<PAGE>
As filed with the Securities and Exchange Commission on October 31, 1996
File No. 811-9130
--------
-------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
--------------------------------------------------------
SCHRODER CAPITAL FUNDS
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: 207-879-1900
----------------------------------------------------------------
Thomas G. Sheehan, Esq.
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
(Name and Address of Agent for Service)
Copies to:
R. Darrell Mounts, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
----------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement is being filed by Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940, as amended.
Beneficial interests in the series of Registrant are not being registered
under the Securities Act of 1933, as amended, because such interests will
be issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of that act.
Investments in Registrant's series may only be made by certain
institutional investors, whether organized within or without the United
States (excluding individuals, S corporations, partnerships, and grantor
trusts beneficially owned by any individuals, S corporations, or
partnerships). This Registration Statement does not constitute an offer
to sell, or the solicitation of an offer to buy, any beneficial interests
in any series of Registrant.
THIS REGISTRATION STATEMENT IS INTENDED TO SUPPLEMENT THE PREVIOUSLY FILED
REGISTRATION STATEMENT OF THE SCHRODER CAPITAL FUNDS AND DOES NOT EFFECT
THE INTERNATIONAL EQUITY FUND, SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO AND SCHRODER U.S. SMALLER COMPANIES PORTFOLIO.
<PAGE>
PART A
(Prospectus)
Schroder Capital Funds
________
Schroder International Smaller Companies Portfolio
Introduction
Schroder Capital Funds (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940
(the "1940 Act"). The Trust offers shares of beneficial interest in
multiple series, each of which has distinct investment objectives and
policies. The Trust currently comprises four series: Schroder
International Smaller Companies Portfolio (the "Portfolio"), International
Equity Fund, Schroder Emerging Markets Fund Institutional Portfolio and
Schroder U.S. Smaller Companies Portfolio. This Part A relates solely to
the Portfolio.
The Trust does not offer its shares directly to the public; shares are
offered exclusively to various institutional investors (including other
investment companies) as described in Item 4 below. An investor that is
an investment company or other collective investment vehicle typically
will have investment objectives and polices substantially similar to those
of the series in which it invests and typically will seek to achieve its
investment objective by holding shares of a series, instead of separately
managing its own portfolio of investment securities and related assets.
Shares of the Trust are not offered publicly and, accordingly, are not
registered under the Securities Act of 1933 (the "1933 Act"). Due to
this, in accordance with paragraph 4 of Instruction F of the General
Instructions to Form N-1A adopted by the Securities and Exchange
Commission (the "Commission"), responses to Items 1, 2, 3 and 5A of this
Part A of the Trust's registration statement on Form N-1A have been
omitted.
Item 1. Cover Page.
------ -----------
Omitted. See "Introduction" above.
Item 2. Synopsis.
------ --------
Omitted. See "Introduction" above.
Item 3. Condensed Financial Information.
------ -------------------------------
Omitted. See "Introduction" above.
<PAGE>
Item 4. General Description of Registrant.
------ ---------------------------------
The Trust was organized as a business trust under the laws of the State of
Delaware pursuant to a Trust Instrument dated September 6, 1995. The
Trust has an unlimited number of authorized shares of beneficial interest.
Beneficial interests in the Trust are divided into four separate series,
the Portfolio, International Equity Fund, Schroder Emerging Markets Fund
Institutional Portfolio and Schroder U.S. Smaller Companies Portfolio,
each of which has distinct investment objective and distinct investment
policies. The assets of each series belong only to that series, and the
assets belonging to a series shall be charged with the liabilities of that
series and shall bear all expenses, costs, charges and reserves
attributable to that series. The Trust is empowered to establish, without
investor approval, additional series which may have different investment
objectives and policies.
The Portfolio is classified as a "diversified" investment company under
the 1940 Act and is expected to commence operations on or about
November 1, 1996.
Beneficial interests in the Portfolio are offered solely in private
placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio
may only be made by certain institutional investors, whether organized
within or outside of the U.S. (excluding individuals, S corporations,
partnerships, and grantor trusts beneficially owned by any individuals, S
corporations, or partnerships). This registration statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
Investment Objective
The investment objective of the Portfolio is long-term capital
appreciation through investment in securities markets outside the United
States. There can be no assurance that the Portfolio will achieve its
investment objective. The investment objective of the Portfolio may not
be changed without approval of the holders of a majority of the
outstanding voting interests (defined in the same manner as the phrase
"vote of a majority of the outstanding voting securities" as defined in
the 1940 Act) of the Portfolio.
Investment Policies
The Portfolio will seek to achieve its investment objective by investing,
under normal market conditions, at least 65% of its total assets in equity
securities of companies domiciled outside the United States that, at the
time of purchase, have market capitalizations of $1.5 billion or less.
A-2
<PAGE>
Investments made on behalf of the Portfolio are selected by the
Portfolio's investment advisor, Schroder Capital Management International
Inc. (the "Advisor"), on the basis of their potential for capital
appreciation without regard for current income. The Advisor will consider
the following factors in determining the potential for capital
appreciation: issuers' sensitivity to cyclical factors; issuers' potential
for long-term growth; issuers' financial conditions; whether issuers'
management holds a significant equity position in the issuer; and
valuation. This investment approach provides the Portfolio the opportunity
to benefit of purchasing undervalued equities.
The Portfolio may purchase preferred stock and convertible securities,
including warrants and convertible preferred stock, and may purchase
American Depository Receipts, European Depository Receipts, Global
Depository Receipts or other similar securities of foreign issuers. The
Portfolio may also enter into foreign exchange contracts, including
forward contracts to purchase or sell foreign currencies, in anticipation
of its currency requirements and to protect against possible adverse
movements in foreign exchange rates. Although such contracts may reduce
the risk of loss to the Portfolio from adverse movements in currency
values, the contracts also limit possible gains from favorable movements.
For temporary defensive purposes, the Portfolio may invest without
limitation in (or enter into repurchase agreements maturing in seven days
or less with U.S. banks and broker-dealers with respect to) short-term
debt securities, including U.S. Government securities, certificates of
deposit and bankers' acceptances of U.S. banks. The Portfolio may also
hold cash and time deposits in foreign banks denominated in any major
foreign currency. See "Investment Policies" in Part B for further
information about these securities.
Countries in which the Portfolio may invest include, Japan, Germany, the
United Kingdom, France, Italy, Belgium, Switzerland, the Netherlands, Hong
Kong, Singapore/Malaysia, Australia, Sweden, Norway, Denmark and Spain.
The Portfolio has a non-fundamental policy to invest in the securities of
foreign issuers domiciled in at least three foreign countries. In
general, the Portfolio will invest only in securities of companies and
governments in countries that the Advisor, in its judgment, considers both
politically and economically stable. The Portfolio may invest more than
25% of its total assets in issuers located in any one country. To the
extent it invests in issuers located in one country, the Portfolio is
susceptible to factors adversely affecting that country. See "Additional
Investment Policies and Risk Considerations."
In selecting securities denominated in foreign currencies, the Advisor
will consider, among other factors, the effect of movement in currency
exchange rates on the U.S. dollar value of such securities. An increase
in the value of a currency will increase the total return to the Portfolio
of securities denominated in such currency. Conversely, a decline in the
value of the currency will reduce the total return. The Portfolio may
seek to hedge all or a portion of the Portfolio's foreign securities
through the use of forward foreign currency contracts ("forward
contracts"). Although such contracts may reduce the risk of loss to the
A-3
<PAGE>
Portfolio from adverse movements in currency values, the contracts also
limit possible gains from favorable movements.
Investment Restrictions
The investment objective and all investment policies of the Portfolio that
are designated as fundamental may not be changed without approval of the
holders of a majority of the outstanding voting securities of the
Portfolio. A majority of outstanding voting securities means the lesser
of (1) 67% of the shares present or represented at a shareholder meeting
at which the holders of more than 50% of the outstanding shares are
present or represented, or (ii) more than 50% of outstanding shares.
Unless otherwise indicated, all investment policies of the Portfolio are
not fundamental and may be changed by the Board of Trustees without
approval of the shareholders of the Portfolio. Likewise, non-fundamental
investment policies of the Portfolio may be changed by the Board of
Trustees without approval of the Portfolio's interest holders.
Investment Types
COMMON AND PREFERRED STOCK AND WARRANTS. The Portfolio may invest in
common and preferred stock. Common stockholders are the owners of the
company issuing the stock and, accordingly, vote on various corporate
governance matters such as mergers. They are not creditors of the
company, but rather, upon liquidation of the company, are entitled to
their pro rata share of the company's assets after creditors (including
fixed income security holders) and, if applicable, preferred stockholders
are paid. Preferred stock is a class of stock having a preference over
common stock as to dividends and, generally, as to the recovery of
investment. A preferred stockholder is a shareholder in a company and not
a creditor of the company, as is a holder of the company's fixed income
securities. Dividends paid to common and preferred stockholders are
distributions of the earnings of the company and not interest payments,
which are expenses of the company. Equity securities owned by the
Portfolio may be traded in the over-the-counter market or on a securities
exchange but may not be traded every day or in the volume typical of
securities traded on a major U.S. national securities exchange. As a
result, disposition by the Portfolio of a security to meet withdrawals by
interest holders may require the Portfolio to sell these securities at a
discount from market prices, to sell during periods when disposition is
not desirable, or to make many small sales over a lengthy period of time.
The market value of all securities, including equity securities, is based
upon the market's perception of value and not necessarily the book value
of an issuer or other objective measure of a company's worth. The
Portfolio may also invest in warrants, which are options to purchase an
equity security at a specified price (usually representing a premium over
the applicable market value of the underlying equity security at the time
of the warrant's issuance) and usually during a specified period of time.
ADRs. The Portfolio may invest in certain emerging market issuers
exclusively or primarily through the purchase of sponsored and unsponsored
American Depository Receipts ("ADRs") or other similar securities, such as
A-4
<PAGE>
American Depository Shares, Global Depository Shares or International
Depository Receipts or through investment in government-approved
investment companies or other vehicles. ADRs are receipts typically
issued by U.S. banks evidencing ownership of the underlying securities,
into which they are convertible ADRs. These securities may or may not be
denominated in the same currency as the underlying securities.
Unsponsored ADRs may be created without the participation of the foreign
issuer. Holders of unsponsored ADRs generally bear all the costs of the
ADR facility, whereas foreign issuers typically bear certain costs in a
sponsored ADR. The bank or trust company depository of an unsponsored ADR
may be under no obligation to distribute shareholder communications
received from the foreign issuer or to pass through voting rights.
Foreign Exchange Contracts. Changes in foreign currency exchange rates
will affect the U.S. dollar values of securities denominated in currencies
other than the U.S. dollar. The rate of exchange between the U.S. dollar
and other currencies fluctuates in response to forces of supply and demand
in the foreign exchange markets. These forces are affected by the
international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors, many
of which may be difficult if not impossible to predict. When investing in
foreign securities, the Portfolio usually effects currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign exchange market. The Portfolio incurs foreign exchange
expenses in converting assets from one currency to another.
The Portfolio may enter into forward contracts or futures contracts or
options for the purchase or sale of foreign currency to "lock in" the U.S.
dollar price of the securities denominated in a foreign currency or the
U.S. dollar value of interest and dividends to be paid on such securities,
or to hedge against the possibility that the currency of a foreign country
in which the Portfolio has investments may suffer a decline against the
U.S. dollar. A forward contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set
at the time of the contract. This method of attempting to hedge the value
of portfolio securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities.
Although the strategy of engaging in foreign currency transactions could
reduce the risk of loss due to a decline in the value of the hedged
currency, it could also limit the potential gain from an increase in the
value of the currency. The Portfolio does not intend to maintain a net
exposure to such contracts where the fulfillment of its obligations under
such contracts would obligate it to deliver an amount of foreign currency
in excess of the value of its portfolio securities or other assets
denominated in the currency. The Portfolio will not enter into these
contracts for speculative purposes and will not enter into non-hedging
currency contracts. These contracts involve a risk of loss if the Advisor
fails to predict currency values correctly. The Portfolio has no present
intention to enter into currency futures contracts or options but may do
so in the future.
A-5
<PAGE>
Because most of the Portfolio's income will be received and realized in
foreign currencies and it will be required to compute and distribute
income in U.S. dollars, a decline in the value of a particular foreign
currency against the U.S. dollar occurring after the Portfolio's income
has been earned and thereafter computed into U.S. dollars may require it
to liquidate some portfolio securities to acquire sufficient U.S. dollars
to make such distributions. Similarly, if the exchange rate declines
between the time the Portfolio incurs expenses in U.S. dollars and the
time such expenses are paid, the Portfolio may be required to liquidate
additional foreign securities to purchase the U.S. dollars required to
meet such expenses.
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, the Portfolio may
purchase securities on a when-issued or delayed delivery basis or may
purchase or sell securities on a forward commitment basis. When such
transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after
the date of the commitment. There is no overall limit on the percentage
of the Portfolio's assets that may be committed to the purchase of
securities on a when-issued, delayed delivery or forward commitment basis.
An increase in the percentage of the Portfolio's assets committed to the
purchase of securities on a when-issued, delayed delivery or forward
commitment basis may increase the volatility of its net asset value.
When, As and If Issued Securities. The Portfolio may purchase securities
on a "when, as and if issued" basis under which the issuance of the
security depends upon the occurrence of a subsequent event, such as
approval of a merger, corporate reorganization, leveraged buyout or debt
restructuring. If the anticipated event does not occur and the securities
are not issued, the Portfolio will have lost an investment opportunity.
There is no overall limit on the percentage of the Portfolio's assets that
may be committed to the purchase of securities on a "when, as and if
issued" basis. An increase in the percentage of the Portfolio's assets
committed to the purchase of securities on a "when, as and if issued"
basis may increase the volatility of its net asset value.
Risk Considerations
Foreign Investments. All investments, foreign and domestic, involve
certain risks. Investment in the securities of foreign issuers may
involve risks in addition to those normally associated with investments in
the securities of U.S. issuers. In general, the Portfolio will invest
only in securities of companies and governments in countries that the
Advisor, in its judgment, considers both politically and economically
stable. Nevertheless, all foreign investments are subject to risks of
foreign political and economic instability, adverse movements in foreign
exchange rates, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital and changes in foreign
governmental attitudes towards private investment possibly leading to
nationalization, increased taxation or confiscation of Portfolio assets.
To the extent the Portfolio invests substantially in issuers located in
A-6
<PAGE>
one country or area, such investments may be subject to greater risk in
the event of political or social instability or adverse economic
developments affecting that country or area.
Moreover, (i) dividends payable on foreign securities may be subject to
foreign withholding taxes, thereby reducing the income earned by the
Portfolio and thus available for distribution to its shareholders; (ii)
commission rates payable on foreign portfolio transactions are generally
higher than in the United States; (iii) accounting, auditing and financial
reporting standards differ from those in the United States, and which
means that less information about foreign companies may be available than
is generally available about issuers of comparable securities in the
United States; (iv) foreign securities often trade less frequently and
with less volume than U.S. securities and consequently may exhibit greater
price volatility; and (v) foreign securities trading practices, including
those involving securities settlement, may expose the Portfolio to
increased risk in the event of a failed trade or the insolvency of a
foreign broker-dealer or registrar.
Emerging Markets. The Portfolio may invest in securities of issuers
located in countries considered by some to be emerging market countries.
The risks of investing in foreign securities may be greater with respect
to securities of issuers in, or denominated in the currencies of, emerging
market countries. The economies of emerging market countries generally
are heavily dependent upon international trade and, accordingly, have been
and may continue to be adversely affected by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which
they trade. The securities markets of emerging market countries are
substantially smaller, less developed, less liquid and more volatile than
the securities markets of the United States and other developed countries.
Disclosure and regulatory standards in many respects are less stringent in
emerging market countries than in the United States and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations may be extremely limited. Investing
in local markets, particularly in emerging market countries, may require
the Portfolio to adopt special procedures, seek local government approvals
or take other actions, each of which may involve additional costs to the
Portfolio. Certain emerging market countries may also restrict investment
opportunities in issuers in industries deemed important to national
interests.
Currency Fluctuations and Devaluations. Because the Portfolio will invest
heavily in non-U.S. currency denominated securities, changes in foreign
currency exchange rates will affect the value of the Portfolio's
investments. A decline in the value of currencies in which the
Portfolio's investments are denominated against the U.S. dollar will
result in a corresponding decline in the U.S. dollar value of its assets.
This risk tends to be heightened in the case of investing in certain
emerging market countries.
A-7
<PAGE>
Smaller Companies. Investments in smaller capitalization companies
involve greater risks than those risks associated with investments in
larger capitalization companies. Smaller capitalization companies
generally experience higher growth rates and higher failure rates than do
larger capitalization companies. The trading volume of securities of
smaller capitalization companies is normally less than that of larger
capitalization companies and, consequently, generally have a
disproportionate effect on their market price, tending to make them rise
more in response to buying demand and fall more in response to selling
pressure than is the case with larger capitalization companies.
Investments in small, unseasoned issuers generally involve greater risk
than is customarily associated with larger, more seasoned companies. Such
issuers often have products and management personnel which have not been
thoroughly tested by time or the marketplace and their financial resources
may not be as substantial as those of more established companies. Their
securities, which the Fund may purchase when they are offered to the
public for the first time, may have a limited trading market, which may
adversely affect their sale by the Fund and can result in such securities
being priced lower than otherwise might be the case. If other
institutional investors engage in trading this type of security, the Fund
may be forced to dispose of its holdings at prices lower than might
otherwise be obtained.
Geographic Concentration. The Portfolio may invest more than 25% of its
total assets in issuers located in any one country. To the extent it
invests in issuers located in one country, the Portfolio is susceptible to
factors adversely affecting that country. In particular, these factors
may include the political and economic developments and foreign exchange
rate fluctuations discussed above. As a result of investing substantially
in one country, the value of the Portfolio's assets may fluctuate more
widely than the value of shares of a comparable portfolio having a lesser
degree of geographic concentration.
Portfolio Turnover. The Portfolio may engage in short-term trading but
its portfolio turnover rate is not expected to exceed 100%. High
portfolio turnover and short-term trading involve correspondingly greater
commission expenses and transaction costs. Also, higher portfolio
turnover rates may cause shareholders of the Portfolio to recognize gains
for federal income tax purposes. See "Taxation" in Part B for further
detail.
Item 5. Management of the Trust.
------ ------------------------
Trustees and Officers
The business and affairs of the Portfolio are managed under the direction
of the Board of Trustees. The Board of Trustees formulates the general
policies of the Portfolio and the Trust and meets periodically to review
the results of the Portfolio, monitor investment activities and practices
and discuss other matters affecting the Portfolio and the Trust.
Additional information regarding the Trustees and executive officers of
the Trust may be found in Part B.
A-8
<PAGE>
Investment Adviser and Portfolio Manager
Schroder Capital Management International Inc. ("SCMI"), 787 Seventh
Avenue, New York, New York 10019, serves as Investment Adviser to the
Portfolio. SCMI manages the investment and reinvestment of the assets in
the Portfolio and continuously reviews, supervises and administers the
Portfolio's investments. In this regard, it is the responsibility of SCMI
to make decisions relating to the Portfolio's investments and to place
purchase and sale orders regarding investments with brokers or dealers
selected by it in its discretion. For its services with respect to the
Portfolio, the Investment Advisory Agreement between SCMI and the Trust
provides that SCMI will receive a monthly advisory fee at the annual
rate of 0.85% of the Portfolio's average daily net assets. SCMI has
agreed, however, to limit its fee to an annual rate of 0.75% of the
Portfolio's average daily net assets. Such fee limitation arrangement shall
remain in effect until its elimination is approved by shareholders.
SCMI is a wholly owned U.S. subsidiary of Schroders Incorporated, the
wholly-owned U.S. holding company subsidiary of Schroders plc. Schroders
plc is the holding company parent of a large world-wide group of banks and
financial services companies (the "Schroder Group"), with associated
companies and branch and representative offices located in eighteen
countries world-wide. The investment management subsidiaries of the
Schroder Group had assets under management of approximately $100 billion
as of June 30, 1996.
The investment management team of Mark J. Smith, a Trustee and Vice
President of the Trust and Laura Luckyn-Malone, a Trustee and Vice
President of the Trust, with the assistance of an investment committee, is
primarily responsible for the day-to-day management of the Portfolio's
investment portfolio. Mr. Smith has been a First Vice President of SCMI
since 1990 and a Director there since 1993. Ms. Luckyn-Malone has been a
Senior Vice President and Director of SCMI since 1990.
Administrative Services
On behalf of the Portfolio, the Trust has entered into an administrative
services contract with Schroder Fund Advisors Inc. ("Schroder Advisors"),
787 Seventh Avenue, New York, New York 10019. Schroder Advisors is a
wholly-owned subsidiary of SCMI. On behalf of the Portfolio, the Trust
has also entered into a sub-administrative agreement with Forum Financial
Services, Inc. ("Forum"), Two Portland Square, Portland, Maine 04101.
Pursuant to these agreements, Schroder Advisors and Forum provide certain
management and administrative services necessary for the Portfolio's
operations, other than the investment management and administrative
services provided to the Portfolio by SCMI. Schroder Advisors is
compensated at the annual rate of 0.15% of the Portfolio's average daily
net assets, a portion of which Forum receives for its services provided to
the Portfolio.
A-9
<PAGE>
Transfer Agent and Portfolio Accountant
Forum Financial Corp., P.O. Box 446, Portland, Maine 04112, acts as the
Portfolio's transfer agent and portfolio accountant.
Expenses
The Portfolio is obligated to pay all of its expenses. These expenses
include: governmental fees; interest charges; taxes; brokerage fees and
commissions; insurance premiums; investment advisory, custodial,
administrative and transfer agency and fund accounting fees, as described
above; compensation of certain of the Trust's Trustees; costs of
membership trade associations; fees and expenses of independent auditors
and legal counsel to the Trust; and expenses associated with calculating
the net asset value and the net income of the Portfolio. The Portfolio's
expenses are comprised of Trust expenses attributable to the Portfolio,
which are allocated to the Portfolio, and expenses not attributable to the
Portfolio, which are allocated among the series of the Trust in proportion
to their average net assets or as otherwise determined by the Board of
Trustees.
Portfolio Transactions
SCMI places orders for the purchase and sale of the Portfolio's
investments with brokers and dealers selected by SCMI in its discretion
and seeks "best execution" of such portfolio transactions. The Portfolio
may pay higher than the lowest available commission rates when SCMI
believes it is reasonable to do so in light of the value of the brokerage
and research services provided by the broker effecting the transaction.
Commission rates for brokerage transactions are fixed on many foreign
securities exchanges, and this may cause higher brokerage expenses to
accrue to the Portfolio than would be the case for comparable transactions
effected on U.S. securities exchanges.
Subject to the Portfolio's policy of obtaining the best price consistent
with quality of execution on transactions, SCMI may employ Schroder
Securities Limited and its affiliates (collectively, "Schroder
Securities"), affiliates of SCMI, to effect transactions of the Portfolio
on certain foreign securities exchanges. Because of the affiliation
between SCMI and Schroder Securities, the Portfolio's payment of
commissions to Schroder Securities is subject to procedures adopted by the
Trust's Board of Trustees designed to ensure that such commissions will
not exceed the usual and customary brokers' commissions. No specific
portion of the Portfolio's brokerage will be directed to Schroder
Securities and in no event will Schroder Securities receive such brokerage
in recognition of research services.
Although the Portfolio does not currently engage in directed brokerage
arrangements to pay expenses, it may do so in the future. These
arrangements, whereby brokers executing the Portfolio's portfolio
transactions would agree to pay designated expenses of the Portfolio if
A-10
<PAGE>
brokerage commissions generated by the Portfolio reached certain levels,
might reduce the Portfolio's expenses. As anticipated, these arrangements
would not materially increase the brokerage commissions paid by the
Portfolio. Brokerage commissions are not deemed to be Fund expenses. In
the Fund's fee table, per share table, and financial highlights, however,
directed brokerage arrangements might cause Fund expenses to appear lower
than actual expenses incurred.
Custodian
The Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York
11245, acts as custodian of the Portfolio's assets.
Item 5A. Management's Discussion of Fund Performance.
------- -------------------------------------------
Omitted. See "Introduction" above.
Item 6. Capital Stock and Other Securities.
------ -----------------------------------
The Trust was organized as a business trust under the laws of the State of
Delaware. Under the Trust Instrument, the Trustees are authorized to
issue beneficial interests in separate series of the Trust.
Each investor in the Portfolio is entitled to participate equally in the
Portfolio's earnings and assets and to a vote in proportion to the amount
of its investment in the Portfolio. Investments in the Portfolio may not
be transferred, but an investor may withdraw all or any portion of its
investment at any time at net asset value ("NAV").
Investments in the Portfolio have no preemptive or conversion rights and
are fully paid and non-assessable, except as set forth below. The Trust
is not required and has no current intention to hold annual meetings of
investors, but the Trust will hold special meetings of investors when in
the Trustees' judgment it is necessary or desirable to submit matters to
an investor vote. Generally, interests will be voted in the aggregate
without reference to a particular series, except if the matter affects
only one series or series voting is required, in which case interests will
be voted separately by series. Investors have the right to remove one or
more Trustees without a meeting by a declaration in writing by a specified
number of investors.
Under the Federal securities laws, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. The Trust, its Trustees and
certain of its officers are required to sign the registration statement of
certain publicly offered investors in the Portfolio. In addition, under
the Federal securities laws, the Trust could be liable for misstatements
A-11
<PAGE>
or omissions of a material fact in any proxy soliciting material of a
publicly offered investor in the Trust. Under the Trust's Trust
Instrument, each investor in the Portfolio indemnifies the Trust and its
Trustees and officers (the "Trust Indemnitees") against certain claims.
Indemnified claims are those brought against Trust Indemnitees but based
on a misstatement or omission of a material fact in the investor's
registration statement or proxy materials, except to the extent such claim
is based on a misstatement or omission of a material fact relating to
information about the Trust in the investor's registration statement or
proxy materials that was supplied to the investor by the Trust.
Similarly, the Trust indemnifies each investor in the Portfolio for any
claims brought against the investor with respect to the investor's
registration statement or proxy materials, to the extent the claim is
based on a misstatement or omission of a material fact relating to
information about a series of the registered investment company that did
not invest in the Trust. The purpose of these cross-indemnity provisions
is principally to limit the liability of the Trust to information that it
knows or should know and can control. With respect to other prospectuses
and other offering documents and proxy materials of investors in the
Trust, the Trust's liability is similarly limited to information about and
supplied by the Trust.
The Portfolio's net income consists of (1) all dividends, accrued interest
(including earned discount, both original issue and market discounts), and
other income, including any net realized gains on the Portfolio's assets,
less (2) all actual and accrued expenses of the Portfolio, amortization of
any premium, and net realized losses on the Portfolio's assets, all as
determined in accordance with generally accepted accounting principles.
All of the Portfolio's net income is allocated pro rata among the
investors in the Portfolio. The Portfolio's net income generally is not
distributed to the investors in the Portfolio, except as determined by the
Trustees from time to time, but instead is included in the NAV of the
investors' respective beneficial interests in the Portfolio.
Under the anticipated method of the Portfolio's operations, it will not be
subject to any income tax. However, each investor in the Portfolio will be
taxed on its proportionate share (as determined in accordance with the
Trust's Trust Instrument and the Internal Revenue Code of 1986, as amended
(the "Code")) of the Portfolio's ordinary income and net capital gains, to
the extent that the investor is subject to tax on its income. It is
intended that the Portfolio's assets, income, and distributions will be
managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the
investor invested all of its assets in the Portfolio. The Trust will
inform investors of the amount and nature of such income or gain.
A-12
<PAGE>
Item 7. Purchase of Securities.
------- ----------------------
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant" above. All investments in the Portfolio are made without a
sales load, at the NAV next determined after an order is received by the
Portfolio.
The net asset value is calculated separately for each class of Shares of
the Fund at 4:00 p.m. (eastern time), Monday through Friday, each day that
the New York Stock Exchange is open for trading ("Fund Business Day"),
which excludes the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Net asset value per Share is calculated by dividing
the aggregate value of the Portfolio's assets less all Portfolio
liabilities, if any, by the number of Shares of the Fund outstanding.
Securities held by the Portfolio that are listed on recognized stock
exchanges are valued at the last reported sale price, prior to the time
when the securities are valued, on the exchange on which the securities
are principally traded. Listed securities traded on recognized stock
exchanges where last sale prices are not available are valued at mid-
market prices. Securities traded in over-the-counter markets, or listed
securities for which no trade is reported on the valuation date, are
valued at the most recent reported mid-market price. Other securities and
assets for which market quotations are not readily available are valued at
fair value as determined in good faith using methods approved by the
Trust's Board of Trustees.
The Trust reserves the right to cease accepting investments in the
Portfolio at any time or to reject any investment order.
The exclusive placement agent for the Trust is Forum. Forum receives no
compensation for serving as the exclusive placement agent for the Trust.
Item 8. Redemption or Repurchase.
------ -------------------------
An investor in the Portfolio may withdraw all or any portion of its
investment in the Portfolio at the NAV next determined after a withdrawal
request in proper form is furnished by the investor to the Trust. The
proceeds of a withdrawal normally will be paid by the Portfolio in federal
funds on the business day after the withdrawal is effected, but in any
event within seven days. Investments in the Portfolio may not be
transferred. The right of redemption may not be suspended nor the payment
dates postponed for more than seven days except when the New York Stock
Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings or under any
emergency or other circumstances as determined by the Commission.
A-13
<PAGE>
Redemptions from the Portfolio may be made wholly or partially in
portfolio securities if the Board determines that payment in cash would be
detrimental to the best interests of the Portfolio. The Trust has filed an
election with the Commission pursuant to which the Portfolio will only
consider effecting a redemption in portfolio securities if the particular
interestholder is redeeming more than $250,000 or 1% of the Portfolio's
NAV, whichever is less, during any 90-day period.
Item 9. Pending Legal Proceedings.
------ --------------------------
Not applicable.
A-14
<PAGE>
PART B
(Statement of Additional Information)
Schroder Capital Funds
________
Schroder International Smaller Companies Portfolio
Item 10. Cover Page
-------- ----------
Not applicable.
Item 11. Table of Contents.
------- ------------------
General Information and History . . . . . . . . . . . . . . . . . . . B-1
Investment Objectives and Policies . . . . . . . . . . . . . . . . . B-1
Management of the Trust . . . . . . . . . . . . . . . . . . . . . . . B-7
Control Persons and Principal Holders of Securities . . . . . . . . . B-10
Investment Advisory and Other Services . . . . . . . . . . . . . . . B-10
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . B-13
Capital Stock and Other Securities . . . . . . . . . . . . . . . . . B-15
Purchase, Redemption and Pricing of Securities . . . . . . . . . . . B-16
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19
Calculations of Performance Data . . . . . . . . . . . . . . . . . . B-19
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-19
Item 12. General Information and History.
-------- --------------------------------
Not applicable.
Item 13. Investment Objectives and Policies.
------- -----------------------------------
Investment Policies
Introduction
Part A contains information about the investment objective and policies of
the Schroder International Smaller Companies Portfolio (the "Portfolio"),
a series of Schroder Capital Funds (the "Trust"). The following
discussion is intended to supplement the disclosure in Part A concerning
the Portfolio's investments, investment techniques and strategies and the
risks associated therewith. This Part B should be read only in
conjunction with Part A.
Definitions
As used in Part B, the following terms shall have the meanings listed:
"Board" shall mean the Board of Trustees of the Trust.
<PAGE>
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
"Commission" shall mean the U.S. Securities and Exchange Commission.
Foreign Securities
Investment in the securities of foreign issuers may involve risks in
addition to those normally associated with investments in the securities
of U.S. issuers. There may be less publicly available information about
foreign issuers than is available for U.S. issuers, and foreign auditing,
accounting and financial reporting practices may differ from U.S.
practices. Foreign securities markets may be less active than U.S.
markets, trading may be thin and consequently securities prices may be
more volatile. The Portfolio's investment adviser, Schroder Capital
Management International, Inc. ("SCMI" or "Adviser") will, in general,
invest only in securities of companies and governments of countries that,
in its judgment, are both politically and economically stable.
Nevertheless, all foreign investments are subject to risks of foreign
political and economic instability, adverse movements in foreign exchange
rates, the imposition or tightening of exchange controls or other
limitations on the repatriation of foreign capital and changes in foreign
governmental attitudes toward private investment, possibly leading to
nationalization, increased taxation, or confiscation of Portfolio assets.
Depository Receipts
Investments in securities of foreign issuers may on occasion be in the
form of sponsored or unsponsored American Depository Receipts ("ADRs") or
European Depository Receipts ("EDRs") or other similar securities
convertible into securities of foreign issuers. These securities may not
necessarily be denominated in the same currency as the securities into
which they may be converted. ADRs are receipts typically issued in the
United States by a bank or trust company evidencing ownership of the
underlying securities. EDRs are typically issued in Europe under a
similar arrangement. Generally, ADRs, in registered form, are designed
for use in the U.S. securities markets and EDRs, in bearer form, are
designed for use in European securities markets. Unsponsored ADRs may be
created without the participation of the foreign issuer. Holders of
unsponsored ADRs generally bear all the costs of the ADR facility, whereas
foreign issuers typically bear certain costs in a sponsored ADR. The bank
or trust company depository of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the
foreign issuer or to pass through voting rights.
Use of Forward Contracts in Foreign Exchange Transactions
To protect or "hedge" against adverse movements in foreign currency
exchange rates, the Portfolio may invest in forward contracts to purchase
or sell an agreed-upon amount of a specified currency at a future date,
which may be any fixed number of days from the date of the contract agreed
B-2
<PAGE>
upon by the parties, at a price set at the time of the contract. Such
contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no commissions
are charged at any stage for trades. Although such contracts tend to
minimize the risk of loss due to a decline in the value of the currency
that is sold, they expose the Portfolio to the risk that the counterparty
is unable to perform and they tend to limit commensurately any potential
gain which might result should the value of such currency increase during
the contract period.
U.S. Government Securities
The Portfolio may invest in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities that have remaining
maturities not exceeding one year. Agencies and instrumentalities that
issue or guarantee debt securities and that have been established or
sponsored by the U.S. Government include the Bank for Cooperatives, the
Export-Import Bank, the Federal Farm Credit System, the Federal Home Loan
Banks, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks, the Federal Land Banks, the Federal National
Mortgage Association, the Government National Mortgage Association and the
Student Loan Marketing Association. Except for obligations issued by the
U.S. Treasury and the Government National Mortgage Association, none of
the obligations of the other agencies or instrumentalities referred to
above is backed by the full faith and credit of the U.S. Government.
Bank Obligations
The Portfolio may invest in obligations of U.S. banks (including
certificates of deposit and bankers' acceptances) having total assets at
the time of purchase in excess of $1 billion. Such banks must be insured
by the Federal Deposit Insurance Corporation or the Federal Savings and
Loan.
The Portfolio also may invest in certificates of deposit issued by foreign
banks, denominated in any major foreign currency. The Portfolio will
invest in instruments issued by foreign banks that, in the view of SCMI
and the Board of Trustees of the Trust, are of creditworthiness and
financial stature in their respective countries comparable to certificates
of deposit issued by U.S. banks in which the Portfolio would invest.
A certificate of deposit is an interest-bearing negotiable certificate
issued by a bank against funds deposited in the bank. A bankers'
acceptance is a short-term draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction.
Although the borrower is liable for payment of the draft, the bank
unconditionally guarantees to pay the draft at its face value on the
maturity date.
B-3
<PAGE>
Short-Term Debt Securities
The Portfolio may invest in commercial paper, that is, short-term
unsecured promissory notes issued in bearer form by bank holding
companies, corporations and finance companies. The commercial paper
purchased by the Portfolio for temporary defensive purposes consists of
direct obligations of domestic issuers that, at the time of investment,
are rated "P-1" by Moody's Investors Service, Inc. ("Moody's") or "A-1" by
Standard & Poor's Ratings Services ("S&P"), or securities that, if not
rated, are issued by companies having an outstanding debt issue currently
rated Aa by Moody's or AAA or AA by S&P. The rating "P-1" is the highest
commercial paper rating assigned by Moody's and the rating "A-1" is the
highest commercial paper rating assigned by S&P.
Repurchase Agreements
The Portfolio may enter into repurchase agreements with U.S. banks or
broker-dealers maturing in seven days or less. In a typical repurchase
agreement the seller of a security commits itself at the time of the sale
to repurchase that security from the buyer at a mutually agreed-upon time
and price. The repurchase price exceeds the sale price, reflecting an
agreed-upon interest rate effective for the period the buyer owns the
security subject to repurchase. The agreed-upon rate is unrelated to the
interest rate on that security. Schroder Capital Management International
Inc. ("SCMI"), the Portfolio's Investment Adviser, will monitor the value
of the underlying security at the time the transaction is entered into and
at all times during the term of the repurchase agreement to insure that
the value of the security always equals or exceeds the repurchase price.
In the event of default by the seller under the repurchase agreement, the
Portfolio may have difficulties in exercising its rights to the underlying
securities and may incur costs and experience time delays in connection
with the disposition of such securities. To evaluate potential risks,
SCMI reviews the creditworthiness of those banks and dealers with which
the Portfolio enters into repurchase agreements.
INVESTMENT RESTRICTIONS
The following investment restrictions, except where stated to be
fundamental policies, are non-fundamental policies of the Portfolio. The
policies defined as fundamental cannot be changed without the vote of a
"majority" of the Portfolio's outstanding voting interests. Under the
1940 Act, such a "majority" vote is defined as the vote of the holders of
the lesser of (i) 67% or more of the interests present or represented by
proxy at a meeting of interestholders, if the holders of more than 50% of
the outstanding interests are present, or (ii) more than 50% of the
outstanding interests.
The following investment restrictions of the Portfolio are fundamental
policies:
(a) The Portfolio may not, with respect to 75% of its assets,
purchase a security other than a security issued or guaranteed by
B-4
<PAGE>
the U.S. Government, its agencies or instrumentalities or a
security of an investment company if, as a result, more than 5%
of the Portfolio's total assets would be invested in the
securities of a single issuer or the Portfolio would own more
than 10% of the outstanding voting securities of any single
issuer.
(b) The Portfolio may not concentrate investments in any particular
industry; therefore, the Portfolio will not purchase the
securities of companies in any one industry if, thereafter, 25%
or more of the Portfolio's total assets would consist of
securities of companies in that industry. This restriction does
not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. An investment of
more than 25% of the Portfolio's assets in the securities of
issuers located in one country does not contravene this policy.
(c) The Portfolio may not borrow money in excess of 33-1/3% of its
total assets taken at market value (including the amount
borrowed) and then only from a bank as a temporary measure for
extraordinary or emergency purposes, including to meet
redemptions or to settle securities transactions that may
otherwise require untimely dispositions of Portfolio securities.
(d) The Portfolio may not purchase or sell real estate, provided that
the Portfolio may invest in securities issued by companies which
invest in real estate or interests therein.
(e) The Portfolio may not make loans to other persons, provided that
for purposes of this restriction, entering into repurchase
agreements or acquiring any otherwise permissible debt securities
shall not be deemed to be the making of a loan.
(f) The Portfolio may not invest in commodities or commodity
contracts other than foreign currency forward contracts.
(g) The Portfolio may not underwrite securities issued by other
persons except to the extent that, in connection with the
disposition of its portfolio investments, it may be deemed to be
an underwriter under U.S. securities laws.
(h) The Portfolio may not issue senior securities except to the
extent permitted by the 1940 Act.
The following investment restrictions of the Portfolio are non-fundamental
policies:
(a) The Portfolio will not purchase more than 3% of the outstanding
securities of any closed-end investment company.
(b) The Portfolio will not purchase securities while borrowings
exceed 5% of total assets.
B-5
<PAGE>
(c) The Portfolio may not acquire securities or invest in repurchase
agreements with respect to any securities if, as a result, more
than 15% of its net assets (taken at current value) would be
invested in illiquid securities (securities that cannot be
disposed of within seven days at their then-current value) or in
repurchase agreements not entitling the holder to payment of
principal within seven days and in securities that are not
readily marketable by virtue of restrictions on the sale of such
securities to the public without registration under the
Securities Act of 1933, as amended ("Restricted Securities").
This policy does not include restricted securities that can be
sold to the public in foreign markets or that may be eligible for
resale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933 that are determined to be
liquid by the Adviser pursuant to guidelines adopted by Core
Trust's Board of Trustees.
(d) The Portfolio may not make investments for the purpose of
exercising control or management. (Investments by the Portfolio
in wholly-owned investment entities created under the laws of
certain countries will not be deemed the making of investments
for the purpose of exercising control or management.)
(e) The Portfolio may not purchase securities on margin, or make
short sales of securities (except short sales against the box),
except for the use of short-term credit necessary for the
clearance of purchases and sales of portfolio securities. The
Portfolio may make margin deposits in connection with permitted
transactions in options, futures contracts and options on futures
contracts.
(f) The Portfolio may not invest in oil, gas and other mineral
resource, lease, or arbitrage transactions.
(g) The Portfolio may not invest in warrants if, as a result, more
than 5% of its net assets would be so invested or if, more than
2% of its net assets would be invested in warrants that are not
listed on the New York or American Stock Exchanges.
(h) The Portfolio may not purchase a security, other than a security
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of a
single issuer or the Portfolio would own more than 10% of the
outstanding voting securities of any single issuer.
Except for the policies on borrowing and illiquid securities, the
percentage restrictions described above apply only at the time of
investment and require no action by the Portfolio as a result of
subsequent changes in value of the investments or the size of the
Portfolio.
B-6
<PAGE>
Item 14. Management of the Trust.
------- ------------------------
The following information relates to the principal occupations of each
Trustee and executive officer of the Trust during the past five years.
Each of these individuals currently serves in the same capacity for
Schroder Capital Funds (Delaware), an investment company with a series
that intends to invest all of its assets in the Portfolio.
PETER E. GUERNSEY, age 75, Oyster Bay, New York - a Trustee of the Trust -
Insurance Consultant since August 1986; prior thereto Senior Vice
President, Marsh & McLennan, Inc., insurance brokers.
JOHN I. HOWELL, age 79, 7 Riverside Road, Greenwich, Connecticut - a
Trustee of the Trust - Private Consultant since February 1987; Director,
American International Group, Inc.; Director, American International Life
Assurance Company of New York.
LAURA E. LUCKYN-MALONE (a) (b) (c), age 43, 787 Seventh Avenue, New York,
New York - President and a Trustee of the Trust - Managing Director of
SCMI since October 1995; Director of SWIS since July 1995; prior thereto,
Director and Senior Vice President of SCMI since February 1990; Director
and President, Schroder Advisors.
CLARENCE F. MICHALIS, age 74, 44 East 64th Street, New York, New York - a
Trustee of the Trust - Chairman of the Board of Directors, Josiah Macy,
Jr. Foundation (charitable foundation).
HERMANN C. SCHWAB, age 76, 787 Seventh Avenue, New York, New York -
Chairman (Honorary) and a Trustee of the Trust - retired since March,
1988; prior thereto, consultant to SCMI since February 1, 1984.
MARK J. SMITH (a) (b), age 34, 33 Gutter Lane, London, England - a Vice
President and a Trustee of the Trust - First Vice President of SCMI since
April 1990; Director and Vice President, Schroder Advisors.
ROBERT G. DAVY, age 35, 787 Seventh Avenue, New York, New York - a Vice-
President of the Trust - Director of SCMI and Schroder Capital Management
International Ltd. since 1994; First Vice President of SCMI since July,
1992; prior thereto, employed by various affiliates of Schroders plc in
various positions in the investment research and portfolio management
areas since 1986.
RICHARD R. FOULKES, age 50, 787 Seventh Avenue, New York, New York - a
Vice President of the Trust; Deputy Chairman of SCMI since October 1995;
Director of SCMI since 1979, Director of Schroder Capital Management
International Ltd. since 1989, and Executive Vice President of both of
these entities.
JOHN Y. KEFFER, age 53, 2 Portland Square, Portland, Maine - a Vice
President of the Trust. President of Forum Financial Services, Inc., the
B-7
<PAGE>
Fund's administrator, and Forum Financial Corp., a transfer and dividend
disbursing agent and fund accountant.
JANE P. LUCAS (c), age 34, 787 Seventh Avenue, New York, New York - Vice
President of the Trust - Director and Senior Vice President SCMI; Director
of SWIS since September 1995; Assistant Director Schroder Investment
Management Ltd. since June 1991.
CATHERINE A. MAZZA, age 36, 787 Seventh Avenue, New York, New York - a
Vice President of the Trust - Senior Vice President Schroder Advisors
since December 1995; Vice President of SCMI since October 1994; prior
thereto, held various marketing positions at Alliance Capital, an
investment adviser, since July 1985.
FARIBA TALEBI, age 35, 787 Seventh Avenue, New York, New York - a Vice
President of the Trust - Group Vice President of SCMI since April 1993,
employed in various positions in the investment research and portfolio
management areas since 1987.
JOHN A. TROIANO (b), age 37, 787 Seventh Avenue, New York, New York - a
Vice President of the Trust - Managing Director of SCMI since October
1995; Director of Schroder Advisors since October 1992, Director and
Senior Vice President of SCMI since 1991; prior thereto, employed by
various affiliates of SCMI in various positions in the investment research
and portfolio management areas since 1981.
IRA L. UNSCHULD, age 31, 787 Seventh Avenue, New York, New York - a Vice
President of the Trust - a Vice President of SCMI since April, 1993 and an
Associate from July, 1990 to April, 1993; prior to July, 1990, employed by
various financial institutions as a securities or financial analyst.
ROBERT JACKOWITZ (b) (c), age 29, 787 Seventh Avenue, New York, New York -
Treasurer of the Trust - Vice President of SWIS since September 1995;
Treasurer of SWIS and Schroder Advisers since July 1995; Vice President of
SCMI since June 1995; and Assistant Treasurer of Schroders Incorporated
since January 1993.
MARGARET H. DOUGLAS-HAMILTON (b) (c), age 55, 787 Seventh Avenue, New
York, New York - Secretary of the Trust - Secretary of SWIS since July
1995; Secretary of Schroder Advisers since April 1990; First Vice
President and General Counsel of Schroders Incorporated since May 1987;
prior thereto, partner of Sullivan & Worcester, a law firm.
DAVID I. GOLDSTEIN, age 34, 2 Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust - Counsel, Forum Financial
Services, Inc. Since 1991; prior thereto, associate at Kirkpatrick &
Lockhart LLP, Washington, D.C.
THOMAS G. SHEEHAN, age 42, 2 Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust - Counsel, Forum Financial
Services, Inc. since 1993; prior thereto, Special Counsel, U.S. Securities
B-8
<PAGE>
and Exchange Commission, Division of Investment Management, Washington,
D.C.
BARBARA GOTTLIEB (c), age 42, 787 Seventh Avenue, New York, New York -
Assistant Secretary of the Trust - Assistant Vice President of SWIS since
July 1995; prior thereto held various positions with SWIS affiliates.
GERARDO MACHADO, age 58, 787 Seventh Avenue, New York, New York -
Assistant Secretary of the Trust - Associate, SCMI.
(a) Interested Trustee of the Trust within the meaning of the 1940
Act by virtue of positions with SCMI and its affiliates.
(b) Schroder Fund Advisors, Inc. ("Schroder Advisors") is a wholly
owned subsidiary of SCMI, which is a wholly owned subsidiary of Schroders
Incorporated, which in turn is an indirect, wholly owned U.S. subsidiary
of Schroders plc.
(c) Schroder Wertheim Investment Services, Inc. ("SWIS") is a wholly
owned subsidiary of Schroder Wertheim Holdings Incorporated which is a
wholly owned subsidiary of Schroders, Incorporated, which in turn is an
indirect wholly owned U.S. subsidiary of Schroders plc.
The following table provides the estimated fees to be paid to each Trustee
of the Trust for the fiscal year ended October 31, 1996.
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Accrued Compensation From
Aggregate As Part of Estimated Annual Trust And Fund
Compensation From Portfolio Benefits Upon Complex Paid To
Name of Trustee Trust Expenses Retirement Trustees*
--------------- ----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Mr. Guernsey $4,000 $0 $0 $17,500
Mr. Howell 4,000 0 0 26,500
Ms. Luckyn-Malone 0 0 0 0
Mr. Michalis 4,000 0 0 6,000
Mr. Schwab 7,000 0 0 10,500
Mr. Smith 0 0 0 0
</TABLE>
* In addition to the Trust, "Fund Complex" includes Schroder Capital
Funds, an open-end investment company for which SCMI serves as investment
adviser, Schroder Capital Funds (Delaware), an open-end investment company
for which SCMI serves as investment adviser, and Schroder Asian Growth
Fund, Inc., a closed-end investment company for which SCMI serves as
investment adviser.
B-9
<PAGE>
As of October 1, 1996, the officers and Trustees of the Trust owned, in
the aggregate, less than 1% of the Trust's outstanding shares.
Although the Trust is a Delaware business trust, certain of its Trustees
or officers are residents of the United Kingdom and substantially all of
their assets may be located outside of the U.S. As a result, it may be
difficult for U.S. investors to effect service upon such persons within
the United States or to realize judgments of courts of the United States
predicated upon civil liabilities of such persons under the federal
securities laws. The Trust has been advised that there is substantial
doubt as to the enforceability in the United Kingdom of such civil
remedies and criminal penalties as are afforded by the federal securities
laws. Also it is unclear if extradition treaties now in effect between
the U.S. and the United Kingdom would subject such persons to effective
enforcement of criminal penalties.
Item 15. Control Persons and Principal Holders of Securities.
-------- ---------------------------------------------------
Prior to the Portfolio's commencement of operations, Forum Financial
Services, Inc. ("Forum") and Forum Advisors, Inc., as initial investors in
the Portfolio, will each own 50% of the value of the outstanding interests
in the Portfolio. It is expected that, at the time of the Portfolio's
commencement of operations, Schroder International Smaller Companies Fund
(the "Fund"), a series of Schroder Capital Funds (Delaware), a Delaware
business trust registered with the SEC as an open-end management
investment company, will invest all of its investable assets in the
Portfolio and control the Portfolio.
Schroder Capital Funds (Delaware) has informed the Trust that whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund
will hold a meeting of its shareholders and will cast its vote as
instructed by its shareholders. This only applies to matters for which
the Fund would be required to have a shareholder meeting if it directly
held investment securities rather than invested in the Portfolio. It is
anticipated that any other registered investment company (or series
thereof) that may invest in the Portfolio will follow the same or a
similar practice.
Item 16. Investment Advisory and Other Services.
------- ---------------------------------------
Investment Adviser
Schroder Capital Management International Inc. ("SCMI"), 787 Seventh
Avenue, New York, New York 10019, serves as investment adviser to the
Portfolio pursuant to an Investment Advisory Contract. SCMI is a wholly
owned U.S. subsidiary of Schroders Incorporated, the wholly-owned U.S.
holding subsidiary of Schroders plc. Schroders plc is the holding company
parent of a large worldwide group of banks and financial service companies
B-10
<PAGE>
(referred to as the "Schroder Group"), with associated companies and
branch and representative offices located in seventeen countries
worldwide. The Schroder Group specializes in providing investment
management services and had assets under management of approximately $100
billion as of June 30, 1996.
Pursuant to the Investment Advisory Contract, SCMI is responsible for
managing the investment and reinvestment of the Portfolio's assets and for
continuously reviewing, supervising and administering the Portfolio's
investments. In this regard, it is the responsibility of SCMI to make
decisions relating to the Portfolio's investments and to place purchase
and sale orders regarding such investments with brokers or dealers
selected by it in its discretion. SCMI also furnishes to the Board
periodic reports on the investment performance of the Portfolio.
Under the terms of the Investment Advisory Contract, SCMI is required to
manage the Portfolio's investment portfolio in accordance with applicable
laws and regulations. In making its investment decisions, SCMI does not
use material information that may be in its possession or in the
possession of its affiliates.
The Investment Advisory Contract will continue in effect provided such
continuance is approved annually (i) by the holders of a majority of the
outstanding voting securities of the Portfolio or by the Board and (ii) by
a majority of the Trustees who are not parties to such contract or
"interested persons" (as defined in the 1940 Act) of any such party. The
Investment Advisory Contract may be terminated without penalty by vote of
the Trustees or the shareholders of the Portfolio on 60 days' written
notice to SCMI, or by SCMI on 60 days' written notice to the Trust and it
will terminate automatically if assigned. The Investment Advisory
Contract also provides that, with respect to the Portfolio, neither SCMI
nor its personnel shall be liable for any error of judgment or mistake of
law or for any act or omission in the performance of its or their duties
to the Portfolio, except for willful misfeasance, bad faith or gross
negligence in the performance of the SCMI's or their duties or by reason
of reckless disregard of its or their obligations and duties under the
Investment Advisory Contract.
Administrative Services
On behalf of the Portfolio, the Trust has entered into an administrative
services contract with Schroder Fund Advisors Inc. ("Schroder Advisors"),
787 Seventh Avenue, New York, New York 10019. Schroder Advisors is a
wholly-owned subsidiary of SCMI. On behalf of the Portfolio, the Trust
has also entered into an sub-administration agreement with Forum Financial
Services, Inc. ("Forum"), Two Portland Square, Portland, Maine 04101.
Pursuant to these agreements, Schroder Advisors and Forum provide certain
management and administration services necessary for the Portfolio's
B-11
<PAGE>
operations, other than the investment management and administrative
services provided to the Portfolio by SCMI pursuant to the investment
advisory contract, including among other things, (i) preparation of
shareholder reports and communications, (ii) regulatory compliance, such
as reports to and filings with the Commission and state securities
commissions, and (iii) general supervision of the operation of the
Portfolio, including coordination of the services performed by the
Portfolio's investment adviser, transfer agent, custodian, independent
accountants, legal counsel and others. Schroder Advisors is compensated
at the annual rate of 0.15% of the Portfolio's average daily net assets, a
portion of which Forum receives for its services with respect to the
Portfolio.
The administrative services agreements are terminable with respect to the
Portfolio without penalty, at any time, by vote of a majority of the
Trustees of the Trust, upon 60 days' written notice to Schroder or Forum,
or, upon 60 days' notice by Schroder or Forum. The administrative
services agreements will terminate automatically in the event of their
assignment.
Custodian
The Chase Manhattan Bank, N.A., through its Global Custody Division
located in London, England, acts as custodian of the Portfolio's
securities and cash.
Independent Auditors
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, serves as independent accountants for the Trust.
Portfolio Accountant
On behalf of the Portfolio, the Trust has entered into a Transfer Agency
and Fund Accounting Agreement with Forum Financial Corp. ("FFC"), an
affiliate of Forum. Pursuant to this agreement, FFC performs transfer
agency and portfolio accounting services. FFC receives a base fee per
year, plus additional amounts depending upon the assets of the Portfolio,
the number and type of securities held by the Portfolio and the portfolio
turnover rate of the Portfolio.
B-12
<PAGE>
Item 17. Brokerage Allocation and Other Practices.
------- ----------------------------------------
Investment Decisions
Investment decisions for the Portfolio and for the other investment
advisory clients of SCMI are made with a view to achieving their
respective investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular client
involved. Thus, a particular security may be bought or sold for certain
clients even though it could have been bought or sold for other clients at
the same time. Likewise, a particular security may be bought for one or
more clients when one or more clients are selling the security. In some
instances, one client may sell a particular security to another client.
It also sometimes happens that two or more clients simultaneously purchase
or sell the same security, in which event each day's transactions in such
security are, insofar as is possible, averaged as to price and allocated
between such clients in a manner which in SCMI's opinion is equitable to
each and in accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio securities
for one or more clients will have an adverse effect on other clients.
Brokerage and Research Services
Transactions on U.S. stock exchanges and other agency transactions involve
the payment by the Portfolio of negotiated brokerage commissions. Such
commissions vary among different brokers. Also, a particular broker may
charge different commissions according to such factors as the difficulty
and size of the transaction. Transactions in foreign securities generally
involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. Since most brokerage transactions
for the Portfolio will be placed with foreign broker-dealers, certain
portfolio transaction costs for the Portfolio may be higher than fees for
similar transactions executed on U.S. securities exchanges. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Portfolio usually
includes an undisclosed dealer commission or mark-up. In underwritten
offerings, the price paid by the Portfolio includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
The Investment Advisory Contract authorizes and directs SCMI to place
orders for the purchase and sale of the Portfolio's investments with
brokers or dealers selected by SCMI in its discretion and to seek "best
execution" of such portfolio transactions. SCMI places all such orders
for the purchase and sale of portfolio securities and buys and sells
securities for the Portfolio through a substantial number of brokers and
dealers. In so doing, SCMI uses its best efforts to obtain for the
Portfolio the most favorable price and execution available. The Portfolio
may, however, pay higher than the lowest available commission rates when
SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
transaction. In seeking the most favorable price and execution, SCMI,
B-13
<PAGE>
having in mind the Portfolio's best interests, considers all factors it
deems relevant, including, by way of illustration, price, the size of the
transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market
prices and trends, the reputation, experience and financial stability of
the broker-dealers involved and the quality of service rendered by the
broker-dealers in other transactions.
It has for many years been a common practice in the investment advisory
business as conducted in certain countries, including the United States,
for advisers of investment companies and other institutional investors to
receive research services from broker-dealers which execute portfolio
transactions for the clients of such advisers. Consistent with this
practice, SCMI may receive research services from broker-dealers with
which SCMI places the Portfolio's portfolio transactions. These services,
which in some cases may also be purchased for cash, include such items as
general economic and security market reviews, industry and company
reviews, evaluations of securities and recommendations as to the purchase
and sale of securities. Some of these services are of value to SCMI in
advising various of its clients (including the Portfolio), although not
all of these services are necessarily useful and of value in managing the
Portfolio. The investment advisory fee paid by the Portfolio is not
reduced because SCMI and its affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"Act"), SCMI may cause the Portfolio to pay a broker-dealer which provides
"brokerage and research services" (as defined in the Act) to SCMI an
amount of disclosed commission for effecting a securities transaction for
the Portfolio in excess of the commission which another broker-dealer
would have charged for effecting that transaction.
Subject to the general policies regarding allocation of portfolio
brokerage as set forth above, the Board has authorized SCMI to employ
Schroder Wertheim & Company, Incorporated ("Schroder Wertheim") an
affiliate of SCMI, to effect securities transactions of the Portfolio, on
the New York Stock Exchange only, provided certain other conditions are
satisfied as described below.
Payment of brokerage commissions to Schroder Wertheim for effecting such
transactions is subject to Section 17(e) of the 1940 Act, which requires,
among other things, that commissions for transactions on a national
securities exchange paid by a registered investment company to a broker
which is an affiliated person of such investment company or an affiliated
person of another person so affiliated not exceed the usual and customary
broker's commissions for such transactions. It is the Portfolio's policy
that commissions paid to Schroder Wertheim will in the judgment of the
officers of the Trust responsible for making portfolio decisions and
selecting brokers, be (i) at least as favorable as commissions
contemporaneously charged by Schroder Wertheim on comparable transactions
for its most favored unaffiliated customers and (ii) at least as favorable
as those which would be charged on comparable transactions by other
qualified brokers having comparable execution capability. The Board,
B-14
<PAGE>
including a majority of the non-interested Trustees, has adopted
procedures pursuant to Rule 17e-1 promulgated by the Securities and
Exchange Commission under Section 17(e) to ensure that commissions paid to
Schroder Wertheim by the Portfolio satisfy the foregoing standards. The
Board will review all transactions at least quarterly for compliance with
such procedures.
The Portfolio has no understanding or arrangement to direct any specific
portion of its brokerage to Schroder Wertheim and will not direct
brokerage to Schroder Wertheim in recognition of research services.
Item 18. Capital Stock and Other Securities.
------- -----------------------------------
Under the Trust Instrument, the Trustees are authorized to issue
beneficial interest in one or more separate and distinct series.
Investments in the Portfolio have no preference, preemptive, conversion or
similar rights and are fully paid and nonassessable, except as set forth
below. Each investor in the Portfolio is entitled to a vote in proportion
to the amount of its investment therein. Investors in the Portfolio and
other series (collectively, the "portfolios") of the Trust will all vote
together in certain circumstances (e.g., election of the Trustees and
ratification of auditors, as required by the 1940 Act and the rules
thereunder). One or more portfolios could control the outcome of these
votes. Investors do not have cumulative voting rights, and investors
holding more than 50% of the aggregate interests in the Trust or in the
Portfolio, as the case may be, may control the outcome of votes. The
Trust is not required and has no current intention to hold annual meetings
of investors, but the Trust will hold special meetings of investors when
(1) a majority of the Trustees determines to do so or (2) investors
holding at least 10% of the interests in the Trust (or the Portfolio)
request in writing a meeting of investors in the Trust (or Portfolio).
Except for certain matters specifically described in the Trust Instrument,
the Trustees may amend the Trust's Trust Instrument without the vote of
investors.
The Trust, with respect to the Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved
by the Trust's Board. The Portfolio may be terminated (1) upon
liquidation and distribution of its assets, if approved by the vote of a
majority of the Portfolio's outstanding voting securities (as defined in
the 1940 Act) or (2) by the Trustees on written notice to the Portfolio's
investors. Upon liquidation or dissolution of any Portfolio, the
investors therein would be entitled to share pro rata in its net assets
available for distribution to investors.
The Trust is organized as a business trust under the laws of the State of
Delaware. The Trust's interestholders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust
Act provides that an interestholder of a Delaware business trust shall be
entitled to the same limitation of liability extended to shareholders of
B-15
<PAGE>
private corporations for profit. However, no similar statutory or other
authority limiting business trust interestholder liability exists in many
other states, including Texas. As a result, to the extent that the Trust
or an interestholder is subject to the jurisdiction of courts in those
states, the courts may not apply Delaware law, and may thereby subject the
Trust to liability. To guard against this risk, the Trust Instrument of
the Trust disclaims liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement,
obligation and instrument entered into by the Trust or its Trustees, and
provides for indemnification out of Trust property of any interestholder
held personally liable for the obligations of the Trust. Thus, the risk
of an interestholder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1)
a court refuses to apply Delaware law, (2) no contractual limitation of
liability is in effect, and (3) the Trust itself is unable to meet its
obligations. In light of Delaware law, the nature of the Trust's
business, and the nature of its assets, the Board believes that the risk
of personal liability to a Trust interestholder is remote.
Item 19. Purchase, Redemption and Pricing of Securities.
------- -----------------------------------------------
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning
of section 4(2) of the 1933 Act. All investments in the Portfolio are
made and withdrawn at the net asset value ("NAV") next determined after an
order is received by the Portfolio. NAV per share is calculated by
dividing the aggregate value of the Portfolio's assets less all
liabilities by the number of shares of the Portfolio outstanding. See
Items 6, 7 and 8 in Part A.
Item 20. Tax Status.
------- -----------
The Portfolio will be classified for federal income tax purposes as a
partnership that will not be a "publicly traded partnership." As a
result, the Portfolio will not be subject to federal income tax; instead,
each investor in the Portfolio will be required to take into account in
determining its federal income tax liability its share of the Portfolio's
income, gains, losses, deductions, and credits, without regard to whether
it has received any cash distributions from the Portfolio. The Portfolio
also will not be subject to Delaware income or franchise tax.
Each investor in the Portfolio will be deemed to own a proportionate share
of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether the investor
satisfies the requirements to qualify as a regulated investment company
for federal income tax purposes ("RIC"). Accordingly, the Portfolio
intends to conduct its operations so that its investors that intend to
B-16
<PAGE>
qualify as RICs ("RIC investors") will be able to satisfy all those
requirements.
Distributions to an investor from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the
investor's recognition of any gain or loss for federal income tax
purposes, except that (1) gain will be recognized to the extent any cash
that is distributed exceeds the investor's basis for its interest in the
Portfolio before the distribution, (2) income or gain will be recognized
if the distribution is in liquidation of the investor's entire interest in
the Portfolio and includes a disproportionate share of any unrealized
receivables held by the Portfolio, (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized
receivables, and (4) gain or loss may be recognized on a distribution to
an investor that contributed property to the Portfolio. An investor's
basis for its interest in the Portfolio generally will equal the amount of
cash and the basis of any property it invests in the Portfolio, increased
by the investor's share of the Portfolio's net income and gains and
decreased by (a) the amount of cash and the basis of any property the
Portfolio distributes to the investor and (b) the investor's share of the
Portfolio's losses.
Dividends and interest received by the Portfolio may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S.
possessions ("foreign taxes") that would reduce the yield on its
securities. Tax conventions between certain countries and the United
States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of
investments by foreign investors. If more than 50% of the value of a RIC
investor's total assets (taking into account its proportionate share of
the Portfolio's assets) at the close of any taxable year consists of
securities of foreign corporations, the RIC investor will be eligible to,
and may, file an election with the Internal Revenue Service that will
enable its shareholders, in effect, to receive the benefit of the foreign
tax credit with respect to its proportionate share of any foreign taxes
paid by the Portfolio ("RIC investor's foreign taxes"). Pursuant to that
election, the RIC investor would treat its foreign taxes as dividends paid
to its shareholders, and each shareholder would be required to (1) include
in gross income, and treat as paid by him, his proportionate share of the
RIC investor's foreign taxes, (2) treat his share of those taxes and of
any dividend paid by the RIC investor that represents its proportionate
share of the Portfolio's income from foreign or U.S. possessions sources
as his own income from those sources, and (3) either deduct the taxes
deemed paid by him in computing his taxable income or, alternatively, use
the foregoing information in calculating the foreign tax credit against
his Federal income tax.
The Portfolio may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general,
meets either of the following tests: (1) at least 75% of its gross income
is passive or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income. Under certain circumstances,
B-17
<PAGE>
a RIC investor will be subject to Federal income tax on its proportionate
share of a part of any "excess distribution" received by the Portfolio on
the stock of a PFIC or of any gain on the Portfolio's disposition of the
stock (collectively "PFIC income"), plus interest thereon, even if the RIC
investor distributes its share of the PFIC income as a taxable dividend to
its shareholders. The balance of the RIC investor's share of the PFIC
income will be included in its investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.
If the Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund," then in lieu of the foregoing tax and interest
obligation, a RIC investor would be required to include in income each
year its proportionate share of the Portfolio's pro rata share of the
qualified electing fund's annual ordinary earnings and net capital gain
(the excess of net long-term capital gain over net short-term capital
loss) -- which probably would have to be distributed by the RIC investor
to satisfy certain distribution requirements -- even if the RIC investor's
share of those earnings and gain were not received by it. In most
instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RIC investors, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each
taxable year the excess, as of the end of that year, of the fair market
value of each such PFIC's stock over the adjusted basis in that stock
(including mark-to-market gain for each prior year for which an election
was in effect).
Gains or losses (1) from the disposition of foreign currencies, (2) on the
disposition of a debt security denominated in a foreign currency that are
attributable to fluctuations in the value of the foreign currency between
the date of acquisition of the security and the date of disposition, and
(3) that are attributable to fluctuations in exchange rates that occur
between the time the Portfolio accrues interest, dividends, or other
receivables or accrues expenses or other liabilities denominated in a
foreign currency and the time it actually collects the receivables or pays
the liabilities, generally are treated as ordinary income or loss. These
gains or losses, referred to under the Code as "section 988" gains or
losses, may increase or decrease the amount of investment company taxable
income available to a RIC investor for distribution to its shareholders.
The Portfolio's use of hedging strategies, such as entering into forward
contracts, involves complex rules that will determine for income tax
purposes the character and timing of recognition of the gains and losses
it realizes in connection therewith. Gains from the disposition of
foreign currencies (except certain gains that may be excluded by future
regulations), and gains from forward contracts derived by the Portfolio
with respect to its business of investing in securities or foreign
currencies, will qualify as permissible income for its RIC investors under
the requirement that at least 90% of a RIC's gross income each taxable
B-18
<PAGE>
year consist of specified types of income. However, income from the
disposition of foreign currencies and forward contracts thereon will be
subject to the requirement applicable to its RIC investors that less than
30% of a RIC's gross income each taxable year consist of certain short-
term gains if they are held for less than three months and are not
directly related to the Portfolio's principal business of investing in
securities (or options and futures with respect thereto).
Item 21. Underwriters.
------- -------------
Forum Financial Services, Inc., Two Portland Square, Portland, Maine
04101, the Portfolio's administrator, serves as the Trust's placement
agent. Forum receives no compensation for such placement agent services.
Item 22. Calculations of Performance Data.
------- --------------------------------
Not applicable.
Item 23. Financial Statements.
-------- ---------------------
Not applicable.
B-19
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
------- ----------------------------------
(a) Financial Statements.
(1) Included in Part A
Not applicable
(2) Included in Part B
Not applicable
(b) Exhibits:
(1) Trust Instrument of Schroder Capital Funds (the "Trust")
(filed as Exhibit 1 to the Trust's Initial Registration
Statement and incorporated herein by reference).
(2) Not applicable.
(3) Not applicable.
(4) Not applicable.
(5) (a) Form of Investment Advisory Agreement between the
Trust and Schroder Capital Management
International Inc. ("SCMI") with respect to
International Equity Fund, Schroder Emerging
Markets Fund Institutional Portfolio and Schroder
U.S. Smaller Companies Portfolio (filed as
Exhibit 5 to the Trust's Amendment No. 1 and
incorporated herein by reference).
(b) Form of Investment Advisory Agreement between the
Trust and SCMI with respect to Schroder
International Smaller Companies Portfolio (to be
filed).
(6) Not required.
(7) Not applicable.
(8) Form of Custodian Agreement between the Trust and The
Chase Manhattan Bank, N.A. with respect to International
Equity Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 8 to the
Trust's Initial Registration Statement and incorporated
herein by reference).
<PAGE>
(9) (a) Form of Administration Agreement between the
Trust and Schroder Fund Advisors Inc. with
respect to International Equity Fund and Schroder
Emerging Markets Fund Institutional Portfolio
(filed as Exhibit 9(a) to the Trust's Initial
Registration Statement and incorporated herein by
reference).
(b) Form of Sub-Administration Agreement between the
Trust and Forum Financial Services, Inc.
("Forum") with respect to International Equity
Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 9(b) to
the Trust's Initial Registration Statement and
incorporated herein by reference).
(c) Form of Administration Agreement between the
Trust and Forum with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).
(d) Form of Administration Agreement between the
Trust and SCMI with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).
(e) Form of Administration Agreement between the
Trust and SCMI with respect to the Schroder
International Smaller Companies Portfolio (to be
filed).
(f) Form of Sub-Administration Agreement between the
Trust and Forum with respect to the Schroder
International Smaller Companies Portfolio (to be
filed).
(g) Form of Transfer Agency and Portfolio Accounting
Agreement between the Trust and Forum Financial
Corp. with respect to International Equity Fund
and Schroder Emerging Markets Fund Institutional
Portfolio (filed as Exhibit 9(c) to the Trust's
Initial Registration Statement and incorporated
herein by reference).
(h) Form of Placement Agent Agreement between the
Trust and Forum with respect to International
Equity Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 9(d) to
the Trust's Initial Registration Statement and
incorporated herein by reference).
(10) Not required.
(11) Not required.
C-2
<PAGE>
(12) Not required.
(13) Not applicable.
(14) Not applicable.
(15) Not applicable.
(16) Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant.
-------- --------------------------------------------------------------
None
Item 26. Number of Holders of Securities as of September 30, 1996.
-------- ---------------------------------------------------------
<TABLE>
<CAPTION>
Title of Class of Shares
of Beneficial Interest Number of Holders
------------------------ -----------------
<S> <C>
International Equity Fund 2
Schroder Emerging Markets Fund Institutional Portfolio 2
Schroder U.S. Smaller Companies Portfolio 2
Schroder International Smaller Companies Portfolio 0
</TABLE>
Item 27. Indemnification.
-------- ----------------
The Trust does not currently hold any directors' and officers' or
errors and omissions insurance policies. The Trust's trustees and
officers are insured under the Trust's fidelity bond purchased pursuant to
Rule 17j-1 under the Investment Company Act of 1940, as amended (the
"Act").
The general effect of Article 5 of Registrant's Trust Instrument
is to indemnify existing or former trustees and officers of the Trust to
the fullest extent permitted by law against liability and expenses. There
is no indemnification if, among other things, any such person is
adjudicated liable to the Registrant or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office. This description is
modified in its entirety by the provisions of Article 5 of Registrant's
Trust Instrument contained in this Registration Statement as Exhibit 1 and
incorporated herein by reference.
C-3
<PAGE>
Provisions of Registrant's investment advisory agreements provide
that the respective investment adviser shall not be liable for any mistake
of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing shall be deemed to protect, or purport to protect,
the investment adviser against any liability to Registrant or to
Registrant's interestholders to which the investment adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the investment adviser's duties, or by
reason of the investment adviser's reckless disregard of its obligations
and duties hereunder. This description is modified in its entirety by the
provisions of Registrant's Investment Advisory Agreement contained in this
Registration Statement as Exhibit 5 and incorporated herein by reference.
Likewise, Registrant has agreed to indemnify (1) Forum Financial Services,
Inc. in the Administration and Sub-Administration Agreements, (2) Forum
Financial Corp. in the Transfer Agency and Fund Accounting Agreement, and
(3) Forum Financial Services, Inc. in the Placement Agent Agreement for
certain liabilities and expenses arising out of their acts or omissions
under the respective agreements.
Item 28. Business and Other Connections of Investment Advisers.
------- ------------------------------------------------------
The following are the directors and principal officers of SCMI,
including their business connections which are of a substantial nature.
The address of each company listed, unless otherwise noted, is 33 Gutter
Lane, London EC2V 8AS, United Kingdom. Schroder Capital Management
International Limited ("Schroder Ltd.") is a United Kingdom affiliate of
SCMI which provides investment management services international clients
located principally in the United States.
I. Peter Sedgwick, Chairman. Mr. Sedgwick is also Vice Chairman
of Schroders PLC, 120 Cheapside, London EC2V 6DS, United Kingdom,
the holding company of the various Schroder companies, Chairman
and Director of Schroder Ltd., Director and Chief Executive
Officer of Schroder Investment Management Limited, an investment
management company, Director of Schroder Investment Management
(UK) Limited, Schroder Personal Financial Management Limited,
Schroder Investment Management (Europe) Limited, Schroder
Investment Trust Management Limited and Church, Charity & Local
Authorities Fund Managers Limited, 2 Fore Street, London EC2Y
5AQ, United Kingdom, each an investment management company, and
Director, The Equitable Life Assurance Company, Walton Street,
Aylesbury, Bucks, United Kingdom, a life assurance company. Mr.
Sedgwick is also a director of various nominee companies and of
various unit trust companies, investment trusts and closed end
investment companies for which SCMI and/or its affiliates provide
investment services.
David M. Salisbury, Chief Executive Officer. Mr. Salisbury is
also the Joint Chief Executive Officer and Director of Schroder
Ltd. and Director of Dimensional Fund Advisors Inc., 1299 Ocean
C-4
<PAGE>
Avenue, Santa Monica, California, an investment advisory company
and DFA Securities Inc., a broker dealer subsidiary of
Dimensional Fund Advisors Inc. located at the same address.
Until October 1992 Mr. Salisbury was Chairman of Schroder Fund
Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New
York, New York, a broker dealer. Mr. Salisbury is a director or
former director of various investment trust companies and closed
end investment companies for which SCMI and/or its affiliates
provide investment services.
John S. Ager, Director. Mr. Ager is also a Director of Schroder
Ltd.
Richard R. Foulkes, Director. Mr. Foulkes is also a Director of
Schroder Ltd.
David Gibson, Director. Mr. Gibson is also a Director of
Schroder Ltd. and Director of Schroder Investment Management
Limited.
C. John Govett, Director. Mr. Govett is also a Director of
Schroder Ltd., Schroder Investment Management Limited, Schroder
Personal Investment Management (investment adviser), Schroder
Ventures Limited (investment adviser) and Schroder Venture
International Holdings Limited (investment adviser). He is
Chairman and Director of Schroder Properties Limited. He is also
Director of several investment companies for which SCMI and/or
its affiliates provide investment services.
Sharon L. Haugh, Director. Ms. Haugh is also a Director of
Schroder Ltd. and Director of Schroder Advisors.
Laura E. Luckyn-Malone, Director. Ms. Luckyn-Malone is also a
Director of Schroder Ltd. and President and Director of a closed-
end investment company for which SCMI and/or its affiliates
provide investment services.
Gavin D.L. Ralston, Director. Mr. Ralston is also a Director of
Schroder Ltd.
Mark J. Smith, Director. Mr. Smith is also Director, Schroder
Ltd. and Schroder Investment Management (Guernsey) Limited, an
investment management company, and Director and Vice President of
Schroder Advisors. Mr. Smith is also a director of various
investment trusts and open end investment companies for which
SCMI and/or its affiliates provide investment services.
John A. Troiano, Director. Mr. Troiano is also a Director of
Schroder Ltd., Director of Schroder Advisors and President and
Director open end investment companies for which Schroder and/or
its affiliates provide investment services.
C-5
<PAGE>
Andrew R. Barker, First Vice President. Mr. Barker is also First
Vice President of Schroder Ltd.
J. Ann Bonathan, First Vice President. Ms. Bonathan is also
First Vice President of Schroder Ltd. During the last two years,
Ms. Bonathan has been Deputy Head of Custody Operations of SG
Warburg, 1 Finsbury Avenue, London, merchant bankers.
John D. Burns, First Vice President. During the last two years,
Mr. Burns has been First Vice President of Schroder Ltd. and
Assistant Director of Morgan Grenfell Asset Management Ltd., 20
Finsbury Circus, London EC2M 1NB, an investment adviser.
Heather F. Crighton, Vice President. Ms. Crighton is also Vice
President of Schroder Ltd.
Louise Crouset, First Vice President. Mr. Crouset is also First
Vice President of Schroder Ltd. and, until October 1993, was Vice
President of Wellington Management, an investment adviser.
Robert C. Davy, First Vice President. Mr. Davy is also a
Director of Schroder Ltd. and an officer of open end investment
companies for which SCMI and/or its affiliates provide investment
services.
Margaret H. Douglas-Hamilton, Secretary. Ms. Douglas-Hamilton is
also First Vice President and General Counsel of Schroders
Incorporated, 787 Seventh Avenue, New York, New York, the holding
company for various United States based SCMI affiliates. Ms.
Douglas-Hamilton is also Secretary to various SCMI affiliates,
including Schroder Advisors.
Abdallah Nauphal, First Vice President.
Joshua Shapiro, First Vice President.
John Stainsby, First Vice President. Mr. Stainsby is also First
Vice President of Schroder Ltd.
Ellen B. Sullivan, First Vice President.
Fariba Talebi, Group Vice President. Ms. Talebi is also an
officer of various open end investment companies for which SCMI
and/or its affiliates provide investment services.
Jan Kees van Heusde, First Vice President. Mr. van Heusde is
also First Vice President of Schroder Ltd.
Patrick Vermeulen, Vice First President. Mr. Vermeulen is also
Vice First President of Schroder Ltd.
C-6
<PAGE>
Kathleen Adams, Vice President. Ms. Adams is also Vice President
of Schroder Advisors.
Mark J. Astley, Vice President.
William H. Barnes, Vice President. During the last two years,
Mr. Barnes has been a marketer at Nomura Capital Management Ltd.,
180 Maiden Lane New York, NY 10038, and investment adviser.
Susan M. Belson, Vice President.
Alan Gilston, Vice President.
Robert A. Jackowitz, Vice President.
Clare L. Latham, Vice President. During the last two years, Ms.
Latham has been First Vice President of Schroder Ltd. and Analyst
at the Bank of England, Threadneedle Street, London EC2R 8AH.
Catherine A. Mazza, Vice President. During the last two years,
Ms. Mazza has been a Vice President of Alliance Capital, 1345
Sixth Avenue, New York, NY 10105, an investment adviser.
Robert J. Martorana, Vice President.
Thomas Melendez, Vice President. During the last two years, Mr.
Melendez has been a Vice President of Natwest Securities, 175
Water Street, New York, NY, an investment adviser.
Ira L. Unschuld, Vice President. Mr. Unschuld is also an officer
of various open end investment companies for which SCMI and/or
its affiliates provide investment services.
Dawn M. Vroegop, Vice President. During the last two years, Ms.
Vroegop has been an Associate of A.T. Keaney, Inc., 153 East 53rd
Street, New York, NY, management consultants.
Item 29. Principal Underwriters.
-------- -----------------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-7
<PAGE>
Item 30. Location of Books and Records.
-------- ------------------------------
The majority of the accounts, books and other documents required
to be maintained by Section 31(a) of the Act and the Rules thereunder are
maintained at the offices of Forum Financial Services, Inc. and Forum
Financial Corp., Two Portland Square, Portland, Maine 04104. The records
required to be maintained under Rule 31a-1(b)(1) with respect to journals
of receipts and deliveries of securities and receipts and disbursements of
cash are maintained at the offices of the Registrant's custodian, which is
named under "Custodian" in Part B to this Registration Statement. The
records required to be maintained under Rule 31a-1(b)(5), (6) and (9) are
maintained at the offices of Registrant's investment adviser, which is
named in Item 28 hereof.
Item 31. Management Services.
-------- --------------------
Not applicable.
Item 32. Undertakings.
-------- ------------
Registrant undertakes to contain in its Trust Instrument
provisions for assisting shareholder communications and for the removal of
trustees substantially similar to those provided for in Section 16(c) of
the Act, except to the extent such provisions are mandatory or prohibited
under applicable Delaware law.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the city of New
York and the State of New York on the 14th day of October, 1996.
SCHRODER CAPITAL FUNDS
By: /s/ Laura E. Luckyn-Malone
---------------------------
Laura E. Luckyn-Malone
President
<PAGE>
EXHIBIT INDEX
(a) Financial Statements.
(1) Included in Part A
Not applicable
(2) Included in Part B
Not applicable
(b) Exhibits:
(1) Trust Instrument of Schroder Capital Funds (the "Trust")
(filed as Exhibit 1 to the Trust's Initial Registration
Statement and incorporated herein by reference).
(2) Not applicable.
(3) Not applicable.
(4) Not applicable.
(5) (a) Form of Investment Advisory Agreement between the
Trust and Schroder Capital Management
International Inc. ("SCMI") with respect to
International Equity Fund, Schroder Emerging
Markets Fund Institutional Portfolio and Schroder
U.S. Smaller Companies Portfolio (filed as
Exhibit 5 to the Trust's Amendment No. 1 and
incorporated herein by reference).
(b) Form of Investment Advisory Agreement between the
Trust and SCMI with respect to Schroder
International Smaller Companies Portfolio (to be
filed).
(6) Not required.
(7) Not applicable.
(8) Form of Custodian Agreement between the Trust and The
Chase Manhattan Bank, N.A. with respect to International
Equity Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 8 to the
Trust's Initial Registration Statement and incorporated
herein by reference).
(9) (a) Form of Administration Agreement between the
Trust and Schroder Fund Advisors Inc. with
respect to International Equity Fund and Schroder
Emerging Markets Fund Institutional Portfolio
<PAGE>
(filed as Exhibit 9(a) to the Trust's Initial
Registration Statement and incorporated herein by
reference).
(b) Form of Sub-Administration Agreement between the
Trust and Forum Financial Services, Inc.
("Forum") with respect to International Equity
Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 9(b) to
the Trust's Initial Registration Statement and
incorporated herein by reference).
(c) Form of Administration Agreement between the
Trust and Forum with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).
(d) Form of Administration Agreement between the
Trust and SCMI with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).
(e) Form of Administration Agreement between the
Trust and SCMI with respect to the Schroder
International Smaller Companies Portfolio (to be
filed).
(f) Form of Sub-Administration Agreement between the
Trust and Forum with respect to the Schroder
International Smaller Companies Portfolio (to be
filed).
(g) Form of Transfer Agency and Portfolio Accounting
Agreement between the Trust and Forum Financial
Corp. with respect to International Equity Fund
and Schroder Emerging Markets Fund Institutional
Portfolio (filed as Exhibit 9(c) to the Trust's
Initial Registration Statement and incorporated
herein by reference).
(h) Form of Placement Agent Agreement between the
Trust and Forum with respect to International
Equity Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 9(d) to
the Trust's Initial Registration Statement and
incorporated herein by reference).
(10) Not required.
(11) Not required.
(12) Not required.
(13) Not applicable.
(14) Not applicable.
<PAGE>
(15) Not applicable.
(16) Not applicable.
<PAGE>