UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-01911
SCHRODER CAPITAL FUNDS (DELAWARE)
(Exact name of registrant as specified in charter)
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875 Third Avenue, 22nd Floor
New York, NY 10022
(Address of principal executive offices) (Zip code)
Schroder Capital Funds (Delaware)
P.O. Box 8507
Boston, MA 02266
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-464-3108
DATE OF FISCAL YEAR END: OCTOBER 31, 2008
DATE OF REPORTING PERIOD: OCTOBER 31, 2008
ITEM 1. REPORTS TO STOCKHOLDERS.
SCHRODER MUTUAL FUNDS
OCTOBER 31, 2008 ANNUAL REPORT
Schroder International Alpha Fund
Schroder International Diversified Value Fund
Schroder Emerging Market Equity Fund
Schroder U.S. Opportunities Fund
Schroder U.S. Small and Mid Cap Opportunities Fund
Schroder North American Equity Fund
Schroder Total Return Fixed Income Fund
Schroder Multi-Asset Growth Portfolio
(SCHRODERS LOGO)
SCHRODER MUTUAL FUNDS
December 23, 2008
Dear Shareholder:
We are pleased to provide the Annual Report to shareholders of the Schroder
Mutual Funds, which covers the 12 months ended October 31, 2008. The Report
includes information designed to help you understand the status of your
investment -- the Management Discussion and Analysis prepared by portfolio
managers explains how they put your money to work in various markets; the
Schedules of Investments give you a point-in-time picture of the holdings in
your fund; and additional information includes a detailed breakdown of other
financial information. We encourage you to read the Report and thank you for
making Schroders part of your financial plan.
The 12 months under review were extremely volatile for investors across all
asset classes. U.S. and international markets moved significantly lower as the
global economy was shaken over the credit crunch that began in the U.S. What
began as a problem for a niche area of the American mortgage market spiraled
into a global crisis that has dominated headlines around the world. The credit
crunch is no longer just a concern for financial institutions and politicians,
but an event with real implications for the consumer. Indeed, the reporting
period saw house prices falling, the cost of borrowing rising and concerns about
job security mounting, leading to consumer confidence reaching its lowest ebb
since the early 1990s. The effect of this is beginning to show -- retail sales
in the U.S. have fallen followed by a sharp fall in UK sales. The U.S. Federal
Reserve (the "Fed") moved aggressively to inject liquidity into financial
markets and bolster confidence in the financial system. However, the Fed's
actions have not led to real economic stimulation. This is evidenced by the fact
that banks are still cautious in extending credit to borrowers. Central banks
elsewhere also stepped up liquidity operations, but generally the banking sector
stayed risk averse as judged from the spreads between money market and official
rates. The ripple effect can be felt across the globe.
In the U.S., the financial world witnessed the collapse of some of banking's
biggest players. Lehman Brothers, Bear Stearns, Washington Mutual, Fortis and
HBOS were just some of the names to fall victim to the ongoing turmoil in the
face of insurmountable debts. This led to the U.S. Government passing the $700
billion Troubled Asset Relief Program ("TARP"). During the reporting period,
credit became much tighter to come by for the consumer, even for those with the
strongest credit ratings. Banks drastically scaled back on home equity lines and
credit card companies have imposed lower limits and higher minimum balance
payments. Even students have been adversely affected as lending institutions
have limited finance options. Downgrading of bond insurers had a major effect on
the municipal bond market. In addition, with the U.S. economy in recession,
worries about job security are stifling the urge to spend. Finally, rising
unemployment and staggered income growth continue to lead to higher delinquency
rates and charge-offs that in turn has led to tighter credit restraints.
In Europe, equity markets have experienced almost unprecedented levels of
volatility in the past 12 months. Prior to the onset of the global credit crunch
in the second quarter of 2007, Europe boasted the economic ingredients for
stellar growth: M&A activity was robust and corporate earnings enjoyed
particularly strong momentum. It was inevitable that this sustained period of
growth would have to revert to the mean, and we are now seeing this strong
growth environment being replaced with one of caution, as the global financial
crisis seeps into the real economy and Europe faces the onset of recession. The
European economy is facing some strong headwinds. Along with other regions
around the world, European markets have been hit hard by reverberations from the
U.S. sub-prime mortgage market meltdown and the aftershocks are likely to be
felt well into 2009. Unsurprisingly, in view of the above, earnings growth
drivers for European companies are weakening. Following outstanding earnings
growth over the past few years, the reporting period saw companies entering a
period of declining growth and profitability. Fears of a global recession during
the past few months have contributed to a significant fall in the price of oil
and other commodities. This has served to ease inflationary pressures and leaves
the European Central Bank ("ECB") open to make substantial interest rate cuts.
In addition to the recent government-led bank bail-outs, huge fiscal stimulus
packages are being discussed and drawn up across Europe, and governments are now
taking unprecedented action in response to potential deflationary pressures.
Asian equities have been amongst the hardest hit by the market turmoil during
the past 12 months. With the dramatic unfolding of events in the ongoing credit
crisis, Asian equities remained under significant pressure as the de-leveraging
process in the global financial system continues to unravel. While the region
has a relatively small direct exposure to the credit crunch, it has been caught
up in the contagion leading to a de-rating in Asian equities. As we move into
2009, we expect growth to slow further and earnings to disappoint as slowing
external demand feeds through to export-intensive Asia. Of the two, earnings
disappointment poses the greater risk. Although there has been a raft of
revision downgrades in the year to date, consensus expectations are still far
too optimistic and we would not be surprised to see a further leg down --
particularly with respect to manufacturing companies as high input costs squeeze
margins and as sluggish sales impact profitability. Corporate earnings growth
could very likely turn negative.
1
SCHRODER MUTUAL FUNDS
A global recession now seems unavoidable with the UK, the U.S. and Europe all
reporting declines in economic growth; and it's not just the developed world
that is affected -- emerging markets growth is also slowing as investors seek
the perceived safe haven of more economically mature markets. It would, indeed,
appear that no economy is immune from this downturn. As such, we now expect
economic growth to fall by 1.5% in the U.S. and by 2% in the UK next year, and
by 0.5% in Europe. We also anticipate emerging market growth slowing to 4% --
from over 6% last year.
On a more positive note, falling commodity prices and weakening global demand
for goods and services should result in a significant drop in inflation over the
coming months. This should eventually bring relief to the world's financial
markets and pave the way for further interest rate cuts. Indeed, as demonstrated
by the Bank of England's recent surprise 1.5% cut, interest rates may fall even
further than initially suspected. We now believe that UK and European interest
rates will fall below 3% by the end of next year. The Fed, in an historic move,
lowered its target for the InterBank federal funds rate to a range of zero to
0.25%, a record low, from 1.00%, and said it was willing to keep rates low for
an extended period. This should allow for a modest recovery in 2010.
In this type of environment, we believe that the long-term investor who
maintains a diversified portfolio -- both across asset classes and geographic
borders -- should be able to weather the bumpy periods better than those who
have high concentrations in one or two sectors. We encourage you to consult with
your financial advisor to ascertain whether your current mix of investments is
suitable for your long-term objectives.
Again, we thank you for including Schroders in your financial plan and we look
forward to our continued relationship.
Sincerely,
/s/ Mark A. Hemenetz
Mark A. Hemenetz, CFA
President
THE VIEWS EXPRESSED IN THE FOLLOWING REPORT WERE THOSE OF EACH RESPECTIVE FUND'S
PORTFOLIO MANAGEMENT TEAM AS OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE
VIEWS OF THE PORTFOLIO MANAGERS ON THE DATE THIS ANNUAL REPORT IS PUBLISHED OR
ANY TIME THEREAFTER. THESE VIEWS ARE INTENDED TO ASSIST SHAREHOLDERS OF THE
FUNDS IN UNDERSTANDING THEIR INVESTMENT IN THE FUNDS AND DO NOT CONSTITUTE
INVESTMENT ADVICE; INVESTORS SHOULD CONSULT THEIR OWN INVESTMENT PROFESSIONALS
AS TO THEIR INDIVIDUAL INVESTMENT PROGRAMS. CERTAIN SECURITIES DESCRIBED IN
THESE REPORTS MAY NO LONGER BE HELD BY THE FUNDS AND THEREFORE MAY NO LONGER
APPEAR IN THE SCHEDULES OF INVESTMENTS AS OF OCTOBER 31, 2008.
2
SCHRODER INTERNATIONAL ALPHA FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
PERFORMANCE
In the 12 months ended October 31, 2008, the Schroder International Alpha Fund
(the "Fund") fell 48.95% (Investor Shares) and 49.04% (Advisor Shares) compared
to the Morgan Stanley Capital International EAFE Index (the "Index"), a
broad-based basket of international stocks, which fell 46.63% during this same
period.
MARKET BACKGROUND
International equity markets moved significantly lower over the past 12 months,
dragged down by two forces. One was the acceleration of the credit crunch, with
the shape of the global financial system in the process of being altered as a
result. Lending conditions remained tight and credit spreads widened further.
Banks as well as other businesses and consumers found it difficult to obtain
financing. Central banks cut interest rates aggressively, continued to inject
liquidity into the financial system and some regulators, as in the U.S., went as
far as restricting the practice of short-selling. Given the uncertainty in the
market, volatility is at all-time highs.
The economic environment clearly deteriorated sharply in the summer when
companies globally 'hit the wall' as banks stopped lending and cash hoarding
escalated. This turned what was set to be a 'strong slowdown' in economic growth
into a full-blown recession. Given this developing scenario, governments in the
U.S., the UK and Europe announced large recapitalization plans. Under the
general terms of the various plans, banks were offered capital in exchange for
common and preference shares. Some were more attractive than others, but they
all had similar goals -- to raise confidence in the financial system and,
crucially, to get banks lending again.
The other force driving markets lower in the period involved a sell-off in
resource stocks. While long-term economic prospects for infrastructure spending
globally remains strong, the acceleration of global economic weakness after
September drove material stocks sharply lower. While oil prices reached an
all-time high of $147 per barrel in July, they fell dramatically for the rest of
the period. This correction in commodity prices was exacerbated by leveraged
investors, especially hedge funds, becoming forced sellers. Those weaker
commodity prices, however, have had a positive influence on inflation as their
retracements deflated inflationary fears.
Given this market backdrop, the financial sector was the weakest performer in
the Index, followed closely by material stocks, especially mining. The
deteriorating outlook for the global economy also had an adverse impact on
industrials and technology stocks. The strongest-performing sectors were
defensives, given their attractiveness in uncertain times, and the best of these
were consumer staples and health care.
PORTFOLIO REVIEW
Performance over the last 12 months was behind the benchmark, due to the impact
of the severe market rotation out of resource-related stocks. From a regional
perspective, our holdings in the UK, continental Europe and the Pacific ex-Japan
were most beneficial for performance. However, these were negated by our limited
exposure to emerging markets and Canada, as well as an underweight position in
Japan, where we are finding it difficult to find growth. Across the Fund's
portfolio, the technology and financial sectors contributed most to returns,
while industrials, energy and utilities detracted most.
Within the technology sector, our contrarian view on names such as HYNIX
SEMICONDUCTOR and TAIWAN SEMICONDUCTOR MANUFACTURING benefited Fund returns.
Software company AUTONOMY also performed well, as it won a number of large
contracts from banks looking to safeguard against credit-related litigation,
while Japan-based entertainment software developer SQUARE-ENIX was another
contributor, driven by the strength of its new product releases.
Our underweight exposure to financials was helpful in the period, as was overall
stock selection, such as our holding in UK motor insurance provider ADMIRAL,
which held up relatively well. Many of our defensive positions in other sectors
also worked well, like pharmaceutical company ROCHE and consumer staple groups
NESTLE and UNILEVER.
In the material sector, our overweight stance detracted from returns, but much
of this was compensated for by strong stock selection within the sector. For
instance, we were rewarded for retaining only a very small exposure to the
mining industry, while some of our climate-change-related holdings also proved
beneficial, including SYNGENTA (crop protection) and LINDE (industrial gases).
In addition, despite market worries about high input costs, REXAM, the UK-based
beverage can and packaging company was able to maintain margin levels and proved
to be defensive.
At the other end, DAEWOO SHIPBUILDING headed the list of detractors as the
market became increasingly concerned that a combination of the credit crunch and
lower commodity prices could see some contracts cancelled. Worries about weaker
global demand also weighed on our holdings in steel companies THYSSEN KRUPP and
ARCELOR MITTAL. Other detractors included telecommunication provider TELENOR and
property company KEPPEL LAND.
3
SCHRODER INTERNATIONAL ALPHA FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
OUTLOOK
We expect that the strong trend of consumer and financial sector de-leveraging
combined with the re-leveraging of government balance sheets will continue to
unroll. There are several key questions going forward, however. One relates to
the speed of adjustment in the global dislocation of the de-leveraging process.
While a rapid adjustment may seem appropriate from a capital markets
perspective, its economic and social consequences are unacceptable from most
political viewpoints, and governments have tried to cushion this via various
actions since the intensification of the crisis in September. Central banks and
governments are taking extraordinary steps, but a stabilisation in the impact of
the 'negative multiplier effect' of de-leveraging will take time.
A second question is if the sharp economic deceleration leads to deflationary
trends. The market until recently focused on inflation, but it is clear that
with a sharp slowdown, increased idle capacity and higher unemployment, the
immediate impact might be deflation, despite high liquidity injections by
governments around the world. A deflationary environment is not bad when it
brings more buying power to consumers in difficulty, but it can be treacherous
if it turns into 'wait and see' consumption patterns in dysfunctional financial
systems and recessionary environments.
A third question relates to the impact on the developing economies of the credit
crunch and, potentially, one of the worst recessions in 30 years in the
developed markets. Emerging economies are in a stronger financial position than
in the past, with a current account surplus of US$785 billion this year, and
foreign debt having fallen to 24% of GDP, but they are exposed to the
misfortunes of the West via trade and capital.
Governments in a few key emerging markets economies, however, should be able to
support their domestic economies via large infrastructure programs and stimulate
consumer and corporate spending through monetary and fiscal policies. China, for
example, which represented close to 30% of world economic growth in 2007, has
announced a package close to US$600 billion focused on infrastructure, property
and fiscal stimulus for the domestic consumer to be spent by 2010.
Clearly, one of the key priorities for governments globally is to get banks
lending again. It is essential to see liquidity becoming accessible for
companies. So far, loan surveys have yet to show any signs of revival and bank
nationalisations may have further to go if this continues. Another key indicator
to watch is U.S. property prices, as a stabilisation would help restore some
confidence and might entice banks to lend again.
In this environment, and from a global perspective, we continue to focus on
quality, in terms of a company's balance sheet, such as having a strong cash
flow and low Net Debt to Equity position. Strong management teams are also key
for vision and leadership, and corporate governance will be an essential
differentiator. We also seek attractively priced companies with positive
earnings growth. In an environment of slower global economic growth, markets
will pay up for companies delivering earnings growth, especially if it is
visible and sustainable.
While it is very difficult in the midst of ongoing short-term negative news, it
is essential to frame stock selection within a medium-term time horizon to avoid
being trapped in the fear-induced panic that markets create in such a volatile
environment. Understanding key long-term trends that will have a strong impact
on the sustainability of growth in earnings in companies around the world is
helpful.
Between now and 2050, the world's population is predicted to grow by a
staggering three billion people -- a 50% increase. Importantly, demographic
trends over the next 40 years will be characterized by three major trends.
First, most population growth will take place in emerging economies, and
urbanization will be a by-product. Second, the variation in percentage of 35-54
year olds in various countries will drive GDP growth and shift in consumption
patterns. Third, increasing longevity means people could have to extend their
working lives and provide for their own retirement and long-term health care.
Global climate change is another secular growth driver that we believe will
continue supporting both the medium and longer-term earnings of certain
companies. Impacts on food supply and weather patterns on insurance and property
prices (as well as banks) in major cities are all key items to monitor and
anticipate. This is in order to understand better the operating environment for
the corporate world. This will lead, once the most intense part of the current
crisis is behind us, to an acceleration of governments' plans to reduce harmful
carbon emissions, and the need for large infrastructure investments to mitigate
and adapt to those harmful changes.
We believe companies with goods and services benefiting from those trends will
have more sustainable earnings and, while some are currently neglected in the
market, current share price weakness offers strong opportunities, in our
opinion.
4
SCHRODER INTERNATIONAL ALPHA FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER INTERNATIONAL ALPHA FUND -- INVESTOR AND ADVISOR SHARES
VS. THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX.
(PERFORMANCE GRAPH)
Schroder Schroder
International International
Alpha Fund, Alpha Fund, MSCI EAFE
Investor Shares Advisor Shares Index
--------------- -------------- ---------
10/31/98 $10,000 $10,000 $10,000
10/31/99 12,182 12,154 12,303
10/31/00 13,158 13,094 11,947
10/31/01 9,874 9,801 8,969
10/31/02 8,176 8,100 7,784
10/31/03 10,028 9,906 9,888
10/31/04 11,363 11,202 11,751
10/31/05 13,573 13,340 13,877
10/31/06 17,625 17,303 17,696
10/31/07 22,451 21,960 22,105
10/31/08 11,462 11,190 11,798
The MSCI EAFE Index is a market weighted index composed of companies
representative of the market structure of certain developed market countries in
Europe, Australia, Asia and the Far East, and reflects dividends reinvested net
of non-recoverable withholding tax.
PERFORMANCE INFORMATION
One Year Ended Five Years Ended Ten Years Ended
October 31, 2008 October 31, 2008 (b) October 31, 2008 (b)
---------------- -------------------- --------------------
Schroder International Alpha Fund (a) --
Investor Shares ..................... (48.95)% 2.71% 1.37%
Advisor Shares ...................... (49.04)% 2.47%(c) 1.13%(c)
(a) Effective April 1, 2006, the advisory fee of the Fund increased to 0.975%
per annum. If the Fund had paid such higher fees during prior periods, the
returns of the Fund would have been lower.
(b) Average annual total return.
(c) The Advisor Shares commenced operations on May 15, 2006. The performance
information provided in the above table for periods prior to May 15, 2006
reflects the performance of the Investor Shares of the Fund, adjusted to reflect
the distribution fees paid by Advisor Shares.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE
BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
Vodafone Group 3.5%
Roche Holding 3.5
Admiral Group 3.4
Nestle 3.1
E.ON 2.6
* Excludes any Short-Term Investments.
GEOGRAPHIC ALLOCATION
(PIE CHART)
% of Investments
----------------
Continental Europre 35.6%
Emerging Markets 21.8
United Kingdom 21.7
Japan 9.6
Pacific ex-Japan 5.2
North America 3.5
Short-term Investement 2.6
5
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
PERFORMANCE
In the 12-months ended October 31, 2008, the Schroder International Diversified
Value Fund (the "Fund") fell 50.61% (Investor Shares) and 50.78% (Advisor
Shares) compared to the Morgan Stanley Capital International EAFE Index (the
"Index"), a broad-based basket of international stocks, which fell 46.63% during
this same period.
MARKET BACKGROUND
International equity markets fell dramatically in the 12-month period ending
October 31, 2008, as the collapse of the U.S. sub-prime mortgage market led to a
global credit crunch, pushing several of the world's largest economies close to
a recession and fuelling anxiety over the outlook for corporate earnings growth.
Volatility increased significantly in this environment; the Chicago Board's VIX
Index, a widely followed gauge of fear in the U.S. stock market, hit a
succession of historic highs towards the end of the review period. This was
accompanied by a flight to quality as investors sought protection against the
turmoil in equity markets in more defensive sectors and asset classes.
Financials stocks declined significantly as the global liquidity crisis resulted
in the collapse of several major financial institutions. The materials sector
also underperformed as commodity prices declined and investors downgraded their
expectations for future demand growth as the global economy slowed.
PORTFOLIO REVIEW
The Fund is managed using a bottom-up approach taking an index unconstrained
approach to international stock investing. The Fund's composition can differ
quite markedly from market cap weighted indices, therefore, and it can
experience large deviations in relative performance in the short term.
The Fund's return lagged the Index over the 12-month period. The Fund's
comparatively low weights in the consumer staples and health care sectors, both
of which performed comparatively well, proved most detrimental. The Fund was
underweight both due to the higher weight concentration in mega cap stocks of
these sectors in the Index as well as limited value opportunities within these
defensive sectors. Holdings in European consumer stocks, especially continental
European autos (RENAULT, PEUGEOT), UK house-builders (TAYLOR WIMPEY, PERSIMMON)
and retailers (KESA ELECTRICALS, DSG INTERNATIONAL), and the Fund's exposure to
real estate investment trusts (REITs) within the financials sector also
detracted from performance.
Positive contributors to performance in the review period included the Fund's
exposure to the materials sector as it avoided under-performing mining companies
and benefited from good relative returns from paper stocks (NIPPON PAPER,
HOLMEN, STORA ENSO). Telecommunications also added value, particularly stocks in
Canada (TELUS) and the emerging markets (Brazil's TELESP and Poland's TPSA).
OUTLOOK
Recent economic data have indicated that all major economies are decelerating
and the world is heading into a recession but there remains considerable
uncertainty over the likely depth and duration of the downturn. Traditional
investment strategies tend to struggle as risk aversion increases because
investors' time horizons shorten. The portfolio management team regards value
returns as a risk premium earned by strong-willed investors who are prepared to
take a long term view, and continue to attempt to position the Fund to capture
significant return opportunities when market conditions stabilize.
6
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND -- INVESTOR AND ADVISOR SHARES
VS. THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX.
(PERFORMANCE GRAPH)
Schroder Schroder
International International
Diversified Diversified
Value Fund, Value Fund,
Investor Advisor MSCI EAFE
Shares Shares Index
------------- ------------- ---------
8/30/06 $10,000 $10,000 $10,000
10/31/06 10,540 10,530 10,407
10/31/07 13,866 13,827 13,000
10/31/08 6,848 6,805 6,938
The MSCI EAFE Index is a market weighted index composed of companies
representative of the market structure of certain developed market countries in
Europe, Australia, Asia and the Far East, and reflects dividends reinvested net
of non-recoverable withholding tax.
PERFORMANCE INFORMATION
One Year Annualized
Ended Since
October 31, 2008 Inception (a)
---------------- -------------
Schroder International
Diversified Value Fund --
Investor Shares ......... (50.61)% (16.01)%
Advisor Shares .......... (50.78)% (16.26)%
(a) From commencement of Fund operations on August 30, 2006.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE
BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
Sanofi Aventis 0.5%
Royal KPN 0.5
Honda Motor 0.5
GlaxoSmithKline 0.5
TELUS 0.5
* Excludes any Short-Term Investments.
GEOGRAPHIC ALLOCATION
(PIE CHART)
% of Investments
----------------
Continental Europe 39.0%
Japan 21.5
Emerging Markets 16.7
United Kingdom 9.3
North America 7.0
Pacific ex-Japan 5.3
Short-Term Investment 1.2
7
SCHRODER EMERGING MARKET EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF NOVEMBER 26, 2008)
PERFORMANCE
In the 12 months ended October 31, 2008, the Schroder Emerging Market Equity
Fund (the "Fund") declined 55.18% (Investor Shares) and 55.25% (Advisor Shares),
compared to the Morgan Stanley Capital International Emerging Markets Index (the
"Index"), a broad-based basket of emerging market stocks, which fell 56.35%
during this same period.
MARKET BACKGROUND
Emerging markets fell sharply in what was a difficult period for stock markets
globally. Performance was particularly weak in the latter half of the period as
concerns grew about the global economic outlook, while commodity price weakness
was a negative for several emerging market countries. Investor confidence was
also hit by severe difficulties at several large financial institutions in the
U.S. and Europe associated with the ongoing problems in global credit markets
(including the collapse of Lehman Brothers). Globally, governments and central
banks intervened with bank rescue packages and interest rate cuts. In other
developments, the Fed announced temporary reciprocal currency arrangements (swap
lines) with Brazil, Mexico, South Korea and Singapore. The International
Monetary Fund ("IMF") also announced the creation of a new facility that can be
drawn on by emerging market countries with a track record of sound
macro-economic policies.
All global emerging equity markets were down sharply over the period. The
energy-dominated Russian market was the weakest performer. The weakening of oil
prices over the period was a negative as were concerns about tightening
liquidity conditions and domestic inflation, while risk premiums in Russia have
increased, given investor concerns about the political and corporate governance
environment. Hungary and Turkey also underperformed. The Turkish market is
particularly sensitive to changes in risk appetite, while increased domestic
political tensions were also a negative for a significant part of the period.
However, these subsided later in the period following the Turkish Constitutional
Court's decision to reject a motion to ban the ruling AKP. Hungary was also
among the weakest performers, with its market falling particularly sharply in
the latter part of the period. The Hungarian central bank surprised the markets
with a 300 basis point increase in interest rates towards the end of the period,
following a sharp fall in the country's currency (the forint). In other
developments, the IMF, EU and World Bank offered Hungary a US$25 billion
bail-out package, to help Hungary cover external debt maturities and any balance
of payments deficits/government borrowing shortfalls. In Asia, India and
Indonesia were the weakest performers. India underperformed despite strong
growth data as inflation started to rise and valuations looked increasingly
expensive relative to other markets. The Indonesian market fell particularly
sharply in the latter half of the period with concerns over the country's
sizeable external debt burden having a negative impact as did commodity price
weakness. In Latin America, Brazil was the weakest performer, with weakness
among commodity-related stocks impacting performance in the latter half of the
period.
Israel was among the better performing emerging markets, outperforming the Index
by a wide margin, while Chile, Colombia and Malaysia also outperformed. Chile
performed relatively well despite the Chilean central bank aggressively
tightening monetary policy to counter an inflation rate which is well above
target, while Malaysia outperformed due to factors including low levels of
foreign ownership of this market and the country's large current account
surplus. In Colombia, developments over the period included the government
announcing the removal of capital controls for equity and fixed income
investments.
PORTFOLIO REVIEW
Fund performance was ahead of the benchmark index over the period. The Fund's
cash exposure added value, given the weak market conditions over the period.
Stock selection in China, Korea, Taiwan and Thailand also added value, as did
the underweight to the Indian and Brazilian markets, which underperformed. On
the negative side, our stock selection in Brazil held back relative returns, as
did our underweight to Mexico, which outperformed. An underweight in South
Africa, which outperformed, also had a negative impact.
OUTLOOK
The outlook for global GDP growth has deteriorated sharply in recent months.
Prospects for economic growth, particularly in the U.S., Europe and Japan, have
worsened due to the virtual freezing up of credit markets. Liquidity has dried
up and banks appear to be unwilling to lend. We now expect negative GDP growth
in the U.S. and Europe next year, OECD GDP of -1.0% and global growth of just
0.4% in 2009. Moreover, the recovery is likely to be modest. Our 2010 global GDP
forecast is 1.9% which is well below the long term average of around 3%. Given
this scenario, GDP in the emerging world will also slow, but remain above that
8
SCHRODER EMERGING MARKET EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF NOVEMBER 26, 2008)
of the developed economies, where deleveraging is likely to be protracted. The
deteriorating growth outlook has led to further weakness in oil and other
commodity prices as worries mount that slowing emerging growth combined with
recession in the developed world will result in reduced demand for materials and
energy. Deleveraging is also likely to result in further downward pressure on
commodity prices. GDP growth in the emerging world is expected to slow from 6.3%
in 2008 to 4.2% in 2009 before recovering to 5.0% in 2010.
We do not believe that the deterioration in growth prospects for 2009 and 2010
has been fully discounted by markets, particularly in terms of earnings
expectations. Therefore, we are maintaining our cautious stance. However,
following the sell-off in recent weeks valuations look particularly attractive.
The current forward P/E ratio for global emerging markets is around 7.5X versus
the longer term average of around 13X. As noted above, valuations may be
flattered by overly optimistic earnings forecasts, but emerging markets still
appear cheap even if downgrades are factored in. Furthermore, the emerging
economies are less dependent on the developed world for growth as domestic
demand and trade between the emerging countries become increasingly important.
Economic fundamentals are also strong so fiscal spending can be used to
counteract any slowdown. Finally, debt levels in emerging markets are generally
modest and they are not suffering from the deleveraging that will impact the
developed markets for some time to come. Rather, apart from a few exceptions, we
believe they are experiencing a short-term liquidity squeeze. We therefore
expect the emerging economies to lead the global recovery. Against this
background, emerging markets are likely to remain volatile in the near term but
should deliver strong returns over the medium term.
9
SCHRODER EMERGING MARKET EQUITY FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER EMERGING MARKET EQUITY FUND -- INVESTOR AND ADVISOR SHARES
VS. THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EMERGING MARKETS INDEX.
(PERFORMANCE GRAPH)
Schroder Schroder
Emerging Emerging
Market Market
Equity Equity MSCI
Fund, Fund, Emerging
Investor Advisor Markets
Shares Shares Index
-------- -------- --------
3/31/06 $10,000 $10,000 $10,000
10/31/06 10,550 10,530 10,510
10/31/07 17,987 17,910 17,639
10/31/08 8,062 8,015 7,700
The MSCI Emerging Markets Index is an unmanaged market capitalization index of
companies representative of the market structure of emerging countries in
Europe, the Middle East, Africa, Latin America and Asia. The Index reflects
actual buyable opportunities for the non-domestic investor by taking into
account local market restrictions on share ownership by foreigners.
PERFORMANCE INFORMATION
One Year Annualized
Ended Since
October 31, 2008 Inception (a)
---------------- -------------
Schroder Emerging Market
Equity Fund --
Investor Shares ..... (55.18)% (8.00)%
Advisor Shares ...... (55.25)% (8.21)%
(a) From commencement of Fund operations on March 31, 2006.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE
BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
OAO Gazprom ADR 4.3%
China Mobile 3.7
Taiwan Semiconductor Manufacturing 3.5
Petroleo Brasileiro ADR 2.8
HON HAI Precision Industry GDR 2.3
* Excludes any Short-Term Investments.
GEOGRAPHIC ALLOCATION
(PIE CHART)
% of Investments
----------------
Asia/Far East 54.2%
Latin America 16.9
Europe 14.8
Africa 5.5
Mid-East 4.7
Short-Term Investment 3.9
10
SCHRODER U.S. OPPORTUNITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
PERFORMANCE
In the 12-months ended October 31, 2008, the Schroder U.S. Opportunities Fund
(the "Fund") fell 31.08% (Investor Shares) and 31.28% (Advisor Shares) compared
to the Russell 2000 Index (the "Index"), a broad-based basket of stocks with
characteristics similar to the Fund's portfolio, which fell 34.16% during this
same period.
MARKET BACKGROUND
Overall, U.S. small cap stocks were in negative territory during the 12-month
period under review. Volatility in the U.S. markets continued throughout the
reporting period.
PORTFOLIO REVIEW
Stock selection in the technology and consumer staples sectors contributed to
performance, but was offset by weaker picks in the autos and transportation and
utilities sectors. A large cash balance (9.9% on average throughout the year)
also contributed to returns.
In the technology sector, SYNIVERSE HOLDINGS, a provider of technology and
business solutions for the telecommunications industry, had a positive impact.
The company announced strong second-quarter earnings of $20.4 million or 30
cents per share, which was ahead of sell-side analysts' expectations. From the
consumer staples sector, UNITED NATURAL FOODS, a distributor of natural, organic
and specialty foods added value to the portfolio. In the third-quarter, the
company beat Wall Street's earnings expectations due to a 21% rise in revenue.
In the autos and transportation sector, HORIZON LINES, a container shipping and
integrated logistics company detracted from performance. Shares of the company
fell when it reported a 24.3% drop in earnings in the second-quarter due to
rising fuel costs earlier this year.
At the sector level, our exposure to cash (averaging 9.9% over the period) was
the largest single contributor to returns. Our overweight in the energy sector
had a positive impact while our underweight in financial services hurt the
portfolio.
OUTLOOK
These are clearly very volatile and worrying times. In the portfolio manager's
history of managing small cap equities (over 25 years), Ms. Jones has never had
to focus so much on the macro environment and the impact that it is having on
the day-to-day operations of companies in the U.S. and on the stock market. In
previous economic slowdowns, the portfolio management team used history as a
guide and as a playbook for how to invest through the downturn. However, in the
current slowdown investors are finding history to be a less useful benchmark as
the world is much more globally integrated than it was in the past.
With the sharp sell off we saw in October, valuations currently stand at
considerable discounts to their long-term averages. Against this backdrop, the
team is now finding many more compelling investment opportunities where they see
significant appreciation potential over the next two or three years.
In this environment we are remaining true to our bottom-up, fundamentally driven
investment process and the team are actively searching for compelling new
investment opportunities. We currently have several health care names on our
"new ideas list" that are approaching valuations where they would be attractive
buy candidates. We are also finding some interesting opportunities in the
consumer discretionary sector where we feel the share prices are now factoring
in an overly pessimistic outlook for certain companies.
11
SCHRODER U.S. OPPORTUNITIES FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER U.S. OPPORTUNITIES FUND -- INVESTOR AND ADVISOR SHARES VS.
THE RUSSELL 2000 INDEX.
(PERFORMANCE GRAPH)
Schroder U.S. Schroder U.S.
Opportunities Fund, Opportunities Fund, Russell 2000
Investor Shares Advisor Shares Index
------------------- ------------------- ------------
10/31/98 $10,000 $10,000 $10,000
10/31/99 10,891 10,867 11,487
10/31/00 15,328 15,256 13,486
10/31/01 15,836 15,719 11,774
10/31/02 14,266 14,126 10,411
10/31/03 18,850 18,617 14,926
10/31/04 22,811 22,471 16,677
10/31/05 25,379 24,939 18,692
10/31/06 30,880 30,287 22,426
10/31/07 37,062 36,272 24,506
10/31/08 25,545 24,927 16,134
The Russell 2000 Index is a market capitalization weighted broad based index of
2,000 small capitalization U.S. companies.
PERFORMANCE INFORMATION
One Year Ended Five Years Ended Ten Years Ended
October 31, 2008 October 31, 2008 (c) October 31, 2008 (c)
---------------- -------------------- --------------------
Schroder U.S. Opportunities Fund (a)(b) --
Investor Shares ....................... (31.08)% 6.27% 9.83%
Advisor Shares ........................ (31.28)% 6.01%(d) 9.56%(d)
(a) The portfolio manager primarily responsible for making investment decisions
for the Fund assumed this responsibility effective January 2, 2003. The
performance results for periods prior to January 2, 2003 were achieved by the
Fund under a different portfolio manager.
(b) Effective May 1, 2006, the combined advisory and administrative fees of the
Fund increased to 1.00% per annum. If the Fund had paid such higher fees during
prior periods, the returns of the Fund would have been lower.
(c) Average annual total return.
(d) The Advisor Shares commenced operations on May 15, 2006. The performance
information provided in the above table for periods prior to May 15, 2006
reflects the performance of the Investor Shares of the Fund, adjusted to reflect
the distribution fees paid by Advisor Shares.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND/OR REIMBURSEMENTS, PERFORMANCE WOULD
HAVE BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
Reinsurance Group of America Class A 2.3%
PSS World Medical 2.0
Waste Connections 2.0
KV Pharmaceutical Class A 2.0
Scientific Games Class A 2.0
* Excludes any Short-Term Investments.
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- --------- ----------------
Financial Services 17.1%
Consumer Discretionary 16.5
Health Care 15.4
Technology 15.1
Materials & Processing 6.9
Other Energy 6.0
Producer Durables 5.0
Utilities 3.0
Consumer Staples 2.5
Autos & Transportation 1.8
Short-Term Investment 10.7
12
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
PERFORMANCE
In the 12- months ended October 31, 2008, the Schroder U.S. Small and Mid Cap
Opportunities Fund (the "Fund") fell 32.31% (Investor Shares) and 32.56%
(Advisor Shares) compared to the Russell 2500 Index (the "Index"), a broad-based
basket of stocks with characteristics similar to the Fund's portfolio, which
fell 37.27% during this same period.
The Fund's outperformance of the Index was driven by strong stock selection in
the technology, financial services and autos and transportation sectors. Stock
selection within the utilities and energy sectors detracted from relative
performance during the 12-month period.
MARKET BACKGROUND
Overall, U.S. small and mid cap stocks were in negative territory during the
12-month period under review. Volatility in the U.S. market continued throughout
the reporting period.
PORTFOLIO REVIEW
In the technology sector, CITRIX SYSTEMS which designs, develops and markets
application delivery infrastructure solutions, had a positive impact on the
Fund's performance. The company's shares rose on the back of the announcement of
better-than-expected revenue and adjusted earnings for the third-quarter.
Within the financial services sector, the Fund's portfolio benefited from owning
two conservatively managed banks, CULLEN/FROST BANKERS and WESTAMERICA BANCORP.
Both companies have had little to no exposure to the subprime mortgage market
and have also maintained high credit quality. They both produced positive
returns over the 12-month period.
Over the same period, stock picks in the utilities and energy sectors detracted
from performance. In the utilities sector, shares of TW TELECOM, a provider of
managed network services tumbled as the economic slowdown put pressure on
revenue. Likewise, shares of FOREST OIL, an oil and gas company, dropped with
the fall of commodity prices.
At the sector level, an average of 9.5% in cash was the largest single
contributor to returns. Our underweight in autos, transportation and consumer
discretionary added value while our underweight in financial services detracted.
OUTLOOK
These are clearly very volatile and worrying times. In the portfolio manager's
history of managing small cap equities (over 25 years), Ms. Jones has never had
to focus so much on the macro environment and the impact that it is having on
the day-to-day operations of companies in the U.S. and on the stock market. In
previous economic slowdowns, the portfolio management team used history as a
guide and as a playbook for how to invest through the downturn. However, in the
current slowdown investors are finding history to be a less useful benchmark as
the world is much more globally integrated than it was in the past.
With the sharp sell off we saw in October, valuations currently stand at
considerable discounts to their long-term averages. Against this backdrop, the
team is now finding many more compelling investment opportunities where they see
significant appreciation potential over the next two or three years.
In this environment we are remaining true to our bottom-up, fundamentally driven
investment process and the team is actively searching for compelling new
investment opportunities. We currently have several health care names on our
"new ideas list" that are approaching valuations where they would be attractive
buy candidates. We are also finding some interesting opportunities in the
consumer discretionary sector where we feel the share prices are now factoring
in an overly pessimistic outlook for certain companies.
13
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND -- INVESTOR AND ADVISOR
SHARES VS. THE RUSSELL 2500 INDEX.
(PERFORMANCE GRAPH)
Schroder U.S. Schroder U.S.
Small and Mid Cap Small and Mid Cap
Opportunities Fund, Opportunities Fund, Russell 2500
Investor Shares Advisor Shares Index
------------------- ------------------- ------------
3/31/06 $10,000 $10,000 $10,000
10/31/06 10,250 10,230 10,077
10/31/07 12,567 12,530 11,358
10/31/08 8,506 8,450 7,125
The Russell 2500 Index is a market capitalization weighted broad based index
measuring the performance of the 2500 smallest companies in the Russell 3000
Index, which represents approximately 20% of the total market capitalization of
the Russell 3000 Index.
PERFORMANCE INFORMATION
One Year Annualized
Ended Since
October 31, 2008 Inception (a)
---------------- -------------
Schroder U.S. Small and Mid Cap Opportunities Fund --
Investor Shares ................................... (32.31)% (6.07)%
Advisor Shares .................................... (32.56)% (6.31)%
(a) From commencement of Fund operations on March 31, 2006.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE
BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
DaVita 3.8%
Amdocs 3.2
iShares Russell Midcap Index Fund 3.1
Reinsurance Group of America Class A 2.9
Pactiv 2.6
* Excludes any Short-Term Investments.
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
Technology 15.9%
Health Care 13.1
Consumer Discretionary 12.6
Financial Services 11.9
Materials & Processing 9.4
Utilities 7.8
Other Energy 4.9
Producer Durables 3.2
Autos & Transportation 2.4
Consumer Staples 0.8
Short-Term Investment 18.0
14
SCHRODER NORTH AMERICAN EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
PERFORMANCE
In the 12-months ended October 31, 2008, the Schroder North American Equity
Fund (the "Fund") fell 34.81% (Investor Shares) and 35.08% (Advisor Shares)
compared to the FTSE North American Index (the "Index"), a broad-based basket
of North American stocks, which fell 36.49%. For the same twelve-month period,
the S&P 500 Index fell by 36.10%.
MARKET BACKGROUND
North American equity markets fell dramatically in the 12-month period ended
October 31, 2008, as the collapse of the U.S. sub-prime mortgage market led to
a global credit crunch, pushing the U.S. and several other major economies
close to a recession and fuelling anxiety over the outlook for corporate
earnings growth. Volatility increased significantly in this environment; the
Chicago Board's VIX Index, a widely followed gauge of fear in the U.S. stock
market, hit a succession of historic highs towards the end of the review
period. This was accompanied by a flight to quality as investors sought
protection against the turmoil in equity markets in more defensive sectors and
asset classes. Financials stocks declined significantly as the global
liquidity crisis resulted in the collapse of several major financial
institutions. The materials sector also underperformed as commodity prices
declined and investors downgraded their expectations for future demand growth
as the global economy slowed.
PORTFOLIO REVIEW
The Fund's portfolio consists of multiple small stock positions diversified
across sectors and industries. The Fund invests in stocks offering a favorable
combination of value, quality and momentum and sector weights versus the Index
are tightly controlled to avoid concentrating risk.
The Fund outperformed the Index over the 12-month period as a result of
positive stock selection (the Fund outperformed or matched the benchmark in
nine out of 10 sectors). Sector positioning had a neutral impact on
performance, which is consistent with the Fund's risk controls. The Fund's
positioning within the financials sector was the main contributor to
outperformance. Its overweight positions in banks BB&T, WELLS FARGO and U.S.
BANCORP added value and the Fund avoided underperforming thrifts. Within the
consumer discretionary sector, the positive contributors included a bias
towards specialty retailers at the expense of multi-line retailers, and good
relative returns from restaurant chains YUM! BRANDS and MCDONALD'S.
Performance was also helped by avoiding the mega cap auto manufacturers, which
witnessed car sales plummeting and the credit crisis threatening companies
with bankruptcy. Pharmaceuticals stocks (JOHNSON & JOHNSON, ABBOTT LABS) and
mid and small cap energy equipment stocks (COMPLETE PRODUCTION SERVICES, GREY
WOLF ) also added value. By avoiding underperforming internet and software
stocks (EBAY, YAHOO!) the Fund also added value in the period.
OUTLOOK
Conditions are likely to remain challenging for North American equities with
the ongoing deceleration in the U.S. economy and growing anxiety over the
outlook for corporate earnings growth. The portfolio management team is able
to take full advantage of heightened market volatility by analyzing over 3,000
North American stocks every day. The investment team's quantitative approach
identifies stocks with value, quality and momentum characteristics. The Fund
is constructed to attempt to perform well against its benchmark in all major
market environments, with multiple investment strategies spread across many
small stock positions and rigorous risk control.
15
SCHRODER NORTH AMERICAN EQUITY FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER NORTH AMERICAN EQUITY FUND -- INVESTOR AND ADVISOR SHARES
VS. THE STANDARD & POOR'S (S&P) 500 INDEX, AND THE FTSE
NORTH AMERICAN (NA) INDEX.
(PERFORMANCE GRAPH)
Schroder North Schroder North
American Equity Fund, American Equity Fund, S&P 500 FTSE NA
Investor Shares Advisor Shares Index Index
--------------------- --------------------- ------- -------
9/17/03 $10,000 $10,000 $10,000 $10,000
10/31/03 10,280 10,278 10,261 10,278
10/31/04 11,348 11,308 11,228 11,331
10/31/05 12,536 12,459 12,207 12,552
10/31/06 14,547 14,408 14,201 14,695
10/31/07 16,740 16,520 16,269 17,155
10/31/08 10,914 10,725 10,396 10,896
The FTSE North American Index is a market capitalization value weighted
composite index of over 700 U.S. and Canadian companies and reflects the
reinvestment of dividends. The S&P 500 Index is a market capitalization value
weighted composite index of 500 large capitalization U.S. companies and
reflects the reinvestment of dividends.
PERFORMANCE INFORMATION
One Year Five Years Annualized
Ended Ended Since
October 31, 2008 October 31, 2008 (c) Inception
---------------- -------------------- ----------
Schroder North American Equity Fund --
Investor Shares (34.81)% 1.20% 1.72%(a)
Advisor Shares (35.08)% 0.85%(b) 1.38%(b)
(a) The Investor Shares commenced operations on September 17, 2003.
(b) The Advisor Shares commenced operations on March 31, 2006. The
performance information provided in the above table for periods prior to March
31, 2006 reflects the performance of the Investor Shares of the Fund, adjusted
to reflect the distribution fees paid by Advisor Shares.
(c) Average annual total return.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL
DIVIDENDS AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES
THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
Exxon Mobil 3.5%
Procter & Gamble 1.9
General Electric 1.9
Microsoft 1.9
Johnson & Johnson 1.7
* Excludes any Short-Term Investments.
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
Manufacturing 41.8%
Finance, Insurance and Real Estate 17.9
Short-Term Investment 9.1
Transportation, Communications, Electric, Gas and Sanitary
Services 8.5
Retail Trade 7.6
Services 7.5
Mining 5.9
Wholesale Trade 1.4
Agriculture, Forestry and Fishing 0.2
Construction 0.1
16
SCHRODER TOTAL RETURN FIXED INCOME FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 2008)
PERFORMANCE
During the 12-months ended October 31, 2008, the Schroder Total Return Fixed
Income Fund (the "Fund") rose 1.93% (Investor Shares) and 1.67% (Advisor
Shares), compared to the Barclays Capital U.S. Aggregate Bond Index (the
"Index"), a broad-based basket of U.S. debt securities, which rose 0.31% during
this same period. The Fund owned fewer corporate bonds and more Treasuries than
the benchmark, which contributed strongly to the Fund's outperformance.
MARKET BACKGROUND
The 12-months under review were volatile for bond investors as the U.S. entered
recession and risk premiums rose sharply. Investors witnessed unprecedented
conditions within the capital markets during the reporting period. The
tremendous amount of deleveraging (i.e., the selling of assets to reduce
positions financed with debt) in the financial system cast enormous downward
pressure on asset prices ranging from housing to financial assets. The
deleveraging effect also restricted the amount of liquidity and borrowing within
the financial system as banks and other financial institutions were fearful of
lending to one another and as banks tightened lending standards to businesses
and to consumers. The sluggish and uncertain economic environment coupled with
the downward technical pressure from forced selling caused an upheaval in the
markets and proved to be a difficult environment for investors.
The deleveraging impact coupled with investor panic led to the collapse of some
of the largest and most well-known financial institutions. Mortgage giants
Fannie Mae and Freddie Mac were taken over by the federal government as they
were put under conservatorship status in early September. Shortly afterward,
Lehman Brothers was forced into bankruptcy, and AIG had to be rescued with a
sizeable government bailout package. Several other financial institutions, such
as Washington Mutual and Merrill Lynch, were salvaged only by acquisitions from
large well-capitalized banks. The turmoil extended to money market mutual funds
as one of the nation's oldest money market funds, the Reserve Primary Fund,
"broke-the-buck" and was forced into liquidation. These events led to the U.S.
Treasury proposing the $700 billion Troubled Asset Relief Program ("TARP"),
which is intended to buy distressed assets from financial institutions as well
as provide capital injections to banks, among other innovative new initiatives
from the Fed and the U.S. Treasury Department.
Even after the first $250 billion in capital infusions provided by the $700
billion TARP, the credit crunch continued unabated as banks continued to
stockpile liquidity and forego lending.
PORTFOLIO REVIEW
The Fund benefited most from its significant underweight to corporate credit,
particularly its very low exposure to financials and economically sensitive
industries. Indeed, all of the Fund's portfolio holdings in the financial sector
are in large banks or institutions that we currently believe to be
well-capitalized or institutions that are national champions or that we believe
are "too big to fail." The Fund held no positions in the brokerage sector or in
banks hit hard by losses from sub-prime mortgage lending such as Wachovia and
Washington Mutual.
The Fund's mortgage holdings are predominantly agency-issued mortgage-backed
securities ("MBS") , which contributed favorably to returns through October. MBS
exposure was trimmed into the rally following the Fannie Mae/Freddie Mac bailout
package, and then was increased after spreads widened in subsequent weeks. The
Fund's yield curve steepening strategy also added to performance as the
front-end of the Treasury curve rallied more strongly than the long-end did.
Modest detractors from Fund performance relative to its benchmark were its
exposure to TIPS (treasury inflation protected securities) (now sold) and its
overweight in commercial mortgage-backed securities ("CMBS") (which has now been
trimmed).
OUTLOOK
Markets are transitioning from deleveraging and forced selling, which hurt all
risk assets, and are now worrying about recession, which has a much bigger
impact on the more leveraged assets. To this end, higher grade corporate and
mortgage sectors are mostly priced for recession risks and beginning to look
attractive. We have reduced our significant Treasury overweight to close to
neutral in order to add exposure to MBS and large liquid corporate bonds.
However, we believe it is still too early to take a very aggressive position, or
to extend exposure to lower-rated issuers.
The yield curve is likely to remain relatively steep. Short-term Treasury yields
cannot decline much further with the Fed Funds rate at 1.0%, but Treasury
funding pressures will keep longer-term yields from falling significantly. The
Fund has a modest underweight in 30-year bonds in favor of intermediate
maturities which benefit from good curve roll down. Duration is unlikely to
deviate materially from neutral.
17
SCHRODER TOTAL RETURN FIXED INCOME FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF OCTOBER 31, 2008)
Prolonged periods of wealth creation built upon leverage have always been
followed by periods of wealth destruction as credit is withdrawn. Just as with
the Fannie Mae/Freddie Mac support package, the $700 billion TARP provides some
relief to the symptoms of the current financial crisis, but does not address the
underlying problems caused by years of over-borrowing and spending. We believe
these packages nonetheless help with the reallocation of risky assets into
stronger hands, and reduce the chances of the credit crunch unfolding into a
more serious and prolonged recession. In addition, the Federal Reserve is now
flooding the financial market with liquidity through their lending programs in
order to prevent a further deterioration in lending conditions. While there are
still fundamentally difficult problems to be solved before the economy can
recover, the steps taken by the U.S. government should soon put an end to the
panic selling of September and October.
Tighter bank lending conditions will be a problem for industrial companies as
well as consumers. Lower-rated companies in cyclical industries are likely to be
impacted most negatively as their profit margins are squeezed and it becomes
more difficult to service their high debt burden. Although credit fundamentals
will remain quite challenging in coming months, the rapid increase in corporate
bond yield spreads now provides more adequate compensation for such risks. We
expect to add credit exposure in the coming months, primarily by buying new
issues priced at material concessions to outstanding bonds and by buying
corporate bonds during waves of volatility.
18
SCHRODER TOTAL RETURN FIXED INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER TOTAL RETURN FIXED INCOME FUND -- INVESTOR AND ADVISOR SHARES
VS. THE BARCLAYS CAPITAL U.S. AGGREGATE BOND INDEX.
(PERFORMANCE GRAPH)
Barclays Capital U.S.
Schroder Total Return Schroder Total Return Aggregate Bond Index
Fixed Income Fund, Fixed Income Fund, (formerly known as the Lehman
Investor Shares Advisor Shares U.S. Aggregate Bond Index)
--------------------- --------------------- -----------------------------
12/31/04 $10,000 $10,000 $10,000
10/31/05 10,151 10,130 10,102
10/31/06 10,649 10,592 10,626
10/31/07 11,170 11,072 11,197
10/31/08 11,386 11,258 11,232
The Barclays Capital U.S. Aggregate Bond Index is a widely used measure of
short-term debt returns. It is not managed.
PERFORMANCE INFORMATION
One Year Annualized
Ended Since
October 31, 2008 Inception (a)
---------------- -------------
Schroder Total Return Fixed Income Fund --
Investor Shares ....................... 1.93% 3.44%
Advisor Shares ........................ 1.67% 3.14%
(a) From commencement of Fund operations on December 31, 2004.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE
BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY % OF INVESTMENTS
- -------- ----------------
FHLMC 3.125%, 10/25/10 12.3%
FNMA 6.000%, 09/01/38 6.8
FNMA 5.000%, 06/01/35 5.2
Barclays Capital 2.648%, 11/26/08 4.8
FNMA 5.000%, 11/01/35 4.6
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
U.S. Government Mortgage-Backed Obligations 46.4%
U.S. Government Agency Obligations 14.2
Corporate Obligations 13.6
U.S. Treasury Obligations 9.1
Commercial Mortgage-Backed Obligations 7.2
Commercial Paper 4.8
Collateralized Mortgage Obligations 3.6
Asset-Backed Securities 0.1
Short-Term Investment 1.0
19
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
PERFORMANCE
The Schroder Multi-Asset Growth Portfolio (the "Fund") was launched and
commenced trading on December 20, 2007. In the period from inception through
October 31, 2008, the Fund declined 29.90% (Investor Shares), 30.00% (Advisor
and Class A Shares) and 30.20% for Class R Shares. This is compared to the
Consumer Price Index ("CPI" or "the Index", specifically, the CPI for All Urban
Consumers), which rose by 3.09% and the MSCI World Index, a market-weighted
index designed to measure the equity market performance of developed markets,
which declined by 37.30% during this same period.
MARKET BACKGROUND
Turbulence in the equity markets continued throughout the reporting period with
concerns over the growth outlook on the world economy taking center stage. While
central banks worldwide have been ready to slash interest rates and pump
liquidity into the financial system to stabilize markets, the consequence of
such measures has yet to be fully seen. Although, there has been some evidence
of a narrowing in interbank spreads, households and corporates continue to face
tight lending conditions. The lack of feed through from monetary policy to the
real economy and the need for greater visibility of earnings has therefore kept
us cautious on equities.
Meanwhile, government bond markets have rallied strongly recently driven by the
deterioration in the economic backdrop. However, we prefer the credit markets
given that spreads are trading at extreme levels and we believe that most of the
bad news has already been discounted.
The economic landscape continued to worsen during the reporting period as the
world economy edges closer to a recession. The latest worldwide business and
consumer surveys have fallen to levels that appear consistent with negative
growth. For the first time since the Second World War, the International
Monetary Fund is now expecting growth in the OECD to turn negative in 2009. We
are also forecasting a global recession with the OECD experiencing a contraction
in growth of 0.9% next year. Growth in the emerging markets is also expected to
slow to 4.2% in 2009.
Despite concerted efforts by central banks worldwide to cut interest rates
aggressively in response to the economic downturn, the lack of flow of liquidity
from monetary policy to the economy remained. Fiscal policy is now expected to
play a greater role as governments look to stimulate activity.
PORTFOLIO REVIEW
With the introduction of the Troubled Asset Recovery Plan ("TARP"), it appeared
that equity markets were likely to rally, and as a consequence, we cautiously
increased the Fund's exposure over the latter part of the reporting period.
Nonetheless, with fundamentals (unemployment, corporate earnings, etc.) still
looking bleak, our outlook remained cautious as evidenced by the Fund's
relatively high cash balance of 21.0% as of October 31, 2008. When the TARP plan
did not create the positive reaction we had expected, we took the decision to
de-risk the Fund's portfolio and reduce the Fund's equity exposure once again.
In order to compensate for our negative views towards equities, we recently
increased our exposure to high yield debt, an area where we saw relative value
especially as corporate spreads were trading at historically wide levels and
yields were in the mid-teens.
In the area of alternatives, with a strengthening U.S. dollar, we decreased the
Fund's emerging market debt exposure. This asset class has been strongly
negatively correlated with the U.S. dollar's performance, and subsequently, this
decision has been vindicated as the dollar has rallied further.
We also took the opportunity to add to our infrastructure allocation. This has
been an asset class which has traditionally shown a low correlation to global
equity markets, while also providing inflation linked returns.
OUTLOOK
We continue to acknowledge that our cyclical asset allocation model has moved
into the recession phase, which is generally a good stage for risk assets.
Indeed, equities are looking attractive in terms of valuation and arguably,
sentiment indicators are suggesting that equities are at over-sold levels.
However, we expect the Fund to remain underweight equities until we are more
confident on two fronts. The first is that we will require evidence that the
transmission mechanism between monetary policy and the real economy has returned
such that there is greater willingness by banks to lend and by consumers to
borrow. Secondly, an improvement in earnings visibility will be an important
step in encouraging a more positive stance on risk assets.
20
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 4, 2008)
Despite the weakness in the U.S. economy, we continue to favor the market for
its defensive qualities. We believe that the monetary environment in the region
is relatively benign and valuations remain attractive.
We remain neutral on UK equities. While the economy has tipped into recession,
the fall in Sterling and the Bank of England's appearance of being forthcoming
with further cuts in interest rates offers support. Concerns that Sterling may
weaken further mean we are moving gradually from underweight to neutral in UK
equities. In contrast, the somewhat cyclical and high beta nature of the
European market suggests that equities look particularly vulnerable to
deterioration in the economic fundamentals.
Meanwhile, we continue to retain our negative outlook on emerging market
equities. The growth prospects of the sector have deteriorated as the slowdown
in the world economy and the decline in commodity prices starts to be a drag on
those markets. Within the emerging sector, we prefer emerging Asia as it has a
more broad-based economy, which is less reliant on commodity production.
Our positive stance on bonds remains with investment grade, high yield and
inflation-linked preferred over conventional government bonds. Government bonds
have rallied strongly in recent weeks given the prospect of the world economy
heading towards a recession, but they appear un-compelling on valuation grounds.
In comparison, high yield and investment grade are looking attractive in terms
of valuation given that spreads have widened to historical levels. Although,
there is the risk of further spread widening, we believe that most of the bad
news has already been discounted by the markets.
We remain cautious on commodities, property, hedge funds and private equity. We
expect that the prospect of a recession in the world economy and the slowdown in
China could put a dampener on the demand for commodities. On the currency front,
we remain positive on the U.S. dollar, negative on Sterling and Euros and
neutral on the Japanese Yen and the Swiss Franc.
21
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
THE SCHRODER MULTI-ASSET GROWTH PORTFOLIO -- INVESTOR, ADVISOR, CLASS A,
AND CLASS R SHARES, VS. THE MORGAN STANLEY CAPITAL
INTERNATIONAL (MSCI) WORLD INDEX, AND THE CONSUMER PRICE INDEX
(PERFORMANCE GRAPH)
Schroder Multi-Asset Schroder Multi-Asset Schroder Multi-Asset Schroder Multi-Asset
Growth Portfolio, Growth Portfolio, Growth Portfolio, Growth Portfolio, MSCI World Consumer
Investor Shares Advisor Shares A Shares R Shares Index Price Index
-------------------- -------------------- -------------------- -------------------- ---------- -----------
12/20/07 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
10/31/08 7,010 7,000 6,685 6,980 6,270 10,309
The MSCI World Index is an unmanaged market capitalization index that is
designed to measure global developed market equity performance. The Consumer
Price Index is a measure of the average change over time in the prices paid by
urban consumers for a market basket of consumer goods and services.
PERFORMANCE INFORMATION
Cumulative
Since
Inception (a)
-------------
Schroder Multi-Asset Growth Portfolio --
Investor Shares ..................... (29.90)%
A Shares ............................ (30.00)%
Advisor Shares ...................... (30.00)%
R Shares ............................ (30.20)%
(a) From commencement of Fund operations on December 20, 2007.
"TOTAL RETURN" SHOWN ABOVE IS CALCULATED INCLUDING REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS. RESULTS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT
FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE
BEEN LOWER. 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.
TOP 5 HOLDINGS
SECURITY* % OF INVESTMENTS
- --------- ----------------
Schroder U.S. Small and Mid Cap Opportunities Fund 13.5%
Goldman Sachs High Yield Fund 10.9
iShares iBoxx Investment Grade Corporate Bond Fund 9.0
Schroder International Alpha Fund 8.8
Schroder International Diversified Value Fund 6.4
* Excludes any Short-Term Investments.
22
SCHRODER INTERNATIONAL ALPHA FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
COMMON STOCK - 94.9%
AUSTRALIA - 1.9%
46,663 Orica (3) 606,865
---------------
CANADA - 3.5%
26,185 Cameco 427,250
15,225 Niko Resources 664,803
---------------
1,092,053
CHINA - 4.0%
15,253 Ctrip.com International ADR 466,437
316,800 Dongfang Electric Class H (3) 616,758
346,000 Industrial & Commercial Bank of
China Class H (3) 162,809
---------------
1,246,004
DENMARK - 1.4%
29,753 Danske Bank (3) 440,567
---------------
FRANCE - 5.2%
27,398 AXA (3) 523,353
12,307 GDF Suez (3) 547,767
9,789 Groupe Danone (3) 544,998
---------------
1,616,118
GERMANY - 6.6%
23,381 E.ON (3) 876,099
5,239 Linde (3) 433,436
6,159 Siemens (3) 362,142
21,085 ThyssenKrupp (3) 399,317
---------------
2,070,994
GREECE - 1.3%
37,898 EFG Eurobank Ergasias (3) 411,891
---------------
HONG KONG - 10.8%
550,000 China Unicom Hong Kong (3) 785,283
2,212,000 Denway Motors (3) 551,673
104,900 Esprit Holdings (3) 596,087
448,000 Shangri-La Asia (3) 634,328
23,000 Sun Hung Kai Properties (3) 201,517
89,000 Swire Pacific Class A (3) 626,840
---------------
3,395,728
ISRAEL - 2.2%
182,661 Makhteshim-Agan Industries (3) 694,475
---------------
ITALY - 2.0%
170,493 Intesa Sanpaolo (3) 623,915
---------------
JAPAN - 9.6%
14,500 Canon (3) 507,379
34,200 Mitsubishi (3) 573,255
114,000 Sekisui Chemical (3) 666,064
25,800 Square Enix (3) 649,995
44,900 Ushio (3) 606,575
---------------
3,003,268
Shares Value $
- --------------- ---------------
LUXEMBOURG - 1.1%
13,082 ArcelorMittal (3) 339,590
---------------
NETHERLANDS - 5.0%
6,246 Koninklijke Philips Electronics (3) 115,412
37,825 SBM Offshore (3) 665,268
31,887 Unilever (3) 768,372
---------------
1,549,052
NORWAY - 0.5%
23,859 Telenor (3) 142,536
---------------
SINGAPORE - 3.3%
60,784 Jardine Strategic Holdings (3) 738,703
236,000 Keppel Land (3) 303,502
---------------
1,042,205
SOUTH KOREA - 0.6%
21,109 Daewoo Shipbuilding & Marine
Engineering (3) 200,977
---------------
SWITZERLAND - 12.7%
13,177 Credit Suisse Group (3) 492,739
27,314 Nestle (3) 1,062,159
16,758 Novartis (3) 850,603
7,083 Roche Holding (3) 1,083,181
2,534 Syngenta (3) 473,689
---------------
3,962,371
TAIWAN - 1.5%
55,668 Taiwan Semiconductor
Manufacturing ADR 459,818
---------------
UNITED KINGDOM - 21.7%
72,876 Admiral Group (3) 1,079,643
47,908 BG Group (3) 703,983
141,878 Rexam (3) 854,379
14,624 Rio Tinto (3) 682,679
219,411 Sage Group (3) 613,853
129,251 Tesco (3) 707,724
77,894 Venture Production (3) 508,022
577,011 Vodafone Group (3) 1,109,290
90,935 WPP Group (3) 543,600
---------------
6,803,173
---------------
TOTAL COMMON STOCK
(Cost $47,771,728) 29,701,600
---------------
EQUITY-LINKED WARRANTS (1) (2) - 2.6%
INDIA - 2.6%
204,163 Infrastructure Development
Finance Company
Expires 07/15/13 238,871
The accompanying notes are an integral part of the financial statements.
23
SCHRODER INTERNATIONAL ALPHA FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
136,608 Shriram Transport Finance
Expires 01/18/13 590,146
---------------
TOTAL EQUITY-LINKED WARRANTS
(Cost $1,792,922) 829,017
---------------
Principal
Amount $
- ---------------
SHORT-TERM INVESTMENT - 2.6%
803,997 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $803,997) 803,997
---------------
TOTAL INVESTMENTS - 100.1%
(Cost $50,368,647) 31,334,614
---------------
OTHER ASSETS LESS LIABILITIES - (0.1)% (28,176)
---------------
NET ASSETS - 100.0% $ 31,306,438
===============
(1) Securities are not readily marketable.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutions. On October 31, 2008, the
value of these securities amounted to $829,017, representing 2.6% of the
net assets of the Fund.
(3) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
ADR - American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
24
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
COMMON STOCK - 98.7%
AUSTRALIA - 2.7%
18,320 Abacus Property Group REIT (3) 4,060
6,960 Aditya Birla Minerals (3) 1,272
7,062 Aspen Group REIT (3) 3,220
1,613 Australia & New Zealand Banking
Group (3) 18,918
2,668 Caltex Australia (3) 16,813
10,757 Centro Retail Group REIT (3) 805
2,895 Challenger Financial Services
Group (3) 3,194
2,249 City Pacific (3) 196
28,723 Commonwealth Property Office
Fund REIT (3) 25,395
20,282 Goodman Fielder (3) 22,520
11,208 GPT Group REIT (3) 5,612
18,014 ING Industrial Fund REIT (3) 4,090
19,042 ING Office Fund REIT (3) 13,970
27,747 Macquarie CountryWide Trust
REIT (3) 4,437
15,703 Macquarie DDR Trust REIT (3) 975
36,636 Macquarie Office Trust REIT (3) 7,051
2,959 McPherson's (2)(3) 4,191
10,177 Minara Resources (3) 7,024
5,819 Mirvac Group REIT (2)(3) 3,811
4,452 Mirvac REIT (3) 1,317
11,656 Pacific Brands (3) 7,823
15,922 Qantas Airways (3) 25,875
10,664 Rubicon America Trust REIT 113
1,699 Sims Group (3) 16,301
20,070 SP Telemedia (3) 1,524
5,754 Stockland REIT (3) 15,481
1,584 Timbercorp (3) 540
7,449 Tishman Speyer Office Fund
REIT (3) 1,577
15,487 Valad Property Group REIT (3) 878
---------------
218,983
AUSTRIA - 0.6%
309 Austria Technologie &
Systemtechnik (3) 1,367
587 OMV (3) 18,788
2,101 Telekom Austria (3) 25,812
---------------
45,967
BELGIUM - 2.9%
1,018 Belgacom (3) 34,826
70 Cofinimmo REIT (3) 8,722
545 Delhaize Group (3) 30,647
1,843 Dexia (3) 9,801
551 Econocom Group (3) 4,563
622 Euronav (3) 9,092
1,604 Fortis (3) 1,858
650 InBev (3) 26,214
136 Intervest Offices REIT (3) 4,167
Shares Value $
- --------------- ---------------
949 KBC Ancora (3) 28,207
298 KBC Groep (3) 12,810
422 Mobistar (3) 28,001
46 Retail Estates REIT (3) 1,906
205 Solvay (3) 19,066
321 Tessenderlo Chemie (3) 12,697
66 Wereldhave Belgium REIT (3) 3,847
---------------
236,424
BERMUDA - 1.4%
3,963 Catlin Group (3) 22,132
700 Frontline (3) 21,797
4,920 Hiscox (3) 19,483
3,533 Lancashire Holdings (3) 19,482
3,000 Seadrill (3) 28,918
---------------
111,812
BRAZIL - 1.2%
420 Brasil Telecom Participacoes ADR 14,385
1,100 Braskem ADR 9,493
900 Cia Energetica de Minas Gerais ADR 13,689
800 CPFL Energia 11,602
1,000 EDP - Energias do Brasil 10,769
1,400 Tele Norte Leste Participacoes ADR 19,012
700 Telecomunicacoes de Sao Paulo ADR 15,925
---------------
94,875
BRITISH VIRGIN ISLANDS - 0.0%
5,357 Livermore Investments Group 1,206
---------------
CANADA - 7.1%
1,400 AGF Management Class B 15,364
300 AltaGas Income Trust 4,776
3,400 Amerigo Resources 1,687
700 Atco Class I 22,774
981 Baytex Energy Trust 16,971
1,600 Bell Aliant Regional Communications 31,770
1,700 Biovail 14,565
900 Bonavista Energy Trust 15,876
400 Empire Class A 15,217
1,800 Energy Savings Income Fund (3) 18,161
682 Enerplus Resources Fund 18,216
340 Enerplus Resources Fund (Canada) 9,124
1,442 GAZ Metro LP 16,707
700 George Weston 35,608
2,902 Gerdau Ameristeel 16,077
1,200 Husky Energy 35,925
1,000 InnVest REIT 4,507
300 Magna International Class A 10,033
600 Manitoba Telecom Services 21,133
1,700 Methanex 19,247
400 Mullen Group Income Fund 4,965
800 Northbridge Financial 19,795
718 Parkland Income Fund 4,216
1,500 Power Corp. of Canada 32,501
1,300 Precision Drilling Trust 13,976
The accompanying notes are an integral part of the financial statements.
25
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
1,100 Progress Energy Trust 8,733
1,400 Provident Energy Trust 8,926
2,200 Superior Plus Income Fund 21,814
1,800 Teck Cominco (United States) Class B 17,658
1,100 TELUS 38,726
1,600 Total Energy Services Trust 6,060
1,400 TransForce 5,685
1,200 Trinidad Drilling 6,748
700 Vermilion Energy Trust 17,309
700 Vicwest Income Fund 4,261
300 Wajax Income Fund 5,954
900 Yellow Pages Income Fund 6,512
---------------
567,577
CHILE - 0.0%
200 Administradora de Fondos
de Pensiones Provida 2,850
---------------
CHINA - 0.3%
9,500 China COSCO Holdings Class H (3) 5,118
19,000 China Shineway Pharmaceutical
Group (3) 7,199
10,000 Jiangxi Copper Class H (3) 4,916
24,000 People's Food Holdings (3) 6,569
4,500 Weiqiao Textile Class H (3) 922
---------------
24,724
CZECH REPUBLIC - 0.3%
1,215 Telefonica O2 Czech Republic (3) 26,021
---------------
DENMARK - 0.2%
150 Amagerbanken (3) 1,732
1,100 Danske Bank (3) 16,288
---------------
18,020
FINLAND - 1.8%
1,016 Elisa (3) 15,281
644 Huhtamaki (3) 4,314
400 Kesko Class B Shares (3) 9,362
38 Lemminkainen (1)(3) 652
1,706 Neste Oil (3) 26,980
1,122 Nokia (3) 17,185
1,254 Outokumpu (3) 12,994
1,242 PKC Group (3) 6,434
600 Rautaruukki (3) 9,791
2,248 Stora Enso Class R Shares (3) 20,903
905 UPM-Kymmene (3) 12,796
962 YIT (3) 5,990
---------------
142,682
FRANCE - 7.2%
1,300 Air France-KLM (3) 18,728
1,609 AXA (3) 30,735
486 BNP Paribas (3) 35,086
588 Bouygues (3) 25,034
462 CNP Assurances (3) 37,223
138 Compagnie Plastic-Omnium (3) 1,497
Shares Value $
- --------------- ---------------
2,420 Credit Agricole (3) 35,006
26 Credit Industriel et Commercial (3) 3,748
201 Esso Ste Anonyme Francaise (3) 23,114
444 Euler Hermes (3) 21,870
200 Fonciere Des Regions REIT (3) 13,224
1,316 France Telecom (3) 33,180
374 Gecina REIT (3) 25,970
361 Groupe Steria (3) 4,727
6,515 Natixis (3) 14,426
463 Nexity (3) 4,032
479 Peugeot (3) 12,781
254 Pierre & Vacances (3) 11,631
280 Rallye (3) 5,670
403 Renault (3) 12,350
1,864 Rexel (3) 18,174
677 Sanofi-Aventis (3) 42,888
1,353 SCOR (3) 22,164
126 Societe de la Tour Eiffel REIT (3) 7,105
1 Societe Generale (3) 54
169 Ste Industrielle d'Aviation Latecoere (3) 1,357
659 Thomson (3) 924
659 Total (3) 36,250
39 Total Gabon (3) 13,888
949 Valeo (3) 16,529
228 Vallourec (3) 25,501
824 Vivendi (3) 21,536
---------------
576,402
GERMANY - 5.6%
241 Allianz (3) 17,685
48 Allianz (France) (3) 3,698
730 BASF (3) 24,097
765 Bayerische Motoren Werke (3) 19,397
61 Boewe Systec (3) 587
612 Commerzbank (3) 6,513
814 Continental (3) 33,446
525 Daimler (3) 17,796
440 Deutsche Bank (3) 16,435
269 Deutsche Beteiligungs (3) 3,578
2,262 Deutsche Lufthansa (3) 31,325
1,416 Deutsche Post (3) 15,524
2,495 Deutsche Telekom (3) 36,600
615 E.ON (3) 23,044
1,166 Hannover Rueckversicherung (3) 28,862
566 Heidelberger Druckmaschinen (3) 5,304
1,253 Hypo Real Estate Holding (3) 8,159
906 IKB Deutsche Industriebank (1)(3) 1,767
455 Indus Holding (3) 8,037
285 Koenig & Bauer (3) 3,083
993 Lanxess (3) 15,027
370 Leoni (3) 4,589
130 MPC Muenchmeyer Petersen
Capital (3) 1,150
269 Muenchener Rueckversicherungs (3) 34,918
573 Norddeutsche Affinerie (3) 18,302
The accompanying notes are an integral part of the financial statements.
26
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
383 RWE (3) 31,395
297 Salzgitter (3) 19,122
125 Schlott Gruppe (3) 1,238
256 Sixt (3) 3,867
1,197 SQS Software Quality Systems (3) 4,297
691 ThyssenKrupp (3) 13,086
---------------
451,928
GREECE - 0.7%
1,277 Alpha Bank (3) 18,642
1,473 EFG Eurobank Ergasias (3) 16,009
1,253 Hellenic Petroleum (3) 10,380
992 Motor Oil Hellas Corinth Refineries (3) 10,758
---------------
55,789
GUERNSEY - 0.1%
5,219 ISIS Property Trust 2 (3) 4,865
---------------
HONG KONG - 4.0%
18,000 Asia Financial Holdings (3) 5,188
26,000 Cathay Pacific Airways (3) 31,730
14,000 CCT Telecom Holdings (3) 480
49,000 Champion REIT (3) 11,765
66,822 Champion Technology Holdings (3) 1,515
20,000 Chinese Estates Holdings (3) 15,367
4,000 Chow Sang Sang Holding (3) 1,783
30,000 Cnpc Hong Kong (3) 9,199
16,000 Fountain SET Holdings (3) 498
9,000 Great Eagle Holdings (3) 10,333
4,000 Guoco Group (3) 23,495
6,000 Hongkong Land Holdings (3) 16,317
30,000 Hung Hing Printing Group (3) 3,728
3,000 Hutchison Whampoa (3) 16,213
1,600 Jardine Matheson Holdings (3) 37,868
8,500 Kingboard Chemical Holdings (3) 16,969
22,000 Kingboard Laminates Holdings (3) 5,388
15,000 Kowloon Development (3) 5,087
22,000 Lerado Group Holdings (3) 1,203
19,000 New World Development (3) 15,817
28,000 Norstar Founders Group (3) 3,370
5,500 Orient Overseas International (3) 9,822
58,000 Pacific Andes International Holdings (3) 3,648
25,000 Pacific Basin Shipping (3) 13,387
2,781 Prosperity Minerals Holdings (3) 911
18,000 Public Financial Holdings (3) 6,537
44,000 Regal REIT (3) 4,123
24,000 Silver Grant International (3) 1,612
30,000 SIM Technology Group (3) 1,306
48,000 Sinolink Worldwide Holdings (3) 2,756
90,000 Solomon Systech International (3) 1,407
11,000 Sun Hung Kai (3) 4,677
21,000 Sunlight REIT (3) 3,224
14,000 TPV Technology (3) 2,780
Shares Value $
- --------------- ---------------
7,200 Transport International Holdings (3) 17,340
5,000 Varitronix International (3) 1,065
18,000 Victory City International Holdings (3) 2,302
3,000 VTech Holdings (3) 11,175
16,000 Xiwang Sugar Holdings (3) 1,941
---------------
323,326
HUNGARY - 0.5%
5,413 Magyar Telekom
Telecommunications (3) 17,392
335 MOL Hungarian Oil & Gas (3) 18,404
---------------
35,796
INDIA - 0.1%
1,900 Tata Motors ADR 11,115
---------------
INDONESIA - 0.2%
65,000 Aneka Tambang (3) 6,176
7,000 Astra Agro Lestari 3,921
36,000 International Nickel Indonesia (3) 5,777
---------------
15,874
IRELAND - 1.1%
5,409 Allied Irish Banks (3) 28,808
3,548 Anglo Irish Bank (3) 11,387
1,501 Bank of Ireland (3) 4,432
2,733 C&C Group (3) 3,975
1,065 DCC (3) 16,598
753 FBD Holdings (3) 10,962
1,959 Irish Life & Permanent (3) 6,700
5,133 McInerney Holdings (3) 1,573
---------------
84,435
ISRAEL - 1.1%
3,959 Bank Hapoalim (3) 9,001
4,582 Bank Leumi Le-Israel (3) 12,069
15,580 Bezeq Israeli Telecommunication (3) 23,355
80 Delek Group (3) 5,246
665 IDB Development (3) 7,880
361 IDB Holding (3) 5,688
5,619 Migdal Insurance & Financial Holding (3) 3,851
1,840 Mizrahi Tefahot Bank (3) 9,671
743 Partner Communications (3) 13,665
---------------
90,426
ITALY - 5.2%
14,452 Banca Monte dei Paschi di Siena (3) 28,055
1,765 Banca Popolare dell'Emilia Romagna (3) 21,987
3,453 Banca Popolare di Milano (3) 20,207
291 Banco di Sardegna (3) 3,566
1,667 Banco Popolare (3) 20,793
2,182 Caltagirone (3) 8,137
8,978 Cofide (3) 4,305
5,016 Enel (3) 33,555
The accompanying notes are an integral part of the financial statements.
27
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
1,487 ENI (3) 35,488
32 ErgyCapital (1)(3) 20
2,480 Fiat (3) 19,676
1,078 Fondiaria-Sai (3) 20,250
802 Indesit (3) 6,533
7,162 Intek (3) 3,489
7,679 Intesa Sanpaolo (3) 28,101
204 Italmobiliare (3) 8,378
3,269 KME Group (3) 2,042
1,516 Mediolanum (3) 5,944
1,746 Milano Assicurazioni (3) 5,707
9,553 Pirelli & C (3) 3,368
171 Pirelli & C Real Estate (3) 1,213
9,025 Saras (3) 31,751
51,939 Seat Pagine Gialle (3) 4,556
23,910 Telecom Italia (3) 27,464
7,542 UniCredit (3) 18,461
1,861 Unione di Banche Italiane (3) 31,392
13,810 Unipol Gruppo Finanziario (3) 24,499
---------------
418,937
JAPAN - 21.6%
2,300 ADEKA (3) 14,536
1,300 Aica Kogyo (3) 11,540
1,300 Aichi (3) 4,674
4,000 Aichi Steel (3) 13,922
2,000 Aida Engineering (3) 7,321
1,500 Aisan Industry (3) 9,580
1,700 Aisin Seiki (3) 30,082
1,400 Amano (3) 9,369
3,000 Ando (3) 4,243
1,300 Aoyama Trading (3) 15,199
3,000 Arnest One (3) 3,870
9 Asset Managers Holdings (3) 605
700 Belluna (3) 1,907
2,600 Brother Industries (3) 17,737
2,000 Bunka Shutter (3) 7,587
800 Canon Finetech (3) 7,836
1,800 Canon Marketing Japan (3) 30,112
500 Century Leasing System (3) 3,278
400 Chiyoda Integre (3) 4,923
4,000 Chuo Mitsui Trust Holdings (3) 15,782
1,300 CKD (3) 4,346
2,000 Commuture (3) 9,692
4 Creed Office Investment REIT (3) 2,644
3 DA Office Investment REIT (3) 5,787
1,000 Daifuku (3) 5,380
1,000 Daiichi Jitsugyo (3) 2,857
8,000 Daikyo (3) 8,404
1,600 Denso (3) 31,185
9,000 DIC (3) 14,547
300 Doshisha (3) 3,333
500 Excel (3) 3,421
13 Fintech Global (3) 504
Shares Value $
- --------------- ---------------
600 Fuji (3) 1,342
600 Fuji Electronics (3) 4,355
600 Fuji Machine Manufacturing (3) 5,181
1,600 FUJIFILM Holdings (3) 36,833
1,200 Fujikura Rubber (3) 3,724
4,000 Furukawa-Sky Aluminum (3) 7,987
600 Furusato Industries (3) 5,079
2 Grandy House (3) 345
360 Gulliver International (3) 5,553
1,000 Harima Chemicals (3) 4,339
5,000 Hitachi Cable (3) 10,531
3,000 Hitachi Kokusai Electric (3) 14,254
1,600 Honda Motor (3) 39,785
970 Honeys (3) 5,704
12 Hoosiers (3) 913
1,000 Hosokawa Micron (3) 3,769
4,000 Ichiken (3) 4,193
5 ITC Networks (3) 7,472
4,000 ITOCHU (3) 21,139
2,400 Itochu Enex (3) 12,104
1,300 Itoki (3) 4,121
3,000 Iwasaki Electric (3) 3,641
800 Japan General Estate (3) 1,760
3 Japan Hotel and Resort REIT (3) 3,606
3 Japan Retail Fund Investment REIT (3) 10,835
700 JBCC Holdings (3) 4,355
1,400 JFE Holdings (3) 35,722
700 Joint (3) 962
4 Joint REIT Investment (3) 3,650
600 Kaga Electronics (3) 6,246
2,000 Kanamoto (3) 6,409
1,400 Kanto Auto Works (3) 17,012
2,000 Kasai Kogyo (3) 4,462
4,000 Kawasaki Kisen Kaisha (3) 15,848
1,000 Keihanshin Real Estate (3) 3,867
900 Keihin (3) 8,044
500 Kintetsu World Express (3) 7,257
700 Koa (3) 3,625
700 Kojima (3) 2,639
900 Komori (3) 10,290
600 Kuroda Electric (3) 4,677
200 Kyoshin Technosonic (3) 879
2,000 Makino Milling Machine (3) 5,798
1,000 Meiwa Estate (3) 4,528
4 MID REIT (3) 5,363
1,000 Mikuni (3) 1,453
8,000 Mitsubishi Chemical Holdings (3) 32,341
3,000 Mitsubishi Materials (3) 6,774
9,000 Mitsubishi Rayon (3) 19,321
3,000 Mitsui (3) 29,069
6,000 Mitsui Chemicals (3) 20,949
2,000 Mitsui Home (3) 8,340
44 Mitsui Knowledge Industry (3) 7,537
The accompanying notes are an integral part of the financial statements.
28
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
6,000 Mitsui OSK Lines (3) 31,331
1,400 Mori Seiki (3) 12,084
600 Muto Seiko (3) 2,486
300 Nafco (3) 3,157
1,000 Namura Shipbuilding (3) 2,299
700 NEC Leasing (3) 6,168
600 NEC Mobiling (3) 8,379
1,700 Neturen (3) 10,116
800 Nihon Eslead (3) 4,093
3,000 Nihon Yamamura Glass (3) 5,975
3,000 Nippon Light Metal (3) 2,835
6,000 Nippon Mining Holdings (3) 18,368
1,000 Nippon Pillar Packing (3) 3,571
5 Nippon Residential Investment REIT (3) 2,691
4,000 Nippon Steel (3) 13,464
3,000 Nippon Steel Trading (3) 5,049
8 Nippon Telegraph & Telephone (3) 32,646
1,000 Nippon Thompson (3) 5,008
2,000 Nippon Valqua Industries (3) 4,551
6,900 Nissan Motor (3) 34,268
2,000 Nissan Shatai (3) 13,063
10,000 Nisshin Steel (3) 13,392
3,000 Nissin (3) 8,558
500 Nitta (3) 5,587
700 Nittan Valve (3) 2,317
18 NTT DoCoMo (3) 28,547
2,000 Okamoto Machine Tool Works (3) 2,380
5 Okinawa Cellular Telephone (3) 8,780
3,000 OKK (3) 3,187
1,000 OKUMA (3) 4,397
2,400 Omron (3) 34,265
500 Onoken (3) 5,312
400 Osaka Steel (3) 3,994
600 Otsuka Kagu (3) 3,958
2,000 Pacific Industrial (3) 6,584
2,000 Pacific Metals (3) 8,829
450 Pal (3) 2,951
2,000 Riken (3) 5,806
5,000 Ryobi (3) 10,270
2,000 Ryoden Trading (3) 10,198
1,100 Ryosan (3) 20,929
3,000 Sakai Chemical Industry (3) 7,573
3,000 San-Ai Oil (3) 11,390
600 Sanei-International (3) 6,239
1,200 Sanoh Industrial (3) 5,664
700 Sanshin Electronics (3) 7,510
4,000 Sanwa Holdings (3) 13,270
5 Sapporo Hokuyo Holdings (3) 21,564
900 Sato Shoji (3) 5,923
2,000 Seika (3) 3,591
1,000 Sekisui Jushi (3) 6,335
3,000 Sharp (3) 21,412
13 Shidax (3) 4,335
Shares Value $
- --------------- ---------------
600 Shinhokoku Steel (3) 1,567
900 Shinko Shoji (3) 5,966
2,000 Shinmaywa Industries (3) 5,248
2,000 Shinwa Kaiun Kaisha (3) 4,727
3,400 Showa Shell Sekiyu (3) 27,776
1,100 Sorun (3) 5,323
2,100 Sumco (3) 22,741
6,000 Sumikin Bussan (3) 12,537
8,000 Sumitomo Light Metal Industries (3) 6,588
3,000 Sumitomo Metal Mining (3) 22,498
8 Tact Home (3) 2,619
4,000 Taihei Kogyo (3) 9,203
12,000 Taiheiyo Cement (3) 13,968
1,100 Taiho Kogyo (3) 7,297
400 Takachiho Electric (3) 3,420
460 Takefuji (3) 3,698
300 Takeuchi Manufacturing (3) 2,433
4,000 Takisawa Machine Tool (3) 3,612
2,000 TBK (3) 3,863
800 TDK (3) 27,031
3,000 Toho Zinc (3) 6,157
1,000 Tokai Lease (3) 1,331
5,000 Tokai Tokyo Securities (3) 13,697
4,000 Tomoku (3) 6,564
1,000 Toppan Printing (3) 7,353
2,000 Toshiba Machine (3) 5,737
3,000 Toshiba TEC (3) 9,263
7,000 Tosoh (3) 13,958
1,400 Toyo Machinery & Metal (3) 2,847
1,700 Toyota Auto Body (3) 27,254
900 Toyota Motor (3) 35,146
1,000 Trinity Industrial (3) 4,078
400 Trusco Nakayama (3) 5,251
1,700 Unipres (3) 13,927
200 USC (3) 1,779
1,000 Yachiyo Industry (3) 7,337
2,200 Yamaha Motor (3) 24,323
1,700 Yamazen (3) 5,371
4,000 Yokohama Rubber (3) 19,627
300 Yorozu (3) 2,476
600 Yusen Air & Sea Service (3) 6,442
---------------
1,740,867
LIECHTENSTEIN - 0.2%
225 Liechtenstein Landesbank (3) 12,477
---------------
MALAYSIA - 0.8%
16,100 DRB-Hicom (3) 3,270
8,400 Hong Leong Financial Group (3) 9,124
5,300 Lingui Development (3) 914
3,100 MNRB Holdings (3) 2,623
7,800 OSK Holdings (3) 2,218
1,418 OSK Property Holdings (3) 88
9,700 Padiberas Nasional (3) 3,169
6,200 Petronas Dagangan (3) 11,748
The accompanying notes are an integral part of the financial statements.
29
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
6,000 Shell Refining (3) 16,983
14,000 Titan Chemicals (3) 2,919
2,000 TM International (1)(3) 2,561
11,300 Unisem M (3) 2,727
15,457 YTL Power International (3) 7,287
---------------
65,631
MEXICO - 0.8%
1,600 Alfa Class A 3,158
9,700 Embotelladoras Arca 21,113
4,453 Gruma Class B (3) 2,903
7,500 Grupo Continental 11,668
25,400 Grupo Mexico, Series B 21,616
---------------
60,458
NETHERLANDS - 3.3%
2,705 Aegon (3) 11,238
313 Draka Holding (3) 3,779
863 Grontmij (3) 18,810
325 Hunter Douglas (3) 8,071
2,554 ING Groep (3) 23,955
253 KAS Bank (3) 4,066
779 Koninklijke DSM (3) 21,691
461 Nieuwe Steen Investments Funds REIT (3) 8,047
1,063 OCE (3) 4,919
1,363 Royal Dutch Shell Class A Shares (3) 37,424
1,300 Royal Dutch Shell Class B Shares (3) 35,223
2,886 Royal KPN (3) 40,639
2,249 SNS Reaal (3) 16,496
521 USG People (3) 5,445
446 Vastned Offices/Industrial REIT (3) 5,881
235 Vastned Retail REIT (3) 12,021
447 Wavin (3) 1,560
105 Wereldhave REIT (3) 8,726
---------------
267,991
NEW ZEALAND - 0.8%
13,956 Air New Zealand (3) 7,467
22,850 AMP NZ Office Trust REIT (3) 13,666
3,103 Fisher & Paykel Appliances Holdings (3) 2,451
1,497 Fletcher Building (3) 5,087
7,801 ING Property Trust REIT (3) 2,805
13,212 Telecom Corp. of New Zealand (3) 17,921
10,489 Vector (3) 12,643
---------------
62,040
NORWAY - 1.7%
9,000 ABG Sundal Collier Holding (3) 6,272
800 Acta Holding (3) 231
640 Aker Class A Shares (3) 14,368
2,100 Aker Solutions (3) 11,498
1,900 DnB NOR (3) 11,024
Shares Value $
- --------------- ---------------
2,400 SpareBank 1 SMN (3) 9,465
866 Sparebank 1 SR Bank (3) 4,661
500 Sparebanken 1 Nord-Norge (3) 3,587
350 Sparebanken More (3) 8,644
1,457 StatoilHydro (3) 29,341
1,600 Storebrand (3) 3,797
4,800 Telenor (3) 28,676
2,200 Veidekke (3) 6,819
---------------
138,383
PHILIPPINES - 0.3%
10,700 First Gen (1)(3) 3,033
6,500 First Philippine Holdings (3) 2,420
400 Globe Telecom (3) 7,454
200 Philippine Long Distance Telephone 8,180
24,400 Universal Robina (3) 2,610
---------------
23,697
POLAND - 0.6%
510 KGHM Polska Miedz (3) 5,662
1,148 Polski Koncern Naftowy Orlen (3) 11,707
4,052 Telekomunikacja Polska (3) 30,621
---------------
47,990
PORTUGAL - 0.6%
3,581 Portugal Telecom (3) 23,549
2,026 Redes Energeticas Nacionais (3) 6,588
1,886 Semapa-Sociedade de Investimento e
Gestao (3) 16,442
916 Sonae Industria (3) 2,414
---------------
48,993
SINGAPORE - 1.8%
17,000 Beyonics Technology (3) 1,172
21,000 CapitaCommercial Trust REIT (3) 14,432
28,000 Fortune REIT (3) 7,079
9,000 Frasers Commercial Trust (3) 1,509
18,000 Jurong Technologies Industrial (3) 1,065
52,000 K1 Ventures (3) 7,023
5,473 Kim Eng Holdings (3) 3,563
26,800 MobileOne (3) 23,868
4,733 Singapore Airlines (3) 36,277
6,000 Singapore Petroleum (3) 8,560
8,000 Suntec REIT (3) 3,831
15,000 UOB-Kay Hian Holdings (3) 9,317
11,000 UOL Group (3) 14,405
4,000 Venture (3) 14,623
2,000 Wing Tai Holdings (3) 934
---------------
147,658
SOUTH AFRICA - 0.4%
481 Astral Foods (3) 4,353
1,003 JD Group (3) 2,890
1,227 Liberty Group (3) 7,726
6,245 Metropolitan Holdings (3) 6,418
The accompanying notes are an integral part of the financial statements.
30
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
219 Nedbank Group (3) 2,129
1,129 Telkom (3) 12,269
---------------
35,785
SOUTH KOREA - 1.7%
160 Cambridge Members (3) 978
660 Chokwang Paint (3) 797
2,000 Dae Won Kang Up (3) 2,676
121 GS Home Shopping (3) 4,142
1,120 Hanil E-Wha (3) 1,453
210 Husteel (3) 2,306
190 Hyundai Motor (3) 8,872
160 INTOPS (3) 1,683
112 KB Financial Group (3) 2,805
190 Kolon Engineering & Construction (3) 572
160 Korea Development (3) 543
700 Korea Exchange Bank (3) 3,935
90 Korean Petrochemical Industries (3) 1,209
900 KT ADR 11,295
1,920 LG Telecom (3) 13,831
86 Nong Shim Holdings (3) 4,360
210 Pusan City Gas (3) 2,763
240 Samwhan (3) 1,658
49 SeAH Holdings (3) 2,465
2,500 Seowon (3) 906
490 Shell-Line (3) 3,871
220 SK Energy (3) 12,790
109 SK Gas (3) 3,930
500 SK Telecom ADR 8,605
580 SL (3) 1,371
623 S-Oil (3) 31,897
1,020 Tae Kyung Industrial (3) 3,001
250 Woori Finance Holdings (3) 1,356
---------------
136,070
SPAIN - 1.8%
1,778 Banco Bilbao Vizcaya Argentaria (3) 20,634
748 Banco Santander (3) 8,213
1,900 Banco Santander Central Hispano (3) 20,546
320 Bolsas y Mercados Espanoles (3) 7,808
10,313 Mapfre (3) 32,818
1,285 Repsol (3) 24,433
1,801 Telefonica (3) 33,342
---------------
147,794
SWEDEN - 2.4%
750 Axfood (3) 14,463
1,800 BE Group (3) 5,280
600 Bilia Class A Shares (3) 1,720
1,300 Billerud (3) 7,343
1,950 Boliden (3) 4,693
1,000 D Carnegie (3) 2,720
2,000 Electrolux, Series B (3) 18,423
1,700 Fabege (3) 6,743
600 Haldex (3) 2,799
Shares Value $
- --------------- ---------------
900 Hoganas Class B Shares (3) 12,666
300 Holmen Class B Shares (3) 8,461
900 KappAhl Holding (3) 3,337
2,500 Klovern (3) 5,024
2,200 Kungsleden (3) 10,649
1,300 NCC Class B Shares (3) 10,629
1,800 Skanska Class B Shares (3) 15,818
1,900 Svenska Cellulosa Class B Shares (3) 14,038
6,000 TeliaSonera (3) 26,413
800 Trelleborg Class B Shares (3) 4,785
2,500 Volvo Class A Shares (3) 12,927
---------------
188,931
SWITZERLAND - 2.4%
317 Baloise Holding (3) 16,948
144 Bellevue Group (3) 4,981
391 Credit Suisse Group (3) 14,621
32 Georg Fischer (3) 7,175
107 Helvetia Holding (3) 18,342
15 Schweizerische National-Versicherungs
Gesellschaft (3) 8,153
228 Swiss Life Holding (3) 20,544
524 Swiss Reinsurance (3) 21,853
123 Swisscom (3) 37,584
36 Valora Holding (3) 5,220
185 Zurich Financial Services (3) 37,532
---------------
192,953
TAIWAN - 2.7%
24,694 Advanced Semiconductor
Engineering (3) 10,519
23,099 AU Optronics (3) 16,135
2,454 AU Optronics ADR 16,933
126 Chunghwa Telecom ADR 2,074
2,100 Compal Communications (3) 1,310
30,300 Compal Electronics (3) 21,756
9,282 Coretronic (3) 5,947
7,000 Dah San Electric Wire & Cable (3) 1,865
906 Eclat Textile (3) 253
18,582 Far EasTone Telecommunications (3) 19,697
715 First Insurance (3) 144
7,000 Formosa Petrochemical (3) 15,999
53,000 HannStar Display (3) 9,652
32,550 Inventec (3) 10,205
10,050 Lite-On Technology (3) 6,278
7,000 Marketech International (3) 2,012
3,150 Mirle Automation (3) 1,781
15,713 Mitac International (3) 5,818
12,339 POU Chen (3) 5,627
3,150 Promate Electronic (3) 1,147
26,780 Quanta Computer (3) 28,200
9,000 Sheng Yu Steel (3) 5,018
16,000 Sinon (3) 4,351
5,249 Sunplus Technology (3) 2,201
The accompanying notes are an integral part of the financial statements.
31
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
6,000 U-Ming Marine Transport (3) 7,007
4,200 Unitech Printed Circuit Board (3) 1,251
16,575 Universal Scientific Industrial (3) 4,981
7,348 WT Microelectronics (3) 3,536
21,000 Yieh Phui Enterprise (3) 6,056
---------------
217,753
THAILAND - 0.7%
36,800 CalComp Electronics Thailand (3) 1,954
5,100 Electricity Generating (3) 8,678
8,000 Hana Microelectronics (3) 2,395
96,400 IRPC (3) 6,284
20,900 MCS Steel (3) 1,205
3,800 Padaeng Industry (3) 912
5,100 Precious Shipping (3) 1,138
2,600 PTT (3) 11,946
4,400 Regional Container Lines (3) 657
1,600 Siam Cement (3) 4,839
3,600 Thai Airways International (3) 794
16,800 Thai Oil (3) 10,066
11,800 Thai Plastic & Chemical (3) 3,544
5,900 Thanachart Capital (3) 1,223
---------------
55,635
TURKEY - 0.4%
1,700 Aksa Akrilik Kimya Sanayii (3) 1,761
2,011 Bolu Cimento Sanayii (3) 1,462
1,178 Ford Otomotiv Sanayi (3) 3,716
1,140 Mardin Cimento Sanayii (3) 2,605
1,695 Sarkuysan Elektrolitik Bakir (3) 2,182
1,149 Tupras Turkiye Petrol Rafine (3) 14,548
6,500 Turkiye Vakiflar Bankasi Tao (3) 6,365
---------------
32,639
UNITED KINGDOM - 9.4%
3,046 Acertec 245
2,359 Antofagasta (3) 14,566
6,557 Ashmore Group (3) 17,252
840 AstraZeneca (3) 35,575
3,710 Aviva (3) 22,116
6,869 Barclays (3) 19,678
1,384 Barratt Developments (3) 1,722
6,061 Beazley Group (3) 10,326
1,433 Bellway (3) 12,476
4,623 BP (3) 37,660
967 Braemar Shipping Services (3) 4,542
2,675 Brit Insurance Holdings (3) 7,862
9,165 British Airways (3) 20,266
1,388 British Land (3) 13,832
920 British Polythene Industries (3) 2,704
12,553 BT Group (3) 23,572
1,162 Capital & Regional (3) 857
869 Carnival (3) 19,098
6,848 Centrica (3) 33,628
9,886 Chaucer Holdings (3) 9,231
2,439 Chesnara (3) 4,168
Shares Value $
- --------------- ---------------
6,947 Clinton Cards (3) 1,762
1,805 Close Brothers Group (3) 15,696
3,282 Colliers Cre (3) 825
3,848 Dart Group (3) 1,623
1,726 Davis Service Group (3) 6,140
1,586 Dawson Holdings (3) 1,290
6,055 Debenhams (3) 3,727
3,219 Drax Group (3) 29,893
5,794 DS Smith (3) 6,212
16,747 DSG International (3) 8,713
8,352 Electrocomponents (3) 19,143
11,520 Ennstone (3) 873
11,188 Friends Provident (3) 12,821
2,048 GlaxoSmithKline (3) 39,345
8,363 HBOS (3) 13,685
9,524 Henderson Group (1)(3) 8,141
8,449 Home Retail Group (3) 26,912
1,360 HSBC Holdings (3) 16,098
1,029 Investec (3) 3,905
6,366 Johnston Press (3) 2,542
11,027 Kcom Group (3) 3,206
7,722 Kesa Electricals (3) 9,910
81 Kier Group (3) 888
9,586 Kingfisher (3) 17,682
2,822 Ladbrokes (3) 7,187
18,146 Legal & General Group (3) 20,856
4,730 Lloyds TSB Group (3) 15,278
393 Mapeley (3) 1,546
2,706 Marston's (3) 4,138
2,271 McBride (3) 4,600
3,467 Millennium & Copthorne Hotels (3) 11,809
238 Mondi (3) 863
191 Northgate (3) 393
1,338 office2office (3) 1,902
20,560 Old Mutual (3) 16,638
4,528 Paragon Group (3) 3,378
10,545 Pendragon (3) 864
1,994 Persimmon (3) 9,647
10,473 Premier Foods (3) 4,641
1,335 Redrow (3) 4,462
11,612 Royal Bank of Scotland Group (3) 12,783
1,536 RPC Group (3) 2,679
400 Stolt-Nielsen (3) 4,140
11,659 Tomkins (3) 21,386
665 Travis Perkins (3) 3,145
3,038 TT electronics (3) 2,312
11,512 Vodafone Group (3) 22,131
2,171 Wolseley (3) 11,873
24,233 Woolworths Group (3) 1,663
4,296 Yell Group (3) 4,261
---------------
756,983
---------------
TOTAL COMMON STOCK
(Cost $14,176,400) 7,940,762
---------------
The accompanying notes are an integral part of the financial statements.
32
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
PREFERRED STOCK - 0.9%
BRAZIL - 0.7%
1,400 AES Tiete 8,748
700 Bradespar 6,160
200 Centrais Eletricas de Santa Catarina Class B 3,048
300 Cia Energetica do Ceara Class A 2,220
720 Eletropaulo Metropolitana Eletricidade
de Sao Paulo Class B 8,851
700 Telemar Norte Leste Class A 17,616
1,000 Usinas Siderurgicas de Minas Gerais Class A 12,802
---------------
59,445
CHILE - 0.0%
1,269 Embotelladora Andina 2,129
---------------
GERMANY - 0.2%
253 Dyckerhoff (3) 10,577
918 ProSiebenSat.1 Media (3) 2,833
---------------
13,410
---------------
TOTAL PREFERRED STOCK
(Cost $ 121,732) 74,984
---------------
RIGHTS - 0.0%
BELGIUM - 0.0%
1,604 Fortis (1)(2)(3), Expires 07/14
(Cost $--) --
---------------
Principal
Amount $
- --------------
SHORT-TERM INVESTMENT - 1.2%
94,381 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $ 94,381) 94,381
---------------
TOTAL INVESTMENTS - 100.8%
(Cost $ 14,392,513) 8,110,127
---------------
OTHER ASSETS LESS LIABILITIES - (0.8)% (64,901)
---------------
NET ASSETS - 100.0% $ 8,045,226
===============
(1) Denotes non-income producing security.
(2) Security considered illiquid. On October 31, 2008 the value of these
securities amounted to $8,002 representing 0.1% of the net assets of the
Fund.
(3) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
ADR - American Depositary Receipt
LP - Limited Partnership
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
33
SCHRODER EMERGING MARKET EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
COMMON STOCK - 92.6%
BRAZIL - 9.8%
900 All America Latina Logistica 4,151
19,926 Banco Bradesco ADR 233,134
3,700 BM&FBOVESPA 9,833
3,900 Brasil Telecom Participacoes 82,012
3,300 Centrais Eletricas Brasileiras 39,609
8,425 Cia de Concessoes Rodoviarias 80,991
2,100 Cia Siderurgica Nacional ADR 28,560
3,100 Cia Vale do Rio Doce 39,830
21,600 Cia Vale do Rio Doce ADR 257,166
1,100 Empresa Brasileira de Aeronautica 5,643
400 Gerdau 2,117
3,700 Gerdau ADR 23,717
200 Global Village Telecom Holding (1) 2,177
200 Perdigao 2,910
6,000 Petroleo Brasileiro 79,530
22,000 Petroleo Brasileiro ADR 485,540
2,300 Tam ADR 24,334
4,191 Unibanco-Uniao de Bancos 139,217
3,920 Usinas Siderurgicas de Minas Gerais 44,930
22,300 Weg 126,769
---------------
1,712,170
CHINA - 10.4%
29,000 China Coal Energy Class H (2) 17,590
206,000 China Communications Services Class H (2) 108,334
355,000 China Construction Bank Class H (2) 176,118
72,000 China Life Insurance Class H (2) 192,424
25,000 China Merchants Bank Class H (2) 38,303
214,000 China National Building Material Class H (2) 124,631
522,000 China Petroleum & Chemical Class H (2) 342,800
121,000 Golden Eagle Retail Group (2) 63,266
168,000 Hidili Industry International Development (2) 35,561
676,000 Industrial & Commercial Bank of China
Class H (2) 318,090
110,000 Parkson Retail Group (2) 102,115
67,500 Ping An Insurance Group of China Class H (2) 288,696
---------------
1,807,928
COLOMBIA - 0.5%
23,700 Almacenes Exito GDR (3) 82,142
---------------
EGYPT - 1.6%
2,588 Orascom Construction Industries (2) 84,771
1,050 Orascom Construction Industries GDR (2) 70,822
48,250 Telecom Egypt (2) 115,877
---------------
271,470
Shares Value $
- --------------- ---------------
HONG KONG - 8.5%
34,000 Beijing Enterprises Holdings (2) 134,286
74,000 China Mobile (2) 651,483
138,000 China Unicom Hong Kong (2) 197,035
337,000 CNOOC (2) 276,720
578,000 Denway Motors (2) 144,153
382,000 Franshion Properties China (2) 73,549
---------------
1,477,226
HUNGARY - 1.7%
29,556 Magyar Telekom
Telecommunications (2) 94,962
1,026 MOL Hungarian Oil & Gas (2) 56,367
1,033 Richter Gedeon (2) 144,930
---------------
296,259
INDIA - 3.4%
4,000 ICICI Bank ADR 68,360
7,600 Infosys Technologies ADR 222,832
26,570 ITC GDR 83,363
3,700 Reliance Industries GDR (2)(3) 210,926
---------------
585,481
INDONESIA - 1.4%
329,500 Bank Central Asia (2) 80,595
582,500 Perusahaan Gas Negara (2) 74,034
165,000 Telekomunikasi Indonesia (2) 83,311
---------------
237,940
ISRAEL - 3.2%
31,504 Bezeq Israeli Telecommunication (2) 47,225
19,282 Makhteshim-Agan Industries (2) 73,310
26,500 Super-Sol (2) 113,309
7,400 Teva Pharmaceutical Industries ADR 317,312
---------------
551,156
MALAYSIA - 3.1%
47,100 Bumiputra-Commerce Holdings BHD (2) 82,110
22,600 Kuala Lumpur Kepong (2) 52,905
326,500 Resorts World (2) 230,662
175,700 Telekom Malaysia (2) 166,302
---------------
531,979
MEXICO - 3.2%
8,339 America Movil ADR, Series L 258,009
4,100 Fomento Economico Mexicano ADR 103,689
4,900 Grupo Televisa ADR 86,534
75,229 Urbi Desarrollos Urbanos (1) 107,328
---------------
555,560
The accompanying notes are an integral part of the financial statements.
34
SCHRODER EMERGING MARKET EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
POLAND - 1.6%
1,000 Central European Distribution (1) 28,790
10,002 Powszechna Kasa Oszczednosci
Bank Polski (2) 113,013
17,432 Telekomunikacja Polska (2) 131,733
---------------
273,536
RUSSIA - 9.2%
6,400 LUKOIL ADR 248,320
4,244 Mechel ADR 38,917
9,600 MMC Norilsk Nickel ADR 96,343
6,800 Mobile Telesystems ADR 266,220
37,543 OAO Gazprom ADR 747,597
32,900 Rosneft Oil GDR (2) 150,992
2,500 Uralkali GDR 52,225
---------------
1,600,614
SOUTH AFRICA - 5.5%
7,012 AngloGold Ashanti (2) 133,428
74,319 FirstRand (2) 108,107
4,921 Impala Platinum Holdings (2) 51,433
28,727 Mr Price Group (2) 70,677
17,875 MTN Group (2) 200,988
8,575 Naspers Class N Shares (2) 142,949
22,242 Raubex Group (2) 57,431
4,648 Sasol (2) 137,382
2,212 Standard Bank Group (2) 17,587
3,933 Telkom (2) 42,743
---------------
962,725
SOUTH KOREA - 13.1%
4,160 Hana Financial Group (2) 66,761
16,000 Hankook Tire (2) 156,499
3,270 Hyundai Development (2) 89,420
2,029 Hyundai Mobis (2) 120,418
3,173 KB Financial Group (1) 79,480
529 KB Financial Group ADR (1) 13,019
5,700 Korea Exchange Bank (2) 32,040
1,897 KT&G (2) 123,038
655 LG Electronics (2) 49,418
20,810 LG Telecom (2) 149,905
756 POSCO (2) 210,417
872 Samsung Electronics (2) 371,509
1,308 Samsung Electronics GDR (2)(3) 270,036
1,472 Samsung Fire & Marine Insurance (2) 197,012
275 Shinsegae (2) 97,538
1,539 SK Telecom (2) 246,840
---------------
2,273,350
Shares Value $
- --------------- ---------------
TAIWAN - 11.7%
22,000 Cathay Financial Holding (2) 23,637
18,642 Cathay Financial Holding GDR 199,236
274,000 Chinatrust Financial Holding (2) 78,300
17,102 Chunghwa Telecom ADR 281,499
81,263 HON HAI Precision Industry GDR 394,215
16,000 MediaTek (2) 143,341
29,396 Siliconware Precision Industries ADR 165,793
334,000 SinoPac Financial Holdings (2) 70,834
145,000 Taiwan Cement (2) 74,483
73,431 Taiwan Semiconductor Manufacturing 606,540
---------------
2,037,878
THAILAND - 3.1%
69,900 Advanced Info Service 140,598
59,700 Kasikornbank (2) 86,754
23,000 Kasikornbank (2) 33,456
419,400 Land & Houses (2) 45,149
38,400 PTT Exploration & Production (1)(2) 96,045
93,800 Siam Commercial Bank 140,499
---------------
542,501
TURKEY - 1.6%
6,264 Tupras Turkiye Petrol Rafine (2) 79,312
43,102 Turk Telekomunikasyon (1)(2) 91,381
39,257 Turkiye Is Bankasi Class C (2) 111,909
---------------
282,602
---------------
TOTAL COMMON STOCK
(Cost $24,944,515) 16,082,517
---------------
PREFERRED STOCK - 3.5%
BRAZIL - 3.5%
3,100 Banco Bradesco 35,603
8,579 Bradespar 75,493
500 Centrais Eletricas Brasileiras 5,419
300 Cia de Bebidas das Americas 12,770
8,659 Cia Energetica de Minas Gerais 131,784
4,400 Cia Vale do Rio Doce Class A 51,103
6,605 Eletropaulo Metropolitana
Eletricidade de Sao Paulo
Class B 81,200
1,600 Gerdau 10,190
700 Metalurgica Gerdau 6,254
6,900 Petroleo Brasileiro 74,431
100 Tam 1,045
700 Telegraph Norte Leste Participacoes 9,479
5,800 Ultrapar Participacoes 107,224
700 Usinas Siderurgicas de Minas Gerais Class A 8,961
---------------
TOTAL PREFERRED STOCK
(Cost $917,658) 610,956
---------------
The accompanying notes are an integral part of the financial statements.
35
SCHRODER EMERGING MARKET EQUITY FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
EQUITY-LINKED
WARRANT (3) (4) - 0.8%
RUSSIA - 0.8%
150,698 Sberbank Savings Bank of the
Russian Federation
Expires 02/28/18
(Cost $353,457) 135,628
---------------
Principal
Amount $
- ---------------
SHORT-TERM INVESTMENT - 3.9%
676,474 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $676,474) 676,474
---------------
TOTAL INVESTMENTS - 100.8%
(Cost $26,892,104) 17,505,575
---------------
OTHER ASSETS LESS
LIABILITIES - (0.8)% (132,490)
---------------
NET ASSETS - 100.0% $ 17,373,085
===============
(1) Denotes non-income producing security.
(2) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
(3) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutions. On October 31, 2008, the
value of these securities amounted to $698,732, representing 4.0% of the
net assets of the Fund.
(4) Security is not readily marketable.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
36
SCHRODER U.S. OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
COMMON STOCK - 89.2%
AUTO & TRANSPORTATION - 1.8%
37,900 BorgWarner 851,613
55,200 Kansas City Southern (1) 1,704,024
66,900 Seaspan 773,364
---------------
3,329,001
CONSUMER DISCRETIONARY - 16.5%
98,800 AH Belo 327,028
158,500 Ambassadors Group 1,654,740
4,400 Capella Education (1) 208,560
105,500 Casual Male Retail Group (1) 200,450
135,100 Central Garden & Pet (1) 456,638
79,000 Children's Place (1) 2,640,970
21,000 GameStop Class A (1) 575,190
196,600 Geo Group (1) 3,471,956
156,900 Home Inns & Hotels Management
ADR (1) 1,569,000
239,000 Internap Network Services (1) 683,540
109,800 Knology (1) 531,432
54,000 Lamar Advertising Class A (1) 819,180
216,100 LKQ (1) 2,472,184
66,000 Regis 816,420
51,000 Rent-A-Center (1) 744,600
199,500 Scientific Games Class A (1) 3,591,000
115,900 Shuffle Master (1) 447,374
9,700 Sohu.com (1) 532,918
85,900 Sonic (1) 919,130
74,200 Standard Parking (1) 1,555,232
110,000 Valueclick (1) 814,000
109,000 Waste Connections (1) 3,689,650
31,800 Watson Wyatt Worldwide Class A 1,350,546
---------------
30,071,738
CONSUMER STAPLES - 2.5%
19,600 Boston Beer Class A (1) 740,684
20,900 Diamond Foods 610,907
27,000 Sanderson Farms 842,940
102,900 United Natural Foods (1) 2,298,786
---------------
4,493,317
FINANCIAL SERVICES - 17.1%
96,350 Annaly Capital Management REIT 1,339,265
48,691 Apollo Investment (1)(2) 641,747
82,373 Argo Group International
Holdings (1) 2,627,699
20,600 Bank of Hawaii 1,044,626
23,100 Berkshire Hills Bancorp 601,293
263,800 Chimera Investment REIT 759,744
26,943 Cullen/Frost Bankers 1,508,000
10,920 CVB Financial 138,247
45,300 Digital Realty Trust REIT 1,516,644
58,700 Genpact (1) 459,621
66,850 H&E Equipment Services (1) 381,045
35,008 Health Care REIT 1,558,206
Shares Value $
- --------------- ---------------
45,400 Huron Consulting Group (1) 2,468,398
45,300 Investment Technology Group (1) 924,573
74,400 Investors Real Estate Trust REIT 735,072
145,000 Jack Henry & Associates 2,756,450
168,400 MFA Mortgage Investments REIT 926,200
70,500 National Retail Properties REIT 1,257,015
146,300 Online Resources (1) 512,050
113,900 Reinsurance Group of America Class A 4,253,026
42,900 SVB Financial Group (1) 2,207,205
45,000 Westamerica Bancorporation 2,576,250
---------------
31,192,376
HEALTH CARE - 15.4%
13,100 Air Methods (1) 219,818
69,700 Amsurg (1) 1,738,318
34,200 athenahealth (1) 1,046,520
257,400 Bruker (1) 1,052,766
106,000 Cepheid (1) 1,258,220
110,600 Cooper 1,822,688
35,500 Haemonetics (1) 2,096,630
50,800 HMS Holdings (1) 1,258,316
37,500 Immucor (1) 995,625
211,600 KV Pharmaceutical Class A (1) 3,597,200
55,300 Luminex (1) 1,031,345
53,800 Perrigo 1,829,200
204,100 PSS World Medical (1) 3,702,374
132,600 Skilled Healthcare Group Class A (1) 1,628,328
97,100 Sun Healthcare Group (1) 1,114,708
58,400 Volcano (1) 908,120
22,500 WellCare Health Plans (1) 543,825
52,600 West Pharmaceutical Services 2,099,792
---------------
27,943,793
MATERIALS & PROCESSING - 6.8%
63,000 Airgas 2,416,680
31,800 Brush Engineered Materials (1) 390,186
91,200 Cabot 2,412,240
27,400 Clean Harbors (1) 1,796,618
55,600 Interface Class A 391,980
54,800 PAN American Silver (1) 636,228
23,800 Perini (1) 452,676
14,300 Royal Gold 412,269
16,700 Schnitzer Steel Industries Class A 449,731
53,200 Scotts Miracle-Gro Class A 1,389,584
59,800 Sonoco Products 1,505,764
43,751 Yamana Gold 202,567
---------------
12,456,523
OTHER ENERGY - 6.0%
58,900 CARBO Ceramics 2,548,603
31,200 Crew Energy (1) 174,939
103,400 Dresser-Rand Group (1) 2,316,160
124,242 Galleon Energy Class A (1) 660,665
88,800 Key Energy Services (1) 550,560
39,100 Plains Exploration & Production (1) 1,102,620
The accompanying notes are an integral part of the financial statements.
37
SCHRODER U.S. OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
109,700 St. Mary Land & Exploration 2,730,433
57,500 Willbros Group (1) 890,675
---------------
10,974,655
PRODUCER DURABLES - 5.0%
75,700 Actuant Class A 1,357,301
8,600 ESCO Technologies (1) 296,700
140,400 FEI (1) 2,949,804
57,450 IDEX 1,331,691
27,300 Nordson 1,008,189
39,700 Rofin-Sinar Technologies (1) 884,913
24,100 Ryland Group 452,839
95,600 Veeco Instruments (1) 739,944
---------------
9,021,381
TECHNOLOGY - 15.1%
500,100 Anadigics (1) 880,176
164,200 Aspen Technology (1) 1,285,686
52,300 Cbeyond (1) 628,646
124,200 Emulex (1) 1,179,900
105,200 F5 Networks (1) 2,611,064
104,800 Gartner (1) 1,928,320
80,000 GeoEye (1) 1,731,200
126,700 Harmonic (1) 900,837
183,400 Informatica (1) 2,576,770
126,400 Intermec (1) 1,639,408
174,900 Interwoven (1) 2,205,489
14,600 MEMSIC (1) 31,536
16,500 Microsemi (1) 358,710
74,860 Parametric Technology (1) 972,432
168,600 QLogic (1) 2,026,572
117,500 Semtech (1) 1,424,100
240,500 SonicWALL (1) 1,077,440
23,100 Standard Microsystems (1) 416,031
143,900 Syniverse Holdings (1) 2,705,320
95,400 Volterra Semiconductor (1) 900,576
---------------
27,480,213
UTILITIES - 3.0%
70,200 NorthWestern 1,371,708
93,600 Portland General Electric 1,920,672
31,900 UIL Holdings 1,052,700
39,100 Unisource Energy 1,078,378
---------------
5,423,458
---------------
TOTAL COMMON STOCK
(Cost $190,221,298) 162,386,455
---------------
INVESTMENT COMPANY - 1.1%
38,300 iShares Russell 2000 Index Fund
(Cost $2,594,775) 2,048,284
---------------
Principal
Amount $ Value $
- --------------- ---------------
SHORT-TERM INVESTMENT - 9.6%
17,420,532 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $17,420,532) 17,420,532
---------------
TOTAL INVESTMENTS - 99.9%
(Cost $210,236,605) 181,855,271
---------------
OTHER ASSETS LESS LIABILITIES - 0.1% 254,208
---------------
NET ASSETS - 100.0% $ 182,109,479
===============
(1) Denotes non-income producing security.
(2) Business development company.
ADR - American Depositary Receipt
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
38
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
COMMON STOCK - 85.6%
AUTO & TRANSPORTATION - 2.5%
5,500 Genuine Parts 216,425
2,200 Wabtec 87,472
---------------
303,897
CONSUMER DISCRETIONARY - 13.2%
12,600 Corrections Corp. of America (1) 240,786
1,900 DeVry 107,711
4,400 Dick's Sporting Goods (1) 67,408
8,400 Interpublic Group of Cos. (1) 43,596
3,900 Lamar Advertising Class A (1) 59,163
1,000 Magna International Class A 33,810
5,000 Monster Worldwide (1) 71,200
3,200 Regis 39,584
12,700 Republic Services 300,990
5,800 Ross Stores 189,602
13,100 Scientific Games Class A (1) 235,800
6,600 Valueclick (1) 48,840
4,300 VeriSign (1) 91,160
2,000 Watson Wyatt Worldwide Class A 84,940
---------------
1,614,590
CONSUMER STAPLES - 0.9%
3,800 Ruddick 108,832
---------------
FINANCIAL SERVICES - 12.4%
900 Affiliated Managers Group (1) 41,742
7,500 Annaly Capital Management REIT 104,250
2,000 Bank of Hawaii 101,420
4,300 Broadridge Financial Solutions 52,030
3,600 Cullen/Frost Bankers 201,492
1,300 Dun & Bradstreet 95,797
1,800 Global Payments 72,918
2,400 Health Care REIT 106,824
200 National Western Life Insurance
Class A (1) 37,756
400 Nationwide Financial Services Class A 18,924
3,900 People's United Financial 68,250
9,800 Reinsurance Group of America Class A 365,932
1,800 Westamerica Bancorporation 103,050
5,700 WR Berkley 149,739
---------------
1,520,124
HEALTH CARE - 13.7%
1,200 Alexion Pharmaceuticals (1) 48,900
2,800 Barr Pharmaceuticals (1) 179,928
8,500 DaVita (1) 482,375
2,600 Dentsply International 78,988
1,800 Gen-Probe (1) 84,708
4,800 IMS Health 68,832
3,300 Inverness Medical Innovations (1) 63,195
2,600 Invitrogen (1) 74,854
10,000 Mylan (1) 85,700
4,600 Omnicare 126,822
Shares Value $
- --------------- ---------------
3,900 Perrigo 132,600
1,900 Pharmaceutical Product Development 58,862
1,900 WellCare Health Plans (1) 45,923
3,500 West Pharmaceutical Services 139,720
---------------
1,671,407
MATERIALS & PROCESSING - 9.8%
5,400 Albemarle 131,490
9,200 Cabot 243,340
2,800 Commercial Metals 31,080
12,700 Crown Holdings (1) 256,286
1,500 Jacobs Engineering Group (1) 54,645
13,900 Pactiv (1) 327,484
1,900 PAN American Silver (1) 22,059
700 Royal Gold 20,181
1,100 Schnitzer Steel Industries Class A 29,623
4,600 ShawCor Class A 69,426
2,470 Yamana Gold 11,436
---------------
1,197,050
OTHER ENERGY - 5.1%
7,300 Dresser-Rand Group (1) 163,520
5,100 Exterran Holdings (1) 114,291
1,500 FMC Technologies (1) 52,485
3,200 Forest Oil (1) 93,472
19,200 Galleon Energy Class A (1) 102,098
3,600 Plains Exploration & Production (1) 101,520
---------------
627,386
PRODUCER DURABLES - 3.3%
2,100 Curtiss-Wright 77,490
5,400 Dover 171,558
6,750 IDEX 156,465
---------------
405,513
TECHNOLOGY - 16.6%
3,500 Adtran 53,200
18,000 Amdocs (1) 406,080
21,900 Brocade Communications Systems (1) 82,563
6,500 Citrix Systems (1) 167,505
7,700 Compuware (1) 49,126
10,200 Emulex (1) 96,900
6,300 F5 Networks (1) 156,366
12,200 Integrated Device Technology (1) 77,592
6,600 Intersil Class A 90,354
14,200 Macrovision Solutions (1) 157,336
5,000 Microchip Technology 123,150
8,200 NetApp (1) 110,946
6,400 Parametric Technology (1) 83,136
4,500 QLogic (1) 54,090
11,500 SAIC (1) 212,405
15,300 Skyworks Solutions (1) 109,089
---------------
2,029,838
The accompanying notes are an integral part of the financial statements.
39
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
UTILITIES - 8.1%
5,800 Constellation Energy Group 140,418
6,900 NeuStar (1) 135,930
4,200 NII Holdings (1) 108,192
8,100 Northeast Utilities 182,736
9,200 Portland General Electric 188,784
10,600 Sierra Pacific Resources 87,874
11,600 tw telecom (1) 82,128
1,800 US Cellular (1) 68,958
---------------
995,020
---------------
TOTAL COMMON STOCK
(Cost $12,883,466) 10,473,657
---------------
INVESTMENT COMPANIES - 4.9%
3,800 iShares Russell 2000 Index Fund 203,224
6,100 iShares Russell Midcap Index Fund 394,182
---------------
TOTAL INVESTMENT COMPANIES
(Cost $610,412) 597,406
---------------
Principal
Amount $
- ---------------
SHORT-TERM INVESTMENT - 14.0%
1,706,213 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $1,706,213) 1,706,213
---------------
TOTAL INVESTMENTS - 104.5%
(Cost $15,200,091) 12,777,276
---------------
OTHER ASSETS LESS LIABILITIES - (4.5)% (548,529)
---------------
NET ASSETS - 100.0% $ 12,228,747
===============
(1) Denotes non-income producing security.
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
40
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
COMMON STOCK - 89.6%
BERMUDA - 1.0%
58,035 Accenture Class A 1,918,057
25,961 ACE 1,489,123
8,367 Axis Capital Holdings 238,292
32,944 Nabors Industries (1) 473,735
2,600 PartnerRe 175,994
5,890 Platinum Underwriters Holdings 186,948
9,000 RenaissanceRe Holdings 413,100
---------------
Total Bermuda 4,895,249
---------------
CANADA - 6.2%
31,300 AGF Management Class B 343,492
18,600 Agrium 710,190
12,200 Bank of Montreal 434,042
38,173 Bank of Nova Scotia 1,268,750
32,721 Barrick Gold 745,775
40,287 BCE 1,167,097
5,550 Bell Aliant Regional
Communications Income
Fund (1)(2)(3)(4) 110,201
39,427 Canadian National Railway 1,705,938
26,427 Canadian Natural Resources 1,329,218
10,700 Davis & Henderson Income Fund 132,732
41,283 EnCana 2,090,438
42,600 Energy Savings Income Fund (1) 429,805
48,654 Gerdau Ameristeel 269,543
36,300 Goldcorp 676,647
18,800 Harry Winston Diamond 182,683
26,200 Husky Energy 784,353
7,900 IGM Financial 238,071
90,752 Manulife Financial 1,810,237
17,400 Methanex 196,995
13,800 Nexen 218,435
22,739 Penn West Energy Trust 404,119
2,996 Penn West Energy Trust
(United States) 53,509
21,300 Petro-Canada 530,915
19,594 Power Corp. of Canada 424,548
27,600 Power Financial 688,631
31,454 Research In Motion (1) 1,587,267
51,000 Rogers Communications Class B 1,475,761
59,986 Royal Bank of Canada 2,323,639
26,000 Saputo 541,846
72,058 Shaw Communications Class B 1,257,976
5,900 Shoppers Drug Mart 226,398
63,400 Suncor Energy 1,517,888
2,079 Teck Cominco Class B 20,632
41,130 Teck Cominco (United States)
Class B 403,485
49,438 Toronto-Dominion Bank 2,327,168
45,700 TransCanada 1,376,442
11,500 Vermilion Energy Trust 284,362
---------------
Total Canada 30,289,228
---------------
Shares Value $
- --------------- ---------------
CAYMAN ISLANDS - 0.2%
16,600 Garmin 372,670
58,611 Seagate Technology 396,796
---------------
Total Cayman Islands 769,466
---------------
UNITED STATES - 82.2%
APPAREL & ACCESSORY STORES - 0.9%
89,000 Gap 1,151,660
43,762 Kohl's (1) 1,537,359
47,400 Limited Brands 567,852
23,900 Nordstrom 432,351
22,700 Ross Stores 742,063
---------------
4,431,285
APPAREL & OTHER FINISHED PRODUCTS - 0.3%
6,900 Phillips-Van Heusen 169,119
5,300 Polo Ralph Lauren 250,001
18,566 VF 1,022,987
---------------
1,442,107
AUTOMOTIVE DEALERS & GASOLINE SERVICE
STATIONS - 0.3%
13,100 Advance Auto Parts 408,720
6,421 Autozone (1) 817,329
---------------
1,226,049
BUILDING CONSTRUCTION GENERAL
CONTRACTORS - 0.0%
400 NVR (1) 196,084
---------------
BUILDING MATERIALS, HARDWARE,
GARDEN SUPPLY & MOBILE HOME
DEALERS - 0.8%
119,900 Home Depot 2,828,441
6,900 Lowe's 149,730
13,472 Sherwin-Williams 766,691
---------------
3,744,862
BUSINESS SERVICES - 5.7%
51,400 Activision Blizzard (1) 640,444
21,700 Adobe Systems (1) 578,088
16,826 Affiliated Computer Services Class A (1) 689,866
10,500 Arbitron 342,090
52,094 Automatic Data Processing 1,820,685
13,100 Cadence Design Systems (1) 53,317
33,300 Check Point Software Technologies (1) 673,326
21,200 Computer Sciences (1) 639,392
21,600 Convergys (1) 166,104
14,900 CSG Systems International (1) 247,787
35,200 Earthlink (1) 242,880
20,900 Fair Isaac 325,831
26,400 Fidelity National Information Services 398,376
The accompanying notes are an integral part of the financial statements.
41
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
6,602 Google Class A (1) 2,372,495
12,100 Heartland Payment Systems 210,661
27,800 infoGROUP 123,988
13,200 Lender Processing Services 304,524
10,000 Manpower 311,300
3,381 Mastercard Class A 499,779
398,934 Microsoft 8,908,196
3,700 MicroStrategy Class A (1) 145,669
33,966 Omnicom Group 1,003,356
244,906 Oracle (1) 4,479,331
16,900 Robert Half International 318,903
2,400 Sohu.com (1) 131,856
8,400 Sybase (1) 223,692
58,800 Symantec (1) 739,704
40,700 Total System Services 559,218
15,920 United Online 117,808
38,000 Western Union 579,880
---------------
27,848,546
CHEMICALS & ALLIED PRODUCTS - 11.0%
85,143 Abbott Laboratories 4,695,636
59,813 Amgen (1) 3,582,201
26,600 Bristol-Myers Squibb 546,630
3,200 CF Industries Holdings 205,408
21,700 Clorox 1,319,577
4,200 Colgate-Palmolive 263,592
61,600 Dow Chemical 1,642,872
55,500 EI Du Pont de Nemours 1,776,000
60,773 Eli Lilly 2,055,343
15,500 Estee Lauder Class A 558,620
34,183 Genentech (1) 2,835,138
16,100 Genzyme (1) 1,173,368
46,146 Gilead Sciences (1) 2,115,794
136,741 Johnson & Johnson 8,387,693
56,000 King Pharmaceuticals (1) 492,240
6,700 Lubrizol 251,786
72,928 Merck 2,257,122
9,220 Monsanto 820,396
278,251 Pfizer 4,927,825
145,067 Procter & Gamble 9,362,624
12,300 Sepracor (1) 163,836
9,500 Terra Industries 208,905
8,700 USANA Health Sciences (1) 330,078
28,600 Viropharma (1) 358,644
108,178 Wyeth 3,481,168
---------------
53,812,496
COAL MINING - 0.0%
4,800 Natural Resource Partners LP 112,896
---------------
COMMUNICATIONS - 3.5%
279,023 AT&T 7,469,446
9,100 Atlantic Tele-Network 221,403
16,396 CenturyTel 411,704
Shares Value $
- --------------- ---------------
36,170 Comcast Class A 570,039
55,206 DIRECTV Group (1) 1,208,459
27,000 Embarq 810,000
88,000 Frontier Communications 669,680
14,400 NII Holdings (1) 370,944
10,100 NTELOS Holdings 262,600
138,531 Verizon Communications 4,110,215
53,896 Viacom Class B (1) 1,089,777
---------------
17,194,267
DEPOSITORY INSTITUTIONS - 7.2%
6,100 Associated Banc-Corp 134,566
249,738 Bank of America 6,036,167
25,743 Bank of New York Mellon 839,222
42,244 BB&T 1,514,447
32,697 Capital One Financial 1,279,107
226,001 Citigroup 3,084,914
10,200 City Bank 105,060
4,900 City Holding 205,016
7,100 Comerica 195,889
160,138 JPMorgan Chase 6,605,693
5,100 M&T Bank 413,610
4,400 Midwest Banc Holdings 13,244
14,000 Northern Trust 788,340
11,600 Pacific Capital Bancorp 227,824
6,500 PacWest Bancorp 162,435
8,000 PNC Financial Services Group 533,360
30,100 Regions Financial 333,809
39,100 State Street 1,694,985
20,900 Sterling Bancshares 166,364
33,200 SunTrust Banks 1,332,648
45,500 Synovus Financial 470,015
20,800 TCF Financial 368,992
6,600 Trustmark 135,432
96,427 U.S. Bancorp 2,874,489
142,890 Wells Fargo 4,865,404
11,400 Whitney Holding 216,600
8,800 Zions Bancorporation 335,368
---------------
34,933,000
EATING & DRINKING PLACES - 0.9%
26,700 Brinker International 248,310
24,900 CKE Restaurants 211,401
8,500 Darden Restaurants 188,445
41,475 McDonald's 2,402,647
40,753 Yum! Brands 1,182,244
---------------
4,233,047
ELECTRIC, GAS & SANITARY SERVICES - 2.0%
17,572 American Electric Power 573,374
38,800 Centerpoint Energy 446,976
26,100 Cleco 600,561
47,660 Dominion Resources 1,729,105
14,300 Edison International 508,937
70,900 El Paso 687,730
The accompanying notes are an integral part of the financial statements.
42
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
15,500 PG&E 568,385
4,400 Pinnacle West Capital 139,260
52,822 Republic Services 1,251,882
29,000 SCANA 954,390
33,500 Southern 1,150,390
8,700 Southern Union 149,814
50,000 TECO Energy 577,000
15,500 Williams 325,035
---------------
9,662,839
ELECTRONIC & OTHER ELECTRICAL
EQUIPMENT - 5.9%
25,500 Amphenol Class A 730,575
24,800 Analog Devices 529,728
5,500 Ceradyne (1) 129,250
178,186 Cisco Systems (1) 3,166,365
14,400 Cooper Industries Class A 445,680
16,800 Diodes (1) 165,984
56,464 Emerson Electric 1,848,067
477,684 General Electric 9,319,615
15,200 Harris 546,440
276,450 Intel 4,423,200
9,200 L-3 Communications Holdings 746,764
16,486 Maxim Integrated Products 224,210
34,300 Micrel 252,105
46,721 National Semiconductor 615,315
25,100 Nvidia (1) 219,876
17,800 Plexus (1) 332,148
77,391 Qualcomm 2,960,980
83,386 Texas Instruments 1,631,030
17,900 Xilinx 329,718
---------------
28,617,050
FABRICATED METAL PRODUCTS - 0.4%
6,500 Ball 222,300
47,692 Illinois Tool Works 1,592,436
---------------
1,814,736
FOOD & KINDRED PRODUCTS - 3.2%
100,886 Coca-Cola 4,445,037
18,100 Flowers Foods 536,665
18,100 General Mills 1,226,094
22,500 HJ Heinz 985,950
13,300 Hormel Foods 375,858
13,900 J&J Snack Foods 435,904
27,800 Kellogg 1,401,676
36,200 Kraft Foods Class A 1,054,868
5,100 McCormick 171,666
20,900 Pepsi Bottling Group 483,208
82,283 PepsiCo 4,690,954
---------------
15,807,880
FORESTRY - 0.2%
31,485 Plum Creek Timber REIT 1,173,761
---------------
Shares Value $
- --------------- ---------------
GENERAL MERCHANDISE STORES - 2.8%
21,400 Costco Wholesale 1,220,014
20,100 Family Dollar Stores 540,891
56,777 Target 2,277,893
53,520 TJX 1,432,195
149,300 Wal-Mart Stores 8,332,433
---------------
13,803,426
HEALTH SERVICES - 0.5%
16,800 DaVita (1) 953,400
11,100 Express Scripts (1) 672,771
13,600 Laboratory Corp. of America Holdings (1) 836,264
4,600 Pediatrix Medical Group (1) 177,790
---------------
2,640,225
HOLDING & OTHER INVESTMENT OFFICES - 2.1%
13,552 Anthracite Capital REIT 58,816
3,700 AvalonBay Communities REIT 262,774
36 Berkshire Hathaway Class A (1) 4,157,640
360 Berkshire Hathaway Class B (1) 1,382,400
5,700 Boston Properties REIT 404,016
874 Brookfield Infrastructure Partners LP 13,110
23,200 Capstead Mortgage REIT 233,160
16,500 Gramercy Capital REIT 43,890
24,516 Host Hotels & Resorts REIT 253,495
31,400 Kimco Realty REIT 709,012
4,500 Liberty Property Trust REIT 107,325
7,900 National Health Investors REIT 236,526
20,300 Prologis REIT 284,200
6,000 Public Storage REIT 489,000
11,909 Simon Property Group REIT 798,260
6,200 Tanger Factory Outlet Centers REIT 224,254
5,000 Ventas REIT 180,300
7,200 Vornado Realty Trust REIT 507,960
5,010 Winthrop Realty Trust REIT 12,826
---------------
10,358,964
HOME FURNITURE, FURNISHINGS &
EQUIPMENT STORES - 0.5%
20,300 Bed Bath & Beyond (1) 523,131
53,318 Best Buy 1,429,456
36,300 Williams-Sonoma 300,564
---------------
2,253,151
HOTELS, ROOMING HOUSES,
CAMPS & OTHER LODGING - 0.1%
12,100 Vail Resorts (1) 402,446
---------------
The accompanying notes are an integral part of the financial statements.
43
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
INDUSTRIAL & COMMERCIAL
MACHINERY/COMPUTER
EQUIPMENT - 5.9%
25,725 3M 1,654,117
3,500 AAON 57,715
33,742 Apple (1) 3,630,302
136,001 Applied Materials 1,755,773
2,900 Black & Decker 146,798
10,400 Cameron International (1) 252,304
29,397 Caterpillar 1,122,083
12,400 Cummins 320,540
9,500 Cymer (1) 232,465
19,137 Deere 737,923
106,602 Dell (1) 1,295,214
11,700 Dover 371,709
4,600 Eaton 205,160
4,800 Flowserve 273,216
15,300 Gardner Denver (1) 391,986
18,300 Graco 452,559
131,114 Hewlett-Packard 5,019,044
69,118 International Business Machines 6,425,900
35,700 International Game Technology 499,800
5,800 Joy Global 168,084
6,900 Lam Research (1) 154,284
23,777 Lexmark International Class A (1) 614,160
14,800 Rockwell Automation 409,516
12,220 Smith International 421,346
12,200 Stanley Works 399,428
24,500 Varian Medical Systems (1) 1,114,995
32,639 Western Digital (1) 538,544
---------------
28,664,965
INSURANCE CARRIERS - 3.4%
32,481 Aetna 807,802
3,033 Aflac 134,301
43,238 Allstate 1,141,051
24,200 American Financial Group 550,066
91,723 American International Group 175,191
5,000 Amerisafe (1) 86,200
28,685 Assurant 730,894
17,400 Catalyst Health Solutions (1) 293,538
21,479 Chubb 1,113,042
7,400 Cincinnati Financial 192,326
10,100 CNA Surety (1) 139,885
25,200 Delphi Financial Group Class A 396,900
32,400 Hartford Financial Services Group 334,368
16,929 HCC Insurance Holdings 373,454
23,193 Lincoln National 399,847
16,800 Meadowbrook Insurance Group 88,536
42,200 MetLife 1,401,884
21,200 Principal Financial Group 402,588
29,500 Prudential Financial 885,000
5,900 RLI 338,601
5,600 Safety Insurance Group 212,744
10,720 Selective Insurance Group 254,600
Shares Value $
- --------------- ---------------
13,300 Torchmark 555,541
27,619 Travelers 1,175,188
81,712 UnitedHealth Group 1,939,026
60,000 Unum Group 945,000
34,672 WellPoint (1) 1,347,701
8,085 WR Berkley 212,393
---------------
16,627,667
MEASURING, ANALYZING & CONTROLLING
INSTRUMENTS - 2.6%
15,817 Agilent Technologies (1) 350,979
12,900 Alcon (1) 1,136,748
43,321 Baxter International 2,620,487
5,400 Becton Dickinson 374,760
1,900 Intuitive Surgical (1) 328,301
71,847 Medtronic 2,897,589
9,800 MTS Systems 318,304
8,872 Rockwell Collins 330,305
5,100 Roper Industries 231,285
38,939 St. Jude Medical (1) 1,480,850
21,800 Stryker 1,165,428
12,400 Waters (1) 543,120
19,753 Zimmer Holdings (1) 917,132
---------------
12,695,288
METAL MINING - 0.2%
21,066 Freeport-McMoRan Copper
& Gold 613,021
20,500 Newmont Mining 539,970
---------------
1,152,991
MISCELLANEOUS MANUFACTURING
INDUSTRIES - 0.2%
13,145 Hasbro 382,125
29,000 Mattel 435,580
---------------
817,705
MISCELLANEOUS RETAIL - 1.3%
12,397 Amazon.com (1) 709,605
68,028 CVS/Caremark 2,085,058
26,400 PetSmart 519,816
19,100 Tiffany 524,295
84,159 Walgreen 2,142,688
17,600 World Fuel Services 377,168
---------------
6,358,630
MOTION PICTURES - 0.6%
178,584 Time Warner 1,801,913
34,840 Walt Disney 902,356
---------------
2,704,269
MOTOR FREIGHT TRANSPORTATION &
WAREHOUSING - 0.3%
6,100 Forward Air 159,637
20,737 JB Hunt Transport Services 589,553
11,500 United Parcel Service Class B 606,970
---------------
1,356,160
The accompanying notes are an integral part of the financial statements.
44
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
NON-DEPOSITORY CREDIT
INSTITUTIONS - 0.6%
24,100 Advanta Class B 108,932
52,800 American Express 1,452,000
7,600 Asta Funding 25,840
106,400 Discover Financial Services 1,303,400
---------------
2,890,172
OIL & GAS EXTRACTION - 3.9%
22,184 Anadarko Petroleum 783,095
15,873 Apache 1,306,824
26,000 Baker Hughes 908,700
13,986 BJ Services 179,720
23,500 Chesapeake Energy 516,295
10,000 Cimarex Energy 404,600
32,553 Devon Energy 2,632,236
4,600 Diamond Offshore Drilling 408,480
19,400 ENSCO International 737,394
62,000 Halliburton 1,226,980
9,500 Helmerich & Payne 325,945
21,800 Noble 702,178
13,211 Noble Energy 684,594
47,982 Occidental Petroleum 2,664,920
13,164 Patterson-UTI Energy 174,686
7,800 Rowan 141,492
22,504 Schlumberger 1,162,332
16,500 St. Mary Land & Exploration 410,685
15,197 Transocean 1,251,169
7,300 Ultra Petroleum (1) 339,815
40,162 Weatherford International (1) 677,935
37,550 XTO Energy 1,349,922
---------------
18,989,997
PAPER & ALLIED PRODUCTS - 0.0%
4,800 Bemis 119,232
---------------
PERSONAL SERVICES - 0.1%
12,900 Cintas 305,730
---------------
PETROLEUM REFINING - 6.2%
97,145 Chevron 7,247,017
73,404 ConocoPhillips 3,818,476
227,898 Exxon Mobil 16,891,800
12,773 Hess 769,062
14,400 Murphy Oil 729,216
23,984 Valero Energy 493,591
---------------
29,949,162
PRIMARY METAL INDUSTRIES - 0.8%
38,500 Alcoa 443,135
24,300 Allegheny Technologies 644,922
104,491 Corning 1,131,637
26,600 Nucor 1,077,566
28,100 Steel Dynamics 334,952
8,200 United States Steel 302,416
---------------
3,934,628
Shares Value $
- --------------- ---------------
PRINTING, PUBLISHING & ALLIED
INDUSTRIES - 0.4%
11,600 John Wiley & Sons Class A 403,448
46,212 McGraw-Hill 1,240,330
21,400 News Class A 227,696
---------------
1,871,474
RAILROAD TRANSPORTATION - 0.8%
23,580 Burlington Northern Santa Fe 2,100,035
19,400 CSX 886,968
18,200 Norfolk Southern 1,090,908
---------------
4,077,911
SECURITY & COMMODITY BROKERS,
DEALERS, EXCHANGES & SERVICES - 1.8%
2,800 BlackRock 367,752
39,700 Broadridge Financial Solutions 480,370
76,800 Charles Schwab 1,468,416
14,200 Cohen & Steers 258,014
15,300 Franklin Resources 1,040,400
20,345 Goldman Sachs Group 1,881,912
5,300 Greenhill 349,641
29,800 Merrill Lynch 553,982
36,300 Morgan Stanley 634,161
6,000 Nasdaq OMX Group (1) 194,760
10,900 Raymond James Financial 253,861
20,209 T Rowe Price Group 799,064
40,534 TD Ameritrade Holding (1) 538,697
---------------
8,821,030
TOBACCO PRODUCTS - 1.3%
62,065 Altria Group 1,191,027
99,959 Philip Morris International 4,345,218
14,400 Reynolds American 705,024
---------------
6,241,269
TRANSPORTATION EQUIPMENT - 1.9%
18,600 Boeing 972,222
22,100 General Dynamics 1,333,072
10,600 Goodrich 387,536
24,437 Harley-Davidson 598,218
9,500 Harsco 224,865
34,665 Honeywell International 1,055,549
30,047 Lockheed Martin 2,555,497
6,400 Polaris Industries 215,488
19,900 Trinity Industries 335,912
29,977 United Technologies 1,647,536
3,200 WABCO Holdings 58,784
---------------
9,384,679
TRANSPORTATION SERVICES - 0.2%
10,600 Ambassadors Group 110,664
13,028 CH Robinson Worldwide 674,590
---------------
785,254
WATER TRANSPORTATION - 0.0%
4,700 Overseas Shipholding Group 176,626
---------------
The accompanying notes are an integral part of the financial statements.
45
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
WHOLESALE TRADE NON-DURABLE
GOODS - 0.9%
12,952 AmerisourceBergen 405,009
7,200 Endo Pharmaceuticals Holdings (1) 133,200
24,900 McKesson 916,071
24,388 Nike Class B 1,405,480
59,600 SYSCO 1,561,520
---------------
4,421,280
WHOLESALE TRADE-DURABLE
GOODS - 0.5%
8,582 Anixter International (1) 288,441
23,700 Fastenal 954,162
17,000 Ingram Micro Class A (1) 226,610
15,500 Pool 269,855
10,200 WW Grainger 801,414
---------------
2,540,482
---------------
Total United States 400,595,718
---------------
TOTAL COMMON STOCK
(Cost $559,037,629) 436,549,661
---------------
RIGHT - 0.0%
UNITED STATES - 0.0%
9,200 Fresenius Kabi Pharmaceuticals
Expires 06/11 (1)
(Cost $9,200) 10,580
---------------
Principal
Amount $ Value $
- --------------- ---------------
SHORT-TERM INVESTMENT - 9.0%
43,749,841 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $43,749,841) 43,749,841
---------------
TOTAL INVESTMENTS - 98.6%
(Cost $602,796,670) 480,310,082
---------------
OTHER ASSETS LESS
LIABILITIES - 1.4% 6,723,366
---------------
NET ASSETS - 100.0% $ 487,033,448
===============
(1) Denotes non-income producing security.
(2) Security considered illiquid. On October 31, 2008 the value of these
securities amounted to $110,201, representing less than 0.1% of the net
assets of the Fund.
(3) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
(4) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutions. On October 31, 2008, the value of this
security amounted to $110,201, representing less than 0.1% of the net
assets of the Fund.
CAD - Canadian Dollar
LP - Limited Partnership
REIT - Real Estate Investment Trust
USD - United States Dollar
FUTURES CONTRACTS:
The Fund had the following futures contracts outstanding as of October 31, 2008:
NUMBER NET
OF EXPIRATION UNREALIZED
CONTRACTS VALUE DATE DEPRECIATION
--------- ----------- ---------- ------------
LONG:
S&P 500 Index 189 $45,704,925 Dec-08 $(6,229,374)
===========
FORWARD FOREIGN CURRENCY CONTRACTS:
The Fund had the following forward foreign currency contracts outstanding as of
October 31, 2008:
NET UNREALIZED
SETTLEMENT APPRECIATION
DATE CURRENCY TO DELIVER CURRENCY TO RECEIVE (DEPRECIATION)
- ---------- ------------------- ------------------- --------------
11/25/08 CAD 21,117,040 USD 20,113,429 $ 2,650,626
11/25/08 USD 21,277,702 CAD 22,928,882 (2,316,591)
-----------
$ 334,035
===========
The accompanying notes are an integral part of the financial statements.
46
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Principal
Amount $ Value $
- --------------- ---------------
U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS - 46.3%
FHLMC Gold
354,609 6.500%, 07/01/32 361,834
27,215 6.000%, 12/01/28 27,391
609,030 5.000%, 07/01/33 577,716
2,038,981 5.000%, 08/01/33 1,934,143
267,301 4.500%, 03/01/19 255,290
50 FHLMC IO (1)
626.687%, 01/15/22 921
FHLMC
1,928,026 5.500%, 04/01/38 1,881,312
1,914,156 5.000%, 11/01/36 1,813,344
1,550,000 FNMA TBA
5.500%, 11/25/38 1,514,156
FNMA
123,404 7.500%, 12/01/29 129,910
4,006 7.000%, 12/01/10 4,022
182,311 6.000%, 12/01/28 183,669
288,328 6.000%, 10/01/29 290,115
4,998,828 6.000%, 09/01/38 4,998,568
279,742 5.500%, 10/01/32 274,132
321,819 5.500%, 01/01/33 315,366
2,610,262 5.500%, 07/01/33 2,556,289
3,279,881 5.500%, 12/01/35 3,210,013
4,023,471 5.000%, 06/01/35 3,817,855
3,559,974 5.000%, 11/01/35 3,375,819
668,042 4.500%, 10/01/33 608,071
GNMA
27,488 8.000%, 11/15/17 29,036
17,442 8.000%, 06/15/26 18,674
136,887 7.000%, 09/15/23 141,426
3,300,799 6.000%, 09/20/37 3,301,798
469,727 5.500%, 01/15/34 461,617
228,619 5.500%, 09/20/34 224,643
1,048,792 5.500%, 10/15/34 1,030,509
619,699 5.500%, 01/15/35 608,709
---------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $34,706,273) 33,946,348
---------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 14.2%
1,355,000 FHLB
3.625%, 10/18/13 1,308,434
8,985,000 FHLMC
3.125%, 10/25/10 9,009,547
125,000 FNMA
4.250%, 05/15/09 126,015
---------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $10,450,799) 10,443,996
---------------
Principal
Amount $ Value $
- --------------- ---------------
CORPORATE
OBLIGATIONS (6) - 13.5%
225,000 Abbott Laboratories
5.600%, 11/30/17 207,576
120,000 AES
8.000%, 10/15/17 93,000
280,000 Aetna
6.500%, 09/15/18 240,433
320,000 Agrium
6.750%, 01/15/19 289,162
170,000 Airgas (2)
7.125%, 10/01/18 140,675
225,000 American International Group
4.250%, 05/15/13 84,120
425,000 Apache
6.900%, 09/15/18 403,046
165,000 Assured Guaranty, Series A (3)
6.400%, 12/15/66 41,250
250,000 Bank of America
6.100%, 06/15/17 218,878
205,000 Barclays Bank
5.450%, 09/12/12 197,715
120,000 Chesapeake Energy
6.500%, 08/15/17 88,950
195,000 Chubb
6.500%, 05/15/38 149,094
465,000 Comcast
6.400%, 05/15/38 356,645
275,000 CVS/Caremark
5.750%, 06/01/17 222,293
125,000 Frontier Communications
6.250%, 01/15/13 104,063
60,000 FTI Consulting
7.625%, 06/15/13 57,450
115,000 GameStop
8.000%, 10/01/12 107,237
175,000 General Electric Capital
6.150%, 08/07/37 129,039
HSBC Holdings
280,000 6.800%, 06/01/38 231,711
135,000 6.500%, 09/15/37 106,448
275,000 ING Bank (2)
5.125%, 05/01/15 265,398
250,000 JPMorgan Chase Bank
5.875%, 06/13/16 226,689
360,000 JPMorgan Chase
4.750%, 05/01/13 333,955
285,000 Kimberly-Clark
7.500%, 11/01/18 287,165
The accompanying notes are an integral part of the financial statements.
47
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2008
Principal
Amount $ Value $
- --------------- ---------------
240,000 Kraft Foods
6.125%, 08/23/18 204,537
250,000 Merrill Lynch
6.875%, 04/25/18 222,418
505,000 Midamerican Energy Holdings
5.750%, 04/01/18 423,231
125,000 Nevada Power, Series L
5.875%, 01/15/15 108,789
245,000 ONEOK Partners LP
6.150%, 10/01/16 198,203
150,000 Pemex Project Funding Master Trust (2)
5.750%, 03/01/18 117,750
PepsiCo
250,000 7.900%, 11/01/18 264,211
170,000 5.000%, 06/01/18 147,131
190,000 Philip Morris International
6.375%, 05/16/38 151,038
250,000 PNC Bank
6.875%, 04/01/18 230,867
165,000 Qwest
7.625%, 06/15/15 127,050
215,000 Rogers Communications
6.800%, 08/15/18 188,453
475,000 Schering-Plough
6.000%, 09/15/17 417,981
120,000 Sprint Capital
8.375%, 03/15/12 96,666
140,000 SPX (2)
7.625%, 12/15/14 117,775
160,000 Telecom Italia Capital
7.721%, 06/04/38 109,114
305,000 Time Warner Cable
5.850%, 05/01/17 250,257
485,000 Union Pacific
7.875%, 01/15/19 480,866
Verizon Communications
115,000 8.950%, 03/01/39 117,013
260,000 5.250%, 04/15/13 239,204
325,000 Viacom
6.750%, 10/05/37 216,313
485,000 Wells Fargo
5.625%, 12/11/17 428,596
185,000 Windstream
7.000%, 03/15/19 113,775
455,000 XTO Energy
6.500%, 12/15/18 381,689
---------------
TOTAL CORPORATE OBLIGATIONS
(Cost $11,340,880) 9,934,919
---------------
Principal
Amount $ Value $
- --------------- ---------------
U.S. TREASURY OBLIGATIONS (6) - 9.1%
U.S. Treasury Bonds
1,560,000 6.250%, 08/15/23 1,785,956
1,405,000 4.500%, 05/15/38 1,436,503
U.S. Treasury Notes
1,425,000 4.500%, 11/30/11 1,539,335
350,000 2.750%, 10/31/13 348,934
1,565,000 2.375%, 08/31/10 1,589,453
---------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,722,723) 6,700,181
---------------
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 7.2%
1,410,000 Merrill Lynch Mortgage Trust,
Series 2002-MW1, Class A4
5.619%, 07/12/34 1,304,886
1,330,000 Merrill Lynch Mortgage Trust,
Series 2004-BPC1, Class A3 (3)
4.467%, 10/12/41 1,206,376
1,255,000 Morgan Stanley Capital I,
Series 2003-T11, Class A3
4.850%, 06/13/41 1,188,737
1,780,000 Wachovia Bank Commercial Mortgage
Trust, Series 2005-C19, Class A5
4.661%, 05/15/44 1,562,927
---------------
TOTAL COMMERCIAL
MORTGAGE-BACKED OBLIGATIONS
(Cost $5,641,345) 5,262,926
---------------
COMMERCIAL PAPER (4) - 4.8%
3,500,000 Barclays Capital
2.648%, 11/26/08 3,493,608
---------------
TOTAL COMMERCIAL PAPER
(Cost $3,493,608) 3,493,608
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 3.6%
217,721 Citigroup Mortgage Loan Trust,
Series 2003-1, Class WA2
6.500%, 06/25/31 203,607
373,368 Citigroup Mortgage Loan Trust,
Series 2003-UP3 Class A2
7.000%, 09/25/33 356,322
1,744,763 Countrywide Alternative Loan Trust,
Series 2007-25, Class 1A2
6.500%, 11/25/37 1,177,753
1,060,000 Greenwich Capital Commercial
Funding, Series 2007-GG11, Class A4
5.736%, 12/10/49 792,362
The accompanying notes are an integral part of the financial statements.
48
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
Principal
Amount $ Value $
- --------------- ---------------
60,882 Residential Accredit Loans,
Series 1999-QS4, Class A1
6.250%, 03/25/14 59,684
18,779 Salomon Brothers Mortgage Securities
VII, Series 2001-CPB1, Class A (3)
6.186%, 12/25/30 16,716
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $3,392,289) 2,606,444
---------------
ASSET-BACKED SECURITIES - 0.1%
36,176 Hedged Mutual Fund Fee Trust,
Series 2003-2, Class 2 (1)(2)(3)(5)
4.840%, 03/02/11 36,142
15,833 Home Equity Asset Trust,
Series 2003-1, Class B2 (1)(3)
7.509%, 06/25/33 336
13,750 Option One Mortgage Loan Trust,
Series 2002-3, Class M2 (3)
4.954%, 08/25/32 2,855
26,824 Structured Asset Investment Loan Trust,
Series 2004-1, Class M4 (1) (3)
7.384%, 02/25/34 4,496
---------------
TOTAL ASSET-BACKED SECURITIES
(Cost $81,511) 43,829
---------------
SHORT-TERM INVESTMENT - 1.0%
719,429 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000%
(Cost $719,429) 719,429
---------------
TOTAL INVESTMENTS - 99.8%
(Cost $76,548,857) 73,151,680
---------------
OTHER ASSETS LESS
LIABILITIES - 0.2% 154,584
---------------
NET ASSETS - 100.0% $ 73,306,264
===============
FUTURES CONTRACTS:
The Fund had the following futures contracts outstanding as of October 31, 2008:
NUMBER NET UNREALIZED
OF EXPIRATION APPRECIATION
CONTRACTS VALUE DATE (DEPRECIATION)
--------- ---------- ---------- --------------
LONG:
U.S. Treasury
5 Year Note 87 $9,853,430 Dec-08 $ 86,843
90-Day Euro 37 9,008,113 Sept-09 (18,029)
--------
68,814
--------
SHORT:
U.S. Long Bond 30 3,393,750 Dec-08 134,411
--------
$203,225
========
(1) Security considered illiquid. On October 31, 2008 the value of these
securities amounted to $41,895, representing 0.1% of the net assets of the
Fund.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutions. On October 31, 2008, the value of this
security amounted to $677,740, representing 0.9% of the net assets of the
Fund.
(3) Variable Rate Security - Rate disclosed is as of October 31, 2008.
(4) The rate shown represents the security's effective yield at time of
purchase.
(5) Security is considered restricted.
(6) Security, or a portion of this security, has been pledged as collateral on
open derivative positions and mortgage dollar rolls.
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
IO - Interest Only Security
LP - Limited Partnership
TBA - To Be Announced
The accompanying notes are an integral part of the financial statements.
49
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2008
Shares Value $
- --------------- ---------------
EQUITIES - 35.6%
DOMESTIC EQUITY - 13.8%
376,803 Schroder U.S. Small and Mid Cap
Opportunities Fund+ 2,999,353
---------------
INTERNATIONAL EQUITIES - 21.8%
2,048 iShares MSCI EAFE Index Fund 91,382
17,443 iShares MSCI Pacific ex-Japan Index Fund 460,146
111,288 Schroder Emerging Market Equity Fund+ 777,900
291,017 Schroder International Alpha Fund+ 1,958,542
255,696 Schroder International Diversified
Value Fund+ 1,434,453
---------------
4,722,423
TOTAL EQUITIES
(Cost $11,193,261) 7,721,776
---------------
FIXED INCOME - 26.7%
CORPORATE BOND - 9.3%
22,861 iShares iBoxx Investment Grade
Corporate Bond Fund 2,003,767
---------------
EMERGING MARKET BONDS - 6.2%
20,092 PIMCO Developing Local Markets Fund 176,408
84,030 PIMCO Emerging Markets Bond Fund 659,632
29,769 PowerShares Emerging Markets
Sovereign Debt Portfolio 505,775
---------------
1,341,815
HIGH YIELD BONDS - 11.2%
459,586 Goldman Sachs High Yield Fund 2,435,807
---------------
TOTAL FIXED INCOME
(Cost $7,097,064) 5,781,389
---------------
REAL ESTATE - 7.6%
15,264 iShares Dow Jones U.S. Real Estate
Index Fund 647,804
42,234 iShares S&P World ex-U.S. Property
Index Fund 1,000,101
---------------
TOTAL REAL ESTATE
(Cost $2,696,050) 1,647,905
---------------
ABSOLUTE RETURN - 5.7%
76,469 Highbridge Statistical Market Neutral
Select Fund, Class A
(Cost $1,193,204) 1,248,733
---------------
INFRASTRUCTURE - 4.3%
539,155 HSBC Infrastructure
(Cost $1,159,556) 927,828
---------------
Shares Value $
- --------------- ---------------
PRIVATE EQUITY - 1.9%
16,286 PowerShares International Listed
Private Equity Portfolio 172,306
22,523 PowerShares Listed Private Equity Portfolio 238,744
---------------
TOTAL PRIVATE EQUITY
(Cost $773,600) 411,050
---------------
Principal
Amount $
- ---------------
SHORT-TERM
INVESTMENTS - 21.0%
1,685,909 JPMorgan Chase Bank, N.A.
Time Deposit (Nassau), 0.000% 1,685,909
2,871,255 Morgan Stanley Institutional
Liquidity Funds - Money Market
Portfolio, 2.320% (1) 2,871,255
---------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,557,164) 4,557,164
---------------
TOTAL INVESTMENTS - 102.8%
(Cost $28,669,899) 22,295,845
---------------
OTHER ASSETS LESS
LIABILITIES - (2.8)% (612,566)
---------------
NET ASSETS - 100.0% $ 21,683,279
===============
+ Investment in affiliated security.
(1) The rate shown represents the 7-day simple yield as of October 31, 2008.
EUR - Euro
GBP - British Pound Sterling
LIBOR - London InterBank Offered Rate
USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
50
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2008
FUTURES CONTRACTS:
The Fund had the following futures contracts outstanding as of October 31, 2008:
NUMBER NET UNREALIZED
OF EXPIRATION APPRECIATION
CONTRACTS VALUE DATE (DEPRECIATION)
--------- ---------- ---------- --------------
LONG:
Topix Index 6 $ 520,150 Dec-08 $(203,442)
S&P 500 Index 5 1,209,125 Dec-08 12,208
---------
(191,234)
---------
SHORT:
DJ Euro Stoxx 41 1,354,336 Dec-08 (192,745)
---------
$(383,979)
=========
FORWARD FOREIGN CURRENCY CONTRACTS:
The Fund had the following forward foreign currency contracts outstanding as of
October 31, 2008:
SETTLEMENT NET UNREALIZED
DATE CURRENCY TO DELIVER CURRENCY TO RECEIVE APPRECIATION
- ---------- ------------------- ------------------- --------------
2/06/09 EUR 631,993 USD 861,456 $ 58,043
2/06/09 USD 789,003 EUR 631,993 14,410
2/06/09 GBP 606,746 USD 1,064,790 93,771
2/06/09 USD 943,367 GBP 606,746 27,652
--------
$193,876
========
SWAP AGREEMENTS:
A summary of the outstanding Total Return Swap agreements held by the Fund at
October 31, 2008 is as follows:
NET UNREALIZED
EXPIRATION NOTIONAL APPRECIATION
DESCRIPTION DATE AMOUNT (DEPRECIATION)
- ----------- ---------- ---------- --------------
Fund receives semi-annually the return of the S&P 500 Total
Return Index based on notional amount. The Fund pays
quarterly USD LIBOR times notional amount.
(Counterparty: JPMorgan). 12/29/08 $3,000,534 $(720,098)
Fund pays semi-annually the return of the Russell 2000 Total
Return Index based on notional amount. The Fund receives
quarterly USD LIBOR less 140 basis points times
notional amount. (Counterparty: JPMorgan). 12/26/08 3,001,608 712,530
---------
$ (7,568)
=========
The accompanying notes are an integral part of the financial statements.
51
SCHRODER MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 2008
INTERNATIONAL EMERGING
INTERNATIONAL DIVERSIFIED MARKET
ALPHA VALUE EQUITY
FUND FUND FUND
------------- ------------- -----------
ASSETS
Investments in securities, at value -- Note 2 ............... $ 31,334,614 $ 8,110,127 $17,505,575
Cash ........................................................ -- -- --
Foreign Currency ............................................ 7 9,975 17,501
Receivable for securities sold .............................. 372,372 130,355 201,345
Receivable for Fund shares sold ............................. 123,817 317 757
Dividends and tax reclaims receivable ....................... 119,361 50,323 48,051
Prepaid expenses ............................................ 19,561 21,773 13,187
Due from Investment Advisor -- Note 3 ....................... 2,449 24,766 24,968
Unrealized appreciation on spot contracts ................... 1 312 78
Initial margin for futures contracts ........................ -- -- --
Unrealized appreciation on forward foreign currency
contracts ................................................ -- -- --
Interest receivable ......................................... -- -- --
Variation margin receivable ................................. -- -- --
------------ ----------- -----------
TOTAL ASSETS ............................................. 31,972,182 8,347,948 17,811,462
LIABILITIES
Payable for securities purchased ............................ 574,099 200,784 314,644
Unrealized depreciation on spot foreign currency contracts .. 3,245 286 52
Foreign currency payable .................................... -- -- --
Variation margin payable .................................... -- -- --
Income distributions payable ................................ -- -- --
Unrealized depreciation on forward foreign currency
contracts ................................................ -- -- --
Payable for Fund shares redeemed ............................ -- -- --
Investment Advisory fees payable -- Note 3 .................. -- -- --
Sub-administration fees payable -- Note 3 ................... 2,566 681 1,425
Trustees' fees payable -- Note 5 ............................ 2,525 1,784 1,907
Distribution fees payable, Advisor Shares -- Note 3 ......... 3,308 180 256
Accrued expenses and other liabilities ...................... 80,001 99,007 120,093
------------ ----------- -----------
TOTAL LIABILITIES ........................................ 665,744 302,722 438,377
------------ ----------- -----------
NET ASSETS .................................................. $ 31,306,438 $ 8,045,226 $17,373,085
============ =========== ===========
NET ASSETS
Capital paid-in ............................................. $ 56,665,935 $14,137,971 $28,092,051
Undistributed (accumulated net investment loss/
distributions in excess of) net investment income ........ 239,024 312,971 (13,044)
Accumulated net realized gain (loss) on investments,
futures and foreign currency transactions ................ (6,555,836) (122,225) (1,316,989)
Net unrealized depreciation on investments .................. (19,034,033) (6,282,386) (9,386,529)
Net unrealized appreciation (deprecation) on futures ........ -- -- --
Net unrealized appreciation (deprecation) on forward foreign
currency contracts and foreign currency translations ..... (8,652) (1,105) (2,404)
------------ ----------- -----------
NET ASSETS .................................................. $ 31,306,438 $ 8,045,226 $17,373,085
============ =========== ===========
Investor Shares:
Net assets .................................................. $ 15,876,312 $ 7,274,202 $16,311,788
Total shares outstanding at end of period ................... 2,360,308 1,296,853 2,333,354
Net asset value, offering and redemption price per share
(net assets / shares outstanding) ........................ $ 6.73 $ 5.61 $ 6.99
Advisor Shares:
Net assets .................................................. $ 15,430,126 $ 771,024 $ 1,061,297
Total shares outstanding at end of period ................... 2,301,114 137,809 152,296
Net asset value, offering and redemption price per share
(net assets / shares outstanding) ........................ $ 6.71 $ 5.59 $ 6.97
Cost of securities ............................................. $ 50,368,647 $14,392,513 $26,892,104
Cost of foreign currency ....................................... $ 8 $ 9,787 $ 17,511
The accompanying notes are an integral part of the financial statements.
52
U.S. SMALL NORTH
U.S. AND MID CAP AMERICAN TOTAL RETURN
OPPORTUNITIES OPPORTUNITIES EQUITY FIXED INCOME
FUND FUND FUND FUND
- ------------- ------------- -------------- ------------
$ 181,855,271 $ 12,777,276 $ 480,310,082 $ 73,151,680
-- -- -- 1,622,015
-- -- -- 3,952
1,468,095 14,688 16,222,805 1,720,698
198,294 872 660 340,102
96,291 2,244 697,616 --
26,546 12,531 22,264 25,963
-- 15,166 -- 10,808
-- -- -- --
-- -- 4,677,750 123,800
-- -- 2,650,626 --
-- 827 -- 485,131
-- -- 274,050 35,625
- ------------- ------------ ------------- ------------
183,644,497 12,823,604 504,855,853 77,519,774
1,252,391 520,950 15,041,462 3,798,174
-- -- 13,864 --
-- -- 177,305 --
-- -- -- 28,673
-- -- -- 298,864
-- -- 2,316,591 --
4,383 -- -- --
156,061 -- 103,462 --
14,826 924 5,380 5,945
4,838 1,822 9,366 2,543
856 48 29 200
101,663 71,113 154,946 79,111
- ------------- ------------ ------------- ------------
1,535,018 594,857 17,822,405 4,213,510
- ------------- ------------ ------------- ------------
$ 182,109,479 $ 12,228,747 $ 487,033,448 $ 73,306,264
============= ============ ============= ============
$ 218,153,947 $ 15,655,742 $ 648,205,774 $ 74,880,844
-- (14,394) 10,556,539 9,796
(7,663,134) (989,786) (43,337,844) 1,609,576
(28,381,334) (2,422,815) (122,486,588) (3,397,177)
-- -- (6,229,374) 203,225
-- -- 324,941 --
- ------------- ------------ ------------- ------------
$ 182,109,479 $ 12,228,747 $ 487,033,448 $ 73,306,264
============= ============ ============= ============
$ 178,772,665 $ 11,999,263 $ 486,931,501 $ 72,309,706
11,323,770 1,508,159 64,252,445 7,554,923
$ 15.79 $ 7.96 $ 7.58 $ 9.57
$ 3,336,814 $ 229,484 $ 101,947 $ 996,558
212,392 29,007 13,494 104,098
$ 15.71 $ 7.91 $ 7.55 $ 9.57
$ 210,236,605 $ 15,200,091 $ 602,796,670 $ 76,548,857
$ -- $ -- $ -- $ 3,952
The accompanying notes are an integral part of the financial statements.
53
SCHRODER MUTUAL FUNDS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2008
Multi-Asset
Growth
Portfolio
------------
ASSETS
Investments in securities, at value -- Note 2 ......................................................... $ 15,125,597
Investments in affiliated securities, at value -- Note 2 .............................................. 7,170,248
Foreign Currency ...................................................................................... 13,418
Appreciated swap contracts, at value -- Note 2 ........................................................ 712,530
Initial margin for futures contracts .................................................................. 349,137
Unrealized appreciation on forward foreign currency contracts ......................................... 193,876
Dividends and tax reclaims receivable ................................................................. 40,026
Prepaid expenses ...................................................................................... 29,159
Due from Investment Advisor -- Note 3 ................................................................. 102,967
Deferred offering costs -- Note 2 ..................................................................... 7,342
Variation margin receivable ........................................................................... 7,250
Receivable for Fund shares sold 691
------------
TOTAL ASSETS ....................................................................................... 23,752,241
LIABILITIES
Payable for securities purchased ...................................................................... 1,096,456
Depreciated swap contracts, at value -- Note 2 ........................................................ 720,098
Variation margin payable .............................................................................. 71,946
Trustees' fees payable -- Note 5 ...................................................................... 1,971
Sub-administration fees payable -- Note 3 ............................................................. 1,828
Distribution fees payable, A Shares -- Note 3 ......................................................... 3,909
Distribution fees payable, Advisor Shares -- Note 3 ................................................... 547
Distribution fees payable, R Shares -- Note 3 ......................................................... 149
Accrued expenses and other liabilities 172,058
------------
TOTAL LIABILITIES 2,068,962
------------
NET ASSETS $ 21,683,279
============
NET ASSETS
Capital paid-in ....................................................................................... $ 31,258,662
Undistributed net investment income ................................................................... 399,100
Accumulated net realized loss on investments, futures, swap contracts and foreign currency
transactions ....................................................................................... (3,405,200)
Net unrealized depreciation on investments ............................................................ (6,374,054)
Net unrealized deprecation on futures ................................................................. (383,979)
Net unrealized depreciation on swap contracts ......................................................... (7,568)
Net unrealized appreciation on forward foreign currency contracts and foreign currency translations ... 196,318
------------
NET ASSETS $ 21,683,279
============
Investor Shares:
Net assets ............................................................................................ $ 353,962
Total shares outstanding at end of period ............................................................. 50,480
Net asset value, offering and redemption price per share (net assets / shares outstanding) ............ $ 7.01
A Shares:
Net assets ............................................................................................ $ 18,320,030
Total shares outstanding at end of period ............................................................. 2,617,135
Net asset value and redemption price per share (net assets / shares outstanding) ...................... $ 7.00
Maximum offering price per share (A Shares NAV/95.5%) ................................................. $ 7.33
Advisor Shares:
Net assets ............................................................................................ $ 2,660,200
Total shares outstanding at end of period ............................................................. 380,201
Net asset value, offering and redemption price per share (net assets / shares outstanding) ............ $ 7.00
R Class Shares:
Net assets ............................................................................................ $ 349,087
Total shares outstanding at end of period ............................................................. 50,000
Net asset value, offering and redemption price per share (net assets / shares outstanding) ............ $ 6.98
Cost of securities ....................................................................................... $ 18,384,771
Cost of affiliated securities ............................................................................ $ 10,285,128
Cost of foreign currency ................................................................................. $ 13,253
The accompanying notes are an integral part of the financial statements.
54
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SCHRODER MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR OR PERIOD ENDED OCTOBER 31, 2008
INTERNATIONAL
INTERNATIONAL DIVERSIFIED
ALPHA VALUE
FUND FUND
------------ -------------
INVESTMENT INCOME
Dividend income ................................................. $ 1,278,081 $ 672,243
Interest income ................................................. 20,935 7,406
Foreign taxes withheld .......................................... (91,241) (64,993)
------------ -----------
TOTAL INCOME ................................................. 1,207,775 614,656
------------ -----------
EXPENSES
Investment Advisory fees -- Note 3 .............................. 467,864 119,278
Distribution fees, Advisor Shares -- Note 3 ..................... 60,072 3,267
Distribution fees, A Shares ..................................... -- --
Distribution fees, R Shares ..................................... -- --
Sub-administration fees -- Note 3 ............................... 48,487 12,047
Trustees fees -- Note 5 ......................................... 13,263 10,774
Transfer agent fees ............................................. 92,380 87,507
Registration fees ............................................... 29,353 29,523
Audit fees ...................................................... 27,305 32,092
Legal fees ...................................................... 24,276 19,311
Custodian fees .................................................. 23,862 43,087
Insurance ....................................................... 18,016 15,162
Printing expenses ............................................... 12,789 9,584
Pricing fees .................................................... 9,621 49,749
Amortization of deferred offering costs -- Note 2 ............... -- --
Tax expense ..................................................... -- --
Other ........................................................... 6,649 7,384
------------ -----------
TOTAL EXPENSES ............................................... 833,937 438,765
Expenses waived by Investment Advisor -- Note 3 ................. (176,726) (119,278)
Reimbursement from Investment Advisor ........................... -- (167,834)
Tax expense waiver .............................................. -- --
------------ -----------
NET EXPENSES ................................................. 657,211 151,653
------------ -----------
NET INVESTMENT INCOME (LOSS) ................................. 550,564 463,003
------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES,
SWAP CONTRACTS, FOREIGN CAPITAL GAINS TAX ON APPRECIATED
SECURITIES AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investments sold .................... (2,944,083) (77,665)
Net realized gain (loss) on futures ............................. -- 1,576
Net realized loss on swap contracts ............................. -- --
Net realized gain (loss) on foreign currency transactions ....... 38,115 (1,390)
------------ -----------
Net realized gain (loss) on investments, futures, swap
contracts and foreign currency transactions ............... (2,905,968) (77,479)
------------ -----------
Change in unrealized depreciation on investments ................ (26,366,565) (8,035,285)
Change in unrealized appreciation (depreciation) on futures ..... -- --
Change in unrealized depreciation on swap contracts ............. -- --
Change in unrealized on foreign capital gains tax on appreciated
securities ................................................... -- 868
Change in unrealized appreciation on forward foreign currency
contracts .................................................... -- --
Change in unrealized appreciation (depreciation) on foreign
currency translations ........................................ (14,839) (2,927)
------------ -----------
Net change in unrealized depreciation on investments, futures,
swap contracts, foreign capital gains tax on appreciated
securities and foreign currency translations .............. (26,381,404) (8,037,344)
------------ -----------
NET REALIZED AND UNREALIZED LOSS ................................ (29,287,372) (8,114,823)
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . $(28,736,808) $(7,651,820)
============ ===========
(a) Fund commenced investment activities on December 20, 2007.
(1) Includes affiliated income of $7,820.
+ Includes realized gains from in-kind transactions (see Note 6 in Notes to
Financial Statements).
The accompanying notes are an integral part of the financial statements.
56
EMERGING U.S. SMALL NORTH
MARKET U.S. AND MID CAP AMERICAN TOTAL RETURN MULTI-ASSET
EQUITY OPPORTUNITIES OPPORTUNITIES EQUITY FIXED INCOME GROWTH
FUND FUND FUND FUND FUND PORTFOLIO(a)
- ------------ ------------- ------------- ------------- ------------- ------------
$ 646,392 $ 1,835,635 $ 97,399 $ 15,396,288 $ -- $ 657,715(1)
18,730 590,422 33,774 188,481 3,289,668 119,679
(66,117) (4,445) (343) (251,537) -- --
- ------------ ------------ ----------- ------------- ----------- -----------
599,005 2,421,612 130,830 15,333,232 3,289,668 777,394
- ------------ ------------ ----------- ------------- ----------- -----------
267,048 2,521,188 131,515 1,678,892 185,873 184,894
4,988 11,877 1,428 439 2,177 7,761
-- -- -- -- -- 51,822
-- -- -- -- -- 2,046
26,911 254,264 13,181 87,305 74,788 24,673
11,588 25,382 10,830 50,663 14,210 10,142
88,840 109,858 87,593 140,983 93,272 144,994
26,801 46,193 24,450 38,429 32,741 9,271
37,333 26,705 27,763 30,605 28,908 30,070
20,641 46,838 19,061 88,515 20,398 134,026
143,854 33,893 12,356 76,194 12,894 4,494
16,088 33,865 15,128 73,466 18,740 --
10,317 51,735 10,300 43,033 12,932 35,136
13,738 1,468 785 4,737 18,545 923
-- -- -- -- -- 204,189
-- -- -- -- -- 147,660
6,194 11,198 6,941 20,775 8,221 8,525
- ------------ ------------ ----------- ------------- ----------- -----------
674,341 3,174,464 361,331 2,334,036 523,699 1,000,626
(209,513) -- (131,515) -- (185,873) (184,894)
-- -- (47,667) -- (38,210) (298,267)
-- -- -- -- -- (147,660)
- ------------ ------------ ----------- ------------- ----------- -----------
464,828 3,174,464 182,149 2,334,036 299,616 369,805
- ------------ ------------ ----------- ------------- ----------- -----------
134,177 (752,852) (51,319) 12,999,196 2,990,052 407,589
- ------------ ------------ ----------- ------------- ----------- -----------
(1,232,300) (7,376,443) (827,378) (33,446,392)+ 775,523 (1,422,570)
-- -- (110,866) (2,410,191) 908,287 (1,759,675)
-- -- -- -- -- (132,489)
(16,448) (12,643) (1,564) 470,505 69,186 235,926
- ------------ ------------ ----------- ------------- ----------- -----------
(1,248,748) (7,389,086) (939,808) (35,386,078) 1,752,996 (3,078,808)
- ------------ ------------ ----------- ------------- ----------- -----------
(18,348,089) (78,583,302) (4,102,063) (237,893,191) (3,518,978) (6,374,054)
-- -- -- (6,229,374) 155,031 (383,979)
-- -- -- -- -- (7,568)
54,849 -- -- -- -- --
-- -- -- 334,035 -- 193,876
(3,819) -- -- (981) -- 2,442
- ------------ ------------ ----------- ------------- ----------- -----------
(18,297,059) (78,583,302) (4,102,063) (243,789,511) (3,363,947) (6,569,283)
- ------------ ------------ ----------- ------------- ----------- -----------
(19,545,807) (85,972,388) (5,041,871) (279,175,589) (1,610,951) (9,648,091)
- ------------ ------------ ----------- ------------- ----------- -----------
$(19,411,630) $(86,725,240) $(5,093,190) $(266,176,393) $ 1,379,101 $(9,240,502)
============ ============ =========== ============= =========== ===========
The accompanying notes are an integral part of the financial statements.
57
SCHRODER MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31,
INTERNATIONAL INTERNATIONAL DIVERSIFIED
ALPHA FUND VALUE FUND
--------------------------- -------------------------
2008 2007 2008 2007
------------ ------------ ----------- -----------
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ............................. $ 550,564 $ 451,404 $ 463,003 $ 369,674
Net realized gain (loss) on investments sold, futures and
foreign currency transactions ......................... (2,905,968) 8,182,229 (77,479) 1,657,302
Change in unrealized appreciation (depreciation) on
investments, foreign capital gains tax on appreciated
securities, futures and foreign currency translations.. (26,381,404) 4,455,335 (8,037,344) 1,311,989
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting from
operations ......................................... (28,736,808) 13,088,968 (7,651,820) 3,338,965
------------ ------------ ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Investor Shares ....................................... (508,093) (283,664) (537,490) (101,970)
Advisor Shares ........................................ (450,753) (178,023) (68,816) (10,713)
Net realized gains:
Investor Shares ....................................... -- -- (1,356,021) (53,820)
Advisor Shares ........................................ -- -- (182,135) (6,027)
------------ ------------ ----------- -----------
Total dividends and distributions ..................... (958,846) (461,687) (2,144,462) (172,530)
------------ ------------ ----------- -----------
SHARE TRANSACTIONS:
INVESTOR SHARES:
Sales of shares .......................................... 3,434,641 11,133,510 2,456,897 336,678
Reinvestment of distributions ............................ 487,919 282,490 1,893,510 155,790
Redemption of shares ..................................... (1,647,090) (13,524,072) (840,680) (334,837)
Redemption fees -- Note 4 ................................ 456 65 9,220 --
------------ ------------ ----------- -----------
Total increase (decrease) from Investor
Share transactions ................................. 2,275,926 (2,108,007) 3,518,947 157,631
------------ ------------ ----------- -----------
ADVISOR SHARES:
Sales of shares .......................................... 4,787,976 17,526,815 617,410 441,159
Reinvestment of distributions ............................ 443,181 175,168 250,951 16,740
Redemption of shares ..................................... (3,304,583) (15,872,841) (685,649) (180,613)
Redemption fees -- Note 4 ................................ 8,118 486 1,079 316
------------ ------------ ----------- -----------
Total increase (decrease) from Advisor Share
transactions ....................................... 1,934,692 1,829,628 183,791 277,602
------------ ------------ ----------- -----------
Net increase (decrease) in net assets
from share transactions ............................ 4,210,618 (278,379) 3,702,738 435,233
------------ ------------ ----------- -----------
Total increase (decrease) in net assets ............... (25,485,036) 12,348,902 (6,093,544) 3,601,668
NET ASSETS
Beginning of Year ........................................ 56,791,474 44,442,572 14,138,770 10,537,102
------------ ------------ ----------- -----------
End of Year .............................................. $ 31,306,438 $ 56,791,474 $ 8,045,226 $14,138,770
============ ============ =========== ===========
Undistributed (accumulated net investment loss/
distributions in excess of) net investment income ..... $ 239,024 $ 529,992 $ 312,971 $ 411,612
============ ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
58
EMERGING MARKET U.S. OPPORTUNITIES U.S. SMALL AND MID CAP
EQUITY FUND FUND OPPORTUNITIES FUND
- --------------------------- ----------------------------- ---------------------------
2008 2007 2008 2007 2008 2007
- ------------ ------------ ------------- ------------- ------------ ------------
$ 134,177 $ 66,570 $ (752,852) $ 259,980 $ (51,319) $ (26,202)
(1,248,748) 3,450,635 (7,389,086) 27,722,406 (939,808) 737,801
(18,297,059) 7,924,344 (78,583,302) 23,437,453 (4,102,063) 1,373,595
- ------------ ------------ ------------- ------------- ------------ ------------
(19,411,630) 11,441,549 (86,725,240) 51,419,839 (5,093,190) 2,085,194
- ------------ ------------ ------------- ------------- ------------ ------------
(213,132) (59,930) (355,955) -- -- (3,936)
(14,585) (3,237) -- -- -- --
(3,019,681) -- (26,787,647) (20,939,518) (612,596) --
(258,346) -- (527,482) (103,868) (85,590) --
- ------------ ------------ ------------- ------------- ------------ ------------
(3,505,744) (63,167) (27,671,084) (21,043,386) (698,186) (3,936)
- ------------ ------------ ------------- ------------- ------------ ------------
7,851,055 4,555,976 19,012,384 67,551,529 7,480,540 2,090,576
3,232,813 59,930 26,496,365 20,495,365 612,596 3,936
(1,250,000) (150,000) (56,895,681) (46,481,850) (789,624) (700,051)
2 -- 7,423 8,024 2,918 1
- ------------ ------------ ------------- ------------- ------------ ------------
9,833,870 4,465,906 (11,379,509) 41,573,068 7,306,430 1,394,462
- ------------ ------------ ------------- ------------- ------------ ------------
4,579,468 783,982 604,435 6,029,859 126,537 897,166
258,744 3,237 512,281 60,689 85,590 --
(4,750,120) (83,180) (1,492,574) (1,457,593) (1,116,008) (219,536)
136 -- -- 2,390 17 194
- ------------ ------------ ------------- ------------- ------------ ------------
88,228 704,039 (375,858) 4,635,345 (903,864) 677,824
- ------------ ------------ ------------- ------------- ------------ ------------
9,922,098 5,169,945 (11,755,367) 46,208,413 6,402,566 2,072,286
- ------------ ------------ ------------- ------------- ------------ ------------
(12,995,276) 16,548,327 (126,151,691) 76,584,866 611,190 4,153,544
30,368,361 13,820,034 308,261,170 231,676,304 11,617,557 7,464,013
- ------------ ------------ ------------- ------------- ------------ ------------
$ 17,373,085 $ 30,368,361 $ 182,109,479 $ 308,261,170 $ 12,228,747 $ 11,617,557
============ ============ ============= ============= ============ ============
$ (13,044) $ 48,572 $ -- $ 355,076 $ (14,394) $ (15,555)
============ ============ ============= ============= ============ ============
The accompanying notes are an integral part of the financial statements.
59
SCHRODER MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31,
NORTH AMERICAN TOTAL RETURN FIXED
EQUITY FUND INCOME FUND
------------------------------- --------------------------
2008 2007 2008 2007
------------- -------------- ----------- ------------
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income ...................................... $ 12,999,196 $ 17,900,409 $ 2,990,052 $ 1,971,368
Net realized gain (loss) on investments sold, futures
and foreign currency transactions ....................... (35,386,078)+ 151,080,379+ 1,752,996 209,640
Change in unrealized appreciation (depreciation) on
investments, futures and foreign currency translations .. (243,789,511) (26,490,841) (3,363,947) 117,455
------------- -------------- ----------- ------------
Net increase (decrease) in net assets resulting
from operations ...................................... (266,176,393) 142,489,947 1,379,101 2,298,463
------------- -------------- ----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Investor Shares ......................................... (16,785,204) (23,398,287) (2,971,942) (1,948,060)
Advisor Shares .......................................... (2,383) (2,080) (33,034) (38,536)
Net realized gains:
Investor Shares ......................................... (89,455,959) (53,303,193) (99,066) --
Advisor Shares .......................................... (14,868) (5,293) (1,187) --
------------- -------------- ----------- ------------
Total dividends and distributions ....................... (106,258,414) (76,708,853) (3,105,229) (1,986,596)
------------- -------------- ----------- ------------
SHARE TRANSACTIONS:
INVESTOR SHARES:
Sales of shares ............................................ 38,329,322 132,568,048 1,104,079 12,479,152
Proceeds from shares sold in-kind .......................... -- -- -- 46,437,681
Reinvestment of distributions .............................. 92,825,863 18,112,110 3,065,135 1,938,673
Redemption of shares ....................................... (38,965,899) (372,052,319) (1,414,329) (11,710,334)
Redemption of shares in-kind ............................... (42,889,159) (296,385,601) -- --
------------- -------------- ----------- ------------
Total increase (decrease) from
Investor Share transactions ............................. 49,300,127 (517,757,762) 2,754,885 49,145,172
------------- -------------- ----------- ------------
ADVISOR SHARES:
Sales of shares ............................................ 20,513 10,000 298,999 682,413
Reinvestment of distributions .............................. 17,252 7,373 34,100 38,536
Redemption of shares ....................................... -- -- (166,091) (922,051)
------------- -------------- ----------- ------------
Total increase (decrease) from Advisor Share
transactions ......................................... 37,765 17,373 167,008 (201,102)
------------- -------------- ----------- ------------
Net increase (decrease) in net assets
from share transactions ................................. 49,337,892 (517,740,389) 2,921,893 48,944,070
------------- -------------- ----------- ------------
Total increase (decrease) in net assets ................. (323,096,915) (451,959,295) 1,195,765 49,255,937
NET ASSETS
Beginning of Year .......................................... 810,130,363 1,262,089,658 72,110,499 22,854,562
------------- -------------- ----------- ------------
End of Year ................................................ $ 487,033,448 $ 810,130,363 $73,306,264 $ 72,110,499
============= ============== =========== ============
Undistributed (distributions in excess of ) net
investment income ....................................... $ 10,556,539 $ 13,409,016 $ 9,796 $ (30,401)
============= ============== =========== ============
+ Includes realized gains from in-kind transactions (see Note 6 in Notes to
Financial Statements).
The accompanying notes are an integral part of the financial statements.
60
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED OCTOBER 31,
MULTI-ASSET
GROWTH PORTFOLIO
----------------
2008(a)
----------------
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income ....................................... $ 407,589
Net realized loss on investments sold, futures, swap
contracts and foreign currency transactions .............. (3,078,808)
Change in unrealized depreciation on investments,
futures, swap contracts, forward foreign
currency contracts and foreign currency translations ..... (6,569,283)
-----------
Net decrease in net assets resulting from operations ..... (9,240,502)
-----------
SHARE TRANSACTIONS:
INVESTOR SHARES:
Sales of shares ............................................. 503,269
-----------
Total increase from Investor Share transactions .......... 503,269
-----------
A SHARES:
Sales of shares ............................................. 26,439,738
Redemption of shares ........................................ (330,699)
Redemption fees -- Note 4 ................................... 9,623
-----------
Total increase from A Share transactions ................. 26,118,662
-----------
ADVISOR SHARES:
Sales of shares ............................................. 3,801,850
-----------
Total increase in Advisor Share transactions ............. 3,801,850
-----------
R SHARES:
Sales of shares ............................................. 500,000
-----------
Total increase in R Share transactions ................... 500,000
-----------
Net increase in net assets from share transactions ....... 30,923,781
-----------
Total increase in net assets ............................. 21,683,279
NET ASSETS
Beginning of Period ......................................... --
-----------
End of Period ............................................... $21,683,279
===========
Undistributed net investment income ......................... $ 399,100
===========
(a) Fund commenced investment activities on December 20, 2007.
The accompanying notes are an integral part of the financial statements.
61
SCHRODER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR THE YEARS OR PERIOD ENDED OCTOBER 31, (UNLESS OTHERWISE INDICATED)
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD
NET ASSET DIVIDENDS
VALUE, NET NET REALIZED TOTAL FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT AND UNREALIZED INVESTMENT INVESTMENT FROM NET TOTAL
OF PERIOD INCOME (LOSS) GAINS (LOSSES) OPERATIONS INCOME REALIZED GAIN DISTRIBUTIONS
--------- ------------- -------------- ---------- ---------- ------------- -------------
INTERNATIONAL ALPHA FUND
Investor Shares
2008 ............. $13.44 $ 0.14(1) $(6.61)+ $(6.47) $(0.24) $ -- $(0.24)
2007 ............. 10.64 0.11(1) 2.78+ 2.89 (0.09) -- (0.09)
2006 ............. 8.35 0.12 2.34 2.46 (0.17) -- (0.17)
2005 ............. 7.08 0.14 1.22 1.36 (0.09) -- (0.09)
2004 ............. 6.37 0.09 0.75 0.84 (0.13) -- (0.13)
Advisor Shares
2008 ............. $13.40 $ 0.11(1) $(6.59)+ $(6.48) $(0.21) $ -- $(0.21)
2007 ............. 10.64 0.07(1) 2.77+ 2.84 (0.08) -- (0.08)
2006(b) .......... 10.23 --(e) 0.41+ 0.41 -- -- --
INTERNATIONAL DIVERSIFIED VALUE FUND
Investor Shares
2008 ............. $13.65 $ 0.37(1) $(6.34)+ $(5.97) $(0.59) $(1.48) $(2.07)
2007 ............. 10.54 0.48 2.80 3.28 (0.11) (0.06) (0.17)
2006(c) .......... 10.00 0.04 0.50 0.54 -- -- --
Advisor Shares
2008 ............. $13.62 $ 0.34(1) $(6.33)+ $(5.99) $(0.56) $(1.48) $(2.04)
2007 ............. 10.53 0.43 2.83+ 3.26 (0.11) (0.06) (0.17)
2006(c) .......... 10.00 0.04 0.49 0.53 -- -- --
EMERGING MARKET EQUITY FUND
Investor Shares
2008 ............. $17.91 $ 0.11 $(8.94)+ $(8.83) $(0.14) $(1.95) $(2.09)
2007 ............. 10.55 0.04 7.37 7.41 (0.05) -- (0.05)
2006(d) .......... 10.00 0.04 0.51 0.55 -- -- --
Advisor Shares
2008 ............. $17.86 $ 0.08 $(8.91)+ $(8.83) $(0.11) $(1.95) $(2.06)
2007 ............. 10.53 0.02 7.34 7.36 (0.03) -- (0.03)
2006(d) .......... 10.00 0.04 0.49 0.53 -- -- --
U.S. OPPORTUNITIES FUND
Investor Shares
2008 ............. $25.40 $(0.06)(1) $(7.22)+ $(7.28) $(0.03) $(2.30) $(2.33)
2007 ............. 23.06 0.02(1) 4.30+ 4.32 -- (1.98) (1.98)
2006 ............. 19.66 --(e) 4.15+ 4.15 -- (0.75) (0.75)
2005 ............. 19.58 --(e) 2.11+ 2.11 -- (2.03) (2.03)
2004 ............. 16.18 --(e) 3.40+ 3.40 -- -- --
Advisor Shares
2008 ............. $25.32 $(0.11)(1) $(7.20) $(7.31) $ -- $(2.30) $(2.30)
2007 ............. 23.04 (0.04)(1) 4.30++ 4.26 -- (1.98) (1.98)
2006(b) .......... 22.21 --(e) 0.83 0.83 -- -- --
* Had custody offsets been included the ratios would have been 1.75% and
2.00% for the Investor Shares and Advisor Shares, respectively.
+ Includes redemption fees. Amount was less than $0.01 per share.
++ Includes redemption fees of $0.01 per share.
(1) Per share net investment loss calculated using average shares.
(a) Total returns would have been lower had certain Fund expenses not been
waived or reimbursed during the periods shown (See Note 3). Total return
calculations for a period of less than one year are not annualized.
(b) Commenced operations on May 15, 2006. All ratios for the period have been
annualized, except for the Total Return and the Portfolio Turnover Rate.
(c) Commenced operations on August 30, 2006. All ratios for the period have
been annualized, except for the Total Return and the Portfolio Turnover
Rate.
(d) Commenced operations on March 31, 2006. All ratios for the period have been
annualized, except for the Total Return and the Portfolio Turnover Rate.
(e) Amount was less than $0.01 per share.
The accompanying notes are an integral part of the financial statements.
62
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
EXPENSES TO EXPENSES TO INCOME (LOSS) TO
AVERAGE NET ASSETS AVERAGE NET ASSETS AVERAGE NET ASSETS
NET ASSET NET ASSETS, (INCLUDING WAIVERS AND (EXCLUDING WAIVERS, (INCLUDING WAIVERS, PORTFOLIO
VALUE, END TOTAL END OF REIMBURSEMENTS, REIMBURSEMENTS REIMBURSEMENTS TURNOVER
OF PERIOD RETURN(a) PERIOD (000) EXCLUDING OFFSETS) AND OFFSETS) AND OFFSETS) RATE
- ---------- --------- ------------ ---------------------- ------------------- ------------------- ---------
$ 6.73 (48.95)% $ 15,876 1.25% 1.61% 1.26% 88%
13.44 27.38 28,483 1.25 1.54 0.92 112
10.64 29.86 22,962 1.25 2.45 1.68 76
8.35 19.45 6,545 1.25 3.88 1.85 126
7.08 13.31 5,233 1.25 3.36 1.16 136
$ 6.71 (49.04)% $ 15,430 1.50% 1.86% 1.04% 88%
13.40 26.92 28,308 1.50 1.77 0.60 112
10.64 4.01 21,481 1.50 2.43 (0.03) 76
$ 5.61 (50.61)% $ 7,274 1.25% 3.65% 3.92% 50%
13.65 31.56 12,479 1.25 3.85 2.97 58
10.54 5.40 9,484 1.25 8.61 2.30 7
$ 5.59 (50.78)% $ 771 1.50% 3.89% 3.58% 50%
13.62 31.31 1,660 1.50 4.12 2.76 58
10.53 5.30 1,053 1.50 8.86 2.05 7
$ 6.99 (55.18)% $ 16,312 1.72% 2.51% 0.53% 123%
17.91 70.50 27,774 1.75 2.68 0.37 107
10.55 5.50 12,767 1.87* 4.88 0.88 49
$ 6.97 (55.25)% $ 1,061 1.98% 2.73% 0.20% 123%
17.86 70.09 2,594 2.00 2.95 0.08 107
10.53 5.30 1,053 2.12* 5.10 0.71 49
$15.79 (31.08)% $178,772 1.25% 1.25% (0.29)% 74%
25.40 20.02 302,351 1.25 1.25 0.10 77
23.06 21.67 231,009 1.21 1.21 (0.11) 101
19.66 11.26 140,467 1.13 1.13 (0.29) 107
19.58 21.01 73,679 1.62 1.62 (0.83) 144
$15.71 (31.28)% $ 3,337 1.50% 1.50% (0.54)% 74%
25.32 19.76 5,910 1.50 1.50 (0.17) 77
23.04 3.74 667 1.68 1.68 (0.31) 101
The accompanying notes are an integral part of the financial statements.
63
SCHRODER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR THE YEARS OR PERIOD ENDED OCTOBER 31, (UNLESS OTHERWISE INDICATED)
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD
NET
REALIZED
NET ASSET NET AND TOTAL DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT UNREALIZED FROM FROM NET FROM NET
BEGINNING INCOME GAINS INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD (LOSS) (LOSSES) OPERATIONS INCOME GAIN DISTRIBUTIONS
--------- ---------- ---------- ---------- ---------- ------------- -------------
U.S. SMALL AND MID CAP OPPORTUNITIES FUND
Investor Shares
2008 ....... $12.56 $(0.04)(1) $(3.81)+ $(3.85) $ -- $(0.75) $(0.75)
2007 ....... 10.25 (0.03)(1) 2.35+ 2.32 (0.01) -- (0.01)
2006(b) .... 10.00 --(h) 0.25 0.25 -- -- --
Advisor Shares
2008 ....... $12.53 $(0.06)(1) $(3.81)+ $(3.87) $ -- $(0.75) $(0.75)
2007 ....... 10.23 (0.05)(1) 2.35+ 2.30 -- -- --
2006(b) .... 10.00 --(h) 0.23 0.23 -- -- --
NORTH AMERICAN EQUITY FUND
Investor Shares
2008 ....... $13.52 $ 0.22 $(4.37) $(4.15) $(0.28) $(1.51) $(1.79)
2007 ....... 12.63 0.31 1.49 1.80 (0.28) (0.63) (0.91)
2006 ....... 11.15 0.23 1.53 1.76 (0.10) (0.18) (0.28)
2005(c) .... 11.00 0.06 0.63 0.69 (0.05) (0.49) (0.54)
2005(d) .... 10.88 0.22 0.62 0.84 (0.20) (0.52) (0.72)
2004(d)(e).. 10.00 0.09 0.86 0.95 (0.04) (0.03) (0.07)
Advisor Shares
2008 ....... $13.48 $ 0.22 $(4.40) $(4.18) $(0.24) $(1.51) $(1.75)
2007 ....... 12.61 0.19 1.56 1.75 (0.25) (0.63) (0.88)
2006(b) .... 11.84 0.22 0.55 0.77 -- -- --
TOTAL RETURN FIXED INCOME FUND
Investor Shares
2008 ....... $ 9.79 $ 0.41 $(0.22) $ 0.19 $(0.40) $(0.01) $(0.41)
2007 ....... 9.81 0.50 (0.03) 0.47 (0.49) -- (0.49)
2006 ....... 9.85 0.48 (0.01) 0.47 (0.49) (0.02) (0.51)
2005(f) .... 10.00 0.30 (0.15) 0.15 (0.30) -- (0.30)
Advisor Shares
2008 ....... $ 9.79 $ 0.39 $(0.22) $ 0.17 $(0.38) $(0.01) $(0.39)
2007 ....... 9.82 0.47 (0.04) 0.43 (0.46) -- (0.46)
2006 ....... 9.85 0.44 -- 0.44 (0.45) (0.02) (0.47)
2005(f) .... 10.00 0.28 (0.15) 0.13 (0.28) -- (0.28)
MULTI-ASSET GROWTH PORTFOLIO
Investor Shares
2008(g) .... $10.00 $ 0.16(1) $(3.15) $(2.99) $ -- $ -- $ --
A Shares
2008(g) .... $10.00 $ 0.14(1) $(3.14)+ $(3.00) $ -- $ -- $ --
Advisor Shares
2008(g) .... $10.00 $ 0.14(1) $(3.14) $(3.00) $ -- $ -- $ --
R Shares
2008(g) .... $10.00 $ 0.12(1) $(3.14) $(3.02) $ -- $ -- $ --
* Had custody offsets been included the ratios would have been 1.40% and
1.64% for the Investor Shares and Advisor Shares, respectively.
+ Includes redemption fees. Amount was less than $0.01 per share.
(1) Per share net investment income calculated using average shares.
(a) Total returns would have been lower had certain Fund expenses not been
waived or reimbursed during the periods shown (See Note 3). Total return
calculations for a period of less than one year are not annualized.
(b) Commenced operations on March 31, 2006. All ratios for the period have been
annualized, except for the Total Return and the Portfolio Turnover Rate.
(c) For the six months ended October 31, 2005. The North American Equity Fund's
fiscal year changed from April 30 to October 31. All ratios for the period
have been annualized, except for the Total Return and the Portfolio
Turnover Rate.
(d) For the year or period ended April 30.
The accompanying notes are an integral part of the financial statements.
64
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME (LOSS) TO
EXPENSES TO AVERAGE NET AVERAGE NET
AVERAGE NET ASSETS ASSETS
ASSETS (INCLUDING (EXCLUDING (INCLUDING
NET ASSET NET ASSETS, WAIVERS AND WAIVERS, WAIVERS, PORTFOLIO
VALUE, END TOTAL END OF REIMBURSEMENTS, REIMBURSEMENTS REIMBURSEMENTS TURNOVER
OF PERIOD RETURN(a) PERIOD (000) EXCLUDING OFFSETS) AND OFFSETS) AND OFFSETS) RATE
- ---------- --------- ------------ ------------------ -------------- ---------------- ---------
$ 7.96 (32.31)% $ 11,999 1.37% 2.74% (0.38)% 92%
12.56 22.60 10,197 1.40 3.13 (0.23) 93
10.25 2.50 6,952 1.55* 6.14 (0.05) 46
$ 7.91 (32.56)% $ 230 1.64% 3.01% (0.55)% 92%
12.53 22.48 1,420 1.65 3.37 (0.45) 93
10.23 2.30 512 1.79* 6.89 (0.33) 46
$ 7.58 (34.81)% $ 486,931 0.35% 0.35% 1.94% 131%
13.52 15.08 809,998 0.33 0.33 1.82 38
12.63 16.04 1,261,983 0.33 0.33 1.66 51
11.15 6.35 1,303,276 0.35 0.35 1.39 30
11.00 7.59 883,146 0.33 0.33 1.79 89
10.88 9.56 890,929 0.37 0.37 1.29 54
$ 7.55 (35.08)% $ 102 0.70% 0.70% 1.57% 131%
13.48 14.66 133 0.68 0.68 1.41 38
12.61 6.50 107 0.68 0.68 1.17 51
$ 9.57 1.93% $ 72,310 0.40% 0.70% 4.03% 555%
9.79 4.90 71,259 0.40 0.96 4.97 464
9.81 4.90 21,795 0.40 2.05 4.86 295
9.85 1.51 9,138 0.40 3.05 3.61 571
$ 9.57 1.67% $ 996 0.65% 0.95% 3.78% 555%
9.79 4.53 852 0.65 1.48 4.73 464
9.82 4.56 1,060 0.65 2.37 4.59 295
9.85 1.30 1,013 0.65 3.30 3.35 571
$ 7.01 (29.90)% $ 354 1.25% 3.80%(i) 1.91% 151%
$ 7.00 (30.00)% $ 18,320 1.50% 4.06%(i) 1.65% 151%
$ 7.00 (30.00)% $ 2,660 1.50% 4.06%(i) 1.66% 151%
$ 6.98 (30.20)% $ 349 1.75% 4.30%(i) 1.41% 151%
(e) Commenced operations on September 17, 2003. All ratios for the period have
been annualized, except for the Total Return and the Portfolio Turnover
Rate.
(f) Commenced operations on December 31, 2004. All ratios for the period have
been annualized, except for the Total Return and the Portfolio Turnover
Rate.
(g) Commenced operations on December 20, 2007. All ratios for the period have
been annualized, except for the Total Return and the Portfolio Turnover
Rate.
(h) Amount was less than $0.01 per share.
(i) If tax expense was not included, the Ratio of Expenses to Average Net
Assets (Excluding Waivers, Reimbursements and Offsets) would have been
3.20%, 3.46%, 3.46%, and 3.71% for the Investor Shares, A Shares, Advisor
Shares and R Shares, respectively.
The accompanying notes are an integral part of the financial statements.
65
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2008
NOTE 1 -- ORGANIZATION
Schroder Global Series Trust ("SGST") is an open-end series management
investment company registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). SGST was organized as a business trust
under the laws of The Commonwealth of Massachusetts on May 27, 2003. SGST has an
unlimited number of authorized shares. Schroder North American Equity Fund (the
"SGST Fund") is the only series of shares currently comprising SGST. Advisor
Shares of the SGST Fund were offered beginning on March 31, 2006.
Schroder Capital Funds (Delaware) ("SCFD") is an open-end series management
investment company registered under the Investment Company Act. SCFD was
organized as a Maryland corporation on July 30, 1969; reorganized as Schroder
Capital Funds, Inc., a series company, on February 29, 1988; and reorganized on
January 9, 1996, as a Delaware business trust. SCFD has an unlimited number of
authorized shares, which are divided into two separate series: Schroder
International Alpha Fund and Schroder U.S. Opportunities Fund (collectively, the
"SCFD Funds"). Advisor Shares of Schroder International Alpha and Schroder U.S.
Opportunities Funds were offered beginning on May 15, 2006. On April 18, 2007,
the Schroder U.S. Opportunities Fund closed to new investors.
Schroder Series Trust ("SST") is an open-end series management investment
company registered under the Investment Company Act. SST was organized as a
business trust under the laws of The Commonwealth of Massachusetts on May 6,
1993. SST has an unlimited number of authorized shares, which are divided into
seven separate series: Schroder International Diversified Value Fund, Schroder
Emerging Market Equity Fund, Schroder U.S. Small and Mid Cap Opportunities Fund,
Schroder Total Return Fixed Income Fund, Schroder Municipal Bond Fund, Schroder
Short-Term Municipal Bond Fund and Schroder Multi-Asset Growth Portfolio
(collectively, the "SST Funds," and together with the SCFD Funds and the SGST
Fund, the "Funds"). Schroder Emerging Market Equity Fund and Schroder U.S. Small
and Mid Cap Opportunities Fund commenced operations on March 31, 2006. Schroder
International Diversified Value Fund and Schroder Multi-Asset Growth Portfolio
commenced operations as of August 30, 2006 and December 20, 2007, respectively.
Additional series of SST, Schroder Enhanced Income Fund and Schroder Strategic
Bond Fund, were liquidated following their close of business on April 29, 2008
and September 29, 2008, respectively.
The Financial Statements for Schroder Municipal Bond Fund and Schroder
Short-Term Municipal Bond Fund, Funds that are in liquidation, are presented
separately.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
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, except that NASDAQ official closing
prices for all NASDAQ National Market and NASDAQ Small Cap Market Securities are
used, where applicable. Listed securities traded on recognized stock exchanges
where last sale prices are not available are valued at the mean of the closing
bid and asked prices ("mid-market price"). Securities traded in over-the-counter
markets are valued at the most recent reported sales price or, if none,
mid-market price for unlisted securities with readily available market
quotations. Options on indices or exchange-traded fund ("ETF") shares are valued
at the closing mid-market price. Prices used for valuations generally are
provided by independent pricing services. Except as noted below with regard to
below investment grade and emerging markets debt instruments, fixed income
securities with remaining maturities of more than 60 days are valued on the
basis of valuations provided by pricing services that determine valuations for
normal institutional size trading units of fixed income securities, or through
obtaining independent quotes from market makers. Below investment grade and
emerging markets debt instruments ("high yield debt") will ordinarily be valued
at prices supplied by a Fund's pricing service based on the mean of bid and
asked prices supplied by brokers or dealers. Short-term investments, having a
maturity of 60 days or less, are valued at amortized cost, a form of fair
valuation which approximates market value, pursuant to procedures adopted by the
Funds' Board of Trustees ("Trustees"). Other securities and assets for which
market quotations are not readily available are valued in accordance with Fair
Value
66
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
Procedures established by the Funds' Trustees. The Funds' Fair Value Procedures
are implemented through a Fair Value Committee (the "Committee") designated by
the Funds' Trustees. Some of the more common reasons that may necessitate that a
security be valued using Fair Value Procedures include: the security's trading
has been halted or suspended; the security has been de-listed from a national
exchange; the security's primary trading market is temporarily closed at a time
when under normal conditions it would be open; or the security's primary pricing
source is not able or willing to provide a price. When a security is valued in
accordance with the Fair Value Procedures, the Committee will determine the
value after taking into consideration relevant information reasonably available
to the Committee.
Investments in registered investment companies are priced at each fund's daily
net asset value. The assets of Multi-Asset Growth Portfolio include investments
in underlying affiliated registered investment companies, which are valued at
their respective daily net asset values.
For securities that principally trade on a foreign market or exchange, a
significant gap in time can exist between the time of a particular security's
last trade and the time at which a Fund calculates its net asset value. The
closing prices of such securities may no longer reflect their market values at
the time the Fund calculates its net asset value if an event that could
materially affect the value of those securities (a "Significant Event") has
occurred between the time of the security's last trade and the time that the
Fund calculates its net asset value. A Significant Event may relate to a single
issuer or to an entire market sector. If a Fund becomes aware of a Significant
Event that has occurred with respect to a security or group of securities after
the closing of the exchange or market on which the security or securities
principally trade, but before the time at which the Fund calculates its net
asset value, a Committee meeting may be called.
Schroder International Alpha, Schroder International Diversified Value and
Schroder Emerging Market Equity Funds use a third party fair valuation vendor
which provides a fair value for securities of companies located in countries
outside the Western Hemisphere held by the Funds based on certain factors and
methodologies applied by the vendor in the event that there is movement in the
U.S. market that exceeds a specific threshold established by the Committee in
consultation with the Trustees. Such methodologies generally involve tracking
valuation correlations between the U.S. market and each non-U.S. security. The
Committee also determines a "confidence interval" which will be used, when the
threshold is exceeded, to determine the level of correlation between the value
of a foreign security and movements in the U.S. market before a particular
security will be fair valued. In the event that the threshold established by the
Committee is exceeded on a specific day, the Funds will typically value such
securities in their portfolios that exceed the applicable confidence interval
based upon the fair values provided by the vendor.
FEDERAL INCOME TAXES: It is the intention of the Funds for each Fund to qualify
or continue 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 would not be subject to Federal income taxes to the
extent that, among other things, they distribute substantially all of their
taxable income, including realized capital gains, for the fiscal year. In
addition, 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 would not be subject to a Federal excise tax.
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
interpretation 48 ("FIN 48"), "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES." This
standard defines the threshold for recognizing the benefits of tax-return
positions in the financial statements as "more-likely-than-not" to be sustained
by the taxing authority and requires measurement of a tax position meeting the
more-likely-than-not criterion, based on the largest benefit that is more than
50 percent likely to be realized. FIN 48 is effective as of the beginning of the
first fiscal year beginning after December 15, 2006. At adoption, companies must
adjust their financial statements to reflect only those tax positions that are
more-likely-than-not to be sustained as of the adoption date. Based on its
analysis, management has determined that the adoption of FIN 48 did not have a
material impact to the Funds' financial statements upon adoption. If the Funds
were to record a tax expense as a result of the adoption of FIN 48, the tax
expense would include any interest and penalties. The Funds file U.S. federal
income tax returns and if applicable, returns in various foreign jurisdictions
in which it invests. While the statute of limitations remains open to examine
the Funds' U.S. federal income tax returns filed for the fiscal years 2005 to
2008, no examinations are in progress or anticipated at this time. However,
management's conclusions regarding FIN 48 may be subject to review and
adjustment at a later date based on factors including, but not limited to,
further implementation guidance expected from the FASB, and on-going analyses of
and changes to tax laws, regulations and interpretations thereof. The Funds are
not aware of any tax positions for which it is reasonably possible that the
total amounts of unrecognized tax benefits will significantly change in the next
twelve months.
67
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
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. Capital gain taxes on securities in certain
foreign countries are accrued on unrealized appreciation and are due when
realized.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date. Dividend
income is recorded net of unrecoverable withholding tax. Interest income is
recorded on an accrual basis. Discounts and premiums on fixed income securities
are accreted and amortized using the effective interest method. Foreign dividend
and interest income amounts and realized capital gains or losses are converted
to U.S. dollar equivalents using foreign exchange rates in effect at the date of
the transactions. Distributions received on securities that represent a return
of capital or capital gain are recorded as a reduction of costs of investments
and/or as a realized gain. The Funds estimate the components of distributions
received that may be considered non-taxable distributions or capital gain
distributions.
EXPENSES: Expenses are recorded on an accrual basis. Many of the expenses of the
Funds can be directly attributable to a specific Fund. Expenses not directly
attributable to a specific Fund are allocated among the Funds based on relative
average net assets or another appropriate methodology. Class specific expenses
are borne by that class. Fund expenses are pro-rated to the respective classes
based on relative net assets.
CLASSES OF SHARES: Income, realized and unrealized gains and losses of a Fund
are prorated to the respective classes of shares based on relative net assets.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends and distributions to
shareholders from net investment income and from net realized capital gains, if
any, are declared and distributed at least annually for each of the Funds,
except Schroder Total Return Fixed Income Fund, which declares dividends to
shareholders from net investment income daily and distributes these dividends
monthly and for which distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
FOREIGN CURRENCY: Foreign currency amounts are translated into U.S. dollars at
the mean of the bid and asked prices of such currencies against U.S. dollars as
follows: (i) assets and liabilities at the rate of exchange at the end of the
respective period; and (ii) purchases and sales of securities and income and
expenses at the rate of exchange prevailing on the dates of such transactions.
The portion of the results of operations arising from changes in the exchange
rates and the portion due to fluctuations arising from changes in the market
prices of securities are not isolated. Such fluctuations are included with the
net realized and unrealized gain or loss on investments.
Certain Funds may enter into forward foreign currency contracts to protect the
U.S. dollar value of the underlying portfolio of securities against the effect
of possible adverse movements in foreign exchange rates. Principal risks
associated with such transactions include the movement in value of the foreign
currency relative to the U.S. dollar and the ability of the counterparty to
perform. Fluctuations in the value of such forward foreign currency transactions
are recorded daily as unrealized gain or loss; realized gain or loss includes
net gain or loss on transactions that have terminated by settlement or by the
Funds entering into offsetting commitments.
WHEN-ISSUED SECURITIES: Each Fund may purchase securities on a when-issued,
delayed delivery, or forward commitment basis. These transactions involve a
commitment by the Fund to purchase a security for a predetermined price or
yield, with payments and delivery taking place more than seven days in the
future, or after a period longer than the customary settlement period for that
type of security. These transactions may increase the overall investment
exposure for a Fund and involve a risk of loss if the value of the securities
declines prior to the settlement date.
DERIVATIVE INSTRUMENTS: Certain Funds may enter into a variety of "derivative"
instruments (for example, options or futures) in order to gain exposure to
particular securities or markets, in connection with hedging transactions, to
adjust the interest rate sensitivity and duration of a Fund's portfolio and to
increase total return. A Fund's use of derivative instruments involves the risk
the instrument may not work as intended due to unanticipated developments in
market conditions or other causes. Derivatives often involve the risk that the
other party to the transaction will be unable or unwilling to perform its
obligations, or that the Fund will be unable to close out the position at any
particular time or at an acceptable price. When a Fund uses certain types of
derivative instruments for investment purposes, it could lose more than the
original cost of the investment and its potential loss could be unlimited. Also,
suitable derivative transactions may not be available in all circumstances, and
there can be no assurance that a Fund will engage in these transactions when
that would be beneficial.
68
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
FUTURES: Financial futures contracts are valued based upon their quoted daily
settlement prices; changes in initial settlement value (represented by cash paid
to or received from brokers as "variation margin") are accounted for as
unrealized appreciation (depreciation). When futures contracts are closed, the
difference between the opening value at the date of purchase and the value at
closing is recorded as realized gain or loss in the Statements of Operations.
Futures contracts may be used in order to hedge against unfavorable changes in
the value of securities or to attempt to realize profits. Futures contracts
involve leverage and are subject to market risk that may exceed the amounts
recognized in the Statements of Assets and Liabilities. Risks arise from the
possible significant movements in prices. The change in value of futures
contracts primarily corresponds to the value of the securities or other index or
amount underlying the contracts, but may not precisely correlate with the change
in value of such securities or other index or amount. In addition, there is the
risk that a Fund may not be able to enter into a closing transaction because of
an illiquid secondary market.
SWAP AGREEMENTS: Certain Funds may enter into swap agreements, including total
return swaps, credit default swaps and interest rate swaps. A swap agreement is
a two-party contract under which an agreement is made to exchange returns from
predetermined investments, instruments or indices including a particular
interest rate, foreign currency, or "basket" of securities representing a
particular index. The Schroder Total Return Fixed Income Fund and Schroder
Multi-Asset Growth Portfolio may enter into credit default swap transactions. In
a credit default swap, one party pays what is, in effect, an insurance premium
through a stream of payments to another party in exchange for the right to
receive a specified return in the event of a default (or similar events) by a
third party on its obligations. Therefore, in a credit default swap, the Funds
may pay a premium and, in return, have the right to put certain bonds or loans
to the counterparty upon default by the issuer of such bonds or loans (or
similar events) and to receive in return the par value of such bonds or loans
(or another agreed upon amount). The Funds would generally enter into this type
of transaction to limit or reduce risk with respect to bonds or loans that it
owns in its portfolio or otherwise in connection with transactions intended to
reduce one or more risks in the Funds' portfolio. In addition, the Funds could
also receive the premium referenced above, and be obligated to pay a
counterparty the par value of certain bonds or loans upon a default (or similar
event) by the issuer. The Funds would generally enter into this type of
transaction as a substitute for investment in the securities of the issuer, or
otherwise to increase the Funds' investment return. The Funds may also enter
into interest rate swap transactions. Interest rate swaps involve the exchange
by the Funds with another party of their respective commitments to pay or
receive interest (e.g., an exchange of floating rate payments for fixed rate
payments) with respect to a notional amount of principal. The Funds could be
exposed to credit or market risk due to unfavorable changes in the fluctuation
of interest rates or if the counterparty defaults on its obligation to perform.
Risk of loss may exceed amounts recognized on the Funds' Statements of Assets
and Liabilities.
Depending on their structures, swap agreements may increase or decrease the
Funds' exposure to long-or short-term interest rates (in the United States or
abroad), foreign currency values, mortgage securities, corporate borrowing
rates, or other factors such as security prices or inflation rates. The values
of the Funds' swap positions would increase or decrease depending on the changes
in value of the underlying rates, currency values, or other indices or measures.
The Funds' ability to engage in certain swap transactions may be limited by tax
considerations.
Swaps are marked-to-market daily and the resulting changes in market values, if
any, are recorded as an unrealized gain or loss.
Entering into swap agreements involves certain other risks. Such risks include
for example, the possibility that there will be no liquid market for these
agreements, that the counterparty to the agreement may default on its obligation
to perform and that there may be unfavorable changes in the fluctuation of
interest rates or other rates or values. Risks also arise from potential losses
from adverse market movements.
EQUITY-LINKED AND INDEX-LINKED WARRANTS: The Schroder International Alpha,
Schroder International Diversified Value, Schroder Emerging Market, Schroder
U.S. Small and Mid Cap Opportunities, and Schroder North American Equity Funds
may invest in equity-linked and index-linked warrants. A Fund purchases the
equity-linked and index-linked warrants from a broker, who in turn is expected
to purchase shares in the local market and issue a call warrant hedged on the
underlying holdings. If the Fund exercises its call and closes its position, the
shares are expected to be sold and the warrant redeemed with the proceeds. Each
warrant typically represents one share of the underlying stock or basket of
stocks representing the index. Therefore, the price, performance and liquidity
of the warrant are all directly linked to the underlying stock or index, less
transaction costs. Equity-linked warrants are generally valued at the closing
price of the underlying securities, then adjusted for stock dividends declared
by the underlying securities. In addition to the market risk related to the
underlying holdings, the Fund bears additional counterparty risk with
69
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
respect to the issuing broker. Moreover, there is currently no active trading
market for either equity-linked or index-linked warrants. A Fund may also
purchase warrants, issued by banks and other financial institutions, whose
values are based on the values from time to time of one or more securities
indices.
RESTRICTED SECURITIES: As of October 31, 2008, the following Funds owned private
placement investments that were purchased through private offerings or acquired
through initial public offerings and cannot be sold without prior registrations
under the Securities Act of 1933, as amended, or pursuant to an exemption
therefrom. These investments are valued in accordance with procedures approved
by the Trustees. The acquisition dates of these investments, along with their
costs and values as of October 31, 2008, were as follows:
PRINCIPAL ACQUISITION % OF NET
AMOUNT DATE COST MARKET VALUE ASSETS
--------- ----------- ------- ------------ --------
SCHRODER TOTAL RETURN FIXED INCOME FUND
Hedged Mutual Fund Fee Trust
4.840%, 3/02/11 $36,176 1/7/05 $36,113 $36,142 0.1%
MORTGAGE DOLLAR ROLLS: The Schroder Total Return Fixed Income Fund may enter
into mortgage dollar rolls (principally using TBAs) in which the Fund sells
mortgage securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar securities in a subsequent month
at an agreed-upon price on a fixed date. The Fund accounts for such dollar rolls
under the purchases and sales method and receives compensation as consideration
for entering into the commitment to repurchase. The Fund must maintain liquid
securities having a value not less than the purchase price (including accrued
interest) for such dollar rolls. The market value of the securities that the
Fund is required to purchase may decline below the agreed upon repurchase price
of those securities.
The counterparty receives all principal and interest payments, including
repayments, made in respect of a security subject to such a contract while it is
the holder. Mortgage dollar rolls may be renewed with a new purchase and
repurchase price and a cash settlement made on settlement date without physical
delivery of the securities subject to the contract.
OFFERING COSTS: During the period ended October 31, 2008, the Schroder
Multi-Asset Growth Portfolio commenced operations and incurred offering costs of
$211,531. Schroder Investment Management North America, Inc. ("SIMNA") absorbed
$157,185 of the offering costs for Schroder Multi-Asset Growth Portfolio. The
amortized portion of the offering costs and the amount absorbed by SIMNA are
included in "Amortization of deferred offering costs" and "Reimbursement from
Investment Advisor" on the Statements of Operations. The remaining offering
costs are being amortized over a 12-month period from Schroder Multi-Asset
Growth Portfolio's inception date and are reflected as "Deferred offering costs"
in the Statements of Assets and Liabilities.
NOTE 3 -- INVESTMENT ADVISORY FEES, ADMINISTRATION AGREEMENTS AND DISTRIBUTION
PLANS
The Funds have entered into investment advisory agreements with Schroder
Investment Management North America, Inc. ("SIMNA"). Under these agreements,
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: 0.975% for the Schroder
International Alpha Fund; 1.00% for each of Schroder International Diversified
Value Fund, Schroder Emerging Market Equity Fund, Schroder U.S. Opportunities
Fund and Schroder U.S. Small and Mid Cap Opportunities Fund; 0.25% for each of
the Schroder North American Equity Fund and Schroder Total Return Fixed Income
Fund and 0.75% for the Schroder Multi-Asset Growth Portfolio (waived until
February 28, 2009 to 0.60%).
SIMNA has retained its affiliate, Schroder Investment Management North America
Limited ("SIMNA Ltd.") to serve as sub-advisor responsible for the portfolio
management of the Schroder International Alpha Fund, the Schroder International
Diversified Value Fund, the Schroder Emerging Market Equity Fund, the Schroder
North American Equity Fund and the Schroder Multi-Asset Growth Portfolio. SIMNA
pays SIMNA Ltd. 50% of the investment advisory fees it receives from these
Funds.
The administrator of SGST is Schroder Fund Advisors, Inc. ("Schroder Advisors"),
a wholly owned subsidiary of SIMNA. Schroder Advisors receives no compensation
for its services for the Schroder North American Equity Fund. SIMNA provides
certain admin-
70
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
istration services to the Schroder International Alpha Fund and the Schroder
U.S. Opportunities Fund. SIMNA's compensation for these services is included in
the Schroder International Alpha and the Schroder U.S. Opportunities Fund's
advisory fees.
Effective November 5, 2001, SCFD entered into a sub-administration and
accounting agreement with SEI Investments Global Funds Services ("SEI") and
Schroder Advisors. On January 4, 2004, SST entered into an amended
administration and accounting agreement with SEI. On January 31, 2005, SGST
entered into a sub-administration and accounting agreement with SEI. Effective
November 1, 2004, under the agreements with SEI, the SCFD Funds and the SST
Funds pay fees to SEI based on the combined average daily net assets of all the
SCFD Funds and the SST Funds according to the following annual rates: 0.115% on
the first $600 million of such assets, 0.11% on the next $400 million of such
assets, 0.09% on the next $1 billion of such assets and 0.07% on assets in
excess of $2 billion. Each Fund pays its pro rata portion of such expenses.
Effective June 1, 2008, the SCFD Funds and SST Funds pay fees to SEI based on
the combined average daily net assets of all the SST and SCFD Funds according to
the following annual rates: 0.095% on the first $1 billion of such assets;
0.085% on the next $1 billion of such assets, 0.07% on the next $1 billion of
such assets, 0.06% on the next $2 billion of such assets, and 0.05% on assets in
excess of $5 billion. Effective January 28, 2005, and renewed June 1, 2008, SGST
pays SEI a fee, computed and paid monthly, at an annual rate of 0.013% of the
SGST Fund's average daily net assets up to $1 billion and 0.005% of the SGST
Fund's average daily net assets over $1 billion.
In order to limit the expenses of the Investor Shares of certain Funds, the
Funds' adviser has contractually agreed to pay or reimburse the applicable Fund
for other fund expenses through February 28, 2009 for Schroder U.S.
Opportunities Fund and Schroder Total Return Fixed Income Fund and through
February 28, 2010 for Schroder International Alpha Fund, Schroder International
Diversified Value Fund, Schroder Emerging Market Fund and Schroder U.S. Small
and Mid Cap Opportunities Fund to the extent that the total annual fund
operating expenses of a Fund (other than acquired fund fees and expenses,
interest, taxes, and extraordinary expenses) allocable to each Fund's Investor
Shares exceed the following annual rates (based on the average daily net assets
attributable to each Fund's Investor Shares): Schroder International Alpha Fund,
1.15% (1.25% prior to October 1, 2008), Schroder International Diversified Value
Fund, 1.15% (1.25% prior to October 1, 2008), Schroder Emerging Market Equity
Fund, 1.25% (1.75% prior to October 1, 2008), Schroder U.S. Opportunities Fund,
1.70%, Schroder U.S. Small and Mid Cap Opportunities Fund, 1.05% (1.40% prior to
October 1, 2008), Schroder Total Return Fixed Income Fund, 0.40% and Schroder
Multi-Asset Growth Portfolio, 1.25%. In order to limit the expenses of the
Advisor Shares of certain Funds, the Funds' adviser has contractually agreed to
pay or reimburse the applicable Fund for other Fund expense through February 28,
2009 for Schroder U.S. Opportunities Fund and Schroder Total Return Fixed Income
Fund and through February 28, 2010 for Schroder International Alpha Fund,
Schroder International Diversified Value Fund, Schroder Emerging Market Equity
Fund and Schroder U.S. Small and Mid Cap Opportunities Fund to the extent that
the total annual fund operating expenses of a Fund (other than acquired fund
fees and expenses, interest, taxes, and extraordinary expenses) allocable to
each Fund's Advisor Shares exceed the following annual rates (based on the
average daily net assets attributable to each Fund's Advisor Shares): Schroder
International Alpha Fund, 1.40% (1.50% prior to October 1, 2008), Schroder
International Diversified Value Fund, 1.40% (1.50% prior to October 1, 2008),
Schroder Emerging Market Equity Fund, 1.50% (2.00% prior to October 1, 2008),
Schroder U.S. Opportunities Fund, 1.95%, Schroder U.S. Small and Mid Cap
Opportunities Fund, 1.30% (1.65% prior to October 1, 2008), Schroder Total
Return Fixed Income Fund, 0.65% and Schroder Multi-Asset Growth Portfolio,
1.50%. In addition, in order to limit the expenses of the A Shares and R Shares
of the Schroder Multi-Asset Growth Portfolio, the adviser has contractually
agreed to reduce its compensation (and, if necessary, to pay other Fund
expenses) until February 28, 2009 to the extent that the total annual fund
operating expenses of the Schroder Multi-Asset Growth Portfolio (other than
acquired fund fees and expenses, interest, taxes, and extraordinary expenses)
allocable to the A Shares and the R Shares exceed the following annual rates
(based on average daily net assets attributable to the Schroder Multi-Asset
Growth Portfolio's A Shares and R Shares), A Shares, 1.50%, R Shares, 1.75%.
The Funds have adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act that allows each Fund to pay distribution and
other fees with respect to its A Shares, Advisor Shares and R Shares. Under the
Plan, a Fund may make payments at the following annual rates: A Shares and
Advisor Shares: up to 0.25%, except for the Schroder North American Equity Fund
which may make payments at an annual rate of up to 0.35%; R Shares: up to 0.50%,
of the daily net assets attributable to the A Shares, Advisor Shares and R
Shares, as applicable, to compensate Schroder Advisors for distribution services
and certain shareholder services with respect to the Funds' A Shares, Advisor
Shares and R Shares.
71
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
NOTE 4 -- REDEMPTION FEE
The Schroder International Alpha Fund, Schroder International Diversified Value
Fund, Schroder Emerging Market Equity Fund, Schroder U.S. Opportunities Fund,
Schroder U.S. Small and Mid Cap Opportunities Fund and Schroder Multi-Asset
Growth Portfolio generally impose a 2.00% redemption fee on shares redeemed
(including in connection with an exchange) two months or less from their date of
purchase. These fees, which are not sales charges, are retained by the Funds and
not paid to Schroder Advisors or any other entity. The redemption fees are
included in the Statements of Changes in Net Assets under "Redemption fees," and
are included as part of "Capital paid-in" on the Statements of Assets and
Liabilities. The redemption fees paid to the Schroder International Alpha Fund,
Schroder International Diversified Value Fund, Schroder Emerging Market Equity
Fund, Schroder U.S. Opportunities Fund, Schroder U.S. Small and Mid Cap
Opportunities Fund and Schroder Multi-Asset Growth Portfolio for the year ended
October 31, 2008 totaled $8,574, $10,299, $138, $7,423, $2,935 and $9,623,
respectively.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES
TRUSTEES' FEES: The Funds pay no compensation to Trustees who are interested
persons of the Trusts, SIMNA or Schroder Advisors. For their services as
Trustees of all open-end investment companies distributed by Schroder Advisors
for the year ended October 31, 2008, Trustees who are not interested persons of
the Funds, SIMNA or Schroder Advisors received an annual retainer of $25,000 and
$2,500 per meeting attended in person or $1,000 per meeting attended by
telephone. Members of an Audit Committee for one or more of such Funds received
an additional $1,000 per meeting, with the Audit Committee chair receiving a
$5,000 retainer. Payment of Trustee fees is allocated 50% equally to each Trust
and the remaining 50% to the Funds based on their respective amount of assets.
Payment of meeting fees were allocated only among those Funds to which the
meeting related. Effective November 1, 2006, several Trustees became Trustee
Emeritus. For their services, the Emeritus trustees instead receive an annual
retainer of $15,000, for a period of two years.
Officers of the Funds are also officers of SIMNA and Schroder Advisors. Such
officers are paid no fees by the Funds for serving as officers of the Funds.
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, 2008 (except
for Schroder Multi-Asset Growth Portfolio, for which data is presented for the
period December 20, 2007 (commencement of investment operations until October
31, 2008), were as follows:
PURCHASES SALES AND MATURITIES
------------ --------------------
Schroder International Alpha Fund .................... $ 45,132,567 $ 41,640,721
Schroder International Diversified Value Fund ........ 8,009,285 5,932,805
Schroder Emerging Market Equity Fund ................. 38,898,088 32,082,399
Schroder U.S. Opportunities Fund ..................... 169,538,823 190,566,087
Schroder U.S. Small and Mid Cap Opportunities Fund ... 16,261,257 10,894,026
Schroder North American Equity Fund .................. 872,550,162 972,143,812
Schroder Total Return Fixed Income Fund .............. 31,366,800 34,641,061
Schroder Multi-Asset Growth Portfolio ................ 59,994,575 34,614,189
Purchases and proceeds from sales and maturities of U.S. Government securities
for the six months ended October 31, 2008 were as follows:
PURCHASES SALES AND MATURITIES
------------ --------------------
Schroder Total Return Fixed Income Fund .............. $336,910,045 $323,109,585
Both redemptions and subscriptions in-kind reflect the valuation of the
underlying securities in accordance with the Funds' valuation policy. The asset
price used to affect the redemption is the respective asset price used to
calculate the net asset value of the shares redeemed. For the years ended
October 31, 2008 and October 31, 2007 the Schroder North American Equity Fund
realized gains from in-kind redemptions of $5,180,341 and $60,232,563,
respectively.
Investments made by the Schroder Multi-Asset Growth Portfolio in other Schroder
Funds are considered to be investments in Affiliated Companies as defined under
section 2(a)(2) of the Investment Company Act. A summary of the investment and
income activity in each Affiliated Company's shares for Schroder Multi-Asset
Growth Portfolio is as follows:
72
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
INCOME
REALIZED FROM
GAINS AFFILIATED
AFFILIATED REGISTERED INVESTMENT COMPANY CONTRIBUTIONS WITHDRAWALS (LOSSES) INVESTMENTS
- ---------------------------------------- ------------- ----------- -------- -----------
Schroder U.S. Small and Mid Cap Opportunities Fund ... $4,076,000 $ 100,000 $ (4,579) $ --
Schroder Emerging Market Equity Fund ................. 1,394,000 -- -- --
Schroder International Alpha Fund .................... 2,721,564 -- -- --
Schroder International Diversified Value Fund ........ 2,198,144 -- -- --
Schroder Strategic Bond Fund ......................... 4,807,820 4,776,917 (30,903) 7,820
NOTE 7 -- FEDERAL INCOME TAXES
The Multi-Asset Growth Portfolio elected to be taxed as a regulated investment
company ("RIC") under Subchapter M of the Internal Revenue Code effective May
23, 2008. All earnings prior to May 23, 2008, both realized and unrealized, are
excluded from the taxable income of the Fund. The prior earnings have been
reclassified to "Capital Paid-in." The undistributed balances and the tax
character of dividends and distributions declared only reflect income earned and
distributions declared after May 23, 2008. Taxable income prior to May 23, 2008
was included in the income tax return of Schroder U.S. Holdings, Inc., an
affiliated company of SIMNA, which was the Fund's sole shareholder until May 23,
2008. The Fund's portion of taxes for this period was estimated as if the Fund
filed on a separate return basis. The estimated taxes for this period were
$147,660, as shown on the accompanying Statement of Operations as tax expense
with an offsetting reimbursement from SIMNA.
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 book/tax differences are either temporary
or permanent in nature. Any permanent differences, which may result in
distribution reclassifications, are primarily due to differing treatments for
gains resulting from redemptions in-kind, paydown gains and losses, investments
in passive foreign investment companies, reclassifications of long-term capital
gain distributions on real estate investment trust securities, partnership and
swap investments, net operating losses and foreign currency transactions.
Distributions from short-term gains and from gains on foreign currency
transactions are treated as distributions from ordinary income for tax purposes.
At October 31, 2008, the Funds reclassified the following permanent amounts
between capital paid-in, undistributed net investment income and accumulates
realized gain (loss):
INCREASE INCREASE
(DECREASE) (DECREASE)
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT REALIZED INCREASE (DECREASE)
INCOME GAIN (LOSS) CAPITAL PAID-IN
-------------- ----------- -------------------
Schroder International Alpha Fund .................... $ 117,314 $ (117,314) $ --
Schroder International Diversified Alpha Fund ........ 44,662 (44,662) --
Schroder Emerging Market Equity Fund ................. 31,924 (31,924) --
Schroder U.S. Opportunities Fund ..................... 753,731 (98,821) (654,910)
Schroder U.S. Small and Mid Cap Opportunities Fund ... 52,480 4,644 (57,124)
Schroder North American Equity Fund .................. 935,914 (6,116,256) 5,180,342
Schroder Total Return Fixed Income Fund .............. 55,121 (55,121) --
Schroder Multi-Asset Growth Portfolio ................ (8,489) (326,392) 334,881
The tax character of dividends and distributions declared during the years or
periods ended October 31, 2008 and October 31, 2007 was as follows:
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
----------- ------------ ----------
Schroder International Alpha Fund
2008 .............................................. $ 958,846 $ -- $ 958,846
2007 .............................................. 461,687 -- 461,687
Schroder International Diversified Value Fund
2008 .............................................. 1,796,852 347,610 2,144,462
2007 .............................................. 172,530 -- 172,530
73
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
----------- ------------ ----------
Schroder Emerging Market Equity Fund
2008 .............................................. $ 2,275,689 $ 1,230,055 $ 3,505,744
2007 .............................................. 63,167 -- 63,167
Schroder U.S. Opportunities Fund
2008 .............................................. 5,039,977 22,631,107 27,671,084
2007 .............................................. 7,344,179 13,699,207 21,043,386
Schroder U.S. Small and Mid Cap
Opportunities Fund
2008 .............................................. 311,839 386,347 698,186
2007 .............................................. 3,936 -- 3,936
Schroder North American Equity Fund
2008 .............................................. 28,675,160 77,583,254 106,258,414
2007 .............................................. 42,947,662 33,761,191 76,708,853
Schroder Total Return Fixed Income Fund
2008 .............................................. 3,069,846 35,383 3,105,229
2007 .............................................. 1,986,596 -- 1,986,596
As of October 31, 2008, the components of accumulated losses on a tax basis were
as follows:
UNDISTRIBUTED UNDISTRIBUTED CAPITAL OTHER TOTAL
ORDINARY LONG-TERM LOSS UNREALIZED TEMPORARY ACCUMULATED
INCOME CAPITAL GAIN CARRYFORWARD DEPRECIATION DIFFERENCES LOSSES
------------- ------------- ------------ ------------- ----------- -------------
Schroder International Alpha Fund ......... $ 235,783 $ -- $ (6,497,617) $ (19,100,900) $ 3,237 $ (25,359,497)
Schroder International Diversified Value
Fund ................................... 346,388 -- (109,889) (6,297,279) (31,965) (6,092,745)
Schroder Emerging Market Equity Fund ...... 4,686 -- (949,933) (9,755,988) (17,731) (10,718,966)
Schroder U.S. Opportunities Fund .......... -- -- (6,743,035) (29,301,433) -- (36,044,468)
Schroder U.S. Small and Mid Cap
Opportunities Fund ..................... -- -- (819,300) (2,593,297) (14,398) (3,426,995)
Schroder North American Equity Fund ....... 10,882,828 -- (41,328,784) (136,635,513) 5,909,143 (161,172,326)
Schroder Total Return Fixed Income Fund ... 1,694,829 476,922 -- (3,212,308) (534,023) (1,574,580)
Schroder Multi-Asset Growth Portfolio ..... 595,835 -- (3,192,418) (6,781,264) (197,536) (9,575,383)
As of October 31, 2008, the Funds 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:
EXPIRATION
DATES
AMOUNT OCTOBER 31,
----------- -----------
Schroder International Alpha Fund .................... $ 2,618,789 2010
913,762 2011
2,965,066 2016
Schroder International Diversified Value Fund ........ 109,889 2016
Schroder Emerging Market Equity Fund ................. 949,933 2016
Schroder U.S. Opportunities Fund ..................... 6,743,035 2016
Schroder U.S. Small and Mid Cap Opportunities Fund ... 819,300 2016
Schroder North American Equity Fund .................. 41,328,784 2016
Schroder Multi-Asset Growth Portfolio ................ 3,192,418 2016
74
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
At October 31, 2008, the identified cost for Federal income tax purposes of
investments owned by each Fund and their respective gross unrealized
appreciation and depreciation were as follows:
GROSS UNREALIZED NET UNREALIZED
IDENTIFIED -------------------------------- APPRECIATION
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ---------------- ------------- --------------
Schroder International Alpha Fund ................... $ 50,426,862 $ 229,068 $ (19,321,316) $ (19,092,248)
Schroder International Diversified Value Fund ....... 14,406,301 69,241 (6,365,415) (6,296,174)
Schroder Emerging Market Equity Fund ................ 27,259,159 13,874 (9,767,458) (9,753,584)
Schroder U.S. Opportunities Fund .................... 211,156,704 12,744,621 (42,046,054) (29,301,433)
Schroder U.S. Small and Mid Cap Opportunities Fund... 15,370,573 422,150 (3,015,447) (2,593,297)
Schroder North American Equity Fund ................. 611,041,162 13,048,976 (143,780,056) (130,731,080)
Schroder Total Return Fixed Income Fund ............. 76,567,213 398,355 (3,813,888) (3,415,533)
Schroder Multi-Asset Growth Portfolio ............... 28,876,267 17,835 (6,598,257) (6,580,422)
NOTE 8 -- PORTFOLIO INVESTMENT RISKS
Schroder International Alpha, Schroder International Diversified Value and
Schroder Emerging Market Equity Funds have a relatively large portion of their
assets invested in companies domiciled in particular foreign countries,
including emerging markets. The Funds may be more susceptible to political,
social and economic events adversely affecting those countries and such issuers.
Each of Schroder International Alpha, Schroder International Diversified Value
and Schroder Emerging Market Equity Funds may invest more than 25% of its total
assets in issuers located in any one country or group of countries. To the
extent that it does so, a Fund is susceptible to a range of factors that could
adversely affect its holdings in issuers of that country, including political
and economic developments and foreign exchange-rate fluctuations. As a result of
investing substantially in a single country, the value of the Fund's assets may
fluctuate more widely than the value of shares of a comparable fund with a
lesser degree of geographic concentration. The Funds may invest in countries
with limited or developing capital markets. Investments in these markets may
involve greater risk than investments in more developed markets.
The Schroder Total Return Fixed Income Fund invests a portion of its assets in
securities of issuers that hold mortgage securities, including subprime mortgage
securities. The value of these securities is sensitive to changes in economic
conditions, including delinquencies and/or defaults, and may be adversely
affected by shifts in the market's perception of the issuers and changes in
interest rates.
NOTE 9 -- BENEFICIAL INTEREST
The following table shows the number of shareholders each owning of record, or
to the knowledge of the Funds beneficially, 5% or more of shares of a Fund
outstanding as of October 31, 2008 and the total percentage of shares of the
Fund held by such shareholders. The table includes omnibus accounts that hold
shares on behalf of several shareholders.
5% OR GREATER SHAREHOLDERS
--------------------------
NUMBER % OF FUND HELD
-------- --------------
Schroder International Alpha Fund ...................... 3 92.61%
Schroder International Diversified Value Fund .......... 2 98.70
Schroder Emerging Market Equity Fund ................... 4 83.21
Schroder U.S. Opportunities Fund ....................... 3 74.87
Schroder U.S. Small and Mid Cap Opportunities Fund ..... 7 98.98
Schroder North American Equity Fund .................... 6 83.71
Schroder Total Return Fixed Income Fund ................ 4 94.07
Schroder Multi-Asset Growth Portfolio .................. 1 96.20
Some of the accounts shown above for Schroder International Alpha Fund, Schroder
International Diversified Value Fund, Schroder Emerging Market Equity Fund,
Schroder U.S. Small and Mid Cap Opportunities Fund and Schroder Multi-Asset
Growth Portfolio are owned by an affiliate of SIMNA.
75
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2008
NOTE 10 -- LINE OF CREDIT
The Funds, along with other related open-end series management investment
companies managed by SIMNA, entered into a credit agreement on October 6, 2008
which enables them to participate in a $25 million committed revolving line of
credit with JPMorgan Chase Bank, N.A. The proceeds from the borrowings shall be
used primarily to finance shareholder redemptions. Interest is charged to the
Funds based on its borrowings at the current reference rate. The Funds pay their
pro rata portion of an annual commitment fee of 0.15% on the total amount of the
credit facility. The Funds did not have any borrowings under the credit
agreement during the period from October 6, 2008 through October 31, 2008.
NOTE 11 -- CAPITAL SHARE TRANSACTIONS
Capital share transactions for the Funds were as follows:
INTERNATIONAL
INTERNATIONAL DIVERSIFIED EMERGING MARKET
ALPHA FUND VALUE FUND EQUITY FUND
----------------------- ---------------------- ------------------------
2008 2007 2008 2007 2008 2007
---------- ---------- ---------- --------- ---------- -----------
INVESTOR SHARES:
Sales of shares ................. 351,750 1,029,716 282,628 26,303 642,134 348,015
Reinvestment of distributions ... 40,026 25,941 184,373 14,253 230,257 5,239
Redemption of shares ............ (150,536) (1,093,754) (84,401) (26,303) (90,216) (12,788)
---------- ---------- -------- ------- ---------- -----------
Net increase (decrease) in
Investor Shares .............. 241,240 (38,097) 382,600 14,253 782,175 340,466
========== ========== ======== ======= ========== ===========
ADVISOR SHARES:
Sales of shares ................. 469,751 1,446,287 50,881 34,528 329,402 50,217
Reinvestment of distributions ... 36,416 16,085 24,459 1,531 18,455 283
Redemption of shares ............ (317,143) (1,370,058) (59,364) (14,226) (340,781) (5,280)
---------- ---------- -------- ------- ---------- -----------
Net increase in Advisor Shares .. 189,024 92,314 15,976 21,833 7,076 45,220
========== ========== ======== ======= ========== ===========
U.S. OPPORTUNITIES U.S. SMALL AND MID CAP NORTH AMERICAN
FUND OPPORTUNITIES FUND EQUITY FUND
----------------------- ---------------------- ------------------------
2008 2007 2008 2007 2008 2007
---------- ---------- ---------- --------- ---------- -----------
INVESTOR SHARES:
Sales of shares ................. 984,467 2,945,901 712,839 195,225 3,916,897 10,660,078
Reinvestment of
distributions ................ 1,238,726 928,653 55,239 364 8,423,399 1,506,831
Redemption of shares ............ (2,802,194) (1,987,960) (71,717) (62,338) (3,625,013) (29,037,394)
Redemption of shares in-kind .... -- -- -- -- (4,373,826) (23,138,873)
---------- ---------- -------- ------- ---------- -----------
Net increase (decrease)
in Investor Shares ........... (579,001) 1,886,594 696,361 133,251 4,341,457 (40,009,358)
========== ========== ======== ======= ========== ===========
ADVISOR SHARES:
Sales of shares ................. 28,434 263,597 12,224 81,615 2,088 782
Reinvestment of distributions ... 24,017 2,754 7,746 -- 1,565 613
Redemption of shares ............ (73,488) (61,888) (104,345) (18,233) -- --
---------- ---------- -------- ------- ---------- -----------
Net increase (decrease)
in Advisor Shares ............ (21,037) 204,463 (84,375) 63,382 3,653 1,395
========== ========== ======== ======= ========== ===========
76
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 2008
TOTAL RETURN FIXED
INCOME FUND
---------------------
2008 2007
-------- ----------
INVESTOR SHARES:
Sales of shares .................. 108,534 1,279,192
Sales sold in-kind ............... -- 4,787,713
Reinvestment of distributions .... 309,996 198,870
Redemption of shares ............. (142,808) (1,207,763)
-------- ----------
Net increase in Investor Shares .. 275,722 5,058,012
======== ==========
ADVISOR SHARES:
Sales of shares .................. 30,531 70,155
Reinvestment of distributions .... 3,447 3,931
Redemption of shares ............. (16,828) (95,000)
-------- ----------
Net increase (decrease) in
Advisor Shares ................ 17,150 (20,914)
======== ==========
MULTI-ASSET
GROWTH PORTFOLIO
----------------
2008(a)
----------------
INVESTOR SHARES:
Sales of shares .................. 50,480
Reinvestment of distributions .... --
Redemption of shares ............. --
---------
Net increase in Investor Shares .. 50,480
=========
A SHARES:
Sales of shares .................. 2,654,639
Reinvestment of distributions .... --
Redemption of shares ............. (37,504)
---------
Net increase in A Shares ......... 2,617,135
=========
ADVISOR SHARES:
Sales of shares .................. 380,201
---------
Net increase in Advisor Shares ... 380,201
=========
R SHARES:
Sales of shares .................. 50,000
---------
Net increase in R Shares ......... 50,000
=========
(a) Fund commenced investment activities on December 20, 2007.
NOTE 12 -- ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued STATEMENT ON FINANCIAL ACCOUNTING STANDARDS
(SFAS) NO. 157, "FAIR VALUE MEASUREMENTS." This standard establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. The changes to current generally accepted accounting
principles from the application of this Statement relate to the definition of
fair value, the methods used to measure fair value, and the expanded disclosures
about fair value measurements. As of October 31, 2008, the Funds do not believe
the adoption of SFAS No. 157 will impact the amounts reported in the financial
statements; however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the measurements
reported on the statement of changes in net assets for a fiscal period.
In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 161 effective for fiscal years and
interim periods beginning after November 15, 2008. SFAS No. 161 requires
enhanced disclosures about the Funds' derivative and hedging activities,
including how such activities are accounted for and their effect on the Funds'
financial position, performance, and cash flows. Management is currently
evaluating the impact the adoption of SFAS No. 161 will have on the Funds'
financial statements and related disclosures.
77
SCHRODER MUTUAL FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Schroder Global Series Trust,
Schroder Capital Funds (Delaware) and
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 North American Equity Fund
(constituting Schroder Global Series Trust), Schroder U.S. Opportunities Fund
and Schroder International Alpha Fund, (constituting Schroder Capital Funds
(Delaware)) and Schroder International Diversified Value Fund, Schroder U.S
Small and Mid Cap Opportunities Fund, Schroder Emerging Market Equity Fund,
Schroder Total Return Fixed Income Fund, and Schroder Multi-Asset Growth
Portfolio (constituting part of Schroder Series Trust) (collectively referred to
as the "Funds") at October 31, 2008, the results of each of their operations for
the year or period then ended and the changes in each of their net assets and
the financial highlights for each of the years or periods presented, 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 the standards of the Public Company Accounting Oversight Board
(United States). Those standards 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 securities at October 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 23, 2008
78
SCHRODER MUTUAL FUNDS
PROXY VOTING (UNAUDITED)
A description of the Funds' proxy voting policies and procedures is available
upon request, without charge, by visiting the Securities and Exchange
Commission's ("SEC") website at http://www.sec.gov, or by calling 1-800-464-3108
and requesting a copy of the applicable Fund's Statement of Additional
Information or on the Schroder Funds website at http://www.schroderfunds.com, by
downloading the Funds' Statement of Additional Information. Information
regarding how the Funds voted proxies related to portfolio securities during the
most recent 12-month period ended June 30 is available without charge, upon
request by calling 1-800-464-3108 and on the SEC's web-site at
http://www.sec.gov.
N-Q (UNAUDITED)
The Funds file their complete schedules of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms
N-Q are available on the SEC's website at http://www.sec.gov, and may be
reviewed and copied at the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
INFORMATION REGARDING REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS
(UNAUDITED)
RENEWAL OF INVESTMENT ADVISORY AGREEMENTS FOR THE SCHRODER MUTUAL FUNDS
The Advisory Agreements for all of the Schroder Mutual Funds (the "Funds") are
subject to annual approval by the Trustees of the Funds. The Trustees meet over
the course of the year with investment advisory personnel from Schroder
Investment Management North American Inc. ("SIMNA") and regularly review
detailed information regarding the investment program and performance of each
Fund. The Trustees met in June 2008 to consider the continuation of the Advisory
Agreement in respect of each of the Funds for the following year. The Trustees
considered a number of factors, none of which alone they considered
determinative. Factors considered by the Trustees included those described
below, among others.
The Trustees considered the fees charged by SIMNA to the Funds under the
Advisory Agreements (which fees, for this purpose, were considered to include
the administrative fee paid by Schroder North American Equity Fund to Schroder
Fund Advisors Inc.), and the fee payable by SIMNA to Schroder Investment
Management North America Limited ("SIMNA Ltd.") as sub-adviser to Schroder
Emerging Market Equity Fund, Schroder International Alpha Fund, Schroder
International Diversified Value Fund, Schroder North American Equity Fund, and
Schroder Multi-Asset Growth Portfolio out of the fees received by SIMNA with
respect to such Funds. The Trustees also considered the total expense ratio of
each of the Funds. The Trustees reviewed the information provided by SIMNA and
compiled by the independent Lipper organization showing a comparison of SIMNA's
fee rate for each Fund, as well as each Fund's expense ratio, compared to peer
mutual funds having similar objectives, strategies, and asset sizes. The
Trustees also considered information provided by SIMNA as to the fees charged by
SIMNA to clients other than the Funds, including institutional separate
accounts, offshore funds and mutual funds for which SIMNA serves as sub-adviser.
The Trustees noted that the advisory and administrative fee charged by SIMNA to
the Funds was generally fair compared to those paid by other clients of SIMNA
and that SIMNA generally charges lower fees to third party mutual funds for
which SIMNA serves as sub-adviser. Representatives of SIMNA reviewed with the
Trustees the reasons for the differences between the fees charged to the Funds
and to those accounts, citing, among other things, the fact that the services
and resources required of SIMNA where it sub-advises mutual funds sponsored by
others are substantially less than in the case of the Funds, since many of the
administrative and compliance oversight and regulatory responsibilities related
to the management function are retained in part by the primary adviser. The
Trustees also noted that in many cases the fees charged to SIMNA's separate
account clients are lower than those charged to the Funds. Representatives of
SIMNA stated that this is primarily due to the fact that the compliance, legal,
and administrative burdens of providing investment advice to mutual funds exceed
those required to provide advisory services to non-mutual fund clients and that
management of public mutual funds generally subjects SIMNA and SIMNA Ltd. to
increased regulatory and enterprise risk. SIMNA management also reported that
the Funds require the resources necessary to conduct daily valuation and to
satisfy liquidity requirements, which is not necessarily the case for separate
account clients. In two asset classes, the fees charged to SIMNA's separate
account clients exceeded those charged to the Funds. SIMNA management explained
that it can be difficult and time-consuming to manage smaller accounts within
the framework of its investment models, so SIMNA may charge institutional
clients a premium for offering the customized services and reporting of a
separate account. The Trustees also noted that, with respect to SIMNA's offshore
pooled vehicles, when advisory fees are charged at the fund level they appear to
be at least the same as, but in most cases higher than, those charged to the
Funds.
79
SCHRODER MUTUAL FUNDS
INFORMATION REGARDING REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS
(UNAUDITED) (CONTINUED)
The Trustees considered the profitability analysis with respect to each Fund for
the years ended December 31, 2007 and December 31, 2006. This information showed
the substantial costs to SIMNA of providing services to the Funds, and indicated
that SIMNA had a net loss with respect to Schroder U.S. Small and Mid Cap
Opportunities Fund, Schroder North American Equity Fund, Schroder Emerging
Market Equity Fund, Schroder International Diversified Value Fund, Schroder
Total Return Fixed Income Fund, and Schroder Multi-Asset Growth Portfolio. The
Trustees considered that SIMNA's net loss from managing the Funds for the year
ended December 31, 2006 had changed to a net profit in the year ended December
31, 2007, and the Trustees concluded that the profitability of Schroder U.S.
Opportunities Fund and Schroder International Alpha Fund to SIMNA did not appear
unreasonable in light of services, rendered, competitiveness and performance.
The Trustees considered whether economies of scale would likely be realized as
the Funds grow and whether a reduction in the advisory fees paid by the Funds by
means of breakpoints would be appropriate. They concluded that it did not appear
necessary at this point for new breakpoints to be implemented, although they
would continue to consider the matter in the future as the Funds grow. SIMNA
noted that, at this time, any increased profit realized by the firm as the Funds
grow enables Schroders to devote greater resources to the management of the
Funds, as well as to provide financial incentives for the portfolio managers,
analysts, and other personnel who in many cases have alternative employment and
business opportunities available to them. In addition, SIMNA noted that most of
the Funds were small and, in its view, competitively priced, and that SIMNA
believed that where it is recognizing profit from a product, the level of
profitability is not excessive.
The Trustees considered the fee waivers and/or expense limitations for the
Funds, including the time periods during which the fee waivers would be in place
and possible extensions of such fee waivers and/or expense limitations. SIMNA
also noted that it had agreed to maintain fee waivers and expense limitations
for most of the Funds.
Representatives of SIMNA discussed with the Trustees in detail the methodology
used by Lipper to select peer group funds for the Funds. The Trustees reviewed
detailed fee and expense and performance information presented by Lipper for
each of the Funds in connection with the proposed renewal of the Advisory
Agreements. The review noted that Schroder North American Equity Fund is
competitive both in its overall expense ratio and its performance, ranking first
out of 15 peer group funds in contractual management fees and in the first
quintile for all expenses rankings measured by Lipper. The Fund's performance in
the last year performance had suffered somewhat due to market conditions, and
was in the third quintile for the last year, but the long-term performance
record remained favorable. The review showed that Schroder International
Diversified Value Fund had a limited performance history, but ranked second out
of four peer group funds in performance while contractual management fees were
higher than the median for the peer group, although after fee waivers and
expense limitations the Fund ranked four out of 13 peer group funds for total
expenses for Investor shares, 11 out of 13 peer group funds for total expenses
for Advisor shares, and first out of 12 peer group funds for management fees
actually paid. Representatives of SIMNA explained that certain Funds had higher
non-management fee expenses than the median of the funds in their respective
peer groups because many of the Funds were smaller than other funds in their
respective peer groups, so fixed expenses, such as transfer agency expenses,
were spread over a smaller amount of assets. Representatives of SIMNA also said
that due to such Funds' relatively small size even a small change in net asset
value can make a substantial difference in such expenses. They noted that where
expenses are reflected for less than a full year of operations this can also
have a substantial impact on expenses and that some expenses do increase as net
asset value increases, for instance expenses related to reprinting prospectuses.
Representatives of SIMNA also noted that audit and other fees that are shared by
the Funds are allocated one-half to each Fund based on assets and one-half is
evenly divided among the Funds, regardless of assets. SIMNA also stated that in
light of Schroder International Diversified Value Fund's limited performance
history, relatively low net assets, and overall expense ratio, SIMNA management
believes that the Fund fees are reasonable. With respect to Schroder U.S.
Opportunities Fund, it was noted that the Fund's contractual management fees are
in the fourth quintile but that performance was consistently in the first
quintile since the Fund's inception as measured by Lipper. While contractual
management fees were above the median, management considered this reasonable
given the limited capacity of the Fund and its historical strong performance.
Then turning to Schroder U.S. Small and Mid Cap Opportunities Fund, it was noted
that performance has been slightly below benchmark but overall strong, was in
the first quintile since inception and was in the second quintile in the last
year. It was also noted that, although the Fund had relatively high expenses,
this was the result at least in part, to the fact that the Fund was the second
smallest fund in the peer group measured by net assets and had a limited
performance history. As to Schroder International Alpha Fund, it was noted that
although the contractual management fees were in the fourth quintile, the Fund's
performance continued to be in the first quintile in all periods reported by
Lipper.
80
SCHRODER MUTUAL FUNDS
INFORMATION REGARDING REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS
(UNAUDITED) (CONCLUDED)
With respect to Schroder Emerging Market Equity Fund, it was noted that
performance had improved significantly, with performance being in the first
quintile and second out of 10 peer group funds for the last year and since
inception, while contractual management fees were in the third quintile, total
expenses in the second quintile, and management fees actually paid in the first
quintile. In respect of Schroder Total Return Fixed Income Fund it was noted
that the Fund has a competitive contractual management fee, being ranked second
out of 17 peer group funds. It was also noted that that for the period since
inception the Fund has ranked in the first quintile for performance and, while
performance in the last year was in the second quintile, it had improved in
recent months. For Schroder Multi-Asset Growth Portfolio, it was noted that, due
to the Fund's limited operating history, the Lipper data provided was of limited
usefulness.
The Trustees considered the nature, extent and quality of the services provided
by SIMNA and the non-advisory services provided by affiliates of SIMNA. In this
regard, the Trustees took into account the experience of the Funds' portfolio
management teams and of SIMNA's senior management, and the time and attention
devoted by each to the Funds. After considering all the information described
above, the Trustees at the meeting, including a majority of the Trustees who are
not "interested persons" (as that term is defined in the Investment Company Act
of 1940, as amended) of the Funds or SIMNA, unanimously voted to approve the
continuation of the Advisory Agreement in respect of each of the Funds,
including the advisory fees proposed in connection with that continuation.
81
SCHRODER MUTUAL FUNDS
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
We believe it is important for you to understand the impact of fees regarding
your investment. All mutual funds have operating expenses. As a shareholder of
the Fund, you incur ongoing costs, which include, among others, costs for
portfolio management, administrative services, and shareholder reports (like
this one), and in the case of Advisor, A and R Shares, distribution (12b-1)
fees. Operating expenses, which are deducted from a fund's gross income,
directly reduce the investment return of the fund. A fund's expenses are
expressed as a percentage of its average net assets. This figure is known as the
expense ratio. The following examples are intended to help you understand the
ongoing costs (in dollars) of investing in your Fund and to compare these costs
with those of other mutual funds. The examples are based on an investment of
$1,000 made at the beginning of the period shown and held for the entire period.
The table below illustrates your Fund's costs in two ways.
- - ACTUAL EXPENSES. This section helps you to estimate the actual expenses
after fee waivers that you paid over the period. The "Ending Account Value"
shown is derived from the Fund's actual return, and the fourth column shows
the dollar amount that would have been paid by an investor who started with
$1,000 in the Fund. You may use the information here, together with the
amount you invested, to estimate the expenses that you paid over the
period.
To do so, simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number given for your Fund under the heading "Expenses Paid During
Period."
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. This section is intended to
help you compare your Fund's costs with those of other mutual funds. It
assumes that the Fund had a return of 5% before expenses during the year,
and that it incurred expenses at the rate of which it in the past incurred
expenses. In this case, because the return used is not the Fund's actual
return, the results may not be used to estimate the actual ending balance
of an account in the Fund over the period or expenses you actually paid.
The example is useful in making comparisons because the SEC requires all
mutual funds to calculate expenses in this table based on a 5% return. You
can assess your Fund's costs by comparing this hypothetical example with
the hypothetical examples that appear in shareholder reports of other
funds.
Please note that the expenses shown in the table are meant to highlight and help
you compare ongoing costs only and do not reflect any transactional costs such
as redemption fees, which are described in the Prospectus. If this fee were
applied to your account, your costs would be higher.
Beginning Ending Net Expenses
Account Account Annualized Paid
Value Value Expense During
5/1/08 10/31/08 Ratios Period*
--------- --------- ---------- --------
Schroder International Alpha Fund
Actual Expenses
Investor Shares $1,000.00 $ 571.80 1.25% $4.94
Advisor Shares 1,000.00 571.60 1.50 5.93
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,018.85 1.25% $6.34
Advisor Shares 1,000.00 1,017.60 1.50 7.61
Schroder International Diversified Value Fund
Actual Expenses
Investor Shares $1,000.00 $ 555.40 1.25% $4.89
Advisor Shares 1,000.00 554.60 1.50 5.86
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,018.85 1.25% $6.34
Advisor Shares 1,000.00 1,017.60 1.50 7.61
82
SCHRODER MUTUAL FUNDS
DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONTINUED)
Beginning Ending Net Expenses
Account Account Annualized Paid
Value Value Expense During
5/1/08 10/31/08 Ratios Period*
--------- --------- ---------- --------
Schroder Emerging Market Equity Fund
Actual Expenses
Investor Shares $1,000.00 $ 505.10 1.75% $6.62
Advisor Shares 1,000.00 504.30 2.00 7.56
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,016.34 1.75% $8.87
Advisor Shares 1,000.00 1,015.08 2.00 10.13
Schroder U.S. Opportunities Fund
Actual Expenses
Investor Shares $1,000.00 $ 748.00 1.22% $5.36
Advisor Shares 1,000.00 746.70 1.47 6.45
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,019.00 1.22% $6.19
Advisor Shares 1,000.00 1,017.75 1.47 7.46
Schroder U.S. Small and Mid Cap Opportunities Fund
Actual Expenses
Investor Shares $1,000.00 $ 728.30 1.40% $6.08
Advisor Shares 1,000.00 727.00 1.65 7.16
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,018.10 1.40% $7.10
Advisor Shares 1,000.00 1,016.84 1.65 8.36
Schroder North American Equity Fund
Actual Expenses
Investor Shares $1,000.00 $ 718.50 0.34% $1.47
Advisor Shares 1,000.00 716.30 0.69 2.98
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,023.43 0.34% $1.73
Advisor Shares 1,000.00 1,021.67 0.69 3.51
Schroder Total Return Fixed Income Fund
Actual Expenses
Investor Shares $1,000.00 $ 979.30 0.40% $1.99
Advisor Shares 1,000.00 977.10 0.65 3.23
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,023.13 0.40% $2.03
Advisor Shares 1,000.00 1,021.87 0.65 3.30
83
SCHRODER MUTUAL FUNDS
DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONCLUDED)
Beginning Ending Net Expenses
Account Account Annualized Paid
Value Value Expense During
5/1/08 10/31/08 Ratios Period*
--------- --------- ---------- --------
Schroder Multi-Asset Growth Portfolio
Actual Expenses
Investor Shares $1,000.00 $ 694.70 1.25% $5.32
A Shares 1,000.00 694.40 1.50 6.39
Advisor Shares 1,000.00 694.40 1.50 6.39
R Shares 1,000.00 692.50 1.75 7.45
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,018.85 1.25% $6.34
A Shares 1,000.00 1,017.60 1.50 7.61
Advisor Shares 1,000.00 1,017.60 1.50 7.61
R Shares 1,000.00 1,016.34 1.75 8.87
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the account period, multiplied by 184/366 (to
reflect the one-half year period).
84
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SCHRODER MUTUAL FUNDS
TRUSTEES AND OFFICERS (UNAUDITED)
Additional information regarding the Trustees is included in the Funds'
Statement of Additional Information, which is available free of charge by
calling (800) 464-3108.
TERM OF
OFFICE
AND NUMBER OF SERIES OTHER
POSITION(S) LENGTH PRINCIPAL IN FUND COMPLEX DIRECTORSHIPS
NAME, AGE HELD WITH THE OF TIME OCCUPATION(S) OVERSEEN BY HELD BY
AND ADDRESS TRUSTS SERVED DURING PAST 5 YEARS BOARD MEMBER(a) BOARD MEMBER
- -------------------------- ------------- ------------------ ----------------------- ---------------- ---------------------
TRUSTEES##
Peter S. Knight*, 57 Trustee Indefinite Director, Schroder 10 Medicis; PAR
875 Third Avenue, 22nd Fl. (All Trusts) Since 1993 (SCF(D) Credit Renaissance Pharmaceuticals;
New York, NY 10022 and SST) Fund, LP; Director, Entremed; Generation
Since 2003 (SGST) Schroder UK Long/Short Investment Management
Fund Ltd.; President, Global Equity Fund
Generation Investment LLP.
Management U.S.
Formerly, Director,
Schroder Japanese
Long/Short Fund;
Director, Schroder
Alternative Strategies
Fund; Managing
Director, MetWest
Financial (financial
services); President,
Sage Venture Partners
(investing); and
Partner, Wunder,
Knight, Forcsey &
DeVierno (law firm).
Catherine A. Mazza+, 48 Trustee and Indefinite Senior Vice President, 10 None
875 Third Avenue, 22nd Fl. Chairman Since 2003 (SGST) Schroder Investment
New York, NY 10022 (All Trusts) Since 2006 (SCF(D) Management North
and SST) American Inc.
("Schroders");
President and Director,
Schroder Fund Advisors
Inc. Formerly,
President and Chief
Executive Officer of
Schroder Capital Funds
(Delaware) and Schroder
Series Trust.
William L. Means*, 72 Trustee Indefinite Retired. 10 None
875 Third Avenue, 22nd Fl. (All Trusts) Since 1997 (SCF(D)
New York, NY 10022 and SST)
Since 2006 (SGST)
James D. Vaughn*, 63 Trustee Indefinite Since Retired. Formerly, 10 AMG National Trust
875 Third Avenue, 22nd Fl. (All Trusts) 2003 Managing Partner, Bank.
New York, NY 10022 Deloitte & Touche USA,
LLP -- Denver
(accounting).
- ----------
* Also serves as a member of the Audit Committees for each Trust on which
they serve.
+ Trustee deemed to be an "interested person" of the Trusts as defined in the
Investment Company Act are referred to as an "Interested Trustee." Ms.
Mazza is an Interested Trustee due to her status as an officer and employee
of Schroder Investment Management North America Inc., the Trust's
investment advisor and its affiliates.
## Effective November 1, 2006, Messrs. David N. Dinkins, John I. Howell,
Clarence F. Michalis and Herman C. Schwab became Trustees Emeriti of
certain of the Trusts.
(a) The "Fund Complex" includes all series of Schroder Capital Funds
(Delaware), Schroder Series Trust and Schroder Global Series Trust.
86 & 87
SCHRODER MUTUAL FUNDS
TRUSTEES AND OFFICERS (UNAUDITED)
TERM OF
OFFICE
AND
POSITION(S) LENGTH PRINCIPAL
NAME, AGE HELD WITH THE OF TIME OCCUPATION(S)
AND ADDRESS TRUSTS SERVED DURING PAST 5 YEARS
- -------------------------- --------------- ------------------ -----------------------
OFFICERS
Mark A. Hemenetz, 52 President and Indefinite Chief Operating Officer
875 Third Avenue, 22nd Fl. Principal Since 2004 Americas, Schroder;
New York, NY 10022 Executive Chairman and Director,
Officer Schroder Fund Advisors
Inc. Formerly,
Executive Vice
President and Director
of Investment
Management, Bank of New
York.
Alan M. Mandel, 51 Treasurer and Indefinite Head of Fund
875 Third Avenue, 22nd Fl. Principal Since 1998 Administration,
New York, NY 10022 Financial and (SST and SCF(D); Schroders; Director,
Accounting Since 2003 (SGST) Schroder Fund Advisors,
Officer Inc.
Stephen M. DeTore, 57 Chief Indefinite Chief Compliance
875 Third Avenue, 22nd Fl. Compliance Since 2005 Officer, Schroders;
New York, NY 10022 Officer Senior Vice President
and Director, Schroder
Fund Advisors Inc.
Formerly, Deputy
General Counsel,
Gabelli Asset
Management, Inc.;
Associate General
Counsel, Gabelli Asset
Management, Inc.;
Assistant Director,
Office of Examination
Support, U.S.
Securities and Exchange
Commission.
William Sauer, 45 Vice Indefinite Head of Investor
875 Third Avenue, President Since 2008 Services, Schroders.
New York, NY 10022 Formerly, Vice
President, The Bank of
New York
Carin F. Muhlbaum, 46 Vice Indefinite General Counsel and
875 Third Avenue, 22nd Fl. President Vice President Chief Administrative
New York, NY 10022 since 1998 Officer, Schroders;
(SST and (SCF(D); Senior Vice President,
Vice President Director, Secretary and
since 2003 (SGST) General Counsel,
Schroder Fund Advisors
Inc.
Abby Ingber, 45 Chief Legal Indefinite Deputy General Counsel,
875 Third Avenue, 22nd Fl. Officer and Chief Legal Schroders. Formerly,
New York, NY 10022 Secretary/Clerk Officer since 2006 Senior Counsel,
Secretary/Clerk TIAA-CREF.
since 2007
Angel Lanier, 47 Assistant Indefinite Legal Assistant,
875 Third Avenue, 22nd Fl. Secretary Since 2005 Schroders; Assistant
New York, NY 10022 Vice President,
Schroder Fund Advisors
Inc. Formerly,
Associate, Schroders.
88 & 89
SCHRODER MUTUAL FUNDS
NOTICE TO SHAREHOLDERS (UNAUDITED)
For shareholders that do not have an October 31, 2008 tax year end, this notice
is for informational purposes only. For shareholders with an October 31, 2008
tax year end, please consult your tax advisor as to the pertinence of this
notice. For the fiscal year ended October 31, 2008, each Fund has designated the
following items with regard to distributions paid during the year.
QUALIFYING
FOR
CORPORATE
LONG TERM DIVIDENDS U.S. QUALIFYING
(15% RATE) ORDINARY TAX- REC. QUALIFYING GOVERNMENT QUALIFYING SHORT-TERM
CAPITAL GAIN INCOME EXEMPT TOTAL DEDUCTIONS DIVIDEND INTEREST INTEREST CAPITAL
FUND DISTRIBUTION DISTRIBUTIONS INTEREST DISTRIBUTIONS (1) INCOME (2) (3) INCOME (4) GAIN (5)
- ---- ------------ ------------- ---------- ------------- ---------- ----------- ---------- ---------- ----------
Schroder International
Alpha Fund (a) ..... 0.00% 100.00% 0.00% 100.00% 0.00% 89.72% 0.00% 2.94% 0.00%
Schroder International
Diversified Value
Fund (b) ........... 15.73% 84.27% 0.00% 100.00% 0.00% 15.55% 0.00% 1.24% 100.00%
Schroder Emerging
Market Equity Fund
(c) ................ 34.51% 65.49% 0.00% 100.00% 0.00% 10.68% 0.00% 0.26% 100.00%
Schroder U.S.
Opportunities
Fund ............... 81.79% 18.21% 0.00% 100.00% 34.75% 35.00% 0.00% 0.00% 100.00%
Schroder U.S. Small and
Mid Cap
Opportunities
Fund ............... 55.33% 44.67% 0.00% 100.00% 18.35% 18.39% 0.00% 11.47% 100.00%
Schroder North American
Equity Fund ........ 73.02% 26.98% 0.00% 100.00% 66.08% 69.08% 0.00% 1.64% 100.00%
Schroder Total Return
Fixed Income
Fund ............... 1.14% 98.86% 0.00% 100.00% 0.00% 0.00% 19.00% 100.00% 100.00%
Schroder Multi-Asset
Growth Portfolio ... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of
"Ordinary Income Distributions."
(2) The percentage in this column represents the amount of "Qualifying Dividend
Income" as created by the Jobs and Growth Tax Relief Reconciliation Act of
2003 and is reflected as a percentage of "Ordinary Income Distributions."
It is the intention of each of the aforementioned funds to designate the
maximum amount permitted by law.
(3) "U.S. Government Interest" represents the amount of interest that was
derived from direct U.S. Government Obligations and distributed during the
fiscal year. This amount is reflected as a percentage of total ordinary
income distributions (the total of short-term capital gain and net
investment income distributions). Generally, interest from direct U.S.
Government Obligations is exempt from state income tax.
(4) The percentage in this column represents the amount of "Qualifying Interest
Income" as created by the American Jobs Creation Act of 2004 and is
reflected as a percentage of net investment income distributions that are
exempt from U.S. withholding tax when paid by foreign investors.
(5) The percentage in this column represents the amount of "Qualifying
Short-Term Capital Gain" as created by the American Jobs Creation Act of
2004 and is reflected as a percentage of short-term capital gain
distributions that are exempt from U.S. withholding tax when paid by
foreign investors.
(a) The Fund intends to pass through a foreign tax credit to shareholders. For
fiscal year ended 2008, the total amount of foreign source income is
$1,274,154. The total amount of foreign tax to be paid is $87,315. Your
allocable share of the foreign tax credit will be reported on Form 1099
DIV.
(b) The Fund intends to pass through a foreign tax credit to shareholders. For
fiscal year ended 2008, the total amount of foreign source income is
$676,749. The total amount of foreign tax to be paid is $64,993. Your
allocable share of the foreign tax credit will be reported on Form 1099
DIV.
(c) The Fund intends to pass through a foreign tax credit to shareholders. For
fiscal year ended 2008, the total amount of foreign source income is
$638,365. The total amount of foreign tax to be paid is $58,091. Your
allocable share of the foreign tax credit will be reported on Form 1099
DIV.
90
SCHRODER MUTUAL FUNDS
NOTICE TO SHAREHOLDERS (UNAUDITED) (CONCLUDED)
On December 12, 2008 the Funds made the following per share distributions to the
shareholders of record as of December 11, 2008:
NET
INVESTMENT
INCOME
----------
Schroder International Alpha Fund
Investor Shares .......................... $0.7310
Advisor Shares ........................... 0.5480
Schroder International Diversified Value Fund
Investor Shares .......................... 0.2723
Advisor Shares ........................... 0.2517
Schroder Emerging Market Equity Fund
Investor Shares .......................... 0.0064
Advisor Shares ........................... --
Schroder North American Equity Fund
Investor Share ........................... 0.2406
Advisor Shares ........................... 0.2108
Schroder Multi-Asset Growth Portfolio
Investor Shares .......................... 0.3646
A Shares ................................. 0.3353
Advisor Shares ........................... 0.3430
R Shares ................................. 0.3214
91
NOTES
PRIVACY STATEMENT
In the course of doing business with Schroders and the Schroder Mutual Funds,
you share nonpublic personal and financial information ("nonpublic personal
information") with us. Schroders respects your right to privacy. We understand
that you have entrusted us with this private information and we recognize the
importance of protecting unnecessary or unauthorized access to it.
I. INFORMATION THAT WE COLLECT
We may collect nonpublic personal information about you when you communicate or
transact business with us or with our service providers in writing,
electronically, or by telephone. For example, we collect nonpublic personal
information (such as name, address, account and other investment information)
about you from the following sources:
- - Applications or forms completed by you; and
- - Your transactions and account positions with us, our affiliates, or others
(including, for example, your own broker or custodian).
II. INFORMATION THAT WE DISCLOSE
We do not sell or rent your nonpublic personal information to any third parties.
We may disclose your nonpublic personal information to third parties in the
following limited circumstances:
- - We may disclose some or all of your nonpublic personal information to
companies that help us maintain, process or service your transactions or
account(s) or financial products or services effected by or through us,
including companies that perform administrative, accounting, transfer
agency, custodial, brokerage or proxy solicitation services for us.
- - We may disclose some or all of your nonpublic personal information, such as
account and transaction data, to companies which assist us in marketing or
client servicing. These companies will use this information only for the
services for which we hired them, are not permitted to use or share this
information for any other purpose and are required to protect the
confidentiality and security of this information.
- - We may disclose or report some or all of your nonpublic personal
information if you request or authorize us to do so, for institutional risk
control, or in other circumstances where we believe in good faith that
disclosure is required or permitted under law.
III. OUR SECURITY PROCEDURES
We maintain physical, electronic, and procedural safeguards that comply with
federal standards to protect your nonpublic personal information. Within
Schroders, access to such information is limited to those employees who need it
to perform their jobs, such as servicing your accounts, resolving problems, or
informing you of new products or services. Finally, our Code of Ethics, which
applies to all employees, restricts the use of customer information and requires
that it be held in strict confidence.
We observe these policies with respect to current and former Schroders customers
and shareholders of the Schroder Mutual Funds.
If you identify any inaccuracy in your personal information or you need to make
a change to that information, please contact us in writing so that we may
promptly update our records.
This Privacy Policy applies to the Schroder Mutual Funds,
Schroder Fund Advisors Inc. and Schroder Investment
Management North America Inc.
(SCHRODERS LOGO)
INVESTMENT ADVISOR Schroder Investment Management North America Inc.
875 Third Avenue, 22nd Floor
New York, NY 10022
TRUSTEES Catherine A. Mazza (CHAIRMAN)
David N. Dinkins*
John I. Howell*
Peter S. Knight
William L. Means
Clarence F. Michalis*
Hermann C. Schwab*
James D. Vaughn
* TRUSTEE EMERITUS
DISTRIBUTOR Schroder Fund Advisors Inc.
875 Third Avenue, 22nd Floor
New York, NY 10022
TRANSFER & SHAREHOLDER Boston Financial Data Services, Inc.
SERVICING AGENT
CUSTODIAN JPMorgan Chase Bank
COUNSEL Ropes & Gray LLP
INDEPENDENT REGISTERED PricewaterhouseCoopers LLP
PUBLIC ACCOUNTING FIRM
The information contained in this report is
intended for the general information of the
shareholders of the Trusts. This report is not
authorized for distribution to prospective
investors unless preceded or accompanied by a
current prospectus which contains important
information concerning the Trusts.
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER SERIES TRUST
SCHRODER GLOBAL SERIES TRUST
P.O. BOX 8507
BOSTON, MA 02266
(800) 464-3108
50935
(SCHRODERS LOGO)
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of trustees has determined that the registrant has
at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial expert is James D. Vaughn. Mr. Vaughn is
independent as defined in Form N-CSR Item 3(a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
PricewaterhouseCoopers LLP billed the Trust aggregate fees for services rendered
to the Trust for the last two fiscal years as follows:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2008 2007
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
All fees and All fees and All other fees All fees and All fees and All other fees
services to the services to and services to services to the services to and services to
Trust that were service service Trust that were service service
pre-approved affiliates that affiliates that pre-approved affiliates that affiliates that
were did not require were did not require
pre-approved pre-approval pre-approved pre-approval
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(a) Audit $56,420 N/A $0 $53,730 N/A $0
Fees(1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(b) Audit-
Related $0 $0 $0 $0 $0 $308,032 (4)
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(c) Tax Fees $7,885 (2) $0 $148,000 (3) $7,510 (2) $0 $0
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(d) All $0 $0 $0 $0 $0 $0
Other
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Notes:
(1) Performance verification services rendered to Schroder Investment
Management North America Inc. to ensure conformity with CFA Institute
performance standards.
(2) Tax return preparation fees.
(3) Tax compliance services provided to service affiliates of the Funds.
(4) Performance verification services, FRAG 21 reporting and other
miscellaneous consulting services rendered to Schroder Investment
Management North America Inc.
(e)(1) The Audit Committee pre-approves, to the extent required by applicable
regulations (including paragraph (c)(7) of Rule 2-01 of Regulation
S-X), (i) all audit and permitted non-audit services rendered by the
independent
accountants to the registrant and (ii) all non-audit services rendered
by the independent accountants to the registrant's investment adviser
and to certain affiliates of the investment adviser.
(e)(2) Percentage of fees billed applicable to non-audit services pursuant to
waiver of pre-approval requirement were as follows:
---------------------------- ----------------- ----------------
2008 2007
---------------------------- ----------------- ----------------
Audit-Related Fees n/a n/a
---------------------------- ----------------- ----------------
Tax Fees 0% 0%
---------------------------- ----------------- ----------------
All Other Fees n/a n/a
---------------------------- ----------------- ----------------
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by PricewaterhouseCoopers
LLP for the last two fiscal years were $155,885 and $315,542 for 2008 and 2007,
respectively.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing date of this
report on Form N-CSR, that the design and operation of such procedures are
effective to provide reasonable assurance that information required to be
disclosed by the investment company on Form N-CSR is recorded, processed,
summarized and reported within the time periods specified in the Commission's
rules and forms.
(b) There have been no changes in the registrant's internal control over
financial reporting during the period from August 1, 2008 through October 31,
2008 that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Schroder Capital Funds (Delaware)
By (Signature and Title)* /s/ Mark A. Hemenetz
-------------------------------------
Mark A. Hemenetz
Principal Executive Officer
Date January 9, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Mark A. Hemenetz
-------------------------------------
Mark A. Hemenetz
Principal Executive Officer
Date January 9, 2009
By (Signature and Title)* /s/ Alan M. Mandel
-------------------------------------
Alan M. Mandel,
Treasurer and Chief Financial Officer
Date January 9, 2009
* Print the name and title of each signing officer under his or her signature.