<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
December 15, 2000
Dear Shareholder:
We are pleased to present the annual report to shareholders for Schroder
Series Trust for the fiscal year ended October 31, 2000.
Market volatility has been the hallmark of this reporting period, as the
Federal Reserve's tightening campaign successfully slowed the pace of economic
growth in the United States. The period was also characterized by the dramatic
about-face in the technology and telecommunications sectors, which enjoyed
tremendous growth early in the period, only to relinquish those gains as
investors shifted to more stable companies with greater earnings visibility.
The bond market faced numerous challenges during the period, as well. The
U.S. Treasury's decision to cut back drastically on new issuance and to begin a
program to repurchase certain outstanding Treasury debt as a way to handle the
surging budget surplus caused a sharp steepening in the Treasury yield curve. In
the corporate debt market, liquidity declined rapidly.
Looking ahead, we continue to expect a "soft landing," or a cyclical
slowdown, for the U.S. economy. With consumer spending, we believe that capital
investment and export growth are likely to grow considerably more slowly in 2001
than in 2000, and the environment for corporate profits to be much more
difficult. We anticipate that more modest top-line growth, rising unit labor
costs and little, if any, pricing power should combine to pressure profits in
2001. We believe that consensus profit estimates for 2001, while lower than they
were earlier this year, are still too high.
On the policy front, we expect the Fed to embark on a modest easing path
beginning sometime in the second quarter, cutting the Fed funds target rate by
50 basis points in early 2001, in two 25-basis-point moves. We are confident,
though, that the Fed will take steps to prevent the slowdown from deteriorating
into a steep decline. While core inflation is up very modestly from its
lows--and could well advance a bit further in the months ahead--this is not
likely to deter the Fed from a moderate easing path as the economic slowdown
becomes more entrenched.
Since our last report, there have been several changes to the Trust. In
July, shareholders approved recommendations by the Trustees to adopt a new
investment objective and revised investment policies for the Schroder Investment
Grade Income Fund which is to seek maximum long-term total return consistent
with preservation of capital. Concurrent with those changes, the Fund's name was
changed to Schroder Total Return Fixed Income Fund. In addition, on
September 11, 2000, the assets of the Schroder Large Capitalization Equity Fund
were transferred to the Schroder U.S. Diversified Growth Fund in exchange for
shares of that Fund. At the same time, the surviving fund was renamed, the
Schroder U.S. Large Cap Equity Fund.
This report includes performance information, the schedule of investments,
comments from portfolio managers, and other relevant information for each Fund.
We encourage you to read the report, and we thank you for making Schroders part
of your investment program.
Sincerely,
/s/ Alexandra Poe
Alexandra Poe
PRESIDENT
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<PAGE>
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SCHRODER SMALL CAPITALIZATION VALUE FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 2000)
PERFORMANCE
The Schroder Small Capitalization Value Fund's Investor Shares had a total
return of 28.98% for the fiscal year ended October 31, 2000. The Fund's
benchmark, the Russell 2000 Index, appreciated by 17.42% over the same period,
while the average small cap value fund in the Lipper universe gained 21.15% in
the fiscal year ended October 31, 2000.
MARKET BACKGROUND/PORTFOLIO REVIEW
This fiscal year was a tale of two cities. Much of its first half was
dominated by recently public technology companies that were selling at huge
multiples of sales with no prospects of earnings for several years, if ever.
From November 1999 through February 2000, Internet and biotech issues drove the
Russell 2000 Index, and the Fund lagged because its investment discipline
disfavors investment in companies with no earnings. It was the worst of times
for relative performance, but the best of times to select from good companies
selling at extremely low valuations, as they were liquidated by those seeking to
participate in the "dot.com" revolution. The Fund stuck to its investment
discipline, seeking to find well-managed companies that were selling at
discounts to their peers and/or their historic valuation parameters, and where
we could identify a catalyst that might cause a stock to trade back toward its
peers and/or its historic norm. The Fund was well positioned in March for the
abrupt market transition that occurred. Overvalued technology stocks corrected
while the market began to recognize the undervaluation in other sectors.
Since early March 2000, the Fund's under-representation in technology names
contributed significantly to its outperformance. The technology sector of the
Russell 2000 plummeted 40.2% from February 29 through October 31. Over that same
period, the Fund was overweighted in energy, aerospace, generic drug companies,
and select finance companies. These sectors were in the bargain basement last
spring. Investors who had been overweighted in technology sought to move into
many of these non-tech areas as they reduced their technology exposure.
OUTLOOK
Since March 2000, value investing has been back in style, and we anticipate
that it will continue to trump growth investing over the next few quarters, as
global economic expansion slows to more normal levels after recent quarters of
above-average growth. Historically, value outperforms growth when the economy
moderates. If, as we expect, the U.S. economy manages a "soft landing," value
tends to exceed growth with positive returns. In the case of a "hard landing,"
value typically beats growth by showing lower negative returns. The reason for a
rotation from growth to value investing is simple: Valuation parameters
typically return to favor. Old-fashioned analysis and price discipline supplant
"momentum" investing and speculation.
The general U.S. equity market, as measured by the S&P 500, is still high by
historic standards, with a price/earnings ratio of 27.4 times calendar 2000
earnings and 24.8 times estimated calendar 2001 earnings as of October 31. (The
average high/low price/earnings range since 1987 is 15-21 times.) The market
price/earnings ratio was supported by low inflation and above-average profit
growth. Since late summer, there have been increasing signs that corporate
profit growth was moderating. Consequently, the "earnings" piece of the price/
earnings multiple is vulnerable to downward adjustments. We therefore believe
the market multiple faces further downside risk over the next few quarters, as
investors adjust to more normal corporate profit growth of 7%-9% per year.
Small cap valuations and performance have lagged large cap over the past
five years and are within the band of their historic trading ranges. We believe
that small cap equities are cheap relative to their large cap counterparts. Our
Fund price/earnings ratio is currently at a considerable discount to the Russell
2000 Index, yet the Fund's holdings' projected growth rates are higher than
those of the benchmark. Consequently, we are cautiously optimistic that
valuation discipline and stock selectivity based upon thorough analysis will
continue to be rewarded.
--------------------------------------------------------------------------------
2
<PAGE>
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SCHRODER SMALL CAPITALIZATION VALUE FUND
--------------------------------------------------------------------------------
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO
MANAGER AS OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO
MANAGER ON THE DATE THIS REPORT IS FIRST PUBLISHED OR ANY TIME THEREAFTER. THIS
VIEW IS INTENDED TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR
INVESTMENT IN THE FUND AND DOES NOT CONSTITUTE INVESTMENT ADVICE; INVESTORS
SHOULD CONSULT THEIR OWN INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL
INVESTMENT PROGRAMS. CERTAIN SECURITIES DESCRIBED IN THIS REPORT MAY NO LONGER
BE HELD BY THE FUND AND THEREFORE NO LONGER APPEAR IN THE SCHEDULE OF
INVESTMENTS AS OF OCTOBER 31, 2000.
--------------------------------------------------------------------------------
3
<PAGE>
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SCHRODER SMALL CAPITALIZATION VALUE FUND
--------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
SCHRODER SMALL CAPITALIZATION VALUE FUND--INVESTOR SHARES VS. RUSSELL 2000 INDEX
AND RUSSELL 2000 VALUE INDEX
<TABLE>
<CAPTION>
SMALL CAPITALIZATION RUSSELL 2000 RUSSELL 2000
VALUE FUND INDEX VALUE INDEX
01/1/94 $10,000 $10,000
<S> <C> <C> <C>
$9,880 $9,982
$9,660 $9,455
04/1/94 $9,800 $9,511
$9,690 $9,404
$9,460 $9,084
$9,520 $9,233
$9,800 $9,748
$9,810 $9,716
10/1/94 $9,770 $9,678
$9,300 $9,287
$9,490 $9,537
$9,210 $9,416
$9,540 $9,808
$9,743 $9,977
04/1/95 $10,023 $10,198
$10,383 $10,374 $10,383
$10,643 $10,912 $10,683
$11,194 $11,541 $11,073
$11,354 $11,780 $11,402
$11,364 $11,990 $11,572
10/1/95 $10,774 $11,454 $11,110
$11,374 $11,935 $11,552
$11,711 $12,251 $11,909
$11,521 $12,237 $11,988
$12,172 $12,619 $12,176
$12,322 $12,876 $12,432
04/1/96 $13,242 $13,565 $12,771
$13,593 $14,100 $13,095
$12,783 $13,520 $12,940
$11,742 $12,340 $12,252
$12,603 $13,057 $12,784
$13,043 $13,567 $13,133
10/1/96 $13,062 $13,359 $13,285
$14,054 $13,909 $14,000
$14,512 $14,273 $14,454
01/1/97 $15,039 $14,559 $14,676
$15,072 $14,206 $14,816
$14,589 $13,536 $14,418
$15,116 $13,574 $14,630
04/1/97 $16,608 $15,083 $15,795
$17,573 $15,730 $16,594
$18,680 $16,462 $17,291
$19,459 $16,839 $17,565
$20,413 $18,071 $18,733
$19,392 $17,278 $18,224
10/1/97 $19,119 $17,166 $18,424
$19,174 $17,466 $19,048
$18,470 $17,190 $18,704
$19,837 $18,460 $19,834
$20,930 $19,221 $20,639
$21,072 $19,327 $20,741
04/1/98 $19,848 $18,285 $20,006
$19,431 $18,323 $19,893
$18,260 $16,841 $18,335
$14,602 $13,571 $15,464
$15,657 $14,633 $16,337
$16,803 $15,230 $16,822
10/1/98 $17,466 $16,028 $17,277
$17,983 $17,020 $17,819
$17,215 $17,247 $17,414
$15,559 $15,850 $16,226
$15,612 $16,097 $16,092
$17,414 $17,539 $17,561
04/1/99 $18,382 $17,795 $18,101
$19,084 $18,600 $18,756
$18,953 $18,090 $18,311
$18,157 $17,421 $17,642
$17,614 $17,424 $17,289
$17,376 $17,496 $16,943
10/1/99 $17,628 $18,049 $17,031
$18,851 $20,092 $17,554
$17,908 $19,768 $17,095
$18,781 $23,032 $18,140
$21,010 $21,514 $18,225
$20,539 $20,219 $18,333
04/1/00 $20,858 $19,040 $18,053
$21,716 $20,700 $18,581
$22,575 $20,034 $19,200
$23,863 $21,562 $20,058
$23,752 $20,929 $19,944
10/1/00 $22,409 $19,997 $19,874
</TABLE>
The Frank Russell Company produces a series of equity indices. All indices are
market cap-weighted and are subsets of the Russell 3000 Index, which is
comprised of the 3000 largest U.S. companies and represents approximately 98% of
the investible U.S. equity market. In addition to indices that are solely based
on market capitalization criteria, Russell also produces indices that segment
the market cap indices into growth and value style indices that are based on
price-to-book values and forecasted growth values.
The Russell 2000 Index is a market capitalization weighted broad based index of
2000 small capitalization U.S. companies.
The Russell 2000 Value Index measures the performance of those Russell 2000
Index companies with lower price-to-book ratios and lower forecasted growth
values.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED FIVE YEARS ENDED INCEPTION TO
OCTOBER 31, 2000 OCTOBER 31, 2000 OCTOBER 31, 2000*
----------------- ----------------- ------------------
<S> <C> <C> <C>
Schroder Small Capitalization Value
Fund--
Investor Shares.................. 28.98% 15.78%(a) 12.78%
</TABLE>
(a) Average annual total return.
* Average annual total return from commencement of Fund 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.
--------------------------------------------------------------------------------
4
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
--------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 2000
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
-------------------------------------------------------------------
National Data 4.3%
Harris 4.1
Fidelity National Financial 3.7
Neuberger Berman 3.7
Sensormatic Electronics 3.7
Barr Laboratories 3.6
Precision Castparts 3.6
Lear 3.5
Roper Industries 3.4
Jacobs Engineering Group 3.3
----------
Total 36.9%
==========
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
<S> <C>
-------------------------------------------------------------------
Banks & Finance 14.3%
Basic Industries 6.4
Business Services 7.2
Capital Goods 13.8
Consumer Cyclicals 4.8
Consumer Staples 3.1
Energy 13.2
Health Care 5.9
Insurance 6.1
Technology 10.8
Utilities 7.6
Cash Equivalents and Other Net Assets 6.8
----------
Total 100.0%
==========
</TABLE>
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5
<PAGE>
--------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 2000)
PERFORMANCE
Schroder MidCap Value Fund's Investor Shares had a total return of 24.11%
for the fiscal year ended October 31, 2000. The Fund's benchmark, the S&P MidCap
400 Index (a broad mid cap index), increased by 31.65% for the same period. The
Russell MidCap Value Index improved by 11.85% and the average midcap value fund
in the Lipper universe grew by 21.63% for the 12 months ended October 31, 2000.
MARKET BACKGROUND/PORTFOLIO REVIEW
Over the six months ended October 31, large cap stocks, as measured by the
S&P 500, and small caps, as measured by the Russell 2000, both depreciated by
approximately -1%. The S&P MidCap 400 Index was the anomaly, increasing by
8.57%. Technology, which represented 20% of the S&P 400 Index, held up better in
midcap than in either the small or large cap segments of the market. For
example, technology fell by -40.2% from February 29 to October 31, 2000, in the
Russell 2000 and by -18.8% in the S&P 500, but the sector was off a mere -3.6%
in the S&P 400 over the same period. While value investing clearly benefited
small and large cap investors since the early March market peak, the case was
murkier in midcap investing over that time frame.
The Fund was underweighted in technology stocks all year. Our extreme
selectivity in the group reflected our valuation disciplines, not a lack of
belief in the technology revolution itself. Despite a rather dramatic sell-off
in technology in the Russell 2000 and a more modest correction in the S&P MidCap
400 Index, technology valuations remained historically high. Accordingly, the
Fund remained underweighted in technology.
The Fund was overweighted in energy, aerospace, healthcare (non-biotech),
and insurance companies during the fiscal year. These sectors were in the
bargain basement last spring and contributed very positively to the Fund's
investment results since March. In fact, we anticipate that midcap investors who
have been overweighted in technology may begin to broaden out their investments
to non-technology areas such as those we have identified, as they come to grips
with the overvaluation of midcap technology names.
OUTLOOK
We expect that value investing will begin to supplant growth in midcap over
the next few quarters, as heavily weighted, high-priced technology and biotech
companies in the S&P 400 begin to encounter slower growth expectations.
Historically, value outperforms growth when the economy moderates. If, as we
expect, the U.S. economy manages a "soft landing," value tends to exceed growth
with positive returns. In the case of a "hard landing," value typically beats
growth by showing lower negative returns. The reason for a rotation from growth
to value investing is simple: Valuation parameters typically return to favor.
Old-fashioned analysis and price discipline supplant "momentum" investing and
speculation.
The general U.S. equity market, as measured by the S&P 500, is still high by
historic standards, with a price/earnings ratio of 27.4 times calendar 2000
earnings and 24.8 times estimated calendar 2001 earnings as of October 31. (The
average high/low price/earnings range since 1987 is 15-21 times.) The market
price/earnings ratio was supported by low inflation and above-average profit
growth. Since late summer, there have been increasing signs that corporate
profit growth was moderating. Consequently, the "earnings" piece of the price/
earnings multiple is vulnerable to downward adjustments. We therefore believe
the market multiple faces further downside risk over the next few quarters, as
investors adjust to more normal corporate profit growth of 7%-9% per year.
As economic growth slows and the market multiple continues to correct, we
believe the Fund's asset class is well positioned. Small and midcap valuations
have lagged those of large cap over the past three years, so their
--------------------------------------------------------------------------------
6
<PAGE>
--------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
--------------------------------------------------------------------------------
current valuations are generally less extended than large cap. The midcap arena
is crowded with what we believe are overlooked, undervalued opportunities,
begging for thorough analysis and market recognition. We believe that our
valuation discipline--to seek significant upside reward with limited downside
risk--coupled with stock selectivity to identity a catalyst to entice other
investors over a six- to 12-month period, should continue to be rewarded in an
uncertain investment environment.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO
MANAGER AS OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO
MANAGER ON THE DATE THIS REPORT IS FIRST PUBLISHED OR ANY TIME THEREAFTER. THIS
VIEW IS INTENDED TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR
INVESTMENT IN THE FUND AND DOES NOT CONSTITUTE INVESTMENT ADVICE; INVESTORS
SHOULD CONSULT THEIR OWN INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL
INVESTMENT PROGRAMS. CERTAIN SECURITIES DESCRIBED IN THIS REPORT MAY NO LONGER
BE HELD BY THE FUND AND THEREFORE NO LONGER APPEAR IN THE SCHEDULE OF
INVESTMENTS AS OF OCTOBER 31, 2000.
--------------------------------------------------------------------------------
7
<PAGE>
--------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
--------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
SCHRODER MIDCAP VALUE FUND--INVESTOR SHARES VS. STANDARD & POOR'S (S&P) MIDCAP
400 INDEX
AND RUSSELL MIDCAP VALUE INDEX
<TABLE>
<CAPTION>
MIDCAP VALUE S&P MIDCAP 400 RUSSELL MIDCAP
FUND INDEX VALUE INDEX
08/1/97 $10,000 $10,000 $10,000
<S> <C> <C> <C>
$10,320 $9,988 $9,883
$10,880 $10,562 $10,496
10/1/97 $10,360 $10,103 $10,177
$10,360 $10,252 $10,521
$10,700 $10,650 $10,923
$10,450 $10,448 $10,711
$11,349 $11,313 $11,427
$11,990 $11,823 $12,015
04/1/98 $11,990 $12,038 $11,948
$11,439 $11,497 $11,669
$11,309 $11,569 $11,706
$10,559 $11,120 $11,112
$8,199 $9,051 $9,550
$8,799 $9,896 $10,107
10/1/98 $9,719 $10,781 $10,762
$10,419 $11,319 $11,140
$10,933 $12,686 $11,478
$10,423 $12,192 $11,211
$9,992 $11,554 $10,964
$10,472 $11,876 $11,121
04/1/99 $11,712 $12,813 $12,174
$11,602 $12,868 $12,225
$11,732 $13,556 $12,364
$11,362 $13,269 $12,055
$10,831 $12,814 $11,638
$10,591 $12,418 $11,049
10/1/99 $10,881 $13,051 $11,375
$11,081 $13,736 $11,167
$11,834 $14,552 $11,466
$10,994 $14,142 $10,780
$10,794 $15,132 $10,329
$12,355 $16,399 $11,581
04/1/00 $12,755 $15,825 $11,627
$13,145 $15,628 $11,827
$12,985 $15,858 $11,386
$13,165 $16,109 $11,653
$14,506 $17,906 $12,367
$13,816 $17,785 $12,485
10/1/00 $13,545 $17,182 $12,723
</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 Frank Russell Company produces a series of equity indices. All indices are
market cap-weighted and are subsets of the Russell 3000 Index, which is
comprised of the 3000 largest U.S. companies and represents approximately 98% of
the investible U.S. equity market. In addition to indices that are solely based
on market capitalization criteria, Russell also produces indices that segment
the market cap indices into growth and value style indices that are based on
price-to-book values and forecasted growth values.
The Russell Midcap Value Index measures the performance of companies in the
Russell Midcap Index (the smallest 800 stocks of the Russell 1000 Index) with
lower price-to-book ratios and lower forecasted growth values.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED INCEPTION TO
OCTOBER 31, 2000 OCTOBER 31, 2000*
----------------- ------------------
<S> <C> <C>
Schroder MidCap Value Fund--Investor
Shares................................ 24.11% 9.79%
</TABLE>
* Average annual total return from commencement of Fund operations
(August 1, 1997)
"TOTAL RETURN" IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE
RESULTS. THE VALUE OF AN INVESTMENT IN THE FUND AND THE RETURN ON INVESTMENT
BOTH WILL FLUCTUATE AND REDEMPTION PROCEEDS MAY BE HIGHER OR LOWER THAN AN
INVESTOR'S ORIGINAL COST.
--------------------------------------------------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
--------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 2000
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
-------------------------------------------------------------------
Nationwide Financial Services 4.0%
Avon Products 3.9
MetLife 3.9
Chubb 3.7
Clorox 3.7
Staples 3.7
Parametic Technology 3.6
IMS Health 3.5
Watson Pharmaceuticals 3.5
Bear Stearns 3.5
----------
Total 37.0%
==========
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
<S> <C>
-------------------------------------------------------------------
Banks & Finance 6.5%
Capital Goods 16.6
Consumer Cyclicals 6.4
Consumer Staples 7.7
Energy 13.8
Health Care 10.3
Insurance 14.7
Technology 15.9
Transportation 2.9
Cash Equivalents and Other Net Assets 5.2
----------
Total 100.0%
==========
</TABLE>
--------------------------------------------------------------------------------
9
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 2000)
PERFORMANCE
Schroder Total Return Fixed Income Fund's Investor Shares had total return
of 5.75% for the fiscal year ended October 31, 2000. Its benchmark, the Lehman
Brothers Aggregate Bond Index, returned 7.13% over the same period. The Fund
outperformed its peer group, the Lipper Corporate A-Rated Average, which
returned 5.52% for the period.
Effective August 14, 2000, the Fund changed its investment objectives and
principal investment strategies; these performance results would not necessarily
have been achieved under the Fund's current investment objectives and policies.
MARKET BACKGROUND
The bond market faced many challenges in 2000, and technical factors played
an unusually important role in determining investment returns. The most
important technical consideration of the year was the U.S. Treasury's decision
to cut back drastically on new issuance and to begin a program to repurchase
certain outstanding Treasury debt as a way to handle the surging budget surplus.
The threat of quickly disappearing Government bonds caused the Treasury yield
curve to invert steeply. Indeed, at the extreme in May, 30-year Treasury bonds
yielded 75 basis points less than two-year Treasury notes--an unusual condition.
Non-Treasury yield curves, by contrast, remained positively sloped to compensate
for additional maturity risk. Consequently, the diverging yield curves resulted
in sharply higher credit yields relative to Treasuries.
During the first half of the fiscal year, U.S. economic growth remained
robust, and the Federal Reserve continued its quest to cool domestic demand and
incipient inflation pressures by raising the Fed Funds target by 100 basis
points, from 5.50% to 6.50%. Rising short-term rates initially exacerbated the
Treasury curve inversion. By the end of the year, tighter monetary policy was
clearly having an effect on corporate profitability, as reflected in widening
credit spreads. In addition, the bond market started to anticipate when the Fed
would begin to lower rates.
Perhaps the most challenging aspect of the past fiscal year was the rapid
decline in liquidity within parts of the corporate bond market. Allocation of
dealer balance sheet capital to other investment sectors, such as Internet
start-ups, meant reduced fixed-income inventories and less willingness to take
on market risks. Dealer consolidation and reduced commitment to support newly
issued deals also contributed to deteriorating liquidity. The net result was
increased volatility in the corporate market in general and, importantly,
pronounced event risk in bonds of individual issuers.
PORTFOLIO REVIEW
Having anticipated the pending supply imbalance in Treasuries, the Fund
remained overweighted in long Treasury bonds and benefited from the drop in
long-term yields during the first part of the fiscal year. The Fund was
underweighted shorter maturities across all sectors in expectation of higher
short-term rates caused by the Fed's more restrictive monetary policy. Toward
the middle of the year, we determined that the Treasury yield curve inversion
had become extreme, and we reversed our stance to anticipate a steeper curve.
Overall, our yield curve policy contributed positively to performance during
fiscal 2000.
During the first part of the year, the Fund maintained an overweighted
exposure to non-government bonds, particularly corporate securities. This
sector's underperformance detracted from overall returns, though this was
partially offset by the sector's significantly higher yield. Much more so than
in past years, companies that reported
--------------------------------------------------------------------------------
10
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
subpar financial results saw yield spreads widen dramatically in the face of
deteriorating liquidity. Negative credit events also hampered the Fund's return,
as several of our bond positions detracted from performance before investments
were shifted into more liquid securities.
At midyear, a tactical investment was made in emerging market debt to take
advantage of significantly higher yields and improving sovereign credit trends.
This allocation was liquidated at a profit.
As it became clear during the summer that the Fed's 100-basis-point
tightening was beginning to hurt corporate profitability, we reduced exposure to
corporate bonds to below that of the benchmark. At that point, we shifted toward
agency debentures and AAA-rated structured securities. During the latter part of
the year, the Fund benefited from an emphasis on high quality and high liquidity
within corporate bonds.
OUTLOOK
Looking ahead, we perceive clear opportunities to add value to the Fund in
the new fiscal year. With economic growth slowing and corporate earnings
deteriorating, we anticipate maintaining the Fund's underweighting of corporate
bonds, despite what appear to be historically attractive yield spreads. Instead,
we expect to continue focusing on highly rated agency debentures and AAA-rated
structured securities. Moreover, we intend to concentrate corporate holdings in
the most liquid issues and in defensive industries. In addition, in expectation
of wider yield spreads overall, we anticipate remaining slightly overweighted in
Treasuries.
The Fund will also remain structured with a concentration of intermediate
maturities in anticipation of a steeper yield curve, particularly in
non-Treasury securities, where investors are not adequately compensated for
taking on additional maturity risk. We expect the Federal Reserve to respond
eventually to slower economic growth and waning inflation pressures with a
reduction of short-term rates. At such time, we would expect to increase the
Fund's exposure to corporate bonds, which should benefit from the easing of
tight monetary conditions.
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO
MANAGER AS OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO
MANAGER ON THE DATE THIS REPORT IS FIRST PUBLISHED OR ANY TIME THEREAFTER. THIS
VIEW IS INTENDED TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR
INVESTMENT IN THE FUND AND DOES NOT CONSTITUTE INVESTMENT ADVICE; INVESTORS
SHOULD CONSULT THEIR OWN INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL
INVESTMENT PROGRAMS. CERTAIN SECURITIES DESCRIBED IN THIS REPORT MAY NO LONGER
BE HELD BY THE FUND AND THEREFORE NO LONGER APPEAR IN THE SCHEDULE OF
INVESTMENTS AS OF OCTOBER 31, 2000.
--------------------------------------------------------------------------------
11
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
SCHRODER TOTAL RETURN FIXED INCOME FUND VS.
LEHMAN BROTHERS AGGREGATE BOND INDEX
<TABLE>
<CAPTION>
TOTAL RETURN LEHMAN BROTHERS
FIXED INCOME AGGREGATE BOND
FUND INDEX
<S> <C> <C>
02/1/94 $10,000 $10,000
$9,968 $9,956
$9,708 $9,710
04/1/94 $9,578 $9,632
$9,548 $9,631
$9,502 $9,610
$9,696 $9,802
$9,689 $9,813
$9,526 $9,669
10/1/94 $9,511 $9,660
$9,492 $9,639
$9,567 $9,706
$9,727 $9,898
$9,983 $10,133
$10,047 $10,195
04/1/95 $10,186 $10,338
$10,626 $10,738
$10,700 $10,816
$10,643 $10,793
$10,771 $10,923
$10,859 $11,029
10/1/95 $10,996 $11,172
$11,168 $11,340
$11,319 $11,499
$11,398 $11,575
$11,161 $11,373
$11,069 $11,294
04/1/96 $10,974 $11,230
$10,931 $11,208
$11,058 $11,358
$11,072 $11,389
$11,049 $11,369
$11,236 $11,567
10/1/96 $11,478 $11,824
$11,673 $12,026
$11,549 $11,914
$11,581 $11,981
$11,441 $11,848
04/1/97 $11,594 $12,026
$11,687 $12,140
$11,811 $12,285
$12,131 $12,616
$12,012 $12,509
$12,178 $12,693
10/1/97 $12,358 $12,877
$12,389 $12,936
$12,498 $13,067
$12,679 $13,234
$12,644 $13,224
$12,673 $13,269
04/1/98 $12,720 $13,338
$12,845 $13,464
$12,945 $13,579
$12,940 $13,607
$13,185 $13,829
$13,536 $14,153
10/1/98 $13,357 $14,078
$13,444 $14,158
$13,471 $14,200
$13,559 $14,301
$13,243 $14,051
$13,346 $14,128
04/1/99 $13,381 $14,173
$13,220 $14,050
$13,155 $14,005
$13,157 $13,945
$13,112 $13,938
$13,229 $14,100
10/1/99 $13,253 $14,152
$13,266 $14,150
$13,212 $14,082
$13,198 $14,036
$13,358 $14,206
$13,549 $14,393
04/1/00 $13,374 $14,352
$13,353 $14,344
$13,628 $14,643
$13,718 $14,776
$13,890 $14,990
$14,000 $15,085
10/1/00 $14,015 $15,184
</TABLE>
The Lehman Brothers Aggregate Bond Index is a composite index which measures the
total universe of investment grade fixed income securities in the U.S.,
including government, corporate, mortgage-backed, asset-backed and international
dollar-denominated bonds, all with maturities greater than one year.
PERFORMANCE INFORMATION
<TABLE>
<CAPTION>
ONE YEAR ENDED FIVE YEARS ENDED INCEPTION TO
OCTOBER 31, 2000 OCTOBER 31, 2000 OCTOBER 31, 2000*
----------------- ----------------- ------------------
<S> <C> <C> <C>
Schroder Total Return Fixed Income
Fund--
Investor Shares(a)............... 5.75% 4.98%(b) 5.18%
</TABLE>
(a) Formerly Schroder Investment Grade Income Fund. Effective August 14, 2000,
the Fund changed its investment objectives and principal strategies; these
performance results would not necessarily have been achieved under the
Fund's current investment objectives and policies.
(b) Average annual total return.
* 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>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 2000
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
-------------------------------------------------------------------
U.S. Treasury Note
6.750% 05/15/05 10.0%
Freddie Mac
6.625% 09/15/09 7.4
Federal Home Loan Mortgage Corporation
6.250% 06/15/23 5.9
Federal National Mortgage Association
6.000% 12/01/28 5.7
Government National Mortgage Association
8.500% 12/31/99 4.9
Federal National Mortgage Association
7.000% 07/15/05 4.5
Government National Mortgage Association
7.000% 08/15/23 3.7
U.S. Treasury Bond
6.125% 08/15/29 3.0
Federal National Mortgage Association
6.000% 10/01/13 2.7
U.S. Treasury Note
5.750% 08/15/10 2.5
----------
Total 50.3%
==========
</TABLE>
INVESTMENT BY SECTOR
<TABLE>
<CAPTION>
SECTOR % OF NET ASSETS
<S> <C>
-------------------------------------------------------------------
Asset-Backed Securities 2.3%
Corporate Bonds 25.1
Government Agencies 39.4
Mortgage-Backed Securities 15.8
U.S. Treasury Issues 16.6
Cash Equivalents and Other Net Assets 0.8
----------
Total 100.0%
==========
</TABLE>
CREDIT QUALITY
<TABLE>
<CAPTION>
% OF MARKET VALUE
RATING OF INVESTMENTS
<S> <C>
---------------------------------------------------------------------
U.S. Treasury Issues 16.9%
Government Agencies 47.9
AAA 9.6
AA 2.5
A 10.4
Baa and below 12.7
-----------
Total 100.0%
===========
</TABLE>
--------------------------------------------------------------------------------
13
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<C> <S> <C>
COMMON STOCKS - 93.2%
BANKS & FINANCE - 14.3%
47,800 Cullen/Frost Bankers $ 1,592,337
52,900 Hudson United Bancorp 1,183,637
30,100 Neuberger Berman 1,979,075
34,100 Waddell & Reed Financial 1,086,938
33,400 Wilmington Trust 1,757,675
-----------
7,599,662
-----------
BASIC INDUSTRIES - 6.4%
33,800 Minerals Technologies 1,058,362
29,900 OM Group 1,382,875
133,900 Titanium Metals 987,513
-----------
3,428,750
-----------
BUSINESS SERVICES - 7.2%
64,000 ACNielson (1) 1,532,000
60,000 National Data 2,287,500
-----------
3,819,500
-----------
CAPITAL GOODS - 13.8%
43,000 Jacobs Engineering Group (1) 1,779,125
68,000 Lear (1) 1,853,000
50,800 Precision Castparts 1,917,700
51,000 Roper Industries 1,785,000
-----------
7,334,825
-----------
CONSUMER CYCLICALS - 4.8%
135,000 InterTan (1) 1,493,438
119,000 Sinclair Broadcast Group (1) 1,097,031
-----------
2,590,469
-----------
CONSUMER STAPLES - 3.1%
146,900 Dial 1,643,444
-----------
ENERGY - 13.2%
22,000 BJ Services (1) 1,153,625
21,300 Cal Dive International (1) 1,059,675
85,000 Forest Oil (1) 1,174,063
93,000 Plains Resources (1) 1,778,625
71,375 Pure Resources (1) 1,177,687
73,700 Superior Energy Services (1) 663,300
-----------
7,006,975
-----------
<CAPTION>
SHARES VALUE
---------- -----------
<C> <S> <C>
HEALTH CARE - 5.9%
32,100 Alpharma $ 1,245,881
30,500 Barr Laboratories (1) 1,925,313
-----------
3,171,194
-----------
INSURANCE - 6.1%
80,600 Fidelity National Financial 1,979,737
54,500 Protective Life 1,260,313
-----------
3,240,050
-----------
TECHNOLOGY - 10.8%
69,400 Harris 2,199,113
108,800 Sensormatic Electronics (1) 1,958,400
161,000 Storage Technology (1) 1,569,750
-----------
5,727,263
-----------
UTILITIES - 7.6%
54,500 Philadelphia Suburban 1,277,344
54,000 RGS Energy Group 1,593,000
63,000 Southern Union 1,185,187
-----------
4,055,531
-----------
Total Common Stocks
(Cost $40,268,705) 49,617,663
-----------
SHORT-TERM INVESTMENTS - 6.5%
1,115,107 SSgA Money Market Fund 6.280% (2) 1,115,107
2,358,488 SSgA U.S. Government Money Market Fund
6.240% (2) 2,358,488
-----------
Total Short-Term Investments
(Cost $3,473,595) 3,473,595
-----------
Total Investments
(Cost $43,742,300) - 99.7% 53,091,258
Other Assets Less Liabilities - 0.3% 148,943
-----------
Total Net Assets - 100% $53,240,201
===========
</TABLE>
------------------
(1) Denotes non-income producing security.
(2) Interest rate shown is 7-day yield as of October 31, 2000.
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
14
<PAGE>
--------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
----------- ----------
<C> <S> <C>
COMMON STOCKS - 94.8%
BANKS & FINANCE - 6.5%
4,700 Bear Stearns $ 284,937
6,600 Countrywide Credit Industries 247,088
----------
532,025
----------
CAPITAL GOODS - 16.6%
6,900 B. F. Goodrich 282,469
7,200 Ingersoll-Rand 271,800
2,900 Northrop Grumman 243,600
8,000 Raytheon Class B 273,500
16,100 Visteon 284,768
----------
1,356,137
----------
CONSUMER CYCLICALS - 6.4%
5,500 NIKE 219,656
21,000 Staples (1) 299,250
----------
518,906
----------
CONSUMER STAPLES - 7.7%
6,600 Avon Products 320,100
6,800 Clorox 303,450
----------
623,550
----------
ENERGY - 13.8%
4,000 BJ Services (1) 209,750
4,900 Devon Energy 246,960
12,000 Grant Prideco (1) 222,750
8,000 National-Oilwell (1) 234,000
5,900 Weatherford International 215,350
----------
1,128,810
----------
HEALTH CARE - 10.3%
3,700 Genzyme (1) 262,700
12,200 IMS Health 288,225
4,600 Watson Pharmaceuticals (1) 287,788
----------
838,713
----------
INSURANCE - 14.7%
3,600 Chubb 303,975
5,300 Lincoln National 256,388
11,400 MetLife (1) 314,925
6,700 Nationwide Financial Services 325,787
----------
1,201,075
----------
<CAPTION>
SHARES VALUE
----------- ----------
<C> <S> <C>
TECHNOLOGY - 15.9%
9,000 AVX $ 257,625
11,200 Ceridian (1) 280,000
8,500 Diebold 221,000
24,000 Parametric Technology (1) 295,500
6,200 Symantec (1) 242,188
----------
1,296,313
----------
TRANSPORTATION - 2.9%
5,000 Delta Air Lines 236,250
----------
Total Common Stocks
(Cost $6,127,813) 7,731,779
----------
SHORT-TERM INVESTMENTS - 9.4%
384,561 SSgA Money Market Fund 6.280% (2) 384,561
384,562 SSgA U.S. Government Money Market Fund
6.240% (2) 384,562
----------
Total Short-Term Investments
(Cost $769,123) 769,123
----------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
REPURCHASE AGREEMENT - 0.4%
$ 35,000 State Street Bank and Trust Company,
5.250%, 11/01/00, repurchase
agreement, dated 10/31/00 with a
repurchase price of $35,005,
collateralized by a $40,000 United
States Treasury Note, 4.250%, due
11/15/03, valued at $38,962.
(Cost $35,000) 35,000
----------
Total Investments
(Cost $6,931,936) - 104.6% 8,535,902
Liabilities in Excess of Other
Assets - (4.6%) (375,053)
----------
Total Net Assets - 100% $8,160,849
==========
</TABLE>
------------------
(1) Denotes non-income producing security.
(2) Interest rate shown is 7-day yield as of October 31, 2000.
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
15
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<C> <S> <C>
ASSET-BACKED SECURITIES - 2.3%
$ 343,522 Commercial Resecuritization Trust
Series 1999-1 Class A
6.740% 01/27/2009 $ 333,010
Contimortgage Home Equity Loan Trust
60,000 Series 1997-4 Class A5
6.440% 12/15/2012 59,447
40,000 Series 1996-3 Class A6
7.820% 02/15/2016 40,211
90,680 Ford Credit Auto Owner Trust
Series 1998-B Class A3
5.850% 10/15/2001 90,590
330,956 Green Tree Financial
Series 1992-2 Class A4
8.150% 01/15/2018 333,319
-----------
Total Asset-Backed Securities
(Cost $875,465) 856,577
-----------
U.S. GOVERNMENT SECURITIES - 25.0%
FEDERAL AGENCY ISSUES - 8.4%
FHLMC
750,000 7.000% 07/15/2005 764,364
FNMA
685,000 5.125% 02/13/2004 660,061
1,620,000 7.000% 07/15/2005 1,651,026
-----------
3,075,451
-----------
TREASURY ISSUES - 16.6%
United States Treasury Bonds
1,055,000 6.125% 08/15/2029 1,092,915
75,000 6.250% 05/15/2030 79,910
225,000 8.875% 02/15/2019 295,879
United States Treasury Notes
900,000 5.750% 08/15/2010 899,438
20,000 6.500% 05/15/2005 20,548
3,515,000 6.750% 05/15/2005 (1) 3,645,168
-----------
6,033,858
-----------
Total U.S. Government Securities
(Cost $9,053,013) 9,109,309
-----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - 39.4%
COLLATERALIZED MORTGAGE OBLIGATIONS - 9.8%
FHLMC
$ 540,000 Series 2143 Class CJ
6.000% 12/15/2024 $ 512,892
2,225,000 Series 2061 Class PD
6.250% 06/15/2023 2,149,573
FNMA
384,717 Series 1997-1 Class B
6.500% 02/18/2004 380,125
545,884 Residential Accredit Loans
Series 1999-QS4 Class A1
6.250% 03/25/2014 522,831
-----------
3,565,421
-----------
COMMERCIAL MORTGAGE BACKED SECURITIES - 5.7%
415,000 Asset Securitization
Series 1996-D3 Class A1C
7.400% 10/13/2026 422,838
19,593,078 Bear Stearns Commercial Mortgage
Securities
Series 1999-WF2 Class X
0.2596% 05/15/2019 380,106
404,849 Chase Commercial Mortgage Securities
Series 2000-2 Class A1
7.543% 09/15/2009 413,817
930,000 LB Commercial Conduit Mortgage Trust
Series 1998-C4 Class A1B
6.210% 10/15/2008 879,333
-----------
2,096,094
-----------
MORTGAGE PASS-THROUGH SECURITIES - 23.9%
FHLMC
513,529 6.000% 05/01/2029 482,236
183,785 8.000% 01/01/2026 186,369
FNMA
1,039,034 6.000% 10/01/2013 1,001,044
2,221,641 6.000% 12/01/2028 2,084,871
293,203 7.000% 12/01/2010 291,737
390,278 7.000% 05/01/2024 382,838
413,756 7.000% 05/01/2026 405,869
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
16
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<C> <S> <C>
MORTGAGE PASS-THROUGH SECURITIES (CONCLUDED)
GNMA
$ 1,362,474 7.000% 08/15/2023 $ 1,344,591
546,332 7.500% 11/15/2029 548,722
172,679 8.000% 06/15/2026 175,593
1,755,000 8.500% 12/31/2099 (2) 1,801,617
-----------
8,705,487
-----------
Total Mortgage-Backed Securities
(Cost $14,300,700) 14,367,002
-----------
CORPORATE BONDS - 32.5%
FEDERAL AGENCY ISSUES - 7.4%
2,730,000 Freddie Mac
6.625% 09/15/2009 2,714,272
-----------
INDUSTRIALS - 5.3%
30,000 Coastal
6.375% 02/01/2009 27,855
380,000 DaimlerChrysler Holding
7.375% 09/15/2006 380,701
205,000 Dominion Resources
8.125% 06/15/2010 211,769
260,000 Lockheed Martin
8.200% 12/01/2009 273,292
315,000 Osprey Trust
7.797% 01/15/2003 315,283
570,000 Saks
7.000% 07/15/2004 384,750
345,000 Williams
6.500% 08/01/2006 332,095
-----------
1,925,745
-----------
MEDIA/TELECOMMUNICATIONS - 1.7%
330,000 Comcast Cable Communications
8.375% 05/01/2007 343,518
275,000 Qwest Capital Funding
7.900% 08/15/2010 279,649
-----------
623,167
-----------
OIL - 1.5%
350,000 Amerada Hess
7.875% 10/01/2029 351,750
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<C> <S> <C>
OIL (CONCLUDED)
$ 190,000 Global Marine
7.125% 09/01/2007 $ 185,040
-----------
536,790
-----------
REITS, INSURANCE, FINANCE & BANKING - 11.7%
385,000 Bear Stearns
7.800% 08/15/2007 384,725
110,000 Capital One Bank
8.250% 06/15/2005 110,663
415,000 Citigroup
7.250% 10/01/2010 412,410
790,000 Conseco
6.800% 06/15/2005 489,800
205,000 EOP Operating
8.100% 08/01/2010 206,341
35,000 General Motors Acceptance
6.150% 04/05/2007 32,749
390,000 Household Finance
7.875% 03/01/2007 394,755
390,000 HSBC Holdings
7.500% 07/15/2009 390,663
380,000 Lehman Brothers Holdings
8.250% 06/15/2007 388,365
230,000 MBNA America Bank
6.750% 03/15/2008 212,632
50,000 Mellon Funding
5.750% 11/15/2003 48,340
115,000 Morgan Stanley Dean Witter
7.750% 06/15/2005 117,496
390,000 PNC Funding
7.500% 11/01/2009 387,738
365,000 Presidental Life
7.875% 02/15/2009 338,012
375,000 UBS Preferred Funding Trust I
8.622% 10/29/2049 379,699
-----------
4,294,388
-----------
SOVEREIGN BONDS - 1.3%
100,000 Republic of Pakistan
10.000% 12/13/2005 65,450
375,000 United Mexican States
9.875% 02/01/2010 390,937
-----------
456,387
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
17
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------- ------------
<C> <S> <C>
YANKEE BONDS - 3.6%
$ 145,000 AB Spintab
7.500% 08/14/2049 $ 139,405
390,000 BSCH Issuances
7.625% 09/14/2010 385,639
375,000 Credit Suisse First Boston
7.900% 05/01/2007 356,601
450,000 Merita Bank
7.150% 12/29/2049 443,793
-----------
1,325,438
-----------
Total Corporate Bonds
(Cost $11,993,574) 11,876,187
-----------
<CAPTION>
SHARES VALUE
-------------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 3.8%
1,379,226 SSgA U.S. Government Money Market Fund
6.240% (3)
(Cost $1,379,226) $ 1,379,226
-----------
</TABLE>
<TABLE>
<S> <C>
Total Investments
(Cost $37,601,978) - 103.0% 37,588,301
Liabilities in Excess of Other Assets -
(3.0%) (1,097,228)
-----------
Total Net Assets - 100% $36,491,073
===========
</TABLE>
------------------
(1) A portion of this security has been segregated by the Custodian Bank to
cover the forward commitment purchase.
(2) Settlement of mortgage backed securities is on a delayed delivery basis
with the final maturity to be announce (TBA) in the future. At October 31,
2000, the cost of the Fund's forward commitment purchases was $1,805,730.
(3) Interest rate shown is 7-day yield as of October 31, 2000.
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
18
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION MIDCAP TOTAL RETURN
VALUE VALUE FIXED INCOME
FUND FUND FUND
--------------- ------------ -------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at
value--Note 2 $53,091,258 $ 8,500,902 $37,588,301
Repurchase Agreements -- 35,000 --
Cash -- 188 14,813
Dividends receivable 21,054 5,775 --
Interest receivable 20,088 2,896 483,573
Receivable for securities sold 304,858 418,114 269,928
Receivable for Fund shares sold 112,431 -- --
Deferred organizational costs -- 6,752 --
Prepaid expenses 15,249 225 2,791
Due from Investment Advisor--Note
3 -- 25,117 19,802
----------- ----------- -----------
Total Assets 53,564,938 8,994,969 38,379,208
----------- ----------- -----------
LIABILITIES
Payable for securities purchased 213,150 765,357 1,805,730
Advisory fee payable--Note 3 42,661 6,005 --
Accounts payable and accrued
expenses 68,926 62,758 82,405
----------- ----------- -----------
Total Liabilities 324,737 834,120 1,888,135
----------- ----------- -----------
Net Assets $53,240,201 $ 8,160,849 $36,491,073
=========== =========== ===========
NET ASSETS
Capital paid-in $33,198,865 $ 5,826,827 $37,901,559
Undistributed net investment
income -- 1,711 9,045
Accumulated net realized gain
(loss) on investments 10,692,378 728,345 (1,405,854)
Net unrealized appreciation
(depreciation) on investments 9,348,958 1,603,966 (13,677)
----------- ----------- -----------
Net Assets $53,240,201 $ 8,160,849 $36,491,073
=========== =========== ===========
INVESTOR CLASS
Net asset value, offering and
redemption price per share $ 16.18 $ 13.50 $ 8.96
Total shares outstanding at end of
period 3,290,783 604,658 4,071,244
Cost of securities including
repurchase agreements $43,742,300 $ 6,931,936 $37,601,978
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
19
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION MIDCAP TOTAL RETURN
VALUE VALUE FIXED INCOME
FUND FUND FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income $ 504,498 $ 101,248 $ --
Interest income 101,803 24,000 2,108,390
---------------- ---------------- ----------------
Total Income 606,301 125,248 2,108,390
---------------- ---------------- ----------------
EXPENSES
Investment advisory fees--Note 3 550,214 85,439 144,194
Shareholder servicing fees--Note
4 163 5 --
Administrative fees--Note 3 60,523 10,694 30,535
Custodian fees 65,694 56,889 65,007
Audit fees 22,407 19,820 20,012
Legal fees 31,877 10,303 26,428
Printing expenses 10,028 12,657 10,007
Trustees fees--Note 5 11,310 1,556 5,328
Transfer agent fees 64,267 35,047 37,022
Organizational expenses -- 5,670 --
Registration fees 20,324 20,885 17,016
Insurance 5,816 823 1,955
Other 5,341 1,758 2,876
---------------- ---------------- ----------------
Total Expenses 847,964 261,546 360,380
Expenses borne by Investment
Adviser--Note 3 (15,869) (133,501) (24,335)
Expenses waived by Investment
Adviser--Note 3 -- -- (144,194)
---------------- ---------------- ----------------
Net Expenses 832,095 128,045 191,851
---------------- ---------------- ----------------
Net Investment Income (Loss) (225,794) (2,797) 1,916,539
---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on
investments sold 14,748,939 1,107,354 (597,621)
Change in net unrealized
appreciation (depreciation) on
investments 854,034 1,015,085 454,407
---------------- ---------------- ----------------
Net Gain (Loss) 15,602,973 2,122,439 (143,214)
---------------- ---------------- ----------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 15,377,179 $ 2,119,642 $ 1,773,325
================ ================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
20
<PAGE>
(This page has been left blank intentionally.)
--------------------------------------------------------------------------------
21
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
VALUE FUND
----------------------------------
Year Ended Year Ended
October 31, 2000 October 31, 1999
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
From operations:
Net investment income
(loss) $ (225,794) $ (355,876)
Net realized gain
(loss) on
investments 14,748,939 3,167,389
Change in net
unrealized
appreciation
(depreciation) on
investments 854,034 (793,982)
---------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations 15,377,179 2,017,531
---------------- ----------------
Net equalization
credits (debits) -- --
---------------- ----------------
Dividends and
distributions to
Investor
Shareholders:
From net investment
income -- --
From net realized
capital gains (2,491,082) (1,240,172)
Dividends and
distributions to
Advisor Shareholders:
From net investment
income -- --
From net realized
capital gains (5,686) (1,465)
---------------- ----------------
(2,496,768) (1,241,637)
---------------- ----------------
INVESTOR SHARE
TRANSACTIONS:
Sales of shares 27,008,941 20,003,670
Reinvestment of
distributions 2,463,098 1,228,923
Redemptions of shares (49,318,023) (29,612,698)
---------------- ----------------
Total increase
(decrease) from
Investor Share
transactions (19,845,984) (8,380,105)
---------------- ----------------
ADVISOR SHARE
TRANSACTIONS:
Sales of shares 77,147 136,082
Reinvestment of
distributions 5,686 1,442
Redemptions of shares (212,105) (60,875)
---------------- ----------------
Total increase
(decrease) from
Advisor Share
transactions (129,272) 76,649
---------------- ----------------
Total increase
(decrease) in net
assets (7,094,845) (7,527,562)
NET ASSETS
Beginning of period 60,335,046 67,862,608
---------------- ----------------
End of period $ 53,240,201 $ 60,335,046
================ ================
Undistributed
(distributions in
excess of) net
investment income $ -- $ (229,129)
================ ================
CHANGES IN FUND SHARES
INVESTOR SHARE
TRANSACTIONS:
Sales of shares 1,953,764 1,514,759
Reinvestment of
distributions 193,640 94,824
Redemption of shares (3,451,165) (2,267,904)
---------------- ----------------
Net increase (decrease)
in Investor shares (1,303,761) (658,321)
================ ================
ADVISOR SHARE
TRANSACTIONS:
Sales of shares 5,657 10,122
Reinvestment of
distributions 451 112
Redemption of shares (16,012) (4,143)
---------------- ----------------
Net increase (decrease)
in Advisor shares (9,904) 6,091
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
22
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TOTAL RETURN
MIDCAP VALUE FUND FIXED INCOME FUND
-------------------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
October 31, 2000 October 31, 1999 October 31, 2000 October 31, 1999
------------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
From operations:
Net investment income
(loss) $ (2,797) $ (3,938) $ 1,916,539 $ 1,584,124
Net realized gain
(loss) on
investments 1,107,354 993,461 (597,621) (767,652)
Change in net
unrealized
appreciation
(depreciation) on
investments 1,015,085 295,984 454,407 (1,029,249)
---------------- ---------------- ---------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations 2,119,642 1,285,507 1,773,325 (212,777)
---------------- ---------------- ---------------- ----------------
Net equalization
credits (debits) -- -- 7,664 (7,624)
---------------- ---------------- ---------------- ----------------
Dividends and
distributions to
Investor
Shareholders:
From net investment
income (3,008) (4,932) (1,942,545) (1,589,130)
From net realized
capital gains -- -- -- (875,449)
Dividends and
distributions to
Advisor Shareholders:
From net investment
income -- -- -- --
From net realized
capital gains -- -- -- --
---------------- ---------------- ---------------- ----------------
(3,008) (4,932) (1,942,545) (2,464,579)
---------------- ---------------- ---------------- ----------------
INVESTOR SHARE
TRANSACTIONS:
Sales of shares 7,713,138 2,461,359 29,663,978 6,783,285
Reinvestment of
distributions 3,006 4,931 1,927,697 2,462,955
Redemptions of shares (12,851,860) (3,050,541) (19,895,936) (9,738,157)
---------------- ---------------- ---------------- ----------------
Total increase
(decrease) from
Investor Share
transactions (5,135,716) (584,251) 11,695,739 (491,917)
---------------- ---------------- ---------------- ----------------
ADVISOR SHARE
TRANSACTIONS:
Sales of shares -- -- -- --
Reinvestment of
distributions -- -- -- --
Redemptions of shares (3,184) -- -- --
---------------- ---------------- ---------------- ----------------
Total increase
(decrease) from
Advisor Share
transactions (3,184) -- -- --
---------------- ---------------- ---------------- ----------------
Total increase
(decrease) in net
assets (3,022,266) 696,324 11,534,183 (3,176,897)
NET ASSETS
Beginning of period 11,183,115 10,486,791 24,956,890 28,133,787
---------------- ---------------- ---------------- ----------------
End of period $ 8,160,849 $ 11,183,115 $ 36,491,073 $ 24,956,890
================ ================ ================ ================
Undistributed
(distributions in
excess of) net
investment income $ 1,711 $ 1,706 $ 9,045 $ 13,399
================ ================ ================ ================
CHANGES IN FUND SHARES
INVESTOR SHARE
TRANSACTIONS:
Sales of shares 662,824 232,021 3,320,895 709,924
Reinvestment of
distributions 264 473 215,766 259,505
Redemption of shares (1,085,562) (283,558) (2,218,981) (1,029,427)
---------------- ---------------- ---------------- ----------------
Net increase (decrease)
in Investor shares (422,474) (51,064) 1,317,680 (59,998)
================ ================ ================ ================
ADVISOR SHARE
TRANSACTIONS:
Sales of shares -- -- -- --
Reinvestment of
distributions -- -- -- --
Redemption of shares (342) -- -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease)
in Advisor shares (342) -- -- --
================ ================ ================ ================
</TABLE>
--------------------------------------------------------------------------------
23
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SMALL CAPITALIZATION VALUE FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTOR SHARES
For an Investor Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
Net Asset Value at
Beginning of Period $ 13.10 $ 12.91 $ 17.67 $ 13.05 $ 10.77
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment Loss (0.09) (0.08) (0.02) (0.05) (0.05)
Net Realized and
Unrealized Gain
(Loss) on Investments 3.74 0.51 (2.05) 5.65 2.34
-------- -------- -------- -------- --------
Total from Investment
Operations 3.65 0.43 (2.07) 5.60 2.29
-------- -------- -------- -------- --------
Less Distributions:
From Net Investment
Income -- -- -- -- --
From Net Realized
Capital Gains (0.57) (0.24) (2.69) (0.98) (0.01)
-------- -------- -------- -------- --------
Total Distributions (0.57) (0.24) (2.69) (0.98) (0.01)
-------- -------- -------- -------- --------
Net Asset Value at End of
Period $ 16.18 $ 13.10 $ 12.91 $ 17.67 $ 13.05
======== ======== ======== ======== ========
Total Return 28.98% 3.40% (13.29)% 48.46% 21.17%
Net Assets at End of
Period (000's) $ 53,240 $ 60,206 $ 67,814 $ 96,709 $ 48,614
Ratios to Average Net
Assets
Expenses including
reimbursement/waiver
of fees 1.44% 1.50% 1.29% 1.32% 1.43%
Expenses excluding
reimbursement/waiver
of fees 1.44% 1.50% 1.29% 1.32% 1.43%
Net Investment Income (0.39)% (0.54)% (0.14)% (0.36)% (0.34)%
Portfolio Turnover Rate 104% 102% 88% 77% 82%
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
24
<PAGE>
--------------------------------------------------------------------------------
SCHRODER MIDCAP VALUE FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTOR SHARES
For an Investor Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Year Ended October 31, Period Ended
------------------------------------- October 31,
2000 1999 1998 1997 (a)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
Net Asset Value at Beginning
of Period $ 10.88 $ 9.72 $ 10.36 $ 10.00
------- -------- -------- --------
Income from Investment
Operations:
Net Investment Loss (0.01) -- (0.01) --
Net Realized and Unrealized
Gain (Loss) on Investments 2.63 1.16 (0.63) 0.36
------- -------- -------- --------
Total from Investment
Operations 2.62 1.16 (0.64) 0.36
------- -------- -------- --------
Less Distributions:
From Net Investment Income -- (b) -- -- --
------- -------- -------- --------
Total Distributions -- -- -- --
------- -------- -------- --------
Net Asset Value at End of
Period $ 13.50 $ 10.88 $ 9.72 $ 10.36
======= ======== ======== ========
Total Return (e) 24.11% 11.98% (6.18)% 3.60%(c)
Net Assets at End of Period
(000's) $ 8,161 $ 11,179 $ 10,484 $ 10,066
Ratios to Average Net Assets
Expenses including
reimbursement/waiver of
fees 1.35% 1.35% 1.35% 1.35%(d)
Expenses excluding
reimbursement/waiver of
fees 2.59% 2.28% 2.47% 4.33%(d)
Net Investment Income (0.03)% (0.03)% (0.06)% (0.13)%(d)
Portfolio Turnover Rate 141% 175% 166% 12%(c)
</TABLE>
----------------
(a) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997.
(b) Amount was less than $0.01 per share.
(c) Not Annualized.
(d) Annualized.
(e) Total returns would have been lower had certain expenses not been reduced
during the periods shown (See Note 3).
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
25
<PAGE>
--------------------------------------------------------------------------------
SCHRODER TOTAL RETURN FIXED INCOME FUND*
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTOR SHARES
For an Investor Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
Net Asset Value at
Beginning of Period $ 9.06 $ 10.00 $ 9.77 $ 9.70 $ 9.93
------- -------- -------- ------- -------
Income from Investment
Operations:
Net Investment Income 0.59 0.55 0.54 0.49 0.53
Net Realized and
Unrealized Gain
(Loss) on Investments (0.09) (0.62) 0.23 0.16 (0.11)
------- -------- -------- ------- -------
Total from Investment
Operations 0.50 (0.07) 0.77 0.65 0.42
------- -------- -------- ------- -------
Less Distributions:
From Net Investment
Income (0.60) (0.56) (0.54) (0.49) (0.53)
From Net Realized
Capital Gains -- (0.31) -- (0.09) (0.12)
------- -------- -------- ------- -------
Total Distributions (0.60) (0.87) (0.54) (0.58) (0.65)
------- -------- -------- ------- -------
Net Asset Value at End of
Period $ 8.96 $ 9.06 $ 10.00 $ 9.77 $ 9.70
======= ======== ======== ======= =======
Total Return (a) 5.75% (0.78)% 8.10% 7.68% 4.38%
Net Assets at End of
Period (000's) $36,491 $ 24,957 $ 28,134 $26,683 $23,708
Ratios to Average Net
Assets
Expenses including
reimbursement/waiver
of fees 0.67% 0.72% 0.89% 1.12% 1.12%
Expenses excluding
reimbursement/waiver
of fees 1.25% 1.22% 1.25% 1.33% 1.24%
Net Investment Income 6.65% 5.81% 5.47% 5.58% 5.46%
Portfolio Turnover Rate 330% 301% 113% 44% 69%
</TABLE>
----------------
(a) Total returns would have been lower had certain expenses not been reduced
during the periods shown (See Note 3).
* Formerly, Schroder Investment Grade Income Fund. Effective August 14, 2000,
the Fund changed its name, its investment objectives and its principal
investment strategies. The Fund would not necessarily have achieved the
financial results and the total returns listed above under its current
investment objectives and policies.
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
26
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
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 three separate investment
portfolios--Schroder Small Capitalization Value Fund, Schroder MidCap Value
Fund and Schroder Total Return Fixed Income Fund (collectively, the "Funds").
As of October 31, 2000, each Fund had Investor Shares outstanding. As of
June 23, 2000, the Advisor Shares of Schroder Small Capitalization Value Fund
and Schroder MidCap Value Fund were recapitalized into Investor Shares, such
that the Funds no longer have any Advisor Shares outstanding. On August 14,
2000, Schroder Investment Grade Income Fund changed its name to Schroder Total
Return Fixed Income Fund and changed its investment objectives and principal
investment strategies. As of September 11, 2000, Schroder Large Capitalization
Equity Fund, a former series of the Trust, merged with and into Schroder U.S.
Large Cap Equity Fund (formerly Schroder U.S. Diversified Growth Fund), a
series of Schroder Capital Funds (Delaware). As of June 30, 2000, Schroder
Short-Term Investment Fund, a former series of the Trust, was terminated and
liquidated.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 income 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 accounting principles generally
accepted in the United States of America.
VALUATION OF INVESTMENTS:
Portfolio securities listed on recognized stock exchanges are valued at
the last reported sale price on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges
where last sale prices are not available are valued at the mean of the closing
bid and ask prices ("mid-market price") or, if none, the last sale price on
the preceding trading day. Securities traded in over-the-counter markets are
valued at the most recent reported mid-market price. Prices used for
valuations generally are provided by independent pricing services. Short-term
investments, having a maturity of 60 days or less, are valued at amortized
cost, which approximates market value, unless the investment adviser believes
another valuation is more appropriate. Other securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith using methods approved by the Trust's Board of
Trustees ("Trustees").
REPURCHASE AGREEMENTS:
When entering into repurchase agreements, it is the Trust's policy that
each Fund take into its possession, through its custodian, the underlying
collateral and monitor the collateral's value at the time the agreement is
entered into and on a daily basis during the term of the repurchase agreement
to ensure that it equals or exceeds the repurchase price. In the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
--------------------------------------------------------------------------------
27
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 the accrual basis. Discounts and premiums on fixed income
securities are accreted and amortized on the effective interest method.
EXPENSES:
Expenses are recorded on an accrual basis. Most of the expenses of the
Trust can be directly attributable to a specific Fund and/or class of shares.
Expenses not directly attributable 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 Schroder Investment Management North America Inc.
("SIMNA"), investment adviser to the Trust, or the Trustees.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders from net investment income are declared and
distributed at least annually for Schroder Small Capitalization Value Fund and
Schroder MidCap Value Fund; and since October 1, 2000 declared daily and
distributed monthly for Schroder Total Return Fixed Income Fund (previously,
that Fund declared and distributed its net investment income monthly).
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 offered two classes of shares during the
periods shown, investment income, common expenses of a Fund, and gains/losses
on investments were allocated to both classes of each Fund based on the
respective daily net assets of each class of such Fund. Shareholder servicing
fees related to Advisor Shares were charged directly to that class. Neither
class had preferential dividend rights. Dividends, if any, paid by a Fund with
respect to its two classes of shares normally differed in amount due to the
differing expenses borne by each class.
DEFERRED ORGANIZATION COSTS:
Costs incurred by the Funds in connection with their organizations are
amortized on a straight-line basis over a five-year period.
EQUALIZATION:
Prior to October 1, 2000, when Schroder Total Return Fixed Income Fund
declared distributions of net investment income monthly, the Fund followed 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 was credited or charged to undistributed net investment income. As
a result, undistributed net investment income per share was 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
--------------------------------------------------------------------------------
28
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
substantially all of their taxable income, including realized capital gains,
for the fiscal year. In addition, as a result of distributing substantially
all of their net investment income during each calendar year, capital gains
and certain other amounts, if any, the Funds will not be subject to a federal
excise tax.
For the year ended October 31, 2000 Schroder MidCap Value Fund utilized
$280,206 of capital loss carryforward. As of October 31, 2000, the Fund listed
below had net tax basis capital loss carryforwards for federal income tax
purposes, that may be applied against future taxable gains until their
expiration date as follows:
<TABLE>
<CAPTION>
EXPIRATION
DATES
FUND AMOUNT OCTOBER 31,
---- -------- -----------
<S> <C> <C>
Schroder Total Return Fixed Income Fund: $782,503 2007
511,510 2008
</TABLE>
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due
to differing treatments for Real Estate Mortgage Investment Conduit (REMIC)
paydowns and losses deferred due to wash sales, net operating losses and
excise tax regulations. Schroder Small Capitalization Value Fund utilizes
earnings and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
At October 31, 2000, the Trust reclassified the following amounts between
capital paid-in, undistributed net investment income and accumulated net
realized gain/loss:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
INCREASE (DECREASE) UNDISTRIBUTED NET ACCUMULATED
CAPITAL PAID-IN INVESTMENT INCOME REALIZED GAIN (LOSS)
------------------- ----------------- --------------------
<S> <C> <C> <C>
Schroder Small Capitalization Value
Fund $3,537,164 $454,923 $(3,992,087)
Schroder MidCap Value Fund (5,810) 5,810 --
Schroder Total Return Fixed
Income Fund 9,458 13,988 (23,446)
</TABLE>
NOTE 3. INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENT
The Trust has entered into an investment advisory agreement with SIMNA.
Under the agreement, SIMNA provides investment management services, and is
entitled to receive for its services compensation, payable monthly, at the
following annual rates based on average daily net assets of each Fund taken
separately: 0.95% for Schroder Small Capitalization Value Fund; 0.90% for
Schroder MidCap Value Fund; and 0.50% for Schroder Total Return Fixed Income
Fund.
Throughout the fiscal period SIMNA was contractually obligated to waive a
portion of the investment advisory fees it was entitled to receive from
Schroder Total Return Fixed Income Fund. As a result, during the period of the
waiver, Schroder Total Return Fixed Income Fund paid no investment advisory
fees.
In addition, throughout the fiscal period SIMNA was contractually
obligated to reduce its compensation and, if necessary, to pay certain
expenses of each of the Funds to the extent that a Fund's Investor Shares
total operating expenses exceed the following annual rates: 1.70% of average
daily net assets of Schroder Small Capitalization Value Fund; 1.35% of average
daily net assets of Schroder MidCap Value Fund; and 1.12% of average daily net
assets of Schroder Total Return Fixed Income Fund. On September 18, 2000,
SIMNA voluntarily reduced this rate on Schroder Total Return Fixed Income Fund
to 0.50% until October 31, 2001.
--------------------------------------------------------------------------------
29
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SIMNA was also contractually obligated to reduce its compensation and, if
necessary, to pay certain expenses of each of the Funds to the extent that a
Fund's Advisor Shares total operating expenses exceed the following annual
rates: 1.95% of average daily net assets of Schroder Small Capitalization
Value Fund; 1.60% of average daily net assets of Schroder MidCap Value Fund;
and 1.37% of average daily net assets of Schroder Total Return Fixed Income
Fund.
The Trust has also entered into an Administration Agreement with State
Street Bank and Trust Company ("State Street"). Under the Administration
Agreement, the Trust, in addition to other Schroder Funds managed by SIMNA and
certain related entities, pay fees to State Street based on the combined
average daily net assets of all the Funds in the Schroder complex, according
to the following rates: 0.06% of the first $1.7 billion of such assets, 0.04%
of the next $1.7 billion of such assets, and 0.02% of such assets in excess of
$3.4 billion, subject to certain minimum requirements.
NOTE 4. SHAREHOLDER SERVICING PLAN
The Trust adopted a shareholder servicing plan for the Advisor Shares of
each Fund. Under the plan, Schroder Fund Advisors Inc. ("Schroder Advisors")
or shareholder servicing organizations provided administrative support
services to their customers who held a Fund's Advisor Shares. For these
shareholder services, Schroder Advisors was entitled to receive 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. As a result of the
recapitalization and discontinuance of Advisor Shares, the shareholder
servicing plan is no longer in use for any of the Funds.
NOTE 5. TRANSACTIONS WITH AFFILIATES
BROKERAGE COMMISSIONS:
Brokerage commissions received by affiliates of SIMNA, from portfolio
transactions conducted with the Funds during the year ended October 31, 2000,
amounted to $2,622.
TRUSTEES' FEES:
The Trust pays no compensation to Trustees who are interested persons of
the Trust, SIMNA or Schroder Advisors. For their services as Trustees of all
open-end investment companies distributed by Schroder Advisors with the
exception of Schroder Series Trust II, Trustees who are not interested persons
of the Trust, SIMNA or Schroder Advisors receive an annual retainer of $11,000
for their services as Trustees of all open end investment companies
distributed by Schroder Advisors, 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 Funds will receive an additional $1,000 per year. Payment of
the annual retainer will be allocated among the various Funds based on their
relative net assets. Payment of meeting fees will be allocated only among
those Funds to which the meeting relates.
NOTE 6. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Fund, for the year ended October 31, 2000 were
as follows:
<TABLE>
<CAPTION>
NON-GOVERNMENT GOVERNMENT NON-GOVERNMENT GOVERNMENT
PURCHASES PURCHASES SALES SALES
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Schroder Small Capitalization
Value Fund $58,164,260 $ 0 $79,664,804 $ 0
Schroder MidCap Value Fund 12,875,642 0 18,117,321 0
Schroder Total Return Fixed
Income Fund 32,092,169 73,046,825 30,345,275 61,727,263
</TABLE>
--------------------------------------------------------------------------------
30
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
At October 31, 2000, 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, 2000 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED ---------------------------- APPRECIATION/
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
----------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Schroder Small Capitalization
Value Fund $44,247,303 $10,396,064 $(1,552,109) $8,843,955
Schroder MidCap Value Fund 6,934,490 1,680,402 (78,990) 1,601,412
Schroder Total Return Fixed
Income Fund 37,713,819 376,045 (501,563) (125,518)
</TABLE>
NOTE 7. PORTFOLIO INVESTMENT RISKS
Schroder Total Return Fixed Income Fund may invest up to 35% of its assets
in securities rated below investment grade. 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.
NOTE 8. BENEFICIAL INTEREST
The following table shows the number of shareholders each owning
beneficially or of record 5% or more of a Fund as of October 31, 2000 and the
total percentage of the Fund held by such shareholders.
<TABLE>
<CAPTION>
5% OR GREATER SHAREHOLDERS
--------------------------
NUMBER % OF FUND HELD
-------- ----------------
<S> <C> <C>
Schroder Small Capitalization Value Fund 5 33%
Schroder MidCap Value Fund 5 86%
Schroder Total Return Fixed Income Fund 4 90%
</TABLE>
NOTE 9. LINE OF CREDIT
The Trust and other Schroder Funds managed by SIMNA (the "Participants")
share in a $37.5 million unsecured revolving credit facility with State Street
for temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of securities.
The Participants are charged an annual commitment fee of 0.08%, which is
allocated, pro rata based upon net assets, among each of the Participants.
Interest is calculated based on the federal funds rate plus 0.50% at the time
of the borrowing. To the extent permitted by a Fund's investment policies and
to the extent amounts remain available for borrowing under the facility, each
Fund may borrow up to a maximum of 33 percent of its respective net assets
under the agreement. For the year ended October 31, 2000, the Trust had no
borrowings against the line of credit.
--------------------------------------------------------------------------------
31
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Schroder Series Trust:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Schroder Series Trust (consisting
of Schroder Small Capitalization Value Fund, Schroder MidCap Value Fund and
Schroder Total Return Fixed Income Fund (formerly, Schroder Investment Grade
Income Fund) (collectively the "Funds") at October 31, 2000, the results of each
of their operations, the changes in each of their net assets and the financial
highlights for the year ended October 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securites at October 31, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion. The statement of changes in
net assets for the year ended October 31, 1999, and financial highlights for
each of the periods ending on or before October 31, 1999, were audited by other
independent accountants whose report dated December 14, 1999, expressed an
unqualified opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 15, 2000
--------------------------------------------------------------------------------
32
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
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,
2000:
Schroder MidCap Value Fund had 86.79% of 2000 dividends qualify for the
corporate dividends paid deduction.
The Fund listed below designated the following amount as long term capital
gain dividends for the purposes of the dividends paid deduction:
<TABLE>
<CAPTION>
CAPITAL GAINS DIVIDENDS
LONG TERM
-----------------------
<S> <C>
Schroder Small Capitialization Value Fund $3,659,631
</TABLE>
On December 18, 2000, the Funds made the following per share distributions
to shareholders of record on December 15, 2000.
<TABLE>
<CAPTION>
NET
INVESTMENT SHORT TERM LONG TERM
INCOME CAPITAL GAIN CAPITAL GAIN
---------- ------------ ------------
<S> <C> <C> <C>
Schroder Small Capitalization Value Fund -- $2.38497 $1.06423
Schroder MidCap Value Fund $0.007144 -- 1.23023
</TABLE>
--------------------------------------------------------------------------------
33
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
SHAREHOLDER MEETING (UNAUDITED)
A meeting of the Shareholders of Schroder Series Trust was held on
August 11, 2000 at the offices of the Trust, 787 Seventh Avenue, New York, New
York. The matters voted upon by Shareholders and the resulting votes are
presented below:
I. Proposal to adopt a new investment objective for Schroder Total Return Fixed
Income Fund:
NUMBER OF VOTES
<TABLE>
<CAPTION>
FOR WITHHELD
------------- --------
<S> <C>
3,693,068.655 0
</TABLE>
II. Proposal to revise or eliminate Fundamental Policies of the Fund:
A. To eliminate the Fund's Fundamental policy regarding short sales:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ---------- ---------
<S> <C> <C>
2,327,629.293 27,040.897 2,449.000
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
B. To revise the Fund's fundamental policy regarding borrowing:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ---------- ---------
<S> <C> <C>
2,329,376.022 25,294.168 2,449.000
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
SCHRODER MIDCAP VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- ------- -------
<S> <C> <C>
506,251.362 0 0
</TABLE>
--------------------------------------------------------------------------------
34
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
SHAREHOLDER MEETING (UNAUDITED) (CONTINUED)
C. To eliminate the Fund's fundamental policy regarding pledging or otherwise
encumbering assets:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- --------- ---------
<S> <C> <C>
2,345,700.417 7,223.044 4,195.729
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
SCHRODER MIDCAP VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- ------- -------
<S> <C> <C>
506,251.362 0 0
</TABLE>
D. To eliminate the Fund's fundamental policy regarding purchasing securities
which are also owned by officers and Trustees of the Trust and its
affiliates:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- --------- ---------
<S> <C> <C>
2,347,454.534 7,215.656 2,449.000
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
E. To eliminate the Fund's fundamental policy regarding purchasing oil, gas, or
other mineral leases, rights, or royalty contracts:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ---------- ---------
<S> <C> <C>
2,326,877.367 27,792.823 2,449.000
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
--------------------------------------------------------------------------------
35
<PAGE>
--------------------------------------------------------------------------------
SCHRODER SERIES TRUST
--------------------------------------------------------------------------------
SHAREHOLDER MEETING (UNAUDITED) (CONCLUDED)
F. To eliminate the Fund's fundamental policy regarding investments made for
the purpose of gaining control of a company's management:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- --------- ---------
<S> <C> <C>
2,350,626.263 4,043.927 2,449.000
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
G. To revise the Fund's fundamental policy regarding limits on acquiring the
voting securities of any one issuer:
SCHRODER SMALL CAPITALIZATION VALUE FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ---------- ---------
<S> <C> <C>
2,331,258.139 21,987.051 3,874.000
</TABLE>
SCHRODER TOTAL RETURN FIXED INCOME FUND:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------- ------- -------
<S> <C> <C>
3,693,068.655 0 0
</TABLE>
--------------------------------------------------------------------------------
36
<PAGE>
INVESTMENT ADVISER
Schroder Investment Management
North America Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRUSTEES
Sharon L. Haugh, CHAIRMAN
Catherine A. Mazza, VICE CHAIRMAN
David N. Dinkins
Peter E. Guernsey
John I. Howell
Peter S. Knight
William L. Means
Clarence F. Michalis
Hermann C. Schwab
DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, NY 10019
TRANSFER & SHAREHOLDER
SERVICING AGENT
Boston Financial Data Services, Inc.
CUSTODIAN
State Street Bank and Trust Company
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
COUNSEL
Ropes & Gray
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.
Schroder Series Trust
P.O. Box 8507
Boston, MA 02266
800-464-3108
[SCHRODER LOGO]
------------------------------------------
Schroder Series Trust
Schroder Small
Capitalization Value Fund
Schroder MidCap
Value Fund
Schroder Total Return
Fixed Income Fund
ANNUAL REPORT
October 31, 2000
WS1200AR
