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, 2009
DATE OF REPORTING PERIOD: OCTOBER 31, 2009
ITEM 1. REPORTS TO STOCKHOLDERS.
SCHRODER MUTUAL FUNDS
OCTOBER 31, 2009 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 2, 2009
Dear Shareholder:
We are pleased to provide the Annual Report to shareholders of the Schroder
Mutual Funds, which covers the twelve months ended October 31, 2009. 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 twelve-month period ended October 31, 2009 was extremely volatile for
investors. The reporting period began on a very negative note with the market
falling sharply through November 2008. Despite recovering some ground toward the
end of November, and trading sideways in December, the S&P 500 ended calendar
2008 down 37.00%. The roller coaster ride for investors continued well into 2009
as the S&P hit its lowest closing level in twelve years on March 9, 2009. The
problems have been broad-based and heavily reported, including the banking
crisis, massive job losses, and the collapse of the housing market and auto
industry. In the end, governments worldwide were forced to take unprecedented
monetary steps to ease the economic pain, including the over $1 trillion in
stimulus packages, expansionary monetary policies and new programs to assist
banks in clearing bad debt off their balance sheets.
Markets have staged a turnaround toward the end of the reporting period with
investors returning to risk assets. Subsequent to March 9, 2009, global equities
and domestic markets began to rise, while the emerging markets are up some 50%
over the same period. As a result, the S&P ended with an increase of 9.80% for
the twelve-month period ended October 31, 2009. We have also seen strong rallies
in the credit and commodity markets while the US dollar has weakened. Meanwhile,
alongside hopes of recovery, government bond yields have risen.
The end of the reporting period saw us upgrade our global growth forecasts, with
the world economy now expected to contract by 2% this year before growing at
just over 2% in 2010. The upgrade has largely been driven by a
better-than-expected GDP performance in the second quarter and an improvement in
business surveys, with the biggest forecast increases having been made in Europe
and Japan. We have also raised our forecasts for emerging markets due to the
growth upgrade in the Organisation for Economic Co-operation and Development
("OECD") region and resilient Chinese growth. The latter has continued to enjoy
upgrades as fiscal policy has boosted activity.
Meanwhile, we expect the recovery in the global economy to be driven by the
industrial sector as the inventory cycle turns and stronger government spending
kicks in.
On the inflation front, we are forecasting a sharp fall in 2009 helped by lower
commodity prices and the slack created by the downturn. In 2010, inflation
should move up again due to higher energy prices. However, deflationary
pressures persist and we believe the US will experience a decline in core
inflation throughout 2010.
In line with the upgrade to global growth, we have brought forward our forecasts
for monetary policy tightening. We now expect the first rate hikes from the US
Federal Reserve (Fed) and the Bank of England (BoE) to occur in June next year,
thus marking an end to the period of ultra-loose policy. Meanwhile, the European
Central Bank (ECB) and the Bank of Japan (BoJ) are expected to follow in August
and September respectively. However, a coordinated move with all the major
central banks tightening together is also a possibility.
While inflation and credit growth are still likely to be subdued at this point,
the tightening of policy will be in recognition of the stabilization of the
banking sector and financial system. The case for setting interest rates at
emergency levels will no longer be valid. At the same time, with the world
economy returning to grow, we would expect rates to increase gradually over the
rest of 2010 and to rise further in 2011. Nonetheless, we believe they should
remain at very low levels by historical standards. Moreover, concerns about the
sustainability of the recovery, the need to rein in budget deficits and an
absence of inflationary pressure will mean that rates will rise slowly and are
likely to peak at levels lower than in previous cycles.
Our view is that returns on cash will likely be negligible for some time,
forcing investors to continue to search for yield. Consequently, we would expect
more gains for credit markets and a potential flattening of the yield curve as
investors reach for longer maturities. More generally, we expect to see a return
of carry trades with investors taking on more risk to generate income. Alongside
continued growth, this is a favorable backdrop for equity markets. The recovery
combined with aggressive cost cutting has brought a substantial improvement in
earnings growth expectations.
1
SCHRODER MUTUAL FUNDS
As we stated in the Funds' Semi-Annual Report, in this type of environment, we
believe that the 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 or
regions. 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 THIS REPORT WERE THOSE OF THE PRESIDENT OF THE FUNDS AND
EACH RESPECTIVE FUND'S PORTFOLIO MANAGEMENT TEAM AS OF THE DATE SPECIFIED, AND
MAY NOT REFLECT THE VIEWS OF THE PRESIDENT OR 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,
2009.
2
SCHRODER INTERNATIONAL ALPHA FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
PERFORMANCE
In the twelve months ended October 31, 2009, the Schroder International Alpha
Fund gained 35.28% (Investor Shares) and 34.84% (Advisor Shares) compared to the
Morgan Stanley Capital International EAFE Index (the "Index"), a broad-based
basket of international stocks, which gained 27.71%.
MARKET BACKGROUND
It was an extremely eventful twelve months - with a strong recovery in the
equity markets post-March 2009. Slowing growth in the global economy in 2008 was
exacerbated by the meltdown in the financial sector as credit markets froze
after the collapse of Lehman Brothers in September. Banks stopped lending to
each other. Previous consensus that the global economy was 'merely' entering a
recession soon escalated into fears of a deeper and much more painful
depression.
The first four months of the period under review saw the Index fall sharply,
with European financials down by over 40%. Like their US peers, most European
banks reported large losses, while Asian (ex Japan) banks and those in emerging
economies fared better. Consumer confidence in developed countries declined as a
result of falling property prices combined with increasing unemployment and high
levels of debt.
Companies took drastic action in the light of slumping global demand and cut
costs rapidly by reducing capacity and announcing layoffs. Inventories were also
drawn down sharply, which weighed on raw material prices and industrial
production. These efforts would prepare businesses for the worst-case scenario
that many economists and business leaders were beginning to predict for 2009. In
fact, these exercises turned out to be very significant in the turnaround in the
economic and corporate environments that followed.
Markets reached a low on March 9, and have rallied strongly thereafter. This
rebound followed an unprecedented global synchronization of activity by
governments and central banks, entering into a period of loose monetary policy.
Interest rates around the world were cut to all-time lows and authorities
devised various ways to inject liquidity into the financial system as well as
the general economy.
Governments around the world, including in key developing economies, announced
sizable quantitative easing and economic stimulus packages. Spending was
targeted at infrastructure projects and at boosting domestic consumption.
China's stimulus plan was perhaps most effective, largely because of the speed
at which it was implemented. Interestingly, as the importance and the resilience
of emerging economies grew stronger, the role of the G20 increased during the
crisis, arguably substituting for the G7 as the key forum for international
economic cooperation. This further underlines our belief in the "Supercycle" -
the increasing role of large emerging markets economies in the global economy.
As investors started to believe that the worst of the economic weakness was
over, global demand for resources strengthened, driving raw material and energy
prices higher. Industrial production rose and the inventory cycle started to
turn positive as companies slowed or stopped de-stocking.
The materials, industrials and financials sectors soared from the lows in March
and ended the twelve-month period with the best overall performances in the
Index. Defensive sectors underperformed, with utilities and healthcare the
weakest overall. Pharmaceuticals continued to be held back by concerns over the
impact of patent expiries. From a regional perspective, Pacific ex Japan
produced the strongest returns in the Index by some margin (more than 65%),
while Japan remained the main laggard. Emerging markets were also extremely
strong.
PORTFOLIO REVIEW
Performance over the twelve months ended October 31, 2009 was substantially
ahead of the Index, with particularly strong relative returns in the first two
quarters of 2009. The outperformance in that period more than compensated for
the impact of disappointing returns in the third quarter 2009, when market
leadership shifted to some of the lower-quality names. This included financial
companies that received government bailouts as well as some of the more cyclical
areas of the market. We maintained a focus on high-quality growth companies
throughout the twelve months and, for the majority of the period, investors
rewarded factors such as visible and sustainable earnings, sound business
models, and quality management teams.
The largest contributions to the Fund's outperformance of the Index came from
its holdings in the energy, financials, consumer discretionary and materials
sectors. In regional terms, an off-benchmark position in emerging markets
contributed a good deal to relative returns.
3
SCHRODER INTERNATIONAL ALPHA FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
The biggest contributor in the energy sector was NIKO RESOURCES, a Canada-based
company that has had very successful drilling results in the Indian
subcontinent.
The benefit of the Fund's commitment to quality was most noticeable in the
financial sector during the initial period of intense pressure. We largely
avoided banks that needed large additional capital and faced the biggest losses.
Instead, we preferred exposure to three areas. One was the more defensive,
better-capitalized European banks such as CREDIT SUISSE and, later in the
period, HSBC HOLDINGS. Another preference was for insurance groups like AXA. The
third was financials benefiting from strong consumption trends in key emerging
markets in Asia (SWIRE PACIFIC, PING AN INSURANCE GROUP OF CHINA and SUN HUNG
KAI PROPERTIES) and Latin America (ITAU UNIBANCO HOLDING). Stocks like these
tended to outperform with lower volatility than the sector average.
In the consumer discretionary sector, we steered clear of companies overly
exposed to Europe and the US and most of the Fund's exposure was in companies
benefiting from the much more resilient emerging markets' domestic economies,
especially China, India and Brazil.
Beijing was able to implement quickly and efficiently its stimulus package, with
funding made available to support consumer spending, including subsidies for
buying fuel-efficient cars, and a focus on infrastructure lending. Companies in
the Fund's portfolio that benefited from the strength of the Chinese consumer
included DENWAY MOTORS. The Fund was well positioned for the wider rebound in
the auto industry, as we focused on manufacturers of small cars and those with
advanced electric and hybrid technologies, such as HONDA MOTOR.
China's infrastructure projects related to green technologies such as renewable
energy. Companies such as DONGFANG ELECTRIC, which manufactures power generation
equipment, saw profits rise sharply after winning contracts, for example in new
hydroelectric and nuclear plants. Construction and infrastructure spending also
went on in a number of other areas, such as roads, railways and housing.
Materials companies such as Brazil's VALE, the largest iron ore producer in the
world, benefitted as did European steel producers such as THYSSEN KRUPP and
ARCELOR MITTAL.
In terms of sectors that detracted from performance, the Fund's telecom holdings
underperformed in the fourth quarter of 2008, as some of the low-growth
companies in the sector, perceived as defensive, did well. CHINA UNICOM was
impacted by restructuring in the industry and supportive regulatory changes were
slower to develop than we anticipated; the stock was sold to fund higher
conviction ideas. JAPAN NTT fell as investors rotated into more cyclical ideas.
OUTLOOK
Markets seem to have shrugged off the fears of earlier this year. In many ways
the operating environment has shifted so dramatically during the crisis that
many companies, especially in the financial sector, are re-evaluating their way
of conducting business or the kind of business opportunity they are seeking.
Looking forward to 2010 and beyond, it seems that the crisis could have a
structural and long-term impact on global economic growth and its competitive
landscape.
In the short term, governments' unprecedented global synchronized liquidity
injection, combined with low interest rates, is very sup-portive of the markets.
The inventory cycle should also support economic growth, as the dramatic
de-stocking gradually stabilizes and reverses. We believe the base effect should
continue to be positive until March or April 2010. Macro economic and corporate
earnings will appear somewhat positive by comparisons to the very poor results
from the fourth quarter of 2008 and the first quarter of 2009.
Furthermore, companies have cut costs dramatically in the past twelve months
and, as a result, equities are in a "sweet spot" - assuming demand stabilizes or
resumes.
Finally, although investors have reversed an abnormally high cash position, we
believe most are still underinvested in equities versus cash or bonds. In
summary, the environment looks very favourable in the short term.
Looking into the medium-term, however, we can identify several sources of
uncertainty that might create volatility in the markets.
First, the evolution of banking regulations post the emergency measures put in
place still appears hesitant. This is particularly the case in Europe, as
governments and regulators are still grappling with a wide range of issues
across the financial sector. In recent events, such as the forced ING business
split, investors may have trouble understanding the rationales of some
government actions if not their consistency.
4
SCHRODER INTERNATIONAL ALPHA FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
Second, the re-leveraging of governments in the developed world in an effort to
cushion the impact of the crisis has potential long-term ramifications in the
West, which we believe investors have failed to appreciate.
Third, how the world will react to the eventual withdrawal of quantitative
easing is still unknown for regions such as the US and Europe. The room for
policy mistakes in this respect is large. The risk, in our view, is not that of
premature tightening, but the opposite - that policy remains too loose for too
long, which could potentially add to inflationary pressure. The other key point
related to the withdrawal of quantitative easing over time is that over the next
twelve to eighteen months, cost of capital will most likely increase for many
companies around the world.
With this in mind, we see the recent interest rate increases in countries like
Australia as positive. It would be fair to assume that other countries, such as
China, will also gradually withdraw stimulus soon.
The marginal growth in consumption in the developing world is becoming more
important than most people accept. This is key to picking successful global
companies with strong balance sheets that can generate emerging market growth
and yet offer attractive valuations.
Another impact of the crisis is linked to relative global corporate
competitiveness. While we can observe abundant liquidity across the world,
access to bank loans in the developed world is still not available to some
companies. This, combined with overcapacity in some key sectors, might create
new aspects of competitiveness that could put higher labor cost countries in
difficulty if innovation fails to bring newer products or services leadership.
Looking beyond the financial crisis and its global structural impact, there are
key long-term trends that are continuing to shape tomorrow's operating
environment for companies, namely climate change, demographics and the
"Supercycle."
While the general lack of credit in 2008 had an adverse effect on the ability to
finance some long-term projects, the crisis also had a positive impact on
climate change investment. Most of the economic stimulus packages announced in
the past year have included substantial investment in green initiatives. A big
milestone is set for the UN conference in Copenhagen in December 2009, when
leaders from around the world meet to reach an agreement on reducing greenhouse
gas emissions.
With regards to the "Supercycle" - the role of the large emerging economies in
the world economy - we believe that, on a relative basis, the outlook for
spending in these countries has improved as a result of the financial crisis.
While quality companies have withstood the crisis quite well overall, it is
essential in our opinion to understand the shifts in the long-term environment
they operate in, such as the key trends mentioned above, to assess the
sustainability of their earnings power.
5
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,
Investor Advisor MSCI EAFE
Shares Shares Index
------------- ------------- ---------
10/31/1999 10,000 10,000 10,000
10/31/2000 10,802 10,773 9,710
10/31/2001 8,105 8,063 7,290
10/31/2002 6,711 6,664 6,327
10/31/2003 8,232 8,150 8,037
10/31/2004 9,328 9,216 9,551
10/31/2005 11,142 10,976 11,279
10/31/2006 14,468 14,236 14,383
10/31/2007 18,430 18,068 17,966
10/31/2008 9,409 9,207 9,590
10/31/2009 12,728 12,414 12,247
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, 2009 October 31, 2009 (b) October 31, 2009 (b)
---------------- -------------------- --------------------
Schroder International Alpha Fund (a) --
Investor Shares ..................... 35.28% 6.41% 2.44%
Advisor Shares ...................... 34.84% 6.14%(c) 2.19%(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
% OF
SECURITY INVESTMENTS
- -------- -----------
Vodaphone Group 3.0%
HSBC Holdings 2.9
Credit Suisse 2.6
Thyssen Krupp 2.6
Cia Vale Do Rio Doce 2.6
GEOGRAPHIC ALLOCATION
(PIE CHART)
% of Investments
----------------
Continental Europe 36.7%
Emerging Markets 11.4
United Kingdom 15.5
Japan 14.8
Pacific ex-Japan 16.7
North America 3.5
Short-Term Investment 1.4
6
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 3, 2009)
PERFORMANCE
For the twelve months ended October 31, 2009, the Schroder International
Diversified Value Fund (the "Fund") gained 48.45% (Investor Shares) and 48.42%
(Advisor Shares) compared to the Morgan Stanley Capital International EAFE Index
(the "Index"), a broad-based basket of international stocks, which rose 27.71%
during this same period.
MARKET BACKGROUND
International equity markets headed higher during the latter part of the
reporting period, continuing the strong rebound from the lows of early March
that was fueled by highly accommodative fiscal and monetary policy. While there
were tentative signs toward the end of the period that the rebound was losing
some of its conviction, many of the themes that were apparent between March and
June were also common to the third quarter. The key drivers remained value and
pro-cyclicality, which was evident at the stock level by strong gains in more
volatile companies with high market sensitivity (i.e., beta). At a broader
level, emerging markets, materials, industrials, financials, as well as small
and mid cap stocks were the clear leaders, while more defensive sectors such as
utilities and health care were the standout laggards. Japanese stocks were also
notable in their underperformance, with the overall market lagging behind other
international stocks generally by more than 10%.
PORTFOLIO REVIEW
The Fund is managed using a bottom-up, unconstrained approach. The Fund aims to
capture as many different value themes as possible, and expects to benefit from
these in the long run as markets recognize this value.
Over the twelve-month period ended October 31, 2009, stock selection was
positive across all sectors and accounted for the vast bulk of the excess
performance relative to the Index. The Fund's allocation to emerging Asia and
Latin America was also beneficial. Value Stocks performed extremely strongly
during the reporting period and relative returns of this magnitude are typically
infrequent but quite understandable given the extreme market pessimism early in
the year - that created a very good opportunity for long-term value investors.
Certainly, a decent part of the value investment opportunity which emerged
during 2008 and early 2009 when investors became very pessimistic may have
played out due to a rebound in investors' risk appetite. However, we see an
emerging value opportunity reflected in the more defensive composition of the
Fund thanks to its significant current allocations to cheap defensives,
particularly within telecoms, health, staples and utilities compared to its
highly cyclical early March portfolio weightings.
OUTLOOK
Compared to the early stages of the market rebound in the second quarter,
portfolio activity has slowed although we still continued to increase exposure
to unfashionable defensive companies within health care and staples whilst
reducing the allocation to the increasingly popular cyclical stocks,
particularly within consumer discretionary, such as autos. Indeed, at the end of
the reporting period, the Fund's position in health care and staples was close
to an all-time high, which represents a substantial difference in the
composition of the portfolio compared to early in the year. In particular, the
higher weight to defensive stocks appears to have reduced the strategy's
sensitivity to market movements dramatically (the Fund's beta is now much closer
to neutral). In financials, we find value opportunities with insurance and asset
management stocks while we believe that banks represent a less attractive
proposition as value and quality tends to be more mutually exclusive and perhaps
more efficiently priced.
Within cyclical areas, we prefer industrials rather than consumer stocks, while
it is also worth noting that exposure to Japan remains somewhat lower than has
been the case in the recent past. We believe that the most attractive investment
opportunities are not in the Index but typically among smaller cap stocks,
particularly in the industrial and technology sectors. More recently, we have
rotated out of some of the "glamour" emerging markets that have performed very
well recently (e.g., China) and reinvested in less fashionable countries like
Thailand.
7
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, MSCI EAFE
Investor Shares Advisor Shares Index
--------------- -------------- ---------
8/30/2006 10,000 10,000 10,000
10/31/2006 10,540 10,530 10,407
10/31/2007 13,866 13,827 12,999
10/31/2008 6,848 6,805 6,939
10/31/2009 10,166 10,100 8,862
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, 2009 Inception (a)
---------------- -------------
Schroder International Diversified Value Fund --
Investor Shares ............................. 48.45% 0.52%
Advisor Shares .............................. 48.42% 0.32%
(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
- -------- ----------------
Teck Cominco 0.5%
Tesco 0.5
Nippon Telephone and Telegraph 0.5
GlaxoSmithKline 0.5
Seven & I Holding 0.5
GEOGRAPHIC ALLOCATION
(PIE CHART)
% of Investments
----------------
Continental Europe 41.0%
Japan 18.2
Emerging Markets 10.1
United Kingdom 11.3
North America 11.2
Pacific ex-Japan 8.2
Short-Term Investment 0.0
8
SCHRODER EMERGING MARKET EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
PERFORMANCE
In the twelve months ended October 31, 2009, the Schroder Emerging Market Equity
Fund (the "Fund") rose 62.38% (Investor Shares) and 62.41% (Advisor Shares),
compared to the Morgan Stanley Capital International Emerging Markets Index (the
"Index"), a broad-based basket of international stocks, which rose 64.13% during
the same period.
MARKET BACKGROUND
Global equity markets delivered strong returns, rallying sharply in the latter
part of the twelve-month reporting period as investor risk appetite improved.
Ongoing uncertainties about the outlook for the global economy and generally
weak data weighed on sentiment in the early part of the period. However, from
mid-March, global equity markets rallied, benefiting from growing confidence
about the prospects for a global economic recovery as well as monetary and
fiscal stimulus measures announced by many of the world's central banks.
Emerging markets delivered excellent returns against this background, well ahead
of overall returns from markets in the developed world, as they gained from the
strengthening of investor confidence. Emerging markets also performed well as
some countries, such as China, were able to offset the global slowdown with
increased domestic demand as a result of government investment. This in turn
boosted demand for raw materials, helping commodity-rich economies such as
Brazil.
Emerging markets generally delivered excellent returns over the period, with
Indonesia, Peru, Colombia and Brazil among the best performers. In Indonesia,
positives included receding external liquidity concerns, the central bank
cutting interest rates and a relatively benign political outlook following
parliamentary elections and confirmation that President Yudhoyono won
re-election in the first round of voting. Peru and Brazil benefited from the
strength of commodity-related stocks while both countries' central banks cut
interest rates. In other developments, rating agency Moody's upgraded Brazil's
sovereign debt rating to investment grade, while data was released showing GDP
growing by 1.9% quarter-on-quarter in the second quarter. In Colombia, positives
included the central bank cutting interest rates. In other developments, the
Colombian authorities were given the facility to request up to US$10.4bn from
the International Monetary Fund ("IMF"), under its Flexible Credit Line (FCL).
China also outperformed. Positives included the country's central bank easing
monetary policy in the early part of the period while the Chinese authorities
announced a significant fiscal package to stimulate infrastructure and housing
investment. This helped to boost domestic growth, with data released showing Q3
2009 GDP growth coming in at 8.9% year-on-year. However, concerns over the
impact of government measures to curb investment and credit growth and about a
surfeit of issuance in the market weighed on sentiment somewhat in the latter
part of the period.
Poland, the Czech Republic and Israel were among the laggards, although they
delivered strong returns in absolute terms. The Polish and Czech markets were
weak in the early part of the period, with investors concerned about the pace of
economic deterioration in the Central European Three ("CE3") countries (Czech
Republic, Hungary and Poland) generally given their close trading links with
developed Europe and also about the level of external debt, especially in
Poland. These markets recovered later in the period as investor confidence
improved, while both countries' central banks reduced interest rates. In Israel,
the underperformance of local index heavyweight TEVA PHARMACEUTICAL INDUSTRIES
held back the market's relative returns while the central bank unexpectedly
raised interest rates in the latter part of the period. Mexico also lagged,
although performance was strong in absolute terms. Poor domestic economic news
and investor concerns about the US economy (to which Mexico has a high degree of
linkage) weighed on the market for much of the period (although the market later
recovered, buoyed by increased risk appetite and investor confidence about the
prospects for economic recovery in the US). The Mexican central bank reduced
interest rates, Mexico extended its foreign exchange swap line agreement with
the US Federal Reserve and the IMF announced a US$47bn support package, against
the background of a weakening currency. In other developments, news emerged in
April of the outbreak of the H1N1 virus in Mexico and its spread to other
countries.
PORTFOLIO REVIEW
Over the twelve-month period, the Fund underperformed the Index. Overall,
country allocation was positive and stock selection negative. Overweights to
both Indonesia and China, as well as the underweight to Mexico added value. In
addition, in Korea, the underweight earlier and overweight later in the period
were also positive. Indonesia outperformed as the economy was relatively less
affected by the global recession. Mexico underperformed on concerns over the
deteriorating fiscal balance and the scale of the economic decline. Korea
underperformed to June given weak domestic demand and its higher than average
sensitivity to developed economic growth. China outperformed as its central bank
eased monetary policy in the early part of the period while the Chinese
authorities announced
9
SCHRODER EMERGING MARKET EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
a significant fiscal package to stimulate infrastructure and housing investment,
boosting domestic demand. This was somewhat offset by the cash position held by
the Fund in the early part of the recovery. Stock selection was positive in
South Africa (overweight ANGLOGOLD and NASPERS), Hungary (overweight GEDEON
RICHTER earlier in the period) and Taiwan (overweight HON HAI PRECISION INDUSTRY
and CHINATRUST FINANCIAL HOLDING). This was offset however by negative stock
selection in Israel (overweight MAKHTESHIM-AGAN INDUSTRIES and SHUFERSAL),
Thailand (overweight SIAM COMMERCIAL BANK and PTT EXPLORATION & PRODUCTION),
China (underweight TENCENT HOLDINGS and CHINA SHENHUA ENERGY) and various other
smaller effects.
OUTLOOK
The pick-up in economic indicators has generated a sharp improvement in investor
sentiment and produced a strong recovery in markets, which although losing
momentum somewhat seems to be well supported. With uncertainty over the strength
of future economic growth still prevalent, the abundant liquidity being provided
by central banks around the world is unlikely to be removed anytime soon,
although a modest tightening in some emerging countries would not be too
surprising. Moreover, earnings momentum is improving. For example, following
aggressive cost cutting, operational gearing in the US is relatively high and
forward looking estimates are being revised up. Furthermore, emerging markets
earnings growth is expected to be 25-30% over the next twelve months and
valuations remain attractive. We continue to believe an economic recovery will
be underway by early 2010, albeit an anaemic one; although the risk of a
significant correction in the near term has receded, a moderate pull-back in
markets would not be too surprising given the strength of the recovery
year-to-date. However, benign monetary and fiscal policies, together with
attractive valuations and growth prospects for the emerging world, suggest that
the outlook for global emerging markets remains favourable.
10
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 Emerging Market Schroder Emerging Market
Equity Fund, Equity Fund, MSCI Emerging Markets
Investor Shares Advisor Shares Index
------------------------ ------------------------ ---------------------
3/31/2006 10,000 10,000 10,000
10/31/2006 10,550 10,530 10,509
10/31/2007 17,987 17,910 17,639
10/31/2008 8,062 8,015 7,700
10/31/2009 13,092 13,017 12,638
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, 2009 Inception (a)
---------------- -------------
Schroder Emerging Market Equity Fund --
Investor Shares .................... 62.38% 7.81%
Advisor Shares ..................... 62.41% 7.64%
(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
- --------- ----------------
Samsung Electronic 3.1%
OAO Gazprom ADR 2.7
Petrobras ADR 2.5
China Construction Bank 2.4
Infosys Technologies ADR 2.1
* Excludes any Short-Term Investments.
GEOGRAPHIC ALLOCATION
(PIE CHART)
% of Investments
----------------
Asia/Far East 56.0%
Latin America 15.9
Europe 14.6
Africa 6.8
Mid-East 3.2
Short-Term Investment 3.5
11
SCHRODER U.S. OPPORTUNITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
PERFORMANCE
In the twelve months ended October 31, 2009, the Schroder U.S. Opportunities
Fund (the "Fund") rose 14.95% (Investor Shares) and 14.64% (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 rose 6.46%.
The Fund's outperformance of the Index was driven by strong stock selection.
Positive stock selection in the financial services, energy and consumer
discretionary sectors contributed to performance. Stock selection detracted in
only two sectors: health care and producer durables sectors. At the sector
level, an underweight in financial services contributed significantly while the
Fund's average cash position (10%) hurt performance.
MARKET BACKGROUND
The US market declined significantly during the first half of the reporting
period. News of the government's initial economic recovery plans along with the
flow of weak economic data (unemployment, industrial production, home prices,
consumer confidence and GDP) caused the US small cap market to fall to levels
not seen since 2003. At the same time, headlines concerning the auto industry,
AIG and Merrill Lynch bailouts and bonuses and the failure of the financial
sector in general created a heightened state of uncertainty. Since March 9,
2009, markets rallied as the government unveiled the Public-Private Investment
Program to clean up toxic assets on US banks' balance sheets and a fiscal
stimulus package. US markets also benefited from some positive economic news. In
housing, the S&P/Case-Shiller Home Price Index, which tracks changes in the
value of residential real estate markets, showed improvement during the 3rd
calendar quarter of 2009. In the manufacturing sector, data from the Institute
for Supply Management's New Orders Index has also generated optimism. Merrill
Lynch has observed that narrowing credit spreads have been a key driver of this
rally. Smaller market cap stocks, companies with higher debt levels and lower
quality stocks have continued to rally since March 9, 2009 and to the end of
September 2009. This is typically what leads off of the bottom but this move has
been well above the average rally in the second half of a recession, with the
Index up over 70% from March 9, 2009, when US equity markets hit their low point
for the year, to September 30, 2009.
PORTFOLIO REVIEW
Within the financial services sector, the Fund's positions in EURONET WORLDWIDE,
DIGITAL REALTY TRUST and ANNALY CAPITAL MANAGEMENT provided positive returns.
Shares of EURONET WORLDWIDE, an electronic payments provider, were up due to
higher profits from India, Poland and Germany and cost cutting efforts. Both
DIGITAL REALTY TRUST and ANNALY CAPITAL MANAGEMENT, which are real estate
investment trusts, recently had positive earnings results.
From the consumer discretionary sector, the Fund's holding in HOME INNS & HOTELS
MANAGEMENT and CENTRAL GARDEN & PET added value to the portfolio. HOME INNS, a
Chinese low cost hotel provider, gained considerable profits from the 2008
Olympics in China and a rise in revenues came from an increase of price
sensitive travelers in the declining macro environment. Shares of CENTRAL GARDEN
were up during the period as the company's stock benefited from a 5% rise in
sales from its gardening division.
On the other hand, stock selection in health care and producer durables lagged
during the reporting period. From the health care sector, the Fund's position in
KV PHARMACEUTICALS, a specialty pharmaceutical company, was the biggest drag on
Fund performance in 2009. KV'S stock declined due to manufacturing problems,
which led to a product recall.
Finally, the Fund's holdings in HURON CONSULTING also hurt performance. In late
July, HURON announced a restatement of more than three years of results to
correct errors from acquisition-related accounting issues. The company lowered
its earnings guidance, HURON'S CEO and Chief Accounting Officer resigned and the
stock price fell significantly. The Fund's position was liquidated on concerns
regarding HURON'S ability to retain key personnel, who are the core of its
business.
At the sector level, the Fund's exposure to cash (averaging 10%) was the largest
single detractor to returns. However, an underweight in financial services and
an overweight in technology added value.
12
SCHRODER U.S. OPPORTUNITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
OUTLOOK
The markets are presently very difficult to read. We have expected a pull back
of some sorts given the sharp move up since March 9, 2009, but this has not
happened. Market reactions to economic news have generally become less extreme
and risk appetite has returned to the market. But at the same time, small cap
valuations have become less attractive now that the market is reflecting the
economic recovery in its pricing.
We are concerned that there are still more headwinds to come. We continue to
maintain a cautious stance, waiting to see sequential company growth through
cash flows, earnings or revenues, or an overall improvement in fundamentals. As
we are bottom-up investors, the Fund's portfolio reflects the companies that we
believe to be most attractive in terms of quality and valuations. Our top-down
thoughts about the economy and the market in general have modest bearing on the
Fund, but we would like to see a recovery in unemployment and consumer
confidence reports.
We are also keeping a watchful eye on the emerging markets, particularly in
China as we believe it is key to global growth with its potential implications
for US markets.
13
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 Russell
Opportunities Fund, Fund, Advisor 2000
Investor Shares Shares Index
------------------- ------------- --------
10/31/1999 10,000 10,000 10,000
10/31/2000 14,073 14,038 11,741
10/31/2001 14,540 14,465 10,250
10/31/2002 13,098 12,999 9,064
10/31/2003 17,307 17,132 12,994
10/31/2004 20,943 20,678 14,518
10/31/2005 23,302 22,949 16,272
10/31/2006 28,352 27,870 19,523
10/31/2007 34,029 33,377 21,334
10/31/2008 23,454 22,938 14,046
10/31/2009 26,960 26,296 14,953
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, 2009 October 31, 2009 (c) October 31, 2009 (c)
---------------- -------------------- --------------------
Schroder U.S. Opportunities Fund (a)(b) --
Investor Shares ....................... 14.95% 5.18% 10.43%
Advisor Shares ........................ 14.64% 4.92%(d) 10.15%(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
- --------- ----------------
Waste Connections 3.0%
Reinsurance Group of America Class A 2.3
St. Mary's Land and Exploration 2.0
PSS World Medical 1.8
Scientific Games Class A 1.6
* Excludes any Short-Term Investments.
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
Consumer Discretionary 18.3%
Technology 15.3
Health Care 14.4
Financial Services 14.0
Short-Term Investment 10.8
Materials & Processing 6.3
Consumer Staples 5.6
Other Energy 5.0
Utilities 4.7
Producer Durables 3.5
Autos & Transportation 2.1
14
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
PERFORMANCE
In the twelve months ended October 31, 2009, the Schroder U.S. Small and Mid Cap
Opportunities Fund (the "Fund") rose 17.71% (Investor Shares) and 17.45%
(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
rose 13.26%.
The Fund's outperformance of the Index was primarily driven by both stock
selection and the residual allocations in the technology, utilities and
financial services sectors. Only our picks in the consumer discretionary, health
care and producer durables detracted.
MARKET BACKGROUND
The US market declined significantly during the first half of the reporting
period. News of the government's initial economic recovery plans along with the
flow of weak economic data (unemployment, industrial production, home prices,
consumer confidence and GDP) caused the US small cap market to fall to levels
not seen since 2003. At the same time, headlines concerning the auto industry,
AIG and Merrill Lynch bailouts and bonuses and the failure of the financial
sector in general created a heightened state of uncertainty. Since March 9,
2009, markets rallied as the government unveiled the Public-Private Investment
Program to clean up toxic assets on US banks' balance sheets and a fiscal
stimulus package. US markets also benefited from some positive economic news. In
housing, the S&P/Case-Shiller Home Price Index, which tracks changes in the
value of residential real estate markets, showed improvement during the 3rd
calendar quarter of 2009. In the manufacturing sector, data from the Institute
for Supply Management's New Orders Index has also generated optimism. Merrill
Lynch has observed that narrowing credit spreads have been a key driver of this
rally. Smaller market cap stocks, companies with higher debt levels and lower
quality stocks have continued to rally since March 9, 2009 and through the end
of September. This is typically what leads off of the bottom but this move has
been well above the average rally in the second half of a recession, with the
Russell 2000 Index up over 70% from March 9, 2009, when US equity markets hit
their low point for the year, to September 30, 2009.
PORTFOLIO REVIEW
From the technology sector, the Fund's positions in ROVI and BROCADE
COMMUNICATION SYSTEMS had the biggest impact. ROVI benefited during the
reporting period due to recurring revenue streams from the digital cable and
satellite businesses. Shares of BROCADE COMMUNICATION surged up 16% on the back
of potential news that Hewlett-Packard or Oracle might buy out the company.
The Fund's stock selection in utilities and financial services also added value.
In utilities, holdings in TW TELECOM and M&T BANK from financial services
positively impacted performance. Shares of TW TELECOM gained strength as the
company beat its consecutive quarterly earnings for the fourth time. This was
driven by an increase in revenues and strong margins, which helped increase cash
flow. In addition, M&T BANK'S share price appreciated as the company benefited
from an FDIC-assisted bank acquisition and improving net interest margins.
In contrast, stock selection in consumer discretionary, health care and producer
durables lagged over the period. Within the three sectors, the Fund's position
in HURON CONSULTING detracted significantly from performance. In late July,
HURON announced that they would restate more than three years of results to
correct errors from acquisition-related accounting issues. The company lowered
its earnings guidance, HURON'S CEO and Chief Accounting Officer resigned and the
stock price fell significantly. The Fund's position was liquidated on concerns
regarding HURON'S ability to retain key personnel, who are the core of its
business.
At the sector level, the Fund benefited from an overweight in technology and an
underweight in utilities and financial services. However, the Fund's average
cash position and an underweight in consumer discretionary weakened overall
performance.
15
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
OUTLOOK
The markets are presently very difficult to read. In a sense, markets are
seemingly driven by the news of the day, rising or falling based on the day's
economic news.
We are concerned that there are still more headwinds to come. We continue to
maintain a cautious stance, waiting to see sequential company growth through
cash flows, earnings or revenues, or an overall improvement in fundamentals. As
we are bottom-up investors, the Fund's portfolio reflects the companies that we
are finding to be most attractive in terms of quality and valuations. Our
top-down thoughts about the economy and the market in general have modest
bearing on the Fund but, we would like to see a recovery in unemployment and
consumer confidence reports.
We also are keeping a watchful eye on the emerging markets, particularly in
China, as we believe it is key to global growth with its potential implications
for US markets.
16
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 Schroder
U.S. Small U.S. Small
and Mid Cap and Mid Cap
Opportunities Opportunities
Fund, Investor Fund, Advisor Russell
Shares Shares 2500 Index
-------------- ------------- ----------
3/31/2006 10,000 10,000 10,000
10/31/2006 10,250 10,230 10,077
10/31/2007 12,567 12,530 11,358
10/31/2008 8,506 8,450 7,125
10/31/2009 10,013 9,924 8,070
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, 2009 Inception (a)
---------------- -------------
Schroder U.S. Small and Mid Cap Opportunities Fund --
Investor Shares .................................. 17.71% 0.04%
Advisor Shares ................................... 17.45% (0.21)%
(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
- --------- ----------------
Republic Service 3.5%
Amdocs 3.2
DaVita 2.9
Devry 2.8
Burger King Holdings 2.3
* Excludes any Short-Term Investments.
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
Short-Term Investment 19.6%
Consumer Discretionary 19.5
Financial Services 13.5
Technology 13.4
Health Care 11.7
Utilities 6.8
Materials & Processing 4.9
Producer Durables 3.6
Other Energy 2.6
Consumer Staples 2.1
Autos & Transportation 1.2
Investment Companies 1.1
17
SCHRODER NORTH AMERICAN EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
PERFORMANCE
In the twelve months ended October 31, 2009, the Schroder North American Equity
Fund (the "Fund") rose 10.59% (Investor Shares) and 10.28% (Advisor Shares). For
the same twelve-month period, the FTSE All World Series North American Index, a
broad-based basket of North American stocks, rose 11.63%. For the same
twelve-month period, the S&P 500 Index rose by 9.80%. (Note that, as the S&P 500
Index is the industry standard and a more widely-recognized benchmark than the
FTSE All World Series North American Index, beginning November 1, 2009, only the
S&P 500 Index will be used for comparisons.)
MARKET BACKGROUND
North American equities fell during the early portion of the reporting period.
Financial conditions remained challenging despite ongoing efforts by the US
government and Federal Reserve to support struggling institutions and encourage
lending. Economic data also added to the gloom, increasingly indicating that the
effects of the financial crisis on the real economy were becoming significant.
Sentiment began to pick up in response to aggressive interest rate cuts and
President Obama's significant fiscal package. Despite the temporary dip in July,
US equities began to make gains toward the end of the period. Evidence of
stabilization, or even strength, in the US economy gathered momentum, led on by
better than expected economic data. There were also signs of stabilization in
the housing market, although the US consumer has so far been less resilient.
Meanwhile, corporate earnings at the end of the period were biased towards the
upside with over 70% of the S&P 500 companies reporting positive earnings
surprises in the second quarter. Against this hopeful backdrop, the S&P 500
Index gained 9.80% for the year, but lagged the rest of world as measured by the
MSCI World Index, which gained 18.42% for the same twelve-month period ended
October 31, 2009. At a sector level, information technology stocks led the
gains; whilst cyclical sectors such as materials outperformed traditionally
defensive utilities, healthcare and tele-com services sectors.
PORTFOLIO REVIEW
The Fund slightly lagged the FTSE All World North Series American Index but was
ahead of the S&P 500 Index over the year as a whole. Leading contributors to
performance included strong stock selection in the utilities and materials
sectors, as well as our relatively lower allocation to underperforming
industrials, particularly US industrials conglomerates and aerospace stocks.
The North American Equity Fund is highly diversified across a large range of
stocks and investment strategies. Sector weights are carefully risk-managed
relative to the benchmark. By design, the strategy is beta-neutral with a
reliable risk controlled "alpha" meaning that it is constructed with the intent
to be insensitive to market movements and other thematic trends. The strategy is
not dominated by fads in market sentiment, which are often captured by following
recent momentum.
OUTLOOK
The key features of the Fund's investment themes at the end of the reporting
period included:
- INCREASED EXPOSURE TO TECHNOLOGY SECTOR. We are increasingly finding
technology companies in both hardware and software that we believe to
be attractive.
- FOCUS UPON QUALITY WITH FINANCIALS. Within financials, where we are
slightly overweight, we favor life insurance issuers where we can find
higher quality stocks on what we believe are favorable valuations.
- REMAINED UNDERWEIGHT UTILITIES. Within defensive sectors we prefer
areas such as staples retailing and telecom stocks rather than
utilities.
- REDUCED EXPOSURE TO CYCLICALS. Within cyclical stocks, we have a bias
to late-cycle industrials.
18
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) EQUITY INDEX.
(PERFORMANCE GRAPH)
Schroder Schroder
North American North American
Equity Fund, Equity Fund,
Investor Advisor S&P 500 FTSENA
Shares Shares Index Equity Index
-------------- ----------------- ------- --------------
9/17/2003 10,000 10,000 10,000 10,000
10/31/2003 10,280 10,278 10,261 10,278
10/31/2004 11,348 11,308 11,228 11,331
10/31/2005 12,536 12,459 12,207 12,552
10/31/2006 14,547 14,408 14,201 14,695
10/31/2007 16,740 16,520 16,269 17,155
10/31/2008 10,914 10,725 10,396 10,896
10/31/2009 12,069 11,827 11,415 12,163
The FTSE North American Equity 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. The S&P 500 Index is the industry standard for
measuring managers' performance in North American equities and is a more widely
recognized benchmark than the FTSE North American Equity Index. For future
reports, only the S&P 500 Index will be used for comparisons.
PERFORMANCE INFORMATION
One Year Five Years Annualized
Ended Ended Since
October 31, 2009 October 31, 2009 (c) Inception
---------------- -------------------- ---------
Schroder North American Equity Fund --
Investor Shares ...................... 10.59% 1.24% 3.12%(a)
Advisor Shares ....................... 10.28% 0.90%(b) 2.78%(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 3.1%
Microsoft 2.5
JPMorgan Chase 1.7
Johnson & Johnson 1.7
Procter & Gamble 1.7
* Excludes any Short-Term Investments
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
Manufacturing 44.6%
Finance, Insurance and Real Estate 15.9
Services 11.2
Transportation, Communications,
Electric, Gas and Sanitary Services 10.1
Retail Trade 7.5
Mining 7.0
Short-Term Investment 2.1
Wholesale Trade 1.6
Construction 0.0
19
SCHRODER TOTAL RETURN FIXED INCOME FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
PERFORMANCE
During the twelve months ended October 31, 2009, the Schroder Total Return Fixed
Income Fund (the "Fund") rose 14.79% (Investor Shares) and 14.61% (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 13.79%.
MARKET BACKGROUND
The reporting period was a remarkable and yet challenging year for investors.
For the last couple months of 2008 and beginning of 2009, the bond market reeled
from the catastrophic collapse of Lehman Brothers, the resultant fears of
counterparty actions and the evaporation of liquidity. Inter-bank lending dried
up and LIBOR rose sharply while US Treasury rates rapidly declined as the
Federal Reserve moved the federal funds rate from 1.0% to a Japan-like zero
interest rate policy for the first time ever. Additionally, the Fed initiated
quantitative easing with a proliferation of programs and corporate and financial
support designed to increase liquidity and avert a depression.
These unprecedented market conditions and policy responses led to a sharp
reversal in interest rates and risk premiums by the middle of the first quarter.
Investors began to unwind the panicked "flight-to-quality" trades of 2008 and
actively sought to increase exposure to risk assets, primarily corporate bonds
and mortgage-backed securities ("MBS"). With continuing depressed economic
conditions, however, the government kept its foot on the accelerator and
increased its use of creative fiscal and monetary policies. The introduction of
the Public-Private Investment Program ("PPIP"), which innovatively combined both
private capital and government-provided leverage to purchase securities from
banks, was an important step to increase liquidity on bank balance sheets. Also,
the Federal Reserve greatly enlarged its debt purchase program in order to
reduce consumer borrowing (mortgage refinance) costs, expanding targeted MBS
pass-through purchases from $500 to $1,250 billion and adding $100 billion in
agency debentures and, importantly, $300 billion in U.S. Treasury debt. The bond
market's initial reaction was an immediate decline of nearly half a percent
across intermediate Treasury maturities, though the impact was not lasting.
By mid year 2009, the elimination of the risk of another financial crisis or
economic depression was the key catalyst in promoting additional risk taking.
Indeed, policies designed to move assets from weak hands to strong hands (such
as the Federal Reserve's Term Asset-Backed Securities Loan Facility ("TALF"))
and bank repayment of some government supplied capital were instrumental in
restoring investor confidence. As a result, cash flows into corporate and
mortgage/asset-backed sectors increased sharply with funds coming from both
low-yielding cash and governments as well as from re-balancing out of other
asset classes like equities.
However, in contrast to the pronounced financial market improvement, economic
conditions only roughly stabilized after very sharp cutbacks in many sectors.
Manufacturing and production indices remained in negative territory, albeit at
significantly better levels than in the first half of 2009, while important
housing prices continued to decline in most regions and unemployment continued
its trajectory higher.
Over the last few months, economic conditions have begun to stabilize with even
a positive print for GDP and improved produc-tivity, further spurring the
already positive performance of non-Treasury sectors. Also positively impacting
the rebound in these sectors, specifically corporate debt, has been the surge in
fund flows. According to AMG Data Service, there has been a net redemption from
money market funds of over $375 billion year to date through September, which
would be the largest annual outflow ever. The majority, $249 billion, has gone
into taxable bond funds with investment grade corporates ($125 billion) and high
yield ($27 billion) receiving large shares. Institutional investor flows not
captured in the above figures have likely been much larger.
Sectors that had been under the most pressure in 2008 performed best during the
reporting period. Treasuries posted modest returns but investment grade
corporate bonds, asset-backed securities ("ABS"), commercial mortgage-backed
securities ("CMBS") and high yield corporates were top performers.
Treasury yields bounced about during the reporting period, with 2-year rates
declining from 1.55% to 0.64% in December, only to surge back to 1.40% in June
and then ending at 0.89%. Ten-year Treasury rates also increased in the first
half of the year, influenced by both economic conditions as well as the surge in
monthly Treasury supply needed to fund fiscal stimulus. After touching just
above 2.00% at the end of 2008, 10-year yields rose to 2.67% at the end of March
and then to above 4.00% in mid-June before falling back to 3.39% on October 30.
The yield curve steepened sharply during the first half of the year as long
rates rose faster than short rates, then was stable for much of the rest of
2009.
20
SCHRODER TOTAL RETURN FIXED INCOME FUND
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 2, 2009)
While Treasuries posted a respectable 6.33% return, the Index returned more than
double that amount, rallying to a 13.79% return. MBS returned 12.05% while the
smaller CMBS/ABS sectors rallied a remarkable 23.29% and 21.99% respectively.
The top performer, however, was corporate bonds, which posted a stunning 31.07%
return. Within corporates, utilities were the top performer, returning 36.00%,
while the earlier plagued financial sector rebounded to generate 31.54% and
industrials were up 29.82%. Lower rated securities had the best returns.
Triple-Bs (returning 36.46%) outpaced single-As (returning 29.37%), which
outperformed double-As (returning 18.55%).
PORTFOLIO REVIEW
In the twelve months under consideration, the Fund outperformed the Index.
Sector strategy added to portfolio returns as exposure to Treasuries was cut to
below that of the benchmark early in the period and we began the year with an
overweight to both agency-issued MBS and corporate bonds. Further additions were
gradually made to corporates, though we retained a bias for defensive industries
and companies with stable cash flows. Underweights in areas like most consumer
cyclical sectors restrained performance. High yield exposure was gradually
increased throughout the period to approximately 10%. This contributed to
performance as high yield bonds, as measured by the Barclays High Yield Index,
returned 51.65% for calendar 2009 through October 31.
The Fund's overweight to agency mortgages was maintained throughout most of the
reporting period, with a reduction in exposure late in the period following
sharp spread tightening as the Fed's purchase programs were initiated. As these
spreads approached 2008 levels, the Fund decreased this exposure in favor of
high-quality, short-duration, well-structured collateralized mortgage
obligations and CMBS. These securities offer comparable yields with much better
protection in the case of higher interest rates.
Yield curve and duration strategies also contributed to returns.
OUTLOOK
Economic activity has picked up materially and shows the power of government
stimulus, particularly initiatives like the recently completed cash-for-clunkers
program but also efforts earlier in the year to reduce home borrowing costs.
This release of pent-up consumer demand and subsequent inventory restocking will
continue to boost growth into the fourth quarter, but our longer-term outlook
for tepid growth remains very much in place. Real final demand will continue to
be constrained by a very large consumer debt overhang which, even with
stabilizing home prices and low interest rates, will prevent further stimulus
from kick-starting a significant economic cycle. While some parts of the economy
will benefit from the weaker US dollar and rising exports to areas of growth
overseas, a return to below trend growth early next year appears most likely.
Excess capacity and high un(der)employment will inhibit inflation from becoming
a tangible threat in 2010.
The Federal Reserve is nonetheless beginning to prepare the market for an
eventual withdrawal of the massive liquidity added to the economy over the last
year, the first tangible actions of which will be the conclusion of their
quantitative easing program near the end of Q1 2010. We do not expect any direct
sales of the $1.25 trillion of agency MBS that will have been purchased by then,
but the Fed will own slightly more than a quarter of all agency-issued mortgages
and their absence from the market could cause yield spreads to widen. We expect
to continue to gradually reduce our agency MBS pass-through exposure in favor of
short collateralized mortgage obligations ("CMOs") and high quality CMBS, with a
target of getting to neutral MBS, late in Q4. We do not expect the Fed to
actually raise rates until late 2010 at the earliest.
Investment grade credit spreads have now contracted to the point where the
overall yields are very low, just 4.76% for the corporate credit index. The
underlying trend of corporate de-levering is still very much in place and
continues to provide positive support. However, it's no surprise that the
financial market recovery combined with large corporate cash positions and low
financing costs have resulted in the first uptick in M&A activity, a potential
negative to the otherwise supportive environment for risk premiums. We continue
to like being long corporate credit in our portfolios as inflows and ongoing
debt reductions outweigh the risk of re-levering for now. We expect to maintain
the Fund's corporate overweight through the quarter, using periods of volatility
to add higher yielding securities.
21
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)
Schroder Total Schroder Total
Return Fixed Return Fixed
Income Fund, Income Fund, Barclays Capital U.S.
Investor Advisor Aggregate Bond
Shares Shares Index
-------------- -------------- ---------------------
12/31/2004 10,000 10,000 10,000
10/31/2005 10,151 10,130 10,102
10/31/2006 10,649 10,592 10,626
10/31/2007 11,170 11,072 11,198
10/31/2008 11,386 11,258 11,232
10/31/2009 13,069 12,902 12,781
The Barclays Capital U.S. Aggregate Bond Index provides a measure of the
performance of the U.S. investment grade bonds market, which includes investment
grade U.S. Government bonds, investment grade corporate bonds, mortgage
pass-through securities and asset-backed securities that are publicly offered
for sale in the United States. The securities in the Index must have a least 1
year remaining to maturity. It is not managed.
PERFORMANCE INFORMATION
One Year Annualized
Ended Since
October 31, 2009 Inception (a)
---------------- -------------
Schroder Total Return Fixed Income Fund --
Investor Shares ....................... 14.79% 5.69%
Advisor Shares ........................ 14.61% 5.41%
(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
- --------- ----------------
FNMA TBA 6.000%, 12/25/39 8.5%
FNMA TBA 5.500%, 12/25/39 4.1
FHLMC 0.522%, 07/16/10 3.5
FNMA 5.000%, 11/01/35 2.6
FNMA 5.500%, 10/01/35 2.3
* Excludes any Short-Term Investments.
SECTOR ALLOCATION
SECTOR % OF INVESTMENTS
- ------ ----------------
U.S. Government Mortgage-
Backed Obligations 37.5%
Corporate Obligations 33.1
Short-Term Investment 15.3
U.S. Government Agency Obligations 5.4
Commercial Mortgage-Backed Obligations 5.2
U.S. Treasury Obligations 3.5
Collateralized Mortgage Obligations 0.0
22
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
MANAGEMENT DISCUSSION AND ANALYSIS (AS OF DECEMBER 3, 2009)
PERFORMANCE
In the twelve months ended October 31, 2009, the Schroder Multi-Asset Growth
Portfolio (the "Fund") rose 19.49% (Investor Shares), 19.13% (Class A Shares),
19.11% (Advisor Shares) and 18.92% (Class R Shares), compared to the Consumer
Price Index ("CPI" or "the Index", the CPI specifically for All Urban
Consumers), which decreased 0.18% on a non-seasonally adjusted basis. For the
same period, the MSCI World Index, a market-weighted index designed to measure
the equity market performance of developed markets, rose by 18.42%.
Given the continuing rally across risk assets, our focus within the Fund has
switched over recent months. For much of the time since it commenced activities
on December 20, 2007, the Fund has maintained a significant exposure to
defensive assets. At the start of the Fund's fiscal year on November 1, 2008,
the Fund had a 21% allocation to cash, which was reduced to under 6% in the
first quarter of 2009. Since the early months of the recovery in markets, which
started in March, we switched the Fund's equity exposure out of defensive
regions and into the more cyclical regions, and over the summer we increased the
Fund's overall equity exposure from 36% a year earlier, holding 44% by the end
of October 2009.
Within non-equity assets the Fund has started to shift from 'nominal' to 'real'
assets given the improvement in the macroeconomic environment over the last six
months. As a result we reduced the Fund's exposure to investment-grade credit.
MARKET BACKGROUND
During the last months of 2008 there were numerous weak data releases across the
world showing rapidly slowing manufacturing and industrial production, as well
as rising unemployment. In addition, mortgage providers Fannie Mae and Freddie
Mac were taken into public ownership, the investment bank Lehman Brothers filed
for bankruptcy, Merrill Lynch was sold to Bank of America and the US government
bailed out the insurance company AIG.
There was a general improvement in all risk asset markets from late March 2009
onwards. Given the extensive quantitative easing policies announced around the
world, especially in the UK, US and Japan, many investors began to believe that
markets had bottomed and risk appetite had returned.
PORTFOLIO REVIEW
At the end of the reporting period, the Fund was invested in a well-diversified
mix of assets, with 44% invested in equities, 33% in fixed income, 20% in
alternatives and 1% in cash. Within the alternatives exposure, we had a bias
towards commodities.
Global financial markets continued to generate strong returns during the end of
the period due to a combination of improving economic data, liquidity, and
continued low interest rates.
The end of the period saw the Fund focused on increasing cyclicality in its
portfolio. Equities, for example, was increased, fixed income was reduced and we
marginally increased the Fund's alternatives exposure. This heightened equity
exposure was mainly obtained through Europe, where we are most positive on
Germany due to its exposure to the industrial cycle and, by extension, demand
from the emerging markets. We retain the Fund's exposure to high-beta emerging
markets given the strength of the liquidity theme, but some caution is warranted
as markets are starting to look overheated. Consequently, our increase in equity
weightings will be concentrated in the US and Europe ex UK.
The Fund's investment grade credit exposure was cut by approximately a third, in
part to finance the rise in cyclical asset exposure.
We have also introduced a number of relative value trades within the Fund. In
Latin America we increased the Fund's exposure to the Brazilian market, while
reducing its exposure to Mexico. Mexico's fortunes are closely tied to those of
the United States, whose own fundamentals remain weak, while Brazil has a
broader range of trading partners benefiting in particular from commodity demand
as global markets recover.
OUTLOOK
We expect the world economy to experience a mild recovery during the second half
of this year, due to the turn in the inventory cycle and expansionary fiscal
policy. However, we believe that growth will fade in the first half of 2010 once
the impact of the inventory cycle has passed and consumer spending remains
constrained by ongoing de-leveraging in the household sector and higher
commodity prices.
23
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 Price
Investor Shares Advisor Shares A Shares R Shares Index Index
---------------------- -------------------- -------------------- -------------------- ---------- --------------
12/20/2007 10,000 10,000 9,550 10,000 10,000 10,000
10/31/2008 7,010 7,000 6,685 6,980 6,270 10,309
10/31/2009 8,376 8,338 7,964 8,300 7,425 10,290
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
One Year Annualized
Ended Since
October 31, 2009 Inception (a)
---------------- -------------
Schroder Multi-Asset Growth Portfolio --
Investor Shares ..................... 19.49% (9.07)%
A Shares ............................ 19.13% (9.29)%
Advisor Shares ...................... 19.11% (9.30)%
R Shares ............................ 18.92% (9.52)%
(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 19.5%
PIMCO Commodity Real Return
Strategy Fund 10.1
Goldman Sachs High Yield Fund 9.9
iShares iBoxx Investment Grade
Corporate Bond Fund 9.5
Schroder International Diversified
Value Fund 7.4
24
SCHRODER INTERNATIONAL ALPHA FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
COMMON STOCK - 97.1%
AUSTRALIA - 1.6%
44,724 Australia & New Zealand Banking
Group (5) 912,048
---------------
BRAZIL - 5.1%
39,663 Itau Unibanco Holding ADR 759,150
43,777 Redecard 643,041
55,762 Vale ADR 1,421,373
---------------
2,823,564
CANADA - 3.5%
12,665 Niko Resources 1,025,847
27,114 Suncor Energy 900,541
---------------
1,926,388
CHINA - 6.3%
105,600 Dongfang Electric Class H (5) 524,621
1,572,000 Industrial & Commercial Bank of
China Class H (5) 1,250,804
111,000 Ping An Insurance Group of China
Class H (5) 972,866
1,237,000 Want Want China Holdings (5) 726,803
---------------
3,475,094
FRANCE - 8.9%
36,460 AXA (5) 906,433
14,674 BNP Paribas (5) 1,105,047
19,376 GDF Suez (5) 809,763
22,706 Groupe Danone (5) 1,363,544
15,045 Ipsen (5) 766,285
---------------
4,951,072
GERMANY - 9.7%
11,547 Bayer (5) 800,840
9,991 Linde (5) 1,048,237
25,317 SAP (5) 1,146,315
10,154 Siemens (5) 917,248
44,976 ThyssenKrupp (5) 1,448,223
---------------
5,360,863
HONG KONG - 6.5%
2,184,000 Denway Motors (5) 1,045,494
75,000 Sun Hung Kai Properties (5) 1,136,376
115,000 Swire Pacific Class A (5) 1,401,553
---------------
3,583,423
ISRAEL - 3.2%
171,850 Makhteshim-Agan Industries (5) 804,014
18,971 Teva Pharmaceutical Industries ADR 957,656
---------------
1,761,670
JAPAN - 15.0%
64,800 Bridgestone (5) 1,069,252
45,300 Honda Motor (5) 1,400,022
64,900 Mitsubishi (5) 1,376,744
157,200 Nomura Holdings (5) 1,108,658
Shares Value $
- ------------- ---------------
189,000 Sekisui Chemical (5) 1,143,873
14,700 Unicharm (5) 1,409,626
48,600 Ushio (5) 764,487
---------------
8,272,662
MEXICO - 1.0%
15,720 Desarrolladora Homex ADR (1) 559,003
---------------
NETHERLANDS - 2.2%
39,387 Unilever (5) 1,213,186
---------------
NORWAY - 1.5%
73,024 DnB NOR (5) 836,515
---------------
SINGAPORE - 2.4%
76,284 Jardine Strategic Holdings (5) 1,324,371
---------------
SPAIN - 3.4%
66,115 Banco Bilbao Vizcaya Argentaria (5) 1,181,371
38,213 Gamesa Tecnologica (5) 698,009
---------------
1,879,380
SWITZERLAND - 11.2%
27,254 Credit Suisse Group (5) 1,456,922
25,792 Novartis (5) 1,343,096
7,935 Roche Holding (5) 1,270,893
670 SGS (5) 894,983
5,171 Syngenta (5) 1,224,396
---------------
6,190,290
UNITED KINGDOM - 15.6%
200,866 BAE Systems (5) 1,032,582
80,876 BG Group (5) 1,391,756
29,382 Cairn Energy (1) (5) 1,266,892
183,294 Centrica (5) 744,422
144,096 HSBC Holdings (5) 1,591,835
141,236 Tesco (5) 941,458
752,835 Vodafone Group (5) 1,658,660
---------------
8,627,605
---------------
TOTAL COMMON STOCK
(Cost $45,908,748) 53,697,134
---------------
EQUITY-LINKED
WARRANT (2) (3) - 2.2%
INDIA - 2.2%
148,794 Shriram Transport Finance, Expires 01/18/13
(Cost $1,004,104) 1,227,551
---------------
SHORT-TERM INVESTMENT (4) - 1.5%
798,123 JPMorgan Prime Money Market Fund, 0.110%
(Cost $798,123) 798,123
---------------
TOTAL INVESTMENTS - 100.8%
(Cost $47,710,975) 55,722,808
---------------
The accompanying notes are an integral part of the financial statements.
25
SCHRODER INTERNATIONAL ALPHA FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
Value $
---------------
OTHER LIABILITIES IN EXCESS
OF OTHER ASSETS - (0.8)% (427,039)
---------------
NET ASSETS - 100.0% $ 55,295,769
===============
(1) Denotes non-income producing security.
(2) Security not readily marketable.
(3) 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, 2009, the value of this
security amounted to $1,227,551, representing 2.2% of the net assets of the
Fund.
(4) The rate shown represents the 7-day current yield as of October 31, 2009.
(5) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
ADR - American Depositary Receipt
The following is a summary of inputs used as of October 31, 2009 in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------- ----------- ------- -----------
INVESTMENTS IN SECURITIES
Common Stock
Australia $ -- $ 912,048 $-- $ 912,048
Brazil 2,823,564 -- -- 2,823,564
Canada 1,926,388 -- -- 1,926,388
China -- 3,475,094 -- 3,475,094
France -- 4,951,072 -- 4,951,072
Germany -- 5,360,863 -- 5,360,863
Hong Kong -- 3,583,423 -- 3,583,423
Israel 957,656 804,014 -- 1,761,670
Japan -- 8,272,662 -- 8,272,662
Mexico 559,003 -- -- 559,003
Netherlands -- 1,213,186 -- 1,213,186
Norway -- 836,515 -- 836,515
Singapore -- 1,324,371 -- 1,324,371
Spain -- 1,879,380 -- 1,879,380
Switzerland -- 6,190,290 -- 6,190,290
United Kingdom -- 8,627,605 -- 8,627,605
---------- ----------- --- -----------
6,266,611 47,430,523 -- 53,697,134
Equity Linked Warrants -- 1,227,551 -- 1,227,551
Short-Term Investment 798,123 -- -- 798,123
---------- ----------- --- -----------
Total Investments in Securities $7,064,734 $48,658,074 $-- $55,722,808
========== =========== === ===========
Amounts designated as "--" are $0 or rounded to $0.
The accompanying notes are an integral part of the financial statements.
26
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
COMMON STOCK - 98.7%
AUSTRALIA - 4.1%
7,417 Aspen Group REIT (1) 3,362
894 Bank of Queensland (1) 9,785
10,757 Centro Retail Group REIT (1) 1,554
24,625 Commonwealth Property Office Fund REIT (1) 19,312
6,998 iiNET (1) 11,610
17,112 Incitec Pivot (1) 39,910
19,856 ING Office Fund REIT (1) 10,475
32,610 Macquarie CountryWide Trust REIT (1) 18,039
11,199 Metcash (1) 47,077
1,404 National Australia Bank (1) 37,090
6,333 Nomad Building Solutions (1) 4,434
10,664 Rubicon America Trust REIT (1)(2)(3) --
1,055 Servcorp (1) 3,691
3,507 Sonic Healthcare (1) 43,776
8,328 Stockland REIT (1) 27,660
5,088 Straits Resources (1) 7,182
5,493 Suncorp-Metway (1) 42,959
13,158 Telstra (1) 39,094
3,993 Washington H Soul Pattinson (1) 47,788
598 Wesfarmers (1) 14,920
3,794 WHK Group (1) 3,534
---------------
433,252
AUSTRIA - 1.4%
722 Oesterreichische Post (1) 21,064
769 OMV (1) 31,678
569 Raiffeisen International Bank Holding (1) 33,355
2,101 Telekom Austria (1) 34,404
87 Vienna Insurance Group (1) 4,900
609 Voestalpine (1) 20,817
---------------
146,218
BELGIUM - 1.6%
1,112 Belgacom (1) 41,633
216 Compagnie d'Entreprises CFE (1) 12,292
577 Compagnie Maritime Belge (1) 17,320
694 Delhaize Group (1) 47,127
551 Econocom Group (1) 7,922
791 Euronav (1) 15,417
341 Mobistar (1) 23,417
66 Wereldhave Belgium REIT (1) 4,978
---------------
170,106
BERMUDA - 0.5%
5,548 Catlin Group (1) 29,948
5,248 Hiscox (1) 27,514
---------------
57,462
BRAZIL - 1.1%
800 Cia de Saneamento Basico do Estado de Sao
Paulo ADR 30,816
1,400 Cia Energetica de Minas Gerais ADR 22,106
900 Cremer 7,157
Shares Value $
- ------------- ---------------
1,800 Grendene 8,067
1,200 Light 16,543
1,000 Tele Norte Leste Participacoes ADR 19,060
400 Telecomunicacoes de Sao Paulo ADR 9,916
---------------
113,665
CANADA - 10.7%
2,100 AGF Management Class B 31,301
2,600 Alimentation Couche Tard Class B 45,653
900 AltaGas Income Trust 14,979
2,200 Avenir Diversified Income Trust 9,927
981 Baytex Energy Trust 23,995
400 BCE 9,576
1,300 Bell Aliant Regional Communications
Income Fund 32,335
600 Bird Construction Income Fund 18,064
1,600 Bonavista Energy Trust 31,112
2,000 CML Healthcare Income Fund 24,743
1,900 Davis & Henderson Income Fund 25,737
700 Empire Class A 27,825
800 EnCana 44,383
1,700 Enerflex Systems Income Fund 22,400
682 Enerplus Resources Fund 14,813
740 Enerplus Resources Fund (Canada) 16,148
1,942 GAZ Metro LP 28,731
600 George Weston 30,602
2,000 Grande Cache Coal (3) 6,898
2,400 Harvest Energy Trust 21,925
900 Husky Energy 23,717
800 IGM Financial 28,516
1,000 InnVest REIT 4,152
600 Keyera Facilities Income Fund 11,007
600 Manitoba Telecom Services 17,426
1,500 Mullen Group 21,706
2,900 NAL Oil & Gas Trust 31,078
200 National Bank of Canada 10,428
3,700 Noranda Income Fund 10,606
1,500 Northland Power Income Fund 14,785
4,100 Paramount Energy Trust 19,334
800 Parkland Income Fund 8,203
3,300 Pengrowth Energy Trust 31,307
2,600 Penn West Energy Trust 43,153
3,200 Peyto Energy Trust 35,092
1,200 Power Corp. of Canada 28,294
1,400 Rogers Communications Class B 41,100
1,800 Teck Resources Class B 52,056
1,100 TELUS 34,571
1,400 TMX Group 37,541
700 Toronto-Dominion Bank 39,922
2,300 Total Energy Services 9,868
300 TransCanada 9,198
1,400 TransForce 9,541
2,600 Trilogy Energy Trust 18,937
900 Vicwest Income Fund 11,900
The accompanying notes are an integral part of the financial statements.
27
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
4,800 Yellow Pages Income Fund 23,789
1,100 Zargon Energy Trust 18,389
---------------
1,126,763
CHILE - 0.4%
45,416 Enersis 16,140
19,905 Inversiones Aguas Metropolitanas 23,517
73,050 Madeco 4,749
---------------
44,406
CHINA - 0.4%
10,000 Great Wall Technology (1) 3,132
8,000 Harbin Power Equipment (1) 7,432
20,000 Pacific Textile Holdings (1) 9,834
24,000 People's Food Holdings (1) 11,320
30,000 Sinotrans (1) 7,864
4,500 Weiqiao Textile Class H (1) 3,140
---------------
42,722
CZECH REPUBLIC - 0.3%
1,215 Telefonica O2 Czech Republic (1) 28,670
---------------
DENMARK - 0.3%
894 D/S Norden (1) 33,498
---------------
FINLAND - 2.3%
1,726 Elisa (1) 33,414
809 Kesko B Shares (1) 26,913
1,675 Metso (1)(3) 46,756
1,995 Orion (1) 37,897
4,108 Pohjola Bank Class A (1) 45,632
667 Sampo (1) 15,959
1,146 Wartsila (1) 41,471
---------------
248,042
FRANCE - 8.1%
2,182 ABC Arbitrage (1) 21,211
1,609 AXA (1) 40,001
588 Bouygues (1) 27,680
972 Carrefour (1) 41,706
455 Casino Guichard Perrachon (1) 36,142
202 Cegid Group (1) 4,697
550 Cie de Saint-Gobain (1) 26,792
243 Ciments Francais (1) 26,472
384 CNP Assurances (1) 37,093
1,628 Credit Agricole (1) 31,173
155 Esso Francaise (1) 21,212
74 Fonciere Des Regions REIT (1) 8,153
1,593 France Telecom (1) 39,458
374 Gecina REIT (1) 39,772
1,186 Generale de Sante (1) 24,041
893 Nexity (1) 33,208
138 Plastic Omnium (1) 3,933
394 PPR (1) 42,924
597 Rallye (1) 20,262
613 Sanofi-Aventis (1) 44,918
Shares Value $
- ------------- ---------------
331 Schneider Electric (1) 34,408
1,668 SCOR (1) 42,436
386 Sword Group (1) 13,370
715 Total (1) 42,770
108 Total Gabon (1) 44,436
275 Vallourec (1) 43,282
434 Vinci (1) 22,641
1,676 Vivendi (1) 46,479
---------------
860,670
GERMANY - 4.2%
367 Allianz (1) 42,051
924 Aurubis (1) 36,800
730 BASF (1) 39,062
300 Bechtle (1) 7,125
1,067 Deutsche Lufthansa (1) 16,470
2,063 Deutsche Telekom (1) 28,181
174 EnBW Energie Baden-Wuerttemberg (1) 10,357
288 Generali Deutschland Holding (1) 27,321
455 Indus Holding (1) 7,799
12 KSB (1) 6,768
487 Metro (1) 27,020
725 MTU Aero Engines Holding (1) 32,933
224 Muenchener Rueckversicherungs (1) 35,427
476 RWE (1) 41,736
426 Sixt (1) 11,847
1,197 SQS Software Quality Systems (1) 3,864
705 Stada Arzneimittel (1) 18,887
691 ThyssenKrupp (1) 22,250
493 Wincor Nixdorf (1) 28,815
---------------
444,713
GREECE - 1.2%
1,341 Eurobank Properties Real Estate
Investment (1) 16,864
2,684 Hellenic Petroleum (1) 32,522
1,775 Hellenic Telecommunications Organization (1) 29,846
1,842 OPAP (1) 46,870
---------------
126,102
GUERNSEY - 0.0%
3,969 IRP Property Investments Limited (1) 5,073
---------------
HONG KONG - 1.9%
28,000 Champion REIT (1) 11,786
133,644 Champion Technology Holdings (1) 4,426
8,000 China Pharmaceutical Group (1) 4,491
16,000 China Ting Group Holdings (1) 2,416
4,000 Chow Sang Sang Holding (1) 3,964
13,000 Goldlion Holdings (1) 3,307
9,000 Great Eagle Holdings (1) 23,743
57,000 GZI Real Estate Investment Trust (1) 21,852
22,000 Lerado Group Holdings (1) 2,176
10,000 Luk Fook Holdings International (1) 5,795
The accompanying notes are an integral part of the financial statements.
28
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
28,000 Norstar Founders Group (1)(2) --
53,000 Pacific Andes International Holdings (1) 8,848
2,781 Prosperity Minerals Holdings 3,034
26,000 Public Financial Holdings (1) 13,423
82,000 Silver Grant International (1) 18,572
30,000 SIM Technology Group (1) 4,919
21,000 Sunlight REIT (1) 5,086
15,000 TAI Cheung Holdings (1) 8,367
34,000 Texwinca Holdings (1) 28,850
7,200 Transport International Holdings (1) 20,356
---------------
195,411
HUNGARY - 0.4%
8,579 Magyar Telekom Telecommunications (1) 37,025
---------------
INDONESIA - 0.2%
5,500 Indo Tambangraya Megah (1) 12,839
25,000 Medco Energi Internasional (1) 6,994
---------------
19,833
IRELAND - 0.7%
3,548 Anglo Irish Bank (1)(2) --
1,709 DCC (1) 44,799
7,529 United Drug (1) 24,802
---------------
69,601
ISRAEL - 1.1%
15,496 Bezeq Israeli Telecommunication (1) 34,617
1,094 Cellcom Israel (1) 32,606
206 IDB Holding (1) 4,855
9,003 Israel Discount Bank Class A (1)(3) 17,203
1,213 Partner Communications (1) 23,023
---------------
112,304
ITALY - 3.5%
2,010 ACEA (1) 23,505
15,636 Banca Monte dei Paschi di Siena (1) 29,699
2,114 Banca Popolare dell'Emilia Romagna (1) 28,733
725 Banco di Sardegna (1) 11,094
3,327 BasicNet (1) 8,893
1,551 Buzzi Unicem (1) 26,012
2,182 Caltagirone (1) 7,984
1,487 ENI (1) 36,815
1,078 Fondiaria-Sai (1) 19,640
7,162 Intek (1) 3,340
1,668 Maire Tecnimont (1) 6,908
2,841 MARR (1) 24,948
2,974 Mediaset (1) 19,305
2,381 Milano Assicurazioni (1) 7,831
6,967 Parmalat (1) 19,302
1,256 Piccolo Credito Valtellinese Scarl (1) 11,538
5,297 Recordati (1) 41,080
19,714 Telecom Italia (1) 31,307
935 Unione di Banche Italiane (1) 13,351
---------------
371,285
Shares Value $
- ------------- ---------------
JAPAN - 18.1%
3,100 Aeon Credit Service (1) 29,865
3,300 Airport Facilities (1) 19,496
200 Alconix (1) 9,557
4,000 Ando (1) 5,285
1,800 Aoyama Trading (1) 28,863
1,500 Arcs (1) 22,049
6 Asax (1) 5,012
1,300 Astellas Pharma (1) 47,900
2,500 Century Tokyo Leasing (1) 27,945
1,300 Charle (1) 4,702
2,000 Chubu Shiryo (1) 18,619
1,600 Chubu Steel Plate (1) 10,290
3,000 COMSYS Holdings (1) 29,668
700 Cosmos Pharmaceutical (1) 18,023
700 Create SD Holdings (1) 16,053
3 DA Office Investment REIT (1) 8,287
1,000 Daifuku (1) 6,196
2,000 Daiichi Jitsugyo (1) 5,758
400 Daiichikosho (1) 4,640
300 Daikoku Denki (1) 5,951
7,000 Daishi Bank (1) 25,515
3,000 Daiwa Industries (1) 15,659
1,400 DTS (1) 12,040
1,100 Eisai (1) 39,085
800 Electric Power Development (1) 24,681
400 Elematec (1) 4,072
700 Excel (1) 8,371
600 Fuji (1) 2,407
600 Fuji Electronics (1) 5,202
5 Fujishoji (1) 6,535
5,000 Fujitsu (1) 29,462
800 Fukuda Denshi (1) 20,861
1,200 Furusato Industries (1) 7,241
800 Himawari Holdings (1) 3,905
2,800 Hitachi Capital (1) 35,595
2,000 Hosiden (1) 24,235
1,900 IT Holdings (1) 23,430
5 ITC Networks (1) 11,649
4,000 ITOCHU (1) 25,299
1,600 Itochu Enex (1) 8,220
4 Japan Excellent (1) 18,788
3 Japan Hotel and Resort REIT (1) 4,258
4 JAPAN OFFICE Investment REIT (1) 4,196
9 Japan Prime Realty Investment REIT Class A (1) 19,612
4 Japan Retail Fund Investment REIT (1) 18,817
1,000 JBCC Holdings (1) 6,874
6,000 JFE Shoji Holdings (1) 21,722
4 Joint REIT Investment (1) 8,670
2,000 Kagoshima Bank (1) 14,778
5,000 Kandenko (1) 30,857
2,000 Kasumi (1) 9,942
The accompanying notes are an integral part of the financial statements.
29
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
2,000 Katakura Chikkarin (1) 6,205
1,300 Kato Sangyo (1) 22,450
2,000 Kawasumi Laboratories (1) 13,988
9 KDDI (1) 47,796
2,000 Kogi (1) 2,667
2,000 Kyowa Exeo (1) 18,329
4 LaSalle Japan REIT (1) 5,370
6,000 Lion (1) 29,937
5,000 Marubeni (1) 24,753
1,000 Megachips (1) 16,570
3,000 Meisei Industrial (1) 6,720
4 MID REIT (1) 9,012
1,100 Mitsubishi (1) 23,335
2,000 Mitsui (1) 26,282
44 Mitsui Knowledge Industry (1) 7,398
15 Money Partners Group (1) 6,851
600 Muto Seiko (1) 5,995
3,000 Nakayama Steel Works (1) 4,570
1,000 Namura Shipbuilding (1) 5,794
600 NEC Mobiling (1) 16,359
1,100 NEC Networks & System Integration (1) 13,374
8,000 Nichirei (1) 29,733
5,000 Nihon Spindle Manufacturing (1) 7,440
4,000 Nippon Mining Holdings (1) 17,856
3,000 Nippon Oil (1) 14,792
5 Nippon Residential Investment REIT (1) 13,213
5,000 Nippon Steel Trading (1) 8,503
1,200 Nippon Telegraph & Telephone (1) 49,545
1,000 Nisshin Oillio Group (1) 5,273
33 NTT DoCoMo (1) 47,888
600 Okabe (1) 2,128
7 Okinawa Cellular Telephone (1) 13,257
800 Ono Pharmaceutical (1) 38,005
13,000 Osaka Gas (1) 43,538
400 Osaka Steel (1) 7,394
22 Pacific Golf Group International Holdings (1) 15,100
1,100 Ryosan (1) 26,282
3,000 San-Ai Oil (1) 15,445
2,000 San-In Godo Bank (1) 17,401
700 Sanshin Electronics (1) 5,518
1,000 Sekisui Jushi (1) 8,062
2,200 Seven & I Holdings (1) 48,192
1,800 Shinko Plantech (1) 18,404
2,600 Shinnihon (1) 4,682
4,000 Shinsho (1) 6,630
3,000 Showa Sangyo(1) 10,034
700 Siix (1) 7,687
2,100 Sojitz (1) 3,879
1,100 Sorun (1) 5,565
1,100 SRA Holdings (1) 9,671
12 SRI Sports (1) 11,024
3,900 Sumitomo (1) 37,883
Shares Value $
- ------------- ---------------
1,200 Takeda Pharmaceutical (1) 48,022
570 Token (1) 17,987
3,000 Tokyo Tekko (1) 9,779
5 Tokyu REIT (1) 25,146
2,000 TonenGeneral Sekiyu (1) 18,262
1,200 Toyota Tsusho (1) 17,168
90 UKC Holdings 1,301
4,000 UNY (1) 29,729
1,700 Utoc (1) 4,718
2,000 Valor (1) 17,171
1,500 Yamato Kogyo (1) 45,042
---------------
1,914,241
LIECHTENSTEIN - 0.1%
225 Liechtenstein Landesbank (1) 14,695
---------------
MALAYSIA - 1.0%
15,400 Affin Holdings (1) 9,157
9,400 Hong Leong Financial Group (1) 17,019
21,670 Multi-Purpose Holdings (1) 11,747
1,418 OSK Property Holdings (1) 232
7,600 Petronas Dagangan (1) 19,785
11,200 RHB Capital (1) 17,584
8,600 TAN Chong Motor Holdings (1) 5,664
23,500 Telekom Malaysia (1) 20,668
5,800 YTL Power International (1) 3,647
---------------
105,503
MALTA - 0.0%
22,416 BGP Holdings (1)(2)(3) --
---------------
MEXICO - 0.1%
900 Telefonos de Mexico ADR 14,949
---------------
NETHERLANDS - 3.7%
371 Accell Group (1) 18,071
85 Corio REIT (1) 5,762
1,291 European Aeronautic Defence and Space (1) 24,166
695 Heineken Holding (1) 27,029
999 Koninklijke Boskalis Westminster (1) 35,050
779 Koninklijke DSM (1) 34,119
2,616 Koninklijke KPN (1) 47,433
784 Nutreco Holding (1) 39,559
566 OCE (1) 3,578
1,022 Royal Dutch Shell (1) 30,290
1,363 Royal Dutch Shell A Shares (1) 40,229
982 Royal Dutch Shell B Shares (1) 28,261
849 Sligro Food Group (1) 26,149
446 Vastned Offices/Industrial REIT (1) 7,729
235 Vastned Retail REIT (1) 15,666
105 Wereldhave REIT (1) 10,247
---------------
393,338
The accompanying notes are an integral part of the financial statements.
30
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
NEW ZEALAND - 0.4%
13,956 Air New Zealand (1) 12,930
8,052 ING Property Trust REIT (1) 4,537
13,558 Telecom Corp. of New Zealand (1) 24,464
---------------
41,931
NORWAY - 1.7%
100 Bonheur (1) 3,088
500 Farstad Shipping (1) 11,598
1,000 Fred Olsen Energy (1) 38,603
2,880 SpareBank 1 SMN (1) 25,304
1,039 Sparebank 1 SR Bank (1) 8,179
350 Sparebanken More (1) 13,000
1,607 StatoilHydro (1) 37,867
1,400 Veidekke (1) 10,720
900 Yara International (1) 29,751
---------------
178,110
PHILIPPINES - 0.6%
1,710 Globe Telecom (1) 32,934
17,000 Metropolitan Bank & Trust (1) 14,446
300 Philippine Long Distance Telephone ADR 15,990
4,300 Union Bank of Philippines (1) 3,104
---------------
66,474
POLAND - 0.5%
1,297 KGHM Polska Miedz (1) 43,660
2,065 Telekomunikacja Polska (1) 12,119
---------------
55,779
PORTUGAL - 0.6%
2,426 Banco Espirito Santo (1) 17,899
3,852 Portugal Telecom (1) 44,014
---------------
61,913
RUSSIA - 0.3%
700 Mobile Telesystems ADR 31,710
---------------
SINGAPORE - 1.5%
17,000 Beyonics Technology (1) 2,328
24,000 Boustead Singapore (1) 12,515
8,000 CapitaCommercial Trust REIT (1) 6,015
25,000 CSE Global (1) 14,109
36,000 Frasers Commercial Trust REIT (1) 3,683
18,000 Hi-P International (1) 8,840
18,000 Jurong Technologies Industrial (1)(2) --
18,800 MobileOne (1) 23,259
18,000 SembCorp Industries (1) 42,415
23,000 StarHub (1) 30,802
9,000 UOB-Kay Hian Holdings (1) 9,269
---------------
153,235
SOUTH AFRICA - 0.5%
2,991 Grindrod (1) 6,919
1,836 Massmart Holdings (1) 21,348
7,670 Metorex (1)(3) 3,090
Shares Value $
- ------------- ---------------
129 Palabora Mining (1) 1,705
3,729 Pick'n Pay Holdings (1) 8,518
1,221 Spar Group (1) 10,837
---------------
52,417
SOUTH KOREA - 1.5%
860 Daesang Holdings (1) 2,494
710 Daewoo Shipbuilding & Marine Engineering (1) 9,309
840 Daishin Securities (1) 10,492
120 Dongwon F&B (1) 4,355
310 Global & Yuasa Battery (1) 5,230
1,530 Hanil E-Wha (1) 4,730
490 Hanyang Securities (1) 4,248
210 Husteel (1) 2,657
134 Hyundai Mipo Dockyard (1) 11,004
1,000 INFAC (1) 1,385
160 INTOPS (1) 2,299
450 ISU Chemical (1) 5,297
2,610 IsuPetasys (1) 3,554
530 Jinheung Mutual Savings Bank (1) 1,895
190 Kolon Engineering & Construction (1) 1,007
190 Kyeryong Construction Industrial (1) 3,528
586 LG (1) 33,091
60 Nexen (1) 1,928
86 Nong Shim Holdings (1) 5,041
390 Poongsan Holdings (1) 6,847
210 Pusan City Gas (1) 3,946
100 SeAH Steel (1) 2,837
1,100 SK Telecom ADR 18,381
789 Sungwoo Hitech (1) 6,481
240 Youngone Holdings (1) 4,911
---------------
156,947
SPAIN - 3.1%
2,619 Almirall (1) 34,593
2,679 Banco Bilbao Vizcaya Argentaria (1) 47,869
135 Bolsas y Mercados Espanoles (1) 4,499
825 Caja de Ahorros del Mediterraneo (1) 7,057
247 Cementos Portland Valderrivas (1) 11,408
6,042 Criteria Caixacorp (1) 29,443
2,086 Iberdrola (1) 18,889
9,049 Mapfre (1) 38,764
540 Miquel y Costas & Miquel (1) 11,629
1,766 Repsol (1) 46,996
762 Sociedad General de Aguas de Barcelona (1) 22,057
1,685 Telefonica (1) 47,039
1,350 Tubos Reunidos (1) 4,130
---------------
324,373
SWEDEN - 2.3%
400 AddTech (1) 5,754
1,104 Axfood (1) 32,938
1,000 D Carnegie (1)(2)(3) --
846 Fabege (1) 4,911
The accompanying notes are an integral part of the financial statements.
31
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
1,300 NCC B Shares (1) 19,638
2,264 Nordea Bank (1) 24,298
5,376 Peab (1) 33,682
600 Ratos Class B Shares (1) 13,954
2,055 Securitas Class B (1) 19,172
1,900 Svenska Cellulosa B Shares (1) 26,106
676 Svenska Handelsbanken A Shares (1) 17,468
6,695 TeliaSonera (1) 44,371
---------------
242,292
SWITZERLAND - 3.4%
408 Baloise Holding (1) 34,934
71 Banque Cantonale Vaudoise (1) 26,743
144 Bellevue Group (1) 5,855
187 Compagnie Financiere Tradition (1) 23,191
105 Galenica (1) 36,180
541 Gottex Fund Management Holdings (1) 4,754
101 Helvetia Holding (1) 32,203
908 Novartis (1) 47,283
193 Roche Holding (1) 30,911
452 Sulzer (1) 35,193
77 Swisscom (1) 27,791
98 Valora Holding (1) 23,366
149 Zurich Financial Services (1) 34,120
---------------
362,524
TAIWAN - 2.3%
4,000 Acer (1) 9,398
6,000 Altek (1) 10,132
10,599 AmTRAN Technology (1) 10,040
7,000 Audix (1) 4,225
1,944 Chunghwa Telecom ADR 33,787
11,000 Eternal Chemical (1) 10,160
6,000 Feng TAY Enterprise (1) 4,939
21,505 Inventec (1) 11,857
5,000 MIN AIK Technology (1) 5,539
3,150 Promate Electronic (1) 1,978
16,907 Quanta Computer (1) 31,878
5,000 Shih Wei Navigation (1) 6,823
25,130 Sinon (1) 9,919
54,000 Taiwan Cooperative Bank (1) 31,758
4,000 Taiwan Navigation (1) 5,379
10,000 Taiwan Sogo Shin Kong SEC (1) 6,417
6,000 Ttet Union (1) 6,789
6,000 U-Ming Marine Transport (1) 10,847
8,000 Weikeng Industrial (1) 4,437
11,000 Wistron (1) 18,354
5,000 Yufo Electronics (1) 5,606
---------------
240,262
THAILAND - 1.0%
18,400 Bangchak Petroleum (1) 7,528
5,100 Bangkok Bank (1) 17,118
9,000 Bangkok Expressway (1) 4,931
57,300 Charoen Pokphand Foods (1) 16,457
8,000 Hana Microelectronics (1) 4,428
Shares Value $
- ------------- ---------------
7,300 Kiatnakin Bank (1) 5,482
25,300 Lanna Resources (1) 11,125
45,800 MCS Steel (1) 5,386
5,100 Precious Shipping (1) 2,789
18,400 Property Perfect (1) 2,186
14,800 SC Asset (1) 5,015
700 Siam Makro (1) 1,665
11,800 Thai Plastic & Chemical (1) 6,407
15,600 Thai Union Frozen Products (1) 12,897
5,900 Thanachart Capital (1) 3,446
---------------
106,860
TURKEY - 0.4%
3,685 Selcuk Ecza Deposu Ticaret ve Sanayi A.S. (1) 5,616
572 Tupras Turkiye Petrol Rafine (1) 9,823
6,429 Turk Hava Yollari (1) 17,945
4,390 Turk Telekomunikasyon (1) 13,323
---------------
46,707
UNITED KINGDOM - 11.2%
4,080 Anglo Pacific Group (1) 13,831
2,043 Arriva (1) 14,719
1,047 AstraZeneca (1) 46,988
3,019 Atkins WS (1) 27,915
7,289 Aviva (1) 45,567
6,218 BAE Systems (1) 31,965
6,278 Balfour Beatty (1) 27,285
6,061 Beazley (1) 10,632
3,157 BP (1) 29,574
7,320 Brit Insurance Holdings (1) 24,922
920 British Polythene Industries (1) 3,565
5,517 Britvic (1) 31,540
15,076 Chaucer Holdings (1) 11,400
4,149 Chesnara (1) 12,389
3,419 Chime Communications (1) 10,928
5,828 Cineworld Group (1) 15,059
1,022 Clarkson (1) 13,824
4,409 Computacenter (1) 20,422
5,308 Davis Service Group (1) 36,359
6,719 Delta (1) 18,395
11,800 Dimension Data Holdings (1) 13,707
3,775 Drax Group (1) 28,713
5,794 DS Smith (1) 11,062
11,520 Ennstone (1)(2) --
2,304 Euromoney Institutional Investor (1) 14,349
7,196 Filtrona (1) 19,703
5,307 Game Group (1) 12,874
2,359 GlaxoSmithKline (1) 48,376
1,176 Hallin Marine Subsea International (1) 2,210
2,958 Hays (1) 4,737
2,169 Hill & Smith Holdings (1) 11,730
7,884 Home Retail Group (1) 37,515
1,649 Interior Services Group (1) 5,031
7,273 International Power (1) 30,187
The accompanying notes are an integral part of the financial statements.
32
SCHRODER INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
2,521 Interserve (1) 9,619
4,831 J Sainsbury (1) 26,064
1,407 Keller Group (1) 16,458
19,526 Legal & General Group (1) 25,048
7,478 Man Group (1) 37,807
4,780 Marks & Spencer Group (1) 26,765
5,682 Marston's (1) 8,063
2,042 Pearson (1) 27,749
5,002 Prudential (1) 45,422
8,612 QinetiQ Group (1) 23,140
3,473 Raymarine 627
1,789 Robert Wiseman Dairies (1) 13,098
12,716 RSA Insurance Group (1) 25,191
3,427 Severfield-Rowen (1) 9,264
1,976 Spectris (1) 21,923
2,786 Sthree (1) 11,473
4,400 Tanjong (1) 19,483
5,532 Tate & Lyle (1) 40,714
7,488 Tesco (1) 49,914
3,038 TT electronics (1) 3,621
11,512 Vodafone Group (1) 25,363
2,971 WPP (1) 26,618
1,140 WSP Group (1) 5,586
---------------
1,186,483
---------------
TOTAL COMMON STOCK
(Cost $10,309,135) 10,437,564
---------------
PREFERRED STOCK - 0.8%
BRAZIL - 0.2%
400 Banco Pine 2,347
300 Cia Energetica do Ceara Class A 4,695
920 Eletropaulo Metropolitana Eletricidade
de Sao Paulo Class B 17,365
---------------
24,407
GERMANY - 0.6%
483 Fresenius (1) 28,050
305 Volkswagen (1) 30,375
---------------
58,425
---------------
TOTAL PREFERRED STOCK
(Cost $78,213) 82,832
---------------
RIGHTS - 0.0%
BELGIUM - 0.0%
1,604 Fortis, Expires 07/01/14 (1)(2)(3) --
---------------
NORWAY - 0.0%
109 Sparebank 1 SR Bank (1)(3) 198
---------------
TOTAL RIGHTS
(Cost $ --) 198
---------------
Shares Value $
- ------------- ---------------
WARRANTS - 0.0%
ITALY - 0.0%
2,105 Mediobanca, Expires 03/20/11 (2)(3) --
935 Unione di Banche Italiane, Expires
06/30/11 (3) 88
---------------
TOTAL WARRANTS
(Cost $ --) 88
---------------
SHORT-TERM INVESTMENT (4) - 0.1%
4,098 JPMorgan Prime Money Market Fund, 0.110%
(Cost $4,098) 4,098
---------------
TOTAL INVESTMENTS - 99.6%
(Cost $10,391,446) 10,524,780
---------------
OTHER ASSETS LESS
LIABILITIES - 0.4% 46,958
---------------
NET ASSETS - 100.0% $ 10,571,738
===============
(1) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
(2) Security considered illiquid. On October 31, 2009 the value of these
securities amounted to $0 representing less than 0.1% of the net assets of
the Fund.
(3) Denotes non-income producing security.
(4) The rate shown represents the 7-day current yield as of October 31, 2009.
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 INTERNATIONAL DIVERSIFIED VALUE FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
The following is a summary of inputs used as of October 31, 2009 in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------- ---------- ------- -----------
INVESTMENTS IN SECURITIES
Common Stock
Australia $ -- $ 433,252 $-- $ 433,252
Austria -- 146,218 -- 146,218
Belgium -- 170,106 -- 170,106
Bermuda -- 57,462 -- 57,462
Brazil 113,665 -- -- 113,665
Canada 1,126,763 -- -- 1,126,763
Chile 44,406 -- -- 44,406
China -- 42,722 -- 42,722
Czech Republic -- 28,670 -- 28,670
Denmark -- 33,498 -- 33,498
Finland -- 248,042 -- 248,042
France -- 860,670 -- 860,670
Germany -- 444,713 -- 444,713
Greece -- 126,102 -- 126,102
Guernsey -- 5,073 -- 5,073
Hong Kong 3,034 192,377 -- 195,411
Hungary -- 37,025 -- 37,025
Indonesia -- 19,833 -- 19,833
Ireland -- 69,601 -- 69,601
Israel -- 112,304 -- 112,304
Italy -- 371,285 -- 371,285
Japan 1,301 1,912,940 -- 1,914,241
Liechtenstein -- 14,695 -- 14,695
Malaysia -- 105,503 -- 105,503
Malta -- -- -- --
Mexico 14,949 -- -- 14,949
Netherlands -- 393,338 -- 393,338
New Zealand -- 41,931 -- 41,931
Norway -- 178,110 -- 178,110
Phillippines 15,990 50,484 -- 66,474
Poland -- 55,779 -- 55,779
Portugal -- 61,913 -- 61,913
Russia 31,710 -- -- 31,710
Singapore -- 153,235 -- 153,235
South Africa -- 52,417 -- 52,417
South Korea 18,381 138,566 -- 156,947
Spain -- 324,373 -- 324,373
Sweden -- 242,292 -- 242,292
Switzerland -- 362,524 -- 362,524
Taiwan 33,787 206,475 -- 240,262
Thailand -- 106,860 -- 106,860
Turkey -- 46,707 -- 46,707
United Kingdom 627 1,185,856 -- 1,186,483
---------- ---------- --- -----------
1,404,613 9,032,951 -- 10,437,564
---------- ---------- --- -----------
Preferred Stock
Brazil 24,407 -- -- 24,407
Germany -- 58,425 -- 58,425
---------- ---------- --- -----------
24,407 58,425 -- 82,832
Rights
Belgium -- -- -- --
Norway -- 198 -- 198
---------- ---------- --- -----------
-- 198 -- 198
Warrants
Italy 88 -- -- 88
---------- ---------- --- -----------
Short-Term Investment 4,098 -- -- 4,098
---------- ---------- --- -----------
Total Investments in
Securities $1,433,206 $9,091,574 $-- $10,524,780
========== ========== === ===========
Amounts designated as "--" are $0 or rounded to $0.
The accompanying notes are an integral part of the financial statements.
34
SCHRODER EMERGING MARKET EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
COMMON STOCK - 90.2%
BRAZIL - 9.6%
18,900 All America Latina Logistica 138,811
4,371 B2W Cia Global Do Varejo 126,773
28,499 Banco Bradesco ADR 561,430
36,900 BM&FBOVESPA 237,895
5,104 BRF-Brasil Foods (1) 123,128
400 BRF-Brasil Foods ADR (1) 19,348
5,100 Cia Brasileira de Distribuicao Grupo
Pao de Acucar ADR 308,499
8,000 Cia Siderurgica Nacional ADR 265,280
49,369 Itau Unibanco Holding ADR 944,923
200 OGX Petroleo e Gas Participacoes 161,318
24,800 PDG Realty Empreendimentos e
Participacoes 207,077
23,000 Petroleo Brasileiro 529,111
3,000 Petroleo Brasileiro ADR 138,660
10,600 Tele Norte Leste Participacoes ADR 202,036
1,300 Vale 33,045
13,900 Vale ADR 354,311
8,642 Vivo Participacoes ADR 209,568
---------------
4,561,213
CHINA - 13.7%
1,570,000 Bank of China Class H (2) 910,814
101,000 China Coal Energy Class H (2) 140,523
1,363,000 China Construction Bank Class H (2) 1,175,176
201,000 China Life Insurance Class H (2) 924,237
472,000 China Shanshui Cement Group (2) 337,065
163,500 China Shenhua Energy Class H (2) 733,534
440,000 China Shipping Container Lines (2) 157,478
169,000 Golden Eagle Retail Group (2) 290,689
215,000 Hidili Industry International
Development (2) 220,037
453,000 Industrial & Commercial Bank of
China Class H (2) 360,441
70,000 Jiangsu Expressway Class H (2) 62,255
218,000 PetroChina Class H (2) 262,336
72,000 Ping An Insurance Group of China
Class H (2) 631,048
42,207 Shanghai Lujiazui Finance & Trade
Zone Development Class B (2) 78,774
13,000 Tencent Holdings (2) 226,381
---------------
6,510,788
CZECH REPUBLIC - 0.4%
1,000 Komercni Banka (2) 196,399
---------------
EGYPT - 0.5%
5,135 Commercial International Bank (2) 52,931
2,185 Orascom Construction Industries (2) 103,329
77,930 Talaat Moustafa Group (1)(2) 103,434
---------------
259,694
Shares Value $
- ------------- ---------------
HONG KONG - 6.4%
53,000 Beijing Enterprises Holdings (2) 317,280
121,000 China Mengniu Dairy (2) 339,055
64,000 China Merchants Holdings
International (2) 204,134
42,000 China Mobile (2) 393,756
2,400 China Mobile ADR 112,152
266,000 China Unicom Hong Kong (2) 338,244
635,000 CNOOC (2) 951,073
771,140 Franshion Properties China (2) 215,637
40,000 Shanghai Industrial Holdings (2) 187,924
---------------
3,059,255
HUNGARY - 2.2%
71,376 Magyar Telekom Telecommunications (2) 308,042
1,905 MOL Hungarian Oil & Gas (2) 159,322
19,921 OTP Bank (2) 560,767
---------------
1,028,131
INDIA - 7.2%
3,300 HDFC Bank ADR 365,013
14,400 ICICI Bank ADR 452,880
22,200 Infosys Technologies ADR 1,021,200
69,797 ITC GDR 378,670
17,950 Mahindra & Mahindra GDR 352,369
10,300 Reliance Industries GDR (1)(2)(3) 854,175
---------------
3,424,307
INDONESIA - 1.8%
444,000 Bank Mandiri (2) 213,279
202,000 Indocement Tunggal Prakarsa (2) 230,252
129,000 Perusahaan Perkebunan London
Sumatra Indonesia (2) 102,964
335,500 Telekomunikasi Indonesia (2) 289,206
---------------
835,701
ISRAEL - 2.7%
56,997 Bank Hapoalim (1)(2) 208,290
50,639 Bezeq Israeli Telecommunication (2) 113,125
23,747 Makhteshim-Agan Industries (2) 111,102
16,800 Teva Pharmaceutical Industries ADR 848,064
---------------
1,280,581
MALAYSIA - 2.7%
150,000 Bumiputra-Commerce Holdings (2) 544,589
94,700 Genting (2) 199,218
100,100 IJM (2) 139,726
87,900 Kuala Lumpur Kepong (2) 384,152
---------------
1,267,685
RUSSIA - 7.7%
52,893 Gazprom ADR 1,277,366
14,500 LUKOIL ADR 829,545
6,700 Mechel ADR 114,972
13,866 MMC Norilsk Nickel ADR (2) 182,151
The accompanying notes are an integral part of the financial statements.
35
SCHRODER EMERGING MARKET EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
9,700 Mobile Telesystems ADR 439,410
1,550 NovaTek GDR (2) 77,812
55,100 Rosneft Oil GDR (2) 418,971
186 Sberbank GDR (2) 45,355
14,400 Severstal GDR (2) 103,872
7,650 Uralkali GDR (2) 172,191
---------------
3,661,645
SOUTH AFRICA - 6.9%
26,928 ABSA Group (2) 429,016
7,654 African Rainbow Minerals (2) 149,148
51,492 Aveng (2) 274,845
246,672 FirstRand (2) 559,181
35,489 Gold Fields (2) 456,973
7,619 Impala Platinum Holdings (2) 168,725
44,362 JD Group (2) 248,810
23,360 MTN Group (2) 350,054
10,789 Naspers N Shares (2) 391,976
34,414 Raubex Group (2) 108,454
3,230 Sasol (2) 121,793
---------------
3,258,975
SOUTH KOREA - 14.6%
13,720 Daegu Bank (2) 181,445
4,517 GS Engineering & Construction (2) 394,820
13,300 Hana Financial Group (2) 393,166
2,715 Hyundai Department Store (2) 258,671
8,077 Hyundai Engineering & Construction (2) 444,475
7,082 Hyundai Motor (2) 640,284
6,104 KB Financial Group (2) 292,649
1,386 MegaStudy (2) 287,300
1,773 NHN (1)(2) 260,651
2,084 POSCO (2) 860,864
2,492 Samsung Electronics (2) 1,494,652
758 Samsung Electronics GDR (2)(3) 229,876
1,321 Samsung Fire & Marine Insurance (2) 239,739
13,670 Shinhan Financial Group (2) 516,969
1,918 SK Energy (2) 175,593
1,856 SK Telecom (2) 281,748
---------------
6,952,902
TAIWAN - 6.9%
151,960 Acer (2) 357,016
97,000 Cathay Financial Holding (2) 165,797
19,500 Cathay Financial Holding GDR (1) 342,958
251,966 China Steel (2) 222,972
1,300 China Steel GDR 23,423
4,035 Chinatrust Financial Holding (2) 2,416
226 Chunghwa Telecom ADR 3,928
85,690 Far Eastern Department Stores (2) 87,741
6,000 HON HAI Precision Industry (2) 23,424
95,764 HON HAI Precision Industry GDR 773,773
13,454 KGI Securities GDR (1) 120,413
167,000 Taiwan Cement (2) 170,771
Shares Value $
- ------------- ---------------
50,139 Taiwan Semiconductor Manufacturing (2) 90,654
69,484 Taiwan Semiconductor Manufacturing ADR 662,877
193,840 Uni-President Enterprises (2) 215,576
---------------
3,263,739
THAILAND - 3.4%
76,100 Bangkok Bank (2) 255,430
262,900 Kasikornbank (2) 604,411
1,127,300 Land & Houses (2) 187,976
44,600 PTT (2) 315,930
53,600 PTT Exploration & Production (1)(2) 229,024
---------------
1,592,771
TURKEY - 3.5%
8,870 Akenerji Elektrik Uretim (2) 79,586
13,142 Tupras Turkiye Petrol Rafine (2) 225,689
41,908 Turkcell Iletisim Hizmet (2) 277,233
148,505 Turkiye Garanti Bankasi (2) 539,213
41,311 Turkiye Halk Bankasi (2) 247,190
83,953 Turkiye Is Bankasi Class C (2) 317,904
---------------
1,686,815
---------------
TOTAL COMMON STOCK
(Cost $37,099,560) 42,840,601
---------------
PREFERRED STOCK - 6.5%
BRAZIL - 6.5%
9,579 Bradespar 196,694
9,048 Cia Energetica de Minas Gerais 142,106
9,743 Eletropaulo Metropolitana Eletricidade
de Sao Paulo Class B 183,902
1,391 Itau Unibanco Holding 26,477
29,723 Petroleo Brasileiro ADR 1,192,487
5,300 Ultrapar Participacoes 232,261
6,287 Usinas Siderurgicas de Minas Gerais
Class A 164,273
40,800 Vale ADR 942,480
500 Vale Class A 11,261
---------------
TOTAL PREFERRED STOCK
(Cost $2,686,625) 3,091,941
---------------
EQUITY-LINKED
WARRANT (2)(3)(4) - 1.0%
RUSSIA - 1.0%
207,095 Sberbank Savings Bank of the Russian
Federation, Expires 02/28/18
(Cost $386,231) 455,609
---------------
RIGHTS (1)(2)(6) - 0.0%
BRAZIL - 0.0%
297 All America Latina Logistica
(Cost $ --) 1,400
---------------
The accompanying notes are an integral part of the financial statements.
36
SCHRODER EMERGING MARKET EQUITY FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
SHORT-TERM INVESTMENT (5) - 3.5%
1,672,853 JPMorgan Prime Money Market Fund, 0.110%
(Cost $1,672,853) 1,672,853
---------------
TOTAL INVESTMENTS - 101.2%
(Cost $41,845,269) 48,062,404
---------------
OTHER LIABILITIES IN EXCESS
OF OTHER ASSETS - (1.2)% (562,020)
---------------
NET ASSETS - 100.0% $ 47,500,384
===============
(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. This security may be resold in transactions exempt from registration
normally to qualified institutions. On October 31, 2009, the value of these
securities amounted to $1,539,660, representing 3.2% of the net assets of
the Fund.
(4) Securities are not readily marketable.
(5) The rate shown represents the 7-day current yield as of October 31, 2009.
(6) Security considered illiquid. On October 31, 2009 the value of these
securities amounted to $1,400 representing less than 0.1% of the net assets
of the Fund.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
The following is a summary of inputs used as of October 31, 2009 in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ----------- ------- -----------
INVESTMENTS IN SECURITIES
Common Stock
Brazil $ 4,561,213 $ -- $-- $ 4,561,213
China -- 6,510,788 -- 6,510,788
Czech Republic -- 196,399 -- 196,399
Egypt -- 259,694 -- 259,694
Hong Kong 112,152 2,947,103 -- 3,059,255
Hungary -- 1,028,131 -- 1,028,131
India 2,570,132 854,175 -- 3,424,307
Indonesia -- 835,701 -- 835,701
Israel 848,064 432,517 -- 1,280,581
Malaysia -- 1,267,685 -- 1,267,685
Russia 2,661,293 1,000,352 -- 3,661,645
South Africa -- 3,258,975 -- 3,258,975
South Korea -- 6,952,902 -- 6,952,902
Taiwan 1,927,373 1,336,366 -- 3,263,739
Thailand -- 1,592,771 -- 1,592,771
Turkey -- 1,686,815 -- 1,686,815
---------- ---------- --- ----------
12,680,227 30,160,374 -- 42,840,601
Preferred Stock
Brazil 3,091,941 -- -- 3,091,941
---------- ---------- --- ----------
Equity-Linked Warrant
Russia -- 455,609 -- 455,609
---------- ---------- --- ----------
Rights
Brazil -- 1,400 -- 1,400
---------- ---------- --- ----------
Short-Term Investment 1,672,853 -- -- 1,672,853
---------- ---------- --- ----------
Total Investments in Securities $17,445,021 $30,617,383 $-- $48,062,404
=========== =========== === ===========
Amounts designated as "--" are $0 or rounded to $0.
The accompanying notes are an integral part of the financial statements.
37
SCHRODER U.S. OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
COMMON STOCK - 89.9%
AUTO & TRANSPORTATION - 2.1%
14,300 Atlas Air Worldwide Holdings (1) 375,947
38,100 BorgWarner 1,155,192
33,100 Kansas City Southern (1) 802,013
42,700 Thor Industries 1,119,594
---------------
3,452,746
CONSUMER DISCRETIONARY - 18.4%
117,000 Ambassadors Group 1,487,070
66,800 Arbitron 1,448,224
36,800 ATC Technology (1) 769,120
19,200 Capella Education (1) 1,322,880
79,300 Central Garden & Pet (1) 786,656
40,600 Central Garden & Pet Class A (1) 384,076
39,700 Children's Place (1) 1,248,565
132,500 Clear Channel Outdoor Holdings
Class A (1) 903,650
110,900 Geo Group (1) 2,345,535
89,400 Healthcare Services Group 1,765,650
39,100 Home Inns & Hotels Management
ADR (1)(2) 1,039,278
66,900 IESI-BFC 859,665
128,800 Internap Network Services (1) 412,160
33,800 Lamar Advertising Class A (1) 821,340
132,100 LKQ (1) 2,281,367
39,500 Men's Wearhouse 915,215
87,200 Pinnacle Entertainment (1) 736,840
54,700 Rent-A-Center (1) 1,004,292
193,600 Scientific Games Class A (1) 2,723,952
47,800 Shuffle Master (1) 373,318
67,100 Standard Parking (1) 1,180,960
158,300 Waste Connections (1) 4,975,369
16,100 Watson Wyatt Worldwide Class A 701,638
---------------
30,486,820
CONSUMER STAPLES - 5.7%
23,000 Boston Beer Class A (1) 874,000
23,600 Diamond Foods 711,540
63,100 Nash Finch 1,828,638
71,500 NBTY (1) 2,603,315
62,600 Sanderson Farms 2,290,534
46,300 United Natural Foods (1) 1,116,293
---------------
9,424,320
FINANCIAL SERVICES - 14.1%
64,373 Argo Group International Holdings (1) 2,186,107
26,500 Bank of Hawaii 1,176,600
23,100 Berkshire Hills Bancorp 474,705
130,000 Brookline Bancorp 1,272,700
107,400 Chimera Investment REIT 374,826
92,720 CVB Financial 742,687
14,000 Digital Realty Trust REIT 631,820
35,200 Euronet Worldwide (1) 832,480
114,400 Genpact (1) 1,362,504
Shares Value $
- ------------- ---------------
39,508 Health Care REIT 1,752,970
51,000 Hilltop Holdings (1) 603,840
52,200 Investment Technology Group (1) 1,125,954
96,700 Investors REIT 809,379
47,600 Lazard LP Class A 1,796,900
69,400 National Penn Bancshares 390,028
40,700 National Retail Properties REIT 788,766
82,300 Ocwen Financial (1) 899,539
51,600 Redwood Trust 719,304
81,600 Reinsurance Group of America 3,761,760
33,400 Westamerica Bancorporation 1,596,520
---------------
23,299,389
HEALTH CARE - 14.5%
40,800 Amedisys (1) 1,623,432
48,400 AMERIGROUP (1) 1,067,220
15,800 athenahealth (1) 594,238
72,000 Bruker (1) 780,480
39,500 Centene (1) 704,285
41,100 Cepheid (1) 545,397
54,500 Cooper 1,526,545
32,500 Emergency Medical Services (1) 1,560,650
24,600 Haemonetics (1) 1,266,900
108,400 Health Management Associates (1) 661,240
31,600 HMS Holdings (1) 1,356,588
96,800 Inspire Pharmaceuticals (1) 432,696
150,000 Lexicon Pharmaceuticals (1) 196,500
54,000 Luminex (1) 794,880
25,400 Masimo (1) 674,878
15,900 Omnicare 344,553
19,300 Onyx Pharmaceuticals (1) 513,380
14,100 Perrigo 524,379
148,100 PSS World Medical (1) 2,994,582
55,100 Seattle Genetics (1) 500,308
14,200 STERIS 415,492
128,000 Sun Healthcare Group (1) 1,162,240
17,200 Techne 1,075,172
80,000 Vivus (1) 632,000
28,400 Volcano (1) 407,540
42,300 West Pharmaceutical Services 1,669,581
---------------
24,025,156
MATERIALS & PROCESSING - 6.3%
31,500 Apogee Enterprises 417,060
83,800 Cabot 1,837,734
64,400 Calgon Carbon (1) 1,020,096
22,600 Clean Harbors (1) 1,275,770
60,300 Olin 920,781
37,600 Pan American Silver (1) 786,592
16,900 Royal Gold 746,473
61,800 ShawCor Class A (3) 1,609,143
50,700 Sonoco Products 1,356,225
57,000 Wausau Paper 499,890
---------------
10,469,764
The accompanying notes are an integral part of the financial statements.
38
SCHRODER U.S. OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
OTHER ENERGY - 5.0%
22,800 Comstock Resources (1) 936,852
59,500 Goodrich Petroleum (1) 1,527,365
84,800 Key Energy Services (1) 619,888
423,900 Ram Power (1)(3) 1,305,212
96,000 St. Mary Land & Exploration 3,273,600
29,200 Superior Energy Services (1) 631,012
---------------
8,293,929
PRODUCER DURABLES - 3.6%
40,400 EnPro Industries (1) 912,232
27,000 FEI (1) 642,870
17,400 HEICO 661,722
57,450 IDEX 1,633,303
63,200 Rofin-Sinar Technologies (1) 1,355,640
41,700 Tutor Perini (1) 736,005
---------------
5,941,772
TECHNOLOGY - 15.4%
9,200 AboveNet (1) 445,280
249,400 Anadigics (1) 800,574
141,400 Ariba (1) 1,671,348
82,800 Aspen Technology (1) 869,400
210,300 Atmel (1) 782,316
57,400 CommVault Systems (1) 1,130,780
50,700 comScore (1) 777,231
36,700 Digital River (1) 837,861
25,800 F5 Networks (1) 1,158,162
135,400 Gartner (1) 2,521,148
126,700 Harmonic (1) 665,175
76,000 Informatica (1) 1,613,480
57,200 Intermec (1) 704,704
19,800 Manhattan Associates (1) 454,410
99,400 Netscout Systems (1) 1,221,626
146,560 Parametric Technology (1) 2,185,210
71,500 PMC-Sierra (1) 609,180
33,600 QLogic (1) 589,344
24,900 Scansource (1) 632,211
1,700 Semtech (1) 26,299
143,300 SonicWALL (1) 1,137,802
41,900 Standard Microsystems (1) 806,994
59,800 Syniverse Holdings (1) 1,024,374
69,400 TriQuint Semiconductor (1) 374,066
20,900 Vishay Intertechnology (1) 130,207
53,100 Volterra Semiconductor (1) 735,435
99,200 Websense (1) 1,593,152
---------------
25,497,769
Shares Value $
- ------------- ---------------
UTILITIES - 4.8%
69,900 Cleco 1,730,025
70,200 NorthWestern 1,695,330
64,700 Pike Electric (1) 811,985
74,300 Portland General Electric 1,381,237
31,900 UIL Holdings 819,192
49,100 Unisource Energy 1,418,008
---------------
7,855,777
---------------
TOTAL COMMON STOCK
(Cost $131,961,562) 148,747,442
---------------
SHORT-TERM INVESTMENT (4) - 10.8%
17,973,863 JPMorgan Prime Money
Market Fund, 0.110%
(Cost $17,973,863) 17,973,863
---------------
TOTAL INVESTMENTS - 100.7%
(Cost $149,935,425) 166,721,305
---------------
OTHER LIABILITIES IN EXCESS
OF OTHER ASSETS - (0.7)% (1,227,908)
---------------
NET ASSETS - 100.0% $ 165,493,397
===============
(1) Denotes non-income producing security.
(2) China domiciled company.
(3) Canadian domiciled company.
(4) The rate shown represents the 7-day current yield as of October 31, 2009.
ADR - American Depositary Receipt
LP - Limited Partnership
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
39
SCHRODER U.S. OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
The following is a summary of inputs used as of October 31, 2009, in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
------------ ------- ------- ------------
INVESTMENTS IN SECURITIES
Common Stock
Auto & Transportation $ 3,452,746 $-- $-- $ 3,452,746
Consumer Discretionary 30,486,820 -- -- 30,486,820
Consumer Staples 9,424,320 -- -- 9,424,320
Financial Services 23,299,389 -- -- 23,299,389
Health Care 24,025,156 -- -- 24,025,156
Materials & Processing 10,469,764 -- -- 10,469,764
Other Energy 8,293,929 -- -- 8,293,929
Producer Durables 5,941,772 -- -- 5,941,772
Technology 25,497,769 -- -- 25,497,769
Utilities 7,855,777 -- -- 7,855,777
------------ --- --- ------------
148,747,442 -- -- 148,747,442
Short-Term Investment 17,973,863 -- -- 17,973,863
------------ --- --- ------------
Total Investments in Securities $166,721,305 $-- $-- $166,721,305
============ === === ============
The accompanying notes are an integral part of the financial statements.
40
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
COMMON STOCK - 88.3%
AUTO & TRANSPORTATION - 1.3%
8,200 Ryder System 332,510
4,600 Wabtec 169,096
---------------
501,606
CONSUMER DISCRETIONARY - 21.8%
8,000 Black & Decker 377,760
59,200 Burger King Holdings 1,015,872
9,600 Copart (1) 308,832
19,100 Corrections Corp. of America (1) 457,254
22,300 DeVry 1,232,967
13,000 Dick's Sporting Goods (1) 294,970
54,100 Interpublic Group of Cos. (1) 325,682
5,300 Lamar Advertising Class A (1) 128,790
6,800 Magna International Class A 269,484
28,000 Monster Worldwide (1) 406,560
17,300 Pinnacle Entertainment (1) 146,185
60,000 Republic Services 1,554,600
12,500 Ross Stores 550,125
47,400 Scientific Games Class A (1) 666,918
24,600 VeriSign (1) 561,126
7,800 Watson Wyatt Worldwide Class A 339,924
---------------
8,637,049
CONSUMER STAPLES - 2.3%
2,200 Church & Dwight 125,136
17,300 NBTY (1) 629,893
6,400 Ruddick 171,008
---------------
926,037
FINANCIAL SERVICES - 15.0%
3,900 Bank of Hawaii 173,160
43,400 Chimera Investment REIT 151,466
4,200 Comerica 116,550
12,100 Cullen/Frost Bankers 566,159
8,100 Dun & Bradstreet 620,136
10,100 Federated Investors Class B 265,125
10,200 Global Payments 502,146
24,100 HCC Insurance Holdings 635,999
5,500 Health Care REIT 244,035
8,500 Lazard LP Class A 320,875
1,700 M&T Bank 106,845
18,300 People's United Financial 293,349
15,400 Reinsurance Group of America 709,940
15,300 SLM (1) 148,410
4,300 Westamerica Bancorporation 205,540
36,500 WR Berkley 902,280
---------------
5,962,015
HEALTH CARE - 13.1%
3,000 Alexion Pharmaceuticals (1) 133,230
8,300 Coventry Health Care (1) 164,589
24,100 DaVita (1) 1,278,023
10,500 DENTSPLY International 346,080
19,300 Emdeon Class A (1) 289,114
Shares Value $
- ------------- ---------------
8,800 Endo Pharmaceuticals Holdings (1) 197,120
5,700 Gen-Probe (1) 237,804
6,400 Hospira (1) 285,696
12,200 Life Technologies (1) 575,474
12,400 LifePoint Hospitals (1) 351,292
12,600 Omnicare 273,042
3,500 Onyx Pharmaceuticals (1) 93,100
4,400 Perrigo 163,636
9,800 Pharmaceutical Product Development 211,190
16,700 Psychiatric Solutions (1) 344,688
6,100 West Pharmaceutical Services 240,767
---------------
5,184,845
MATERIALS & PROCESSING - 5.5%
6,700 Airgas 297,212
4,000 Albemarle 126,320
15,600 Cabot 342,108
9,900 Crown Holdings (1) 263,835
10,200 Pactiv (1) 235,518
5,100 Pan American Silver (1) 106,692
6,700 Reliance Steel & Aluminum 244,416
2,400 Royal Gold 106,008
6,300 ShawCor Class A (2) 164,039
10,288 Sino-Forest (1)(3) 144,879
13,170 Yamana Gold 140,260
---------------
2,171,287
OTHER ENERGY - 2.9%
7,600 Cimarex Energy 297,616
10,100 Concho Resources (1) 384,911
18,100 Plains Exploration & Production (1) 479,650
---------------
1,162,177
PRODUCER DURABLES - 4.0%
12,500 Aecom Technology (1) 315,500
5,800 Dover 218,544
20,550 IDEX 584,237
4,700 Verisk Analytics Class A (1) 128,921
13,400 Zebra Technologies Class A (1) 335,000
---------------
1,582,202
TECHNOLOGY - 14.9%
6,400 Adtran 147,456
55,900 Amdocs (1) 1,408,680
61,400 Brocade Communications Systems (1) 526,812
7,500 Citrix Systems (1) 275,700
13,700 Digital River (1) 312,771
6,600 F5 Networks (1) 296,274
52,500 Integrated Device Technology (1) 308,700
7,000 Microchip Technology 167,720
32,900 Parametric Technology (1) 490,539
11,100 QLogic (1) 194,694
23,700 Rovi (1) 652,935
42,200 SAIC (1) 747,362
38,900 Skyworks Solutions (1) 405,727
---------------
5,935,370
The accompanying notes are an integral part of the financial statements.
41
SCHRODER U.S. SMALL AND MID CAP OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
UTILITIES - 7.5%
13,000 Cleco 321,750
10,700 Energen 469,516
38,600 MetroPCS Communications (1) 240,478
19,800 NeuStar Class A (1) 457,380
17,600 NII Holdings (1) 473,968
9,900 Northeast Utilities 228,195
19,400 NV Energy 222,324
21,300 Portland General Electric 395,967
14,900 tw telecom (1) 187,740
---------------
2,997,318
---------------
TOTAL COMMON STOCK
(Cost $31,475,977) 35,059,906
---------------
INVESTMENT COMPANIES - 1.2%
2,900 iShares Russell 2000 Index Fund 163,415
4,400 iShares Russell Midcap Index Fund 329,164
---------------
TOTAL INVESTMENT COMPANIES
(Cost $472,302) 492,579
---------------
Shares Value $
- ------------- ---------------
SHORT-TERM INVESTMENT (4) - 21.9%
8,673,362 JPMorgan Prime Money Market
Fund, 0.110%
(Cost $8,673,362) 8,673,362
---------------
TOTAL INVESTMENTS - 111.4%
(Cost $40,621,641) 44,225,847
---------------
OTHER LIABILITIES IN EXCESS OF
OTHER ASSETS - (11.4)% (4,539,506)
---------------
NET ASSETS - 100.0% $ 39,686,341
===============
(1) Denotes non-income producing security.
(2) Canadian domiciled company.
(3) Hong Kong domiciled company.
(4) The rate shown represents the 7-day current yield as of October 31, 2009.
LP - Limited Partnership
REIT - Real Estate Investment Trust
The following is a summary of inputs used as of October 31, 2009, in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ------- ------- -----------
INVESTMENTS IN SECURITIES
Common Stock
Auto & Transportation $ 501,606 $-- $-- $ 501,606
Consumer Discretionary 8,637,049 -- -- 8,637,049
Consumer Staples 926,037 -- -- 926,037
Financial Services 5,962,015 -- -- 5,962,015
Health Care 5,184,845 -- -- 5,184,845
Materials & Processing 2,171,287 -- -- 2,171,287
Other Energy 1,162,177 -- -- 1,162,177
Producer Durables 1,582,202 -- -- 1,582,202
Technology 5,935,370 -- -- 5,935,370
Utilities 2,997,318 -- -- 2,997,318
----------- --- --- -----------
35,059,906 -- -- 35,059,906
Investment Companies 492,579 -- -- 492,579
----------- --- --- -----------
Short-Term Investment 8,673,362 -- -- 8,673,362
----------- --- --- -----------
Total Investments in Securities $44,225,847 $-- $-- $44,225,847
=========== === === ===========
The accompanying notes are an integral part of the financial statements.
42
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
COMMON STOCK - 97.5%
BAHAMAS - 0.0%
4,000 Steiner Leisure (1) 147,840
---------------
Total Bahamas 147,840
---------------
BERMUDA - 1.0%
35,652 Accenture 1,321,976
10,353 ACE 531,730
7,500 Allied World Assurance Holdings 335,700
17,000 Max Capital Group 351,050
26,604 Nabors Industries (1) 554,162
3,400 PartnerRe 260,032
18,200 Validus Holdings 460,460
---------------
Total Bermuda 3,815,110
---------------
CANADA - 8.0%
7,100 AG Growth International 209,159
2,516 Agrium 117,111
26,200 AltaGas Income Trust 436,061
25,700 ARC Energy Trust 463,622
6,800 Astral Media 201,453
11,142 Bank of Montreal 515,736
6,333 Bank of Nova Scotia 264,973
20,707 Barrick Gold 745,950
5,550 Bell Aliant Regional Communications
Income Fund (1)(2)(3)(4) 138,044
13,300 Bell Aliant Regional Communications
Income Fund 330,809
14,900 Brookfield Asset Management Class A 314,670
34,000 Brookfield Properties 353,675
29,321 Canadian National Railway 1,417,927
25,598 Canadian Natural Resources 1,662,036
13,702 Canadian Oil Sands Trust 369,694
16,800 Enbridge 653,825
35,430 EnCana 1,965,603
17,200 Ensign Energy Services 246,828
4,000 Franco-Nevada 99,491
4,700 Freehold Royalty Trust 64,535
20,410 Goldcorp 750,726
14,900 IGM Financial 531,110
12,900 Loblaw 356,166
4,600 Major Drilling Group International 91,787
6,237 Manulife Financial 117,070
1,600 Mosaid Technologies 24,337
16,000 Mullen Group 231,530
36,700 NAL Oil & Gas Trust 393,299
13,600 National Bank of Canada 709,111
44,241 Nexen 952,317
37,500 Pengrowth Energy Trust 355,756
38,500 Penn West Energy Trust 638,997
41,100 Peyto Energy Trust 450,713
6,400 Potash Corp. of Saskatchewan 597,156
19,000 Power Corp. of Canada 447,989
Shares Value $
- ------------- ---------------
21,500 Power Financial 541,327
10,596 Research In Motion (1) 625,277
29,864 Rogers Communications Class B 876,729
42,941 Royal Bank of Canada 2,175,836
32,683 Shaw Communications Class B 581,736
39,900 Sherritt International 256,039
4,768 Shoppers Drug Mart 189,530
17,100 Sun Life Financial 473,234
63,200 Talisman Energy 1,078,754
50,280 Teck Resources Class B 1,454,098
39,600 Teck Resources (Canada) Class B 1,150,103
9,000 TMX Group 241,331
21,907 Toronto-Dominion Bank 1,249,398
47,900 TransCanada 1,468,668
9,279 Vermilion Energy Trust 249,928
17,500 Westshore Terminals Income Fund 206,149
14,300 Zargon Energy Trust 239,061
---------------
Total Canada 30,276,464
---------------
CAYMAN ISLANDS - 0.2%
20,688 Garmin 626,019
---------------
Total Cayman Islands 626,019
---------------
UNITED STATES - 88.3%
AMUSEMENT & RECREATION SERVICES - 0.1%
12,000 Life Time Fitness (1) 258,600
---------------
APPAREL & ACCESSORY STORES - 1.3%
5,100 Aeropostale (1) 191,403
25,800 American Eagle Outfitters 451,242
12,600 Buckle 378,126
42,900 Gap 915,486
5,200 Jos A Bank Clothiers (1) 213,096
22,224 Kohl's (1) 1,271,657
28,978 Nordstrom 920,921
14,126 Ross Stores 621,685
---------------
4,963,616
APPAREL & OTHER FINISHED PRODUCTS - 0.3%
14,200 Guess? 519,010
8,300 Gymboree (1) 353,331
4,278 Polo Ralph Lauren 318,369
---------------
1,190,710
AUTOMOTIVE DEALERS & GASOLINE SERVICE
STATIONS - 0.0%
3,800 America's Car-Mart (1) 78,774
---------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.1%
13,100 Wright Express (1) 365,621
---------------
The accompanying notes are an integral part of the financial statements.
43
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY &
MOBILE HOME DEALERS - 0.3%
28,693 Home Depot 719,907
13,100 Lowe's 256,367
5,500 Tractor Supply (1) 245,850
---------------
1,222,124
BUSINESS SERVICES - 8.2%
7,897 Alliance Data Systems (1) 434,177
5,000 Arbitron 108,400
24,167 Automatic Data Processing 961,847
25,400 CA 531,368
8,800 Check Point Software Technologies (1) 273,416
5,100 Computer Programs & Systems 215,424
15,712 Computer Sciences (1) 796,755
52,900 Compuware (1) 373,474
24,800 Earthlink 200,880
55,000 eBay (1) 1,224,850
9,700 Equifax 265,586
8,087 Fair Isaac 164,409
27,200 Fidelity National Information Services 591,872
14,800 Fiserv (1) 678,876
16,400 Global Cash Access Holdings (1) 103,812
8,349 Google Class A (1) 4,476,066
14,760 Heartland Payment Systems 181,400
14,800 i2 Technologies (1) 232,952
12,900 Infosys Technologies ADR 593,400
35,900 Interpublic Group of Cos. (1) 216,118
16,862 Lender Processing Services 671,108
2,100 Mantech International Class A (1) 92,106
600 Mastercard Class A 131,412
333,050 Microsoft 9,235,476
3,891 MicroStrategy Class A (1) 339,568
50,700 MoneyGram International (1) 151,593
27,423 Omnicom Group 940,060
181,381 Oracle 3,827,139
7,000 Quality Systems 427,140
19,500 Quest Software (1) 327,015
12,200 Robert Half International 283,040
46,500 Sapient (1) 378,510
4,100 Sybase (1) 162,196
16,900 TeleTech Holdings (1) 302,341
6,700 TNS (1) 189,342
32,832 Total System Services 524,327
---------------
30,607,455
CHEMICALS & ALLIED PRODUCTS - 10.7%
57,733 Abbott Laboratories 2,919,558
47,626 Amgen (1) 2,558,945
33,567 Avon Products 1,075,822
89,671 Bristol-Myers Squibb 1,954,828
2,582 CF Industries Holdings 214,952
9,891 Colgate-Palmolive 777,729
Shares Value $
- ------------- ---------------
10,300 Dow Chemical 241,844
39,100 EI Du Pont de Nemours 1,244,162
49,061 Eli Lilly 1,668,565
17,594 Genzyme (1) 890,256
16,802 Gilead Sciences (1) 714,925
6,200 Hawkins 130,324
20,800 Hospira (1) 928,512
46,600 Huntsman 370,470
5,400 Innospec 63,828
109,184 Johnson & Johnson 6,447,315
9,514 Lubrizol 633,252
107,774 Merck 3,333,450
12,340 Monsanto 829,001
10,300 NBTY (1) 375,023
8,200 PetMed Express 128,658
266,647 Pfizer 4,540,998
12,400 PPG Industries 699,732
109,611 Procter & Gamble 6,357,438
17,800 RPM International 313,636
3,700 Schering-Plough 104,340
13,772 Terra Industries 437,537
6,800 Valspar 172,516
---------------
40,127,616
COAL MINING - 0.3%
18,900 Arch Coal 409,374
7,600 Consol Energy 325,356
13,400 Peabody Energy 530,506
---------------
1,265,236
COMMUNICATIONS - 3.0%
5,600 Adtran 129,024
225,039 AT&T 5,776,751
63,900 Comcast Class A 926,550
22,356 DIRECTV Group (1) 587,963
5,300 Telephone & Data Systems 156,986
2,559 Time Warner Cable 100,927
116,330 Verizon Communications 3,442,205
---------------
11,120,406
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 0.0%
4,000 EMCOR Group (1) 94,480
---------------
DEPOSITORY INSTITUTIONS - 6.1%
314,850 Bank of America 4,590,513
16,620 Bank of New York Mellon 443,089
14,000 Bank of the Ozarks 318,500
38,698 BB&T 925,269
4,500 BOK Financial 193,365
445,622 Citigroup 1,822,594
3,600 Credicorp 248,508
10,800 Cullen/Frost Bankers 505,332
40,000 Fifth Third Bancorp 357,600
28,700 International Bancshares 426,195
154,863 JPMorgan Chase 6,468,628
The accompanying notes are an integral part of the financial statements.
44
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
18,400 Oriental Financial Group 195,960
8,977 State Street 376,855
9,100 SunTrust Banks 173,901
6,300 SVB Financial Group (1) 259,875
29,800 Trustmark 564,710
19,351 U.S. Bancorp 449,330
160,072 Wells Fargo 4,405,181
---------------
22,725,405
EATING & DRINKING PLACES - 0.8%
9,121 Brinker International 115,290
2,900 Chipotle Mexican Grill Class A (1) 236,321
15,249 Darden Restaurants 462,197
17,781 McDonald's 1,042,144
30,200 Yum! Brands 995,090
---------------
2,851,042
ELECTRIC, GAS & SANITARY SERVICES - 3.1%
58,900 AES (1) 769,823
16,600 Black Hills 404,542
29,700 CMS Energy 395,010
13,960 Consolidated Edison 567,893
15,800 DPL 400,372
11,547 Edison International 367,426
31,700 El Paso 310,977
3,500 Energen 153,580
8,200 Exelon 385,072
14,200 FPL Group 697,220
8,700 Kinder Morgan Energy Partners LP 469,800
26,138 MDU Resources Group 542,363
28,300 NV Energy 324,318
3,300 ONEOK Partners LP 179,520
19,537 PG&E 798,868
11,400 Sempra Energy 586,530
34,208 Southern 1,066,947
8,600 Southern Union 168,302
9,700 TC Pipelines LP 378,979
5,300 UGI 126,564
12,000 Unisource Energy 346,560
7,000 Vectren 157,780
19,100 Waste Management 570,708
20,900 Westar Energy 400,235
46,800 Xcel Energy 882,648
---------------
11,452,037
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT - 6.3%
7,200 Altera 142,488
184,285 Cisco Systems (1) 4,210,912
12,717 Cooper Industries 492,021
49,571 Emerson Electric 1,871,305
412,289 General Electric 5,879,241
13,867 Harris 578,531
225,474 Intel 4,308,808
Shares Value $
- ------------- ---------------
7,400 InterDigital (1) 152,144
13,800 Intersil Class A 173,190
27,698 Micrel 206,904
3,500 Millicom International Cellular (1) 219,310
7,900 Monolithic Power Systems (1) 157,921
11,539 Multi-Fineline Electronix (1) 314,438
1,500 National Presto Industries 130,395
13,900 National Semiconductor 179,866
27,400 Pixelworks (1) 67,130
56,577 QUALCOMM 2,342,854
4,400 Silicon Laboratories (1) 184,360
10,400 Synaptics (1) 234,000
72,922 Texas Instruments 1,710,021
6,900 TTM Technologies (1) 70,173
12,400 Volterra Semiconductor (1) 171,740
---------------
23,797,752
ENGINEERING, ACCOUNTING & RESEARCH
MANAGEMENT - 0.5%
18,700 Fluor 830,654
8,700 Hewitt Associates Class A (1) 309,024
8,400 Quest Diagnostics 469,812
5,900 SAIC (1) 104,489
3,400 VSE 148,886
---------------
1,862,865
FABRICATED METAL PRODUCTS - 0.0%
4,200 Sun Hydraulics 80,052
---------------
FOOD & KINDRED PRODUCTS - 3.8%
27,500 Archer-Daniels-Midland 828,300
5,200 Bunge 296,712
90,658 Coca-Cola 4,832,978
44,900 Coca-Cola Enterprises 856,243
34,600 Del Monte Foods 373,680
4,500 General Mills 296,640
29,565 HJ Heinz 1,189,696
10,313 Hormel Foods 376,012
6,700 J&J Snack Foods 262,439
7,100 JM Smucker 374,383
13,937 Kellogg 718,313
4,412 McCormick 154,464
63,824 PepsiCo 3,864,543
---------------
14,424,403
FOOD STORES - 0.2%
25,581 Kroger 591,688
---------------
GENERAL MERCHANDISE STORES - 2.3%
4,800 Big Lots (1) 120,240
9,173 Costco Wholesale 521,485
34,800 Target 1,685,364
28,498 TJX 1,064,400
104,423 Wal-Mart Stores 5,187,735
---------------
8,579,224
The accompanying notes are an integral part of the financial statements.
45
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
HEALTH SERVICES - 0.5%
11,362 DaVita (1) 602,527
8,962 Express Scripts (1) 716,243
7,980 Laboratory Corp. of America Holdings (1) 549,742
---------------
1,868,512
HOLDING & OTHER INVESTMENT OFFICES - 1.5%
3,000 Agree Realty REIT 69,990
29,500 Annaly Capital Management REIT 498,845
5 Berkshire Hathaway Class A (1) 495,000
160 Berkshire Hathaway Class B (1) 525,280
12,600 Capstead Mortgage REIT 165,816
21,800 Duke Realty REIT 245,032
4,500 Entertainment Properties Trust REIT 153,090
7,500 Equity One REIT 111,900
11,200 Equity Residential REIT 323,456
5,400 Hatteras Financial REIT 151,740
73,500 Host Hotels & Resorts REIT 743,085
6,200 Kilroy Realty REIT 171,244
28,000 MFA Financial REIT 207,760
3,800 National Health Investors REIT 114,000
34,200 NorthStar Realty Finance REIT 120,726
17,455 Simon Property Group REIT 1,185,020
13,100 Weingarten Realty Investors REIT 242,350
---------------
5,524,334
HOME FURNITURE, FURNISHINGS & EQUIPMENT
STORES - 0.5%
21,181 Bed Bath & Beyond (1) 745,783
30,600 Best Buy 1,168,308
8,900 Kirkland's (1) 111,962
---------------
2,026,053
INDUSTRIAL & COMMERCIAL MACHINERY/
COMPUTER EQUIPMENT - 8.5%
13,435 3M 988,413
33,539 Apple (1) 6,322,102
23,388 Baker Hughes 983,933
36,208 Caterpillar 1,993,613
9,500 Deere 432,725
100,499 Dell (1) 1,456,231
5,700 Dover 214,776
112,700 EMC (1) 1,856,169
6,179 Flowserve 606,840
6,873 Graco 189,282
101,033 Hewlett-Packard 4,795,026
50,594 International Business Machines 6,102,142
15,300 ITT 775,710
19,700 John Bean Technologies 323,474
13,876 Joy Global 699,489
3,800 Lufkin Industries 216,790
12,900 Robbins & Myers 299,280
21,867 Smith International 606,372
6,941 Stanley Works 313,941
Shares Value $
- ------------- ---------------
20,800 Teradata (1) 579,904
10,900 Toro 403,518
19,776 Varian Medical Systems (1) 810,420
24,348 Western Digital (1) 820,041
---------------
31,790,191
INSURANCE AGENTS, BROKERS & SERVICE - 0.1%
14,500 Willis Group Holdings 391,500
---------------
INSURANCE CARRIERS - 2.3%
26,213 Aetna 682,324
19,200 Allstate 567,744
15,500 American Financial Group 381,300
17,700 Assurant 529,761
14,300 Catalyst Health Solutions (1) 448,591
16,344 Chubb 793,011
14,800 Cincinnati Financial 375,328
17,704 Delphi Financial Group Class A 384,177
7,000 HCC Insurance Holdings 184,730
16,153 MetLife 549,687
33,000 Protective Life 635,250
15,930 Prudential Financial 720,514
3,400 Reinsurance Group of America 156,740
10,400 StanCorp Financial Group 381,784
14,000 Torchmark 568,400
7,681 Travelers 382,437
36,300 Unum Group 724,185
---------------
8,465,963
LEATHER & LEATHER PRODUCTS - 0.3%
27,400 Coach 903,378
3,800 Steven Madden (1) 153,900
7,000 Wolverine World Wide 179,060
---------------
1,236,338
MEASURING, ANALYZING & CONTROLLING
INSTRUMENTS - 3.0%
8,612 Alcon 1,229,708
6,500 Allergan 365,625
700 Atrion 82,887
29,472 Baxter International 1,593,256
4,361 Becton Dickinson 298,118
26,400 Covidien 1,111,968
3,573 CR Bard 268,225
3,800 Fossil (1) 101,574
52,503 Medtronic 1,874,357
3,300 ResMed (1) 162,393
16,265 Rockwell Collins 819,431
20,635 St. Jude Medical (1) 703,241
21,799 Stryker 1,002,754
10,008 Waters (1) 574,759
100,100 Xerox 752,752
9,000 Zoll Medical (1) 174,780
---------------
11,115,828
The accompanying notes are an integral part of the financial statements.
46
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
METAL MINING - 0.3%
2,211 Freeport-McMoRan Copper & Gold 162,199
48,800 Hecla Mining (1) 200,568
13,295 Newmont Mining 577,801
26,700 Stillwater Mining (1) 165,540
---------------
1,106,108
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.1%
25,427 Mattel 481,333
---------------
MISCELLANEOUS RETAIL - 1.9%
2,406 Amazon.com (1) 285,857
2,800 Amerigas Partners LP 102,928
18,500 Big 5 Sporting Goods 272,875
11,400 Books-A-Million 98,724
15,300 Cash America International 462,978
71,517 CVS Caremark 2,524,550
12,200 Inergy LP 377,834
48,600 Staples 1,054,620
12,600 Tiffany 495,054
30,841 Walgreen 1,166,715
5,303 World Fuel Services 269,657
---------------
7,111,792
MOTION PICTURES - 1.3%
23,100 Discovery Communications Class A (1) 635,250
20,300 Discovery Communications Class C (1) 487,606
48,045 Time Warner 1,447,115
90,772 Walt Disney 2,484,430
---------------
5,054,401
MOTOR FREIGHT TRANSPORTATION &
WAREHOUSING - 0.2%
10,464 United Parcel Service Class B 561,707
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.8%
46,500 Advance America Cash Advance Centers 229,710
53,327 American Express 1,857,913
55,018 Discover Financial Services 777,954
---------------
2,865,577
OIL & GAS EXTRACTION - 2.2%
26,278 BJ Services 504,538
15,652 ENSCO International 716,705
3,700 EOG Resources 302,142
54,837 Halliburton 1,601,789
7,671 Helmerich & Payne 291,651
1,000 North European Oil Royalty Trust 31,400
13,133 Occidental Petroleum 996,532
28,962 Patterson-UTI Energy 451,228
26,772 Schlumberger 1,665,218
10,671 Weatherford International (1) 187,063
38,518 XTO Energy 1,600,808
---------------
8,349,074
Shares Value $
- ------------- ---------------
PAPER & ALLIED PRODUCTS - 0.2%
9,300 Kimberly-Clark 568,788
---------------
PERSONAL SERVICES - 0.0%
4,000 Unifirst 168,280
---------------
PETROLEUM REFINING - 6.3%
67,120 Chevron 5,137,365
63,959 ConocoPhillips 3,209,463
17,347 Enterprise Products Partners LP 486,410
161,974 Exxon Mobil 11,608,676
47,000 Marathon Oil 1,502,590
18,520 Murphy Oil 1,132,313
28,300 Tesoro 400,162
19,369 Valero Energy 350,579
---------------
23,827,558
PIPELINES, EXCEPT NATURAL GAS - 0.3%
8,400 Buckeye Partners LP 417,648
3,900 NuStar Energy LP 209,274
6,900 Sunoco Logistics Partners LP 403,305
---------------
1,030,227
PRIMARY METAL INDUSTRIES - 0.5%
5,700 Hubbell Class B 242,421
16,242 Nucor 647,244
12,000 Precision Castparts 1,146,360
---------------
2,036,025
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.2%
9,800 Harte-Hanks 115,052
5,461 John Wiley & Sons Class A 192,336
11,893 McGraw-Hill 342,281
9,800 Meredith 265,188
---------------
914,857
RAILROAD TRANSPORTATION - 1.3%
20,934 Burlington Northern Santa Fe 1,576,749
22,166 CSX 934,962
17,393 Norfolk Southern 810,861
25,400 Union Pacific 1,400,556
---------------
4,723,128
RUBBER & MISCELLANEOUS PLASTIC PRODUCTS - 0.0%
4,000 Tupperware Brands 180,080
---------------
SECURITY & COMMODITY BROKERS,
DEALERS, EXCHANGES & SERVICES - 2.5%
78,900 BGC Partners Class A 381,087
18,897 Broadridge Financial Solutions 393,247
73,986 Charles Schwab 1,282,917
21,300 Federated Investors Class B 559,125
7,600 Franklin Resources 795,188
38,900 GFI Group 200,335
16,523 Goldman Sachs Group 2,811,719
46,800 Morgan Stanley 1,503,216
The accompanying notes are an integral part of the financial statements.
47
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
18,100 Raymond James Financial 427,341
10,700 T. Rowe Price Group 521,411
22,100 Waddell & Reed Financial Class A 620,126
---------------
9,495,712
STONE, CLAY, GLASS AND CONCRETE PRODUCTS - 0.1%
20,500 Apogee Enterprises 271,420
---------------
TOBACCO PRODUCTS - 1.3%
14,700 Lorillard 1,142,484
67,991 Philip Morris International 3,220,054
8,200 Reynolds American 397,536
---------------
4,760,074
TRANSPORTATION BY AIR - 0.0%
23,600 Hawaiian Holdings (1) 167,324
---------------
TRANSPORTATION EQUIPMENT - 2.2%
12,500 Boeing 597,500
26,347 General Dynamics 1,651,957
16,200 Goodrich 880,470
50,691 Honeywell International 1,819,300
1,656 Lockheed Martin 113,916
3,600 Polaris Industries 151,452
13,400 Spartan Motors 66,866
49,795 United Technologies 3,059,903
---------------
8,341,364
TRANSPORTATION SERVICES - 0.5%
8,555 Ambassadors Group 108,734
17,718 CH Robinson Worldwide 976,439
14,900 Expeditors International of Washington 480,078
11,300 Universal Travel Group (1) 131,984
---------------
1,697,235
WATER TRANSPORTATION - 0.4%
35,833 Carnival 1,043,457
9,900 Overseas Shipholding Group 388,575
---------------
1,432,032
WHOLESALE TRADE-DURABLE GOODS - 0.6%
12,400 Fastenal 427,800
7,400 PSS World Medical (1) 149,628
13,881 Reliance Steel & Aluminum 506,379
4,600 Tech Data (1) 176,778
7,100 WESCO International (1) 181,476
9,632 WW Grainger 902,807
---------------
2,344,868
WHOLESALE TRADE-NON-DURABLE GOODS - 1.0%
5,100 Airgas 226,236
37,302 AmerisourceBergen 826,240
7,600 Andersons 235,828
Shares Value $
- ------------- ---------------
19,803 McKesson 1,163,030
4,600 Medco Health Solutions (1) 258,152
6,400 Mosaic 299,072
30,774 Sysco 813,972
---------------
3,822,530
---------------
Total United States 331,389,319
---------------
TOTAL COMMON STOCK
(Cost $382,208,597) 366,254,752
---------------
RIGHTS - 0.0%
UNITED STATES - 0.0%
7,363 Fresenius Kabi Pharmaceuticals
Holding, Expires 06/30/11 (1)
(Cost $7,363) 3,424
---------------
SHORT-TERM INVESTMENT (5) - 2.1%
7,750,393 JPMorgan Prime Money Market
Fund, 0.110%
(Cost $7,750,393) 7,750,393
---------------
TOTAL INVESTMENTS - 99.6%
(Cost $389,966,353) 374,008,569
---------------
OTHER ASSETS LESS LIABILITIES - 0.4% 1,421,586
---------------
NET ASSETS - 100.0% $ 375,430,155
===============
(1) Denotes non-income producing security.
(2) Security considered illiquid. On October 31, 2009, the value of this
security was $138,044, representing less than 0.1% of the net assets of the
Fund.
(3) 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, 2009, the value of this
security amounted to $138,044, representing less than 0.1% of the net
assets of the Fund.
(4) Security is fair valued. (See Note 2 in Notes to Financial Statements.)
(5) The rate shown represents the 7-day current yield as of October 31, 2009.
ADR - American Depositary Receipt
CAD - Canadian Dollar
LP - Limited Partnership
REIT - Real Estate Investment Trust
USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
48
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
The following is a summary of inputs used as of October 31, 2009, in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- --------- ------- ------------
INVESTMENTS IN SECURITIES
Common Stock
Bahamas $ 147,840 $ -- $-- $ 147,840
------------ --------- --- ------------
Bermuda 3,815,110 -- -- 3,815,110
------------ --------- --- ------------
Canada 30,138,420 138,044 -- 30,276,464
------------ --------- --- ------------
Cayman Islands 626,019 -- -- 626,019
------------ --------- --- ------------
United States
Amusement & Recreation Services 258,600 -- -- 258,600
Apparel & Accessory Stores 4,963,616 -- -- 4,963,616
Apparel & Other Finished Products 1,190,710 -- -- 1,190,710
Automotive Dealers & Gasoline Service
Stations 78,774 -- -- 78,774
Automotive Repair, Services & Parking 365,621 -- -- 365,621
Building Materials, Hardware, Garden
Supply & Mobile Home Dealers 1,222,124 -- -- 1,222,124
Business Services 30,607,455 -- -- 30,607,455
Chemicals & Allied Products 40,127,616 -- -- 40,127,616
Coal Mining 1,265,236 -- -- 1,265,236
Communications 11,120,406 -- -- 11,120,406
Construction Special Trade Contractors 94,480 -- -- 94,480
Depository Institutions 22,725,405 -- -- 22,725,405
Eating & Drinking Places 2,851,042 -- -- 2,851,042
Electric, Gas & Sanitary Services 11,452,037 -- -- 11,452,037
Electronic & Other Electrical Equipment 23,797,752 -- -- 23,797,752
Engineering, Accounting & Research
Management 1,862,865 -- -- 1,862,865
Fabricated Metal Products 80,052 -- -- 80,052
Food & Kindred Products 14,424,403 -- -- 14,424,403
Food Stores 591,688 -- -- 591,688
General Merchandise Stores 8,579,224 -- -- 8,579,224
Health Services 1,868,512 -- -- 1,868,512
Holding & Other Investment Offices 5,524,334 -- -- 5,524,334
Home Furniture, Furnishings &
Equipment Stores 2,026,053 -- -- 2,026,053
Industrial & Commercial Machinery/
Computer Equipment 31,790,191 -- -- 31,790,191
Insurance Agents, Brokers & Service 391,500 -- -- 391,500
Insurance Carriers 8,465,963 -- -- 8,465,963
Leather & Leather Products 1,236,338 -- -- 1,236,338
Measuring, Analyzing & Controlling
Instruments 11,115,828 -- -- 11,115,828
Metal Mining 1,106,108 -- -- 1,106,108
Miscellaneous Manufacturing Industries 481,333 -- -- 481,333
Miscellaneous Retail 7,111,792 -- -- 7,111,792
Motion Pictures 5,054,401 -- -- 5,054,401
Motor Freight Transportation & Warehousing 561,707 -- -- 561,707
Non-Depository Credit Institutions 2,865,577 -- -- 2,865,577
Oil & Gas Extraction 8,349,074 -- -- 8,349,074
Paper & Allied Products 568,788 -- -- 568,788
Personal Services 168,280 -- -- 168,280
The accompanying notes are an integral part of the financial statements.
49
SCHRODER NORTH AMERICAN EQUITY FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- --------- ------- ------------
INVESTMENTS IN SECURITIES (CONTINUED)
United States (continued)
Petroleum Refining $ 23,827,558 $ -- $-- $ 23,827,558
Pipelines, Except Natural Gas 1,030,227 -- -- 1,030,227
Primary Metal Industries 2,036,025 -- -- 2,036,025
Printing, Publishing & Allied Industries 914,857 -- -- 914,857
Railroad Transportation 4,723,128 -- -- 4,723,128
Rubber & Miscellaneous Plastic Products 180,080 -- -- 180,080
Security & Commodity Brokers, Dealers,
Exchanges & Services 9,495,712 -- -- 9,495,712
Stone, Clay, Glass and Concrete Products 271,420 -- -- 271,420
Tobacco Products 4,760,074 -- -- 4,760,074
Transportation By Air 167,324 -- -- 167,324
Transportation Equipment 8,341,364 -- -- 8,341,364
Transportation Services 1,697,235 -- -- 1,697,235
Water Transportation 1,432,032 -- -- 1,432,032
Wholesale Trade-Durable Goods 2,344,868 -- -- 2,344,868
Wholesale Trade-Non-Durable Goods 3,822,530 -- -- 3,822,530
------------ --------- --- ------------
331,389,319 -- -- 331,389,319
------------ --------- --- ------------
Rights
United States 3,424 -- -- 3,424
------------ --------- --- ------------
Short-Term Investment 7,750,393 -- -- 7,750,393
------------ --------- --- ------------
Total Investments in Securities $373,870,525 $ 138,044 $-- $374,008,569
============ ========= === ============
OTHER FINANCIAL INSTRUMENTS
Forwards -- Unrealized Appreciation $ -- $ 315,018 $-- $ 315,018
Forwards -- Unrealized Depreciation -- (200,696) -- (200,696)
Futures -- Unrealized Depreciation (327) -- -- (327)
------------ --------- --- ------------
Total Other Financial Instruments $ (327) $ 114,322 $-- $ 113,995
============ ========= === ============
FUTURES CONTRACTS -- The Fund had the following futures contracts outstanding as
of October 31, 2009:
NUMBER OF NET UNREALIZED
CONTRACTS VALUE EXPIRATION DATE DEPRECIATION
--------- ---------- --------------- --------------
LONG:
S&P 500 E-Mini 139 $7,179,350 Dec-09 $(327)
=====
FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund had the following forward foreign
currency contracts outstanding as of October 31, 2009:
NET UNREALIZED
SETTLEMENT APPRECIATION
DATE CURRENCY TO DELIVER CURRENCY TO RECEIVE (DEPRECIATION)
- ---------- ------------------- ------------------- --------------
11/13/2009 USD 6,315,450 CAD 6,613,106 $(200,696)
11/13/2009 CAD 38,242,467 USD 35,675,598 315,018
---------
$ 114,322
=========
The accompanying notes are an integral part of the financial statements.
50
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Principal
Amount $ Value $
- ------------- ---------------
U.S. GOVERNMENT
MORTGAGE-BACKED
OBLIGATIONS - 45.2%
FHLMC Gold
277,591 6.500%, 07/01/32 300,453
21,239 6.000%, 12/01/28 22,837
1,715,578 5.000%, 08/01/33 1,785,237
38 FHLMC IO REMIC
1,169.001%, 01/15/22 (6) 807
FHLMC REMIC
1,413,000 6.000%, 11/15/30 1,501,805
1,567,000 5.500%, 09/15/27 1,627,848
409,418 4.750%, 12/15/34 425,718
224,000 FHLMC TBA
4.500%, 11/15/24 232,610
1,375,212 FHLMC
5.000%, 11/01/36 1,428,686
2,310,051 FHLMC (1)
5.732%, 04/01/37 2,442,795
FNMA REMIC
539,124 6.500%, 12/25/23 586,804
1,842,000 6.000%, 07/25/30 1,964,005
802,404 5.500%, 07/25/34 851,867
1,951,139 4.500%, 08/25/23 1,994,588
611,417 FNMA REMIC (1)
0.494%, 07/25/36 601,895
FNMA TBA
810,000 6.500%, 12/25/39 866,321
16,100,000 6.000%, 12/25/39 17,040,852
7,750,000 5.500%, 12/25/39 8,125,394
3,540,000 5.000%, 12/25/39 3,653,945
2,080,000 4.500%, 11/25/24 2,160,600
600,000 4.500%, 11/25/39 607,313
FNMA
106,754 7.500%, 12/01/29 120,816
136 7.000%, 12/01/10 139
142,963 6.000%, 12/01/28 153,827
231,984 6.000%, 10/01/29 249,540
3,921,663 6.000%, 05/01/38 4,174,332
206,406 5.500%, 10/01/32 218,439
2,051,931 5.500%, 07/01/33 2,170,912
4,373,732 5.500%, 10/01/35 4,623,242
2,775,693 5.500%, 12/01/35 2,934,039
3,378,069 5.000%, 06/01/35 3,513,119
4,956,175 5.000%, 11/01/35 5,151,217
GNMA REMIC
1,884,075 5.000%, 12/20/29 1,970,123
87,830 4.500%, 08/20/35 91,683
GNMA
22,063 8.000%, 11/15/17 24,208
16,151 8.000%, 06/15/26 18,502
111,627 7.000%, 09/15/23 122,815
Principal
Amount $ Value $
- ------------- ---------------
222,588 5.500%, 07/15/34 236,392
970,630 5.500%, 11/15/38 1,026,882
---------------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED
OBLIGATIONS
(Cost $73,661,002) 75,022,607
---------------
CORPORATE
OBLIGATIONS (4) - 39.8%
325,000 ACCO Brands (2)
10.625%, 03/15/15 349,375
1,015,000 Achmea Hypotheekbank (2)
3.200%, 11/03/14 1,021,351
350,000 Alliance One International (2)
10.000%, 07/15/16 365,750
325,000 America Movil (2)
5.000%, 10/16/19 318,337
245,000 American Tower (2)
7.250%, 05/15/19 270,112
510,000 Anadarko Petroleum
5.750%, 06/15/14 549,129
Anheuser Busch InBev Worldwide (2)
250,000 7.750%, 01/15/19 291,822
770,000 5.375%, 11/15/14 819,603
555,000 ArcelorMittal
7.000%, 10/15/39 524,814
255,000 Atlas Energy Operating LLC (2)
10.750%, 02/01/18 271,575
255,000 Atmos Energy
8.500%, 03/15/19 314,235
310,000 Ball
7.125%, 09/01/16 318,525
Bank of America
2,135,000 6.100%, 06/15/17 2,163,825
335,000 6.000%, 09/01/17 342,553
1,005,000 5.650%, 05/01/18 1,017,484
375,000 Bank of New York Mellon
4.300%, 05/15/14 395,622
895,000 Barclays Bank
6.750%, 05/22/19 1,008,196
260,000 Basic Energy Services (2)
11.625%, 08/01/14 276,900
450,000 BAT International Finance (2)
9.500%, 11/15/18 580,595
440,000 Berry Plastics Escrow LLC (2)
8.250%, 11/15/15 435,050
255,000 Boise Paper Holdings LLC (2)
9.000%, 11/01/17 258,825
360,000 Cablevision Systems (2)
8.625%, 09/15/17 374,400
210,000 CareFusion (2)
6.375%, 08/01/19 226,896
The accompanying notes are an integral part of the financial statements.
51
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Principal
Amount $ Value $
- ------------- ---------------
385,000 Case New Holland (2)
7.750%, 09/01/13 384,037
315,000 CBS
8.875%, 05/15/19 356,385
370,000 Cenovus Energy (2)
6.750%, 11/15/39 405,596
1,360,000 CenturyTel
7.600%, 09/15/39 1,334,496
475,000 Cequel Communications
Holding I LLC (2)
8.625%, 11/15/17 468,255
325,000 Chubb
6.500%, 05/15/38 375,932
310,000 Cincinnati Bell
8.250%, 10/15/17 307,675
350,000 Citigroup
8.500%, 05/22/19 409,809
255,000 Clean Harbors (2)
7.625%, 08/15/16 262,650
425,000 Complete Production Services
8.000%, 12/15/16 404,812
800,000 COX Communications
5.450%, 12/15/14 859,682
Credit Suisse NY
230,000 5.500%, 05/01/14 249,661
525,000 5.300%, 08/13/19 544,007
465,000 Crown Castle International
7.125%, 11/01/19 460,350
CVS Caremark
380,000 6.600%, 03/15/19 424,540
540,000 6.125%, 09/15/39 547,384
450,000 5.750%, 06/01/17 484,916
2,800,000 Danske Bank (2)
2.500%, 05/10/12 2,859,853
240,000 DirecTV Holdings LLC (2)
5.875%, 10/01/19 247,216
195,000 Dow Chemical
8.550%, 05/15/19 222,989
255,000 Dynegy Holdings
8.375%, 05/01/16 239,062
135,000 El Paso
8.250%, 02/15/16 140,427
345,000 Eli Lilly
5.950%, 11/15/37 382,108
530,000 Embraer Overseas
6.375%, 01/15/20 504,825
345,000 EnCana
6.500%, 05/15/19 383,930
610,000 Energy Transfer Partners LP
9.000%, 04/15/19 738,268
360,000 Enterprise Products Operating LLC
6.125%, 10/15/39 361,958
195,000 EQT
8.125%, 06/01/19 223,809
960,000 France Telecom
4.375%, 07/08/14 1,013,352
Principal
Amount $ Value $
- ------------- ---------------
505,000 Freedom Group (2)
10.250%, 08/01/15 535,300
375,000 Frontier Communications
8.125%, 10/01/18 378,281
305,000 General Electric Capital MTN
6.000%, 08/07/19 321,175
465,000 General Mills
5.650%, 02/15/19 502,786
390,000 Geo Group (2)
7.750%, 10/15/17 397,800
380,000 Global Aviation Holdings (2)
14.000%, 08/15/13 378,100
280,000 Global Crossing (2)
12.000%, 09/15/15 301,700
750,000 Goldman Sachs Group
7.500%, 02/15/19 878,560
140,000 Goodyear Tire & Rubber (1)
5.010%, 12/01/09 140,000
190,000 HCA
9.250%, 11/15/16 199,025
200,000 HCA (2)
7.875%, 02/15/20 206,500
465,000 HCP
6.700%, 01/30/18 462,759
300,000 Helix Energy Solutions Group (2)
9.500%, 01/15/16 309,750
280,000 HJ Heinz Finance (2)
7.125%, 08/01/39 323,197
160,000 Holcim US Finance (2)
6.000%, 12/30/19 164,992
630,000 HSBC Holdings
6.800%, 06/01/38 725,664
350,000 Huntsman International LLC (2)
5.500%, 06/30/16 304,500
150,000 Intelsat
9.250%, 06/15/16 153,330
255,000 Iron Mountain
8.375%, 08/15/21 265,200
1,810,000 JPMorgan Chase Bank
6.000%, 10/01/17 1,930,932
350,000 JPMorgan Chase Capital XXVII
7.000%, 11/01/39 353,451
Kraft Foods
260,000 6.500%, 11/01/31 267,554
340,000 6.125%, 08/23/18 362,081
380,000 Lorillard Tobacco
8.125%, 06/23/19 423,229
90,000 Magellan Midstream Partners LP
6.550%, 07/15/19 99,403
340,000 Marathon Oil
7.500%, 02/15/19 399,284
435,000 Massey Energy
6.875%, 12/15/13 431,737
590,000 McDonald's
6.300%, 03/01/38 669,816
The accompanying notes are an integral part of the financial statements.
52
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Principal
Amount $ Value $
- ------------- ---------------
330,000 McKesson
7.500%, 02/15/19 388,878
505,000 Midamerican Energy Holdings
5.750%, 04/01/18 540,841
510,000 Mirant Americas Generation LLC
8.500%, 10/01/21 456,450
Morgan Stanley
400,000 7.300%, 05/13/19 448,942
250,000 6.000%, 05/13/14 268,632
465,000 Navios Maritime Holdings (2)
8.875%, 11/01/17 474,300
125,000 Nevada Power, Series L
5.875%, 01/15/15 135,806
705,000 Newmont Mining
6.250%, 10/01/39 689,814
320,000 News America
6.650%, 11/15/37 335,295
Nexen
370,000 7.500%, 07/30/39 409,908
110,000 6.200%, 07/30/19 115,422
345,000 Nordstrom
6.750%, 06/01/14 384,827
275,000 Norfolk Southern
5.900%, 06/15/19 304,477
150,000 Pemex Project Funding Master Trust
5.750%, 03/01/18 149,250
245,000 Peninsula Gaming LLC (2)
8.375%, 08/15/15 244,388
490,000 Petrobras International Finance
5.750%, 01/20/20 490,980
255,000 Pinnacle Entertainment (2)
8.625%, 08/01/17 255,000
440,000 Plains All American Pipeline
8.750%, 05/01/19 534,983
830,000 PNC Bank
6.875%, 04/01/18 887,801
660,000 ProLogis
7.375%, 10/30/19 663,229
295,000 QVC (2)
7.500%, 10/01/19 293,525
165,000 Qwest
7.625%, 06/15/15 167,475
825,000 Rabobank Nederland (2)
4.200%, 05/13/14 861,119
115,000 Rabobank Nederland (1)(2)
11.000%, 12/31/49 144,738
Royal Bank of Scotland (2)
930,000 4.875%, 08/25/14 947,527
2,230,000 2.625%, 05/11/12 2,280,880
510,000 Sabine Pass LNG LP
7.500%, 11/30/16 433,500
80,000 Safeway
5.000%, 08/15/19 81,262
240,000 SBA Telecommunications (2)
8.000%, 08/15/16 249,600
Principal
Amount $ Value $
- ------------- ---------------
390,000 Sinclair Television Group (2)
9.250%, 11/01/17 386,100
255,000 Smithfield Foods (2)
10.000%, 07/15/14 269,025
315,000 Spirit Aerosystems (2)
7.500%, 10/01/17 314,213
120,000 Sprint Capital
8.375%, 03/15/12 122,100
300,000 Sprint Nextel
8.375%, 08/15/17 291,000
750,000 Svenska Handelsbanken (2)
4.875%, 06/10/14 788,102
1,460,000 Swedbank (2)
2.900%, 01/14/13 1,498,217
400,000 Talecris Biotherapeutics Holdings (2)
7.750%, 11/15/16 407,000
245,000 Talisman Energy
7.750%, 06/01/19 291,699
200,000 Teck Resources
10.750%, 05/15/19 234,000
735,000 Telecom Italia Capital
6.175%, 06/18/14 798,134
320,000 Terra Capital (2)
7.750%, 11/01/19 323,200
255,000 Univision Communications (2)
12.000%, 07/01/14 276,994
260,000 US Bancorp
4.200%, 05/15/14 271,857
440,000 US Bank
4.950%, 10/30/14 473,667
155,000 Vale Overseas
5.625%, 09/15/19 155,481
445,000 Ventas Realty
6.750%, 04/01/17 429,425
280,000 Verizon Communications
8.750%, 11/01/18 350,281
360,000 Viacom
5.625%, 09/15/19 373,720
Virginia Electric and Power
310,000 8.875%, 11/15/38 439,605
210,000 5.000%, 06/30/19 219,191
325,000 Vitamin Shoppe (1)
7.940%, 11/15/12 325,813
1,000,000 Wachovia Bank (1)
0.863%, 11/03/14 915,826
1,385,000 Wells Fargo
3.750%, 10/01/14 1,386,087
255,000 Yonkers Racing (2)
11.375%, 07/15/16 266,475
Yum! Brands
645,000 6.875%, 11/15/37 705,720
130,000 5.300%, 09/15/19 131,829
---------------
TOTAL CORPORATE OBLIGATIONS
(Cost $62,197,285) 66,062,674
---------------
The accompanying notes are an integral part of the financial statements.
53
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
Principal
Amount $ Value $
- ------------- ---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.5%
3,700,000 FHLB (3)
0.573%, 06/11/10 3,695,449
7,000,000 FHLMC (3)
0.522%, 07/16/10 6,987,540
---------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $10,661,009) 10,682,989
---------------
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 6.3%
1,641,000 Banc of America Commercial
Mortgage Securities, Series 2002-PB2,
Class A4
6.186%, 06/11/35 1,738,239
1,020,000 Bear Stearns Commercial Mortgage
Securities, Series 2002-TOP6, Class A2
6.460%, 10/15/36 1,083,352
1,150,000 Bear Stearns Commercial Mortgage
Securities, Series 2005-T20, Class A4A (1)
5.298%, 10/12/42 1,165,373
243,409 First Union National Bank Commercial
Mortgage Securities, Series 2000-C1,
Class A2
7.841%, 05/17/32 245,440
683,091 GE Capital Commercial Mortgage
Securities, Series 2002-2A, Class A2
4.970%, 08/11/36 710,461
1,220,000 LB-UBS Commercial Mortgage Trust,
Series 2001-C7, Class A5
6.133%, 12/15/30 1,289,764
510,000 LB-UBS Commercial Mortgage Trust,
Series 2002-C7, Class A4
4.960%, 12/15/31 530,446
1,790,000 Morgan Stanley Capital I,
Series 2003-T11, Class A4
5.150%, 06/13/41 1,856,842
1,780,000 Wachovia Bank Commercial Mortgage
Trust, Series 2005-C19, Class A5
4.661%, 05/15/44 1,797,360
---------------
TOTAL COMMERCIAL MORTGAGE-BACKED OBLIGATIONS
(Cost $10,035,350) 10,417,277
---------------
Principal
Amount $ Value $
- ------------- ---------------
U.S. TREASURY OBLIGATIONS (4) - 4.2%
3,855,000 U.S. Treasury Bond
4.250%, 05/15/39 3,864,036
U.S. Treasury Notes
795,000 3.625%, 08/15/19 810,528
2,080,000 2.375%, 10/31/14 2,084,875
270,000 1.375%, 10/15/12 269,810
---------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,978,181) 7,029,249
---------------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 0.0%
42,165 Residential Accredit Loans,
Series 1999-QS4, Class A1
6.250%, 03/25/14 41,930
17,849 Salomon Brothers Mortgage Securities
VII, Series 2001-CPB1, Class A (1)
4.211%, 12/25/30 17,397
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $60,422) 59,327
---------------
Shares
- -------------
SHORT-TERM INVESTMENT (5) - 18.5%
30,655,849 JPMorgan Prime Money Market Fund, 0.110%
(Cost $30,655,849) 30,655,849
---------------
TOTAL INVESTMENTS - 120.5%
(Cost $194,249,098) 199,929,972
---------------
OTHER LIABILITIES IN EXCESS OF
OTHER ASSETS - (20.5)% (34,078,022)
---------------
NET ASSETS - 100.0% $ 165,851,950
===============
The accompanying notes are an integral part of the financial statements.
54
SCHRODER TOTAL RETURN FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
(1) Variable Rate Security - Rate disclosed is as of October 31, 2009.
(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, 2009, the value of these
securities amounted to $23,690,440, representing 14.3% of the net assets of
the Fund.
(3) Zero Coupon Security -- Rate disclosed is the effective yield at time of
purchase.
(4) Security, or portion of the security, has been pledged as collateral on
open derivative positions and mortgage dollar rolls.
(5) The rate shown represents the 7-day current yield as of October 31, 2009.
(6) Security considered illiquid. On October 31, 2009, the value of this
security amounted to $807, representing less than 0.1% of the net assets of
the Fund.
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
LLC - Limited Liability Company
LP - Limited Partnership
MTN - Medium Term Note
NY - New York
REMIC - Real Estate Mortgage Investment Conduit
TBA - To Be Announced
The following is a summary of inputs used as of October 31, 2009, in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ------------ ------- ------------
INVESTMENTS IN SECURITIES
U.S. Government Mortgage-Backed Obligations $ -- $ 75,022,607 $-- $ 75,022,607
Corporate Obligations -- 66,062,674 -- 66,062,674
U.S. Government Agency Obligations -- 10,682,989 -- 10,682,989
Commercial Mortgage-Backed Obligations -- 10,417,277 -- 10,417,277
U.S. Treasury Obligations -- 7,029,249 -- 7,029,249
Collateralized Mortgage Obligations -- 59,327 -- 59,327
Short-Term Investment 30,655,849 -- -- 30,655,849
----------- ------------ --- ------------
Total Investments in Securities $30,655,849 $169,274,123 $-- $199,929,972
=========== ============ === ============
OTHER FINANCIAL INSTRUMENTS
Futures -- Unrealized Appreciation $ 182,781 $ -- $-- $ 182,781
Futures -- Unrealized Depreciation (207,741) -- -- (207,741)
----------- ------------ --- ------------
Total Other Financial Instruments $ (24,960) $ -- $-- $ (24,960)
=========== ============ === ============
FUTURES CONTRACTS -- The Fund had the following futures contracts outstanding as
of October 31, 2009:
NUMBER NET UNREALIZED
OF EXPIRATION APPRECIATION
CONTRACTS VALUE DATE (DEPRECIATION)
--------- ----------- ---------- --------------
LONG:
Canadian 10 Year Bond 44 $ 4,904,485 Dec-09 $ 28,860
U.S. Treasury 5 Year Note 56 6,521,375 Dec-09 35,145
U.S. Treasury 2 Year Note 128 27,854,000 Dec-09 118,776
U.S. Long Bond 5 600,781 Dec-09 (1,602)
---------
$ 181,179
---------
SHORT:
U.S. Treasury 10 Year Note 163 $19,333,328 Dec-09 $(206,139)
---------
$ (24,960)
=========
The accompanying notes are an integral part of the financial statements.
55
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2009
Shares Value $
- ------------- ---------------
EQUITIES - 43.7%
DOMESTIC EQUITY - 19.2%
139,225 Schroder U.S. Small and Mid Cap
Opportunities Fund (1) 1,304,541
---------------
INTERNATIONAL EQUITIES - 24.5%
3,175 iShares MSCI EAFE Index Fund 169,228
2,846 iShares MSCI EMU Index Fund 103,224
11,209 iShares MSCI Pacific ex-Japan Index Fund 443,764
26,797 Schroder Emerging Market Equity Fund (1) 303,884
16,543 Schroder International Alpha Fund (1) 148,883
62,887 Schroder International Diversified
Value Fund (1) 497,439
---------------
1,666,422
---------------
TOTAL EQUITIES
(Cost $2,344,246) 2,970,963
---------------
FIXED INCOME - 33.3%
CORPORATE BOND - 9.4%
6,029 iShares iBoxx Investment Grade
Corporate Bond Fund 637,145
---------------
EMERGING MARKET
BONDS - 13.7%
41,743 PIMCO Developing Local Markets Fund 413,676
32,707 PIMCO Emerging Markets Bond Fund 334,920
7,179 PowerShares Emerging Markets
Sovereign Debt Portfolio 185,936
---------------
934,532
HIGH YIELD BONDS - 10.2%
97,052 Goldman Sachs High Yield Fund 661,896
3,744 T. Rowe Price High Yield Fund 34,183
---------------
696,079
---------------
TOTAL FIXED INCOME
(Cost $2,070,983) 2,267,756
---------------
COMMODITIES - 9.9%
83,869 PIMCO Commodity RealReturn Strategy Fund
(Cost $591,859) 676,821
---------------
REAL ESTATE - 4.5%
3,035 iShares Dow Jones U.S. Real Estate Index Fund 123,069
5,865 iShares S&P World ex-U.S. Property Index Fund 181,698
---------------
TOTAL REAL ESTATE
(Cost $379,849) 304,767
---------------
Shares Value $
- ------------- ---------------
INFRASTRUCTURE - 3.6%
132,338 HSBC Infrastructure
(Cost $241,974) 247,539
---------------
ABSOLUTE RETURN - 1.5%
6,319 Highbridge Statistical Market Neutral
Select Fund, Class A
(Cost $95,038) 100,978
---------------
PRIVATE EQUITY - 0.7%
5,534 PowerShares Listed Private
Equity Portfolio
(Cost $64,018) 48,589
---------------
SHORT-TERM INVESTMENT (2) - 1.2%
80,180 JPMorgan Prime Money Market Fund, 0.110%
(Cost $80,180) 80,180
---------------
TOTAL INVESTMENTS - 98.4%
(Cost $5,868,147) 6,697,593
---------------
OTHER ASSETS LESS LIABILITIES - 1.6% 108,707
---------------
NET ASSETS - 100.0% $ 6,806,300
===============
(1) Affiliated fund.
(2) The rate shown represents the 7-day current yield as of October 31, 2009.
DJ - Dow Jones
EAFE - Europe, Australasia, and the Far East
EMU - European Monetary Unit
EUR - Euro
FTSE - Financial Times and London Stock Exchange
GBP - British Pound Sterling
JPY - Japanese Yen
MSCI - Morgan Stanley Capital International
NOK - Norwegian Krone
S&P - Standard & Poor's
SEK - Swedish Krona
USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
56
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2009
The following is a summary of inputs used as of October 31, 2009, in valuing the
Fund's investments carried at value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------- -------- ------- ----------
INVESTMENTS IN SECURITIES
Equities
Domestic Equity $1,304,541 $ -- $-- $1,304,541
International Equities 1,666,422 -- -- 1,666,422
---------- -------- --- ----------
2,970,963 -- -- 2,970,963
Fixed Income
Corporate Bond 637,145 -- -- 637,145
Emerging Market Bonds 934,532 -- -- 934,532
High Yield Bonds 696,079 -- -- 696,079
---------- -------- --- ----------
2,267,756 -- -- 2,267,756
---------- -------- --- ----------
Commodities 676,821 -- -- 676,821
---------- -------- --- ----------
Real Estate 304,767 -- -- 304,767
---------- -------- --- ----------
Infrastructure 247,539 -- -- 247,539
---------- -------- --- ----------
Absolute Return 100,978 -- -- 100,978
---------- -------- --- ----------
Private Equity 48,589 -- -- 48,589
---------- -------- --- ----------
Short-Term Investment 80,180 -- -- 80,180
---------- -------- --- ----------
Total Investments in Securities $6,697,593 $ -- $-- $6,697,593
========== ======== === ==========
OTHER FINANCIAL INSTRUMENTS
Forwards -- Unrealized Appreciation $ -- $ 13,942 $-- $ 13,942
Forwards -- Unrealized Depreciation -- (24,732) -- (24,732)
Futures -- Unrealized Appreciation 70,212 -- -- 70,212
Futures -- Unrealized Depreciation (27,900) -- -- (27,900)
---------- -------- --- ----------
Total Other Financial Instruments $ 42,312 $(10,790) $-- $ 31,522
========== ======== === ==========
FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund had the following forward foreign
currency contracts outstanding as of October 31, 2009:
NET UNREALIZED
SETTLEMENT APPRECIATION
DATE CURRENCY TO DELIVER CURRENCY TO RECEIVE (DEPRECIATION)
- ---------- ------------------- ------------------- --------------
12/17/2009 EUR 93,819 SEK 949,475 $ (4,096)
12/17/2009 EUR 448,645 USD 656,613 (3,284)
12/17/2009 GBP 97,340 USD 161,419 1,750
11/19/2009 JPY 31,641,662 USD 334,889 (16,877)
12/17/2009 SEK 949,475 EUR 92,278 1,830
12/17/2009 USD 274,494 NOK 1,631,179 9,887
--------
$(10,790)
========
The accompanying notes are an integral part of the financial statements.
57
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 2009
FUTURES CONTRACTS -- The Fund had the following futures contracts outstanding as
of October 31, 2009:
NUMBER NET UNREALIZED
OF EXPIRATION APPRECIATION
CONTRACTS VALUE DATE (DEPRECIATION)
--------- ---------- ---------- --------------
LONG:
FTSE 100 Index 3 $ 246,169 Dec-09 $ 280
DJ Euro Stoxx 50 8 320,819 Dec-09 (12,871)
S&P 500 E-Mini 16 826,400 Dec-09 (3,534)
--------
$(16,125)
--------
SHORT:
Russell Mini 23 $1,288,920 Dec-09 $ 69,932
U.S. Treasury 10 Year Note 6 711,656 Dec-09 (11,495)
--------
$ 58,437
--------
$ 42,312
========
The accompanying notes are an integral part of the financial statements.
58
This page intentionally left blank.
SCHRODER MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 2009
INTERNATIONAL EMERGING
INTERNATIONAL DIVERSIFIED MARKET
ALPHA VALUE EQUITY
FUND FUND FUND
------------- ------------- ------------
ASSETS
Investments in securities, at value -- Note 2 ............... $ 55,722,808 $10,524,780 $48,062,404
Foreign currency ............................................ 8 1,378 105,805
Receivable for securities sold .............................. 949,006 270,506 190,922
Receivable for Fund shares sold ............................. 58,041 -- 979,537
Dividends and tax reclaims receivable ....................... 214,488 48,444 88,564
Prepaid expenses ............................................ 21,109 22,126 17,075
Due from Investment Advisor -- Note 3 ....................... -- 2,014 --
Unrealized appreciation on spot foreign currency contracts .. 6,160 1,144 860
Initial margin for futures contracts ........................ -- -- --
Unrealized appreciation on forward foreign currency
contracts ................................................ -- -- --
Variation margin receivable ................................. -- -- --
------------ ----------- -----------
TOTAL ASSETS 56,971,620 10,870,392 49,445,167
LIABILITIES
Payable for securities purchased ............................ 1,519,689 217,052 1,723,250
Unrealized depreciation on spot foreign currency contracts .. 7,536 411 2,476
Variation margin payable .................................... -- -- --
Income distributions payable ................................ -- -- --
Unrealized depreciation on forward foreign currency
contracts ................................................ -- -- --
Payable for Fund shares redeemed ............................ 18,950 -- 98,201
Investment Advisory fees payable -- Note 3 .................. 40,335 -- 30,529
Sub-administration fees payable -- Note 3 ................... 7,284 1,403 5,773
Trustees' fees payable -- Note 6 ............................ 960 660 888
Distribution fees payable, Advisor Shares -- Note 3 ......... 8,387 295 2,250
Accrued expenses and other liabilities ...................... 72,710 78,833 81,416
------------ ----------- -----------
TOTAL LIABILITIES ........................................ 1,675,851 298,654 1,944,783
------------ ----------- -----------
NET ASSETS .................................................. $ 55,295,769 $10,571,738 $47,500,384
============ =========== ===========
NET ASSETS
Capital paid-in ............................................. $ 65,390,301 $13,813,199 $46,281,577
Undistributed (accumulated net investment loss/distributions
in excess of) net investment income ...................... 640,305 256,632 266,624
Accumulated net realized gain (loss) on investments, futures
and foreign currency transactions ........................ (18,749,575) (3,631,675) (5,268,126)
Net unrealized appreciation (depreciation) on investments ... 8,011,833 133,334 6,217,135
Net unrealized deprecation on futures ....................... -- -- --
Net unrealized appreciation (deprecation) on forward foreign
currency contracts and foreign currency translations ..... 2,905 248 3,174
------------ ----------- -----------
NET ASSETS .................................................. $ 55,295,769 $10,571,738 $47,500,384
============ =========== ===========
Investor Shares:
Net assets .................................................. $ 15,877,765 $ 9,229,735 $33,479,464
Total shares outstanding at end of year ..................... 1,764,978 1,166,866 2,951,192
Net asset value, offering and redemption price per share
(net assets / shares outstanding) ........................ $ 9.00 $ 7.91 $ 11.34
Advisor Shares:
Net assets .................................................. $ 39,418,004 $ 1,342,003 $14,020,920
Total shares outstanding at end of year ..................... 4,392,679 169,735 1,238,988
Net asset value, offering and redemption price per share
(net assets / shares outstanding) ........................ $ 8.97 $ 7.91 $ 11.32
Cost of securities ............................................. $ 47,710,975 $10,391,446 $41,845,269
Cost of foreign currency ....................................... $ 8 $ 1,382 $ 105,754
The accompanying notes are an integral part of the financial statements.
60
U.S. SMALL NORTH TOTAL
U.S. AND MID CAP AMERICAN RETURN FIXED
OPPORTUNITIES OPPORTUNITIES EQUITY INCOME
FUND FUND FUND FUND
- ------------- ------------- ------------- ------------
$166,721,305 $44,225,847 $ 374,008,569 $199,929,972
-- -- -- --
665,310 833,515 14,204,399 33,015,984
55,261 225,453 -- 4,435,660
71,801 5,665 537,947 1,283,077
29,054 17,018 30,622 38,531
-- -- -- --
-- -- -- --
-- -- 865,465 296,933
-- -- 315,018 --
-- -- -- 104,155
- ------------ ----------- ------------- ------------
167,542,731 45,307,498 389,962,020 239,104,312
1,606,491 5,510,403 13,943,885 72,453,719
-- 95 25,590 --
-- -- 138,431 149,634
-- -- -- 516,143
-- -- 200,696 --
173,371 23,668 -- 1,175
148,212 13,266 82,149 14,873
22,421 4,678 4,272 20,464
1,738 824 3,136 1,618
865 695 38 1,404
96,236 67,528 133,668 93,332
- ------------ ----------- ------------- ------------
2,049,334 5,621,157 14,531,865 73,252,362
- ------------ ----------- ------------- ------------
$165,493,397 $39,686,341 $ 375,430,155 $165,851,950
============ =========== ============= ============
$182,672,993 $38,205,672 $ 503,444,856 $158,769,164
-- (13,234) 5,073,093 (104,587)
(33,965,476) (2,110,269) (117,200,526) 1,535,300
16,785,880 3,604,206 (15,957,784) 5,680,874
-- -- (327) (24,960)
-- (34) 70,843 (3,841)
- ------------ ----------- ------------- ------------
$165,493,397 $39,686,341 $ 375,430,155 $165,851,950
============ =========== ============= ============
$162,693,847 $36,102,549 $ 375,314,539 $158,899,964
8,965,960 3,851,547 46,383,134 15,375,436
$ 18.15 $ 9.37 $ 8.09 $ 10.33
$ 2,799,550 $ 3,583,792 $ 115,616 $ 6,951,986
155,412 385,624 14,321 672,119
$ 18.01 $ 9.29 $ 8.07 $ 10.34
$149,935,425 $40,621,641 $ 389,966,353 $194,249,098
$ -- $ -- $ -- $ --
The accompanying notes are an integral part of the financial statements.
61
SCHRODER MUTUAL FUNDS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2009
MULTI-ASSET
GROWTH
PORTFOLIO
------------
ASSETS
Investments in securities, at value -- Note 2 ............................................... $ 4,442,846
Investments in affiliated securities, at value -- Note 2 .................................... 2,254,747
Initial margin for futures contracts ........................................................ 164,240
Unrealized appreciation on forward foreign currency contracts ............................... 13,942
Dividends and tax reclaims receivable ....................................................... 2,827
Prepaid expenses ............................................................................ 35,950
Due from Investment Advisor -- Note 3 ....................................................... 37,572
Variation margin receivable ................................................................. 37,051
------------
TOTAL ASSETS ............................................................................. 6,989,175
LIABILITIES
Variation margin payable .................................................................... 44,156
Payable for securities purchased ............................................................ 32,575
Unrealized depreciation on forward foreign currency contracts ............................... 24,732
Trustees' fees payable -- Note 6 ............................................................ 633
Sub-administration fees payable -- Note 3 ................................................... 895
Distribution fees payable, A Shares -- Note 3 ............................................... 684
Distribution fees payable, Advisor Shares -- Note 3 ......................................... 760
Distribution fees payable, R Shares -- Note 3 ............................................... 172
Accrued expenses and other liabilities ...................................................... 78,268
------------
TOTAL LIABILITIES ........................................................................ 182,875
------------
NET ASSETS .................................................................................. $ 6,806,300
============
NET ASSETS
Capital paid-in ............................................................................. $ 17,210,075
Undistributed net investment income ......................................................... 70,860
Accumulated net realized loss on investments, affiliated investments, futures, swap contracts
and foreign currency transactions ........................................................ (11,337,994)
Net unrealized appreciation on investments and affiliated investments ....................... 829,446
Net unrealized appreciation on futures ...................................................... 42,312
Net unrealized depreciation on forward foreign currency contracts and foreign currency
translations ............................................................................. (8,399)
------------
NET ASSETS .................................................................................. $ 6,806,300
============
Investor Shares:
Net assets .................................................................................. $ 607,457
Total shares outstanding at end of year ..................................................... 76,654
Net asset value, offering and redemption price per share (net assets / shares outstanding) .. $ 7.92
A Shares:
Net assets .................................................................................. $ 2,496,230
Total shares outstanding at end of year ..................................................... 315,119
Net asset value and redemption price per share (net assets / shares outstanding) ............ $ 7.92
Maximum offering price per share (A Shares NAV/95.5%) ....................................... $ 8.29
Advisor Shares:
Net assets .................................................................................. $ 3,287,476
Total shares outstanding at end of year ..................................................... 415,349
Net asset value, offering and redemption price per share (net assets / shares outstanding) .. $ 7.91
R Class Shares:
Net assets .................................................................................. $ 415,137
Total shares outstanding at end of year ..................................................... 52,535
Net asset value, offering and redemption price per share (net assets / shares outstanding) .. $ 7.90
Cost of securities ............................................................................. $ 4,119,267
Cost of affiliated securities .................................................................. $ 1,748,880
The accompanying notes are an integral part of the financial statements.
62
This page intentionally left blank.
SCHRODER MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2009
INTERNATIONAL
INTERNATIONAL DIVERSIFIED
ALPHA VALUE
FUND FUND
------------- -------------
INVESTMENT INCOME
Dividend income ................................................... $ 1,497,289 $ 411,111
Income from affiliated investments ................................ -- --
Interest income ................................................... 5,003 1,449
Foreign taxes withheld ............................................ (162,294) (47,264)
------------ -----------
TOTAL INCOME ................................................... 1,339,998 365,296
------------ -----------
EXPENSES
Investment Advisory fees -- Note 3 ................................ 448,007 83,272
Distribution fees, Advisor Shares -- Note 3 ....................... 77,311 2,233
Distribution fees, A Shares -- Note 3 ............................. -- --
Distribution fees, R Shares -- Note 3 ............................. -- --
Sub-administration fees -- Note 3 ................................. 60,038 10,796
Trustees fees -- Note 6 ........................................... 11,800 9,363
Transfer agent fees ............................................... 88,535 82,910
Registration fees ................................................. 28,815 30,672
Audit fees ........................................................ 30,042 29,107
Legal fees ........................................................ 49,154 37,055
Custodian fees .................................................... 18,197 69,090
Insurance ......................................................... 21,100 18,960
Printing .......................................................... 17,437 10,542
Pricing fees ...................................................... 8,973 46,830
Amortization of deferred offering costs ........................... -- --
Other ............................................................. 19,038 28,869
------------ -----------
TOTAL EXPENSES ................................................. 878,447 459,699
Expenses waived by Investment Advisor -- Note 3 ................... (272,731) (83,272)
Reimbursement from Investment Advisor ............................. -- (278,434)
------------ -----------
NET EXPENSES ................................................... 605,716 97,993
------------ -----------
NET INVESTMENT INCOME (LOSS) ................................... 734,282 267,303
------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, AFFILIATED
INVESTMENTS, FUTURES, SWAP CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS AND TRANSLATIONS
Net realized gain (loss) on investments sold ...................... (12,193,739) (3,445,553)
Net realized loss on affiliated investments ....................... -- --
Net realized gain (loss) on futures ............................... -- --
Net realized gain on swap contracts ............................... -- --
Net realized gain (loss) on foreign currency transactions ......... 370 114
------------ -----------
Net realized gain (loss) on investments, affiliated investments,
futures, swap contracts and foreign currency transactions ... (12,193,369) (3,445,439)
------------ -----------
Change in unrealized appreciation on investments .................. 27,045,866 6,415,720
Change in unrealized appreciation on affiliated investments ....... -- --
Change in unrealized appreciation (depreciation) on futures ....... -- --
Change in unrealized appreciation on swap contracts ............... -- --
Change in unrealized appreciation (depreciation) on forward
foreign currency contracts and foreign currency translations ... 11,557 1,353
------------ -----------
Net change in unrealized appreciation on investments, affiliated
investments, futures, swap contracts, forward foreign currency
contracts and foreign currency translations ................. 27,057,423 6,417,073
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ........................... 14,864,054 2,971,634
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ... $ 15,598,336 $ 3,238,937
============ ===========
+ Includes realized losses from in-kind transactions (see Note 7 in Notes to
Financial Statements).
The accompanying notes are an integral part of the financial statements.
64
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
- ----------- ------------- ------------- ------------ ------------ -----------
$ 693,510 $ 1,440,432 $ 210,347 $ 9,406,516 $ 30,479 $ 347,024
-- -- -- -- -- 91,456
2,191 37,199 6,241 64,198 4,486,129 3,637
(69,538) (9,459) (504) (161,910) -- --
- ----------- ------------ ----------- ------------ ----------- -----------
626,163 1,468,172 216,084 9,308,804 4,516,608 442,117
- ----------- ------------ ----------- ------------ ----------- -----------
248,457 1,542,310 215,383 925,641 276,958 74,938
8,408 6,093 3,148 345 13,158 6,905
-- -- -- -- -- 16,075
-- -- -- -- -- 1,795
33,453 197,211 29,337 48,134 147,204 11,653
10,557 21,091 10,223 39,770 17,142 9,680
84,840 104,184 84,451 112,202 92,709 158,150
26,753 35,795 25,874 33,138 38,704 42,633
27,581 32,236 27,917 34,231 27,741 25,051
43,074 85,706 44,791 159,709 80,605 91,653
93,964 24,511 9,102 48,929 14,017 2,762
20,235 38,622 19,347 71,788 26,295 17,421
13,551 47,194 12,060 43,300 25,387 36,031
14,114 3,645 2,439 10,651 24,216 728
-- -- -- -- -- 7,342
19,369 31,106 15,953 54,849 24,826 16,500
- ----------- ------------ ----------- ------------ ----------- -----------
644,356 2,169,704 500,025 1,582,687 808,962 519,317
(248,457) -- (215,383) -- (276,958) (74,938)
(76,928) -- (55,344) -- (75,684) (294,718)
- ----------- ------------ ----------- ------------ ----------- -----------
318,971 2,169,704 229,298 1,582,687 456,320 149,661
- ----------- ------------ ----------- ------------ ----------- -----------
307,192 (701,532) (13,214) 7,726,117 4,060,288 292,456
- ----------- ------------ ----------- ------------ ----------- -----------
(3,951,138) (26,232,447) (1,116,608) (78,502,445)+ 1,537,570 (3,225,903)
-- -- -- -- -- (3,797,707)
-- -- -- (13,847,614) 271,736 (935,106)
-- -- -- -- -- 15,542
(12,744) 16,776 1,174 (362,188) (53,820) 179,235
- ----------- ------------ ----------- ------------ ----------- -----------
(3,963,882) (26,215,671) (1,115,434) (92,712,247) 1,755,486 (7,763,939)
- ----------- ------------ ----------- ------------ ----------- -----------
15,603,664 45,167,214 6,027,021 106,528,804 9,078,051 3,575,655
-- -- -- -- -- 3,627,845
-- -- -- 6,229,047 (228,185) 426,291
-- -- -- -- -- 7,568
5,578 -- (34) (254,098) (3,841) (204,717)
- ----------- ------------ ----------- ------------ ----------- -----------
15,609,242 45,167,214 6,026,987 112,503,753 8,846,025 7,432,642
- ----------- ------------ ----------- ------------ ----------- -----------
11,645,360 18,951,543 4,911,553 19,791,506 10,601,511 (331,297)
- ----------- ------------ ----------- ------------ ----------- -----------
$11,952,552 $ 18,250,011 $ 4,898,339 $ 27,517,623 $14,661,799 $ (38,841)
=========== ============ =========== ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
65
SCHRODER MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31,
INTERNATIONAL INTERNATIONAL DIVERSIFIED
ALPHA FUND VALUE FUND
--------------------------- --------------------------
2009 2008 2009 2008
------------ ------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ....................... $ 734,282 $ 550,564 $ 267,303 $ 463,003
Net realized loss on investments, futures and
foreign currency transactions ................... (12,193,369) (2,905,968) (3,445,439) (77,479)
Change in unrealized appreciation (depreciation) on
investments, futures and foreign currency
translations .................................... 27,057,423 (26,381,404) 6,417,073 (8,037,344)
------------ ------------ ------------ -----------
Net increase (decrease) in net assets resulting
from operations ................................. 15,598,336 (28,736,808) 3,238,937 (7,651,820)
------------ ------------ ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Investor Shares ................................. (172,598) (508,093) (353,167) (537,490)
Advisor Shares .................................. (160,773) (450,753) (34,486) (68,816)
Net realized gains:
Investor Shares ................................. -- -- -- (1,356,021)
Advisor Shares .................................. -- -- -- (182,135)
------------ ------------ ------------ -----------
Total dividends and distributions ............... (333,371) (958,846) (387,653) (2,144,462)
------------ ------------ ------------ -----------
SHARE TRANSACTIONS:
INVESTOR SHARES:
Sales of shares .................................... 2,580,442 3,434,641 100,720 2,456,897
Reinvestment of distributions ...................... 167,480 487,919 353,167 1,893,510
Redemption of shares ............................... (7,198,600) (1,647,090) (1,022,080) (840,680)
Redemption fees -- Note 5 .......................... 4,503 456 -- 9,220
------------ ------------ ------------ -----------
Total increase (decrease) from Investor
Share transactions ........................... (4,446,175) 2,275,926 (568,193) 3,518,947
------------ ------------ ------------ -----------
ADVISOR SHARES:
Sales of shares .................................... 21,064,271 4,787,976 295,360 617,410
Reinvestment of distributions ...................... 157,487 443,181 33,381 250,951
Redemption of shares ............................... (8,064,342) (3,304,583) (86,505) (685,649)
Redemption fees -- Note 5 .......................... 13,125 8,118 1,185 1,079
------------ ------------ ------------ -----------
Total increase (decrease) from Advisor
Share transactions ........................... 13,170,541 1,934,692 243,421 183,791
------------ ------------ ------------ -----------
Net increase (decrease) in net assets
from share transactions ...................... 8,724,366 4,210,618 (324,772) 3,702,738
------------ ------------ ------------ -----------
Total increase (decrease) in net assets ......... 23,989,331 (25,485,036) 2,526,512 (6,093,544)
NET ASSETS
Beginning of year .................................. 31,306,438 56,791,474 8,045,226 14,138,770
------------ ------------ ------------ -----------
End of year ........................................ $ 55,295,769 $ 31,306,438 $ 10,571,738 $ 8,045,226
============ ============ ============ ===========
Undistributed (accumulated net investment loss/
distributions in excess of) net
investment income ............................... $ 640,305 $ 239,024 $ 256,632 $ 312,971
============ ============ ============ ===========
The accompanying notes are an integral part of the financial statements.
66
EMERGING MARKET U.S. OPPORTUNITIES U.S. SMALL AND MID CAP
EQUITY FUND FUND OPPORTUNITIES FUND
- --------------------------- ---------------------------- -------------------------
2009 2008 2009 2008 2009 2008
- ------------ ------------ ------------ ------------- ----------- -----------
$ 307,192 $ 134,177 $ (701,532) $ (752,852) $ (13,214) $ (51,319)
(3,963,882) (1,248,748) (26,215,671) (7,389,086) (1,115,434) (939,808)
15,609,242 (18,297,059) 45,167,214 (78,583,302) 6,026,987 (4,102,063)
- ------------ ------------ ------------ ------------- ----------- -----------
11,952,552 (19,411,630) 18,250,011 (86,725,240) 4,898,339 (5,093,190)
- ------------ ------------ ------------ ------------- ----------- -----------
(14,779) (213,132) -- (355,955) -- --
-- (14,585) -- -- -- --
-- (3,019,681) -- (26,787,647) -- (612,596)
-- (258,346) -- (527,482) -- (85,590)
- ------------ ------------ ------------ ------------- ----------- -----------
(14,779) (3,505,744) -- (27,671,084) -- (698,186)
- ------------ ------------ ------------ ------------- ----------- -----------
18,155,150 7,851,055 11,843,373 19,012,384 26,242,853 7,480,540
14,779 3,232,813 -- 26,496,365 -- 612,596
(11,859,646) (1,250,000) (45,951,302) (56,895,681) (6,719,141) (789,624)
19,940 2 3,403 7,423 678 2,918
- ------------ ------------ ------------ ------------- ----------- -----------
6,330,223 9,833,870 (34,104,526) (11,379,509) 19,524,390 7,306,430
- ------------ ------------ ------------ ------------- ----------- -----------
14,149,425 4,579,468 585,543 604,435 3,303,768 126,537
-- 258,744 -- 512,281 -- 85,590
(2,298,543) (4,750,120) (1,347,110) (1,492,574) (269,502) (1,116,008)
8,421 136 -- -- 599 17
- ------------ ------------ ------------ ------------- ----------- -----------
11,859,303 88,228 (761,567) (375,858) 3,034,865 (903,864)
- ------------ ------------ ------------ ------------- ----------- -----------
18,189,526 9,922,098 (34,866,093) (11,755,367) 22,559,255 6,402,566
- ------------ ------------ ------------ ------------- ----------- -----------
30,127,299 (12,995,276) (16,616,082) (126,151,691) 27,457,594 611,190
17,373,085 30,368,361 182,109,479 308,261,170 12,228,747 11,617,557
- ------------ ------------ ------------ ------------- ----------- -----------
$ 47,500,384 $ 17,373,085 $165,493,397 $ 182,109,479 $39,686,341 $12,228,747
============ ============ ============ ============= =========== ===========
$ 266,624 $ (13,044) $ -- $ -- $ (13,234) $ (14,394)
============ ============ ============ ============= =========== ===========
The accompanying notes are an integral part of the financial statements.
67
SCHRODER MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31,
NORTH AMERICAN TOTAL RETURN FIXED
EQUITY FUND INCOME FUND
------------------------------ --------------------------
2009 2008 2009 2008
------------- ------------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ............................. $ 7,726,117 $ 12,999,196 $ 4,060,288 $ 2,990,052
Net realized gain (loss) on investments, futures
and foreign currency transactions .............. (92,712,247)+ (35,386,078)+ 1,755,486 1,752,996
Change in unrealized appreciation (depreciation) on
investments, futures, forward foreign currency
contracts and foreign currency translations .... 112,503,753 (243,789,511) 8,846,025 (3,363,947)
------------- ------------- ------------ -----------
Net increase (decrease) in net assets resulting
from operations ............................. 27,517,623 (266,176,393) 14,661,799 1,379,101
------------- ------------- ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Investor Shares ................................ (12,818,379) (16,785,204) (3,990,845) (2,971,942)
Advisor Shares ................................. (2,845) (2,383) (181,136) (33,034)
Net realized gains:
Investor Shares ................................ -- (89,455,959) (1,793,854) (99,066)
Advisor Shares ................................. -- (14,868) (38,598) (1,187)
------------- ------------- ------------ -----------
Total dividends and distributions .............. (12,821,224) (106,258,414) (6,004,433) (3,105,229)
------------- ------------- ------------ -----------
SHARE TRANSACTIONS:
INVESTOR SHARES:
Sales of shares ................................... 20,083,463 38,329,322 88,416,860 1,104,079
Reinvestment of distributions ..................... 7,983,706 92,825,863 5,379,168 3,065,135
Redemption of shares .............................. (69,810,327) (38,965,899) (15,543,514) (1,414,329)
Redemption of shares in-kind ...................... (84,561,824) (42,889,159) -- --
------------- ------------- ------------ -----------
Total increase (decrease) from
Investor Share transactions .................... (126,304,982) 49,300,127 78,252,514 2,754,885
------------- ------------- ------------ -----------
ADVISOR SHARES:
Sales of shares ................................... 4,500 20,513 9,530,543 298,999
Reinvestment of distributions ..................... 2,785 17,252 163,668 34,100
Redemption of shares .............................. (1,995) -- (4,058,405) (166,091)
------------- ------------- ------------ -----------
Total increase from Advisor Share
transactions ................................ 5,290 37,765 5,635,806 167,008
------------- ------------- ------------ -----------
Net increase (decrease) in net assets
from share transactions ........................ (126,299,692) 49,337,892 83,888,320 2,921,893
------------- ------------- ------------ -----------
Total increase (decrease) in net assets ........ (111,603,293) (323,096,915) 92,545,686 1,195,765
NET ASSETS
Beginning of year ................................. 487,033,448 810,130,363 73,306,264 72,110,499
------------- ------------- ------------ -----------
End of year ....................................... $ 375,430,155 $ 487,033,448 $165,851,950 $73,306,264
============= ============= ============ ===========
Undistributed (distributions in excess of)
net investment income .......................... $ 5,073,093 $ 10,556,539 $ (104,587) $ 9,796
============= ============= ============ ===========
+ Includes realized gains or losses from in-kind transactions (see Note 7 in
Notes to Financial Statements).
The accompanying notes are an integral part of the financial statements.
68
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR OR PERIOD ENDED OCTOBER 31,
MULTI-ASSET
GROWTH PORTFOLIO
---------------------------
2009 2008(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ................................................ $ 292,456 $ 407,589
Net realized loss on investments, affiliated investments,
futures, swap contracts and foreign currency transactions ......... (7,763,939) (3,078,808)
Change in unrealized appreciation (depreciation) on
investments, affiliated investments, futures,
swap contracts, forward foreign currency contracts and
foreign currency translations ..................................... 7,432,642 (6,569,283)
------------ -----------
Net decrease in net assets resulting from operations .............. (38,841) (9,240,502)
------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Investor Shares: .................................................. (18,542) --
A Class Shares .................................................... (130,497) --
Advisor Shares .................................................... (624,442) --
R Class Shares .................................................... (16,070) --
------------ -----------
Total dividends and distributions ................................. (789,551) --
------------ -----------
SHARE TRANSACTIONS:
INVESTOR SHARES:
Sales of shares ...................................................... 156,821 503,269
Reinvestment of distributions ........................................ 18,542 --
Redemption of shares ................................................. (1,867) --
------------ -----------
Total increase from Investor Share transactions ...................... 173,496 503,269
------------ -----------
A CLASS SHARES:
Sales of shares ...................................................... 125,605 26,439,738
Reinvestment of distributions ........................................ 585,002 --
Redemption of shares ................................................. (15,189,859) (330,699)
Redemption fees -- Note 5 ............................................ 498 9,623
------------ -----------
Total increase (decrease) from A Share transactions ............... (14,478,754) 26,118,662
------------ -----------
ADVISOR SHARES:
Sales of shares ...................................................... 149,124 3,801,850
Reinvestment of distributions ........................................ 130,497 --
Redemption of shares ................................................. (39,683) --
Redemption fees -- Note 5 ............................................ 663 --
------------ -----------
Total increase from Advisor Share transactions .................... 240,601 3,801,850
------------ -----------
R CLASS SHARES:
Sales of shares ...................................................... -- 500,000
Reinvestment of distributions ........................................ 16,070 --
------------ -----------
Total increase in R Share transactions ............................ 16,070 500,000
------------ -----------
Net increase (decrease) in net assets from share transactions ..... (14,048,587) 30,923,781
------------ -----------
Total increase (decrease) in net assets ........................... (14,876,979) 21,683,279
NET ASSETS
Beginning of period .................................................. 21,683,279 --
------------ -----------
End of period ........................................................ $ 6,806,300 $21,683,279
============ ===========
Undistributed net investment income .................................. $ 70,860 $ 399,100
============ ===========
(a) Fund commenced investment activities on December 20, 2007.
The accompanying notes are an integral part of the financial statements.
69
SCHRODER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR THE YEARS OR PERIODS 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
2009 ................ $ 6.73 $ 0.13(1) $ 2.21+ $ 2.34 $(0.07) $ -- $(0.07)
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)
Advisor Shares
2009 ................ $ 6.71 $ 0.11(1) $ 2.20+ $ 2.31 $(0.05) $ -- $(0.05)
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
2009 ................ $ 5.61 $ 0.20(1) $ 2.37 $ 2.57 $(0.27) $ -- $(0.27)
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
2009 ................ $ 5.59 $ 0.19(1) $ 2.38++ $ 2.57 $(0.25) $ -- $(0.25)
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
2009 ................ $ 6.99 $ 0.12(1) $ 4.24++ $ 4.36 $(0.01) $ -- $(0.01)
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
2009 ................ $ 6.97 $ 0.05(1) $ 4.30+++ $ 4.35 $ -- $ -- $ --
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
2009 ................ $15.79 $(0.07)(1) $ 2.43+ $ 2.36 $ -- $ -- $ --
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)
Advisor Shares
2009 ................ $15.71 $(0.11)(1) $ 2.41 $ 2.30 $ -- $ -- $ --
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.
+++ Includes redemption fees of $0.02 per share.
(1) Per share net investment income (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.
70
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
- ---------- --------- ------------ ---------------------- ------------------- ------------------- ---------
$ 9.00 35.28% $ 15,878 1.15% 1.75% 1.82% 109%
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
$ 8.97 34.84% $ 39,418 1.40% 1.99% 1.49% 109%
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
$ 7.91 48.45% $ 9,230 1.15% 5.49% 3.23% 140%
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
$ 7.91 48.42% $ 1,342 1.40% 5.71% 3.01% 140%
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
$11.34 62.38% $ 33,479 1.25% 2.61% 1.34% 91%
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
$11.32 62.41% $ 14,021 1.50% 2.47% 0.55% 91%
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
$18.15 14.95% $162,694 1.40% 1.40% (0.45)% 64%
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
$18.01 14.64% $ 2,800 1.65% 1.65% (0.71)% 64%
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.
71
SCHRODER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR THE YEARS OR PERIODS ENDED OCTOBER 31, (UNLESS OTHERWISE INDICATED)
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD
NET REALIZED
NET ASSET AND DIVIDENDS
VALUE, NET UNREALIZED TOTAL FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT GAINS INVESTMENT INVESTMENT FROM NET TOTAL
OF PERIOD INCOME (LOSS) (LOSSES) OPERATIONS INCOME REALIZED GAIN DISTRIBUTIONS
--------- ------------- ------------ ---------- ---------- ------------- -------------
U.S. SMALL AND MID CAP
OPPORTUNITIES FUND
Investor Shares
2009 ................. $ 7.96 $ --(1)(g) $ 1.41+ $ 1.41 $ -- $ -- $ --
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 --(g) 0.25 0.25 -- -- --
Advisor Shares
2009 ................. $ 7.91 $(0.04)(1) $ 1.42+ $ 1.38 $ -- $ -- $ --
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 --(g) 0.23 0.23 -- -- --
NORTH AMERICAN EQUITY FUND
Investor Shares
2009 ................. $ 7.58 $ 0.18 $ 0.57 $ 0.75 $(0.24) $ -- $(0.24)
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)
Advisor Shares
2009 ................. $ 7.55 $ 0.16 $ 0.57 $ 0.73 $(0.21) $ -- $(0.21)
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
2009 ................. $ 9.57 $ 0.37 $ 1.01 $ 1.38 $(0.38) $(0.24) $(0.62)
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(e) .............. 10.00 0.30 (0.15) 0.15 (0.30) -- (0.30)
Advisor Shares
2009 ................. $ 9.57 $ 0.35 $ 1.02 $ 1.37 $(0.36) $(0.24) $(0.60)
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(e) .............. 10.00 0.28 (0.15) 0.13 (0.28) -- (0.28)
MULTI-ASSET GROWTH PORTFOLIO
Investor Shares
2009 ................. $ 7.01 $ 0.18(1) $ 1.09 $ 1.27 $(0.36) $ -- $(0.36)
2008(f) .............. 10.00 0.16(1) (3.15) (2.99) -- -- --
A Shares
2009 ................. $ 7.00 $ 0.21(1) $ 1.05+ $ 1.26 $(0.34) $ -- $(0.34)
2008(f) .............. 10.00 0.14(1) (3.14)+ (3.00) -- -- --
Advisor Shares
2009 ................. $ 7.00 $ 0.17(1) $ 1.08+ $ 1.25 $(0.34) $ -- $(0.34)
2008(f) .............. 10.00 0.14(1) (3.14) (3.00) -- -- --
R Shares
2009 ................. $ 6.98 $ 0.15(1) $ 1.09 $ 1.24 $(0.32) $ -- $(0.32)
2008(f) .............. 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.
72
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
- ---------- --------- ------------ ---------------------- ------------------- ------------------- ---------
$ 9.37 17.71% $ 36,103 1.05% 2.32% (0.04)% 75%
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
$ 9.29 17.45% $ 3,584 1.30% 2.33% (0.40)% 75%
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
$ 8.09 10.59% $ 375,314 0.43% 0.43% 2.09% 85%
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
$ 8.07 10.28% $ 116 0.78% 0.78% 1.69% 85%
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
$10.33 14.79% $ 158,900 0.40% 0.72% 3.68% 590%
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
$10.34 14.61% $ 6,952 0.65% 0.98% 3.39% 590%
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
$ 7.92 19.49% $ 607 1.25% 6.30% 2.53% 45%
7.01 (29.90) 354 1.25 3.80(h) 1.91 151
$ 7.92 19.13% $ 2,496 1.50% 4.58% 3.11% 45%
7.00 (30.00) 18,320 1.50 4.06(h) 1.65 151
$ 7.91 19.11% $ 3,288 1.50% 6.27% 2.42% 45%
7.00 (30.00) 2,660 1.50 4.06(h) 1.66 151
$ 7.90 18.92% $ 415 1.75% 6.49% 2.18% 45%
6.98 (30.20) 349 1.75 4.30(h) 1.41 151
(e) Commenced operations on December 31, 2004. All ratios for the period have
been annualized, except for the Total Return and the Portfolio Turnover
Rate.
(f) Commenced operations on December 20, 2007. All ratios for the period have
been annualized, except for the Total Return and the Portfolio Turnover
Rate.
(g) Amount was less than $0.01 per share.
(h) 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.
73
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
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.
The Financial Statements for Schroder Municipal Bond Fund and Schroder
Short-Term Municipal Bond Fund 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.
FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB") ACCOUNTING STANDARDS CODIFICATION:
The FASB issued FASB ASC 105 (formerly FASB Statement No. 168), The "FASB
ACCOUNTING STANDARDS CODIFICATION(TM)" AND THE HIERARCHY OF GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("ASC 105"). ASC 105 established the FASB Accounting
Standards Codification(TM) ("Codification" or "ASC") as the single source of
authoritative U.S. generally accepted accounting principles ("GAAP") recognized
by the FASB to be applied by non-governmental entities. Rules and interpretive
releases of the Securities and Exchange Commission ("SEC") under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. The Codification superseded all existing non-SEC accounting and
reporting standards. All other non-grandfathered, non-SEC accounting literature
not included in the Codification became non-authoritative.
Following the Codification, the FASB did not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
Instead, it issued Accounting Standards Updates, which served to update the
Codification, provided background information about the guidance and provide the
basis for conclusions on the changes to the Codification.
GAAP is not intended to be changed as a result of the FASB's Codification
project, but it changed the way the guidance is organized and presented. As a
result, these changes have a significant impact on how companies reference GAAP
in their financial statements and in their accounting policies for financial
statements issued for interim and annual periods ending after September 15,
2009. The Funds implemented the Codification as of October 31, 2009.
74
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
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 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" that 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.
As of November 1, 2008, the Funds adopted Statement of Financial Accounting
Standards No. 157 -- Fair Value Measurements, which has been codified into ASC
Topic 820 ("ASC 820"). ASC 820 defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. ASC
820 requires disclosure surrounding the various inputs that are used in
determining the fair value of the Funds' investments. These inputs are
summarized into the three broad levels listed below.
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted
prices for similar securities, interest rates, prepayment speeds,
credit risk, etc.)
- Level 3 -- significant unobservable inputs (including the Funds' own
assumptions in determining the fair value of investments)
75
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
Fair value measurement classifications are summarized in each Fund's Schedule of
Investments.
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.
The Funds evaluate tax positions taken or expected to be taken in the course of
preparing the Funds' tax returns to determine whether it is "more-likely
than-not" (i.e., greater than 50-percent) that each tax position will be
sustained upon examination by a taxing authority based on the technical merits
of the position. Tax positions not deemed to meet the more-likely-than-not
threshold are recorded as a tax benefit or expense in the current year. The
Funds did not record any tax provision in the current period. However,
management's conclusions regarding tax positions taken may be subject to review
and adjustment at a later date based on factors including, but not limited to,
examination by tax authorities (i.e., the last 3 tax year ends, as applicable),
on-going analysis of and changes to tax laws, regulations and interpretations
thereof.
As of, and during the year ended October 31, 2009, the Funds did not have a
liability for any unrecognized tax benefits. The Funds recognize interest and
penalties, if any, related to unrecognized tax benefits as income tax expense in
the Statement of Operations. During the year, the Funds did not incur any
interest or penalties.
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.
76
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
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.
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 Funds, in particular 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 to adjust interest rate
sensitivity and duration of a Fund's portfolio and to increase total return.
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.
77
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
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. Equity-linked warrants
provide a way for investors to access markets where entry is difficult and time
consuming due to regulation. 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 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, 2009, the Funds did not own any private
placement investments purchased through private offerings or acquired through
initial public offerings that 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.
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.
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%, and until February 28, 2010 to 0.54%).
78
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
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, after waivers.
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 administration 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, 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' advisor has contractually agreed to pay or reimburse the applicable Fund
for expenses through February 28, 2010 to the extent that the total annual fund
operating expenses of a Fund (other than acquired fund fees and expenses, other
indirect acquired fund 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%, Schroder International
Diversified Value Fund, 1.15%, Schroder Emerging Market Equity Fund, 1.25%,
Schroder U.S. Opportunities Fund, 1.70%, Schroder U.S. Small and Mid Cap
Opportunities Fund, 1.05%, 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' advisor has contractually agreed
to pay or reimburse the applicable Fund for other Fund expenses through February
28, 2010 for Schroder U.S. Opportunities Fund, Schroder Total Return Fixed
Income Fund, 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, other
indirect acquired fund 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%, Schroder International Diversified
Value Fund, 1.40%, Schroder Emerging Market Equity Fund, 1.50%, Schroder U.S.
Opportunities Fund, 1.95%, Schroder U.S. Small and Mid Cap Opportunities Fund,
1.30%, 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 advisor
has contractually agreed to reduce its compensation (and, if necessary, to pay
other Fund expenses) until February 28, 2010 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.
79
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
NOTE 4 -- DERIVATIVE CONTRACTS
In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which has been codified into ASC Topic 815
("ASC 815"). ASC 815 is effective for fiscal years and interim periods beginning
after November 15, 2008. ASC 815 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.
FAIR VALUE OF DERIVATIVE INSTRUMENTS: The fair value of derivative instruments
as of October 31, 2009, was as follows:
SCHRODER INTERNATIONAL ALPHA FUND
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ------------------------------------------
YEAR ENDED OCTOBER 31, 2009 YEAR ENDED OCTOBER 31, 2009
---------------------------------------- ------------------------------------------
DERIVATIVES NOT ACCOUNTED STATEMENT OF ASSETS FAIR STATEMENT OF ASSETS FAIR
FOR AS HEDGING INSTRUMENTS AND LIABILITIES LOCATION VALUE AND LIABILITIES LOCATION VALUE
- ----------------------------- --------------------------- ---------- ----------------------------- ----------
Equity contracts Investments in securities, Investments in securities,
at value $1,227,551 at value $ --
---------- ----------
TOTAL DERIVATIVES NOT ACCOUNTED
FOR AS HEDGING INSTRUMENTS $1,227,551 $ --
========== ==========
SCHRODER EMERGING MARKET EQUITY FUND
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ------------------------------------------
YEAR ENDED OCTOBER 31, 2009 YEAR ENDED OCTOBER 31, 2009
---------------------------------------- ------------------------------------------
DERIVATIVES NOT ACCOUNTED STATEMENT OF ASSETS FAIR STATEMENT OF ASSETS FAIR
FOR AS HEDGING INSTRUMENTS AND LIABILITIES LOCATION VALUE AND LIABILITIES LOCATION VALUE
- ----------------------------- --------------------------- ---------- ----------------------------- ----------
Equity contracts Investments in securities, Investments in securities,
at value $ 455,609 at value $ --
---------- ----------
TOTAL DERIVATIVES NOT ACCOUNTED
FOR AS HEDGING INSTRUMENTS $ 455,609 $ --
========== ==========
80
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
SCHRODER NORTH AMERICAN EQUITY FUND
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ------------------------------------------
YEAR ENDED OCTOBER 31, 2009 YEAR ENDED OCTOBER 31, 2009
---------------------------------------- ------------------------------------------
DERIVATIVES NOT ACCOUNTED STATEMENT OF ASSETS FAIR STATEMENT OF ASSETS FAIR
FOR AS HEDGING INSTRUMENTS AND LIABILITIES LOCATION VALUE AND LIABILITIES LOCATION VALUE
- ----------------------------- --------------------------- ---------- ----------------------------- ----------
Foreign exchange contracts Unrealized appreciation Unrealized depreciation
on forward foreign on forward foreign
currency contracts $ 315,018 currency contracts $ 200,696
Equity contracts Unrealized appreciation Unrealized depreciation
on futures contracts -- on futures contracts 327
---------- ----------
TOTAL DERIVATIVES NOT ACCOUNTED
FOR AS HEDGING INSTRUMENTS $ 315,018 $ 201,023
========== ==========
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ------------------------------------------
YEAR ENDED OCTOBER 31, 2009 YEAR ENDED OCTOBER 31, 2009
---------------------------------------- ------------------------------------------
DERIVATIVES NOT ACCOUNTED STATEMENT OF ASSETS FAIR STATEMENT OF ASSETS FAIR
FOR AS HEDGING INSTRUMENTS AND LIABILITIES LOCATION VALUE AND LIABILITIES LOCATION VALUE
- ----------------------------- --------------------------- ---------- ----------------------------- ----------
Foreign exchange contracts Unrealized appreciation Unrealized depreciation
on forward foreign on forward foreign
currency contracts $ 13,942 currency contracts $ 24,732
Equity contracts Unrealized appreciation Unrealized depreciation
on futures contracts 70,212 on futures contracts 27,900
---------- ----------
TOTAL DERIVATIVES NOT ACCOUNTED
FOR AS HEDGING INSTRUMENTS $ 84,154 $ 52,632
========== ==========
The effect of derivative instruments on the Statement of Operations for the year
ended October 31, 2009, was as follows:
Amount of realized gain (loss) on derivatives recognized in income:
SCHRODER INTERNATIONAL ALPHA FUND
EQUITY-LINKED
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS WARRANTS TOTAL
- ---------------------------------------------------- ------------- ---------
Equity contracts $(613,707) $(613,707)
--------- ---------
Total $(613,707) $(613,707)
========= =========
SCHRODER EMERGING MARKET EQUITY FUND
EQUITY-LINKED
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS WARRANTS TOTAL
- ---------------------------------------------------- ------------- ---------
Equity contracts $(100,085) $(100,085)
--------- ---------
Total $(100,085) $(100,085)
========= =========
81
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
SCHRODER NORTH AMERICAN EQUITY FUND
FUTURES FORWARD FOREIGN
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS CONTRACTS CURRENCY CONTRACTS TOTAL
- ---------------------------------------------------- ------------ ------------------ ------------
Foreign exchange contracts $ -- $(521,601) $ (521,601)
Equity contracts (13,847,614) -- (13,847,614)
------------ --------- ------------
Total $(13,847,614) $(521,601) $(14,369,215)
============ ========= ============
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
FUTURES FORWARD FOREIGN SWAP
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS CONTRACTS CURRENCY CONTRACTS CONTRACTS TOTAL
- ---------------------------------------------------- ----------- ------------------ --------- ---------
Foreign exchange contracts $ -- $187,487 $ -- $ 187,487
Equity contracts (1,005,119) -- 15,542 (989,577)
Interest rate contracts 70,013 -- -- 70,013
----------- -------- ------- ---------
Total $ (935,106) $187,487 $15,542 $(732,077)
=========== ======== ======= =========
SCHRODER TOTAL RETURN FIXED INCOME FUND
OPTION FUTURES
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS CONTRACTS CONTRACTS TOTAL
- ---------------------------------------------------- --------- --------- --------
Interest rate contracts $(21,457) $271,736 $250,279
-------- -------- --------
Total $(21,457) $271,736 $250,279
======== ======== ========
Change in unrealized appreciation (depreciation) on derivatives recognized in
income:
SCHRODER INTERNATIONAL ALPHA FUND
EQUITY-LINKED
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS WARRANTS TOTAL
- ---------------------------------------------------- ------------- ----------
Equity contracts $1,187,351 $1,187,351
---------- ----------
Total $1,187,351 $1,187,351
========== ==========
SCHRODER EMERGING MARKET EQUITY FUND
EQUITY-LINKED
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS WARRANTS TOTAL
- ---------------------------------------------------- ------------- ----------
Equity contracts $287,208 $287,208
-------- --------
Total $287,208 $287,208
======== ========
SCHRODER NORTH AMERICAN EQUITY FUND
FUTURES FORWARD FOREIGN
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS CONTRACTS CURRENCY CONTRACTS TOTAL
- ---------------------------------------------------- ---------- ------------------ ----------
Foreign exchange contracts $ -- $(219,713) $ (219,713)
Equity contracts 6,229,047 -- 6,229,047
---------- --------- ----------
Total $6,229,047 $(219,713) $6,009,334
========== ========= ==========
82
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
SCHRODER MULTI-ASSET GROWTH PORTFOLIO
FUTURES FORWARD FOREIGN SWAP
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS CONTRACTS CURRENCY CONTRACTS CONTRACTS TOTAL
- ---------------------------------------------------- --------- ------------------ --------- ---------
Foreign exchange contracts $ -- $(204,666) $ -- $(204,666)
Equity contracts 437,786 -- 7,568 445,354
Interest rate contracts (11,495) -- -- (11,495)
-------- --------- ------ ---------
Total $426,291 $(204,666) $7,568 $ 229,193
======== ========= ====== =========
SCHRODER TOTAL RETURN FIXED INCOME FUND
FUTURES
DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS CONTRACTS TOTAL
- ---------------------------------------------------- --------- ---------
Interest rate contracts $(228,185) $(228,185)
--------- ---------
Total $(228,185) $(228,185)
========= =========
NOTE 5 -- 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, 2009 totaled $17,628, $1,185, $28,361, $3,403, $1,277 and $1,161,
respectively.
NOTE 6 -- 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, 2009, 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.
If a meeting relates to a single Fund or group of Funds, payments of such
meeting fees are allocated only among those Funds to which the meeting relates.
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 7 -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Fund, for the year ended October 31, 2009 were as
follows:
PURCHASES SALES AND MATURITIES
------------ --------------------
Schroder International Alpha Fund ................... $ 58,195,962 $ 48,653,694
Schroder International Diversified Value Fund ....... 11,634,554 12,098,615
Schroder Emerging Market Equity Fund ................ 40,618,799 22,710,355
Schroder U.S. Opportunities Fund .................... 90,366,256 124,848,835
Schroder U.S. Small and Mid Cap Opportunities Fund .. 34,302,168 14,722,591
Schroder North American Equity Fund ................. 306,595,574 404,490,846
Schroder Total Return Fixed Income Fund ............. 119,681,382 66,899,497
Schroder Multi-Asset Growth Portfolio ............... 4,033,925 15,314,165
83
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
Purchases and proceeds from sales and maturities of U.S. Government securities
for the year ended October 31, 2009 were as follows:
PURCHASES SALES AND MATURITIES
------------ --------------------
Schroder Total Return Fixed Income Fund .......... $561,966,711 $536,916,454
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 effect the redemption is the respective asset price used to
calculate the net asset value of the shares redeemed. For the year ended October
31, 2008, the Schroder North American Equity Fund realized gains from in-kind
redemptions of $5,180,341. For the year ended October 31, 2009, the Schroder
North American Equity Fund realized losses from in-kind redemptions of
$18,461,226.
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:
INCOME
FROM
AFFILIATED REGISTERED REALIZED AFFILIATED
INVESTMENT COMPANY CONTRIBUTIONS WITHDRAWALS LOSSES INVESTMENTS
- --------------------- ------------- ----------- ----------- -----------
Schroder U.S. Small and Mid Cap Opportunities Fund .. $661,037 $2,292,098 $(1,280,596) $ --
Schroder Emerging Market Equity Fund ................ 72,140 638,330 (648,037) 557
Schroder International Alpha Fund ................... 21,273 1,666,877 (963,692) 21,273
Schroder International Diversified Value Fund ....... 108,033 1,010,817 (905,382) 69,626
NOTE 8 -- FEDERAL INCOME TAXES
The Schroder 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 the fiscal year ended October 31, 2008,
related to the period from inception of May 23, 2008, was estimated as if the
Fund filed on a separate return basis.
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, 2009, the Funds reclassified the following permanent amounts
between capital paid-in, undistributed net investment income and accumulated
realized gain (loss):
INCREASE (DECREASE) INCREASE (DECREASE)
UNDISTRIBUTED ACCUMULATED DECREASE
NET INVESTMENT INCOME REALIZED GAIN (LOSS) CAPITAL PAID-IN
--------------------- -------------------- ---------------
Schroder International Alpha Fund .............. $ 370 $ (370) $ --
Schroder International Diversified Value Fund .. 64,011 (64,011) --
Schroder Emerging Market Equity Fund ........... (12,745) 12,745 --
Schroder U.S. Opportunities Fund ............... 701,532 (86,671) (614,861)
84
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
INCREASE (DECREASE) INCREASE (DECREASE)
UNDISTRIBUTED ACCUMULATED DECREASE
NET INVESTMENT INCOME REALIZED GAIN (LOSS) CAPITAL PAID-IN
--------------------- -------------------- ---------------
Schroder U.S. Small and Mid Cap Opportunities
Fund .......................................... $ 14,374 $ (5,049) $ (9,325)
Schroder North American Equity Fund .............. (388,339) 18,849,565 (18,461,226)
Schroder Total Return Fixed Income Fund .......... (2,690) 2,690 --
Schroder Multi-Asset Growth Portfolio ............ 168,855 (168,855) --
The tax character of dividends and distributions declared during the years ended
October 31, 2009 and October 31, 2008 was as follows:
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
----------- ------------ ------------
Schroder International Alpha Fund
2009 .......................................... $ 333,371 $ -- $ 333,371
2008 .......................................... 958,846 -- 958,846
Schroder International Diversified Value Fund
2009 .......................................... 387,653 -- 387,653
2008 .......................................... 1,796,852 347,610 2,144,462
Schroder Emerging Market Equity Fund
2009 .......................................... 14,779 -- 14,779
2008 .......................................... 2,275,689 1,230,055 3,505,744
Schroder U.S. Opportunities Fund
2009 .......................................... -- -- --
2008 .......................................... 5,039,977 22,631,107 27,671,084
Schroder U.S. Small and Mid Cap Opportunities Fund
2009 .......................................... -- -- --
2008 .......................................... 311,839 386,347 698,186
Schroder North American Equity Fund
2009 .......................................... 12,821,224 -- 12,821,224
2008 .......................................... 28,675,160 77,583,254 106,258,414
Schroder Total Return Fixed Income Fund
2009 .......................................... 5,527,511 476,922 6,004,433
2008 .......................................... 3,069,846 35,383 3,105,229
Schroder Multi-Asset Growth Portfolio
2009 .......................................... 789,551 -- 789,551
As of October 31, 2009, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
TOTAL
DISTRIBUTABLE
UNDISTRIBUTED CAPITAL UNREALIZED OTHER EARNINGS
ORDINARY LOSS APPRECIATION TEMPORARY (ACCUMULATED
INCOME CARRYFORWARD (DEPRECIATION) DIFFERENCES LOSSES)
------------- ------------- -------------- ----------- -------------
Schroder International Alpha Fund ........ $ 906,736 $ (18,134,885) $ 7,132,245 $ 1,372 $ (10,094,532)
Schroder International Diversified
Value Fund ............................ 316,951 (3,604,956) 76,648 (30,104) (3,241,461)
Schroder Emerging Market Equity Fund ..... 329,221 (4,105,624) 5,011,555 (16,345) 1,218,807
Schroder U.S. Opportunities Fund ......... -- (33,631,998) 16,452,395 7 (17,179,596)
Schroder U.S. Small and Mid Cap
Opportunities Fund .................... -- (1,694,220) 3,188,123 (13,234) 1,480,669
Schroder North American Equity Fund ...... 5,164,287 (110,491,358) (22,599,226) (88,404) (128,014,701)
Schroder Total Return Fixed Income Fund .. 2,120,820 -- 5,479,860 (517,894) 7,082,786
Schroder Multi-Asset Growth Portfolio .... 94,116 (10,655,406) 216,671 (59,156) (10,403,775)
85
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
As of October 31, 2009, 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, except for Schroder
Emerging Market Equity Fund, which may be subject to annual limitations:
EXPIRATION
DATES
AMOUNT OCTOBER 31,
----------- -----------
Schroder International Alpha Fund ................... $ 2,618,789 2010
913,762 2011
2,965,067 2016
11,637,267 2017
Schroder International Diversified Value Fund ....... 109,889 2016
3,495,067 2017
Schroder Emerging Market Equity Fund ................ 949,933 2016
3,155,691 2017
Schroder U.S. Opportunities Fund .................... 6,743,042 2016
26,888,956 2017
Schroder U.S. Small and Mid Cap Opportunities Fund .. 819,456 2016
874,764 2017
Schroder North American Equity Fund ................. 41,332,728 2016
69,158,630 2017
Schroder Multi-Asset Growth Portfolio ............... 3,192,418 2016
7,462,988 2017
At October 31, 2009, 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 ................... $ 48,593,468 $ 9,143,160 $ (2,013,820) $ 7,129,340
Schroder International Diversified Value Fund ....... 10,448,380 1,062,015 (985,615) 76,400
Schroder Emerging Market Equity Fund ................ 43,054,023 6,884,070 (1,875,689) 5,008,381
Schroder U.S. Opportunities Fund .................... 150,268,910 23,748,213 (7,295,818) 16,452,395
Schroder U.S. Small and Mid Cap Opportunities Fund .. 41,037,690 4,184,914 (996,757) 3,188,157
Schroder North American Equity Fund ................. 396,678,311 24,445,844 (47,115,586) (22,669,742)
Schroder Total Return Fixed Income Fund ............. 194,421,311 5,776,655 (267,994) 5,508,661
Schroder Multi-Asset Growth Portfolio ............... 6,514,835 912,095 (729,337) 182,758
NOTE 9 -- 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 and Schroder International Diversified
Value 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.
86
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2009
NOTE 10 -- 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, 2009 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 .................... 4 90.10%
Schroder International Diversified Value Fund ........ 3 97.54
Schroder Emerging Market Equity Fund ................. 6 87.70
Schroder U.S. Opportunities Fund ..................... 3 79.63
Schroder U.S. Small and Mid Cap Opportunities Fund ... 8 86.28
Schroder North American Equity Fund .................. 6 82.63
Schroder Total Return Fixed Income Fund .............. 10 83.46
Schroder Multi-Asset Growth Portfolio ................ 3 98.20
Some of the accounts shown above for Schroder International Alpha Fund, Schroder
International Diversified Value Fund, Schroder North American Equity Fund and
Schroder Multi-Asset Growth Portfolio are owned by an affiliate of SIMNA.
NOTE 11 -- 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
that enables them to participate in a $25 million committed revolving line of
credit with JPMorgan Chase Bank, N.A. Any advance under the line of credit is
contemplated primarily for temporary or emergency purposes consistent with the
investment objectives and fundamental investment restrictions of the borrower,
or to finance the redemption of the shares of a shareholder of the borrower.
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 November 1, 2008
through October 31, 2009.
NOTE 12 -- CAPITAL SHARE TRANSACTIONS
Capital share transactions for the Funds were as follows:
INTERNATIONAL
INTERNATIONAL DIVERSIFIED EMERGING MARKET
ALPHA FUND VALUE FUND EQUITY FUND
--------------------- ------------------ ---------------------
2009 2008 2009 2008 2009 2008
---------- -------- -------- ------- ---------- --------
INVESTOR SHARES:
Sales of shares ................. 337,966 351,750 14,444 282,628 2,028,125 642,134
Reinvestment of distributions ... 26,500 40,026 68,576 184,373 2,155 230,257
Redemption of shares ............ (959,796) (150,536) (213,007) (84,401) (1,412,442) (90,216)
---------- -------- -------- ------- ---------- --------
Net increase (decrease) in
Investor Shares .............. (595,330) 241,240 (129,987) 382,600 617,838 782,175
========== ======== ======== ======= ========== ========
ADVISOR SHARES:
Sales of shares ................. 3,235,665 469,751 37,996 50,881 1,335,904 329,402
Reinvestment of distributions ... 24,919 36,416 6,481 24,459 -- 18,455
Redemption of shares ............ (1,169,019) (317,143) (12,551) (59,364) (249,212) (340,781)
---------- -------- -------- ------- ---------- --------
Net increase in Advisor Shares .. 2,091,565 189,024 31,926 15,976 1,086,692 7,076
========== ======== ======== ======= ========== ========
87
SCHRODER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 2009
U.S. SMALL
U.S. OPPORTUNITIES AND MID CAP NORTH AMERICAN
FUND OPPORTUNITIES FUND EQUITY FUND
----------------------- -------------------- ------------------------
2009 2008 2009 2008 2009 2008
---------- ---------- --------- -------- ----------- ----------
INVESTOR SHARES:
Sales of shares ................ 767,206 984,467 3,192,731 712,839 2,909,053 3,916,897
Reinvestment of distributions .. -- 1,238,726 -- 55,239 1,200,557 8,423,399
Redemption of shares ........... (3,125,016) (2,802,194) (849,343) (71,717) (9,487,201) (3,625,013)
Redemption of shares in-kind ... -- -- -- -- (12,491,720) (4,373,826)
---------- -------- --------- ------- ----------- ---------
Net increase (decrease) in
Investor Shares ............. (2,357,810) (579,001) 2,343,388 696,361 (17,869,311) 4,341,457
========== ======== ========= ======= =========== =========
ADVISOR SHARES:
Sales of shares ................ 35,407 28,434 393,426 12,224 690 2,088
Reinvestment of distributions .. -- 24,017 -- 7,746 419 1,565
Redemption of shares ........... (92,387) (73,488) (36,809) (104,345) (282) --
---------- -------- --------- ------- ----------- ---------
Net increase (decrease) in
Advisor Shares .............. (56,980) (21,037) 356,617 (84,375) 827 3,653
========== ======== ========= ======= =========== =========
TOTAL RETURN FIXED
INCOME FUND
---------------------
2009 2008
---------- --------
INVESTOR SHARES:
Sales of shares .................. 8,844,502 108,534
Reinvestment of distributions .... 539,766 309,996
Redemption of shares ............. (1,563,755) (142,808)
---------- --------
Net increase in Investor Shares .. 7,820,513 275,722
========== ========
ADVISOR SHARES:
Sales of shares .................. 956,614 30,531
Reinvestment of distributions .... 16,397 3,447
Redemption of shares ............. (404,990) (16,828)
---------- --------
Net increase in
Advisor Shares ................ 568,021 17,150
========== ========
MULTI-ASSET
GROWTH PORTFOLIO
----------------------
2009 2008(a)
---------- ---------
INVESTOR SHARES:
Sales of shares ...................... 23,486 50,480
Reinvestment of distributions ........ 2,929 --
Redemption of shares ................. (241) --
---------- ---------
Net increase in Investor Shares ...... 26,174 50,480
========== =========
A SHARES:
Sales of shares ...................... 19,275 2,654,639
Reinvestment of distributions ........ 92,272 --
Redemption of shares ................. (2,413,563) (37,504)
---------- ---------
Net increase (decrease) in A Shares .. (2,302,016) 2,617,135
========== =========
ADVISOR SHARES:
Sales of shares ...................... 19,514 380,201
Reinvestment of distributions ........ 20,583 --
Redemption of shares ................. (4,949) --
---------- ---------
Net increase in
Advisor Shares .................... 35,148 380,201
========== =========
R SHARES:
Sales of shares ...................... -- 50,000
Reinvestment of distributions ........ 2,535 --
---------- ---------
Net increase in R Shares ............. 2,535 50,000
========== =========
(a) Fund commenced investment activities on December 20, 2007.
NOTE 13 -- SUBSEQUENT EVENTS
The Trust has evaluated the need for disclosures and/or adjustments resulting
from subsequent events through December 23, 2009, the date the financial
statements were available to be issued. Based on this evaluation, no adjustments
were required to the financial statements as of October 31, 2009.
88
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, 2009, the results of each of their operations for
the year 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, 2009 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 23, 2009
89
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 twelve-month period ended June 30 is available without charge, upon
request by calling 1-800-464-3108 and on the SEC's website 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 2009 to consider the continuation of the Advisory
Agreements in respect of each of the Funds for the following year. The Trustees
considered a number of factors, though they did not identify one particular
factor alone that 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-advisor 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-advisor.
The Trustees noted that the advisory and administrative fees charged by SIMNA to
the Funds were 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-advisor. 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 advisor. 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 and in the one asset
category where SIMNA manages a U.S. private fund, the advisory fees appear to be
the same or lower than for 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 one asset class, 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
90
SCHRODER MUTUAL FUNDS
INFORMATION REGARDING REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS
(UNAUDITED) (CONTINUED)
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.
The Trustees considered the profitability analysis with respect to each Fund for
the years ended December 31, 2008 and December 31, 2007. 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 Emerging Market Equity Fund, Schroder International
Diversified Value Fund, Schroder Total Return Fixed Income Fund, and Schroder
Multi-Asset Growth Portfolio for the calendar year ended December 31, 2008. The
Trustees considered that SIMNA's net profit from managing the Funds for the year
ended December 31, 2007 had increased in size for the year ended December 31,
2008, and the Trustees concluded that the profitability of Schroder U.S.
Opportunities Fund, Schroder International Alpha Fund and Schroder North
American Equity 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 SIMNA 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. The Trustees noted that SIMNA's undertakings with respect
to expense limitations and/or fee waivers are recognized by the Trustees in
their review of SIMNA's advisory relationship with the Funds, while
acknowledging that the focus of their review and determination is with respect
to the contractual fee rates themselves.
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. Representatives of SIMNA also discussed with the Trustees 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 and audit 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 impact
on expenses and that some expenses do increase as net asset values increase, for
instance expenses related to reprinting prospectuses. Representatives of SIMNA
also noted that audit expenses 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.
The Trustees' review showed that Schroder North American Equity Fund is
competitive both in its overall expense ratio and its performance, with
contractual and actual management fees ranking first out of fourteen peer group
funds, Investor Shares total expenses ranking in the first quintile and Advisor
Shares total expenses ranking in the second quintile as measured by Lipper. They
noted that Schroder North American Equity Fund's performance in the last year
had suffered somewhat due to market conditions, but remained in the second
quintile for all periods measured by Lipper since inception for Investor Shares
and was in the third quintile in the last year for Advisor Shares.
The review showed that Schroder International Diversified Value Fund has a
limited performance history, and while its performance ranked behind that of the
sole other peer group fund available for comparison by Lipper in the last year,
it had outperformed this other fund since inception and that, although
contractual management fees were higher than the median for the peer group,
after fee waivers and expense limitations the Fund ranked second out of eight
peer group funds for management fees actually paid, and first out of eight and
fifth out of eight peer group funds for Investor and Advisor Shares total
expenses, respectively.
91
SCHRODER MUTUAL FUNDS
INFORMATION REGARDING REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS
(UNAUDITED) (CONCLUDED)
With respect to Schroder U.S. Opportunities Fund, it was noted that the Fund's
contractual management fees are in the fifth quintile, and that performance has
suffered recently, reflected by the Fund dropping from the first quintile in
performance to the second quin-tile in performance for the last year, as
measured by Lipper. While contractual management fees were above the median and
the Fund ranked sixth and sixteenth out of seventeen peer funds in total
expenses for Investor and Advisor Shares, respectively, management considered
this reasonable given the limited capacity of the Fund, the Fund's investment
strategy, and its historical strong performance.
With respect to Schroder U.S. Small and Mid Cap Opportunities Fund, it was noted
that the Fund has a limited performance history, but that performance since
inception has been strong overall, and was in the second quintile in the last
year and since inception, as measured by Lipper. It was also noted that,
although the Fund's expenses were in the fourth and fifth quintile for Investor
and Advisor Shares, respectively, that this was due at least in part, to the
small size of the Fund. It was also noted that while the Fund's contractual
management fees were in the fifth quintile, that actual management fees paid
after waiver were in the second quintile, as measured by Lipper.
As to Schroder International Alpha Fund, it was noted that although the
contractual management fees were in the fifth quintile, that actual management
fees paid were in the first quintile, total expenses were in the second and
third quintiles for Investor and Advisor Shares, respectively, and the Fund's
performance was first out of three peer group funds for the ten year historical
period and third out of five peer group funds in the last year.
With respect to Schroder Emerging Market Equity Fund, it was noted that while
total expenses were in the third and fourth quin-tiles for Investor and Advisor
Shares respectively, the Fund's performance has been consistently first out of
all peer group funds in all periods measured by Lipper since inception, while
contractual management fees were in the second quintile, and management fees
actually paid were 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 in every period measured by Lipper since
inception, the Fund has ranked in the first quintile for performance.
For Schroder Multi-Asset Growth Portfolio, it was noted that the Fund has a
limited operating history, but that contractual management fees ranked in the
second quintile and performance since inception ranked in the third quintile,
while for total expenses the Fund was ranked first out of six peer group funds.
In addition, SIMNA noted that it had agreed to increase the waiver of its
management fee compensation for Schroder Multi-Asset Growth Portfolio, although
the overall fee waiver and expense limitation amount for the Fund remained the
same, to reflect increased investments by the Fund in other Schroder mutual
funds.
Representatives of SIMNA also discussed with the Trustees the services provided
to Schroder Multi-Asset Growth Portfolio, referring to the discussions they had
had at earlier meetings with the Trustees regarding the asset-allocation,
portfolio design, investment, and monitoring functions to be performed by SIMNA
and SIMNA Ltd. for Schroder Multi-Asset Growth Portfolio.
In summary, 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, in concluding
that each of the Fund's fees appeared reasonable, unanimously voted to approve
the continuation of the Advisory Agreements in respect of each of the Funds,
including the advisory fees proposed in connection with that continuation.
92
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
5/1/09 10/31/09 Ratios Period*
--------- --------- ---------- --------
Schroder International Alpha Fund
Actual Return
Investor Shares $1,000.00 $1,335.30 1.15% $6.77
Advisor Shares 1,000.00 1,330.90 1.40% $8.23
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,019.41 1.15% $5.85
Advisor Shares 1,000.00 1,018.15 1.40% $7.12
Schroder International Diversified Value Fund
Actual Return
Investor Shares $1,000.00 $1,387.70 1.15% $6.92
Advisor Shares 1,000.00 1,387.70 1.40% $8.43
Hypothetical Example for
Comparison Purposes
Investor Shares $1,000.00 $1,019.41 1.15% $5.85
Advisor Shares 1,000.00 1,018.15 1.40% $7.12
93
SCHRODER MUTUAL FUNDS
DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONTINUED)
Beginning Ending Net Expenses
Account Account Annualized Paid
Value Value Expense During
5/1/09 10/31/09 Ratios Period*
--------- --------- ---------- --------
Schroder Emerging Market Equity Fund
Actual Return
Investor Shares $1,000.00 $1,381.20 1.25% $7.50
Advisor Shares 1,000.00 1,383.90 1.50 9.01
Hypothetical Example for Comparison Purposes
Investor Shares $1,000.00 $1,018.90 1.25% $6.36
Advisor Shares 1,000.00 1,017.64 1.50 7.63
Schroder U.S. Opportunities Fund
Actual Return
Investor Shares $1,000.00 $1,177.80 1.42% $7.79
Advisor Shares 1,000.00 1,175.60 1.67 9.16
Hypothetical Example for Comparison Purposes
Investor Shares $1,000.00 $1,018.05 1.42% $7.22
Advisor Shares 1,000.00 1,016.79 1.67 8.49
Schroder U.S. Small and Mid Cap Opportunities Fund
Actual Return
Investor Shares $1,000.00 $1,169.80 1.05% $5.74
Advisor Shares 1,000.00 1,168.60 1.30 7.11
Hypothetical Example for Comparison Purposes
Investor Shares $1,000.00 $1,019.91 1.05% $5.35
Advisor Shares 1,000.00 1,018.65 1.30 6.61
Schroder North American Equity Fund
Actual Return
Investor Shares $1,000.00 $1,205.70 0.43% $2.39
Advisor Shares 1,000.00 1,202.70 0.78 4.33
Hypothetical Example for Comparison Purposes
Investor Shares $1,000.00 $1,023.04 0.43% $2.19
Advisor Shares 1,000.00 1,021.27 0.78 3.97
Schroder Total Return Fixed Income Fund
Actual Return
Investor Shares $1,000.00 $1,060.30 0.40% $2.08
Advisor Shares 1,000.00 1,059.00 0.65 3.37
Hypothetical Example for Comparison Purposes
Investor Shares $1,000.00 $1,023.19 0.40% $2.04
Advisor Shares 1,000.00 1,021.93 0.65 3.31
94
SCHRODER MUTUAL FUNDS
DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONCLUDED)
Beginning Ending Net Expenses
Account Account Annualized Paid
Value Value Expense During
5/1/09 10/31/09 Ratios Period*
--------- --------- ---------- --------
Schroder Multi-Asset Growth Portfolio
Actual Return
Investor Shares $1,000.00 $1,211.00 1.25% $6.97
A Shares 1,000.00 1,209.20 1.50 8.35
Advisor Shares 1,000.00 1,209.50 1.50 8.35
R Shares 1,000.00 1,208.00 1.75 9.74
Hypothetical Example for Comparison Purposes
Investor Shares $1,000.00 $1,018.90 1.25% $6.36
A Shares 1,000.00 1,017.64 1.50 7.63
Advisor Shares 1,000.00 1,017.64 1.50 7.63
R Shares 1,000.00 1,016.38 1.75 8.89
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the account period, multiplied by 184/365 (to
reflect the one-half year period).
95
SCHRODER MUTUAL FUNDS
TRUSTEES AND OFFICERS (UNAUDITED)
Additional information regarding the Trustees is included in the Funds'
Statements of Additional Information, which are available free of charge by
calling (800) 464-3108.
TERM OF
OFFICE
AND
POSITION(S) LENGTH
NAME, AGE HELD WITH THE OF TIME
AND ADDRESS TRUSTS SERVED
- -------------------------- ------------------------ ---------------------------
TRUSTEES
Peter S. Knight*, 58 Trustee Indefinite
875 Third Avenue, 22nd Fl. (All Trusts) Since 1993 (SCF(D) and SST)
New York, NY 10022 Since 2003 (SGST)
Catherine A. Mazza+, 49 Trustee and Indefinite
875 Third Avenue, 22nd Fl. Chairman Since 2003 (SGST)
New York, NY 10022 (All Trusts) Since 2006 (SCF(D) and SST)
William L. Means*, 73 Trustee Indefinite
875 Third Avenue, 22nd Fl. (All Trusts) Since 1997 (SCF(D) and SST)
New York, NY 10022 Since 2006 (SGST)
James D. Vaughn*, 64 Trustee Indefinite
875 Third Avenue, 22nd Fl. (All Trusts) Since 2003
New York, NY 10022
- ----------
* 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.
96
SCHRODER MUTUAL FUNDS
NUMBER OF SERIES OTHER
PRINCIPAL IN FUND COMPLEX DIRECTORSHIPS
OCCUPATION(S) OVERSEEN BY HELD BY
DURING PAST 5 YEARS BOARD MEMBER(a) BOARD MEMBER
- ----------------------------------------------- ---------------- ---------------------------------------
Director, Schroder Credit Renaissance Fund, LP; 10 Medicis; PAR Pharmaceuticals; Entremed;
Director, Schroder UK Long/Short Fund Ltd.; Generation Investment Management Global
President, Generation Investment Management Equity Fund LLP.
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).
Senior Vice President, Schroder Investment 10 None
Management North 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.
Retired. 10 None
Retired. Formerly, Managing Partner, 10 AMG National Trust Bank.
Deloitte & Touche USA, LLP --
Denver (accounting).
- ----------
(a) The "Fund Complex" includes all series of Schroder Capital Funds
(Delaware), Schroder Series Trust and Schroder Global Series Trust.
97
SCHRODER MUTUAL FUNDS
TRUSTEES AND OFFICERS (UNAUDITED)
TERM OF
OFFICE
AND
POSITION(S) LENGTH
NAME, AGE HELD WITH THE OF TIME
AND ADDRESS TRUSTS SERVED
- -------------------------- ------------------------ ---------------------------
OFFICERS
Mark A. Hemenetz, 53 President and Indefinite
875 Third Avenue, 22nd Fl. Principal Executive Since 2004
New York, NY 10022 Officer
Alan M. Mandel, 52 Treasurer and Principal Indefinite
875 Third Avenue, 22nd Fl. Financial and Accounting Since 1998 (SST and SCF(D);
New York, NY 10022 Officer Since 2003 (SGST)
Stephen M. DeTore, 58 Chief Compliance Officer Indefinite
875 Third Avenue, 22nd Fl. Since 2005
New York, NY 10022
William Sauer, 46 Vice President Indefinite
875 Third Avenue, Since 2008
New York, NY 10022
Carin F. Muhlbaum, 47 Vice President Indefinite
875 Third Avenue, 22nd Fl. Vice President since 1998
New York, NY 10022 (SST and (SCF(D);
Vice President since 2003
(SGST)
Abby Ingber, 46 Chief Legal Officer Indefinite
875 Third Avenue, 22nd Fl. and Secretary/Clerk Chief Legal Officer since 2006
New York, NY 10022 Secretary/Clerk since 2007
Angel Lanier, 48 Assistant Secretary Indefinite
875 Third Avenue, 22nd Fl. Since 2005
New York, NY 10022
98
SCHRODER MUTUAL FUNDS
PRINCIPAL
OCCUPATION(S)
DURING PAST 5 YEARS
- -----------------------------------------------
Chief Operating Officer Americas, Schroder;
Chairman and Director, Schroder Fund Advisors
Inc. Formerly, Executive Vice President and
Director of Investment Management, Bank of New
York.
Head of Fund Administration, Schroders;
Director, Schroder Fund Advisors, Inc.
Chief Compliance Officer, Schroders; 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.
Head of Investor Services, Schroders. Formerly,
Vice President, The Bank of New York.
General Counsel and Chief Administrative
Officer, Schroders; Senior Vice President,
Director, Secretary and General Counsel,
Schroder Fund Advisors Inc.
Deputy General Counsel, Schroders. Formerly,
Senior Counsel, TIAA-CREF.
Legal Assistant, Schroders; Assistant Vice
President, Schroder Fund Advisors Inc.
Formerly, Associate, Schroders.
99
SCHRODER MUTUAL FUNDS
NOTICE TO SHAREHOLDERS (UNAUDITED)
For shareholders who do not have an October 31, 2009 tax year end, this notice
is for informational purposes only. For shareholders with an October 31, 2009
tax year end, please consult your tax advisor as to the pertinence of this
notice. For the fiscal year ended October 31, 2009, each Fund has designated the
following items with regard to distributions paid during the year.
QUALIFYING
LONG TERM ORDINARY FOR CORPORATE
CAPITAL GAIN INCOME TOTAL DIVIDENDS REC.
FUND DISTRIBUTION DISTRIBUTIONS DISTRIBUTIONS DEDUCTIONS (1)
- ---- ------------ ------------- ------------- --------------
Schroder International
Alpha Fund (a) .............. 0.00% 100.00% 100.00% 0.00%
Schroder International
Diversified Value Fund (b) .. 0.00% 100.00% 100.00% 0.00%
Schroder Emerging Market
Equity Fund (c) ............. 0.00% 100.00% 100.00% 0.00%
Schroder U.S.
Opportunities Fund .......... 0.00% 0.00% 0.00% 0.00%
Schroder U.S. Small and
Mid Cap Opportunities Fund .. 0.00% 0.00% 0.00% 0.00%
Schroder North American
Equity Fund ................. 0.00% 100.00% 100.00% 100.00%
Schroder Total Return
Fixed Income Fund ........... 8.24% 91.76% 100.00% 0.00%
Schroder Multi-Asset
Growth Portfolio ............ 0.00% 100.00% 100.00% 0.05%
QUALIFYING U.S. QUALIFYING QUALIFYING
DIVIDEND GOVERNMENT INTEREST SHORT-TERM
FUND INCOME (2) INTEREST (3) INCOME (4) CAPITAL GAIN (5)
- ---- ---------- ------------ ---------- ----------------
Schroder International
Alpha Fund (a) .............. 100.00% 0.00% 1.10% 0.00%
Schroder International
Diversified Value Fund (b) .. 96.23% 0.00% 1.02% 0.00%
Schroder Emerging Market
Equity Fund (c) ............. 94.76% 0.00% 0.22% 0.00%
Schroder U.S.
Opportunities Fund .......... 0.00% 0.00% 0.00% 0.00%
Schroder U.S. Small and
Mid Cap Opportunities Fund .. 0.00% 0.00% 0.00% 0.00%
Schroder North American
Equity Fund ................. 100.00% 0.00% 1.08% 0.00%
Schroder Total Return
Fixed Income Fund ........... 0.00% 8.11% 49.25% 100.00%
Schroder Multi-Asset
Growth Portfolio ............ 76.37% 1.06% 75.47% 0.00%
(1) Qualifying dividends represent dividends that qualify for the corporate
dividends received deduction and are 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 2009, the total amount of gross foreign source income is
$1,432,715. The total amount of foreign tax to be paid is $126,386. 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 2009, the total amount of gross foreign source income is
$410,413. The total amount of foreign tax to be paid is $42,218. 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 2009, the total amount of gross foreign source income is
$664,456. The total amount of foreign tax to be paid is $64,307. Your
allocable share of the foreign tax credit will be reported on Form 1099
DIV.
100
SCHRODER MUTUAL FUNDS
NOTICE TO SHAREHOLDERS (UNAUDITED) (CONCLUDED)
On December 11, 2009 the following Funds made the following per share income
distributions to the shareholders of record as of December 10, 2009:
NET
INVESTMENT
INCOME
----------
Schroder International Alpha Fund
Investor Shares ............................. $0.1698
Advisor Shares .............................. 0.1510
Schroder International Diversified Value Fund
Investor Shares ............................. 0.2657
Advisor Shares .............................. 0.2525
Schroder Emerging Market Equity Fund
Investor Shares ............................. 0.0646
Advisor Shares .............................. 0.0593
Schroder North American Equity Fund
Investor Share .............................. 0.1454
Advisor Shares .............................. 0.1218
Schroder Multi-Asset Growth Portfolio
Investor Shares ............................. 0.1935
A Shares .................................... 0.1607
Advisor Shares .............................. 0.1771
R Shares .................................... 0.1600
On December 21, 2009, the following Fund made the following short-term capital
gains distributions to the shareholders of record as of December 21, 2009.
CAPITAL
GAINS
-------
Schroder Total Return Fixed Income Fund
Investor Shares .......................... $0.1006
Advisor Shares ........................... 0.1006
101
NOTES
NOTES
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; and
- - 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)
Peter S. Knight
William L. Means
James D. Vaughn
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 PUBLIC PricewaterhouseCoopers LLP
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
52692
(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:
2009 2008
------------------------------------------------ ---------------------------------------------------
All fees and All other fees All fees and All other fees
services to and services to services to and services to
All fees and service service All fees and service service
services to the affiliates affiliates that services to the affiliates that affiliates that
Trust that were that were did not require Trust that were were did not require
pre-approved pre-approved pre-approval pre-approved pre-approved pre-approval
--------------- ------------ --------------- --------------- --------------- ---------------
(a) Audit $57,404 N/A $ 31,000 $56,420 N/A $ 31,000
Fees
(b) Audit-Related $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Fees
(c) Tax Fees $ 7,885(1) $ 0 $209,633(2) $7,885(1) $ 0 $148,000(2)
(d) All Other $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Fees
Notes:
(1) Tax return preparation fees.
(2) Tax compliance services provided to service affiliates of the Funds.
(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:
2009 2008
---- ----
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 $xxx and $155,885 for 2009 and 2008,
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, 2009 through October 31,
2009 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 6, 2010
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 6, 2010
By (Signature and Title)* /s/ Alan M. Mandel
----------------------------------------
Alan M. Mandel
Treasurer and Chief Financial Officer
Date January 6, 2010
* Print the name and title of each signing officer under his or her
signature.