<PAGE>
SCHRODER SERIES TRUST
PROSPECTUS SUPPLEMENT
TO INVESTOR SHARES PROSPECTUS DATED MARCH 1, 2000
INVESTMENT GRADE INCOME FUND
The Shareholders of Schroder Investment Grade Income Fund have approved a
change to the investment objective, and certain investment policies, of the
Fund. THE FUND'S NAME HAS ALSO BEEN CHANGED TO "SCHRODER TOTAL RETURN FIXED
INCOME FUND." The information relating to the Fund beginning on page 6 of the
Prospectus and ending immediately before the bar chart on page 7 is amended to
read as follows:
- INVESTMENT OBJECTIVE. To seek maximum long-term total return consistent
with preservation of capital.
- PRINCIPAL INVESTMENT STRATEGIES. The Fund normally invests at least 65% of
its assets in fixed-income securities that are "investment grade" quality.
To be considered "investment grade," the securities must be rated (at the
time of investment) in one of the four highest grades by Moody's Investors
Service, Inc. or Standard and Poor's Ratings Services, or determined by
Schroder to be of comparable quality. The Fund may invest the remainder of
its assets in securities rated below investment grade.
The Fund normally expects to invest a substantial portion of its assets in
U.S. Government securities. The Fund may also invest in a variety of other
fixed-income securities, including corporate debt securities, preferred
stocks, and money market instruments. The Fund may invest up to 20% of its
assets in debt securities denominated in currencies other than the U.S.
dollar, including up to 10% of its assets in securities of developing
countries and of private issuers in those countries.
The Fund may invest a substantial portion of its assets in mortgage-backed
certificates and other securities representing ownership interests in
mortgage pools, including collateralized mortgage obligations, and in other
types of asset-backed securities. In addition, the Fund may buy or sell a
variety of derivative and related instruments with respect to fixed-income
securities, indices and interest rates for risk management or investment
purposes. These may include short sales, options, futures contracts, and
options on futures contracts.
The Fund may trade its portfolio securities actively to take advantage of
perceived inefficiencies in the fixed-income markets based on Schroder's
research and analyses regarding market sectors, individual issuers, and
market conditions. The Fund's active trading strategy may lead to high
levels of portfolio turnover, which may involve higher Fund expenses and
tax liability for shareholders.
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The Fund will normally maintain an average portfolio duration of between
three and seven years. Portfolio duration is a measure of the expected life
of a fixed income security that was developed as a more precise alternative
to the concept of "term to maturity", and is used to determine the
sensitivity of a security's price to changes in interest rates.
- PRINCIPAL RISKS.
DEBT SECURITIES. The principal risks of investing in the Fund include the
risk that interest rates will rise or fall in ways not anticipated by
Schroder. For example, if interest rates were to rise, the value of
fixed-income securities held by the Fund would typically fall. Securities
having longer durations would tend to experience greater price declines in
response to rising interest rates. If the Fund's portfolio duration is
relatively long at a time when interest rates were to rise, the value of
the Fund's shares would likely fall more than if the Fund had invested in
securities with shorter durations. By contrast, if interest rates were to
fall, the value of fixed-income securities held by the Fund would typically
rise. Securities having shorter durations would tend to experience smaller
price increases in response to falling interest rates. If the Fund's
portfolio duration is relatively short at a time when interest rates were
to decline, the value of the Fund's shares would likely rise less than if
the Fund had invested in securities with longer durations.
The Fund is also subject to the risk that the issuer of a fixed-income
security will have its credit rating downgraded or will be unable to pay
its obligations when due. This could cause the Fund's portfolio securities
to decline in value, especially where an issuer defaults on its
obligations.
FOREIGN SECURITIES. Investments in foreign securities entail risks not
present in domestic investments including, among others, risks related to
political or economic instability, currency exchange, and taxation.
Investments in securities of issuers in developing countries may experience
high levels of volatility. Risks of investing in such countries include
greater political and economic instability than in foreign developed
markets, currency transfer restrictions, a more limited number of potential
buyers, and uncertainties associated with dependence on revenue from
particular commodities or international aid.
JUNK BONDS. The Fund may invest up to 35% of its assets in securities rated
below investment grade (sometimes referred to as "junk bonds"). Lower-rated
securities lack outstanding investment characteristics and have speculative
characteristics and are subject to greater credit and market risks than
higher-rated securities. The lower ratings of such securities reflect a
greater possibility that adverse changes in the financial condition of the
issuer or in general economic conditions, or an unanticipated rise in
interest rates, may impair the ability of the issuer to make payments of
interest and principal. The values of lower rated securities held by the
Fund may be more volatile than those of higher rated securities.
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MORTGAGE-BACKED SECURITIES. The Fund's investment in mortgage-backed
securities may involve special risks relating to unscheduled prepayment on
the mortgages underlying the securities. Falling interest rates tend to
increase prepayments, which could significantly shorten the effective
maturities of mortgage-backed securities. Similarly, rising interest rates
tend to reduce prepayments, which could significantly lengthen the
effective maturities. When interest rates decline, significant unscheduled
prepayments on the underlying mortgages would have to be reinvested at the
then-prevailing lower rates. Therefore, the Fund's mortgage-backed
securities may have less potential for capital appreciation during periods
of falling interest rates than other fixed-income securities of comparable
maturities. However, the securities have a comparable risk of decline in
market value during periods of rising interest rates. The Fund's
investments in other types of asset-backed securities are subject to risks
similar to those associated with mortgage-backed securities.
SHORT SALES. The Fund may sell securities short. The Fund may sell a
security short and borrow the same security from a broker or other
institution to complete the sale when Schroder anticipates that the price
of the security will decline, or when Schroder attempts to take advantage
of temporary disparities in pricing in the fixed-income securities markets.
Short positions may result in a loss if the market price of the security in
question increases between the date when the Fund enters into the short
position and the date when the Fund closes the short position. Such a loss
could theoretically be unlimited in a case where the Fund is unable, for
whatever reason, to close out its short position. In addition, short
positions may result in a loss if a portfolio strategy of which the short
position is a part is otherwise unsuccessful.
ACTIVE TRADING STRATEGY. The Fund is also subject to the risk that
Schroder's active trading strategy will not be successful, which depends
greatly on Schroder's ability to analyze and identify inefficiencies
accurately in fixed-income markets, sectors and issuers, and to predict
market movements generally.
DERIVATIVES. The Fund's use of derivative instruments involves the risk
that the instrument may not work as intended due to unanticipated
developments in market conditions or other causes. Derivatives often
involve the risk that the other party to the transaction will be unable to
meet its obligations or that the Fund will be unable to close out the
position at any particular time or at an acceptable price. When the Fund
uses derivatives for investment purposes, it could lose more than the
original cost of the investment and its potential loss could be unlimited.
Also, suitable derivative transactions may not be available in all
circumstances, and there can be no assurance that the Fund will engage in
these transactions when that would be beneficial.
In the future, the Fund's investment objective and strategies may be
changed solely by vote of the Trustees.
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LARGE CAPITALIZATION EQUITY FUND
(1) The information relating to Schroder Large Capitalization Equity Fund
and Mr. Paul Morris is deleted from the table under "Portfolio Managers" on page
16 of the Prospectus. Investment decisions for that Fund are made by Schroder's
U.S. equity investment team.
(2) The Board of Trustees of Schroder Series Trust has approved an
Agreement and Plan of Reorganization pursuant to which Schroder Large
Capitalization Equity Fund would merge into Schroder U.S. Diversified Growth
Fund, a series of Schroder Capital Funds (Delaware). If shareholders of Schroder
Large Capitalization Equity Fund likewise approve the Agreement and Plan of
Reorganization, it is expected that the merger will occur in September, 2000.
SHORT-TERM INVESTMENT FUND
Schroder Short-Term Investment Fund has terminated and is no longer offered
to investors.
RESTATED EXPENSE INFORMATION FOR LARGE CAPITALIZATION EQUITY FUND, SMALL
CAPITALIZATION VALUE FUND, MIDCAP VALUE FUND, AND TOTAL RETURN FIXED INCOME FUND
In May 2000, Schroders plc sold its worldwide investment banking
business to Solomon Smith Barney. A substantial percentage of each Fund's
assets is owned by participants in retirement accounts sponsored by
affiliates of Schroder. In connection with the sale of the investment bank,
it is anticipated that some or all of these assets will be redeemed by the end
of August 2000.
The information relating to certain expenses of the Large Capitalization
Equity Fund, Small Capitalization Value Fund, MidCap Value Fund, and Total
Return Fixed Income Fund (formerly, the Investment Grade Income Fund) in the
Annual Fund Operating Expenses table on page 10 of the Prospectus is restated
to reflect the anticipated redemptions. The restated expense
information (which assumes that the redemptions occurred at the end of the
Trust's last fiscal year, October 31, 1999) is as follows:
<TABLE>
<CAPTION>
Schroder Schroder Schroder
Large Small Schroder Total Return
Capitalization Capitalization MidCap Value Fixed Income
Equity Fund Value Fund Fund Fund
----------- ---------- ---- ----
<S> <C> <C> <C> <C>
Advisory Fees 0.75% 0.95% 0.90% 0.50%
Distribution (12b-1) Fees None None None None
Other Fees 0.79 0.67 2.40 2.87
---- ---- ---- ----
Total Annual Fund Operating Expenses 1.54 1.62 3.30 3.37
Fee Waiver and/or Expense Limitation 0.25(1) N/A 1.95(1) 2.25(1)
---- --- ---- ----
Net Expenses 1.29(1) 1.62 1.35(1) 1.12(1)
</TABLE>
(1) The Net Expenses shown above for Schroder Large Capitalization Equity Fund,
Schroder MidCap Value Fund, and Schroder Total Return Fixed Income Fund
reflect the effect of contractually imposed expense limitations and/or fee
waivers, in effect through October 31, 2000, on the Total Annual Fund
Operating Expenses of the Funds.
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Accordingly, the information relating to the Funds in the Example on page
10 of the Prospectus is restated as follows:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Schroder Large Capitalization Equity Fund* $158 $490 $845 $1,845
Schroder Small Capitalization Value Fund $166 $515 $888 $1,934
Schroder MidCap Value Fund* $338 $1,031 $1,747 $3,640
Schroder Total Return Fixed Income Fund* $346 $1,054 $1,786 $3,726
</TABLE>
* Assuming that each of these Fund's operating expenses remain the same as
the Net Expenses set forth above, based on the other assumptions
described above, your costs would be as follows for 1 year, 3 years,
5 years and 10 years, respectively:
Schroder Large Capitalization Equity Fund -- $132, $411, $712 and $1,564.
Schroder MidCap Value Fund -- $138, $430, $744 and $1,632.
Schroder Total Return Fixed Income Fund -- $115, $358, $622 and $1,377.
If you have any questions regarding these matters, please contact Schroder
at (800) 464-3108.
August 17, 2000
