13107 $15571
Oct $13383 $16001
$14492 $17210
$14180 $16870
Jan-97 $15044 $17924
$15125 $18064
$14635 $17319
Apr $15229 $18353
$16163 $19464
$16746 $20336
Jul $18123 $21955
$16840 $20725
$17470 $21861
Oct $16886 $21131
$17563 $22109
$17904 $22489
Jan-98 $18089 $22739
$19223 $24378
$20372 $25627
Apr $20287 $25885
$19861 $25440
$21521 $26473
Jul $21308 $26190
$17946 $22403
$19180 $23839
Oct-98 $20925 $25777
</TABLE>
The S&P 500 Index is a market value weighted composite index of 500 large
capitalization U.S. companies and reflects the reinvestment of dividends.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
TOTAL RETURNS
-------------
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1998 OCTOBER 31, 1998*
---------------- -----------------
<S> <C> <C>
Schroder Large Capitalization Equity Fund.......... 23.91% 16.98%
</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.
- --------------------------------------------------------------------------------
3
<PAGE> 4
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1998
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- -----------------------------------------------------------
<S> <C>
General Electric Co. 10.3%
IBM 5.1%
Philip Morris Cos. 4.5%
AT&T Corp. 4.1%
Bristol-Myers Squibb Co. 4.0%
Johnson & Johnson 4.0%
American International Group, Inc. 3.2%
SBC Communications, Inc. 3.1%
Bell Atlantic Corp. 3.0%
Bellsouth Corp. 2.8%
-----
Total 44.1%
INVESTMENT BY SECTOR
<CAPTION>
SECTOR % OF NET ASSETS
- -----------------------------------------------------------
<S> <C>
Banks 14.7%
Capital Goods 14.2%
Consumer Cyclical 3.7%
Consumer Staples 13.2%
Financial Services 14.6%
Health Care 13.7%
Technology 9.1%
Telecommunications 15.1%
Transportation 0.5%
Utilities 0.8%
Cash Equivalents and Other Net Assets 0.4%
------
Total 100.0%
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE> 5
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of October 31, 1998)
PERFORMANCE
For the fiscal year ended October 31, 1998, the Schroder Small Capitalization
Value Fund Investor Shares declined 13.29%, and its Advisor Shares declined
13.63%, compared with its benchmark, the Russell 2000 Index, which fell 11.84%.
For the fiscal quarter ended October 31, 1998, the Fund's Investor Shares
declined 7.98% and its Advisor Shares declined 8.08%; for the same quarter, the
Russell 2000 Index declined 9.57%.
The last year has been a rollercoaster ride for investors. After significant
outperformance in fiscal 1997, our small capitalization value style was out of
favor. Recurring fears about events in Asia and the slowing global economy
resulted in continual volatility and a "flight to quality", as investors sought
safety and liquidity in large cap stocks. Small cap stocks, in general, lagged
behind their larger counterparts.
However, the Fund ended the year on a high note. Following an unexpected rate
cut by the Federal Reserve in mid-October, the Fund rose, with its Investor
Shares rising a total of 23.9% from October 8 through October 31, outperforming
the Russell 2000, which rose 21.9% and the S&P 500 Index, which rose 14.5%.
INVESTMENT POLICY
At the start of the year, the Fund was positioned to limit its exposure to the
developing Asian economic crisis. We reduced investments in companies exposed to
Asia and reinvested in small companies with predominantly U.S. derived earnings;
we trimmed our positions in technology, cyclical, and capital goods; we remained
overweighted in interest-sensitive issues, especially asset gatherers and
specialty insurers. We also identified some attractive niche opportunities in
the utility sector, including water and gas companies. As the Asian crisis
spread to Russia, Latin America and, in some instances, to Europe and North
America, earnings expectations for U.S. companies in 1999 were reduced to
reflect slowing global growth. We added some defense industry and education
stocks, as we believe that their prospects for earnings growth in the short term
are superior and their valuations were extremely attractive.
While our defensive positioning helped our relative performance, illiquidity and
outflows overrode our Fund's positioning. In early October, small cap valuations
were at unprecedented low levels relative to large cap stocks. Consequently, we
upgraded our portfolio. A number of excellent companies, which have historically
been too expensive, returned to our universe at extremely attractive valuations.
We were able to select from among the best businesses with the best managements,
superior earnings prospects and high quality balance sheets at bargain prices.
For example, many technology companies were particularly hard hit by the Asian
economic crisis, as much of the incremental demand growth for these products
came from emerging Asian economies. We were able to buy many quality situations
at or below solid book value.
OUTLOOK
Looking ahead, we are optimistic. We believe that the small cap sector may have
bottomed in early October and that small caps should be able to sustain their
rally into 1999. Most notably, rate cuts by the Federal Reserve have
historically been the catalyst for small cap outperformance. We are confident
that the current portfolio is now well positioned to take advantage of any
rebound in the Russell 2000.
- --------------------------------------------------------------------------------
5
<PAGE> 6
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
[Comparison Chart]
<TABLE>
<CAPTION>
SMALL CAP VALUE
FUND RUSSELL 2000 INDEX
<S> <C> <C>
Feb-94 $10000 $10000
$ 9880 $ 9982
$ 9660 $ 9455
Apr $ 9800 $ 9511
$ 9690 $ 9404
$ 9460 $ 9084
Jul $ 9520 $ 9233
$ 9800 $ 9748
$ 9810 $ 9716
Oct $ 9770 $ 9678
$ 9300 $ 9287
$ 9490 $ 9537
Jan-95 $ 9210 $ 9416
$ 9540 $ 9808
$ 9743 $ 9977
Apr $10023 $10196
$10383 $10374
$10643 $10912
Jul $11194 $11541
$11354 $11780
$11364 $11990
Oct $10774 $11454
$11374 $11935
$11711 $12251
Jan-96 $11521 $12237
$12172 $12619
$12322 $12876
Apr $12242 $13565
$13593 $14100
$12783 $13520
Jul $11742 $12340
$12603 $13057
$13043 $13567
Oct $13062 $13359
$14054 $13909
$14512 $14273
Jan-97 $15039 $14559
$15072 $14206
$14589 $13536
Apr $15116 $13574
$16608 $15083
$17573 $15730
Jul $18680 $16462
$19459 $16839
$20143 $18071
Oct $19392 $17278
$19119 $17166
$19174 $17466
Jan-98 $18470 $17190
$19837 $18460
$20930 $19221
Apr $21072 $19327
$19848 $18285
$19431 $18323
Jul $18260 $16841
$14602 $13571
$15657 $14633
Oct-98 $16803 $15230
</TABLE>
The Russell 2000 Index is a capitalization weighted broad based index of 2000
small capitalization U.S. companies.
*The line shown presents performance information for Investor Shares only.
Performance of Advisor Shares of the Fund will be less than the line shown for
Investor Shares due to shareholder servicing fees paid by Advisor Shares.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
TOTAL RETURNS
-------------
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1998 OCTOBER 31, 1998*
---------------- ------------------
<S> <C> <C>
Schroder Small Capitalization Value Fund -- Investor
Shares................................................. -13.29% 11.66%
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1998 OCTOBER 31, 1998**
---------------- ------------------
<S> <C> <C>
Schroder Small Capitalization Value Fund -- Advisor
Shares................................................. -13.63% -15.19%
</TABLE>
* Average annual total return from commencement of Fund operations (February
16, 1994)
** Average annual total return from inception date of Advisor Shares (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.
- --------------------------------------------------------------------------------
6
<PAGE> 7
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1998
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- ---------------------------------------------------------------
<S> <C>
Data General Corp. 4.3%
Symantec Corp. 3.8%
Kent Electronics Corp. 3.5%
Protective Life Corp. 3.3%
Alliant Techsystems, Inc. 3.1%
Millipore Corp. 3.1%
The Learning Co., Inc. 3.1%
Valassis Communications, Inc. 3.1%
Warnaco Group Inc. 3.0%
Horace Mann Educators Corp. 3.0%
----
Total 33.3%
INVESTMENT BY SECTOR
<CAPTION>
SECTOR % OF NET ASSETS
- --------------------------------------------------------------
<S> <C>
Banks and Finance 8.2%
Basic Industry 6.1%
Capital Goods 11.4%
Consumer Discretionary 12.3%
Consumer Staples 3.5%
Energy 13.4%
Health Care 2.9%
Insurance 8.8%
Real Estate Investment Trust 1.5%
Technology 19.5%
Utilities 8.1%
Cash Equivalents and Other Net Assets 4.3%
-----
Total 100.0%
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE> 8
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of October 31, 1998)
PERFORMANCE
During the fiscal year ended October 31, 1998, the Schroder MidCap Value Fund's
Investor Shares declined 6.18%, compared with its benchmark, the S&P MidCap 400
Index, which rose 6.71% over the same period.
There are a number of reasons for our underperformance. The Fund was invested in
the lower end of the MidCap Index, so that we bought stocks at an initial market
size of between $750 million and $5 billion. Approximately 17% of the index was
invested in companies with a market capitalization in excess of $5 billion. Over
the fiscal period, performance was dominated by the large cap stocks. Small and
mid-cap stocks significantly lagged behind their larger counterparts. In
addition, our "value" investment style was out of favor in fiscal 1998.
Investors favored rapid growth stocks like internet-related companies, rather
than smaller, value-oriented companies.
However, the Fund ended the year on a high note. Fanned by a second, unexpected
rate cut by the Federal Reserve, the Fund's Investor Shares rose 25.4% from
October 8 to October 31, outperforming its benchmark, the S&P MidCap 400 Index,
which rose 21.1%.
INVESTMENT POLICY
The Fund was positioned at the start of the year with limited exposure to the
developing Asian economic crisis. We reduced our investments in companies
exposed to these regions, reinvesting in companies with predominantly U.S.
derived earnings. We also trimmed our holdings in the technology, cyclical and
capital goods sectors.
Our main overweighting during the period was in interest-sensitive stocks, such
as asset gatherers and specialty insurers. We also identified several attractive
niche opportunities in the utility sector, investing in water, gas and electric
companies for the first time. As we reduced our earnings expectations to reflect
the slowing growth, we added some defense industry and education stocks to our
portfolio. We believe that their prospects for superior earnings growth in the
short term are excellent and valuations were compelling.
By early October, mid-cap stock valuations had reached unprecedented lows
relative to large cap stocks. As estimate reductions and illiquidity
indiscriminately pummeled most mid-cap stocks, we upgraded our portfolio. A
number of excellent companies, which have historically been too expensive,
returned to our universe at extremely attractive valuations. We were able to
select from among the best businesses with the best managements, superior
earnings prospects and high quality balance sheets at bargain prices. Among the
sectors hardest hit was technology, as much of the incremental demand growth for
these products came from emerging Asian economies. We were able to buy many of
these technology stocks at or below their solid book values and we finished the
year overweight in this sector.
OUTLOOK
In the year ahead, we will stick to our focused stock-selection discipline. We
are confident that the Fund is invested in high quality, well managed businesses
with above-average growth prospects at bargain basement valuations. In our view,
the huge difference in valuation between large cap and mid-cap stocks will
significantly reduce in the year ahead and the Fund is well positioned to take
advantage of any such rebound.
- --------------------------------------------------------------------------------
8
<PAGE> 9
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
[Comparison Chart]
<TABLE>
<CAPTION>
S & P
MIDCAP MIDCAP 400
VALUE FUND INDEX
<S> <C> <C>
AUG-97 $10000 $10000
$10320 $ 9988
$10880 $10562
OCT $10360 $10103
$10360 $10252
$10700 $10650
JAN-98 $10450 $10448
$11349 $11313
$11990 $11823
APR $11990 $12038
$11439 $11497
$11309 $11569
JUL $10559 $11120
$ 8199 $ 9051
$ 8799 $ 9896
OCT-98 $ 9720 $10781
</TABLE>
The S&P MidCap 400 Index is a market weighted composite index of 400 stocks in
the middle capitalization sector of the U.S. equities market.
*The line shown presents performance information for Investor Shares only.
Performance of Advisor Shares of the Fund will be less than the line shown for
Investor Shares due to shareholder servicing fees paid by Advisor Shares.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
TOTAL RETURNS
-------------
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1998 OCTOBER 31, 1998*
---------------- -----------------
<S> <C> <C>
Schroder MidCap Value Fund -- Investor Shares........... -6.18% -2.24%
<CAPTION>
INCEPTION TO
OCTOBER 31, 1998**
------------------
<S> <C> <C>
Schroder MidCap Value Fund -- Advisor Shares............ 4.52%
</TABLE>
* Average annual total return from commencement of Fund operations (August 1,
1997)
** Total return from inception date of Advisor Shares (October 23, 1998)
"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.
- --------------------------------------------------------------------------------
9
<PAGE> 10
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1998
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- --------------------------------------------------------------
<S> <C>
Alliant Techsystems, Inc. 4.3%
Valassis Communications, Inc. 4.3%
The Learning Co., Inc. 4.1%
Diebold, Inc. 4.0%
Protective Life Corp. 3.9%
Weatherford International, Inc. 3.9%
Teradyne, Inc. 3.8%
SCI Systems, Inc. 3.7%
Comdisco, Inc. 3.6%
Millipore, Corp. 3.2%
----
Total 38.8%
INVESTMENT BY SECTOR
<CAPTION>
SECTOR % OF NET ASSETS
- -------------------------------------------------------------
<S> <C>
Banks and Finance 6.0%
Basic Industry 6.0%
Capital Goods 7.3%
Consumer Cyclical 10.9%
Consumer Staples 9.2%
Energy 15.4%
Health Care 5.0%
Insurance 9.5%
Technology 19.3%
Transportation 3.1%
Utilities 5.9%
Cash Equivalents and Other Net
Assets 2.4%
-----
Total 100.0%
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE> 11
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of October 31, 1998)
PERFORMANCE
For the fiscal year ended October 31, 1998, the Schroder Investment Grade Income
Fund returned 8.10%, as compared with its benchmark, the unmanaged Lehman
Brothers Government/Corporate Index, which returned 10.28% over the period. The
Fund outperformed its peer group, the Lipper Corporate Debt A-Rated Average,
which returned 7.72%.
MARKET BACKGROUND
It was a mixed year for the U.S. fixed income market. While interest rates fell
sharply during the period, only Treasury issues showed positive returns.
Corporates, mortgages and asset backed securities substantially dropped in
value, as investors became increasingly concerned about the growing global
economic crisis. Finally, the Federal Reserve responded to the reduced liquidity
in the global capital markets by twice lowering the Federal Funds Rate
one-quarter of one percent, from 5.5% to 5% by October 31. As central banks
around the world also reduced their short-term interest rates, stability
returned to the global capital markets. By the end of October, there were clear
signs of recovery in the markets, including currency stability and increased
international lending and borrowing. Nevertheless, as a result of the liquidity
crunch which inhibited credit from spreading, non-Treasury issues have been
badly hurt, leaving them at their cheapest levels in nearly ten years.
INVESTMENT POLICY
During fiscal 1998, in response to the growing concern in the capital markets
and in order to benefit from falling U.S. interest rates, we extended the
average maturity of the securities held by the Fund. We also increased our
holdings in Treasury issues due to their high credit ratings and good liquidity.
In terms of downside protection, we reduced our holdings in corporates, held
virtually no non-U.S. issuers and avoided exposing the Fund to high yield and
emerging market securities. As a result, the Fund benefited from the
outperformance of Treasuries to a greater extent than its peers.
OUTLOOK
We believe that the Fund is well positioned to benefit from the abundance of
cheap opportunities which now exist in the fixed income market. Going forward,
we favor mortgage, corporate and asset backed issues, given that interest rates
should remain relatively stable in the year ahead. We anticipate reducing our
holdings in Treasuries and reinvesting in these sectors around the turn of the
year. We will continue to focus on investment grade securities with high credit
ratings and stable cash flow characteristics.
- --------------------------------------------------------------------------------
11
<PAGE> 12
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
[Comparison Chart]
<TABLE>
<CAPTION>
INVESTMENT GRADE LEHMAN BROTHERS
INCOME FUND GOV'T/CORP INDEX
<S> <C> <C>
Feb-94 $10000 $10000
$ 9968 $ 9945
$ 9708 $ 9701
Apr $ 9578 $ 9621
$ 9548 $ 9604
$ 9502 $ 9581
Jul $ 9696 $ 9773
$ 9689 $ 9777
$ 9526 $ 9629
Oct $ 9511 $ 9619
$ 9492 $ 9601
$ 9567 $ 9665
Jan-95 $ 9727 $ 9850
$ 9983 $10079
$10047 $10146
Apr $10186 $10288
$10626 $10720
$10700 $10805
Jul $10643 $10763
$10771 $10901
$10859 $11012
Oct $10996 $11174
$11168 $11358
$11319 $11525
Jan-96 $11398 $11597
$11161 $11351
$11069 $11256
Apr $10974 $11178
$10931 $11159
$11058 $11307
Jul $11072 $11333
$11049 $11305
$11236 $11506
Oct $11477 $11774
$11673 $11991
$11549 $11858
Jan-97 $11563 $11872
$11581 $11897
$11441 $11755
Apr $11594 $11927
$11687 $12038
$11811 $12182
Jul $12131 $12555
$12012 $12415
$12178 $12610
Oct $12358 $12811
$12389 $12879
$12498 $13014
Jan-98 $12679 $13198
$12644 $13172
$12673 $13212
Apr $12720 $13278
$12845 $13421
$12945 $13557
Jul $12940 $13568
$13185 $13833
$13536 $14228
Oct-98 $13357 $14127
</TABLE>
The Lehman Brothers Government/Corporate Index is a composite of approximately
5,000 investment grade issues with maturities greater than one year.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
TOTAL RETURNS
-------------
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1998 OCTOBER 31, 1998*
---------------- -----------------
<S> <C> <C>
Schroder Investment Grade Income Fund..................... 8.10% 6.37%
</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.
- --------------------------------------------------------------------------------
12
<PAGE> 13
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1998
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- -----------------------------------------------
<S> <C>
U.S. Treasury Note 14.0%
6.500% 10/15/06
U.S. Treasury Bond 13.8%
6.250% 8/15/23
FNMA PC# 409344 4.8%
6.000% 10/01/13
U.S. Treasury Note 4.1%
7.875% 11/15/04
FNMA 1997-1 B 2.1%
6.500% 2/18/04
Sears Roebuck Acceptance Corp. 2.0%
6.950% 5/15/02
Union Pacific Resources Group, Inc. 2.0%
6.750% 05/15/08
FNMA PC# 303909 1.9%
7.00% 05/01/26
FNMA PC# 250030 1.9%
7.00% 05/01/24
Royal Caribbean Cruises, Ltd. 1.9%
8.25% 04/01/05
-----
Total 48.5%
INVESTMENT BY SECTOR
<CAPTION>
SECTOR % OF NET ASSETS
- -----------------------------------------------
<S> <C>
Corporate Bonds 32.0%
Mortgage Backed Securities 22.2%
Asset Backed Securities 6.8%
U.S. Treasury Issues 36.9%
Cash Equivalents and Other Net
Assets 2.1%
------
Total 100.0%
CREDIT QUALITY
<CAPTION>
% OF MARKET VALUE
RATING OF INVESTMENTS
- -----------------------------------------------
<S> <C>
U.S. Treasury Issues 36.7%
U.S. Government
Agencies/Mortgages 24.7%
AAA 6.8%
AA 4.0%
A 14.6%
BBB 13.2%
------
Total 100.0%
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE> 14
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (As of October 31, 1998)
PERFORMANCE
For the fiscal year ended October 31, 1998, the Schroder Short-Term Investment
Fund rose 5.09% compared with its benchmark, the 90 Day U.S. Treasury Bill,
which rose 5.15%.
MARKET BACKGROUND
The early part of the fiscal year was a period of relative stability for
short-term interest rates, with the 90 Day U.S. Treasury Bill trading within a
very narrow yield range of 5% to 5.25% for most of the period. From mid-August
until mid-October 1998, yields on the Treasury Bill plunged from 5.10% to 3.61%.
Investors became concerned about the growing global economic and capital markets
crisis and consequently fled to the safe-haven status of other short-term U.S.
government securities. Finally, the Federal Reserve responded to the reduced
liquidity in the global capital markets by moving to lower interest rates. From
the end of September until mid-October, the Federal Reserve made two quarter-
point cuts, reducing the Federal Funds Rate from 5.5% to 5%.
INVESTMENT POLICY
During fiscal 1998, in response to growing concern in the capital markets and in
order to benefit from falling U.S. interest rates, we extended the average
effective maturity of securities held by the Fund from two to four months. We
increased investments in those sectors of the market which had become most
distressed, including asset backed and corporate securities, which were
consequently the cheapest sectors of the market. All our asset backed securities
had AAA credit ratings and stable cash flow characteristics. These investments
were largely responsible for the Fund's incremental returns over the period.
OUTLOOK
The Fund is well positioned to benefit from the opportunity that now exists in
the short duration sector. We have gradually reduced liquidity by adding asset
backed and corporate issues at what we believe to be cheap prices, in an effort
to boost the overall yield and performance of the Fund. Going forward, we expect
to continue with this strategy. We also expect to maintain a bias toward the
higher rated end of investment grade securities, notably AAA and A1/P1 rated
instruments. We are confident that these securities will perform well in the
coming year as we anticipate that the Federal Reserve will continue to play its
part in stabilizing the global financial markets.
- --------------------------------------------------------------------------------
14
<PAGE> 15
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
[Comparison Chart]
The 90 Day U.S. Treasury Bill return is an average return on the three month
U.S. Treasury Bill.
[PERFORMANCE INFORMATION]
<TABLE>
<CAPTION>
TOTAL RETURNS
-------------
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 1998 OCTOBER 31, 1998*
---------------- -----------------
<S> <C> <C>
Schroder Short-Term Investment Fund....................... 5.09% 4.45%
</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.
- --------------------------------------------------------------------------------
15
<PAGE> 16
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
Portfolio Characteristics as of October 31, 1998
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
- -----------------------------------------------------------------
<S> <C>
Federal National Mortgage Association 91-173 PH
6.95% 1/25/20 10.0%
Federal National Mortgage Association
Discount Note
4.72% 5/25/99 4.9%
Chase Manhattan RV Owner Trust 97-A A5
6.05% 11/15/04 4.3%
Chase Manhattan Auto Owner Trust 97-B A3
6.35% 2/15/01 4.2%
General Motors Acceptance Corp. FRN
5.219% 10/30/00 3.7%
Green Tree Financial Corp. 92-2 A4
8.15% 1/15/18 3.5%
Contimortgage Home Equity Loan Trust 97-4 A5
6.44% 12/15/12 3.4%
Green Tree Financial Corp. 97-6 A3
6.32% 1/15/29 3.4%
Ford Credit Auto Owner Trust 98-B A3
5.85% 10/15/01 3.4%
Contimortgage Home Equity Loan Trust 98-2 A3
6.13% 3/15/13 3.3%
----
Total 44.1%
INVESTMENT BY SECTOR
<CAPTION>
SECTOR % OF NET ASSETS
- ----------------------------------------------------------------
<S> <C>
Asset and Mortgage Backed Securities 53.6%
Certificates of Deposit 3.3%
Commercial Paper 27.8%
Corporate Bonds 7.1%
U.S. Government Agency Discount Notes 4.9%
U.S. Treasury Notes and Government Agencies 3.3%
Cash Equivalents and Other Net Assets 0.0%
-----
Total 100.0%
CREDIT QUALITY
<CAPTION>
% OF MARKET VALUE
RATING OF INVESTMENTS
- ----------------------------------------------------------------
<S> <C>
U.S. Government Issues 24.9%
AAA/A1/P1 75.1%
-----
Total 100.0%
</TABLE>
- --------------------------------------------------------------------------------
16
<PAGE> 17
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
Set forth below is performance information for each Fund as of the most recent
calendar quarter:
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION OF FUND TO
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998*
------------------ --------------------
<S> <C> <C>
Schroder Large Capitalization Equity
Fund -- Investor.................................... 9.79% 15.13%
Schroder Small Capitalization Value
Fund -- Investor.................................... -23.29% 10.19%
Schroder Small Capitalization Value Fund -- Advisor... -23.54% 10.11%**
Schroder MidCap Value Fund -- Investor................ -19.12% -10.37%
Schroder Investment Grade Income Fund -- Investor..... 11.17% 6.80%
Schroder Short-Term Investment Fund -- Investor....... 5.13% 4.44%
</TABLE>
* Average annual total returns from commencement of Fund operations (February
16, 1994 for Schroder Large Capitalization Equity Fund and Schroder Small
Capitalization Value Fund; 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)
** Performance for the Fund's Advisor Shares includes information for the Fund's
Investor Shares for periods prior to September 26, 1997, the inception date for
Advisor Shares. Such performance has been recalculated to reflect the actual
fees and expenses attributable to Advisor Shares. The average annual total
return for Advisor Shares of the Fund from September 26, 1997 through September
30, 1998 was -21.94%.
There were no Advisor Shares of the Schroder MidCap Value Fund outstanding as of
September 30, 1998.
"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.
------------------
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.
- --------------------------------------------------------------------------------
17
<PAGE> 18
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shares Value $
------ -------
<S> <C> <C>
COMMON STOCKS
BANKS - (14.7%)
17,874 BankAmerica Corporation 1,026,638
6,400 BankBoston Corporation 235,600
16,400 Bank of New York,
Incorporated 517,625
10,206 Bank One Corporation 498,818
5,100 Chase Manhattan
Corporation 289,744
3,400 Comerica, Incorporated 219,300
5,800 Fifth Third Bancorp 384,250
21,300 First Union Corporation 1,235,400
12,400 Fleet Financial Group,
Incorporated 495,225
5,700 Mellon Bank Corporation 342,712
7,200 National City Corporation 463,050
16,600 Norwest Corporation 617,312
6,600 PNC Bank Corporation 330,000
3,500 State Street Corporation 218,313
4,600 Suntrust Banks,
Incorporated 320,563
16,300 U.S. Bancorp 594,950
4,500 Wachovia Corporation 408,937
1,900 Wells Fargo & Company 703,000
---------
8,901,437
CAPITAL GOODS - (14.2%)
71,500 General Electric Company 6,256,250
2,800 Honeywell, Incorporated 223,650
6,000 Pitney Bowes,
Incorporated 330,375
12,800 Tyco International
Limited 792,800
5,000 United Technologies
Corporation 476,250
12,400 Waste Management,
Incorporated 559,550
---------
8,638,875
CONSUMER CYCLICAL - (3.7%)
13,100 Carnival Corporation 424,112
4,700 Costco Companies,
Incorporated(1) 266,725
9,600 Dayton Hudson Corporation 406,800
4,600 Federated Department
Stores, Incorporated(1) 176,813
6,200 Gannett, Incorporated 383,625
7,700 Lowes Companies,
Incorporated 259,394
5,100 The May Department Stores
Company 311,100
---------
2,228,569
CONSUMER STAPLES - (13.2%)
5,400 Albertson's, Incorporated 300,038
10,700 Anheuser Busch Company,
Incorporated 635,981
5,800 Avon Products,
Incorporated 230,188
8,400 CVS Corporation 383,775
5,600 Kroger Company(1) 310,800
15,100 McDonald's Corporation 1,009,812
32,700 PepsiCo, Incorporated 1,103,625
53,300 Philip Morris Companies,
Incorporated 2,724,962
5,700 Rite Aid Corporation 226,219
10,500 Safeway, Incorporated(1) 502,031
10,200 Sara Lee Corporation 608,812
---------
8,036,243
FINANCIAL SERVICES - (14.6%)
18,382 Allstate Corporation 791,575
10,100 American Express Company 892,588
5,600 American General
Corporation 383,600
23,050 American International
Group, Incorporated 1,965,013
3,700 AON Corporation 229,400
7,600 Associates First Capital
Corporation 535,800
4,900 Equitable Companies,
Incorporated 240,100
14,900 Federal Home Loan
Mortgage Corporation 856,750
22,800 Federal National Mortgage
Association 1,614,525
1,667 General Reinsurance
Corporation 366,219
5,650 Marsh & McLennan Company,
Incorporated 313,575
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
18
<PAGE> 19
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shares Value $
------ -------
<S> <C> <C>
COMMON STOCKS
FINANCIAL SERVICES - (CONTINUED)
16,500 MBNA Corporation 376,406
4,300 SunAmerica, Incorporated 303,150
-----------
8,868,701
HEALTH CARE - (13.7%)
33,900 Abbott Laboratories 1,591,181
5,600 Amgen, Incorporated(1) 439,950
6,200 Baxter International,
Incorporated 371,613
5,400 Becton Dickinson &
Company 227,475
21,800 Bristol-Myers Squibb
Company 2,410,263
3,300 Guidant Corporation 252,450
29,500 Johnson & Johnson 2,404,250
11,100 Pharmacia & Upjohn,
Incorporated 587,606
-----------
8,284,788
TECHNOLOGY - (9.1%)
7,100 Eastman Kodak Company 550,250
10,900 EMC Corporation(1) 701,687
9,400 HBO & Company 246,750
20,700 International Business
Machines 3,072,656
4,000 Tellabs, Incorporated(1) 220,000
7,235 Xerox Corporation 700,891
-----------
5,492,234
TELECOMMUNICATIONS - (15.1%)
24,100 Ameritech Corporation 1,299,894
39,800 AT&T Corporation 2,477,550
34,100 Bell Atlantic Corporation 1,811,562
21,700 Bellsouth Corporation 1,731,931
40,300 SBC Communications,
Incorporated 1,866,394
-----------
9,187,331
TRANSPORTATION - (0.5%)
10,500 Burlington Northern Santa
Fe Corporation 324,188
-----------
UTILITIES - (0.8%)
7,900 Duke Energy Corporation 511,031
-----------
TOTAL COMMON STOCKS (Cost
$57,110,568) - 99.6% 60,473,397
-----------
SHORT TERM INVESTMENT - (0.1%)
32,561 SSgA U.S. Government Fund
4.780% (2)
(Cost $32,561) - 0.1% 32,561
-----------
TOTAL INVESTMENTS
(Cost $57,143,129) - 99.7% 60,505,958
OTHER ASSETS LESS
LIABILITIES - 0.3% 188,489
-----------
NET ASSETS - 100.0% $60,694,447
===========
</TABLE>
(1) Denotes non-income producing security.
(2) Interest rate shown is the 7 day yield as of October 31, 1998.
See notes to financial statements.
- --------------------------------------------------------------------------------
19
<PAGE> 20
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shares Value $
------ -------
<S> <C> <C>
COMMON STOCKS
BANKS & FINANCE - (8.2%)
12,000 Cullen/Frost Bankers,
Incorporated 639,000
58,000 Eaton Vance Corporation 1,297,750
63,000 Liberty Financial
Companies, Incorporated 1,582,875
6,900 Peoples Heritage
Financial Group,
Incorporated 124,200
144,000 Sovereign Bancorp,
Incorporated 1,890,000
-----------
5,533,825
BASIC INDUSTRY - (6.1%)
10,300 Aptargroup, Incorporated 275,525
85,200 Millipore Corporation 2,098,050
54,000 OM Group, Incorporated 1,761,750
-----------
4,135,325
CAPITAL GOODS - (11.4%)
30,000 Alliant Techsystems,
Incorporated (1) 2,100,000
52,900 Case Corporation 1,163,800
75,000 Gerber Scientific,
Incorporated 1,696,875
58,600 Kollmorgen Corporation 981,550
56,000 Stone & Webster,
Incorporated 1,785,000
-----------
7,727,225
CONSUMER DISCRETIONARY - (12.3%)
85,200 Capstar Broadcasting
Corporation (1) 1,480,350
36,300 Kroll-O'Gara Company (1) 893,888
52,000 Valassis Communications,
Incorporated (1) 2,073,500
79,000 Warnaco Group,
Incorporated 2,019,437
66,000 WestPoint Stevens,
Incorporated (1) 1,876,875
-----------
8,344,050
CONSUMER STAPLES - (3.5%)
16,200 Nu Skin Enterprises,
Incorporated (1) 297,675
81,000 The Learning Company,
Incorporated (1) 2,090,812
-----------
2,388,487
ENERGY - (13.4%)
120,000 National - Oilwell,
Incorporated (1) 1,905,000
96,500 Newpark Resources,
Incorporated (1) 910,719
176,000 Patina Oil & Gas
Corporation 737,000
110,000 Plains Resources,
Incorporated (1) 1,870,000
124,000 Snyder Oil Corporation 1,976,250
67,800 Valero Energy Corporation 1,695,000
-----------
9,093,969
HEALTH CARE - (2.9%)
72,000 Alpharma, Incorporated 1,993,500
-----------
INSURANCE - (8.8%)
37,000 Delphi Financial Group,
Incorporated 1,725,125
70,000 Horace Mann Educators
Corporation 2,003,750
60,000 Protective Life
Corporation 2,223,750
-----------
5,952,625
REAL ESTATE INVESTMENT
TRUST - (1.5%)
47,850 JDN Realty Corporation 1,019,803
-----------
TECHNOLOGY - (19.5%)
56,400 CACI, Incorporated (1) 944,700
173,000 Data General Corporation
(1) 2,941,000
148,400 Kent Electronics
Corporation (1) 2,402,225
55,000 National Data Corporation 1,863,125
43,000 Policy Management Systems
Corporation (1) 1,953,812
55,900 Stanford
Telecommunications,
Incorporated (1) 572,975
160,200 Symantec Corporation (1) 2,563,200
-----------
13,241,037
UTILITIES - (8.1%)
32,500 Aquarion Company 1,068,438
14,000 E'Town Corporation 613,375
70,000 Philadelphia Suburban
Corporation 1,719,375
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
20
<PAGE> 21
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shares Value $
------ -------
<S> <C> <C>
COMMON STOCKS
UTILITIES - (CONTINUED)
20,000 Rochester Gas & Electric
Corporation 582,500
65,100 Southern Union Company 1,509,506
-----------
5,493,194
TOTAL COMMON STOCKS
(Cost $55,634,134) - 95.7% 64,923,040
-----------
SHORT TERM INVESTMENTS - (4.3%)
148,351 SSgA Money Market Fund
4.962% (2) 148,351
2,802,123 SSgA U.S. Government Fund
4.780% (2) 2,802,123
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $2,950,474) - 4.3% 2,950,474
-----------
TOTAL INVESTMENTS
(Cost
$58,584,608) - 100.0% 67,873,514
LIABILITIES IN EXCESS OF
OTHER ASSETS - (0.0)% (10,906)
-----------
NET ASSETS - 100.0% $67,862,608
===========
</TABLE>
(1) Denotes non-income producing security.
(2) Interest rate shown is the 7 day yield as of October 31, 1998.
See notes to financial statements.
- --------------------------------------------------------------------------------
21
<PAGE> 22
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shares Value $
------ -------
<S> <C> <C>
COMMON STOCKS
BANKS & FINANCE - (6.0%)
17,800 Peoples Heritage
Financial Group,
Incorporated 320,400
23,400 Sovereign Bancorp,
Incorporated 307,125
-----------
627,525
BASIC INDUSTRY - (6.0%)
13,700 Millipore Corporation 337,363
9,000 OM Group, Incorporated 293,625
-----------
630,988
CAPITAL GOODS - (7.3%)
6,500 Alliant Techsystems,
Incorporated (1) 455,000
14,000 Case Corporation 308,000
-----------
763,000
CONSUMER CYCLICAL - (10.9%)
7,200 Chancellor Media
Corporation (1) 276,300
13,500 Diebold, Incorporated 421,031
11,300 Valassis Communications,
Incorporated (1) 450,587
-----------
1,147,918
CONSUMER STAPLES - (9.2%)
13,800 Consolidated Stores
Corporation (1) 226,838
9,400 Suiza Foods Corporation (1) 306,675
16,500 The Learning Company,
Incorporated (1) 425,906
-----------
959,419
ENERGY - (15.4%)
11,400 BJ Services Company (1) 232,988
9,500 Noble Affiliates,
Incorporated 311,125
22,100 Pioneer Natural Resources
Company 332,881
9,800 Sun Company, Incorporated 336,262
14,880 Weatherford
International,
Incorporated (1) 404,550
-----------
1,617,806
HEALTH CARE - (5.0%)
7,000 HCR Manor Care,
Incorporated (1) 227,500
7,400 Teva Pharmaceutical
Industries Ltd 291,838
-----------
519,338
INSURANCE - (9.5%)
7,900 Nationwide Financial
Services, Incorporated 327,850
11,100 Protective Life
Corporation 411,394
9,000 Provident Company,
Incorporated 261,562
-----------
1,000,806
TECHNOLOGY - (19.3%)
24,400 Comdisco, Incorporated 376,675
9,300 NCR Corporation (1) 312,713
5,400 Network Associates,
Incorporated (1) 229,500
7,000 Policy Management Systems
Corporation (1) 318,062
9,800 SCI Systems, Incorporated (1) 387,100
12,200 Teradyne, Incorporated (1) 396,500
-----------
2,020,550
TRANSPORTATION - (3.1%)
10,700 CNF Transportation,
Incorporated 323,675
-----------
UTILITIES - (5.9%)
8,300 DQE, Incorporated 327,331
11,200 Washington Gas Light
Company 296,100
-----------
623,431
-----------
TOTAL COMMON STOCKS
(Cost $9,941,559) -97.6% 10,234,456
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
22
<PAGE> 23
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shares Value $
------ -------
<S> <C> <C>
SHORT TERM INVESTMENTS - (3.4%)
1 SSgA Money Market Fund
4.962% (2) 1
358,795 SSgA U.S. Government Fund
4.780% (2) 358,795
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $358,796) - 3.4% 358,796
-----------
TOTAL INVESTMENTS
(Cost
$10,300,355) - 101.0% 10,593,252
LIABILITIES IN EXCESS OF
OTHER ASSETS - (1.0)% (106,461)
-----------
NET ASSETS - 100.0% $10,486,791
===========
</TABLE>
(1) Denotes non-income producing security.
(2) Interest rate shown is the 7 day yield as of October 31, 1998.
See notes to financial statements.
- --------------------------------------------------------------------------------
23
<PAGE> 24
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -------
<S> <C> <C>
ASSET BACKED
SECURITIES - (6.8%)
Contimortgage Home
Equity Loan Trust
520,000 Series 1997-4 Class A5
6.440% 12/15/2012 539,157
400,000 Series 1996-3 Class A6
7.820% 02/15/2016 413,176
460,000 Ford Credit Auto Owner
Trust
Series 1998-B Class A3
5.850% 10/15/2001 468,188
465,000 Green Tree Financial
Corporation
Series 1992-2 Class A4
8.150% 01/15/2018 486,651
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $1,887,676) - 6.8% 1,907,172
-----------
GOVERNMENT SECURITIES
U.S. GOVERNMENT SECURITIES - (36.9%)
United States Treasury Bonds
280,000 5.500% 08/15/2028 294,820
3,470,000 6.250% 08/15/2023 3,885,394
300,000 6.750% 08/15/2026 360,366
United States Treasury Notes
425,000 6.500% 05/31/2002 454,512
3,505,000 6.500% 10/15/2006 3,934,257
275,000 7.250% 08/15/2004 313,418
975,000 7.875% 11/15/2004 1,145,518
-----------
TOTAL GOVERNMENT
SECURITIES
(Cost $10,116,922) - 36.9% 10,388,285
-----------
MORTGAGE BACKED
SECURITIES
COLLATERALIZED MORTGAGE
OBLIGATIONS - (6.2%)
Federal Home Loan
Mortgage Corporation
400,000 Series G024 Class VB
6.500% 07/25/2010 407,376
500,000 Series 1543 Class PJ
7.000% 10/15/2022 508,950
Federal National
Mortgage Association
575,000 Series 1997 1 Class B
6.500% 02/18/2004 582,699
250,000 Series 1996 53 Class M
6.500% 12/18/2011 250,915
-----------
1,749,940
MORTGAGE PASS-THROUGH
SECURITIES - (16.0%)
314,830 Federal Home Loan
Mortgage Corporation
Pool # G00432 8.000%
01/01/2026 325,062
Federal National
Mortgage Association
1,346,400 Pool # 409344 6.000%
10/01/2013 1,354,920
429,985 Pool # 303945 7.000%
12/01/2010 438,855
531,989 Pool # 250030 7.000%
05/01/2024 543,794
536,634 Pool # 303909 7.000%
05/01/2026 548,542
Government National
Mortgage Association
450,367 Pool # 780350 6.500%
05/15/2009 459,514
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
24
<PAGE> 25
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -------
<S> <C> <C>
MORTGAGE BACKED SECURITIES
MORTGAGE PASS-THROUGH SECURITIES -
(CONTINUED)
524,983 Pool # 375991 7.000%
01/15/2024 537,944
268,714 Pool # 423825 8.000%
06/15/2026 278,874
-----------
4,487,505
-----------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $6,085,167) - 22.2% 6,237,445
-----------
CORPORATE BONDS
COMMUNICATION SERVICES - (1.1%)
285,000 Cox Communications,
Incorporated 6.500%
11/15/2002 293,721
-----------
FINANCE & BANKING - (19.6%)
500,000 AFC Capital Trust I
8.207% 02/03/2027 534,370
Associates Corporation of
North America
515,000 5.750% 11/01/2003 520,999
200,000 5.960% 05/15/2037 205,578
400,000 Conseco, Incorporated
6.800% 06/15/2005 386,368
450,000 Donaldson, Lufkin &
Jenrette, Incorporated
6.500% 06/01/2008 435,672
General Motors Acceptance
Corporation
300,000 6.750% 07/18/2003 314,319
250,000 6.750% 10/06/2003 262,425
515,000 Household Finance
Corporation 5.875%
11/01/2002 515,994
400,000 Lehman Brothers Holdings,
Incorporated 6.125%
07/15/2003 386,452
400,000 Merrill Lynch & Company,
Incorporated 6.640%
09/19/2002 410,640
425,000 Nationsbank Corporation
6.600% 05/15/2010 438,494
100,000 NCNB Corporation 10.200%
07/15/2015 132,277
400,000 Paine Webber Group,
Incorporated 6.550%
04/15/2008 390,108
550,000 Sears Roebuck Acceptance
Corporation 6.950%
05/15/2002 575,982
-----------
5,509,678
INDUSTRIALS - (5.2%)
400,000 Dayton Hudson Corporation
5.875% 11/01/2008 398,750
335,000 Lexmark International
Group, Incorporated
6.750% 05/15/2008 333,596
320,000 Nabisco, Incorporated
7.050% 07/15/2007 325,984
400,000 Tyco International Group
SA 6.375% 06/15/2005 410,552
-----------
1,468,882
LEISURE TIME - (2.9%)
495,000 Royal Caribbean Cruises,
Limited
8.250% 04/01/2005 540,307
250,000 Time Warner, Incorporated
8.180% 08/15/2007 286,928
-----------
827,235
OIL - (3.2%)
350,000 Enterprise Oil
6.700% 09/15/2007 359,842
550,000 Union Pacific Resources
Group, Incorporated
6.750% 05/15/2008 549,599
-----------
909,441
-----------
TOTAL CORPORATE BONDS
(Cost $8,890,929) - 32.0% 9,008,957
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
25
<PAGE> 26
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -------
<S> <C> <C>
SHORT TERM
INVESTMENTS - (2.7%)
1 SSgA Money Market Fund
4.962% (1) 1
752,398 SSgA U.S. Government Fund
4.780% (1) 752,398
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $752,399) - 2.7% 752,399
-----------
TOTAL INVESTMENTS
(Cost
$27,733,093) - 100.6% 28,294,258
LIABILITIES IN EXCESS OF
OTHER ASSETS - (0.6)% (160,471)
-----------
NET ASSETS - 100.0% $28,133,787
===========
</TABLE>
(1) Interest rate shown is the 7 day yield as of October 31, 1998.
See notes to financial statements.
- --------------------------------------------------------------------------------
26
<PAGE> 27
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -------
<S> <C> <C>
ASSET BACKED SECURITIES - (35.1%)
303,207 California
Infrastructure Series
1997-1 Class A1 5.980%
12/26/2000 304,238
1,250,000 Chase Manhattan Auto
Owner Trust Series
1997-B Class A3 6.350%
02/15/2001 1,264,388
1,250,000 Chase Manhattan RV Owner
Trust Series 1997-A
Class A5 6.050%
11/15/2004 1,284,037
Contimortgage Home
Equity Loan Trust
1,000,000 Series 1998-2 Class A3
6.130% 03/15/2013 1,005,495
1,000,000 Series 1997-4 Class A5
6.440% 12/15/2012 1,036,840
934,576 Corestates Home Equity
Trust Series 1996-1
Class A2 6.750%
12/15/2005 939,492
1,000,000 Ford Credit Auto Owner
Trust Series 1998-B
Class A3 5.850%
10/15/2001 1,017,800
Green Tree Financial
Corporation
1,000,000 Series 1997-6 Class A3
6.320% 01/15/2029 1,027,000
1,000,000 Series 1992-2 Class A4
8.150% 01/15/2018 1,046,562
960,017 Money Store Auto Trust
Series 1997-4 Class A2
6.350% 03/20/2004 974,638
625,487 Nationsbank Auto Owner Trust
Series 1996-A Class A3
6.375% 07/15/2000 629,290
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost
$10,405,778) - 35.1% 10,529,780
-----------
GOVERNMENT AND AGENCY SECURITIES
COLLATERALIZED MORTGAGE
OBLIGATIONS - (15.2%)
Federal Home Loan
Mortgage Corporation
92,433 Series 1386 Class B
6.000% 12/15/2005 92,216
754,266 Series 2020 Class A
6.250% 02/15/2008 754,274
3,008,254 Federal National
Mortgage Association
Series 1991-173 Class
PH 6.950% 01/25/2020 3,008,584
716,748 Government National
Mortgage Association
Series 1995-5 Class H
7.500% 10/20/2018 719,034
-----------
4,574,108
FEDERAL AGENCIES - (8.2%)
1,000,000 Federal Home Loan Bank
5.310% 11/30/1998 999,407
1,500,000 Federal National
Mortgage Association
4.720% 05/25/1999 1,459,144
-----------
2,458,551
MORTGAGE PASS-THROUGH
SECURITIES - (3.3%)
952,855 Government National
Mortgage Association
Pool # 1989 8.500%
04/20/2025 1,000,497
-----------
TOTAL GOVERNMENT AND AGENCY
SECURITIES
(Cost
$8,023,879) - 26.7% 8,033,156
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
27
<PAGE> 28
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount $ Value $
- --------- -------
<S> <C> <C>
CORPORATE BONDS - (7.1%)
1,000,000 Associates Corporation
of North America 6.000%
03/15/1999 1,004,220
1,125,000 General Motors
Acceptance Corporation
(1) 5.219% 10/30/2000 1,119,836
-----------
TOTAL CORPORATE BONDS
(Cost $2,123,132) - 7.1% 2,124,056
-----------
COMMERCIAL PAPER - (29.7%)
1,000,000 American Express Company
5.400% 01/07/1999 990,423
1,000,000 Chrysler Financial
Corporation 5.480%
11/13/1998 998,173
1,000,000 General Electric Capital
Corporation 5.370%
02/11/1999 986,381
1,000,000 John Deere Capital
Corporation 5.180%
03/25/1999 980,828
1,000,000 Merrill Lynch & Company,
Incorporated 5.500%
12/04/1998 994,958
1,000,000 Morgan J P & Company,
Incorporated 5.470%
12/11/1998 993,922
1,000,000 Norwest Financial,
Incorporated 5.450%
11/06/1998 999,243
1,000,000 Prudential Funding
Corporation 5.360%
01/14/1999 989,438
1,000,000 Sears Roebuck Acceptance
Corporation 5.470%
12/03/1998 995,138
-----------
TOTAL COMMERCIAL PAPER
(Cost
$8,924,432) - 29.7% 8,928,504
-----------
CERTIFICATES OF DEPOSIT - (3.3%)
1,000,000 Credit Suisse Yankee
5.740% 01/07/1999
(Cost $999,763) - 3.3% 1,000,608
-----------
SHORT TERM INVESTMENTS - (5.1%)
337,557 SSgA Money Market Fund
4.962% (2) 337,557
1,203,064 SSgA U.S. Government
Fund 4.780% (2) 1,203,064
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $1,540,621) - 5.1% 1,540,621
-----------
TOTAL INVESTMENTS
(Cost
$32,017,605) - 107.0% 32,156,725
LIABILITIES IN EXCESS
OF OTHER ASSETS - (7.0)% (2,102,507)
-----------
NET ASSETS - 100.0% $30,054,218
===========
</TABLE>
(1) Floating rate security.
(2) Interest rate shown is the 7 day yield as of October 31, 1998.
See notes to financial statements.
- --------------------------------------------------------------------------------
28
<PAGE> 29
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<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................ $60,505,958 $67,873,514 $10,593,252 $28,294,258 $32,156,725
Dividends receivable..... 102,839 7,642 468 0 0
Interest receivable...... 1,090 11,798 3,128 311,033 148,571
Receivable for securities
sold.................. 0 0 0 463,282 0
Receivable for trust
shares sold........... 206,728 173,800 26,184 0 106,704
Deferred organizational
costs................. 6,139 6,066 18,137 6,479 4,045
Prepaid expenses......... 2,676 15,424 201 3,267 2,820
Due from Schroder Capital
Management Inc. -
Note 3................ 0 2,273 0 0 714
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS........ 60,825,430 68,090,517 10,641,370 29,078,319 32,419,579
LIABILITIES
Payable for securities
purchased............. 0 122,079 66,115 885,835 2,050,537
Payable for trust shares
redeemed.............. 64,305 49,914 3,234 0 263,982
Advisory fee payable -
Note 3................ 24,233 49,081 9,290 0 10,438
Shareholder servicing fee
payable - Note 4...... 0 47 0 0 0
Accounts payable and
accrued expenses...... 42,445 4,951 75,940 56,888 40,086
Dividends payable........ 0 1,837 0 1,809 318
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES... 130,983 227,909 154,579 944,532 2,365,361
----------- ----------- ----------- ----------- -----------
NET ASSETS.......... $60,694,447 $67,862,608 $10,486,791 $28,133,787 $30,054,218
=========== =========== =========== =========== ===========
NET ASSETS
Capital paid-in.......... $43,999,068 $57,414,022 $11,561,432 $26,684,577 $30,030,263
Undistributed
(distributions in
excess of) net
investment income..... 121,839 0 4,932 12,850 (3,572)
Accumulated net realized
gain (loss) on
investments........... 13,210,711 1,159,680 (1,372,470) 875,195 (111,593)
Net unrealized
appreciation of
investments........... 3,362,829 9,288,906 292,897 561,165 139,120
----------- ----------- ----------- ----------- -----------
NET ASSETS.......... $60,694,447 $67,862,608 $10,486,791 $28,133,787 $30,054,218
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
29
<PAGE> 30
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (CONCLUDED)
OCTOBER 31, 1998
<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............... $60,694,447 $67,813,573 $10,483,466 $28,133,787 $30,054,218
Net asset value, offering
and redemption price
per share............. $ 14.75 $ 12.91 $ 9.72 $ 10.00 $ 9.90
Total shares outstanding at
end of period............ 4,113,931 5,252,865 1,078,196 2,813,562 3,034,881
Advisor Class:
Net Assets............... -- $ 49,035 $ 3,325 -- --
Net asset value, offering
and redemption price
per share............. -- $ 12.86 $ 9.72 -- --
Total shares outstanding at
end of period............ -- 3,813 342 -- --
Cost of securities......... $57,143,129 $58,584,608 $10,300,355 $27,733,093 $32,017,605
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
30
<PAGE> 31
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
<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>
INVESTMENT INCOME
Dividend income............... $ 743,824 $ 808,836 $ 109,250 $ 0 $ 0
Interest income............... 60,595 223,584 40,633 1,719,619 1,622,892
Foreign taxes withheld........ (2,072) 0 0 0 0
----------- ------------ ----------- ---------- ----------
TOTAL INCOME............. 802,347 1,032,420 149,883 1,719,619 1,622,892
EXPENSES
Investment advisory fees -
Note 3..................... 428,911 849,196 104,762 135,403 114,344
Shareholder servicing fees -
Note 4..................... 0 56 0 0 0
Administrative fees -
Note 3..................... 76,431 115,327 17,015 39,562 41,377
Custodian fees................ 44,400 56,745 40,740 41,399 36,000
Audit fees.................... 16,400 16,536 17,682 16,400 16,400
Legal fees.................... 20,000 20,246 20,094 20,000 20,000
Printing expenses............. 7,700 5,092 10,023 8,000 8,000
Trustees fees - Note 5........ 4,000 7,051 4,220 3,000 2,400
Transfer agent fees........... 54,000 55,000 39,104 44,717 50,000
Organizational expenses....... 9,647 9,720 14,645 9,647 9,647
Registration fees............. 20,000 20,113 18,059 17,279 17,000
Insurance..................... 4,950 10,084 703 2,855 3,900
Other......................... 2,557 4,379 442 1,370 1,511
Expenses borne by Schroder
Capital Management Inc. -
Note 3..................... 0 (13,941) (130,268) (19,660) (26,333)
Expenses waived by Schroder
Capital Management Inc. -
Note 3..................... (92,467) 0 0 (79,318) 0
----------- ------------ ----------- ---------- ----------
TOTAL EXPENSES........... 596,529 1,155,604 157,221 240,654 294,246
----------- ------------ ----------- ---------- ----------
NET INVESTMENT INCOME
(LOSS)................ 205,818 (123,184) (7,338) 1,478,965 1,328,646
----------- ------------ ----------- ---------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
investments................ 17,791,908 1,642,336 (1,230,448) 937,282 (74)
Change in net unrealized
appreciation (depreciation)
of investments............. (7,399,855) (13,419,656) 234,550 (316,048) 113,160
----------- ------------ ----------- ---------- ----------
NET GAIN (LOSS).......... 10,392,053 (11,777,320) (995,898) 621,234 113,086
----------- ------------ ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................... $10,597,871 $(11,900,504) $(1,003,236) $2,100,199 $1,441,732
=========== ============ =========== ========== ==========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
31
<PAGE> 32
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
LARGE CAPITALIZATION SMALL CAPITALIZATION
EQUITY FUND VALUE FUND
------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/98 10/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net investment income (loss).... $ 205,818 $ 323,538 $ (123,184) $ (278,667)
Net realized gain (loss) on
investments................... 17,791,908 8,236,625 1,642,336 15,073,103
Change in net unrealized
appreciation (depreciation) of
investments................... (7,399,855) 3,525,651 (13,419,656) 13,740,928
----------- ----------- ------------ -----------
Net increase (decrease) in net
assets resulting from
operations.................... 10,597,871 12,085,814 (11,900,504) 28,535,364
Net equalization credits........... 0 0 0 0
Dividends and distributions to
Investor Shareholders:
From net investment income...... (267,881) (386,573) 0 0
From net realized capital
gains......................... (8,235,872) (2,294,529) (14,815,244) (5,368,195)
Dividends and distributions to
Advisor Shareholders:
From net investment income...... -- -- 0 0
From net realized capital
gains......................... -- -- (3,017) 0
Net increase (decrease) from
Investor share transactions... 13,048,089 (6,757,731) (2,176,361) 24,925,518
Net increase (decrease) from
Advisor share transactions.... -- -- (7,484) 58,347
----------- ----------- ------------ -----------
TOTAL INCREASE (DECREASE)....... 15,142,207 2,646,981 (28,902,610) 48,151,034
Net Assets
Beginning of period............. 45,552,240 42,905,259 96,765,218 48,614,184
----------- ----------- ------------ -----------
End of period................... $60,694,447 $45,552,240 $ 67,862,608 $96,765,218
=========== =========== ============ ===========
Including undistributed
(distributions in excess of) net
investment income.................. $ 121,839 $ 235,504 $ 0 $ (23)
</TABLE>
(1) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997.
See notes to financial statements.
- --------------------------------------------------------------------------------
32
<PAGE> 33
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
MIDCAP VALUE INVESTMENT GRADE SHORT-TERM
FUND INCOME FUND INVESTMENT FUND
-------------------------- -------------------------- --------------------------
YEAR PERIOD YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/98 10/31/97(1) 10/31/98 10/31/97 10/31/98 10/31/97
-------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ (7,338) $ (8,680) $ 1,478,965 $ 1,336,280 $ 1,328,646 $ 1,442,775
(1,230,448) (144,375) 937,282 (45,129) (74) (4,609)
234,550 58,347 (316,048) 535,056 113,160 8,461
----------- ----------- ----------- ----------- ----------- -----------
(1,003,236) (94,708) 2,100,199 1,826,207 1,441,732 1,446,627
0 0 2,797 2,056 0 0
0 0 (1,482,588) (1,335,618) (1,334,421) (1,442,734)
0 0 0 (246,670) 0 0
-- -- -- -- -- --
-- -- -- -- -- --
1,421,327 10,160,224 830,443 2,729,362 2,600,601 (3,184,155)
3,184 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
421,275 10,065,516 1,450,851 2,975,337 2,707,912 (3,180,262)
10,065,516 0 26,682,936 23,707,599 27,346,306 30,526,568
----------- ----------- ----------- ----------- ----------- -----------
$10,486,791 $10,065,516 $28,133,787 $26,682,936 $30,054,218 $27,346,306
=========== =========== =========== =========== =========== ===========
$ 4,932 $ 0 $ 12,850 $ (4,305) $ (3,572) $ 977
</TABLE>
- --------------------------------------------------------------------------------
33
<PAGE> 34
- --------------------------------------------------------------------------------
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED OCTOBER 31, ENDED
--------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994 (1)
---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD................................ $ 14.48 $ 12.18 $ 11.12 $ 9.45 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income................. 0.05(2) 0.10 0.11 0.11(2) 0.06(2)
Net Realized and Unrealized Gain
(Loss) on Investments.............. 2.95 3.04 1.92 1.63 (0.61)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS...... 3.00 3.14 2.03 1.74 (0.55)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income............ (0.09) (0.11) (0.13) (0.07) 0.00
From Net Realized Capital Gains....... (2.64) (0.73) (0.84) 0.00 0.00
------- ------- ------- ------- -------
Total Distributions................... (2.73) (0.84) (0.97) (0.07) 0.00
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD........ $ 14.75 $ 14.48 $ 12.18 $ 11.12 $ 9.45
======= ======= ======= ======= =======
TOTAL RETURN............................ 23.91% 26.18% 19.30% 18.63% (5.50)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)... $60,694 $45,552 $42,905 $38,088 $21,309
Ratio of Operating Expenses to Average
Net Assets......................... 1.04%(2) 1.23% 1.26% 1.40%(2) 1.30%(2)(4)
Ratio of Net Investment Income to
Average Net Assets................. 0.36% 0.63% 0.94% 1.27% 1.37%(4)
Portfolio Turnover Rate............... 161.11% 64.91% 56.83% 83.15% 102.56%(3)
</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 and/or a
management fee waiver by Schroder Capital Management Inc. (See Note 3 to the
Trust's financial statements.) Had the Investment Adviser not undertaken to
pay, reimburse or waive 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: 1998 -- $0.03 and 1.20%, 1995 -- $0.11 and 1.45%; 1994
-- $0.02 and 2.17%, respectively.
(3) Not annualized.
(4) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
34
<PAGE> 35
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND - INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED OCTOBER 31, ENDED
------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994 (1)
---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD... $ 17.67 $ 13.05 $ 10.77 $ 9.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss)........... (0.02) (0.05) (0.05) (0.03)(2) 0.00(2)
Net Realized and Unrealized Gain (Loss)
on Investments...................... (2.05) 5.65 2.34 1.03 (0.23)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS....... (2.07) 5.60 2.29 1.00 (0.23)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains........ (2.69) (0.98) (0.01) 0.00 0.00
------- ------- ------- ------- -------
Total Distributions.................... (2.69) (0.98) (0.01) 0.00 0.00
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD......... $ 12.91 $ 17.67 $ 13.05 $ 10.77 $ 9.77
======= ======= ======= ======= =======
TOTAL RETURN............................. (13.29)% 48.46% 21.17% 10.27% (2.30)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's).... $67,814 $96,709 $48,614 $47,929 $21,193
Ratio of Operating Expenses to Average
Net Assets.......................... 1.29% 1.32% 1.43% 1.56%(2) 1.45%(2)(4)
Ratio of Net Investment Income to
Average Net Assets.................. (0.14)% (0.36)% (0.34)% (0.29)% 0.17%(4)
Portfolio Turnover Rate................ 87.51% 77.48% 81.63% 45.74% 18.53%(3)
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income (Loss) 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 (Loss) per share and
Ratio of Operating Expenses to Average Net Assets would have been as
follows: 1995 -- $(0.03) and 1.62%; 1994 -- $(0.04) and 3.15%, respectively.
(3) Not annualized.
(4) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
35
<PAGE> 36
- --------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND - ADVISOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN ADVISOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED ENDED
OCTOBER 31, OCTOBER 31,
1998 1997 (1)
----------- -----------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD..................... $ 17.67 $18.29
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss...................................... (0.02)(2) (0.01)
Net Realized and Unrealized Loss on Investments.......... (2.10) (0.61)
------- ------
TOTAL FROM INVESTMENT OPERATIONS......................... (2.12) (0.62)
------- ------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains.......................... (2.69) 0.00
------- ------
Total Distributions...................................... (2.69) 0.00
------- ------
NET ASSET VALUE AT END OF PERIOD........................... $ 12.86 $17.67
======= ======
TOTAL RETURN............................................... (13.63)% (3.39)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)...................... $ 49 $ 56
Ratio of Operating Expenses to Average Net Assets........ 1.54%(2) 1.46%(4)
Ratio of Net Investment Income to Average Net Assets..... (0.42)% 0.63%(4)
Portfolio Turnover Rate.................................. 87.51% 77.48%(5)
</TABLE>
(1) For the period September 26, 1997 (initial offering date of Advisor Shares
of the Fund) through October 31, 1997.
(2) Net Investment Loss 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 Loss per share and Ratio of
Operating Expenses to Average Net Assets would have been as follows:
1998 -- $(3.68) and 77.44%, respectively.
(3) Not annualized.
(4) Annualized.
(5) Represents the Fund's portfolio turnover rate for the entire fiscal year
ended October 31, 1997.
See notes to financial statements.
- --------------------------------------------------------------------------------
36
<PAGE> 37
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND - INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED ENDED
OCTOBER 31, OCTOBER 31,
1998 1997 (1)
----------- -----------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD..................... $ 10.36 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (2)......................... (0.01) 0.00
Net Realized and Unrealized Gain (Loss) on Investments... (0.63) 0.36
------- -------
TOTAL FROM INVESTMENT OPERATIONS......................... (0.64) 0.36
------- -------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains.......................... 0.00 0.00
------- -------
Total Distributions...................................... 0.00 0.00
------- -------
NET ASSET VALUE AT END OF PERIOD........................... $ 9.72 $ 10.36
======= =======
TOTAL RETURN............................................... (6.18)% 3.60%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)...................... $10,484 $10,066
Ratio of Operating Expenses to Average Net Assets (2).... 1.35% 1.35%(4)
Ratio of Net Investment Income to Average Net Assets..... (0.06)% (0.13)%(4)
Portfolio Turnover Rate.................................. 165.62% 11.96%(3)
</TABLE>
(1) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997.
(2) Net Investment Income (Loss) 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 (Loss) per share and
Ratio of Operating Expenses to Average Net Assets would have been as
follows: 1998 -- $(0.12) and 2.47%, 1997 -- $(0.06) and 4.33%, respectively.
(3) Not annualized.
(4) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
37
<PAGE> 38
- --------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND - ADVISOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN ADVISOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
ENDED
OCTOBER 31,
1997 (1)
------------
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...................... $ 9.30
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss (2)................................... (0.00)
Net Realized and Unrealized Gain on Investments........... 0.42
-------
TOTAL FROM INVESTMENT OPERATIONS.......................... 0.42
-------
LESS DISTRIBUTIONS:
From Net Realized Capital Gains........................... 0.00
-------
Total Distributions....................................... 0.00
-------
NET ASSET VALUE AT END OF PERIOD............................ $ 9.72
=======
TOTAL RETURN................................................ 4.52%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)....................... $ 3
Ratio of Operating Expenses to Average Net Assets (2)..... 1.60%(4)
Ratio of Net Investment Income to Average Net Assets...... (1.06)%(4)
Portfolio Turnover Rate................................... 165.62%(5)
</TABLE>
(1) For the period October 23, 1998 (initial offering date of Advisor Shares of
the Fund) through October 31, 1998.
(2) Net Investment Loss 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 Loss per share and Ratio of
Operating Expenses to Average Net Assets would have been as follows:
1998 -- $(1.38) and 671.68%.
(3) Not annualized.
(4) Annualized.
(5) Represents the Fund's portfolio turnover rate for the entire fiscal year
ended October 31, 1998.
See notes to financial statements.
- --------------------------------------------------------------------------------
38
<PAGE> 39
- --------------------------------------------------------------------------------
SCHRODER INVESTMENT GRADE INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
---------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994 (1)
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD.............................. $ 9.77 $ 9.70 $ 9.93 $ 9.14 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (2)........... 0.54 0.49 0.53 0.59 0.34
Net Realized and Unrealized Gain
(Loss) on Investments............ 0.23 0.16 (0.11) 0.79 (0.83)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... 0.77 0.65 0.42 1.38 (0.49)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income.......... (0.54) (0.49) (0.53) (0.59) (0.34)
From Net Realized Capital Gains..... 0.00 (0.09) (0.12) 0.00 0.00
Tax Return of Capital............... 0.00 0.00 0.00 0.00 (0.03)
------- ------- ------- ------- -------
Total Distributions................. (0.54) (0.58) (0.65) (0.59) (0.37)
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD...... $ 10.00 $ 9.77 $ 9.70 $ 9.93 $ 9.14
======= ======= ======= ======= =======
TOTAL RETURN.......................... 8.10% 7.68% 4.38% 15.62% (4.90)%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period
(000's).......................... $28,134 $26,683 $23,708 $23,704 $12,905
Ratio of Operating Expenses to
Average Net Assets (2)........... 0.89% 1.12% 1.12% 1.06% 0.87%(4)
Ratio of Net Investment Income to
Average Net Assets............... 5.47% 5.58% 5.46% 6.35% 6.39%(4)
Portfolio Turnover Rate............. 112.69% 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 and/or a
management fee waiver by Schroder Capital Management Inc. (See Note 3 to the
Trust's financial statements.) Had the Investment Adviser not undertaken to
pay, reimburse or waive 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: 1998 -- $0.51 and 1.25%, 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.
- --------------------------------------------------------------------------------
39
<PAGE> 40
- --------------------------------------------------------------------------------
SCHRODER SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
---------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994 (1)
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD........................ $ 9.87 $ 9.87 $ 9.88 $ 9.88 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.46(2) 0.46(2) 0.45 0.49(2) 0.30(2)
Net Realized and Unrealized
Gain (Loss) on
Investments................ 0.03 (0.00) 0.00 0.00 (0.12)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS................. 0.49 0.46 0.45 0.49 0.18
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From Net Investment Income.... (0.46) (0.46) (0.45) (0.49) (0.30)
In Excess of Net Investment
Income..................... 0.00 0.00 (0.01) 0.00 0.00
------- ------- ------- ------- -------
Total Distributions........... (0.46) (0.46) (0.46) (0.49) (0.30)
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF
PERIOD........................ $ 9.90 $ 9.87 $ 9.87 $ 9.88 $ 9.88
======= ======= ======= ======= =======
TOTAL RETURN.................... 5.09% 4.74% 4.63% 5.02% 1.83%(3)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period
(000's).................... $30,054 $27,346 $30,527 $33,936 $30,771
Ratio of Operating Expenses to
Average Net Assets......... 1.03%(2) 1.03%(2) 1.00% 0.95%(2) 0.78%(2)(4)
Ratio of Net Investment Income
to Average Net Assets...... 4.65% 4.64% 4.50% 4.91% 4.48%(4)
Portfolio Turnover Rate....... 92.95% 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:
1998 -- $0.45 and 1.12%, 1997 -- $0.46 and 1.05%, 1995 -- $0.47 and 1.08%;
1994 -- $0.24 and 1.66%, respectively.
(3) Not annualized.
(4) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
40
<PAGE> 41
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
NOTE 1 -- ORGANIZATION
Schroder Series Trust (the "Trust"), is an open-end series management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a 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, Schroder Small Capitalization Value Fund,
Schroder MidCap Value Fund, Schroder Investment Grade Income Fund and Schroder
Short-Term Investment Fund (collectively, the "Funds"). Each Fund is presently
authorized to issue two classes of shares -- "Investor Shares" and "Advisor
Shares", except that Schroder Short-Term Investment Fund may issue Investor
Shares only. As of October 31, 1998, each Fund had issued Investor Shares and
only Schroder Small Capitalization Value Fund and Schroder MidCap Value Fund had
issued Advisor Shares.
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
Board of Trustees of the Trust ("Trustees").
REPURCHASE AGREEMENTS: Funds may 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 from the 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.
- --------------------------------------------------------------------------------
41
<PAGE> 42
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
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 and/or class of shares.
Expenses not directly attributed to a specific Fund and/or class of shares are
allocated among the Funds and/or classes of shares in such a manner as deemed
equitable by 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.
With respect to each Fund that currently offers two classes of shares,
investment income and gains (losses) on investments are allocated to both
classes of a Fund on the basis of the daily net assets of each class.
Shareholder servicing fees relating to the Advisor Class are charged directly to
that class. Neither class has preferential dividend rights. Income dividends, if
any, paid by a Fund on its two classes of shares will normally differ in amounts
due to the differing expenses borne by each class.
DEFERRED ORGANIZATION COSTS: Costs 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 during which 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 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.
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.
- --------------------------------------------------------------------------------
42
<PAGE> 43
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
As of October 31, 1998, 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.......................... $ 144,375 2005
Schroder MidCap Value Fund.......................... 1,137,669 2006
Schroder Short-Term Investment Fund................. 104,408 2004
Schroder Short-Term Investment Fund................. 4,553 2005
Schroder Short-Term Investment Fund................. 2,632 2006
</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, 1998, the Trust reclassified the following amounts between paid
in capital, accumulated undistributed net investment income and accumulated
undistributed net realized gain (loss):
<TABLE>
<CAPTION>
INCREASE (DECREASE) INCREASE (DECREASE)
INCREASE (DECREASE) UNDISTRIBUTED NET ACCUMULATED
PAID IN CAPITAL INVESTMENT INCOME REALIZED GAIN (LOSS)
------------------- ------------------- --------------------
<S> <C> <C> <C>
Schroder Large Capitalization
Equity Fund........................ $4,587,957 $(51,602) $(4,536,355)
Schroder Small Capitalization
Value Fund......................... 329,201 123,207 (452,408)
Schroder MidCap Value Fund........... (14,623) 12,270 2,353
Schroder Investment Grade Income
Fund............................... (1,370) 17,981 (16,611)
Schroder Short-Term Investment
Fund............................... 1,332 1,226 (2,558)
</TABLE>
These reclassifications had no impact on the nest asset value of the Funds and
are designed to present each Fund's capital accounts on a tax basis.
NOTE 3 -- INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENT
The Trust has entered into an investment advisory agreement with SCM. Under the
agreement, SCM provides investment management services, and is entitled to
receive for its services compensation monthly 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.
SCM has voluntarily undertaken, through October 31, 1999, to waive a portion of
the investment advisory fees it is entitled to receive from Schroder Large
Capitalization Equity Fund and from Schroder Investment Grade Income Fund. As a
result, during the period of the waiver, Schroder Large Capitalization Equity
Fund will pay investment advisory fees
- --------------------------------------------------------------------------------
43
<PAGE> 44
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
to SCM at the annual rate of 0.50% of the Fund's average daily net assets, and
Schroder Investment Grade Income Fund will pay no investment advisory fees.
In addition, SCM has voluntarily agreed to reduce its compensation and, if
necessary, to pay certain expenses of each of the Funds until October 31, 1999,
to the extent that a Fund's total operating expenses attributable to its
Investor Shares and its Advisor Shares exceed the following annual rates: 1.55%
and 1.80% of average daily net assets attributable to Investor Shares and
Advisor Shares, respectively, of Schroder Large Capitalization Equity Fund;
1.70% and 1.95% of average daily net assets attributable to Investor Shares and
Advisor Shares, respectively, of Schroder Small Capitalization Value Fund; 1.35%
and 1.60% of average daily net assets attributable to Investor Shares and
Advisor Shares, respectively, of Schroder MidCap Value Fund; 1.12% and 1.37% of
average daily net assets attributable to Investor Shares and Advisor Shares,
respectively, of Schroder Investment Grade Income Fund; and 1.03% of average
daily net assets attributable to Investor Shares 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.
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.
NOTE 4 -- SHAREHOLDER SERVICING PLAN
The Trust has adopted a shareholder servicing plan for the Advisor Shares of
each Fund except Schroder Short-Term Investment Fund. Under the plan, Schroder
Fund Advisors Inc. or shareholder servicing organizations provide administrative
support services to shareholders of a Fund's Advisor Shares. For providing or
arranging for the provision of 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.
Schroder Fund Advisors Inc. may pay shareholder servicing organizations for
these services at an annual rate of up to 0.25%.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES
TRUSTEES' FEES: The Trust pays no compensation to Trustees who are employees of
SCM. Trustees who are not interested persons of the Trust, SCM or Schroder Fund
Advisors Inc. 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.
- --------------------------------------------------------------------------------
44
<PAGE> 45
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
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, 1998 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................................ $91,050,716 $ 3,576,458 $86,901,088 $ 1,606,239
Schroder Small Capitalization Value
Fund................................ 73,801,188 0 87,124,637 0
Schroder MidCap Value Fund............ 19,836,918 0 18,165,001 0
Schroder Investment Grade Income
Fund................................ 11,293,751 20,197,986 8,760,859 20,712,344
Schroder Short-Term Investment Fund... 13,935,548 6,871,904 7,310,631 3,999,453
</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, 1998 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED COST APPRECIATION (DEPRECIATION) APPRECIATION
--------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Schroder Large Capitalization
Equity Fund................... $57,143,654 $ 5,004,115 $(1,641,811) $3,362,304
Schroder Small Capitalization
Value Fund.................... 58,679,969 10,782,269 (1,588,724) 9,193,545
Schroder MidCap Value Fund...... 10,390,781 1,019,264 (819,793) 199,471
Schroder Investment Grade Income
Fund.......................... 27,733,347 655,904 (94,993) 560,911
Schroder Short-Term Investment
Fund.......................... 32,017,605 145,349 (6,229) 139,120
</TABLE>
- --------------------------------------------------------------------------------
45
<PAGE> 46
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
NOTE 7 -- SHAREHOLDERS' TRANSACTIONS
Following is a summary of shareholder transactions for each Fund:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES DOLLARS SHARES DOLLARS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
SCHRODER LARGE CAPITALIZATION EQUITY
FUND INVESTOR SHARES
Shares sold......................... 2,358,624 $ 33,242,828 1,127,960 $ 15,235,730
Shares issued to shareholders in
reinvestment..................... 672,845 8,486,981 215,393 2,664,515
Shares redeemed..................... (2,063,508) (28,681,720) (1,720,780) (24,657,976)
---------- ------------ ---------- ------------
Net increase (decrease)............. 967,961 $ 13,048,089 (377,427) $ (6,757,731)
========== ============ ========== ============
SCHRODER SMALL CAPITALIZATION VALUE
FUND INVESTOR SHARES
Shares sold......................... 2,332,423 $ 33,749,377 3,086,934 $ 46,850,624
Shares issued to shareholders in
reinvestment..................... 987,453 14,680,429 405,502 5,332,355
Shares redeemed..................... (3,538,630) (50,606,167) (1,744,917) (27,257,461)
---------- ------------ ---------- ------------
Net (decrease) increase............. (218,754) $ (2,176,361) 1,747,519 $ 24,925,518
========== ============ ========== ============
FOR THE PERIOD
SEPTEMBER 26, 1997
TO OCTOBER 31, 1997
SHARES DOLLARS
---------- ------------
SCHRODER SMALL CAPITALIZATION VALUE
FUND ADVISOR SHARES
Shares sold......................... 4,118 $ 50,654 3,180 $ 58,347
Shares issued to shareholders in
reinvestment..................... 81 1,208 0 0
Shares redeemed..................... (3,566) (59,346) (0) (0)
---------- ------------ ---------- ------------
Net increase (decrease)............. 633 $ (7,484) 3,180 $ 58,347
========== ============ ========== ============
</TABLE>
- --------------------------------------------------------------------------------
46
<PAGE> 47
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD AUGUST 1, 1997
OCTOBER 31, 1998 TO OCTOBER 31, 1997
SHARES DOLLARS SHARES DOLLARS
-------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
SCHRODER MIDCAP VALUE FUND INVESTOR
SHARES
Shares sold........................ 612,837 $ 6,657,769 1,017,450 $ 10,654,297
Shares issued to shareholders in
reinvestment.................... 0 0 0 0
Shares redeemed.................... (506,218) (5,236,442) (45,873) (494,073)
-------- ------------ --------- ------------
Net increase....................... 106,619 $ 1,421,327 971,577 $ 10,160,224
======== ============ ========= ============
<CAPTION>
FOR THE PERIOD
OCTOBER 23, 1998
TO OCTOBER 31, 1998
SHARES DOLLARS
-------- ------------
<S> <C> <C>
SCHRODER MIDCAP VALUE FUND ADVISOR
SHARES
Shares sold........................ 342 $ 3,184
Shares issued to shareholders in
reinvestment.................... 0 0
Shares redeemed.................... (0) (0)
-------- ------------
Net increase....................... 342 $ 3,184
========= ============
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES DOLLARS SHARES DOLLARS
-------- ------------ --------- ------------
<S> <C> <C> <C> <C>
SCHRODER INVESTMENT GRADE INCOME FUND
INVESTOR SHARES
Shares sold........................ 413,213 $ 4,144,975 733,026 $ 7,023,844
Shares issued to shareholders in
reinvestment.................... 147,906 1,460,393 162,500 1,557,874
Shares redeemed.................... (479,624) (4,772,128) (607,125) (5,850,300)
Income equalization received....... 0 (2,797) 0 (2,056)
-------- ------------ --------- ------------
Net increase....................... 81,495 $ 830,443 288,401 $ 2,729,362
======== ============ ========= ============
</TABLE>
- --------------------------------------------------------------------------------
47
<PAGE> 48
- --------------------------------------------------------------------------------
SCHRODER SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES DOLLARS SHARES DOLLARS
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
SCHRODER SHORT-TERM INVESTMENT
FUND INVESTOR SHARES
Shares sold.................... 2,559,113 $ 25,265,801 1,733,819 $ 17,100,221
Shares issued to shareholders
in reinvestment............. 135,287 1,334,916 143,695 1,417,451
Shares redeemed................ (2,430,714) (24,000,116) (2,200,190) (21,701,827)
---------- ------------- ---------- -------------
Net increase (decrease)........ 263,686 $ 2,600,601 (322,676) $ (3,184,155)
========== ============= ========== =============
</TABLE>
NOTE 8 -- BENEFICIAL INTEREST
The following table shows the number of shareholders each owning 5% or more of a
class of shares of a Fund outstanding as of October 31, 1998 and the total
percentage of the class of shares of the Fund held by such shareholders.
<TABLE>
<CAPTION>
5% OR GREATER SHAREHOLDERS
--------------------------
NUMBER % OF FUND HELD
------- ---------------
<S> <C> <C>
Schroder Large Capitalization Equity Fund -- Investor....... 3 46.78%
Schroder Small Capitalization Value Fund -- Investor........ 4 22.47%
Schroder Small Capitalization Value Fund -- Advisor......... 1 92.43%
Schroder MidCap Value Fund -- Investor...................... 2 39.44%
Schroder MidCap Value Fund -- Advisor....................... 1 100.00%
Schroder Investment Grade Income Fund -- Investor........... 3 58.64%
Schroder Short-Term Investment Fund -- Investor............. 2 16.82%
</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,
1998:
Schroder Large Capitalization Equity Fund and Schroder MidCap Value Fund had
17.55% and 92.57% of 1998 dividends qualify for corporate dividends received
deduction, respectively.
Schroder Large Capitalization Equity Fund and Schroder Small Capitalization
Value Fund designated $7,264,557 and $11,901,987 as capital gains dividends for
the purpose of the dividend paid deduction, respectively.
- --------------------------------------------------------------------------------
48
<PAGE> 49
- --------------------------------------------------------------------------------
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, 1998, 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 four 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, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement 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,
1998, 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 the
financial highlights for each of the four 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 11, 1998
- --------------------------------------------------------------------------------
49
<PAGE> 50
(This page has been left blank intentionally)
<PAGE> 51
INVESTMENT MANAGER
Schroder Capital Management Inc.
OFFICERS
Mark J. Smith, Chairman
Ashbel C. Williams Jr., President
Jane P. Lucas, Vice President
Catherine A. Mazza, Vice President
Robert C. Michele, Vice President
Fergal Cassidy, Treasurer
Alan M. Mandel, Assistant Treasurer
Alexandra Poe, Clerk
Barbara Gottlieb, Assistant Clerk
Carin Muhlbaum, Assistant Clerk
Nicholas Rossi, 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.
================================================================================
- --------------------------------------------------------------------------------
<PAGE> 52
[SCHRODER LOGO]
============================
SCHRODER SERIES TRUST
Schroder Large
Capitalization Equity
Fund
Schroder Small
Capitalization Value Fund
Schroder MidCap
Value Fund
Schroder Investment
Grade Income Fund
Schroder Series Trust
P.O. Box 8507 Schroder Short-Term
Boston, Mass. 02266 Investment Fund
800-464-3108
1098WS ANNUAL REPORT
October 31, 1998
