As filed with the Securities and Exchange Commission on March 17, 1998
File Nos. 333-42943 and 811-8567
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
SCHRODER SERIES TRUST II
(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
Catherine S. Wooledge, Esq.
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
(Name and Address of Agent for Service)
Copies to:
Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Alexandra Poe, Esq.
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ApproximateDate of Proposed Public Offering: March 20, 1998 or as
soon as practicable after the effectiveness of the
registration under the Securities Act of 1933.
Title of Securities Being Registered: Class A Shares of Schroder All-Asia Fund,
no par value.
<PAGE>
CROSS REFERENCE SHEET
PART A
(Prospectus offering Class A Shares of Schroder All-Asia Fund)
<TABLE>
<S> <C> <C>
Form N-1A
ITEM NO. (CAPTION) LOCATION IN PROSPECTUS (CAPTION)
1. Cover Page.COVER PAGE
2. Synopsis EXPENSES OF INVESTING IN
THE FUND
3. Condensed Financial Information FINANCIAL HIGHLIGHTS
4. General Description of INVESTMENT OBJECTIVE AND POLICIES; Other
Investment Practices and Risk
Considerations; Other Information
5. Management of the Fund MANAGEMENT OF THE FUND
5A. Management's Discussion of` Not Applicable
Fund Performance
6. Capital Stock and Other Securities OTHER INFORMATION
7. Purchase of Securities INVESTMENT IN THE FUND
8. Redemption or Repurchase INVESTMENT IN THE FUND
9. Pending Legal Proceedings None
</TABLE>
2
<PAGE>
CROSS REFERENCE SHEET
PART B
(SAI offering Class A Shares of Schroder All-Asia Fund)
<TABLE>
<S> <C> <C>
Form N-1A Location in Statement of Additional
ITEM NO. (CAPTION) INFORMATION (CAPTION)
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History OTHER INFORMATION
13. Investment Objectives and Policies INVESTMENT OBJECTIVES AND POLICIES OF THE
TRUST AND RISK CONSIDERATIONS; Investment
Restrictions
14. Management of the Fund MANAGEMENT
15. Control Persons and Principal Not Applicable
Holders of Securities
16. Investment Advisory and MANAGEMENT; PORTFOLIO
Other Services TRANSACTIONS; OTHER
INFORMATION
17. Brokerage Allocation and PORTFOLIO TRANSACTIONS
Other Practices
18. Capital Stock and Other Securities OTHER INFORMATION
19. Purchase, Redemption and Pricing of ADDITIONAL PURCHASE AND
Securities Being Offered REDEMPTION
20. Tax Status TAXATION
21. Underwriters MANAGEMENT; PORTFOLIO
TRANSACTIONS
22. Calculation of Performance Data None
23. Financial Statements APPENDIX B.
</TABLE>
3
<PAGE>
SCHRODER ALL-ASIA FUND
CLASS A SHARES
The investment objective of Schroder All-Asia Fund is to seek long-term capital
appreciation through investment primarily in equity securities of Asian
companies. The Fund invests primarily in equity securities of Asian companies,
namely, companies domiciled or doing business in established and emerging
markets in Asia. Asian markets include China, Hong Kong SAR, India, Indonesia,
Japan, Korea, Malaysia, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan,
Thailand, and others in the region that permit foreign investors to participate
in their stock markets. The Fund is a non-diversified management investment
company. The Fund is intended for investors who seek the aggressive growth
potential of foreign markets and are willing to bear the special investment
risks of investing in those markets.
The Fund currently invests substantially all of its assets in Schroder Asian
Growth Fund Portfolio and Schroder Japan Portfolio, separately managed,
non-diversified investment companies. Schroder Capital Management International
Inc. is the investment adviser to the Fund and each of the Portfolios. The Fund
is a series of Schroder Series Trust II, a Delaware business trust (the
"Trust").
This Prospectus explains concisely the information you should know before
investing in the Fund's Class A shares. Please read it carefully and keep it for
future reference. You can find more detailed information about the Trust and
Fund in the March 20, 1998 Statement of Additional Information ("SAI"), as
amended from time to time. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is available along with other related materials
for reference on the SEC's Internet Web Site (http://www.sec.gov). A free copy
may be obtained without charge from the Trust by writing to P.O. Box 8507,
Boston, Massachusetts 02266-8507 or by calling 1-800-464-3108. The SAI has been
incorporated into this Prospectus by reference. The Fund has not authorized
anyone to provide you with information that is different from what is contained
in this Prospectus or in other documents to which this Prospectus refers you.
FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE
FEDERAL RESERVE SYSTEM OR ANY OTHER GOVERNMENT AGENCY AND ALSO ARE NOT
OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR GUARANTEED BY, ANY BANK OR
ITS AFFILIATES. FUND INVESTMENTS INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES, IN CANADA.
PROSPECTUS
MARCH 20, 1998
<PAGE>
===============================================================================
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
SCHRODER SERIES TRUST II 1-800-464-3108
SCHRODER ALL-ASIA FUND
<TABLE>
<S> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER MIDCAP VALUE FUND
SCHRODER EMERGING MARKETS FUND SCHRODER
INVESTMENT GRADE INCOME FUND
SCHRODER U.S. EQUITY FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
</TABLE>
================================================================================
<PAGE>
EXPENSES OF INVESTING IN THE FUND
Expenses are one of several factors to consider when investing in the
Fund's Class A Shares. The "Shareholder Transaction Expenses" table below
summarizes the maximum transaction costs you would incur by investing in the
Fund. The "Annual Operating Expenses" table and related "Example" estimate the
expenses that your investment in Class A Shares would incur based upon the
Fund's anticipated expenses for its first fiscal year operating as an open-end
investment company. Annual Operating Expenses include the Fund's pro rata
portion of all anticipated operating expenses of the Portfolios in which the
Fund invests. The Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in the Fund over specified periods. See
"Management of the Fund -- Fees -- Expenses".
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
Maximum Sales Load Imposed on Purchase
<S> <C> <C>
(as a percentage of offering price)(1)...........................................................5.25%
Maximum Deferred Sales Load (as a percentage)........................................................None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage).................................None
Redemption Fee (based on net asset value of shares redeemed)(2)......................................None
Exchange Fee None
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
Management Fees (after waivers)(3)s....................................................................0.90%
12b-1 Fees...........................................................................................None
Other Expenses:
Shareholder Servicing Fee.......................................................................0.25%
Other Expenses(4)...............................................................................0.80%
TOTAL OTHER EXPENSES (after vaivers)(4).............................................................1.05%
TOTAL FUND OPERATING EXPENSES (after waivers)............................................................1.95%
</TABLE>
(1) Maximum sales charge applicable to purchases of less than $25,000.
(2) Shares received in connection with the conversion of Schroder Asian
Growth Fund, Inc. are subject to a redemption fee of 2.00% for the
six-month period following the conversion on March 20, 1998.
(3) Management Fees include amounts the Fund expects to pay to SCMI for
asset allocation and administrative services. The Fund pays asset
allocation fees and administration fees to SCMI at the annual rates of
0.20% and 0.05%, respectively, of its average daily net assets.
Management Fees also include: the Fund's pro rata portion of
investment advisory fees paid by Schroder Asian Growth Fund Portfolio
and Schroder Japan Portfolio at the annual rates of 0.70% and 0.55%,
respectively, of their average daily net assets, and the Fund's pro
rata portion of administration fees paid to SCMI by those Portfolios
at the annual rate of 0.05% of their average daily net assets. In the
absence of voluntary waivers by SCMI or Schroder Advisors, Management
Fees would be 0.94% and Total Fund Operating Expenses would be 2.03%,
respectively. The expenses shown above have been calculated on the
basis of an allocation of 60% investment in Schroder Asian Growth Fund
Portfolio and 40% investment in Schroder Japan Portfolio. If all of
the Fund's assets were invested in Schroder Asian Growth Fund
Portfolio, Management Fees would be 1.00%. Allocations of the Fund's
assets between the two Portfolios will vary, although SCMI does not
presently intend to allocate all of the Fund's assets to Schroder
Asian Growth Fund Portfolio.]
(4) Includes a pro rata portion of "Other Expenses" anticipated to be
incurred by Schroder Asian Growth Fund Portfolio and Schroder Japan
Portfolio at the annual rates of 0.46% and 0.44%, respectively, of
their average daily net assets. In the absence of voluntary waivers,
"Other Expenses" would be 0.84%.
EXAMPLE
The table below indicates how much you would pay in total expenses on a
$1,000 investment in the Fund, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period. The example is based on the expenses
listed above, assumes reinvestment of all dividends and other distributions, and
assumes payment of the maximum sales charge. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURNS. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL RETURNS
WILL VARY.
PERIOD ASSUMING 5.25% LOAD
------ -------------------
1 Year $71
3 Years $111
FINANCIAL HIGHLIGHTS
Presented below are financial highlights for Schroder Asian Growth Fund,
Inc., a closed-end management investment company. On March 20, 1998, the Fund,
which had no previous operating history, acquired substantially all of the
assets and liabilities of Schroder Asian Growth Fund, Inc.
The financial information below may not be indicative of the Fund's
performance as an open-end fund. The fees and expenses of the Fund will differ
from those of Schroder Asian Growth Fund, Inc. The Fund is an open-end
investment company whose shares generally are purchased at the public offering
price (which is based on net asset value and which includes a sales load except
in certain instances). Shares are redeemed at net asset value. In any case, the
total investment return on an investment in the Fund in the future will be based
only on the net asset value of the Class A Shares and not on any market value.
The financial statements of Schroder Asian Growth Fund, Inc. for the year
ended October 31, 1997 (including the financial highlights presented below) have
been audited by its independent accountants and, are, together with the report
of the independent auditors, incorporated by reference into the Statement of
Additional Information. Further information about the performance of Schroder
Asian Growth Fund, Inc. also is contained in that Fund's Annual Report to
Shareholders, which may be obtained without charge by writing the Fund at P.O.
Box 8507, Boston, Massachusetts 02266-8507 or by calling 1-800-464-3108. See
"Management of the Fund" and "Other
Information -- Fund Structure".
<TABLE>
December 30,
For the Year Ended 1993(1) to
October 31, October 31,
--------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.15 $12.62 $13.84 $14.01(2)
Investment Operations:
Net investment income (loss) (0.05) (0.03) 0.02 (0.01)
Net realized and unrealized gain (loss)
on investments (net of estimated tax
liability on Indian investments) and
foreign currencies and forward currency
contracts. (3.66) 0.56 (1.24) (0.16)
------------ ------------ ------------ ---------------
Total from investment operations (3.71) 0.53 (1.22) (0.17)
------------ ------------ ------------ ---------------
Less dividends from investment income-net (0.09) - - -
------------ ------------ ------------ ---------------
Tender offer costs charged to
paid-in-capital
in excess of par -(3) - -
(0.01) (7)
Net asset value, end of period $9.34 $13.15 $12.62 $13.84
Market value, end of period $8.50 $12.00 $11.125 $12.00
Total investment return based on (4):
Market value (28.62)% 7.87% (7.29)% (20.00)%
Net asset value (28.43)% 4.20% (8.82)% (1.21)%
Ratio/Supplementary Data:
Net assets, end of period (Millions) $150.41 $257.84 $247.49 $271.42
Ratio of expenses to average net assets 1.78% 1.57% 1.65% 1.59%(5)
Ratio of expenses to average net assets
excluding conversion costs 1.59% - - -
Ratio of net investment income (loss) to
average net assets (0.31)% (0.19)% 0.12% (0.10)%(5)
Portfolio turnover rate 39.14% 34.71% 66.79% 19.76%
Average commission rate per share(6) $0.0142 $0.0224 N/A N/A
</TABLE>
- -------------------------------------------- -- ------------ -- ------------
(1) Commencement of investment operations of Schroder Asian Growth Fund, Inc.,
the "Predecessor Fund". (2) Net of $0.09 offering expenses per share.
(3) Less than $0.01 per share.
(4) For the Predecessor Fund, total investment return is calculated assuming a
purchase of common stock on the opening of the first day and a
sale on the closing of the last day of each period reported. Dividends and
distributions, if any, are assumed for the purposes of this calculation, to
be reinvested at prices obtained under the Predecessor Fund's dividend
reinvestment plan. Total investment return does not reflect brokerage
commissions charged on the purchase or sale of the Predecessor Fund's
outstanding shares. Generally, a closed-end fund's total investment return
based on net asset value will be higher than its total investment return
based on market value in periods where there is an increase in the discount
or a decrease in the premium of the market value to the net asset value from
the beginning to the end of such periods. Conversely, a closed-end fund's
total investment return based on net asset value will be lower than total
investment return based on market value in periods where there is a decrease
in the discount or an increase in the premium of the market value to the net
asset value from the beginning to the end of such periods. Total investment
returns for periods of less than one full year are not annualized.
(5) Annualized.
(6) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average rate per share for trades on which a commission is
charged.
(7) Pursuant to a tender offer approved by the Board of Directors of the
Predecessor Fund on February 10, 1997, the Predecessor Fund
purchased 3.5 million shares for a total of $45,640,000.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek long-term capital
appreciation through investment primarily in equity securities of Asian
companies. The Fund is intended for investors who seek the aggressive growth
potential of foreign markets and are willing to bear the special investment
risks of investing in those markets. Investments in the securities of foreign
issuers generally involve risks in addition to the risks associated with
investments in the securities of U.S. issuers. The Fund is not intended for
investors whose objective is assured income or preservation of capital. See
"Other Investment Practices and Risk Considerations."
The Fund currently seeks to achieve its investment objective by
allocating its assets between Schroder Asian Growth Fund Portfolio ("Asia
ex-Japan Portfolio") and Schroder Japan Portfolio ("Japan Portfolio"),
separately managed non-diversified investment companies. Japan and Asia ex-Japan
Portfolios both have as their investment objectives to seek long-term capital
appreciation; the Japan Portfolio focuses its investment in Japan, while the
Asia ex-Japan Portfolio focuses its investment in Asia excluding Japan. SCMI
will increase or decrease the Fund's exposure to Japan relative to the rest of
Asia by increasing or decreasing the amount of its assets allocated to the Japan
Portfolio. (For example, the Fund expects initially to allocate 60% of its
assets to Asia ex-Japan Portfolio and 40% of its assets to Japan Portfolio; SCMI
will change the allocation from time to time in response to market conditions
and other factors.) There can be no assurance that the Fund or a Portfolio will
achieve its investment objective.
The following information describes the investment policies of the Fund
and the responsibilities of the Trust's Board of Trustees (the "Trust Board"),
and applies generally to the Portfolios and the Board of Trustees of Schroder
Capital Funds.
The Fund invests primarily in equity securities of Asian companies.
"Asian companies" are: (1) companies that are organized under the laws of China,
Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, Pakistan, the
Philippines, Singapore, Sri Lanka, Taiwan, or Thailand, or any other countries
in the Asian region located south of the border of the former Soviet Union, east
of the borders of Afghanistan and Iran, north of the Australian sub-continent,
and west of the International Date Line and that, in the future, permit foreign
investors to participate in their stock markets ( collectively, the " Asian
countries," and each, an "Asian country,"); and (2) companies, wherever
organized, that are determined by SCMI at the time of investment, either: (a) to
derive at least 75% of their revenues from goods produced or sold, investments
made, or services performed in Asian countries; or (b) to maintain at least 75%
of their assets in Asian countries.
Under normal market conditions, the Fund will be invested in companies
located in at least five Asian countries. As a matter of fundamental policy,
under normal market conditions the Fund invests at least 65% of its total assets
in equity securities of Asian companies.
Equity securities in which the Fund may invest include common stocks,
preferred stocks, convertible preferred stocks, convertible debt securities, and
stock rights and warrants to purchase any of the foregoing, as well as equity
interests in trusts, partnerships, joint ventures, or similar enterprises, and
American or Global Depositary Receipts, and other similar instruments providing
for indirect investment in securities of foreign issuers. Under certain
circumstances, the Fund may invest indirectly in equity securities by investing
in other investment companies or similar pooled vehicles. See "Other Investment
Policies and Risk Considerations --Investment in Other Investment Companies".
The Fund may also invest up to 10% of its total assets in debt
securities of governments or governmental agencies of Asian countries or of
Asian companies. It may also invest in debt securities of certain international
organizations. Debt securities in which the Fund invests may be unrated or may
be rated below investment grade, which entail special risks. See "Other
Investment Practices and Risk Considerations --.Debt Securities."
[For temporary defensive purposes, the Fund may invet without limitation in
( or enter into repruchase agreements maturing in seven days or less with U.S.
banks and broker-dealers with respect to) shorter-term securities, including
commercial paper, U.s. Treasury bills, other short-term U.S. Government
securities, certificates of deposit, and bankers' acceptances of U.S. banks. The
Fund also may hold cash and time deposits in U.S. banks.]
[At times, Schroder Capital Management International Inc. ("SCMI") may
judge that market conditions make pursuing the Fund's basic investment strategy
inconsistent with the best interests of its shareholders. At such times, SCMI
may temporarily use alternative strategies, primarily designed to reduce
fluctuations in the values of the Fund's assets. In implementing these
"defensive" strategies, the Fund may invest without limit in U.S. government
securities and other high-quality debt instruments that SCMI believes to be
consistent with the Fund's best interests.]
All percentage limitations on investments apply at the time of
investment and will not be considered violated unless an excess or a deficiency
occurs or exists immediately after and as a result of the investment, except
that the policies stated with regard to borrowing and liquidity will be observed
at all times. See the SAI for additional information concerning the investment
policies and restrictions of the Fund and Portfolios. The investment policies of
the Fund may, unless otherwise specifically stated, be charged by the Trustees
of the Trust without a shareholder vote.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Fund may also engage in the following investment practices, each of
which involves certain risks. The SAI contains more detailed information about
these practices (some of which may be considered "derivative" investments),
including limitations designed to reduce these risks.
FOREIGN SECURITIES. Investments in foreign securities entail certain
risks. Since foreign securities are normally denominated and traded in foreign
currencies, the values of the Fund's assets may be affected favorably or
unfavorably by currency exchange rates, exchange control regulations, foreign
withholding taxes and restrictions or prohibitions on the repatration of foreign
currencies. There may be less information publicly available about a foreign
issuer than about a U.S. issuer, and foreign issuers are not generally subject
to accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some foreign issuers
are less liquid and at times more volatile than securities of comparable U.S.
issuers. Aggregate foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement procedures and
trade regulations may involve certain risks (such as delay in payment or in
delivery of securities or in the recovery of assets held abroad) and expenses
not present in the settlement of domestic investments. The willingness and
ability of sovereign issuers to pay principal and interest on government
securities depends on various economic factors, including without limitation the
issuer's balance of payments, overall debt level, and cash flow considerations
related to the availability of tax or other revenues to satisfy the issuer's
obligations.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange controls, confiscatory
taxation, political or financial instability, currency devaluations, and
diplomatic developments that could affect the value of the Fund's investments in
certain foreign countries. Legal remedies available to investors in certain
foreign countries may be more limited than those available with respect to
investments in the United States or in other foreign countries. In the case of
securities issued by a foreign governmental entity, the issuer may in certain
circumstances be unable or unwilling to meet its obligations on the securities
in accordance with their terms, and the Fund may have limited recourse available
to it in the event of default. The laws of some foreign countries may limit the
Fund's ability to invest in securities of issuers located in those countries.
Because the Fund's investments will be concentrated in Asian countries,
political, economic, market and other factors affecting those countries will
likely affect the values of the Fund's investments more than if the Fund's
investments were invested elsewhere or in a greater range of geographic regions.
In addition, the Fund may invest more than 25% of its total assets in issuers
located in any one of the Asian countries hereafter named: China, Hong Kong SAR,
India, Indonesia, Japan, Korea, Malaysia, Pakistan, the Philippines, Singapore,
Sri Lanka, Taiwan, and Thailand. To the extent that it does so, the Fund is more
exposed to factors that could adversely affect that country, including political
and economic developments and foreign exchange rate fluctuations as discussed
above. As a result of investing substantially in one country, the value of the
Fund's assets may fluctuate more widely than the value of shares of a comparable
fund with a lesser degree of geographic concentration.
Most of the Fund's assets and income are expected to be denominated in
foreign currencies. Currency values are affected by a wide variety of economic
forces and events; thus, fluctuations in values can be difficult, if not
impossible, to predict. If the Fund purchases securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income. Further, if the value of a particular currency declines between
the time the Fund incurs expenses in U.S. dollars and the time such expenses are
paid, the amount of such other currency required to be converted into U.S.
dollars in order to pay such expenses will be greater than the amount that would
have been needed at the time the expenses were incurred. The Fund may buy or
sell foreign currencies and options and futures contracts on foreign currencies
for hedging purposes in connection with its foreign investments.
Special tax considerations apply to foreign securities. In determining
whether to invest in foreign securities, SCMI considers the likely impact of
foreign taxes on the net yield available to the Fund and its shareholders.
Income and/or gains received by the Fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Any such taxes paid by Fund will reduce the net income
available for distribution to shareholders.
EMERGING MARKETS. The Fund intends to invest in securities of issuers
in Asian emerging market countries and may at times invest a substantial portion
of its assets in such securities. The prices of securities of issuers in
emerging market countries are subject to greater volatility than those of
issuers in more developed countries. Investments in emerging market countries
are subject to the same risks applicable to foreign investments generally,
although those risks may be increased due to conditions in such countries. For
example, the securities markets and legal systems in emerging market countries
may only be in a developmental stage and may provide few, or none, of the
advantages or protections of markets or legal systems available in more
developed countries. Although many of the securities in which the Fund may
invest are traded on securities exchanges, they may trade in limited volume, and
the exchanges may not provide all of the conveniences or protections provided by
securities exchanges in more developed markets. The Fund may also invest a
substantial portion of its assets in securities traded in the over-the-counter
markets in Asian countries and not on any exchange, which may affect the
liquidity of the investment and expose the Fund to the credit risk of its
counterparties in trading those investments. Emerging market countries may
experience extremely high rates of inflation, which may adversely affect these
countries' economies and securities markets.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency
exchange rates will affect the U.S. dollar values of securities denominated in
foreign currencies. Exchange rates between the U.S. dollar and other currencies
fluctuate 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. The Fund may engage in foreign currency exchange transactions to
protect against uncertainty in the level of future exchange rates. 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.
In particular, the Fund may enter into foreign currency exchange
transactions: (1) to protect against a change in exchange ratio that may occur
between the date on which the Fund contracts to trade a security and the
settlement date; (2) to "lock in" the U.S. dollar value of interest and
dividends to be paid in a foreign currency ("transaction hedging"); or (3) to
hedge against the possibility that a foreign currency in which portfolio
securities are denominated or quoted may suffer a decline against the U.S.
dollar ("position hedging"). When investing in foreign securities, the Fund
usually effects currency exchange transactions on a spot (I.E., cash) basis at
the spot rate prevailing in the foreign exchange market. The Fund incurs foreign
exchange expenses in converting assets from one currency to another.
The Fund may also enter into forward currency contracts. A forward
currency 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. Forward
contracts do not eliminate fluctuations in the underlying prices of securities
and expose the Fund to the risk that the counterparty is unable to perform.
The Fund does not intend to maintain a net exposure to forward
contracts if the fulfillment of 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 Fund will
not enter into these contracts for speculative purposes and will not enter into
non-hedging currency contracts. The Fund will generally not enter into a forward
contract with a term of greater than one year. Forward contracts are not
exchange traded, and there can be no assurance that a liquid market will exist
at a time when the Fund seeks to close out a forward contract. Currently, only a
limited market, if any, exists for exchange transactions relating to currencies
in certain emerging markets or to securities of issuers domiciled or principally
engaged in business in certain emerging markets. This may limit the Fund's
ability to hedge its investments in those markets. These contracts involve a
risk of loss if SCMI fails to predict accurately changes in relative currency
values, the directions of securities prices or interest rates, and other
factors.
From time to time, the Fund's currency hedging transactions may call
for the delivery of one foreign currency in exchange for another foreign
currency and may at times involve currencies in which its portfolio securities
are then denominated ("cross hedging"). Cross hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions related and changes in the value of the currency or
other asset or liability which was the subject of the hedge.
INVESTMENTS IN SMALLER COMPANIES. The Fund may invest a portion of its
assets in securities issued by small companies. Such companies may offer greater
opportunities for capital appreciation than larger companies, but investments in
such companies may involve certain special risks. Such companies may have
limited product lines, markets, or financial resources and may be dependent on a
limited management group. While the markets in securities of such companies have
grown rapidly in recent years, such securities may trade less frequently and in
smaller volume than more widely held securities. The values of these securities
may fluctuate more sharply than those of other securities, and the Fund may
experience some difficulty in establishing or closing out positions in these
securities at prevailing market prices. There may be less publicly available
information about the issuers of these securities or less market interest in
such securities than in the case of larger companies, and it may take a longer
period of time for the prices of such securities to reflect the full value of
their issuers' underlying earnings potential or assets. Some securities of
smaller issuers may be restricted as to resale or may otherwise be highly
illiquid. The ability of the Fund to dispose of such securities may be greatly
limited, and the Fund may have to continue to hold such securities during
periods when SCMI would otherwise have sold the security.
NON-DIVERSIFICATION. The Fund is a "non-diversified" investment company
under the Investment Company Act of 1940, as amended. This means that it may
invest its assets in a more limited number of issuers than may other investment
companies. Under the Internal Revenue Code, an investment company, including a
non-diversified investment company, generally may not invest more than 25% of
its assets in securities of any one issuer other than U.S. government securities
and, with respect to 50% of its total assets, the Fund may not invest more than
5% of its total assets in the securities of any one issuer (except U.S.
government securities). Thus, the Fund may invest up to 25% of its total assets
in the securities of each of any two issuers. To the extent the Fund invests in
securities of a relatively few issuers, the value of its shares will be affected
by changes in the values of those securities more than if it had invested in a
more diversified portfolio.
DEBT SECURITIES. The Fund may invest up to 10% of its total assets in
convertible or non-convertible debt securities. The Fund may invest in debt
securities issued or guaranteed by Asian governments (including countries,
provinces and municipalities) or their agencies and instrumentalities
("governmental entities"); debt securities issued or guaranteed by international
organizations designated or supported by multiple foreign governmental entities
(which are not obligations of foreign governments) to promote economic
reconstruction or development; and debt securities issued by Asian companies.
The Fund may invest in lower-quality, high-yielding debt securities
that may be rated below investment grade and in unrated debt securities
determined by SCMI to be of comparable quality. Lower-rated debt securities
(commonly called "junk bonds") are considered to be of poor standing and
predominantly speculative. Securities in the lowest rating categories may have
extremely poor prospects of attaining any real investment standing, and some of
those securities in which the Fund may invest may be in default. The rating
services' descriptions of securities in the various rating categories, including
speculative characteristics, are set forth in the SAI.
The values of lower-rated securities fluctuate in response to changes
in interest rates like those of other fixed-income securities. In addition, the
lower ratings of such securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the ability or perceived inability of an issuer to make payments of interest and
principal may also affect the value of these investments. See the SAI.
OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in a variety of
transactions including options and futures contracts for hedging against market
changes. Although the Fund does not presently intend to do so, the Fund may: (1)
write covered call options on portfolio securities, and the U.S. dollar and
foreign currencies without limit; (2) write covered put options on portfolio
securities and the U.S. dollar and foreign currencies with the limitation that
the aggregate value of the obligations underlying the puts determined as of the
date the options are sold will not exceed 50% of the Fund's net assets; (3)
purchase call and put options in amounts up to 5% of the Fund's total assets;
and (4)(a) purchase and sell exchange-traded futures contracts on underlying
portfolio securities, any foreign currency, U.S. and foreign fixed-income
securities and such indices of U.S. or foreign equity or fixed-income securities
as may exist or come into being, and (b) purchase and write call and put options
on such futures contracts for hedging purposes only, and provided that the Fund
may not enter into futures contracts or purchase related options, if,
immediately thereafter, the amount committed to margin plus the amount paid for
premiums for unexpired options on futures contracts generally exceeds 5% of the
value of the Fund's total assets. All of the foregoing are referred to as
"Hedging Instruments".
The Fund may use Hedging Instruments: (1) to protect against declines
in the market value of the Fund's portfolio securities or stock index futures,
and the currencies in which they are denominated; or (2) to establish a position
in securities markets as a temporary substitute for purchasing securities. The
Fund will not use Hedging Instruments for speculation.
Hedging Instruments have certain risks associated with them, including:
(1) the possible failure of such instruments as hedging techniques in cases
where the price movement of the securities underlying the options or futures
does not follow the price movements of the portfolio securities subject to the
hedge; (2) potentially unlimited loss associated with futures transactions and
the possible lack of liquid secondary market for closing out a futures position;
and (3) possible losses resulting from the inability of SCMI to predict the
direction of stock prices, interest rates, relative currency values and other
economic factors.
In addition, only a limited market, if any, currently exists for
hedging transactions relating to currencies in many emerging market countries or
to securities of issuers domiciled or principally engaged in business in
emerging market countries. This may limit the Fund's ability to hedge its
investments in such emerging markets.
The Fund generally expects that its options and futures contract
transactions will be conducted on recognized exchanges. In certain instances,
however, the Fund may purchase and sell options in the over-the-counter markets.
The Fund's ability to terminate options in the over-the-counter markets may be
more limited than for exchange-traded options and may also involve the risk that
securities dealers participating in such transactions would be unable to meet
their obligations to the Fund. The Fund will, however, engage in
over-the-counter transactions only when appropriate exchange-traded transactions
are unavailable and when, in the opinion of SCMI, the pricing mechanism and
liquidity of the over-the-counter markets are satisfactory and the participants
are responsible parties likely to meet their contractual obligations. The Fund
will treat over-the-counter options (and, in the case of options sold by the
Fund, the underlying securities held by the Fund) as illiquid investments as
required by applicable law.
For more information about any of the options or futures portfolio
transactions described above, see "Options and Futures Transactions" in the SAI.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The
Fund may lend portfolio securities amounting to not more than one-third of its
assets to brokers, dealers and financial institutions meeting specified credit
conditions, and may enter into repurchase agreements without limit. These
transactions must be fully collateralized at all times but involve some risk to
the Fund if the other party should default on its obligation and the Fund is
delayed or prevented from recovering its assets or realizing on the collateral.
The Fund may also purchase securities for future delivery, which may increase
its overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date.
INVESTMENTS IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund is
permitted to invest in other investment companies or pooled vehicles, including
closed-end funds, that are advised by SCMI or its affiliates or by unaffiliated
parties. The Fund may invest in the shares of other investment companies that
invest in securities in which the Fund is permitted to invest. Pursuant to the
Investment Company Act of 1940, as amended (the "1940 Act"), the Fund may invest
up to 10% of its total assets in the shares of other investment companies and up
to 5% of its total assets in any one investment company, as long as each
investment does not represent more than 3% of the outstanding voting stock of
the investment company at the time of such investment. When investing through
investment companies, the Fund may pay a premium above such investment
companies' net asset value per share. As a shareholder in an investment company,
the Fund would bear its ratable share of the investment company's expenses,
including its advisory and administrative fees. At the same time, the Fund would
continue to pay its own fees and expenses. The Fund does not intend to invest in
other investment companies unless, in SCMI's judgment, the potential benefits of
such investment justify the payments of any applicable premiums or sales
charges.
LIQUIDITY. The Fund will not invest more than 15% of its net assets in
securities determined by SCMI to be illiquid. Certain securities that are
restricted as to resale may nonetheless be resold by the Fund in accordance with
Rule 144A under the Securities Act of 1933, as amended. Such securities may be
determined by SCMI to be liquid for purposes of compliance with the limitation
on the Fund's investment in illiquid securities. There can, however, be no
assurance that the Fund will be able to sell such securities at any time when
SCMI deems it advisable to do so or at prices prevailing for comparable
securities that are more widely held.
PORTFOLIO TURNOVER. The Fund 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,
transaction costs and potentially higher amounts of taxable income. See
"Taxation" in the SAI.
MANAGEMENT OF THE FUND
[NEW SCHRODER GRAPHIC OF WORLD]
BOARDS OF TRUSTEES
The business and affairs of the Fund are managed under the direction of
the Board of Trustees of the Trust. The business and affairs of the Portfolios
are managed under the direction of the Board of Trustees of Schroder Capital
Funds, a Delaware business trust of which each Portfolio is a series of shares.
Information regarding the Trustees and executive officers of the Trust, as well
as the Trustees and executive officers of Schroder Capital Funds, is contained
in the SAI under "Management, Trustees and Officers."
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
SCMI is a wholly owned U.S. subsidiary of Schroders U.S. Holdings Inc., an
indirect, wholly owned U.S. subsidiary of Schroders plc. Schroders plc is the
holding company parent of a large world-wide group of banks and financial
services companies.
SCMI serves as investment adviser to the Fund under an investment
advisory and asset allocation agreement with the Trust (the "Fund Advisory
Agreement"). Under the Fund Advisory Agreement, SCMI is entitled to receive a
monthly investment advisory fee for asset allocation services at the annual rate
of 0.20% of the Fund's average daily net assets with respect to assets invested
in the Portfolios (or another registered investment company). SCMI does not
receive an additional investment advisory fee directly from the Fund for any of
the Fund's assets invested in Asia ex-Japan Portfolio or Japan Portfolio. The
Board of Trustees may at any time determine that the Fund should cease investing
in one or both of those Portfolios. In that event, the Fund would pay SCMI a
monthly fee at an annual rate of 0.90% of the Fund's average daily net assets
managed by SCMI directly at the Fund level. The Fund Advisory Agreement is the
same in all material respects as the advisory agreements under which SCMI acts
as investment adviser to the Portfolios (except as to the parties and the fees).
Subject to such policies as the Board of Trustees of Schroder Capital
Funds may determine, SCMI also furnishes a continuous investment program for
each Portfolio and makes investment decisions on its behalf. For these services,
the Investment Advisory Agreements between SCMI and Schroder Capital Funds
provide that SCMI is entitled to receive monthly advisory fees at the annual
rates of 0.70% and 0.55%, respectively, of Asia ex-Japan Portfolio's and Japan
Portfolio's average daily net assets.
The Fund currently pursues its investment objective through investment
in Asia ex-Japan and Japan Portfolios. The Fund's investments may be withdrawn
from the Portfolios at any time if the Trust Board determines that it is in the
best interests of the Fund and its shareholders to do so. See "Other Information
- --Fund Structure".
The current investment management team at SCMI with primary responsibility
for managing the Fund and the Portfolios includes Louise Croset, a Trustee and
President of the Trust; Heather F. Crighton, Vice President of the Trust; and
Donald M. Farquharson, Vice President of the Trust. Ms. Croset and Ms. Crighton
are primarily responsible for management of Asian securities excluding Japan,
while Ms. Croset and Mr. Farquharson are primarily responsible for management of
Japanese securities.
Ms. Croset has managed the assets of Schroder Asian Growth Fund, Inc. (the
predecessor closed-end fund) since January 1997 and has managed the Fund's and
Portfolios' assets since inception. She has been a First Vice President and
Director of SCMI since 1993. She served as a Vice President at Wellington
Management Co. from 1987 to 1993. Ms. Crighton, a manager of the Predecessor
Fund and the Fund since inception, is a Vice President of SCMI and has been
employed by SCMI in the investment research and portfolio management areas since
1992. Mr. Farquharson is a First Vice President of SCMI. He originally joined
SCMI as an equity analyst in 1988, served as the head of SCMI's Japanese Equity
Research group in Tokyo from 1993 to 1995, and thereafter has served as fund
manager.
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Fund Advisors Inc. ("Schroder Advisors"), and a
subadministration agreement with Forum Administrative Services, LLC ("Forum").
Under these agreements, Schroder Advisors and Forum provide certain management
and administrative services necessary for the Fund's operations. For providing
services to the Fund, Schroder Advisors and Forum are each entitled to a monthly
fee at the annual rate of 0.05% of the Fund's average daily net assets. Schroder
Advisors and Forum provide similar services to each Portfolio, for which each is
entitled to a monthly fee at the annual rate of 0.05% of each Portfolio's
average daily net assets.
DISTRIBUTOR
Schroder Advisors, 787 Seventh Avenue, New York, New York 10019, serves
as Distributor of Fund shares under a Distribution Agreement. Schroder Advisors
was organized in 1989 as a registered broker-dealer to serve as an administrator
and distributor of the Fund and other mutual funds.
SHAREHOLDER SERVICE PLAN
The Trust has adopted a shareholder service plan (the "Plan") for the
Fund's Class A Shares. Under the Plan, the Fund may pay Schroder Advisors or
other broker-dealers or financial institutions ("Service Organizations") a
servicing fee. Payments under the Plan may be for various types of services,
including: (1) answering customer inquiries regarding the manner in which
purchases, exchanges and redemptions of shares of the Fund may be effected and
other matters pertaining to the Fund's services; (2) providing necessary
personnel and facilities to establish and maintain shareholder accounts and
records; (3) assisting shareholders in arranging for processing purchase,
exchange and redemption transactions; (4) arranging for the wiring of funds; (5)
guaranteeing shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts; (6) integrating
periodic statements with other customer transactions; and (7) providing such
other related services as the shareholder may request. Fees are payable under
the Plan at the annual rate of 0.25% of the Fund's average daily net assets
attributable to the Class A Shares.
Payments to a particular Service Organization under the Plan are
calculated by reference to the average daily net assets of Class A Shares owned
beneficially by investors who have a service relationship with the Service
Organization. Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to invest more than
the minimum or subsequent investments specified by the Fund or charging a direct
fee for servicing. If imposed, these fees would be in addition to any amounts
which might be paid to the Service Organization by Schroder Advisors.
Shareholders using Service Organizations are urged to consult them regarding any
such fees or conditions.
EXPENSES
The Fund bears all costs of its operations other than expenses
specifically assumed by SCMI, Schroder Advisors, or Forum. The costs borne by
the Fund include legal and accounting expenses; Trustees' fees and expenses;
insurance premiums, custodian and transfer agent fees and expenses; expenses of
registering and qualifying the Fund's shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on
portfolio securities and pricing of the Fund's shares; expenses of maintaining
the Trust's and the Fund's legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. For assets invested in a Portfolio, the Fund also
bears its ratable share of the Portfolio's expenses, including any investment
advisory fees payable to SCMI. From time to time, SCMI, Schroder Advisors or
Forum may waive voluntarily all or a portion of its fees.
PORTFOLIO TRANSACTIONS
SCMI places orders for the purchase and sale of the Fund's investments
with brokers and dealers it selects and seeks "best execution" of such portfolio
transactions. The Fund may pay brokers 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. Commission rates for
brokerage transactions are fixed on many foreign securities exchanges, which may
cause higher brokerage expenses to accrue to the Fund than would be the case for
comparable transactions effected on U.S. securities exchanges.
Subject to the Fund'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
Schroder, to effect transactions of the Fund or a Portfolio on certain foreign
securities exchanges. Because of the affiliation between SCMI and Schroder
Securities, payment of commissions by the Fund or a Portfolio to Schroder
Securities is subject to procedures adopted by the Board of Trustees of Schroder
Capital Funds designed to ensure that commissions will not exceed the usual and
customary brokers' commissions. No specific portion of the Fund's brokerage will
be directed to Schroder Securities, and in no event will Schroder Securities
receive any brokerage fees in recognition of research services.
INVESTMENT IN THE FUND
PURCHASE OF SHARES
Investors may purchase Class A Shares directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Boston Financial Data Services, Inc., the Fund's transfer agent
(the "Transfer Agent"). See "Other Information -- Shareholder Inquiries".
Investments also may be made through broker-dealers and other financial
institutions that assist their customers in purchasing Class A Shares ("Service
Organizations"). Service Organizations may charge their customers a service fee
for processing orders to purchase or sell shares. Investors wishing to purchase
Class A Shares through their accounts at a Service Organization should contact
that organization directly for appropriate instructions.
The Fund's Class A Shares are offered at the applicable offering price
(the next-determined net asset value per share plus an initial sales charge
assessed as described below) after receipt of a completed account application
(at the address set forth below). The minimum initial investment is $2,500, and
the minimum subsequent investment is $250. All purchase payments are invested in
full and fractional shares. The Fund is authorized to reject any purchase order.
Purchases may be made by mailing a check (in U.S. dollars), payable to
Schroder All-Asia Fund to:
Schroder All-Asia Fund -- Class A Shares
Schroder Series Trust II
Boston Financial Data Services
P.O. Box 8507
Boston, Massachusetts 02266-8507
For initial purchases, the check must be accompanied by a completed
account application in proper form. Further documentation, such as corporate
resolutions and instruments of authority, may be requested from corporations,
administrators, executors, personal representatives, directors or custodians to
evidence the authority of the person or entity making the subscription request.
No third party checks will be accepted.
Subsequent purchases may be made by mailing a check, by sending a bank
wire, or through a shareholder's Service Organization, as indicated above. All
payments should clearly indicate the shareholder's name and account number.
Investors and Service Organizations (on behalf of their customers) may
transmit purchase payments by Federal Reserve Bank wire directly to the Fund as
follows:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts
ABA No.: 011000028
Ref.: Schroder All-Asia Fund -- Class A Shares
DDA No.: 9904-650-0
FBO: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class
(I.E., Class A Shares), the account name and number, address, confirmation
number, amount to be wired, name of the wiring bank, and name and telephone
number of the person to be contacted in connection with the order. If the
initial investment is by wire, an account number will be assigned and a
completed account application must be mailed to the Fund before any transaction
will be effected. Wire orders received prior to the close of the New York Stock
Exchange (the "Exchange") on each day that the Exchange is open for trading are
processed at the NAV determined as of that day. Wire orders received after the
close of the Exchange are processed at the NAV next determined. See "Net Asset
Value".
The Fund's Transfer Agent establishes for each shareholder of record an
open account to which all shares purchased and all reinvested dividends and
other distributions are credited. Although most shareholders elect not to
receive share certificates, certificates for full shares can be obtained by
written request to the Fund's Transfer Agent. No certificates are issued for
fractional shares.
The Transfer Agent will deem an account lost if six months have passed
since correspondence to the shareholder's address of record is returned, unless
the Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions will automatically be reinvested.
In addition, the amount of any outstanding checks for dividends and other
distributions that have been returned to the Transfer Agent will be reinvested
and the checks will be canceled.
SALES CHARGES AND DISCOUNTS
The public offering price of the Fund's Class A Shares is their
next-determined NAV plus an initial sales charge assessed as follows (no sales
charge is assessed on the reinvestment of dividends or distributions):
<TABLE>
BROKER-
DEALERS'
REALLOWANCE
SALES CHARGE AS A
AS A PERCENTAGE OF PERCENTAGE OF
-------------------------------------------------
AMOUNT OF PURCHASE OFFERING PRICE NET ASSET VALUE* OFFERING PRICE
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Less than $25,000 5.25% 5.54% 5.00%
At least $25,000 but less than $50,000 4.75% 4.99% 4.50%
At least $50,000 but less than $100,000 4.00% 4.17% 3.75%
At least $100,000 but less than $250,000 3.00% 3.09% 2.75%
At least $250,000 but less than $1,000,000 2.00% 2.04% 1.80%
$1,000,000 and over 1.00% 1.01% 1.01%
</TABLE>
------------------------------------------------
*Rounded to the nearest one-hundredth percent.
Schroder Advisors may pay a broker-dealers' reallowance to selected
broker-dealers purchasing Class A Shares as principal or agent, which may
include Service Organizations. Normally, Schroder Advisors reallows discounts to
selected broker-dealers in the amounts indicated in the table above. In
addition, Schroder Advisors may elect to reallow the entire sales charge to
selected broker-dealers for all sales wherein orders are placed with the
Transfer Agent. The broker-dealers' reallowance may be changed from time to
time.
In addition, from time to time and at its own expense, Schroder Advisors
may provide compensation, including financial assistance, to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns or other dealer-sponsored special
events. Compensation may include: (1) the provision of travel arrangements and
lodging; (2) tickets for entertainment events; and (3) merchandise. SCMI and/or
Schroder Advisors may make additional payments (out of their respective
resources) to selected broker-dealers on shares purchased at NAV. In some
instances, this compensation may be made available only to certain dealers or
other financial intermediaries who have sold or are expected to sell significant
amounts of Class A Shares or who charge an asset based fee (whether or not they
have a fiduciary relationship with their clients).
REDUCED INITIAL SALES CHARGES. To qualify for a reduced sales charge,
you or your Service Organization must notify the Transfer Agent at the time of
purchase of the your intention to qualify and must provide the Transfer Agent
with sufficient information to verify that the purchase qualifies for a reduced
sales charge. Reduced sales charges may be modified or terminated at any time
and are subject to confirmation of your holdings. For purposes of calculating
the eligibility for sales charge break points, shareholders shall be credited
with the number of Class A Shares held as a result of the conversion of Schroder
Asian Growth Fund, Inc., the predecessor closed-end fund.
SALES AT NET ASSET VALUE. Class A Shares are sold at net asset value
without imposition of sales charges when investments are made by the following
classes of investors: (1) trustees or other fiduciaries purchasing shares for
employee benefit plans which are sponsored by organizations which have at least
100 employees; (2) current or retired Trustees, directors and officers of the
investment companies for which SCMI serves as investment advisor; employees or
retired employees of SCMI or its affiliates; the spouses, children, siblings,
and parents of the persons in the foregoing categories; and trusts primarily for
the benefit of such persons; (3) registered representatives or full-time
employees of broker/dealers that have entered into dealer or shareholder
servicing agreements with Schroder Advisors, and the children, siblings, and
parents of such persons; and employees of financial institutions that directly,
or indirectly through their affiliates, have entered into dealer agreements with
Schroder Advisors ( or that otherwise have an arrangement with respect to sales
of Fund shares with a broker/dealer that has entered into a dealer agreement
with Schroder Advisors) and the spouses, children, siblings and parents of such
employees; (4) companies exchanging shares with or selling assets to the Fund
pursuant to a merger, acquisition or exchange offer ( or similar transaction);
(5) registered investment advisors and bank trust departments exercising
discretionary investment authority with respect to the assets invested in the
Fund; (6) persons participating in a "wrap account" or similar fee-based program
sponsored and maintained by a registered broker/dealer which has entered into
agreements with Schroder Advisors; (7) clients of administrators of
tax-qualified employee benefit plans which have entered into agreements with
Schroder Advisors; and (8) retirement plans participants who borrow from their
retirement accounts by redeeming shares of the Fund and subsequently repay such
loans via purchase of Fund shares.
The Fund may require appropriate documentation concerning an investor's
eligibility to purchase Fund shares without a sales charge. If you invest
through a broker/dealer or other financial institution, your broker/dealer or
other financial institution will be responsible for electing on your behalf to
take advantage of any of these reduced sales charges or waivers described above.
Please instruct your broker/dealer or other financial institution accordingly.
REINSTATEMENT PRIVILEGE. If you have redeemed the Fund's Class A
Shares, you may, within 60 days after the redemption, repurchase them without
paying additional sales charges. You or your Service Organization should contact
the Transfer Agent for further information if you wish to exercise this
reinstatement privilege. Consult your tax advisor about the potential tax
consequences of reinstatement.
INVESTORS IN OTHER FUND FAMILIES. You may make purchases at NAV
(without a sales charge) if: (1) you are investing the proceeds from a
redemption of shares of another open-end investment company; (2) on which you
paid a front-end sales charge; and (3) the redemption occurred within 60 days
prior to the date of your purchase of Class A Shares. You or your Service
Organization should contact the Transfer Agent for further information.
RIGHTS OF ACCUMULATION. If you notify the Transfer Agent or your
Service Organization, you may include the Class A Shares you already own (valued
at the maximum offering price) in calculating the price applicable to your
current purchase.
STATEMENT OF INTENTION. You may obtain reduced sales charges based on
cumulative purchases by executing a written Statement of Intention that
expresses your intent to invest $25,000 or more in the Fund's Class A Shares
within a period of 13 months. The applicable sale charge will be determined by
the aggregate Statement of Intention amount; the public offering price of each
investment will vary based on the then current net asset value of the Fund. If
you wish to enter into a Statement of Intention in conjunction with your initial
investment in the Fund's Class A Shares, please complete the appropriate portion
of the account application form. Current Fund shareholders may obtain a
Statement of Intention form by contacting the Transfer Agent.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Fund Class A Shares are offered in connection with tax-deferred
retirement plans. Application forms and further information about these plans,
including applicable fees, are available upon request. Before investing in the
Fund through one of these plans, investors should consult their tax advisors.
The Fund may be used as an investment vehicle for an IRA including
SEP-IRA. An IRA naming State Street Bank and Trust Company as custodian is
available from the Trust or the Transfer Agent. The minimum initial investment
for an IRA is $2,000; the minimum subsequent investment is $250. Under certain
circumstances contributions to an IRA may be tax deductible. IRAs are available
to individuals (and their spouses) who receive compensation or earned income
whether or not they are active participants in a tax-qualified or
government-approved retirement plan. An IRA contribution by an individual or
spouse who participates in a tax-qualified or government-approved retirement
plan may not be deductible, depending upon the individual's income. Individuals
also may establish an IRA to receive a "rollover" contribution of distributions
from another IRA or qualified plan. Tax advice should be obtained before
effecting a rollover.
EXCHANGES
In most cases, shareholders may exchange the Fund's Class A Shares for
"Advisor" class shares of any fund offered by the Schroder family of funds so
long as your investment meets the initial investment minimum of the fund being
purchased and the respective minimum account balance remains in each fund owned.
Exchanges between each fund are at NAV with respect to the Fund purchased.
For federal income tax purposes an exchange is considered to be a sale
of shares on which you may realize a capital gain or loss. If you hold Class A
Shares through a Service Organization, you must make an exchange through your
Service Organization. If you hold Class A Shares directly, you may make an
exchange by calling the Transfer Agent at 1-800-464-3108 (see "Redemption of
Shares -- By Telephone") or by mailing written instructions to Schroder Series
Trust II, Boston Financial Data Services, Boston, Massachusetts 02266-8507.
Exchange privileges may be exercised only in those states where shares of the
other funds of the Schroder family of funds may legally be sold. Exchange
privileges may be amended or terminated at any time upon sixty (60) days'
notice.
REDEMPTION OF SHARES
Class A Shares are redeemed at their NAV next determined after receipt
by the Fund (see the address set forth under "Purchase of Shares") of a
redemption request in proper form. Redemption requests that are received prior
to the close of the Exchange on any day are processed at the NAV determined on
that day. Redemption requests that are received after the close of the Exchange
are processed at the NAV next determined. See "Net Asset Value".
TELEPHONE REQUESTS. Redemption requests may be made by telephoning the
Transfer Agent at 1-800-464-3108. A shareholder must provide the Transfer Agent
with the class of shares, the dollar amount or number of shares to be redeemed,
shareholder account number, and some additional form of identification. A
redemption by telephone may be made only if the telephone redemption privilege
option has been elected on the account application or otherwise in writing. In
an effort to prevent unauthorized or fraudulent redemption requests by
telephone, reasonable procedures will be followed by the Transfer Agent to
confirm that telephone instructions are genuine. The Transfer Agent and the
Trust generally will not be liable for any losses due to unauthorized or
fraudulent redemption requests, but either or both may be liable if they do not
follow these procedures. Shares for which certificates have been issued may not
be redeemed by telephone. In times of drastic economic or market change it may
be difficult to make redemptions by telephone. If a shareholder cannot reach the
Transfer Agent by telephone, redemption requests may be mailed or hand-delivered
to the Transfer Agent.
WRITTEN REQUESTS. Redemptions may be made by letter to the Fund
specifying the class of Shares, the dollar amount or number of Shares to be
redeemed, and the shareholder account number. The letter must also be signed in
exactly the same way the account is registered (if there is more than one owner
of the Shares, all must sign) and, in certain cases, signatures must be
guaranteed by an institution that is acceptable to the Transfer Agent. Such
institutions include certain banks, brokers, dealers (including municipal and
government securities brokers and dealers), credit unions and savings
associations. Notaries public are not acceptable. Further documentation may be
requested to evidence the authority of the person or entity making the
redemption request. Questions concerning the need for signature guarantees or
documentation of authority should be directed to the Fund at the above address
or by calling the telephone number appearing on the cover of this Prospectus.
If Class A Shares to be redeemed are held in certificate form, the
certificates must be enclosed with the redemption request and the assignment
form on the back of the certificates (or an assignment separate from the
certificates but accompanied by the certificates) must be signed by all owners
in exactly the same way the owners' names are written on the face of the
certificates. Requirements for signature guarantees and/or documentation of
authority as described above could also apply. For your protection, the Trust
suggests that certificates be sent by registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds
normally are mailed within seven days. No redemption proceeds are mailed until
checks in payment for the purchase of the Class A Shares to be redeemed have
been cleared, which may take up to 15 calendar days from the purchase date.
Unless other instructions are given in proper form, a check for the proceeds of
a redemption are sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when:
(1) trading on the New York Stock Exchange is restricted or that the New York
Stock Exchange is closed; (2) the SEC has by order permitted such suspension; or
(3) an emergency (as defined by rules of the SEC) exists making disposal of
portfolio investments or determination of the Fund's NAV not reasonably
practicable.
If the Board of Trustees determines that it would be detrimental to the
best interest of the remaining shareholders of the Fund to make payment wholly
or partly in cash, the Fund may redeem Class A Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Class A Shares solely in cash up to the lesser of $250,000 or 1%
of net assets during any 90-day period for any one shareholder. In the event
that payment for redeemed Class A Shares is made wholly or partly in portfolio
securities, the shareholder may be subject to additional risks and costs in
converting the securities to cash.
See "Additional Purchase and Redemption Information" in the SAI.
The proceeds of a redemption may be more or less than the amount
invested and, therefore, a redemption may result in a gain or loss for federal
income tax purposes.
MINIMUM ACCOUNT BALANCE. Due to the relatively high cost of maintaining
smaller accounts, the Fund reserves the right to redeem shares in any account
(other than an IRA) if at any time the account does not have a value of at least
$2,000, unless the value of the account falls below that amount solely as a
result of market activity. Shareholders will be notified that the value of the
account is less than the required minimum and be allowed at least 30 days to
make an additional investment to increase the account balance to at least the
required minimum amount.
NET ASSET VALUE
The net asset value per share of the Fund is calculated for Class A
Shares as of the close of trading on the New York Stock Exchange, on each day
the Exchange is open, which excludes the following U.S. holidays: New Year's
Day, Martin Luther King, Jr. 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 Fund's assets,
less its liabilities by the number of outstanding shares of the Fund.
Generally, securities that are listed on recognized stock exchanges are
valued at the last reported sale price, on the day when the securities are
valued (the "Valuation Day"), on the primary exchange on which the securities
are principally traded. Listed securities traded on recognized stock exchanges
for which there were no sales on the Valuation Day are valued at the last sale
price on the preceding trading day or at closing mid-market prices. Securities
traded in over-the-counter markets 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 Schroder Core Board of Trustees.
Trading in securities on non-U.S. exchanges and over-the-counter
markets may not take place on every day that the Exchange is open for trading.
Furthermore, trading takes place in various foreign markets on days on which the
Fund's NAV is not calculated. If events materially affecting the value of
foreign securities occur between the time when their price is determined and the
time when NAV is calculated, such securities may be valued at fair value as
determined in good faith by using methods approved by the Schroder Core Board of
Trustees.
All assets and liabilities of the Fund denominated in foreign
currencies are valued in U.S. dollars based on the exchange rate last quoted by
a major bank prior to the time when the Fund's NAV is calculated.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THE FUND
The Fund intends to comply with the provisions of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies. By
complying therewith, the Fund will not have to pay federal income tax on that
part of its income or net realized capital gain that is distributed to
shareholders. The Fund intends to distribute substantially all of its income and
net realized capital gain, and therefore, intends not to be subject to federal
income tax.
Dividends and capital-gain distributions on Class A Shares are
reinvested in additional Class A Shares at NAV unless the shareholder has
elected in the account application, or otherwise in writing, to receive
dividends and other distributions in cash.
Dividends from the Fund's income generally will be taxable to
shareholders as ordinary income, whether the dividends are invested in
additional Class A Shares or received in cash. Distributions by the Fund of any
net long-term capital gain will be taxable to a shareholder as long-term capital
gain regardless of how long the shareholder has held the Class A Shares. Such
distributions will qualify for the new reduced rates for capital gains on assets
held for more than 18 months to the extent they represent gains on the sale of
such assets. Each year the Trust will notify shareholders of the tax status of
dividends and other distributions.
Dividends from the Fund are generally not expected to qualify for the
dividends-received deduction for corporate shareholders because the Fund does
not generally expect to receive dividends from domestic corporations.
A redemption of Class A Shares may result in taxable gain or loss to
the redeeming shareholder, depending on whether the redemption proceeds are more
or less than the shareholder's basis in the redeemed Class A Shares. If Class A
Shares are redeemed at a loss after being held for six months or less, the loss
will be treated as a long-term, rather than a short-term, capital loss to the
extent of any capital gain distributions received on those Class A Shares.
The Fund must withhold 31% from dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other
noncorporate shareholders who do not furnish the Fund with a correct taxpayer
identification number. Withholding at that rate also is required from dividends
and capital gain distributions payable to such shareholders who otherwise are
subject to backup withholding. Depending on the residence of a shareholder for
tax purposes, distributions from the Fund may also be subject to state and local
taxes, including withholding taxes.
In an effort to adhere to certain tax requirements, the Fund may have
to limit its investment activity in some types of instruments.
If the Fund's dividends exceed its taxable income in any year, all or a
portion of the Fund's dividends may be treated as a return of capital to
shareholders for tax purposes. Any return of capital will reduce the cost basis
of your shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. Shareholders will be notified
by the Trust if a distribution included a return of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the Fund
and its investments, which generally reduce the Fund's income.
Pursuant to the tax convention between the U.S. and Japan (the
"Convention"), a Japanese withholding tax at the maximum rate of 15% is, with
certain exceptions, imposed upon dividends paid by Japanese corporations to the
Fund. Pursuant to the present terms of the Convention, interest received by the
Fund from sources within Japan is subject to a Japanese withholding tax at a
maximum rate of 10%. Capital gains of the Fund arising from its investments as
described herein are not taxable in Japan.
Generally, the Fund will be subject to the Japanese securities
transaction tax on its sale of certain securities in Japan. The current rates of
such tax range from 0.03% to 0.30% depending upon the particular type of
securities involved. Transactions involving equity securities are currently
taxed at the highest rate.
If the Fund is eligible to do so, it ordinarily expects to elect to
permit its shareholders to take a credit (or a deduction), subject to certain
limitations, for the Fund's share of foreign income taxes paid by the Fund. If
the Fund does make such an election, its shareholders would include as gross
income in their federal income tax returns both: (1) distributions received from
the Fund; and (2) the amount that the Fund advises is their pro rata portion of
foreign income taxes paid with respect to or withheld from, dividends and
interest paid to the Fund from its foreign investments. Shareholders then would
be entitled, subject to certain limitations, to take a foreign tax credit
against their federal income tax liability for the amount of such foreign taxes
or else to deduct such foreign taxes as an itemized deduction from gross income.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its U.S. shareholders; see the
SAI for further information. Shareholders should consult their own tax advisors
as to the tax consequences of their ownership of Class A Shares, including with
respect to the applicability of state, local and non-U.S. taxes.
THE PORTFOLIOS
Neither Portfolio is required to pay federal income tax because it is
classified as a partnership for federal income tax purposes. All interest,
dividends, gains and losses of a Portfolio will be deemed to have been "passed
through" to the Fund in proportion to the Fund's holdings in the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
Each Portfolio intends to conduct its operations so as to enable the
Fund, if it invests all of its assets in the Portfolios, to qualify as a
regulated investment company.
OTHER INFORMATION
CAPITALIZATION AND VOTING
The Trust was formed on December 5, 1997, as a Delaware business trust.
The Trust has authority to issue an unlimited number of shares of beneficial
interest. The Trust Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate portfolios or series
(such as the Fund) and may divide such portfolios or series into classes of
shares (such as the Class A Shares), and the costs of doing so are borne by the
Trust or series in accordance with the Trust Instrument. The Trust currently
consists of one series, the Fund.
When issued in accordance with the terms of the Trust Instrument and
Prospectus, Class A Shares are fully paid, non-assessable, and have no
preemptive rights. Shareholders have non-cumulative voting rights, which means
that the holders of more than 50% of the Trust's outstanding shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so.
A shareholder is entitled to one vote for each full share held (and a fractional
vote for each fractional share held). Each Class A Share has equal voting
rights.
There normally are no meetings of shareholders to elect Trustees unless
and until such time as less than a majority of the Trustees holding office have
been elected by shareholders. However, the holders of not less than a majority
of the outstanding Shares of the Trust may remove any person serving as a
Trustee.
REPORTS
The Trust will send each Fund shareholder a semi-annual report and an
audited financial statement, when available, containing the Fund's financial
statements.
CUSTODIAN AND TRANSFER AGENT
The Chase Manhattan Bank, Global Custody Division, is custodian of the
Fund's and of the Portfolios' assets. Boston Financial Data Services, Inc.
serves as the Fund's transfer agent and dividend disbursing agent.
SHAREHOLDER INQUIRIES
Inquiries about the Fund should be directed to:
Schroder All-Asia Fund
Schroder Series Trust II
Boston Financial Data Services
P.O. Box 8507
Boston, Massachusetts 02266-8507
Information about specific shareholder accounts may be obtained from
the Transfer Agent by calling 1-800-464-3108 or 1-617-774-2565.
FUND STRUCTURE
CLASSES OF SHARES. The Fund has one class of shares, Class A Shares.
Class A Shares are offered to individual investors, in most cases through
service organizations. Another class of shares may be issued in the future with
different investment minimums, sales load (if any) and expenses. Each Share is
entitled to participate equally in dividends and other distributions and the
proceeds of any liquidation of the Fund.
THE PORTFOLIOS. The Fund currently seeks to achieve its investment
objective by allocating all of its investable assets in two Portfolios.
Accordingly, each Portfolio directly acquires its own securities, and the Fund
acquires an indirect interest in those securities. Each Portfolio is a separate
series of Schroder Capital Funds, a business trust organized under the laws of
the State of Delaware in September 1995. Schroder Capital Funds is registered
under the 1940 Act as an open-end, management investment company and currently
has eight separate series. The assets of each Portfolio, belong only to, and the
liabilities of the Portfolio are borne solely by, the Portfolio and no other
portfolio of Schroder Capital Funds.
The Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. It is expected that as of March 20, 1998,
the Fund will be one of three institutional investor in each Portfolio. A
Portfolio may permit other investment companies or other qualified investors to
invest in it. All investors in a Portfolio invest at the NAV per interest of the
Portfolio and generally on the same terms and conditions as the Fund (except as
described below regarding indemnification of the Portfolio and of the Trustees
of Schroder Capital Funds by certain investors including registered investment
companies, under certain circumstances). All investors in a Portfolio bear a
proportionate share of the Portfolio's expenses.
Neither Portfolio normally holds meetings of investors except as
required by the 1940 Act. Each investor in a Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On issues
subject to a vote of investors, as permitted under the 1940 Act and other
applicable law, the Board may solicit proxies from the Fund's shareholders and
vote the Fund's interest in a Portfolio based upon the vote of its shareholders
or the Board may determine to vote the Fund's interests in a Portfolio in the
same proportion as the vote of all other interestholders in the Portfolio. If
there are other investors in a Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders would
receive a majority of votes cast by all investors in the Portfolio; indeed, if
other investors hold a majority interest in the Portfolio, they would have
voting control of the Portfolio.
Neither Portfolio sells its shares directly to members of the general
public. Another investor in the Portfolios, such as an investment company, that
would offer its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund and could have a
different asset allocation in the Portfolios and different expenses and other
fees than the Fund. Fund shareholders, therefore, are likely to have different
returns than shareholders in another investment company that invests in the
Portfolios. There are currently no such other investment companies that offers
shares to the general public. Information regarding any such funds in the future
will be available from Schroder Capital Funds by calling Schroder Advisors at
1-800-730-2932.
Under federal securities law, 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. Schroder Core, its trustees and
certain of its officers are required to sign the registration statement and any
amendments of the Trust and may be required to sign the registration statements
of certain other investors in the Portfolio. In addition, under federal
securities law, Schroder Core may be liable for misstatements or omissions of a
material fact in any proxy soliciting material of a publicly offered investor in
Schroder Core, including the Fund. Each registered investment company or series
thereof, that invests in a Portfolio, including the Trust, is required to
indemnify Schroder Core and its trustees and officers ("Schroder Core
Indemnitees") against certain claims.
Indemnified claims are those brought against Schroder Core Indemnitees
based on a misstatement or omission of a material fact in the investor's
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Core and was supplied to the investor by Schroder Core. Similarly,
Schroder Core will indemnify each investor in a Portfolio, including the Fund,
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
Schroder Core that is supplied to the investor by Schroder Core. In addition,
each registered investment company investor in a Portfolio will indemnify each
Schroder Core Indemnitee against any claim 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 Schroder Core. The purpose of
these cross-indemnity provisions is principally to limit the liability of
Schroder Core 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 Schroder Core, its liability is similarly limited to information
about and supplied by it.
CERTAIN RISKS OF INVESTING IN A PORTFOLIO. The Fund's investment in a
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if a Portfolio had a large investor other than
the Fund that redeemed its interest in the Portfolio, its remaining investors
(including the Fund) might, as a result, experience higher pro rata operating
expenses, thereby producing lower returns.
The Fund may withdraw its entire investment from a Portfolio at any
time, if the Trust Board determines that it is in the best interests of the Fund
and its shareholders to do so. The Fund might withdraw, for example, if there
were other investors in a Portfolio with power to, and who did by a vote of the
shareholders of all investors (including the Fund), change the investment
objective or policies of the Portfolio in a manner not acceptable to the Trust
Board. A withdrawal could result in a distribution in kind of portfolio
securities (as opposed to a cash distribution) by a Portfolio. That distribution
could result in a less diversified portfolio of investments for the Fund and
could affect adversely the liquidity of the Fund's investment portfolio. If the
Fund decided to convert those securities to cash, it would likely incur
brokerage fees or other transaction costs. If the Fund withdrew its investment
from a Portfolio, the Trust Board would consider appropriate alternatives,
including the management of the Fund's assets in accordance with its investment
objective and policies by SCMI or the investment of all of the Fund's investable
assets in another pooled investment entity having substantially the same
investment objective as the Fund. The inability of the Fund to find a suitable
replacement investment, if the Board decided not to permit SCMI to manage the
Fund's assets, could have a significant impact on shareholders of the Fund.
Each investor in a Portfolio, including the Fund, may be liable for all
obligations of the Portfolio. The risk to an investor in a Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be remote. Upon liquidation of a
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
TRANSFER AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
P.O. Box 8507
Boston, Massachusetts 02266-8507
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The Chase Manhattan Bank
Global Custody Division
125 London Wall
London EC2Y 5AJ United Kingdom
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
TABLE OF CONTENTS
EXPENSES OF INVESTING
IN THE FUND..................................
Fee Table......................................
Example........................................
FINANCIAL HIGHLIGHTS...........................
INVESTMENT OBJECTIVE and POLICIES..............
Other Investment Practices and Risk
Considerations...............................
MANAGEMENT OF THE FUND.........................
Boards of Trustees.............................
Investment Adviser and Portfolio Managers......
Administrative Services........................
Distributor....................................
Shareholders Service Plan......................
Expenses.......................................
Portfolio Transactions.........................
INVESTMENT IN THE FUND.........................
Purchase of Shares.............................
Sales Charges and Discounts....................
Retirement Plans and Individual
Retirement Accounts..........................
Exchanges......................................
Redemption of Shares...........................
Net Asset Value................................
DIVIDENDS, DISTRIBUTIONS
AND TAXES....................................
The Fund.......................................
The Portfolio..................................
OTHER INFORMATION..............................
Capitalization and Voting......................
Reports........................................
Custodian and Transfer Agent...................
Shareholder Inquiries..........................
Fund Structure.................................
<PAGE>
SCHRODER ALL-ASIA FUND
STATEMENT OF ADDITIONAL INFORMATION
MARCH 20, 1998
[GRAPHIC OF WORLD]
INVESTMENT ADVISER
Schroder Capital Management International Inc. ("SCMI")
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc. ("Schroder Advisors")
SUBADMINISTRATOR
Forum Administrative Services, LLC ("Forum")
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc. ("BFDS")
GENERAL INFORMATION: 1-800-464-3108
ACCOUNT INFORMATION: 1-800-464-3108
FAX: 1-617-774-2579
Class A Shares of Schroder All-Asia Fund (the "Fund") are offered for sale at
the offering price (net asset value plus the applicable sales charge) as an
investment vehicle for individual investors, in most cases through Service
Organizations (as defined in the prospectus).
This Statement of Additional Information ("SAI") is not a prospectus and is
authorized for distribution only when preceded or accompanied by the Fund's
current prospectus dated March 20, 1998, as may be amended from time to time
(the "Prospectus"). This SAI contains additional and more detailed information
than that set forth in the Prospectus and should be read in conjunction with the
Prospectus and retained for future reference. The Prospectus and this SAI are
available along with other related materials for reference on the SEC's Internet
Web Site (http://www.sec.gov). All terms used in this SAI that are defined in
the Prospectus have the meaning assigned in the Prospectus. You may obtain an
additional copy of the Prospectus without charge by writing to the Fund at P.O.
Box 8507, Boston, Massachusetts 02266-8507 or calling the numbers listed above.
<PAGE>
TABLE OF CONTENTS
INTRODUCTION........................................3
INVESTMENT OBJECTIVES AND
POLICIES OF THE TRUST AND
RISK CONSIDERATIONS...............................3
Warrants and Stock Rights...........................3
American Depositary Receipts ("ADRs")...............3
Convertible Securities..............................4
Debt-to-Equity Conversions..........................4
Brady Bonds.........................................5
Zero-coupon and Payment in Kind Bonds...............5
Indexed Securities..................................5
Forward Foreign Currency Exchange Contracts.........5
Options and Futures Transactions....................6
Options on Foreign Currencies.......................7
Covered Call Writing................................8
Covered Put Writing.................................9
Purchasing Call and Put Options.....................9
Risks of Options Transactions.......................9
Futures Contracts..................................10
Interest-Rate Futures Contracts....................11
Currency Futures Contracts.........................11
Index Futures Contracts............................12
Options on Futures Contracts.......................12
Limitations on Futures Contracts and
Options on Futures Contracts.....................13
Risks of Transactions in Futures Contracts
and Related Options..............................13
Interest-Rate Transactions.........................14
When-Issued and Delayed Delivery Securities
and Forward Commitments..........................15
When, As and If Issued Securities..................15
Investment in Other Investment
Companies or Vehicles............................15
Temporary Investments..............................15
Short-Term Debt Securities.........................16
Repurchase Agreements..............................16
Restricted Securities..............................16
Rule 144A Securities...............................17
U.S. Government Securities.........................17
Bank Obligations...................................17
Loans of Portfolio Securities......................17
INVESTMENT RESTRICTIONS............................20
MANAGEMENT.........................................23
Officers and Trustees..............................23
Investment Adviser.................................25
Administrative Services............................26
Distribution of Fund Shares........................26
Fund Accounting....................................27
PORTFOLIO TRANSACTIONS.............................28
Investment Decisions...............................28
Brokerage and Research Services....................29
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION........................30
Determination of NAV Per Share.....................30
Redemption In-Kind.................................31
TAXATION...........................................31
OTHER INFORMATION..................................34
Organization.......................................34
Capitalization and Voting..........................35
Principal Shareholders.............................36
Custodian..........................................36
Transfer Agent and Dividend Disbursing Agent.......36
Legal Counsel......................................36
Independent Accountant.............................36
Year 2000 Disclosure.................................
Registration Statement.............................37
Financial Statements...............................37
APPENDIX A.......................................A-1
Description of Securities Ratings
APPENDIX B........................................B-1
Audited Financial Statements of Schroder Asian Growth Fund, Inc. for year ended
October 31, 1997
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
OF THE TRUST AND RISK CONSIDERATION
WARRANTS AND STOCK RIGHTS. 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). Investments in warrants involve certain risks, including
the possible lack of a liquid market for the resale of the warrants, potential
price fluctuations as a result of speculation or other factors and failure of
the price of the underlying security to reach a level at which the warrant can
be prudently exercised (in which case the warrant may expire without being
exercised, resulting in the loss of the Fund's entire investment therein). The
prices of warrants do not necessarily move parallel to the prices of the
underlying securities. Warrants have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
In addition, the Fund may invest to a limited degree in stock rights. A
stock right is an option given to a shareholder to buy additional shares at a
predetermined price during a specified time period. Currently, the Fund does not
intend to invest more than 5% of its total net assets (at the time of
investment) in stock rights.
AMERICAN DEPOSITARY RECEIPTS ("ADRS"). As described in the Prospectus,
the Fund may invest in American Depositary Receipts, European Depositary
Receipts, and other similar instruments provide for indirect investment in
securities of foreign issuers. Due to the absence of established securities
markets in certain foreign countries and restrictions in certain countries on
direct investment by foreign entities, the Fund may invest in certain issuers
through the purchase of sponsored and unsponsored ADRs or other similar
securities, such as American Depositary Shares, Global Depositary Shares or
International Depositary Receipts. ADRs are receipts typically issued by U.S.
banks evidencing ownership of the underlying securities into which they are
convertible. 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.
CONVERTIBLE SECURITIES. The Fund may invest in convertible preferred
stocks and convertible debt securities ("convertible securities"). A convertible
security is a bond, debenture, note, preferred stock or other security that may
be converted into or exchanged for a prescribed amount of common stock of the
same or a different issuer within a particular period of time at a specified
price or formula. Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, carry less risk than the
corporation's common stock. The value of a convertible security is a function of
its "investment value" (its value as if it did not have a conversion privilege),
and its "conversion value" (the security's worth if it were to be exchanged for
the underlying security, at market value, pursuant to its conversion privilege).
Because convertible debt is convertible into stock under specified conditions,
the value of convertible debt also is affected normally by changes in the value
of the issuer's equity securities.
DEBT-TO-EQUITY CONVERSIONS. The Fund may invest up to 5% of its net
assets in debt-to-equity conversions. Debt-to-equity conversion programs are
sponsored in varying degrees by certain foreign countries and permit investors
to use external debt of a country to make equity investments in local companies.
Many conversion programs relate primarily to investments in transportation,
communication, utilities and similar infrastructure-related areas. The terms of
the programs vary from country to country but include significant restrictions
on the application of proceeds received in the conversion and on the
repatriation of investment profits and capital. When inviting conversion
applications by holders of eligible debt, a government usually specifies the
minimum discount from par value that it will accept for conversion. SCMI
believes that debt-to-equity conversion programs may offer opportunities to
invest in otherwise restricted equity securities that have a potential for
significant capital appreciation. SCMI, therefore, may invest the Fund's assets
to a limited extent in such programs under appropriate circumstances. There can
be no assurance that debt-to-equity conversion programs will continue to be
successful or that the Fund will be able to convert all or any of its emerging
market debt portfolio into equity investments.
<PAGE>
BRADY BONDS. The Fund may invest a portion of its assets in Brady
Bonds, which are securities created through the exchange of existing commercial
bank loans to sovereign entities for new obligations in connection with debt
restructurings. Brady Bonds have been issued only recently and, therefore, do
not have a long payment history. Brady Bonds may have collateralized and
uncollateralized components, are issued in various currencies, and are actively
traded in the over-the-counter secondary market. Brady Bonds are not considered
U.S. government securities. In light of the residual risk associated with the
uncollateralized portions of Brady Bonds and, among other factors, the history
of defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds, investments in Brady Bonds are considered
speculative. Brady Bonds acquired by the Fund could be subject to restructuring
arrangements or to requests for new credit, which could cause the Fund to suffer
a loss of interest or principal on its holdings.
ZERO-COUPON AND PAYMENT IN KIND BONDS. The Fund may at times invest in
" zero-coupon" bonds and "payment-in-kind" bonds. Zero-coupon bonds are issued
at a significant discount from face value and pay interest only at maturity
rather than at intervals during the life of the security. Payment-in-kind bonds
allow the issuer, at its option, to make current interest payments on the bonds
either in cash or in additional bonds. The values of zero-coupon bonds and
payment-in-kind bonds are subject to greater fluctuation in response to changes
in market interest rates than bonds which pay interest currently, and may
involve greater credit risk than such bonds.
The Fund will not necessarily dispose of a security when its debt
rating is reduced below its rating at the time of purchase, although SCMI will
monitor the investment to determine whether continued investment in the security
will assist in meeting the Fund's investment objective. If a security's rating
is reduced below investment grade, an investment in that security may entail the
risks of lower-rated securities described below.
INDEXED SECURITIES. The Fund may invest in indexed securities, the
values of which are linked to currencies, interest rates, commodities, indices,
or other financial indicators. Investment in indexed securities involves certain
risks. In addition to the credit risk of the securities issuer and normal risks
of price changes in response to changes in interest rates, the principal amount
of indexed securities may decrease as a result of changes in the value of the
reference instruments. Also, in the case of certain indexed securities where the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Further, indexed securities may
be more volatile than the reference instruments underlying indexed securities.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS CONTRACTS. Changes in currency
exchange rates will affect the U.S. dollar values of securities denominated in
foreign currencies. Exchange rates between the U.S. dollar and other currencies
fluctuate 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. The Fund may engage in foreign currency exchanges transactions to
protect against uncertainty in the level of future exchange rates. 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.
In particular, the Fund may enter into foreign currency exchange
transactions: (1) to protect against a change in exchange ratio that may occur
between the date on which the Fund contracts to trade a security and the
settlement date; (2) to "lock in" the U.S. dollar value of interest and
dividends to be paid in a foreign currency ("transaction hedging"); or (3) to
hedge against the possibility that a foreign currency in which portfolio
securities are denominated or quoted may suffer a decline against the U.S.
dollar ("position hedging"). When investing in foreign securities, the Fund
usually effects currency exchange transactions on a spot (I.E., cash) basis at
the spot rate prevailing in the foreign exchange market. The Fund incurs foreign
exchange expenses in converting assets from one currency to another.
<PAGE>
The Fund may also enter into forward currency contracts. A
forward currency 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. Forward contracts do not eliminate fluctuations in the underlying
prices of securities and expose the Fund to the risk that the counterparty is
unable to perform.
The Fund does not intend to maintain a net exposure to forward
contracts if the fulfillment of 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 Fund will
not generally enter into these contracts for speculative purposes and will not
enter into non-hedging currency contracts. The Fund will Forward contracts are
not exchange traded, and there can be no assurance that a liquid market will
exist at a time when the Fund seeks to close out a forward contract. Currently,
only a limited market, if any, exists for hedging transactions relating to
currencies in certain emerging markets or to securities of issuers domiciled or
principally engaged in business in certain emerging markets. This may limit the
Fund's ability to hedge its investments in those markets. These contracts
involve a risk of loss if SCMI fails to predict accurately changes in relative
currency values.
From time to time, the Fund's currency hedging transactions may call
for the delivery of one foreign currency in exchange for another foreign
currency and may at times involve currencies in which its portfolio securities
are then denominated ("cross hedging"). Cross hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions related and changes in the value of the currency or
other asset or liability which was the subject of the hedge.
OPTIONS AND FUTURES TRANSACTIONS. As discussed in the Prospectus, the
Fund may write covered call options against securities held in its portfolio and
covered put options on eligible portfolio securities and may purchase options of
the same series to effect closing transactions The Fund also may hedge against
potential changes in the market value of its investments (or anticipated
investments), by purchasing put and call options on portfolio (or eligible
portfolio) securities (and the currencies in which they are denominated) and
engaging in transactions involving futures contracts and options on such
contracts.
Call and put options on U.S. Treasury notes, bonds and bills and on
various foreign currencies are listed on several U.S. and foreign securities
exchanges and are written in over-the-counter transactions ("OTC Options").
Listed options are issued or guaranteed by the exchange on which they trade or
by a clearing corporation such as the Options Clearing Corporation ("OCC").
Ownership of a listed call option gives the Fund the right to buy from the OCC
(in the U.S.) or other clearing corporation or exchange, the underlying security
or currency covered by the option at the stated exercise price (the price per
unit of the underlying security or currency) by filing an exercise notice prior
to the expiration date of the option. The writer (seller) of the option would
then have the obligation to sell, to the OCC (in the U.S.) or other clearing
corporation or exchange, the underlying security or currency at that exercise
price prior to the expiration date of the option, regardless of its then current
market price. Ownership of a listed put option would give the Fund the right to
sell the underlying security or currency to the OCC (in the U.S.) or other
clearing corporation or exchange at the stated exercise price. Upon notice of
exercise of the put option, the writer of the option would have the obligation
to purchase the underlying security or currency from the OCC (in the U.S.) or
other clearing corporation or exchange at the exercise price. The OCC or other
clearing corporation or exchange that issues listed options ensures that all
transactions in such options are properly executed.
OTC options are purchased from or sold (written) to dealers or
financial institutions that have entered into direct agreements with the Fund.
With OTC options, variables such as expiration date, exercise price and premium
are agreed between the Fund and the transacting dealer. If the transacting
dealer fails to make or take delivery of the securities or amount of foreign
currency underlying an option it has written, the Fund would lose the premium
paid for the option as well as any anticipated benefit of the transaction. The
Fund will engage in OTC option transactions only with member banks of the
Federal Reserve System or primary dealers in U.S. government securities or with
affiliates of such banks or dealers which have capital of at least $50 million
or whose obligations are guaranteed by an entity having capital of at least $50
million.
<PAGE>
OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and write options
on foreign currencies for purposes similar to those involved with investing in
forward foreign currency exchange contracts. For example, in order to protect
against declines in the dollar value of portfolio securities that are
denominated in a foreign currency, the Fund may purchase put options on an
amount of such foreign currency equivalent to the current value of the portfolio
securities involved. As a result, the Fund would be able to sell the foreign
currency for a fixed amount of U.S. dollars, thereby securing the dollar value
of the portfolio securities (less the amount of the premiums paid for the
options). Conversely, the Fund may purchase call options on foreign currencies
in which securities it anticipates purchasing are denominated to secure a set
U.S. dollar price for such securities and protect against a decline in the value
of the U.S. dollar against such foreign currency. The Fund may also purchase
call and put options to close out written option positions.
The Fund also may write covered call options on foreign currency to
protect against potential declines in its portfolio securities that are
denominated in foreign currencies. If the U.S. dollar value of the portfolio
securities falls as a result of a decline in the exchange rate between the
foreign currency in which it is denominated and the U.S. dollar, then a loss to
the Fund occasioned by such value decline would be ameliorated by receipt of the
premium on the option sold. At the same time, however, the Fund gives up the
benefit of any rise in value of the relevant portfolio securities above the
exercise price of the option and, in fact, only receives a benefit from the
writing of the option to the extent that the value of the portfolio securities
falls below the price of the premium received. The Fund also may write options
to close out long call option positions. A covered put option on a foreign
currency would be written by the Fund for the same reason it would purchase a
call option, namely, to hedge against an increase in the U.S. dollar value of a
foreign security that the Fund anticipates purchasing. In this case, the receipt
of the premium would offset, to the extent of the size of the premium, any
increased cost to the Fund resulting from an increase in the U.S. dollar value
of the foreign security. However, the Fund could not benefit from any decline in
the cost of the foreign security that is greater than the price of the premium
received. The Fund also may write options to close out long put option
positions.
Markets in foreign currency options are relatively new, and the Fund's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Fund will not purchase or
write such options unless and until, in the opinion of the SCMI, the market for
them has developed sufficiently to ensure that their risks are not greater than
the risks in connection with the underlying currency, there can be no assurance
that a liquid secondary market will exist for a particular option at any
specific time. In addition, options on foreign currencies are affected by all of
those factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar, with the result that the price
of the option position may vary with changes in the value of either or both
currencies and may have no relationship to the investment merits of a foreign
security, including foreign securities held in a "hedged" investment portfolio.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and, thus, may not reflect relatively smaller transactions
(I.E., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that are not reflected in the options market.
COVERED CALL WRITING. The Fund is permitted to write covered call
options on portfolio securities, and on the U.S. dollar and foreign currencies
in which they are denominated, without limit. Generally, a call option is
"covered" if the Fund owns or has the right to acquire without additional cash
consideration (or for additional cash consideration held for the Fund by its
custodian in a segregated account) the underlying security (currency) subject to
<PAGE>
the option. In the case of call options on U.S. Treasury Bills, however, the
Fund might own U.S. Treasury Bills of a different series from those underlying
the call option but with a principal amount and value corresponding to the
exercise price and a maturity date no later than that of the security (currency)
deliverable under the call option. A call option is also covered if the Fund
holds a call on the same security as the underlying security (currency) of the
written option, where the exercise price of the call used for coverage is equal
to or less than the exercise price of the call or greater than the exercise
price of the call written if the mark-to-market difference is maintained by the
Fund in cash, U.S. government or other high-grade debt obligations, or other
high-quality liquid securities, held by the Fund in a segregated account
maintained with its custodian.
The Fund receives a premium from the purchaser in return for a call it
has written. Receipt of such premiums may enable the Fund to earn a higher level
of current income than it would earn from only holding the underlying securities
(currencies). Moreover, the premium received offsets a portion of the potential
loss incurred by the Fund if the securities (currencies) underlying the option
are ultimately sold (exchanged) by the Fund at a loss. Furthermore, a premium
received on a call written on a foreign currency ameliorates any potential loss
of value on the portfolio security due to a decline in the value of the
currency. However, during the option period, the covered call writer has, in
return for the premium, given up the opportunity for capital appreciation above
the exercise price should the market price of the underlying security (or the
exchange rate of the currency in which it is denominated) increase but has
retained the risk of loss should the price of the underlying security (or the
exchange rate of the currency in which it is denominated) decline. The premium
received fluctuates with varying economic market conditions. If the market value
of the portfolio securities (or the currencies in which they are denominated)
upon which call options have been written increases, the Fund may receive a
lower total return from the portion of its portfolio upon which calls have been
written than it would have received had such calls not been written.
With respect to listed options and certain OTC options, during the
option period the Fund may be required, at any time, to deliver the underlying
security (currency) against payment of the exercise price on any calls it has
written (exercise of certain listed and OTC options may be limited to specific
expiration dates). This obligation terminates upon the expiration of the option
period or at such earlier time when the writer effects a closing purchase
transaction. A closing purchase transaction is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Fund has been assigned an exercise notice, the Fund is unable to effect a
closing purchase transaction.
Closing purchase transactions are ordinarily effected to realize a
profit on an outstanding call option, to prevent an underlying security
(currency) from being called, to permit the sale of an underlying security (or
the exchange of the underlying currency) or to enable the Fund to write another
call option on the underlying security (currency) with either a different
exercise price or expiration date or both. The Fund may realize a net gain or
loss from a closing purchase transaction depending upon whether the amount of
the premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be wholly or partially offset by unrealized
appreciation in the market value of the underlying security (currency).
Conversely, a gain resulting from a closing purchase transaction could be offset
in whole or in part or exceeded by a decline in the market value of the
underlying security (currency).
If a call option expires unexercised, the Fund realizes a gain in the
amount of the premium on the option less the commission paid. Such a gain,
however, may be offset by depreciation in the market value of the underlying
security (currency) during the option period. If a call option is exercised, the
Fund realizes a gain or loss from the sale of the underlying security (currency)
equal to the difference between the purchase price of the underlying security
(currency) and the proceeds of the sale of the security (currency) plus the
premium received on the option less the commission paid.
Options written by the Fund normally have expiration dates of up to
eighteen months from the date written. The exercised price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
<PAGE>
COVERED PUT WRITING. As a writer of a covered put option, the Fund
would incur an obligation to buy the security underlying the option from the
purchaser of the put, at the option's exercise price at any time during the
option period, at the purchaser's election (certain listed and OTC put options
written by the Fund will be exercisable by the purchaser only on a specific
date). A put is "covered" if at all times the Fund maintains with its custodian
(in a segregated account) cash, U.S. government or other high-grade obligations,
or other high-quality liquid securities, in an amount equal to at least the
exercise price of the option. Similarly, a short put position could be covered
by the Fund by its purchase of a put option on the same security (currency) as
the underlying security of the written option, where the exercise price of the
purchased option is equal to or more than the exercise price of the put written
or less than the exercise price of the put written if the marked to market
difference is maintained by the Fund in cash, U.S. government or other
high-grade debt obligations, or other high-quality liquid securities, that the
Fund holds in a segregated account maintained at its custodian. In writing puts,
the Fund assumes the risk of loss should the market value of the underlying
security (currency) decline below the exercise price of the option (any loss
being decreased by the receipt of the premium on the option written). In the
case of listed options, during the option period the Fund may be required, at
any time, to make payment of the exercise price against delivery of the
underlying security (currency). The operation of and limitations on covered put
options in other respects are substantially identical to those of call options.
The Fund will write put options for three purposes: (1) to receive the
income derived from the premiums paid by purchasers; (2) when SCMI wishes to
purchase the security (or a security denominated in the currency underlying the
option) underlying the option at a price lower than its current market price (in
which case it will write the covered put at an exercise price reflecting the
lower purchase price sought); and (3) to close out a long put option position.
The potential gain on a covered put option is limited to the premium received on
the option (less the commissions paid on the transaction) while the potential
loss equals the differences between the exercise price of the option and the
current market price of the underlying securities (currencies) when the put is
exercised, offset by the premium received (less the commissions paid on the
transaction).
PURCHASING CALL AND PUT OPTIONS. The Fund may purchase listed and OTC
call and put options in amounts equaling up to 5% of its total assets. The Fund
may purchase a call option in order to close out a covered call position, see
"Covered Call Writing", to protect against an increase in price of a security it
anticipates purchasing or, in the case of a call option on foreign currency, to
hedge against an adverse exchange rate move of the currency in which the
security it anticipates purchasing is denominated vis-a-vis the currency in
which the exercise price is denominated. The purchase of the call option to
effect a closing transaction on a call written over-the-counter may be a listed
or an OTC option. In either case, the call purchased is likely to be on the same
securities (currencies) and have the same terms as the written option. If
purchased over-the-counter, the option would generally be acquired from the
dealer or financial institution that purchased the call written by the Fund.
The Fund may purchase put options on securities (currencies) that it
holds in its portfolio to protect itself against a decline in the value of the
security and to close out written put option positions. If the value of the
underlying security (currency) were to fall below the exercise price of the put
purchased in an amount greater then the premium paid for the option, the Fund
would incur no additional loss. In addition, the Fund may sell a put option it
has previously purchased prior to the sale of the securities (currencies)
underlying such option. Such a sale would result in a net gain or loss depending
upon whether the amount received on the sale is more or less than the premium
and other transaction costs paid on the put option that is sold. Any such gain
or loss could be offset in whole or in part by a change in the market value of
the underlying security (currency). If a put option purchased by the Fund
expired without being sold or exercised, the premium would be lost.
RISKS OF OPTIONS TRANSACTIONS. During the option period, the covered
call writer has, in return for the premium on the option, given up the
opportunity for capital appreciation above the exercise price if the market
price of the underlying security (or the value of its denominated currency)
increases, but the writer has retained the risk of loss if the price of the
underlying security (or the value of its denominated currency) declines. The
writer has no control over the time when it may be required to fulfill its
obligation as a writer of the option. Once an option writer has received an
exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver or receive the
underlying securities at the exercise price.
<PAGE>
Prior to exercise or expiration, an option position can only be
terminated by entering into a closing purchase or sale transaction. If a covered
call option writer is unable to effect a closing purchase transaction or to
purchase an offsetting OTC option, it cannot sell the underlying security until
the option expires or the option is exercised. Accordingly, a covered call
option writer may not be able to sell an underlying security at a time when it
might otherwise be advantageous to do so. A covered put option writer who is
unable to effect a closing purchase transaction or to purchase an offsetting OTC
option would continue to bear the risk of decline in the market price of the
underlying security until the option expires or is exercised. In addition, a
covered put writer would be unable to utilize the amount held in cash, U.S.
government or other high-grade short-term obligations, or other high-quality
liquid securities, as security for the put option for other investment purposes
until the exercise or expiration of the option.
The Fund's ability to close out its position as a writer of an option
is dependent upon the existence of a liquid secondary market on option
exchanges. There is no assurance that such a market will exist, particularly in
the case of OTC options, since such options will generally only be closed out by
entering into a closing purchase transaction with the purchasing dealer.
However, the Fund may be able to purchase an offsetting option that does not
close out its position as a writer but constitutes an asset of equal value to
the obligation under the option written. If the Fund is not able to either enter
into a closing purchase transaction or purchase an offsetting position, it will
be required to maintain the securities subject to the call, or the collateral
underlying the put, even though it might not be advantageous to do so, until a
closing transaction can be entered into (or the option is exercised or expires).
Among the possible reasons for the absence of a liquid secondary market
on an exchange are: (1) insufficient trading interest in certain options; (2)
restrictions on transactions imposed by an exchange; (3) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (4) interruption of the normal
operations on an exchange; (5) inadequacy of the facilities of an exchange or
the OCC to handle current trading volume; or (6) a decision by one or more
exchanges to discontinue the trading of options (or a particular class or series
of options), in which event the secondary market on that exchange (or in that
class or series of options) would cease to exist.
In the event of the bankruptcy of a broker through which the Fund
engages in transactions in options, the Fund could experience delays and/or
losses in liquidating open positions purchased or sold through the broker and/or
incur a loss of all or part of its margin deposits with the broker. Similarly,
in the event of the bankruptcy of the writer of an OTC option purchased by the
Fund, the Fund could experience a loss of all or part of the value of the
option. Transactions will be entered into by the Fund only with brokers or
financial institutions deemed creditworthy by SCMI.
Exchanges have established limitations governing the maximum number of
options on the same underlying security or futures contract (whether or not
covered) that may be written by a single investor, whether acting alone or in
concert with others (regardless of whether such options are written on the same
or different exchanges or are held or written on one or more accounts or through
one or more brokers). An exchange may order the liquidation of positions found
to be in violation of these limits and it may impose other sanctions or
restrictions. These position limits may restrict the number of listed options
which the Fund may write.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. If the option markets close before
the markets for the underlying securities, significant price and rate movements
can take place in the underlying markets that cannot be reflected in the option
markets.
The extent to which the Fund may enter into transactions involving
options may be limited by the Internal Revenue Code's requirements for
qualification as a regulated investment company and the Portfolio's intention to
operate in such a manner as to permit a fund invested in the Portfolio to
qualify as such, see "Taxation".
<PAGE>
FUTURES CONTRACTS. The Fund may purchase and sell interest-rate,
currency, and index futures contracts ("futures contracts") that are traded on
U.S. and foreign commodity exchanges, on such underlying securities as U.S.
Treasury bonds, notes and bills, and/or any foreign government fixed-income
security ("interest-rate futures contracts"), on various currencies ("currency
futures contracts"), and on such indices of U.S. and foreign securities as may
exist or come into being ("index futures contracts").
The Fund may purchase or sell interest-rate futures contracts for the
purpose of hedging some or all of the value of its portfolio securities (or
anticipated portfolio securities) against changes in prevailing interest rates.
If SCMI anticipates that interest rates may rise and, concomitantly, that the
price of certain of its portfolio securities fall, the Fund may sell an
interest-rate futures contract. If declining interest rates are anticipated, the
Fund may purchase an interest-rate futures contract to protect against a
potential increase in the price of securities the Fund intends to purchase.
Subsequently, appropriate securities may be purchased by the Fund in an orderly
fashion; as securities are purchased, corresponding futures positions would be
terminated by offsetting sales of contracts.
The Fund may purchase or sell currency futures contracts on currencies
in which its portfolio securities (or anticipated portfolio securities) are
denominated for the purposes of hedging against anticipated changes in currency
exchange rates. The Fund may enter into currency futures contracts for the same
reasons as set forth above for entering into forward foreign currency exchange
contracts; namely, to secure the value of a security purchased or sold in a
given currency vis-a-vis a different currency or to hedge against an adverse
currency exchange rate movement of a portfolio security's (or anticipated
portfolio security's) denominated currency vis-a-vis a different currency.
The Fund may purchase or sell index futures contracts for the purpose
of hedging some or all of its portfolio (or anticipated portfolio) securities
against changes in their prices. If SCMI anticipates that the prices of
securities the Fund holds may fall, the Fund may sell an index futures contract.
Conversely, if SCMI wishes to hedge the portfolio against anticipated price
rises in those securities that the Fund intends to purchase, the Fund may
purchase an index futures contract.
In addition to the above, interest-rate, currency and index futures
contracts will be bought or sold in order to close out short or long positions
maintained by the Fund in corresponding futures contracts.
Although most interest-rate futures contracts call for actual delivery
or acceptance of securities, the contracts usually are closed out before the
settlement date without making or taking delivery. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of the specific type of security (currency) and the same delivery date.
If the sale price exceeds the offsetting purchase price, the seller would be
paid the difference and would realize a gain. If the offsetting purchase price
exceeds the sale price, the seller would pay the difference and would realize a
loss. Similarly, a futures contract purchase is closed out by effecting a
futures contract sale for the same aggregate amount of the specific type of
security (currency) and the same delivery date. If the offsetting sale price
exceeds the purchase price, the purchaser would realize a gain, whereas if the
purchase price exceeds the offsetting sale price, the purchaser would realize a
loss. There is no assurance that the Fund will be able to enter into a closing
transaction.
INTEREST-RATE FUTURES CONTRACTS. When the Fund enters into an
interest-rate futures contract, it is initially required to deposit with its
custodian (in a segregated account in the name of the broker performing the
transaction) an "initial margin" of cash, U.S. government or other high-grade
short-term obligations, or other high-quality liquid securities, equal to
approximately 2% of the contract amount. Initial margin requirements are
established by the exchanges on which futures contracts trade and may change. In
addition, brokers may establish margin deposit requirements in excess of those
required by the exchanges.
Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
money by a brokers' client but is, rather, a good faith deposit on the futures
contract that will be returned to the Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily, and the
Fund may be required to make subsequent deposits with its futures contract
<PAGE>
clearing broker of cash or U.S. government securities (called "variation
margin") that are reflective of price fluctuations in the futures contract.
CURRENCY FUTURES CONTRACTS. Generally, foreign currency futures
contracts provide for the delivery of a specified amount of a given currency, on
the exercise date, for a set exercise price denominated in U.S. dollars or other
currency. Foreign currency futures contracts would be entered into for the same
reason and under the same circumstances as forward foreign currency exchange
contracts. SCMI assesses such factors as cost spreads, liquidity and transaction
costs in determining whether to use futures contracts or forward contracts in
its foreign currency transactions and hedging strategy.
Purchasers and sellers of foreign currency futures contracts are
subject to the same risks that apply generally to the buying and selling of
futures contracts. In addition, there are risks associated with foreign currency
futures contracts and their use as a hedging device similar to those associated
with options on foreign currencies described above. Further, settlement of a
foreign currency futures contract must occur within the country issuing the
underlying currency. Thus, the Fund must accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign restrictions
or regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and may be required to pay any fees, taxes or charges associated with
such delivery that are assessed in the issuing country.
INDEX FUTURES CONTRACTS. The Fund may invest in index futures
contracts. An index futures contract sale creates an obligation by the Fund, as
seller, to deliver cash at a specified future time. An index futures contract
purchase creates an obligation by the Fund, as purchaser, to take delivery of
cash at a specified future time. Futures contracts on indices do not require the
physical delivery of securities but provide for a final cash settlement on the
expiration date that reflects accumulated profits and losses credited or debited
to each party's account.
The Fund is required to maintain margin deposits with brokerage firms
through which it effects index futures contracts in a manner similar to that
described above for interest-rate futures contracts. In addition, due to current
industry practice, daily variations in gain and loss on open contracts are
required to be reflected in cash in the form of variation margin payments. The
Fund may be required to make additional margin payments during the term of the
contract.
At any time prior to expiration of the futures contract, the Fund may
elect to close the position by taking an opposite position, which will operate
to terminate the Fund's position in the futures contract. A final determination
of variation margin is then made, additional cash may be required to be paid by
or released to the Fund, and it realizes a loss or gain.
OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write call and
put options on futures contracts traded on an exchange and may enter into
closing transactions with respect to such options to terminate an existing
position. An option on a futures contract gives the purchaser the right (in
return for the premium paid) to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the term of the option. Upon
exercise of the option, the delivery of the position in the futures contract by
the writer of the option to the holder of the option is accompanied by delivery
of the accumulated balance in the writer's futures margin account, which
represents the amount by which the market price of the futures contract at the
time of exercise exceeds, in case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
The Fund may purchase and write options on futures contracts for
purposes identical to those set forth above for the purchase of a futures
contract (purchase of a call option or sale of a put option) and the sale of a
futures contract (purchase of a put option or sale of a call option), or to
close out a long or short position in futures contracts. If, for example, SCMI
wished to protect against an increase in interest rates and the resulting
negative impact on the value of a portion of its fixed-income portfolio, the
Fund might write a call option on an interest-rate futures contract, the
underlying security of which correlates with the portion of the portfolio that
SCMI seeks to hedge. Any premiums received in the writing of options on futures
contracts may provide a further hedge against losses resulting from price
declines in portions of the Fund's investment portfolio.
<PAGE>
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. To reduce this risk,
the Fund will not purchase or write options on foreign currency futures
contracts unless and until, in SCMI's opinion, the market for such options has
developed sufficiently that the risks in connection with them are not greater
than the risks in connection with transactions in the underlying foreign
currency futures contracts.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Fund may not enter into futures contracts or purchase related options thereon
if, immediately thereafter, the amount committed to margin plus the amount paid
for premiums for unexpired options on futures contracts exceeds 5% of the value
of the Fund's total assets, after taking into account unrealized gain and
unrealized loss on such contracts it has entered into, provided, however, that
in the case of an option that is in-the-money (the exercise price of the call
(put) option is less (more) than the market price of the underlying security) at
the time of purchase, the in-the-money amount may be excluded in calculating the
5%. However, there is no overall limitation on the percentage of the Fund's
assets that may be subject to a hedge position. In addition, in accordance with
the regulations of the Commodity Futures Trading Commission under which each
Portfolio is excluded from registration as a commodity pool operator, the Fund
may only enter into futures contracts and options on futures contracts
transactions for purposes of hedging a part or all of its portfolio. Except as
described above, there are no other limitations on the use of futures and
options thereon by the Fund.
The writer of an option on a futures contract is required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to futures contracts. Premiums received from the writing of an option
on a futures contract are included in initial margin deposits.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. The
Fund may sell a futures contract to protect against the decline in the value of
securities (or the currency in which they are denominated) it holds. However, it
is possible that the futures market may advance and the value of the Fund's
securities (or the currency in which they are denominated) may decline. If this
occurs, the Fund will lose money on the futures contract and also experience a
decline in value of its portfolio securities. While this might occur for only a
very brief period or to a very small degree, over time the value of a
diversified portfolio will tend to move in the same direction as the futures
contracts.
If the Fund purchases a futures contract to hedge against the increase
in value of securities it intends to buy (or the currency in which they are
denominated) and the value of such securities (currencies) decreases, then the
Fund may determine not to invest in the securities as planned and will realize a
loss on the futures contract that is not offset by a reduction in the price of
the securities.
If the Fund has sold a call option on a futures contract, it will cover
this position by holding (in a segregated account maintained by its custodian)
cash, U.S. government securities or other high-grade debt obligations, or other
high-quality liquid securities, equal in value (when added to any initial or
variation margin on deposit) to the market value of the securities (currencies)
underlying the futures contract or the exercise price of the option. Such a
position may also be covered by owning the securities (currencies) underlying
the futures contract or by holding a call option permitting the Fund to purchase
the same contract at a price no higher than the price at which the short
position was established.
In addition, if the Fund holds a long position in a futures contract,
it will hold cash, U.S. government or other high-grade debt obligations, or
other high-quality liquid securities, equal to the purchase price of the
contract (less the amount of initial or variation margin on deposit) in a
segregated account maintained by the Fund's custodian. Alternatively, the Fund
could cover its long position by purchasing a put option on the same futures
contract with an exercise price as high or higher than the price of the contract
held by the Fund.
<PAGE>
Exchanges limit the amount by which the price of a futures contract may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin on open
futures contract positions. In such situations, if the Fund has insufficient
cash, it may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition, the
Fund may be required to take or make delivery of the instruments underlying
interest-rate futures contracts it holds at a time when it is disadvantageous to
do so. The inability to close out options and futures contract positions could
also have an adverse impact on the Fund's ability to effectively hedge its
portfolio.
Futures contracts and options thereon that are purchased or sold on
foreign commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges, and brokerage
commissions, clearing costs and other transaction costs may be higher. Greater
margin requirements may limit the Fund's ability to enter into certain commodity
transactions on foreign exchanges. Moreover, differences in clearance and
delivery requirements on foreign exchanges may cause delays in the settlement of
the Fund's foreign exchange transactions.
In the event of the bankruptcy of a broker through which the Fund
engages in transactions in futures or options thereon, the Fund could experience
delays and/or losses in liquidating open positions purchased or sold through the
broker and/or incur a loss of all or part of its margin deposits with the
broker. Similarly, in the event of the bankruptcy of the writer of an OTC option
purchased by the Fund, the Fund could experience a loss of all or part of the
value of the option. Transactions are entered into by the Fund only with brokers
or financial institutions deemed creditworthy by SCMI.
While the futures contracts and options transactions in which the Fund
engages for the purpose of hedging its portfolio securities are not speculative
in nature, there are risks inherent in the use of such instruments. One such
risk that may arise in employing futures contracts to protect against the price
volatility of portfolio securities (and the currencies in which they are
denominated) is that the prices of securities and indices subject to futures
contracts (and thereby the futures contract prices) may correlate imperfectly
with the behavior of the cash prices of the Fund's portfolio securities (and the
currencies in which they are denominated). Another such risk is that prices of
interest-rate futures contracts may not move in tandem with the changes in
prevailing interest rates against which the Fund seeks a hedge. A correlation
may also be distorted by the fact that the futures market is dominated by
short-term traders seeking to profit from the difference between a contract or
security price objective and their cost of borrowed funds. Such distortions are
generally minor and are expected to diminish as the contract approaches
maturity.
There may exist an imperfect correlation between the price movements of
futures contracts purchased by the Fund and the movements in the prices of the
securities (currencies) that are the subject of the hedge. If participants in
the futures market elect to close out their contracts through offsetting
transactions rather than meet margin deposit requirements, distortions in the
normal relationship between the debt securities or currency markets and futures
markets could result. Price distortions could also result if investors in
futures contracts choose to make or take delivery of underlying securities
rather than engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, because the deposit requirements
in the futures markets are less onerous than margin requirements in the cash
market, increased participation by speculators in the futures market can be
anticipated with the resulting speculation causing temporary price distortions.
Due to the possibility of price distortions in the futures contracts market and
because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of interest-rate trends may still not result in a successful hedging
transaction.
There is no assurance that a liquid secondary market will exist for
futures contracts and related options in which the Fund may invest. In the event
a liquid market does not exist, it may not be possible to close out a futures
position, and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of variation margin. In addition,
limitations imposed by an exchange or board of trade on which futures contracts
are traded may compel the Fund to close, or prevent it from closing, out a
contract, which may result in
<PAGE>
reduced gain or increased loss to the Fund. The absence of a liquid market in
futures contracts might cause the Fund to make or take delivery of the
underlying securities (currencies) at a time when it may be disadvantageous to
do so.
The extent to which the Fund may enter into transactions involving
futures contracts and options thereon may be limited by the Internal Revenue
Code's requirements for qualification as a regulated investment company and the
Fund's intention to operate in such a manner as to permit a fund invested in the
Fund to qualify as such, see "Taxation".
INTEREST-RATE TRANSACTIONS. In order to attempt to protect the value of
its portfolio from interest-rate fluctuations and to adjust the interest-rate
sensitivity of its portfolio, each Portfolio may enter into interest-rate swaps
and other interest-rate transactions, such as interest-rate caps, floors, and
collars. Interest-rate swaps involve the exchange by the Fund with another party
of different types of interest-rate streams (E.G., an exchange of floating-rate
payments for fixed-rate payments with respect to a notional amount of
principal). The purchase of an interest-rate cap entitles the purchaser to
receive payments on a notional principal amount from the party selling the cap
to the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of a floor entitles the purchaser to receive payments on a
notional principal amount from the party selling the floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a combination of a cap and a floor that preserves a certain return within a
predetermined rate of interest rates or values. The Portfolios intend to use
these interest-rate transactions as a hedge and not as a speculative investment.
The Fund's ability to engage in certain interest rate transactions is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If SCMI
were incorrect in its forecasts of market values, interest rates, or other
applicable factors, the Fund's investment performance would be less favorable
than it would have been if this investment technique were not used.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS.
The Fund 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 may take place a month or more after the date of the
commitment. There is no overall limit on the percentage of the Fund'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
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of the Fund's
net asset value.
WHEN, AS AND IF ISSUED SECURITIES. The Fund 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 Fund
will have lost an investment opportunity. There is no overall limit to the
percentage of the Fund'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 Fund'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.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. Pursuant to the
1940 Act, the Fund may invest in the shares of other investment companies that
invest in securities that the Fund is permitted to purchase subject to the
limits permitted under the 1940 Act or any orders, rules or regulations
thereunder. From time to time, such investment funds may be the sole means by
which the Fund may invest in equity securities of certain Asian Companies. When
investing through investment companies, the Fund may pay substantial premiums
above such investment companies' net asset value per share. As a shareholder in
an investment company, the Fund would bear its ratable share of the investment
company's expenses, including its advisory and administrative fees. At the same
time, the Portfolio would continue to pay its own fees and expenses.
TEMPORARY INVESTMENTS. As described in the Prospectus, the Fund may
hold and/or invest its assets without limitation in cash and/or Temporary
Investments (as defined below) for cash management purposes, pending initial
investment in accordance with the Fund's investment objective and policies. In
addition, the Fund
<PAGE>
may hold these investments for temporary defensive purposes. The Fund may assume
a temporary defensive posture when, owing to political, market or other factors
broadly affecting markets in one or more Asian Countries, SCMI determines either
that opportunities for capital appreciation in those markets may be
significantly limited or that significant diminution in value of the securities
traded in those markets may occur. The Fund may invest without limitation in (or
enter into repurchase agreements maturing in seven days or less with banks and
broker-dealers with respect to) short-term debt securities, including commercial
paper, U.S. Treasury bills, other short-term U.S. government securities,
certificates of deposit, and bankers' acceptances of U.S. or foreign banks. The
Fund also may hold cash and time deposits denominated in any major foreign
currency in foreign banks. To the extent that the Fund invests in Temporary
Investments, it may not achieve its investment objective.
Temporary Investments are high quality debt securities (rated "AA" or
above by Standard & Poor's Corporation ("S&P") or "Aa" or above by Moody's
Investors Services, Inc. ("Moody's") or with an equivalent rating by other
nationally recognized securities rating organizations) denominated in U.S.
dollars or in another freely convertible currency including: (1) short-term
(less than 12 months to maturity) and medium-term (not more than five years to
maturity) obligations issued or guaranteed by: (a) the U.S. Government, its
agencies instrumentalities, or government-sponsored enterprises; or (b)
international organizations designated or supported by multiple foreign
governmental entities to promote economic reconstruction or development
("supranational entities"); (2) U.S. finance company obligations, corporate
commercial paper and other short-term commercial obligations; (3) obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks; and (4) repurchase agreements with respect to securities
in which the Fund may invest. The banks whose obligations may be purchased by
the Fund and the banks and broker-dealers with which the Fund may enter into
repurchase agreements include any member bank of the Federal Reserve System and
any U.S. broker-dealer or any foreign bank that has been determined by the
investment adviser to be creditworthy.
SHORT-TERM DEBT SECURITIES. For cash management, pending investment or
other temporary purposes, the Fund may invest in commercial paper -- short-term
unsecured promissory notes issued in bearer form by bank holding companies,
corporations and finance companies. The commercial paper purchased by the Fund
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 ("Moody's") or "A-1" by Standard & Poor's ("S&P"), or securities that,
if not rated, are issued by companies having an outstanding debt issue currently
rated "Aaa" or "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. The Fund also may invest in
variable rate master demand notes, which are obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a commercial bank acting as agent for the
payer of such notes. Generally both parties have the right to vary the amount of
the outstanding indebtedness on the notes.
REPURCHASE AGREEMENTS. The Fund may invest in securities subject to
repurchase agreements that mature or may be terminated by notice in seven days
or less with banks or broker-dealers. 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. SCMI
monitors 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. If a seller defaults under a repurchase agreement, the Fund may have
difficulty 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 credit-worthiness of
banks and dealers with which the Fund enters into repurchase agreements.
RESTRICTED SECURITIES. "Liquidity" under "Investment Policies" in the
Prospectus sets forth the circumstances in which the Fund may invest in
"restricted securities". In connection with the Fund's original purchase of
restricted securities, SCMI may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the registration
expenses of illiquid restricted securities may also be negotiated by the Fund
with the issuer at the time such securities are purchased by the Portfolio. When
registration is required, however, a considerable period may elapse between the
decision to sell the securities and the time the Fund would
<PAGE>
be permitted to sell such securities. A similar delay might be experienced in
attempting to sell such securities pursuant to an exemption from registration.
Thus, the Fund may not be able to obtain as favorable a price as that prevailing
at the time of the decision to sell.
If SCMI determines that a "restricted security" is liquid pursuant to
guidelines adopted by Board of Trustees of Schroder Capital Funds (the "Schroder
Core Board"), the security is not deemed illiquid. These guidelines take into
account trading activity for the securities and the availability of reliable
pricing information, among other factors. If there is a lack of trading interest
in a particular restricted security, that security may become illiquid, which
could affect the Fund's liquidity.
RULE 144A SECURITIES. The Fund may purchase certain restricted
securities ("Rule 144A securities") for which there is a secondary market of
qualified institutional buyers, as contemplated by rule 144A under the
Securities Act of 1933 (the "Securities Act"). Rule 144A provides an exemption
from the registration requirements of the Securities Act for resale of certain
restricted securities to qualified institutional buyers. One effect of Rule 144A
is that certain restricted securities may now be deemed to be liquid, though
there is no assurance that a liquid market for any particular Rule 144A security
will develop or be maintained. SCMI will make liquidity determinations subject
to guidelines approved by the Schroder Core Board. If any Rule 144A security
previously determined to be liquid is later determined to be illiquid, such
security will be subject to the Fund's 15% limitation on illiquid securities.
U.S. GOVERNMENT SECURITIES. The Fund may invest in securities issued or
guaranteed by the U.S. Government (or its agencies, instrumentalities or
government-sponsored enterprises). Agencies, instrumentalities and
government-sponsored enterprises that have been established or sponsored by the
U.S. Government and issue or guarantee debt securities 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, instrumentalities or government-sponsored enterprises referred
to above are backed by the full faith and credit of the U.S. Government. There
can be no assurance that the U.S. Government will provide financial support to
these obligations where it is not obligated to do so.
BANK OBLIGATIONS. The Fund may invest in obligations of U.S. and
foreign banks (including certificates of deposit and bankers' acceptances) whose
total assets at the time of purchase exceed $1 billion. The Fund also may hold
cash and time deposits denominated in any major currency in foreign banks. 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. A time deposit is a non-negotiable receipt
issued by a bank in exchange for the deposit of funds. Similar to a certificate
of deposit, a time deposit earns a specified rate of interest over a definite
time period; however, it cannot be traded in the secondary markets.
LOANS OF FUND SECURITIES. The Fund may lend its portfolio securities
subject to the restrictions stated in the Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan collateral must:
(1) on each business day, at least equal the market value of the loaned
securities; and (2) consist of cash, bank letters of credit, U.S. government
securities, other cash equivalents or liquid securities in which the Fund is
permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Fund. When lending portfolio securities, the Fund receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan plus the interest on the collateral
securities (less any finders' or administrative fees the Fund pays in arranging
the loan). The Fund may share the interest it receives on the collateral
securities with the borrower if it realizes at least a minimum amount of
interest required by the lending guidelines established by the Schroder Core
Board. The Fund will not lend its portfolio securities to any officer, trustee,
employee or affiliate of the Fund or SCMI. The terms of the Fund's loans must
meet certain tests
<PAGE>
under the Internal Revenue Code and permit the Fund to reacquire loaned
securities on five business days' notice or in time to vote on any important
matter.
The market value of portfolio securities purchased with cash collateral
may decline. Loans of securities by the Fund are subject to termination at the
Fund's or the borrower's option. The Fund may pay reasonable negotiated fees in
connection with loaned securities, so long as such fees are set forth in a
written contract and approved by the Schroder Core Board.
HIGH YIELD/HIGH RISK SECURITIES. High yield/high risk securities'
market values are affected more by individual issuer developments and are more
sensitive to adverse economic changes than are higher-rated securities. Issuers
of high yield/high risk securities may be highly leveraged and may not have more
traditional methods of financing available to them. During economic downturns or
substantial periods of rising interest rates, issuers of high yield/high risk
securities, especially highly leveraged ones, may be less able to service their
principal and interest payment obligations, meet their projected business goals,
or obtain additional financing. The risk of loss due to default by the issuer is
significantly greater for holders of high yield/high risk securities because
such securities may be unsecured and may be subordinated to other creditors of
the issuer. In addition, the Fund may incur additional expenses if it is
required to seek recovery upon a default by the issuer of such an obligation or
participate in the restructuring of such obligation.
Periods of economic uncertainty and change are likely to cause
increased volatility in the market prices of high yield/high risk securities
and, correspondingly, in the Fund's net asset value if it invests in such
securities. Market prices of such securities structured as zero coupon or
pay-in-kind securities are more affected by interest-rate changes and, thus,
tend to be more volatile than securities that pay interest periodically and in
cash.
High yield/high risk securities may have call or redemption features
that would permit an issuer to repurchase the securities from the Fund. If a
call were exercised by the issuer during a period of declining interest rates,
the Fund would likely have to replace called securities with lower yielding
securities, thus decreasing the Fund's net investment income and dividends to
shareholders.
While a secondary trading market for high yield/high risk securities
does exist, it is generally not as liquid as the secondary market for
higher-rated securities. In periods of reduced secondary market liquidity,
prices of high yield/high risk securities may become volatile and experience
sudden and substantial price declines. The Fund may, therefore, have difficulty
disposing of particular issues to meet its liquidity needs or in response to a
specific economic event (such as a deterioration in the creditworthiness of the
issuer). Reduced secondary market liquidity for certain high yield/high risk
securities also may make it more difficult for the Fund to obtain accurate
market quotations (for purposes of valuing the Fund's investment portfolio):
market quotations generally are available on many high yield/high risk
securities only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Under such
conditions, high yield/high risk securities may have to be valued at fair value
as determined by the Schroder Core Board or SCMI under Board-approved
guidelines.
Adverse publicity and investor perceptions (which may not be based on
fundamental analysis) may decrease the value and liquidity of high yield/high
risk securities, particularly in a thinly traded market. Factors adversely
affecting the market value of high yield/high risk securities are likely to
adversely affect the Fund's, and thus the Fund's, net asset value.
SOVEREIGN DEBT. Investment in sovereign debt carries high risk. Certain
foreign countries are large debtors to commercial banks and foreign governments.
At times, certain foreign countries have declared moratoria on the payment of
principal and/or interest on outstanding debt. The governmental entity that
controls the repayment of sovereign debt may not be able or willing to repay the
principal and/or interest when due in accordance with the terms of such debt. A
governmental entity's willingness or ability to repay principal and interest
when it is due may be affected by many factors, such as its cash flow situation,
the extent of its foreign reserves, the availability of sufficient foreign
exchange, the relative size of the debt service burden to the economy as a
whole, and political restraints. The Fund, as a holder of sovereign debt, may be
asked to participate in the
<PAGE>
rescheduling of such debt and to extend further loans to governmental entities.
There is no bankruptcy proceeding by which defaulted sovereign debt may be
collected.
The sovereign debt instruments in which the Fund may invest involve
great risk, are deemed to be the equivalent in terms of quality to high
yield/high risk securities discussed above and are subject to many of the same
risks as such securities. Similarly, the Fund may have difficulty disposing of
certain sovereign debt obligations because there may be a thin trading market
for such securities. The Fund will not invest in sovereign debt that is in
default.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies of the
Fund and cannot be changed without the vote of a "majority" of the Fund's
outstanding shares. Except as noted, these restrictions also are fundamental
investment restrictions of each Portfolio and cannot be changed without the vote
of a "majority" of its outstanding interests. Under the 1940 Act, such a
"majority" vote is defined as the vote of the holders of the lesser of: (1) 67%
of more of the shares present or represented by proxy at a meeting of
shareholders, if the holders of more than 50% of the outstanding shares are
present; or (2) more than 50% of the outstanding shares. Under these additional
restrictions, the Fund will not:
FUNDAMENTAL RESTRICTIONS
1. INDUSTRY CONCENTRATION
purchase any securities which would cause 25% or more of the
value of its total assets, taken at market value at the time
of such purchase, to be invested in securities of one or more
issuers conducting their principal business activities in the
same industry, provided that there is no limitation with
respect to investment in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. For
purposes of this restriction, a foreign government is deemed
to be an "industry."
2. BORROWING AND SENIOR SECURITIES
borrow money except that the Fund may borrow from banks up to
33 1/3% of its total assets (including the amount borrowed )
for temporary or emergency purposes or to meet redemption
requests. The Fund may not issue any class of securities which
is senior to the Fund's shares of beneficial interest;
provided, however, that none of the following shall be deemed
to create senior securities: (1) any borrowing permitted by
this restriction or any pledge or encumbrance to secure such
borrowing; (2) any collateral arrangements with respect to
options, futures contracts, options on future contracts or
other financial instruments; or (3) any purchase, sale or
other permitted transaction in options, forward contracts,
futures contracts, options on future contracts or other
financial instruments. (The following are not treated as
borrowings to the extent they are fully collateralized: (1)
the delayed delivery of purchased securities (such as the
purchase of when-issued securities); (2) reverse repurchase
agreements; (3) dollar-roll transactions; and (5) the lending
of securities.)
3. REAL ESTATE
purchase or sell real estate, real estate mortgage loans or
real estate limited partnership interests (other than
securities secured by real estate or interests therein or
securities issued by companies that invest in real estate or
interests therein )
<PAGE>
4. LENDING
make loans to other parties, except that the Fund may: (a)
purchase and hold debt instruments (including bonds,
debentures or other obligations and certificates of deposit,
bankers' acceptances and fixed time deposits) in accordance
with its investment objective and policies, (b) enter into
repurchase agreements with respect to portfolio securities,
and (c) make loans of portfolio securities.
5. COMMODITIES
purchase or sell commodities or commodity contracts,
including futures contracts and options thereon, except that
the Fund may purchase or sell financial futures contracts
and related options, and futures contracts, forward
contracts, and options with respect to foreign currencies,
and may enter into swaps or other financial transactions.
6. UNDERWRITING
underwrite (as that term is defined in the Securities Act of
1933, as amended) securities issued by other persons except to
the extent that, in connection with the disposition of its
portfolio securities, it may be deemed to be an underwriter.
7. EXERCISING CONTROL OF ISSUERS
invest for the purpose of exercising control over the
management of any company.
8. SHORT SALES AND PURCHASING ON MARGIN
make short sales of securities or maintain a short position;or
purchase securities on margin, (except for delayed delivery or
when-issued transactions or such short-term credits as are
necessary for the clearance of transactions and for hedging
purposes and margin deposits in connection with transactions
in futures contracts, options on futures contracts, options on
securities and securities indices, and currency transactions).
Notwithstanding any other investment policy or restriction
to the contrary, the Fund may seek to achieve its investment
objective by investing some or all of its assets in the
securities of one or more investment companies to the extent
permitted by the 1940 Act or an applicable exemptive order
under such Act; provided that, except to the extent the Fund
invests in other investment companies pursuant to Section
12(d)(1)(A) of the 1940 Act, the Fund treats the assets of
the investment companies in which it invests as its own.(The
foregoing investment policy is fundamental.)
NONFUNDAMENTAL LIMITATIONS
The Fund and the Portfolios have each adopted the following
nonfundamental investment limitations. Non-fundamental limitations may be
changed by the Trustees without shareholder approval.
<PAGE>
1. NON -DIVERSIFICATION
Under these additional restrictions, the Fund may not invest
more than 25% of its total assets in obligations of any one
issuer other than U.S. Government securities and, with
respect to 50% of its total assets, the Fund may not invest
more than 5% of its total assets in the securities of any one
issuer (except U.S. Government securities). Thus, the Fund
may invest up to 25% of its total assets in the securities of
each of any two issuers.
2. LIQUIDITY
The Fund may not invest more than 15% of its net assets in:
(1) securities that cannot be disposed of within seven days at
their then-current value; (2) repurchase agreements not
entitling the holder to payment of principal within seven
days; and (3) securities subject to restrictions on the sale
of the securities to the public without registration under the
1933 Act ("restricted securities") that are not readily
marketable. The Fund may treat certain restricted securities
as liquid pursuant to guidelines adopted by the Board.
3. Lending
The Fund may not lend a security if, as a result, the amount
of loaned securities would exceed an amount equal to one third
of the Fund's total assets.
MANAGEMENT
OFFICERS AND TRUSTEES. The following information relates to the
principal occupations during the past five years of each Trustee and executive
officer of the Trust and shows the nature of any affiliation with SCMI. Except
as noted, each of these individuals currently serves in the same capacity for
Schroder Capital Funds, Schroder Capital Funds II, Schroder Capital Funds
(Delaware) and Schroder Series Trust II, other registered investment companies
in the Schroder family of funds.
I. PETER SEDGWICK*,62, 33 Gutter Lane, London, England - Chairman and Trustee of
the Trust; Group Managing Director, Schroders plc; Chairman and Director, SCMI
and Schroder Capital Management International Ltd.; Chief Executive and
Director, Schroder Investment Management Ltd.; Director, various offshore funds
for which a member of the Schroder group of companies serves as manager.
DAVID M. SALISBURY*, 46, 33 Gutter Lane, London, England - Vice Chairman and
Trustee of the Trust; Chairman, SCMI and Schroder Capital Management
International Ltd.; Director, Schroders plc.
PETER E. GUERNSEY, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Insurance Consultant since August 1986; prior thereto
Senior Vice President, Marsh & McLennan, Inc., insurance brokers.
JOHN I. HOWELL, 80, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Private Consultant since February 1987; Honorary Director,
American International Group, Inc.; Director, American International Life
Assurance Company of New York.
WILLIAM L. MEANS, 59. c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Chief Investment Officer, Alaska Permanent Fund
Corporation, 1983-1994. Investment Officer, State of Alaska, Department of
Revenue, 1973-83.
LOUISE CROSET,* 42, 33 Gutter Lane, London, England - Trustee and President of
the Trust; First Vice President and Director of SCMI since 1993. Vice President,
Wellington Management, from 1987 to 1993.
<PAGE>
MARK J. SMITH, 35, 33 Gutter Lane, London, England - Vice President of the
Trust; Senior Vice President and Director of SCMI since April 1990; Director and
Senior Vice President, Schroder Advisors.
HEATHER F. CRIGHTON, 31, 33 Gutter Lane, London, England - Vice President of the
Trust; Vice President of SCMI and Schroder Capital management International Ltd.
since 1994; prior thereto, Fund Manager with SCMI since 1993 and Fund Manager
with Mercantile and General Reinsurance Co., London, 1988-1992.
DONALD H.M. FARQUHARSON, 34, 33 Gutter Lane, London, England - Vice President of
the Trust; First Vice President and Assistant Director of SCMI since 1996; prior
thereto Vice President since 1995 and Fund Manager of SCMI since 1988.
FERGAL CASSIDY, 28, 787 Seventh Avenue, 34th Floor, New York, New York -
Treasurer and Chief Financial Officer of the Trust; Acting Controller and
Assistant Vice President of SCM and SCMI since September 1997; Assistant Vice
President of SCM and SCMI from April 1997 to September 1997; Associate, SCMI,
from August 1995 to March 1997; and prior thereto Senior Accountant of
Concurrency Mgt., Greenwich, Connecticut from November 1994 to August 1995, and
Senior Accountant, Schroder Properties, London, September 1990 to November 1993.
MARGARET H. DOUGLAS-HAMILTON, 55, 787 Seventh Avenue, 34th Floor, New York, New
York - Secretary of the Trust; Secretary of SCM since 1995; Senior Vice
President (since April 1997) and General Counsel of Schroders U.S.
Holdings Inc. since 1987.
CATHERINE A. MAZZA, 37, 787 Seventh Avenue, 34th Floor, New York, New York -
Vice President and Assistant Secretary of the Trust; President and Director of
Schroder Advisors since 1997 and 1998, respectively; First Vice President of
SCMI and SCM since 1996; prior thereto, held various marketing positions at
Alliance Capital, an investment adviser, since July 1985.
ALEXANDRA POE, 37, 787 Seventh Avenue, 34th Floor, New York, New York -
Assistant Secretary of the Trust; First Vice President of SCMI since August
1996; Fund Counsel and Senior Vice President of Schroder Advisors since August
1996; Secretary of Schroder Advisors; prior thereto, an investment management
attorney with Gordon Altman Butowsky Weitzen Shalov & Wein since 1994; prior
thereto counsel to and Vice President of Citibank, N.A. since 1989.
THOMAS G. SHEEHAN, 42, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Counsel and Relationship
Manager-of Forum, the Trust's subadministrator; Counsel, Forum Financial
Services, Inc. since 1993; prior thereto, Special Counsel, U.S. Securities and
Exchange Commission, Division of Investment Management, Washington, D.C.
CATHERINE S. WOOLEDGE, 55, Two Portland Square, Portland, Maine - Assistant
Secretary of the Trust - Counsel, Forum Financial Services, Inc. since November
1996. Prior thereto, associate at Morrison & Foerster, Washington, D.C. from
October 1994 to November 1996, associate corporate counsel at Franklin
Resources, Inc. from September 1993 to September 1994, and prior thereto
associate at Drinker Biddle & Reath, Philadelphia, PA.
* Interested Trustee of the Trust within the meaning of the 1940 Act.
Schroder Advisors is a wholly owned subsidiary of SCMI, which is a wholly
owned subsidiary of Schroders U.S. Holdings Inc., which in turn is an indirect,
wholly owned U.S. subsidiary of Schroders plc. Schroder Capital Management Inc.
("SCM") is also a wholly owned subsidiary of Schroders U.S. Holdings Inc..
Officers and Trustees who are interested persons of the Trust receive
no salary, fees or compensation directly from the Trust or Fund. The Trust's
independent Trustees of the Trust receive an annual fee of $7,500 and a fee of
$500 for each meeting of the Trust Board attended by them. The Fund has no
bonus, profit sharing, pension or retirement plans.
<PAGE>
The following table provides the fees paid to each of the Trust's
independent Trustees by Schroder Asian Growth Fund, Inc. (the predecessor
closed-end fund) and the other funds in the Schroder family of funds for the
fiscal year ended October 31, 1997 (the most recent fiscal year of the
predecessor fund and many of the other funds in the Schroder family).
<TABLE>
<S> <C> <C> <C> <C>
Pension or Total
Retirement Compensation From
Aggregate Benefits Accrued Estimated Annual Trust And Fund
Compensation From As Part of Trust Benefits Upon Complex Paid To
Name of Trustee TrustSchroder Expenses Retirement Trustees
Asian Growth Fund,
Inc.
- -------------------------------- -------------------- -------------------- --------------------- -------------------
Mr. Guernsey $10,625 $0 $0 $21,875
Mr. Howell $10,625 $0 $0 $21,875
Mr. Means 10,625 $0 $0 $10,625
</TABLE>
As of March 1, 1998, the Fund had no outstanding shares.
INVESTMENT ADVISER
SCMI, 787 Seventh Avenue, New York, New York 10019, serves as
investment adviser to each Portfolio under an investment advisory agreement
between Schroder Core and SCMI (the "Core Advisory Agreement"). SCMI is a wholly
owned U.S. subsidiary of Schroders U.S. Holdings Inc., the wholly owned U.S.
holding company subsidiary of Schroders plc. Schroders plc is the holding
company parent of a large worldwide group of banks and financial service
companies (referred to as the "Schroder Group"), with associated companies and
branch and representative offices in eighteen countries. The Schroder Group
specializes in providing investment management services, with funds under
management currently in excess of $175 billion as of December 31, 1997.
Under the Core Advisory Agreement, SCMI is responsible for managing the
investment program for each Portfolio. In this regard, it is SCMI's
responsibility to make decisions relating to the Portfolios' investments and to
place purchase and sale orders regarding such investments with brokers or
dealers it selects. SCMI also furnishes Schroder Core and the Trust Board, which
has overall responsibility for the business and affairs of the Trust, with
periodic reports on the investment performance of the Portfolios and Fund.
The Core Advisory Agreement continues in effect provided such
continuance is approved annually: (1) by the holders of a majority of the
outstanding voting securities of the Fund or by Schroder Core Board; and (2) by
a majority of the Trustees who are not parties to the Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Core Advisory
Agreement may be terminated without penalty by vote of the Trustees or the
shareholders of the Fund on 60 days' written notice to the investment adviser,
or by the investment adviser on 60 days' written notice to the Trust, and it
terminates automatically if assigned. The Core Advisory Agreement also provides
that, with respect to the Portfolios, 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 duties to the Portfolio, except for willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of any obligations and duties under the Agreement
SCMI also serves as investment adviser to the Fund under an investment
advisory and asset allocation agreement with the Trust (the "Fund Advisory
Agreement"). Under the Fund Advisory Agreement, SCMI is entitled to receive an
investment advisory fee for asset allocation services of 0.20% of the Fund's
average daily net assets, on an annual basis, with respect to assets invested in
the Fund (or another registered investment company). The Fund Advisory
Agreement, however, provides that with respect to assets invested in a
Portfolio, SCMI is not entitled to receive an investment advisory fee from the
Fund for investment management services. The Fund's investment may be withdrawn
from a Portfolio at any time if the Trust Board determines that it is in the
best interests of the Fund and its shareholders to do so. In that event, under
the Fund Advisory Agreement, SCMI would
<PAGE>
be entitled to receive a monthly fee at an annual rate of 0.90% of the Fund's
average daily net assets, on assets managed directly at the Fund level. The Fund
Advisory Agreement between the Trust and SCMI is the same in all material
respects as the Portfolios' Core Advisory Agreement (except as to the parties
and the circumstances under which fees will be paid).
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an Administration
Agreement with Schroder Advisors, under which Schroder Advisors provides
management and administrative services necessary for the operation of the Fund,
including: (1) preparation of shareholder reports and communications; (2)
regulatory compliance, such as reports to and filings with the SEC and state
securities commissions; and (3) general supervision of the operation of the
Fund, including coordination of the services performed by the Fund's investment
adviser, transfer agent, custodian, independent accountants, legal counsel and
others. Schroder Advisors is a wholly owned subsidiary of SCMI and is a
registered broker-dealer organized to act as administrator and distributor of
mutual funds.
For providing administrative services Schroder Advisors is entitled to
receive from the Fund a fee, payable monthly, at the annual rate of 0.05% of the
Fund's average daily net assets. The Administration Agreement is terminable with
respect to the Fund without penalty, at any time, by the Trust Board, upon 60
days' written notice to Schroder Advisors or by Schroder Advisors upon 60 days'
written notice to the Trust.
The Trust has entered into a Subadministration Agreement with Forum.
Under its Agreement, Forum assists Schroder Advisors with certain of its
responsibilities under the Administration Agreement, including shareholder
reporting and regulatory compliance. For providing its services, Forum is
entitled to receive a monthly fee from the Fund at the annual rate of 0.05% of
the average daily net assets. The Subadministration Agreement is terminable with
respect to the Fund without penalty, at any time, by the Trust Board, upon 60
days' written notice to Forum or by Forum upon 60 days' written notice to the
Fund.
Schroder Advisors and Forum provide similar services to the Portfolios
pursuant to administration and subadministration agreements between Schroder
Core and each of these entities, for which Schroder Advisors and Forum are each
compensated at the annual rate of 0.05% of the Fund's average daily net assets.
The administration and subadministration agreements are the same in all material
respects as the Fund's respective agreements (except as to the parties and the
fees payable thereunder).
The fees paid by the Fund and Portfolios to SCMI and Schroder Advisors
may equal up to 1.00% of the Fund's average daily net assets. Such fees as a
whole are higher than advisory and management fees charged to mutual funds which
invest primarily in U.S. securities but not necessarily higher than those
charged to funds with investment objectives similar to that of the Fund.
DISTRIBUTION OF FUND SHARES
Schroder Advisors, 787 Seventh Avenue, New York, New York 10019, serves
as Distributor of Fund shares under a Distribution Agreement. Schroder Advisors
is a wholly owned subsidiary of Schroders U.S. Holdings Inc., the parent company
of SCMI, and is a registered broker-dealer organized to act as administrator
and/or distributor of mutual funds.
Under the Distribution Agreement, Schroder Advisors has agreed to use
its best efforts to secure purchases of Fund shares in jurisdictions in which
such shares may be legally offered for sale. Schroder Advisors is not obligated
to sell any specific amount of Fund shares. Further, Schroder Advisors has
agreed in the Distribution Agreement to serve without compensation and to pay
from its own resources all costs and expenses incident to the sale and
distribution of Fund shares including expenses for printing and distributing
prospectuses and other sales materials to prospective investors, advertising
expenses, and the salaries and expenses of its employees or agents in connection
with the distribution of Fund shares.
<PAGE>
FUND ACCOUNTING
Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of
Forum, performs fund accounting services for the Fund pursuant to an agreement
with the Trust. The Accounting Agreement is terminable with respect to the Fund
without penalty, at any time, by the Trust Board upon 60 days' written notice to
Forum Accounting or by Forum Accounting upon 60 days' written notice to the
Trust.
Under its agreement, Forum Accounting prepares and maintains the books
and records of the Fund that are required to be maintained under the 1940 Act,
calculates the net asset value per share of the Fund, calculates dividends and
capital-gain distributions, and prepares periodic reports to shareholders and
the SEC. For its services to the Fund, Forum Accounting is entitled to receive
from the Trust a fee of $36,000 per year plus $12,000 per year for each class of
the Fund above one. Forum Accounting is entitled to an additional $24,000 per
year with respect to global and international funds.
Forum Accounting is required to use its best judgment and efforts in
rendering fund accounting services and is not liable to the Trust for any action
or inaction in the absence of bad faith, willful misconduct or gross negligence.
Forum Accounting is not responsible or liable for any failure or delay in
performance of its fund accounting obligations arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control. The
Trust has agreed to indemnify and hold harmless Forum Accounting and its
employees, agents, officers and directors against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, counsel fees and all other expenses arising out of or in any way
related to Forum Accounting's actions taken or failures to act with respect to a
Fund or based, if applicable, upon information, instructions or requests with
respect to a Fund given or made to Forum Accounting by an officer of the Trust
duly authorized. This indemnification does not apply to Forum Accounting's
actions taken or failures to act in cases of Forum Accounting's own bad faith,
willful misconduct or gross negligence.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Investment decisions for the Fund or the Portfolios and for SCMI's
other investment advisory clients 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, and
a particular security may be 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 other 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 that, 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. Each Portfolio's portfolio transaction costs are borne prorata by
its investors, including the Fund.
BROKERAGE AND RESEARCH SERVICES
Transactions on U.S. stock exchanges and other agency transactions
involve the payment of negotiated brokerage commissions. Such commissions vary
among brokers. Also, a particular broker may charge different commissions
according to the difficulty and size of the transaction; for example,
transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the U.S. Since
most brokerage transactions for the Fund are placed with foreign broker-dealers,
certain portfolio transaction costs for the Fund may be higher than fees for
similar transactions executed on U.S. securities exchanges. However, SCMI seeks
to achieve the best net results in effecting its portfolio transactions. There
is generally less governmental supervision and regulation of foreign stock
exchanges and brokers than in the U.S. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid usually
<PAGE>
includes an undisclosed dealer commission or mark-up. In underwritten offerings,
the price paid includes a disclosed, fixed commission or discount retained by
the underwriter or dealer.
The Fund and Core Advisory Agreements authorize and direct SCMI to
place orders for the purchase and sale of the Fund's or a Portfolio's
investments with brokers or dealers it selects 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 through a substantial
number of brokers and dealers. In so doing, SCMI uses its best efforts to obtain
the most favorable price and execution available. The Fund or a 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 considers all factors it deems
relevant (including price, transaction size, the nature of the market for the
security, the commission amount, 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).
Historically, investment advisers, including advisers of investment
companies and other institutional investors, have received research services
from broker-dealers that execute portfolio transactions for the advisers'
clients. Consistent with this practice, SCMI may receive research services from
broker-dealers with which it places 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 Fund or a Portfolio), although not all of these
services are necessarily useful and of value in managing the Fund or a
Portfolio. The investment advisory fee paid by the Fund or a Portfolio is not
reduced because SCMI and its affiliates receive such services.
As permitted by Section 28(e) of the 1934 Act, SCMI may cause the Fund
or a Portfolio to pay a broker-dealer that provides SCMI with "brokerage and
research services" (as defined in the 1934 Act) an amount of disclosed
commission for effecting a securities transaction in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
In addition, although it does not do so currently SCMI may allocate brokerage
transactions to broker-dealers who have entered into arrangements under which
the broker-dealer allocates a portion of the commissions paid by the Fund or a
Portfolio toward payment of Fund or Portfolio expenses, such as custodian fees.
Subject to the general policies of the Fund or a Portfolio regarding
allocation of portfolio brokerage as set forth above, the Core Board has
authorized SCMI to employ: (1) Schroder & Co. Inc. ("Schroder Inc.") an
affiliate of SCMI, to effect securities transactions of the Fund or a Portfolio
on the New York Stock Exchange only; and (2) Schroder Securities Limited and its
affiliates (collectively, "Schroder Securities"), affiliates of SCMI, to effect
securities transactions of the Fund or a Portfolio on various foreign securities
exchanges on which Schroder Securities has trading privileges, provided certain
other conditions are satisfied as described below.
Payment of brokerage commissions to Schroder Inc. or Schroder
Securities 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 securities exchange paid by a registered investment company to a broker
that 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 Fund's and Portfolios' policy that
commissions paid to Schroder Inc. or Schroder Securities will, in SCMI's
opinion, be: (1) at least as favorable as commissions contemporaneously charged
by Schroder Inc. or Schroder Securities, as the case may be, on comparable
transactions for their most favored unaffiliated customers; and (2) at least as
favorable as those which would be charged on comparable transactions by other
qualified brokers having comparable execution capability. The Trust Board and
Core Board, including a majority of the respective non-interested Trustees, have
each adopted procedures pursuant to Rule 17e-1 under the 1940 Act to ensure that
commissions paid to Schroder Inc. or Schroder Securities by the Fund or a
Portfolio satisfy the foregoing standards. Such procedures are reviewed
periodically by the applicable Board, including a majority of the non-interested
Trustees. Each Board also reviews all transactions at least quarterly for
compliance with such procedures.
<PAGE>
It is further a policy of the Fund and Portfolios that all such
transactions effected by Schroder Inc. on the New York Stock Exchange be in
accordance with Rule 11a2-2(T) promulgated under the 1934 Act, which requires in
substance that a member of such exchange not associated with Schroder Inc.
actually execute the transaction on the exchange floor or through the exchange
facilities. Thus, while Schroder Inc. will bear responsibility for determining
important elements of execution such as timing and order size, another firm will
actually execute the transaction.
Schroder Inc. pays a portion of the brokerage commissions it receives
from the Fund or a Portfolio to the brokers executing the transactions on the
New York Stock Exchange. In accordance with Rule 11a2-2(T), Schroder Core has
entered into an agreement with Schroder Inc. permitting it to retain a portion
of the brokerage commissions paid to it by the Fund or a Portfolio. Each Board,
including a majority of the non-interested Trustees, have approved this
agreement.
Neither the Fund nor a Portfolio has any understanding or arrangement
to direct any specific portion of its brokerage to Schroder Inc. or Schroder
Securities, and neither will direct brokerage to Schroder Inc. or Schroder
Securities in recognition of research services.
From time to time, the Fund or a Portfolio may purchase securities of a
broker or dealer through which it regularly engages in securities transactions.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DETERMINATION OF NAV PER SHARE
The NAV per share of the Fund is determined as of the close of trading
on the New York Stock Exchange each day that the Exchange is open. Any assets or
liabilities initially expressed in terms of non-U.S. dollar currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the afternoon of valuation. The Exchange's most recent
holiday schedule (which is subject to change) states that it will close on New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Core Board has established procedures for the valuation of the
Portfolio's securities: (1) equity securities listed or traded on the New York
or American Stock Exchange or other domestic or foreign stock exchange are
valued at their latest sale prices on such exchange that day prior to the time
when assets are valued; in the absence of sales that day, such securities are
valued at the last sale price on the preceding trading day or at closing
mid-market prices (in cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by the Fund's investment adviser); (2) unlisted equity securities for
which over-the-counter market quotations are readily available are valued at the
latest available mid-market prices prior to the time of valuation; (3)
securities (including restricted securities) not having readily-available market
quotations are valued at fair value under the Core Board's procedures; (4) debt
securities having a maturity in excess of 60 days are valued at the mid-market
prices determined by a portfolio pricing service or obtained from active market
makers on the basis of reasonable inquiry; and (5) short-term debt securities
(having a remaining maturity of 60 days or less) are valued at cost, adjusted
for amortization of premiums and accretion of discount.
When an option is written, an amount equal to the premium received is
recorded in the books as an asset, and an equivalent deferred credit is recorded
as a liability. The deferred credit is adjusted ("marked-to-market") to reflect
the current market value of the option. Options are valued at their mid-market
prices in the case of exchange-traded options or, in the case of options traded
in the over-the-counter market, the average of the last bid price as obtained
from two or more dealers unless there is only one dealer, in which case that
dealer's price is used. Futures contracts and related options are stated at
market value.
<PAGE>
REDEMPTIONS IN-KIND
In the event that payment for redeemed shares is made wholly or partly
in portfolio securities, shareholders may incur brokerage costs in converting
the securities to cash. An in-kind distribution of portfolio securities is
generally less liquid than cash. The shareholder may have difficulty finding a
buyer for portfolio securities received in payment for redeemed shares.
Portfolio securities may decline in value between the time of receipt by the
shareholder and conversion to cash. A redemption in-kind of portfolio securities
could result in a less diversified portfolio of investments for the Fund and
could affect adversely the liquidity of its investment portfolio.
TAXATION
Under the Internal Revenue Code of 1986, as amended (the "Code"), the
Fund and each other series established from time to time by the Trust Board is
treated as a separate taxpayer for federal income tax purposes with the result
that: (1) each such series must meet separately the income and distribution
requirements for qualification as a regulated investment company; and (2) the
amounts of investment income and capital gain earned are determined on a
series-by-series (rather than on a Trust-wide) basis.
The Predecessor Fund qualified in its last fiscal year as a regulated
investment company under Subchapter M of the Code. The Fund intends to qualify
as a regulated investment company under Subchapter M of the Code each year so
long as such qualification is in the best interests of its shareholders. To do
so, the Fund intends to distribute to shareholders at least 90% of its
"investment company taxable income" as defined in the Code (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gain over net long-term capital loss), and to meet certain
diversification of assets, source of income, and other requirements of the Code.
By so doing, the Fund will not be subject to federal income tax on its
investment company taxable income and "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss) distributed to
shareholders. If the Fund does not meet all of these Code requirements, it will
be taxed as an ordinary corporation, and its distributions will be taxable to
shareholders as ordinary income.
Amounts not distributed on a timely basis (in accordance with a
calendar year distribution requirement) are subject to a 4% nondeductible excise
tax. To prevent this, the Fund must distribute for each calendar year an amount
equal to the sum of: (1) at least 98% of its ordinary income (excluding any
capital gain or loss) for the calendar year; (2) at least 98% of the excess of
its capital gain over capital loss realized during the one-year period ending
October 31 of such year; and (3) all such ordinary income and capital gain for
previous years that were not distributed during such years. A distribution will
be treated as paid during the calendar year if it is declared by the Fund in
October, November or December of the year with a record date in such month and
paid by the Fund during January of the following year. Such distributions will
be taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Distributions of investment company taxable income (including net
realized short-term capital gain) are taxable to shareholders as ordinary
income. Generally, it is not expected that such distributions will be eligible
for the dividends received deduction available to corporations. However, if the
Fund acquires at least 10% of the stock of a foreign corporation that has U.S.
source income, a portion of the Fund's ordinary income dividends attributable to
such income may be eligible for such deduction, if certain requirements are met.
<PAGE>
Distributions of net long-term capital gain are taxable to shareholders
as long-term capital gain, regardless of the length of time Fund shares have
been held by a shareholder and are not eligible for the dividends received
deduction. Such distributions will qualify for the new reduced rates for capital
gains on assets held for more than 18 months to the extent they represent gains
on the sale of such assets. A loss realized by a shareholder on the sale of Fund
shares with respect to which capital-gain distributions have been paid will, to
the extent of such capital-gain distributions, be treated as long-term capital
loss (even though such shares may have been held by the shareholder for one year
or less). Further, a loss realized on a disposition will be disallowed to the
extent the shares disposed of are replaced (whether by reinvestment or
distribution or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss.
All distributions to shareholders are taxable whether reinvested in
additional shares or received in cash. Shareholders that reinvest distributions
will have for federal income tax purposes a cost basis in each share received
equal to the net asset value of a share of the Fund on the reinvestment date.
Shareholders will be notified annually as to the federal tax status of
distributions.
Distributions by the Fund reduce the net asset value of the Fund's
shares. If a distribution reduces the net asset value below a shareholder's cost
basis, such distribution nevertheless would be taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution, which will be returned to the investor
in the form of a taxable distribution.
Upon redemption or sale of shares, a shareholder will realize a taxable
gain or loss, which will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands. Such gain or loss generally will be
long-term or short-term depending upon the shareholder's holding period for the
shares, and generally will qualify for the new reduced rates for capital gains
if the shares have been held for more than 18 months.
Ordinary income dividends paid to Fund shareholders who are nonresident
aliens are subject to a 30% U.S. withholding tax under existing provisions of
the Code applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
Nonresident shareholders are urged to consult their own tax advisors concerning
the applicability of the U.S. withholding tax.
Dividends and interest received (and, in certain circumstances,
realized capital gain) by the Fund may give rise to withholding and other taxes
imposed by foreign countries. Tax conventions between certain countries and the
U.S. may reduce or eliminate such taxes. If more than 50% in value of the Fund's
total assets at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible, and ordinarily expects, to file an
election with the Internal Revenue Service ("IRS") pursuant to which
shareholders of the Fund will be required to include their proportionate share
of such withholding taxes in their U.S. income tax returns as gross income;
treat such proportionate share as taxes paid by them; and, subject to certain
limitations, deduct such proportionate share in computing their taxable incomes
or, alternatively, use them as foreign tax credits against their U.S. income
taxes. No deductions for foreign taxes, however, may be claimed by noncorporate
shareholders who do not itemize deductions. A shareholder that is a nonresident
alien individual or a foreign corporation may be subject to U.S. withholding tax
on the income resulting from the Fund's election described in this paragraph but
may not be able to claim a credit or deduction against such U.S. tax for the
foreign taxes treated as having been paid by such shareholder. The Fund will
report annually to its shareholders the amount per share of such withholding
taxes.
Pursuant to the tax convention between the U.S. and Japan ( the "
Convention "), a Japanese withholding tax at the maximum rate of 15% is, with
certain exceptions, imposed upon dividends paid by Japanese corporations to the
Fund. Pursuant to the present terms of the Convention, interest received by the
Fund from sources within Japan is subject to a Japanese withholding tax at a
maximum rate of 10%. Capital gains of the Fund arising from its investments as
described herein are not taxable in Japan.
<PAGE>
Generally, the Fund will be subject to the Japanese securities
transaction tax on its sale of certain securities in Japan. The current rates of
such tax range from 0.03% to 0.30% depending upon the particular type of
securities involved. Transactions involving equity securities are currently
taxed at the highest rate.
Due to investment laws in certain emerging market countries, it is
anticipated that the Fund's investments in equity securities in such countries
will consist primarily of shares of investment companies (or similar investment
entities) organized under foreign law or of ownership interests in special
accounts, trusts or partnerships. If the Fund purchases shares of an investment
company (or similar investment entity) organized under foreign law, the Fund
will be treated as owning shares in a passive foreign investment company
("PFIC") for U.S. federal income tax purposes. The Fund may be subject to U.S.
federal income tax, and an additional tax in the nature of interest, on a
portion of distributions from such company and on gain from the disposition of
such shares (collectively referred to as "excess distributions"), even if such
excess distributions are paid by the Fund as a dividend to its shareholders.
The Fund may make an election with respect to PFICs in which it owns
shares that will allow it to avoid the taxes on excess distributions. However,
such election may cause the Fund to recognize income in a particular year in
excess of the distributions received from such PFICs.
The Fund may write, purchase or sell options or futures contracts.
Unless the Fund is eligible to, and does, make a special election, such options
and futures contracts that are "Section 1256 contracts" will be "marked to
market" for federal income tax purposes at the end of each taxable year (I.E.,
each option or futures contract will be treated as sold for its fair market
value on the last day of the taxable year). In general, unless such special
election is made, gain or loss from transactions in options and futures
contracts will be 60% long-term and 40% short-term capital gain or loss.
Code Section 1092, which applies to certain "straddles," may affect the
taxation of the Fund's transactions in options and futures contracts. Under
Section 1092, the Fund may be required to postpone recognition for tax purposes
of losses incurred in certain closing transactions in options and futures.
In general, gain from "foreign currencies" and from foreign currency
options, foreign currency futures contracts and forward foreign exchange
contracts relating to investments in stock, securities or foreign currencies
will be qualifying income for purposes of determining whether the Fund qualifies
as a regulated investment company. It is currently unclear, however, who will be
treated as the issuer of a foreign currency instrument or how foreign currency
options, futures contracts or forward foreign currency contracts will be valued
for purposes of the regulated investment company diversification requirements
applicable to the Fund.
Under Code Section 988, special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional currency
(I.E., unless certain special rules apply, currencies other than the U.S.
dollar). In general, foreign currency gain or loss from certain forward
contracts not traded in the interbank market, from futures contracts that are
not "regulated futures contracts," and from unlisted options will be treated as
ordinary income or loss under Code Section 988. In certain circumstances, the
Fund may elect capital gain or loss treatment for such transactions. In general,
however, Code Section 988 gain or loss will increase or decrease the amount of
the Fund's investment company taxable income available to be distributed to
shareholders as ordinary income. Additionally, if the Code Section 988 loss
exceeds other investment company taxable income during a taxable year, the Fund
would not be able to make any ordinary dividend distributions, and any
distributions made before the loss was realized but in the same taxable year
would be recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's basis in his or her Fund shares.
The Trust is required to report to the Internal Revenue Service ("IRS")
all distributions and gross proceeds from the redemption of Fund shares (except
in the case of certain exempt shareholders). All such distributions and proceeds
generally will be subject to the withholding of federal income tax at a rate of
31% ("backup withholding") in the case of non-exempt shareholders if: (1) the
shareholder fails to furnish the Trust with and to certify the shareholder's
correct taxpayer identification number or social security number; (2) the IRS
notifies the Trust that the shareholder has failed to report properly certain
interest and dividend income to the IRS and to respond to notices to that
effect; or (3) when required to do so, the shareholder fails to certify that it
is not subject to backup withholding. If the withholding provisions are
applicable, any such distributions or proceeds, whether reinvested in additional
<PAGE>
shares or taken in cash, will be reduced by the amount required to be withheld.
Any amounts withheld may be credited against the shareholder's federal income
tax liability. Investors may wish to consult their tax advisors about the
applicability of the backup withholding provisions.
U.S. federal income taxation of a shareholder who, under the Code, is a
non-resident alien individual, a foreign trust or estate, foreign corporation or
foreign partnership ("non-U.S. shareholder") depends on whether the income form
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder. Ordinarily, income from the Fund will not be treated as so
"effectively connected."
If the income from the Fund is not treated as "effectively connected"
with a U.S. trade or business carried on by the non-U.S. shareholder dividends
of net investment income (which includes short-term capital gains), whether
received in cash or reinvested in shares, will be subject to a U.S. federal
income tax of 30% (or lower treaty rate), which tax is generally withheld from
such dividends. Furthermore, such non-U.S. shareholders may be subject to U.S.
federal income tax at the rate of 30% (or lower treaty rate) on their income
resulting from the Fund's election (described above) to "pass through" the
amount of non-U.S. taxes paid by the Fund, but may not be able to claim a credit
or deduction with respect to the non-U.S. income taxes treated as having been
paid by them.
A non-U.S. shareholder whose income is not treated as "effectively
connected" with a U.S. trade or business generally will not be subject to U.S.
federal income taxation on distributions of net long-term capital gains and any
gain realized upon the sale of Fund shares. If the non-U.S. shareholder is
treated as a non-resident alien individual but is physically present in the
United States for more than 182 days during the taxable year, then in certain
circumstances such distributions of net long-term capital gains amounts retained
by the Fund which are designated as undistributed capital gains and grain from
the sale of Fund shares will be subject to a U.S. federal income tax of 30% (or
lower treaty rate). In the case of a non-U.S. shareholder who is a non-resident
alien individual, the Fund may be required to withhold U.S. federal income tax
at a rate of 31% of distributions (including distributions of net long-term
capital gains) unless IRS Form W-8 is provided. See "backup withholding," above.
If the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by a non-U.S. shareholder, then distributions of net
investment income (which includes short-term capital gains) whether received in
cash or reinvested in shares net long-term capital gains and amounts otherwise
includable in income, such as amounts retained by the Fund which are designated
as undistributed capital gains and any gains realized upon the sale of shares of
the Fund will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. taxpayers. Non-U.S. shareholders that are corporations may
also be subject to the branch profits tax.
Transfers of shares of the Fund by gift by a non-U.S. shareholder will
generally not be subject to U.S. federal gift tax, but the value of shares of
the Fund held by such a shareholder at death will be includable in the
shareholder's gross estate for U.S. federal income tax purposes.
The income tax and estate tax consequences to a non-U.S. shareholder
entitled to claim the benefits of an applicable tax treaty may be different from
those described herein. Non-U.S. shareholders may be required to provide
appropriate documentation to establish their entitlement to the benefits of such
a treaty.
Non-U.S. shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in shares of
the Fund.
* * * * * *
The foregoing discussion relates only to federal income tax law as
applicable to U.S. persons (I.E., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). Distributions by the Fund also
may be subject to state and local taxes, and their treatment under state and
local income tax laws may differ from the federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of federal, foreign, state and local taxation.
<PAGE>
OTHER INFORMATION
ORGANIZATION
The Trust was formed as a Delaware business trust on December 5, 1997.
The Trust is registered as an open-end management investment company under the
1940 Act.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. Securities regulators of some states, however, have
indicated that they and the courts in their state may decline to apply Delaware
law on this point. To guard against this risk, the Trust Instrument contains an
express disclaimer of shareholder liability for the debts, liabilities,
obligations, and expenses of the Trust. The Trust Instrument provides for
indemnification out of each series' property of any shareholder or former
shareholder held personally liable for the obligations of the series. The Trust
Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply (or no contractual limitation
of liability was in effect) and the series is unable to meet its obligations.
Forum believes that, in view of the above, there is no risk of personal
liability to shareholders.
CAPITALIZATION AND VOTING
The Trust has authorized an unlimited number of shares of beneficial
interest. The Trust Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate series (such as the Fund)
and may divide series into classes of shares, and the costs of doing so may be
borne by a series or a class or the Trust in accordance with the Trust
Instrument. The Trust currently consists of one series. The Fund offers one
class of shares, Class A Shares.
When issued for the consideration described in the Prospectus or under
the dividend reinvestment plan, shares are fully paid, nonassessable, and have
no preferences as to conversion, exchange, dividends, retirement or other
features. Shares have no preemptive rights and have non-cumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so.
Each shareholder of record is entitled to one vote for each full share held (and
a fractional vote for each fractional share held).
The Trust does not hold annual meetings of shareholders. The matters
considered at an annual meeting typically include the reelection of Trustees,
approval of an investment advisory agreement, and the ratification of the
selection of independent accountants. These matters are not submitted to
shareholders unless a meeting of shareholders is held for some other reason,
such as those indicated below. Each Trustee serves until death, resignation or
removal. Vacancies are filled by the remaining Trustees, subject to the
provisions of the 1940 Act requiring a meeting of shareholders for election of
Trustees to fill vacancies. Similarly, the selection of independent accountants
and renewal of investment advisory agreements for future years is performed
annually by the Trust Board. Future shareholder meetings will be held to elect
Trustees if required by the 1940 Act, to obtain shareholder approval of changes
in fundamental investment policies, to obtain shareholder approval of material
changes in investment advisory agreements, to select new independent accountants
if the employment of the Trust's independent accountants has been terminated,
and to seek any other shareholder approval required under the 1940 Act. The
Trust Board has the power to call a meeting of shareholders at any time when it
believes it is necessary or appropriate.
In addition to the foregoing rights, the Trust Instrument provides that
holders of at least two-thirds of the outstanding shares of the Trust may remove
any person serving as a Trustee at any meeting of the shareholders.
<PAGE>
PRINCIPAL SHAREHOLDERS
As of March 10, 1998, the Fund had no outstanding shares.
CUSTODIAN
The Chase Manhattan Bank, through its Global Custody Division located
in London, England, acts as custodian of the Fund's and the Portfolios' assets
but plays no role in making decisions as to the purchase or sale of portfolio
securities for the Fund or the Portfolios. Pursuant to rules adopted under the
1940 Act, the Fund may maintain its foreign securities and cash in the custody
of certain eligible foreign banks and securities depositories. Selection of
these foreign custodial institutions is made currently by the Core Trust Board
following a consideration of a number of factors, including (but not limited to)
the reliability and financial stability of the institution; the ability of the
institution to perform capably custodial services for the Fund; the reputation
of the institution in its national market; the political and economic stability
of the country in which the institution is located; and further risks of
potential nationalization or expropriation of Portfolio assets.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
BFDS, Two Heritage Drive, North Quincy, Massachusetts 02171, acts as the
Fund's transfer agent and dividend disbursing agent.
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
serves as counsel to the Trust.
INDEPENDENT ACCOUNTANT
Coopers & Lybrand L.L.P. serves as independent accountants for the Trust.
Coopers & Lybrand L.L.P. provides audit services and consultation in connection
with review of U.S. SEC filings. Their address is One Post Office Square,
Boston, Massachusetts 02109.
YEAR 2000 DISCLOSURE
The Fund receives services from the investment advisor, administrators,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the Year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. Schroder
Advisors is taking steps that it believes are reasonably designed to address
this potential "Year 2000" problem and to obtain satisfactory assurances that
comparable steps are being taken by each of the Fund's other major service
providers. There can be no assurance, however, that these steps will be
sufficient to avoid any adverse impact on the Fund from this problem.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included
in the Trust's registration statement filed with the SEC under the Securities
Act of 1933 with respect to the securities offered hereby, certain portions of
which have been omitted pursuant to the rules and regulations of the SEC. The
registration statement, including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.
<PAGE>
FINANCIAL STATEMENTS
The fiscal year end of the Fund is October 31. Financial statements for
the Fund's semi-annual period and fiscal year will be distributed to
shareholders of record. The Board in the future may change the fiscal year end
of the Fund.
The audited financial statements of Schroder Asian Growth Fund, Inc. for
the fiscal year ended October 31, 1997, including Statement of Assets and
Liabilities, Statement of Operations, Statement of Changes in Net Assets, Notes
to Financial Statements, Financial Highlights, Portfolio of Investments and
Report of Independent Accountants are set forth herein as Appendix B.
<PAGE>
APPENDIX A
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
FIXED-INCOME SECURITY RATINGS
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group they comprise what are
generally known as high grade fixed-income securities. They are rated lower than
the best fixed-income securities because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
"A" Fixed-income securities which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.
"Baa" Fixed-income securities which are rated "Baa" are considered as medium
grade obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack characteristics
of the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
<PAGE>
"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Rating Refinements: Moody's may apply numerical modifiers, "1", "2",
and "3" in each generic rating classification from "Aa" through "B" in its
municipal fixed-income security rating system. The modifier "1" indicates that
the security ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and a modifier "3" indicates that
the issue ranks in the lower end of its generic rating category.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. The ratings apply to Municipal Commercial Paper as well as taxable
Commercial Paper. Moody's employs the following three designations, all judged
to be investment grade, to indicate the relative repayment capacity of rated
issuers: "Prime-1", "Prime-2", "Prime-3".
Issuers rated "Prime-1" have a superior capacity for repayment of
short-term promissory obligations. Issuers rated "Prime-2" have a strong
capacity for repayment of short-term promissory obligations; and Issuers rated
"Prime-3" have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.
STANDARD & POOR'S RATING GROUP("STANDARD & POOR'S")
FIXED-INCOME SECURITY RATINGS
A Standard & Poor's fixed-income security rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.
"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the highest-rated issues only in
small degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.
"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic
<PAGE>
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for fixed-income securities in this
category than for fixed-income securities in higher-rated categories.
Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.
"BB" Fixed-income securities rated "BB" have less near-term vulnerability to
default than other speculative grade fixed-income securities. However, it faces
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity or willingness to
pay interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to default
but presently have the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions would likely
impair capacity or willingness to pay interest and repay principal.
"CCC" Fixed-income securities rated "CCC" have a current identifiable
vulnerability to default, and the obligor is dependent upon favorable business,
financial and economic conditions to meet timely payments of interest and
repayments of principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and repay
principal.
"CC" The rating "CC" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied "CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities subordinated
to senior debt which is assigned an actual or implied "CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which no
interest is being paid.
"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are
regarded as having predominantly speculative characteristics with respect to
capacity to pay interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such fixed-income
securities will likely have some quality and protective characteristics, these
are out-weighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by
the addition of a plus or minus sign to show relative standing with the major
ratings categories.
COMMERCIAL PAPER RATINGS
Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
Issues assigned "A" ratings are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation "1", "2", and "3" to indicate the relative degree of safety.
<PAGE>
"A-1" Indicates that the degree of safety regarding timely payment is very
strong.
"A-2" Indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- - ------------------------------------------------------------
PORTFOLIO CHARACTERISTICS AS OF OCTOBER 31, 1997
COUNTRY WEIGHTINGS
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS
<S> <C>
- - ------------------------------------------------------------------------------
Hong Kong 27.3%
Japan 18.7%
Singapore 9.7%
Malaysia 8.0%
India 7.4%
Korea 3.8%
Philippines 3.5%
Indonesia 3.0%
China 1.8%
Thailand 1.6%
Cash 15.2%
------------------------------------------------------------------------------
Total 100.0%
</TABLE>
INVESTMENT BY INDUSTRY
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
- - ------------------------------------------------------------------------------
Real Estate 20.3%
Capital Equipment 17.6%
Services 14.9%
Energy 8.5%
Finance 7.2%
Multi-Industry 6.8%
Materials 4.7%
Consumer Goods 3.2%
Insurance 1.6%
Cash 15.2%
- - ------------------------------------------------------------------------------
Total 100.0%
</TABLE>
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
SECURITY % OF NET ASSETS
<S> <C>
- - ----------------------------------------------------------------------------------------------
Citic Pacific Ltd. (HK) 4.4%
Hutchison Whampoa (HK) 3.7%
Cheung Kong Holdings Ltd. (HK) 2.8%
Sun Hung Kai Properties Ltd. (HK) 2.5%
Swire Pacific Ltd. 'A' (HK) 2.4%
China Resources Enterprise Ltd. (HK) 2.4%
Singapore Press Holdings Ltd. (SGD) 2.3%
Cheung Kong Infrastucture Holdings (HK) 2.3%
New World Infrastucture Ltd. (HK) 2.0%
Hong Kong & China Gas Company Ltd. (HK) 1.9%
- --------------------------------------------------------------------------------
Total 26.7%
</TABLE>
- --------------------------------------------------------------------------------
65
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS - 84.8%
CHINA - 1.8%
SHARES VALUE US$
- - --------- ------------
121,000 UTILITIES ELECTRICAL & GAS - 1.8%
Huaneng Power International,
Ltd. (a)*
(Cost $2,050,520)
HONG KONG - 27.3%
2,662,000
------------
1,331,000 BUILDING & CONSTRUCTION - 2.3%
Cheung Kong Infrastructure
Holdings
3,443,726
------------
3,160,000 CHEMICALS - 0.8%
Chen Hsong Holdings Ltd.
1,226,391
------------
1,376,000 COMMERCE/INDUSTRIAL - 6.8%
672,000 Citic Pacific Ltd.
Swire Pacific Ltd. 'A'
6,586,287
3,590,375
------------
10,176,662
------------
1,486,000 ELECTRICITY & GAS - 1.8%
Hong Kong and China Gas
Company Ltd.
2,806,675
------------
767,250 FOODS - 0.1%
Guangdong Brewery Holdings
Ltd.*
140,944
------------
616,000 REAL ESTATE - 14.7%
1,290,000 Cheung Kong Holdings Ltd.
811,000 China Resources Enterprise
77,000 Ltd.
1,501,000 Hutchison Whampoa
509,000 New World Development Company
825,000 Ltd.
New World Infrastructure Ltd.*
Sun Hung Kai Properties Ltd.
Wharf (Holdings) Ltd.
4,283,312
3,537,904
5,613,001
270,944
3,019,476
3,753,299
1,686,287
------------
22,164,223
------------
1,214,000 SERVICES - 0.5%
Guangdong Investments
773,474
------------
430,000 WHOLESALE - 0.3%
Guangnan Holdings
TOTAL HONG KONG
(COST $43,034,303)
INDIA - 7.4%
394,955
------------
41,127,050
------------
BANKING - 0.8%
State Bank of India
COMMON STOCKS
1,191,460
165,000 ------------
SHARES VALUE US$
- - --------- ------------
<C> <S> <C>
INDIA (CONCLUDED)
HOUSEHOLD GOODS - 1.6%
69,000 Hindustan Lever Ltd. 2,435,032
------------
LEISURE AND TOURISM - 0.0%
125 Indian Hotels Co., Ltd. 2,019
------------
MACHINERY & ENGINEERING - 1.2%
72,000 Bajaj Auto Ltd. 1,142,327
36,000 Bajaj Auto Ltd. Bonus Shares 571,140
227 Tata Engineering & Locomotive
Company Ltd. 1,992
------------
1,715,459
------------
OIL, INTEGRATED - 1.0%
127,000 Bharat Petroleum Corporation
Ltd. 1,523,720
------------
PHARMACEUTICALS - 0.0%
1,779 Ranbaxy Laboratories Ltd. 34,701
------------
TELECOMMUNICATIONS - 2.8%
393,000 Mahanagar Telephone Nigam Ltd. 2,742,024
63,000 Videsh Sanchar Nigam Ltd. 1,473,583
------------
4,215,607
------------
TOTAL INDIA
(COST $9,361,192) 11,117,998
------------
INDONESIA - 3.0%
COMMUNICATIONS - 1.0%
46,000 P.T. Indosat 104,109
1,430,000 P.T. Telekomunikasi Indonesia 1,334,401
------------
1,438,510
------------
FOODS - 0.5%
774,680 P.T. Indofood Sukses Makmur 776,838
------------
MISC. MANUFACTURING - 0.8%
435,000 P.T. Gudang Garam 1,235,933
------------
RETAIL SALES - 0.4%
82,500 P.T. Unilever Indonesia 643,454
------------
TRANSPORTATION EQUIPMENT - 0.3%
551,000 P.T. Astra International 410,564
------------
TOTAL INDONESIA
(COST $6,075,219) 4,505,299
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
66
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- - ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- - --------- ------------
JAPAN - 18.7%
<C> <S> <C>
CHEMICALS - 0.1%
38,000 Sakata Inx Corp. 175,127
------------
CONSTRUCTION - 1.4%
54,000 Daiwa House Industry Co., Ltd. 521,088
73,000 Higashi Nihon House Co. 546,544
48,000 Kinden Corporation 590,966
42,000 Sanki Engineering Co. 349,389
8,000 Tostem Corporation 111,139
------------
2,119,126
------------
ELECTRICAL APPLIANCES - 3.9%
27,000 Fuji Photo Film Co. 979,286
142,000 Hitachi Ltd. 1,092,671
6,000 Kyocera Corporation 343,898
77,000 Matsushita Electrical
Industrial Company, Ltd. 1,293,902
88,000 Mitsubishi Electric
Corporation 293,553
16,000 Murata Manufacturing Co., Ltd. 644,206
30,000 Omron Corporation 514,100
7,700 SMC Corporation 666,168
------------
5,827,784
------------
INSURANCE - 1.6%
181,000 Koa Fire & Marine Insurance
Co., Ltd. 941,061
90,000 Sumitomo Marine & Fire
Insurance 600,449
162,000 Yasuda Fire & Marine Insurance 898,877
------------
2,440,387
------------
IRON & STEEL - 0.6%
411,000 Sumitomo Metal Industries 823,983
------------
LAND TRANSPORTATION - 1.1%
123 East Japan Railway Company 598,577
317,000 Hanshin Electric Railway Co. 1,073,280
------------
1,671,857
------------
MACHINERY - 1.5%
63,000 Amada Metrics Co. Ltd. 463,813
106,000 Glory Ltd. 1,737,127
------------
2,200,940
------------
MINING - 0.1%
31,000 Nittetsu Mining Co. 173,813
------------
MISC. FINANCIAL - 0.7%
40,700 Credit Saison Co., Ltd. 1,093,595
------------
MISC. MANUFACTURING - 0.6%
72,000 Toppan Printing Company Ltd. 904,417
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- - --------- ------------
<C> <S> <C>
JAPAN (CONCLUDED)
OIL - 0.3%
72,000 Showa Shell Sekiyu 504,916
------------
PAPER & PULP - 0.2%
66,000 Oji Paper Co., Ltd. 334,914
------------
PHARMECEUTICALS - 0.9%
51,000 Takeda Chemical Industries 1,391,565
------------
REAL ESTATE - 0.4%
133,100 Airport Facilities Co., Ltd. 476,108
17,000 T.O.C Co. 171,117
------------
647,225
------------
RETAIL SALES - 0.4%
12,000 Ito-Yokado Co., Ltd. 596,955
------------
RUBBER GOODS - 1.0%
66,000 Bridgestone Corp. 1,427,502
------------
SECURITIES - 0.4%
51,000 Nomura Securities Company Ltd. 593,961
------------
SERVICES - 0.1%
9,000 Chubu-Nippon Broadcasting Co.,
Ltd. 157,225
------------
TEXTILES - 0.4%
67,000 Kuraray Company Limited 601,947
------------
TRANSPORTATION EQUIPMENT - 0.8%
40,000 Toyota Motor Corporation 1,114,716
------------
WHOLESALE - 2.2%
100,000 Inaba Denkisangyo Co. 1,123,035
15,000 Meiko Shokai Co. 461,692
81,000 Mitsubishi Corporation 694,035
143,000 Mitsui & Company 1,086,091
------------
3,364,853
------------
TOTAL JAPAN
(COST $35,979,550) 28,166,808
------------
KOREA - 3.8%
BANKING - 0.5%
86,979 Shinhan Bank 670,463
------------
COMMUNICATIONS - 0.4%
1,833 SK Telecom Co. Ltd.(1) 623,755
------------
ELECTRICAL APPLIANCES - 0.9%
35,000 LG Electronics 473,958
22,784 Samsung Electronics Co.(1) 901,748
------------
1,375,706
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
67
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- - ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- - --------- ------------
KOREA (CONCLUDED)
<C> <S> <C>
ELECTRICITY & GAS - 0.5%
49,000 Korea Electric & Power Corp. 699,271
------------
IRON-STEEL - 0.6%
21,000 Pohang Iron & Steel Co., Ltd.
(1) 927,631
------------
OILS - 0.4%
46,020 Yukong Ltd. 623,188
------------
SECURITIES - 0.5%
64,000 Daewoo Securities Co.* 793,333
------------
TOTAL KOREA
(COST $12,929,984) 5,713,347
------------
MALAYSIA - 8.0%
BANKING - 1.2%
354,000 Malayan Banking Berhad 1,365,202
465,000 RHB Capital Berhad 389,238
83,400 RHB Sakura Merchant Bankers
Berhad* 52,359
------------
1,806,799
------------
CONSTRUCTION - 1.6%
665,000 Gamuda Berhad 1,013,901
615,000 United Engineers (Malaysia)
Ltd. 1,452,466
------------
2,466,367
------------
ELECTRICITY & GAS - 1.4%
65,000 Petronas Gas Berhad 174,888
888,000 Tenaga Nasional Berhad 1,911,390
------------
2,086,278
------------
GLASS & CERAMICS - 0.2%
100,000 Fraser & Neave Ltd. 224,963
------------
MISC. MANUFACTURING - 0.8%
820,000 R.J. Reynolds Berhad 1,262,481
------------
REAL ESTATE - 1.7%
2,779,000 Island & Peninsular Berhad 2,575,456
------------
SERVICES - 1.1%
561,500 Genting Berhad 1,577,907
------------
TOTAL MALAYSIA
(COST $26,018,189) 12,000,251
------------
PHILIPPINES - 3.5%
COMMUNICATION - 1.6%
96,340 Philippine Long Distance
Telephone 2,401,638
------------
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
- - --------- ------------
<C> <S> <C>
PHILIPPINES (CONCLUDED)
ELECTRICITY & GAS - 0.7%
315,315 Manila Electric Co. 'B' 970,200
------------
MINING - 0.3%
5,496,000 Belle Corporation* 501,060
1,099,200 Belle Corporation Wts. (2)* 203
------------
501,263
------------
REAL ESTATE - 0.9%
3,323,768 Ayala Land, Inc. 'B' 1,302,046
------------
TOTAL PHILIPPINES
(COST $7,831,441) 5,175,147
------------
SINGAPORE - 9.7%
BANKING - 3.1%
576,000 Overseas Union Bank Ltd. 1,923,664
500,880 United Overseas Bank Ltd. 2,772,046
------------
4,695,710
------------
GLASS & CERAMICS - 0.4%
110,000 Fraser & Neave Ltd. 552,799
------------
MACHINERY & ENGINEERING - 1.6%
760,000 Keppel Corp., Ltd. 2,407,634
------------
REAL ESTATE - 2.3%
522,000 City Developments Ltd. 2,191,603
748,000 DBS Land Ltd. 1,275,216
------------
3,466,819
------------
SERVICES - 2.3%
253,200 Singapore Press Holdings Ltd. 3,495,191
------------
TOTAL SINGAPORE
(COST $22,240,842) 14,618,153
------------
THAILAND - 1.6%
COMMUNICATIONS - 0.4%
630,000 TelecomAsia Corp.* 277,262
183,000 Total Access Communication
Co., Ltd. 349,530
------------
626,792
------------
ELECTRICITY & GAS - 0.6%
582,200 Electricity Generating Public
Co., Ltd. 953,726
------------
MINING - 0.3%
49,000 PTT Exploration and Production
Public Company Limited 491,198
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
68
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS
SHARES VALUE US$
----------- ------------
REAL ESTATE - 0.3%
Land & House Corp. Limited
TOTAL THAILAND 364,694
(COST $7,720,378) ------------
TOTAL COMMON STOCKS
(COST $173,241,618) 2,436,410
COMMON STOCKS ------------
426,171 127,522,463
PRINCIPAL ------------
AMOUNT VALUE US$
- - ----------- ------------
<C> <S> <C>
(000)
SHORT-TERM INVESTMENTS - 12.6%
REPURCHASE AGREEMENT - 12.6%
U.S.$19,000 With Chase Securities
Incorporated dated 10/31/97
5.55%, due 11/03/97
(repurchase proceeds
$19,008,788); collateralized
by: $17,885,000 U.S.
Treasury Note, 6.875%, due
5/15/06 (value $19,947,546)
(COST $19,000,000) 19,000,000
------------
TOTAL INVESTMENTS
(COST $192,241,618) - 97.4% 146,522,463
Other assets less
liabilities - 2.6% 3,883,112
------------
Net Assets - 100% $150,405,575
------------
------------
</TABLE>
* Non-income producing security.
(a) American Depositary Receipt.
(1) Priced at fair value as determined by the Investment Adviser and approved by
the Board of Directors.
(2) The warrants enable the holder to subscribe to one share for every warrant
held at PHP 8.50 per share. The warrants can be exercised from 10/06/98 thru
12/31/00.
Percentages are based on net assets.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
69
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $173,241,618) $ 127,522,463
Repurchase agreement 19,000,000
Cash 3,514,982
Foreign currency, at value (cost $14,556) 14,556
Receivable for securities sold 1,755,433
Receivable for dividends 225,566
Receivable for interest 19,383
Unrealized appreciation on forward foreign currency
contracts 1,260
Deferred organization expenses 39,567
Prepaid expenses 9,924
-------------
Total Assets 152,103,134
-------------
LIABILITIES:
Payable for securities purchased 991,206
Estimated tax liability on Indian investments (Note 5) 209,820
Investment advisory fee payable 142,321
Administration fee payable 35,580
Unrealized depreciation on forward foreign currency
contracts 205
Accrued expenses payable and other liabilities 318,427
-------------
Total Liabilities 1,697,559
-------------
Net Assets $ 150,405,575
-------------
-------------
NET ASSETS WERE COMPOSED OF:
Capital Stock, par value ($.01 per share, applicable to
19,607,100 shares issued: authorized 100,000,000
shares) $ 196,071
Paid-in-capital in excess of par 270,878,538
Treasury Stock at cost (3,500,000 shares--Note 6) (45,640,000)
Accumulated net investment loss (245,643)
Accumulated net realized losses from investments (28,855,504)
Net unrealized depreciation of investments (net of
estimated tax liability on Indian investments of
$209,820 - Note 5) (45,928,975)
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies and forward foreign
currency contracts 1,088
-------------
Net Assets $ 150,405,575
-------------
-------------
Net asset value per share ($150,405,575
divided by 16,107,100 shares outstanding) $ 9.34
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
70
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $133,393) $ 2,597,793
Interest and discount earned 784,509
------------
Total Investment Income 3,382,302
------------
EXPENSES:
Investment advisory fee 2,301,847
Administration fee 575,461
Legal fees and expenses 385,107
Custodian's fees and expenses 282,580
Transfer agent's fees and expenses 183,596
Reports to shareholders 138,858
Directors' fees and expenses 72,116
Insurance expense 53,295
Independent accountants' fees and expenses 35,791
Amortization of deferred organization expenses 33,981
Registration fees 24,260
Miscellaneous expenses 12,235
------------
Total Expenses 4,099,127
------------
NET INVESTMENT LOSS (716,825)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments (net of taxes paid on Indian Investments of
$212,364) 3,269,878
Foreign currency transactions and forward foreign currency
contracts (160,676)
Net change in unrealized appreciation (depreciation) on:
Investments (net of change in estimated tax liability on
Indian investments of $56,530 - Note 5) (62,130,824)
Translation of assets and liabilities in foreign
currencies and forward foreign currency contracts 3,541
------------
NET REALIZED AND UNREALIZED LOSS FROM INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS (59,018,081)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(59,734,906)
------------
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
71
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
<S> <C> <C>
- --------------------------------------------------------------------------------
INCREASE(DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (716,825) $ (508,543)
Net realized gain from investment
transactions 3,269,878 21,946
Net realized gain (loss) from
foreign currency transactions and
forward foreign currency contracts (160,676) 2,568,860
Net change in unrealized
appreciation (depreciation) on
investments (net of estimated tax
liability on Indian investments of
$209,820 and $266,350,
respectively - Note 5) (62,130,824) 8,574,019
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign currencies
and forward foreign currency
contracts 3,541 (245,390)
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (59,734,906) 10,410,892
----------------- -----------------
DIVIDENDS TO SHAREHOLDERS:
Investment income-net (1,826,573) -
----------------- -----------------
CAPITAL STOCK TRANSACTIONS (NOTE 6):
Cost of shares redeemed pursuant to
tender offer (45,640,000) -
Tender offer costs charged to paid
in capital in excess of par (237,658) (53,304)
----------------- -----------------
TOTAL CAPITAL STOCK TRANSACTIONS (45,877,658) (53,304)
----------------- -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (107,439,137) 10,357,588
----------------- -----------------
NET ASSETS:
Beginning of year 257,844,712 247,487,124
----------------- -----------------
End of year (including undistributed
(accumulated) net investment
income (loss) of $(245,643) and
$1,826,585 for the years ended
1997 and 1996, respectively) $ 150,405,575 $ 257,844,712
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
72
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios:
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
YEAR YEAR YEAR DECEMBER 30,
ENDED ENDED ENDED 1993* TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.15 $ 12.62 $ 13.84 $ 14.01**
Investment Operations:
Net investment income (loss) (0.05) (0.03) 0.02 (0.01)
Net realized and unrealized gain (loss) on
investments (net of estimated tax
liability on Indian investments) and
foreign currency transactions and foreign
currency contracts (3.66) 0.56 (1.24) (0.16)
----------- ----------- ----------- -------
Total from investment operations (3.71) 0.53 (1.22) (0.17)
----------- ----------- ----------- -------
Less dividends from investment income-net (0.09) - - -
----------- ----------- ----------- -------
Tender offer costs charged to
paid-in-capital in excess of par (0.01) -+ - -
----------- ----------- ----------- -------
Net asset value, end of period $ 9.34 $ 13.15 $ 12.62 $ 13.84
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Market value, end of period $ 8.50 $ 12.00 $ 11.125 $ 12.00
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Total investment return based on (1):
Market value (28.62 )% 7.87% (7.29 )% (20.00 )%
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Net asset value (28.43 )% 4.20% (8.82 )% (1.21 )%
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Ratio/Supplementary Data:
Net assets, end of period (Millions) $ 150.41 $ 257.84 $ 247.49 $ 271.42
Ratio of expenses to average net assets 1.78 % 1.57 % 1.65 % 1.59 %***
Ratio of expenses to average net assets
excluding conversion costs (Note 7) 1.59 % - - -
Ratio of net investment income (loss) to
average net assets (0.31 )% (0.19 )% 0.12 % (0.10 )%***
Portfolio turnover rate 39.14 % 34.71 % 66.79 % 19.76 %
Average commission rate per share**** $ 0.0142 $ 0.0224 N/A N/A
</TABLE>
* Commencement of investment operations.
** Net of $.09 offering expenses.
*** Annualized.
**** For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose its average commission rate per share for trades on
which a commission is charged.
+ Less than $0.01 per share.
(1) Total investment return is calculated assuming a purchase of common
stock on the opening of the first day and a sale on the closing of the last
day of each period reported. Dividends and distributions, if any, are
assumed for the purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions paid to purchase shares of the
Fund. Generally, total investment return based on net asset value will be
higher than total investment return based on market value in periods where
there is an increase in the discount or a decrease in the premium of the
market value to the net asset value from the beginning to the end of such
periods. Conversely, total investment return based on net asset value will
be lower than total investment return based on market value in periods where
there is a decrease in the discount or an increase in the premium of the
market value to the net asset value from the beginning to the end of such
periods. Total investment returns for periods of less than one full year are
not annualized.
- --------------------------------------------------------------------------------
73
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES:
Schroder Asian Growth Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as a
non-diversified, closed-end management investment company. The Fund was
incorporated in Maryland on November 5, 1993 and investment operations
commenced on December 30, 1993. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements.
SECURITY VALUATION
Portfolio securities listed or traded on a recognized stock exchange or
NASDAQ National Market System are valued at the last reported sales price on
the exchange on which the securities are principally traded. Other
securities for which market quotations are readily available are valued at
the last sales price prior to the time of determination. If there is no
sales price on such date, and if bid and asked quotations are available,
such securities are valued at the mean between the last current bid and
asked prices. The value of a foreign security is determined in its national
currency as of 9:00 a.m., New York time, and that value is then converted
into its U.S. dollar equivalent on the day of valuation as of 11:30 a.m.,
New York time. Securities for which market quotations are not readily
available, and securities for which, in the judgment of the Investment
Adviser, the prices or values available do not represent the fair value of
the instrument, are valued at fair value, pursuant to the Fund's pricing
procedures as determined by the Adviser and approved in good faith by the
Board of Directors. In determining the fair value of such securities, the
Adviser and the Board consider all relevant information, including but not
limited to types of securities, current financial and market information and
restrictions on dispositions. The values assigned to the securities holdings
do not necessarily represent amounts which might ultimately be realized upon
their sale or other disposition, since such amounts depend on future
circumstances and cannot reasonably be determined until the actual
disposition occurs. However, because of the inherent uncertainty of such
valuations, those estimated values may differ significantly from the values
that would have been used had a ready market for the investments existed,
and the differences could be material. At October 31, 1997, the portfolio
contained three securities for which market quotations were not readily
available and which were fair valued pursuant to the Fund's procedures.
These securities had a total value of $2,453,134 representing 1.6% of the
Fund's net assets.
The Fund may enter into repurchase agreements whereby the Fund, through
its custodian, receives delivery of the underlying securities. The
underlying collateral is valued daily on a marked-to-market basis to assure
that the value, including accrued interest, is at least equal to the
repurchase price. In the event of a default of the obligation to repurchase,
the Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. If the seller defaults and the value of the
collateral declines, realization of the collateral by the Fund may be
delayed or limited.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date except for certain dividends from foreign
securities which are recorded as soon as the Fund is informed of the
ex-dividend date. Interest income (including accretion of discount) is
recorded on the accrual basis. Realized gains and losses from security
transactions are determined on the identified cost basis.
FOREIGN CURRENCY TRANSLATION
Foreign currency amounts denominated in or expected to settle in foreign
currencies ("FC") are translated into U.S. dollars on the following basis:
market value of investment securities and other assets and liabilities at
- --------------------------------------------------------------------------------
74
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the rate of exchange at the end of the respective period, purchases and
sales of investment securities and income and expenses at the rate of
exchange prevailing on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from the investment.
Reported net realized foreign exchange gains or losses arise from sales
of portfolio securities, sales and maturities of short-term securities,
sales of FCs, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses include
changes in the value of assets and liabilities, other than investments in
securities at fiscal year end, arising as a result of changes in the
exchange rate.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions payable by the Fund, if any, are accrued on
the ex-dividend date. Dividends from net investment income and capital gain
distributions are determined in accordance with U.S. Federal income tax
regulations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies and net
investment losses. As a result of these differences, at October 31, 1997,
the Fund decreased paid-in-capital by $549,102, decreased accumulated net
investment loss by $471,170, decreased accumulated net realized losses from
investments by $20,769 and decreased accumulated net realized losses from
foreign currency transactions and forward foreign currency contracts by
$57,163. Net assets were not affected by the reclassification.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward contracts to purchase or sell FCs to
protect against the effect of possible adverse movements in foreign exchange
rates on the U.S. dollar value of the underlying portfolio. Risks associated
with such contracts include the movement in value of the FC relative to the
U.S. dollar and the ability of the counterparty to perform. Forward foreign
currency contracts are valued at the forward rate and are marked-to-market
weekly. Fluctuations in the value of such contracts are recorded as
unrealized gains or losses; realized gains or losses include net gains or
losses on contracts which have terminated by settlement.
ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization and
initial registration are being amortized on a straight line basis over a
five-year period from the commencement of investment operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate cost of securities purchased and the proceeds from sales
of securities, excluding short-term investments, for the year ended October
31, 1997 were $83,156,326 and $149,297,647, respectively.
- --------------------------------------------------------------------------------
75
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FORWARD FOREIGN CURRENCY CONTRACTS AS OF OCTOBER 31, 1997:
<TABLE>
<CAPTION>
CONTRACTS TO UNREALIZED
DELIVER/ SETTLEMENT IN EXCHANGE APPRECIATION/
RECEIVE DATE FOR VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------
CONTRACTS TO BUY:
Hong Kong Dollar USD 331,191 11/03/97 HKD 2,560,505 $ 331,242 $ 51
Hong Kong Dollar USD 273,378 11/03/97 HKD 2,113,543 273,420 42
Japanese Yen USD 48,201 11/04/97 JPY 5,815,412 48,377 176
Japanese Yen USD 13,864 11/06/97 JPY 1,664,057 13,843 (21)
Malaysian Ringit USD 177,931 11/06/97 MYR 596,995 178,474 543
Malaysian Ringit USD 145,401 11/07/97 MYR 487,865 145,849 448
------
Total $ 1,239
------
------
CONTRACTS TO SELL:
Hong Kong Dollar HKD 2,403,436 11/03/97 USD (310,875) (310,923) (48)
Malaysian Ringit MYR 149,715 11/06/97 USD (44,622) (44,758) (136)
------
Total $ (184 )
------
------
</TABLE>
4. INVESTMENT ADVISORY AND ADMINISTRATIVE AGREEMENTS AND OTHER TRANSACTIONS
WITH AFFILIATES:
The Fund retains Schroder Capital Management International, Inc. as
Investment Adviser (the "Adviser"). The Investment Advisory Agreement, as
amended on May 16, 1996, provides for a monthly fee at the annual rate of
(1) 1.00% of the Fund's average weekly net assets up to and including $300
million, and (2) 0.85% of the Fund's average weekly net assets in excess of
$300 million. The Fund paid or accrued fees to the Adviser of $2,301,847 for
the year ended October 31, 1997.
The Fund retains Princeton Administrators, L.P. as the Administrator.
Pursuant to the administration agreement, as amended on May 16, 1996, the
Administrator receives a monthly fee equal to the greater of (a) $150,000
per annum or (b) an annual rate of (1) 0.25% of the Fund's average weekly
net assets up to and including $300 million, and (2) 0.22% of the Fund's
average weekly net assets in excess of $300 million.The Fund paid or accrued
fees to the Administrator of $575,461 for the year ended October 31, 1997.
Several individuals who are directors and/or officers of the Fund are
also directors or officers of the Investment Advisor or its affiliates.
5. FEDERAL INCOME TAXES:
Since it is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its stockholders, no
Federal income tax provision is required.
For Federal income tax purposes, the tax basis of investment securities
owned is $192,677,609. At October 31, 1997, net unrealized depreciation on
investments was $(46,155,146). This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $11,066,950 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value was $57,222,096.
- --------------------------------------------------------------------------------
76
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
For Federal income tax purposes, the Fund had a capital loss carry
forward as of October 31, 1997 of $28,664,146 ($2,615,657 expiring in 2002
and $26,048,489 expiring in 2003) which is available to offset future
capital gains, subject to limitations imposed under the Internal Revenue
Code.
Under the applicable foreign tax law, a withholding tax may be imposed
on interest, dividends, and capital gains at various rates. Indian tax
regulateons require that taxes be paid on capital gains realized by the
Fund. At October 31, 1997, the Fund decreased net unrealized appreciation by
the estimated tax liability attributable to Indian investments of $209,820.
6. CAPITAL STOCK:
There are 100,000,000 shares of $.01 par value common stock authorized.
There are 16,107,100 shares issued and outstanding as of October 31, 1997.
On February 18, 1997, the Fund's Board of Directors approved a tender
offer (the "Tender Offer") to purchase up to 3.5 million shares of
outstanding common stock. The offer commenced on February 19, 1997 and
expired on March 20, 1997. The Fund received tenders representing 13,268,062
shares of common stock. Pursuant to the terms of the Tender Offer, the Fund
determined to accept 3.5 million common shares. As a result of the Tender
Offer, the Fund purchased 3.5 million shares for a total of $45,640,000.
As of October 31,1997 and October 31, 1996, costs incurred in connection
with the tender offer in the amount of $237,658 and $53,304, respectively,
have been charged to paid-in-capital in excess of par.
7. SUBSEQUENT EVENT:
On October 24, 1997, the shareholders of the Fund approved management's
proposal to convert the Fund from a closed-end to an open-end investment
company (the "Conversion"). Approval of this proposal included approval of
(1) amendments to the fundamental policies of the Fund to enable the Fund to
participate in an open-end Core and Gateway fund structure, (2) new
investment advisory agreements with the Investment Adviser to take effect
upon the Conversion, (3) changing the Fund's subclassification under the
Investment Company Act from a closed-end to an open-end company, and (4)
adopting an Agreement and Plan of Reorganization pursuant to which the Fund
would reorganize from a Maryland corporation into a Delaware business trust.
Following the Conversion, shares of the Fund will be subject to an
asset-based shareholder servicing fee of 0.25% per annum, and, for shares
purchased after the Conversion through brokers or other financial
intermediaries, a front-end sales charge based on the size of the purchase.
In addition, during the first six months after the conversion, open-end
shares received by stockholders of the Fund in the Conversion will be
subject to a redemption fee of 2.00%. Following the Conversion, stockholders
will be able to buy and sell at a price based on net asset value, subject
for the first six months to a redemption fee of 2.00%. In the course of
converting to an open-end fund, the Fund will also (a) convert from a
Maryland corporation to a Delaware business trust; and (b) commence
operating in a Core-and-Gateway fund-of-funds structure. There will be no
change in the Fund's investment objective and strategy. Schroder Capital
Management International, Inc. will continue to serve as investment adviser
for the Fund's investments.
As of October 31, 1997, costs incurred in connection with the Conversion
amounted to $431,366, the majority of which related to legal and transfer
agent fees.
- --------------------------------------------------------------------------------
77
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
PROXY RESULTS
During the year ended October 31, 1997, Schroder Asian Growth Fund, Inc.
shareholders voted on the following proposals. The proposals were approved at
the annual meeting of shareholders held on June 3, 1997. The description of the
proposals and number of shares voted are as follows:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
SHARES
VOTED FOR ABSTENTIONS
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. To elect certain Directors: John I. Howell(1) 12,144,007 639,784
12,148,287 635,504
David M.
Salisbury(1)
12,146,872 636,919
Louise Croset(2)
(1) Nominee for Class II director to serve until 2000 annual meeting of stockholders
(2) Nominee for Class III director to serve until 1998 annual meeting of stockholders
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES
SHARES VOTED
VOTED FOR AGAINST ABSTENTIONS
<S> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------
2. To ratify the selection of Coopers & Lybrand L.L.P.
as the Fund's independent accountants. 12,366,765 268,458 148,568
- - -------------------------------------------------------------------------------------------------------
</TABLE>
The following proposals were voted on at the Special Meeting of
Stockholders, October 24, 1997. The proposal to approve the Conversion of the
Fund to an open-end Core and Gateway Fund Structure, which required the
affirmative vote of holders of two-thirds of the outstanding shares of the Fund,
was approved. The proposal to eliminate the tender offer undertaking set forth
in the Fund's prospectus dated December 22, 1993, which required the affirmative
vote of a majority of the outstanding voting securities of the Fund, as defined
by the Investment Company Act of 1940, was not approved.
<TABLE>
<CAPTION>
SHARES SHARES
VOTED VOTED
FOR AGAINST ABSTAIN
----------- ----------- ---------
<S> <C> <C> <C> <C>
1. TO APPROVE THE CONVERSION OF THE FUND TO AN OPEN-END CORE AND 10,834,272 312,118 134,720
GATEWAY FUND STRUCTURE
2. TO ELIMINATE THE TENDER OFFER UNDERTAKING SET FORTH IN THE 7,121,328 437,017 253,171
FUND'S PROSPECTUS
</TABLE>
DIVIDEND REINVESTMENT PLAN
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment Plan (the "Plan"), pursuant to which
dividends and capital gain distributions to shareholders will be paid in or
reinvested in additional shares of the Fund (the "Dividend Shares"). State
Street Bank and Trust Company (the "Plan Agent") will act as agent for
participants under the Plan. Shareholders whose shares are held in the name of a
brokerage firm, bank, or other nominee should contact such nominee to see if it
will participate in the Plan on the shareholders' behalf. If the nominee is
unable to do so, the shareholder may wish to request that their shares be
reregistered in the shareholder's own name.
A shareholder may elect to withdraw from the Plan without penalty at any
time upon written notice to the Plan Agent. When a participant withdraws from
the Plan, or upon termination of the Plan, certificates for whole Dividend
Shares credited to the shareholder's account under the Plan will be issued and
cash payment will be made for any fractional Dividend Shares credited to such
account. An election to withdraw from the Plan will, until such election is
changed, be deemed to be an election by a shareholder to take all subsequent
dividends and distributions in cash. Elections will be effective immediately if
notice is received by the Plan Agent not less than ten days prior to any
dividend or distribution record date; otherwise, such termination will be
effective after the investment of the then current dividend or distribution. If
a withdrawing shareholder requests the Plan Agent to sell the
- --------------------------------------------------------------------------------
78
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
shareholder's Dividend Shares upon withdrawal from participation in the Plan,
the withdrawing shareholder will be required to pay a $2.50 fee plus brokerage
commission.
Whenever the Fund declares a distribution from capital gains or an income
dividend either in cash or in shares of the Fund, participants in the Plan will
receive shares of the Fund. Whenever the market price per share is equal to or
exceeds the net asset value of the valuation date, participants will be issued
shares of the Fund at a price per share equal to the greater of (a) the net
asset value per share on the date or (b) 95% of the market price of the Fund's
shares on the date. The valuation date will be the dividend or distribution
payment date or, if that date is not a trading day on the New York Stock
Exchange, the immediately preceding trading day. The Fund will not issue
Dividend Shares under the Plan at a price below net asset value. If net asset
value exceeds the market price of Fund shares as of the valuation date, or if
the Fund should declare a dividend or capital gains distribution payable only in
cash, the Plan Agent will, as agent for the participants, buy Fund shares in the
open market, on the New York Stock Exchange or elsewhere, for the participants'
accounts on or shortly after the payment date. If, before the Plan Agent has
completed its purchase, the market price exceeds the net asset value of a Fund
share, the average per share purchase price paid by the Plan Agent may exceed
the net asset value of the Fund's shares, resulting in the acquisition of fewer
Dividend Shares than if the dividend or capital gains distribution had been paid
in shares issued by the Fund.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmation of all transactions in the accounts, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in noncertificated form in
the name of the participant, and each shareholder's proxy will include those
Dividend Shares purchased pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions. The Plan Agent's fee for the handling of reinvestment of
dividends and distributions will be paid by the Fund. There will be no brokerage
charges with respect to Dividend Shares issued directly by the Fund as a result
of dividends or capital gains distributions payable either in shares or in cash.
However, each participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or capital gains distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. Federal income tax that may be payable on such
dividends or distributions. To the extent dividends and distributions are
reinvested in additional Shares issued by the Fund, participants should be
treated for U.S. Federal income tax purposes as receiving a distribution in an
amount equal the fair market value, determined as of the valuation date, of the
shares received (regardless of the net asset value of the shares on the
valuation date), and should have a cost basis in such shares equal to such fair
market value.
Experience under the plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to notice of the change
sent to participants in the plan at least 90 days before the record date for
such dividend or distribution. The Plan may also be amended or terminated by the
Plan Agent at least 90 days prior written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent at
State Street Bank and Trust Company, P.O. Box 8200, Boston, Massachusetts
02266-8200, at 1-800-426-5523.
- --------------------------------------------------------------------------------
79
<PAGE>
- --------------------------------------------------------------------------------
SCHRODER ASIAN GROWTH FUND, INC.
- ------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Schroder Asian Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Schroder Asian Growth Fund, Inc., including the schedule of investments, as of
October 31, 1997, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the three years in the
period then ended, and for the period December 30, 1993 (commencement of
operations) to October 31, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Schroder Asian Growth Fund, Inc. as of October 31, 1997, the results of its
operations for the year then ended, and the changes in its net assets for each
of the two years in the period then ended, and financial highlights for the
three years in the period then ended and for the period December 30, 1993
(commencement of operations) to October 31, 1994, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
December 4, 1997
80
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS
Included in the Prospectus:
Financial Highlights for Schroder Asian Growth Fund,
Inc.
Included in the Statement of Additional Information:
Audited financial statements for the fiscal year
ended October 31, 1997, including Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, Notes to
Financial Statements, Financial Highlights, Portfolio of Investments
and Report of Independent Accountants for Schroder Asian Growth Fund,
Inc.
(B) EXHIBITS:
(1) Trust Instrument of Schroder Series Trust II, filed as Exhibit 1 to
Registrant's Registration Statement via EDGAR on December 22, 1997,
Accession No. 0001004402-97-000270.
(4) Sections 2.04 and 2.06 of Registrant's Trust Instrument provide as
follows:
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by
the Trustees, Shares shall be transferable on the records of the
Trust only by the record holder thereof or by that holder's agent
thereunto duly authorized in writing, upon delivery to the Trustees
or the Transfer Agent of a duly executed instrument of transfer and
such evidence of the genuineness of such execution and
authorization and of such other matters as may be required by the
Trustees or Transfer Agent. Upon such delivery the transfer shall
be recorded on the register of the Trust. Until such record is
made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of
the proposed transfer.
SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby
shall consist of one or more Series and separate and distinct
records shall be maintained by the Trust for each Series and the
assets associated with any such Series shall be held and accounted
for separately from the assets of the Trust or any other Series.
The Trustees may divide the Shares of any Series into Classes. The
Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote
of the Shareholders of any Series, to establish and designate and
to change in any manner any such Series or Class and to fix such
preferences, voting powers, rights and privileges of such Series or
Classes as the Trustees may from time to time determine, to divide
or combine the Shares or any Series or Classes into a greater or
lesser number, to classify or reclassify any issued Shares or any
Series or Classes into one or more Series or Classes, and to take
such other action with respect to the Shares as the Trustees may
deem desirable. The establishment and designation of any Series or
Class shall be effective upon the adoption of a resolution by the
Trustees setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series or
Class.
All references to Shares in this Trust Instrument shall be
deemed to be Shares of any or all Series or Classes, as the context
may require. All provisions herein relating to the Trust shall
apply equally to each Series and each Class, except as the context
otherwise requires.
81
<PAGE>
Each Share of a Series of the Trust shall represent an
equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series or Class thereof shall be entitled to
receive the holder's pro rata share of all distributions made with
respect to such Series or Class thereof. Upon redemption of Shares,
such Shareholder shall be paid solely out of the funds and property
of such Series of the Trust.
The current Series and Classes thereof of the Trust, and
the characteristics of those Series and Classes are set forth in
Annex A to this Trust Instrument.
(5) Investment Advisory and Asset Allocation Agreement between the
Registrant and Schroder Capital Management International Inc. dated
as of December 9, 1997 and filed herewith.
(6) Distribution Agreement between the Registrant and Schroder Fund
Advisors Inc. dated as of December 9, 1997 and filed herewith.
(8) Global Custody Agreement between the Registrant and The Chase
Manhattan Bank dated as of December 9, 1997 and filed herewith.
(9)(a) Administration Agreement between the Registrant and Schroder Fund
Advisors Inc. dated as of December 9, 1997 and filed herewith.
(9)(b) Subadministration Agreement between the Registrant and Forum
Administrative Services, LLC. dated as of December 9, 1997 and
filed herewith.
(9)(c) Transfer Agency Agreement between the Registrant and State Street
Bank and Trust Company. dated as of December 9, 1997 and filed
herewith.
(9)(d) Fund Accounting Agreement between the Registrant and Forum
Accounting Services, LLC.
(10) Opinion and Consent of Smith, Katzenstein & Furlow, LLP, dated
March 16, 1998 and filed herewith.
(11) Consent of Coopers & Lybrand L.L.P., independent auditors of the
Registrant, dated March 16, 1998 and filed herewith.
(12) Not applicable.
(13) Agreement and Plan of Reorganization between Schroder Asian Growth
Fund, Inc. and the Registrant dated as of December 9, 1997 and
filed herewith.
(25) Powers of Attorney for the Registrant, filed as Exhibit 25 to
Registrant's Registration Statement via EDGAR on December 22, 1997,
Accession No. 0001004402-97-000270.
- --------------------------------------------------------------------------------
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
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ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF MARCH 16, 1998.
TITLE OF CLASS OF SHARES OF BENEFICIAL INTEREST NUMBER OF HOLDERS
----------------------------------------------- -----------------
Class A Shares 0
ITEM 27. INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b): (1) every Person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid in connection with any claim, action,
suit or proceeding in which he or she becomes involved as a party or otherwise
by virtue of his or her being or having been a Trustee or officer and against
amounts paid or incurred in the settlement thereof; and (2) the words "claim,"
"action," "suit," or "proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals), actual or threatened
while in office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(1) who shall have been adjudicated by a court or body before which the
proceeding was brought: (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office; or (B) not to have
acted in good faith in the reasonable belief that his or her action was in the
best interest of the Trust; or (2) in the event of a settlement, unless there
has been a determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office: (x) by the court or other body
approving the settlement; (y) by at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter based upon
a review of readily available facts (as opposed to a full trial-type inquiry);
or (z) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a Person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other Persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him or her to the Trust or Series if it is ultimately determined that he
or she is not entitled to indemnification under this Section 10.02; provided,
however, that either: (1) such Covered Person shall have provided appropriate
security for such undertaking; (2) the Trust is insured against losses arising
out of any such advance payments; or (3) either a majority of the Trustees who
are neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trial-type inquiry or
full investigation), that there is reason to believe that such Covered Person
will be found entitled to indemnification under Section 10.02.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The following are the directors and principal officers of SCMI, including their
business connections of a substantial nature. The address of each company
listed, unless otherwise noted, is 33 Gutter Lane, London EC2V 8AS, United
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Kingdom. Schroder Capital Management International Limited ("Schroder Ltd."), a
United Kingdom affiliate of SCMI, provides investment management services to
international clients located principally in the United Kingdom.
David M. Salisbury. Chief Executive Officer, Director and Chairman;
Joint Chief Executive and Director of Schroder.
Richard R. Foulkes. Senior Vice President and Managing Director.
John A. Troiano. Managing Director and Senior Vice President; Director
of Schroder Ltd.
David Gibson. Senior Vice President and Director; Director of Schroder
Capital Management Inc.
John S. Ager. Senior Vice President and Director.
Sharon L. Haugh. Senior Vice President and Director; Director and
Chairman of Schroder Advisors.
Gavin D.L. Ralston. Senior Vice President and Director.
Mark J. Smith. Senior Vice President and Director.
Robert G. Davy. Senior Vice President; Director of Schroder Ltd. and
an officer of open end investment companies for which SCMI and/or its
affiliates provide investment services.
Jane P. Lucas. Senior Vice President and Director; Director of
Schroder Advisors Inc.; Director of Schroder Capital Management Inc.
C. John Govett. Director; Group Managing Director of Schroder
Investment Management Ltd. and Director of Schroders plc.
Phillipa J. Gould. Senior Vice President and Director.
Louise Croset. First Vice President and Director.
Abdallah Nauphal. Group Vice President and Director.
ITEM 29. PRINCIPAL UNDERWRITERS.
(A) Schroder Fund Advisors Inc., the Registrant's principal underwriter,
also serves as principal underwriter for Schroder Capital Funds
(Delaware).
(B) Following is information with respect to each officer and director of
Schroder Fund Advisors Inc., the Distributor of the shares of Schroder
All Asia Fund (sole series of the Registrant):
Catherine A. Mazza, President.*
Mark J. Smith, Director and Senior Vice President.*
Sharon L. Haugh, Chairman and Director.*
Fergal Cassidy, Treasurer and Chief Financial Officer.*
Alexandra Poe, Secretary and Senior Vice President.*
Jane P. Lucas, Director.*
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* Address for each is 787 Seventh Avenue, 34th Floor, New York, New York 10019
except for Mark J. Smith, whose address is 33 Gutter Lane, London, England,
EC2V 8AS.
(C) Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by Registrant
with respect to its series under Section 31(a) of the Investment Company Act of
1940, and the Rules thereunder, are maintained at the offices of Schroder
Capital Management International Inc. (investment management records) and
Schroder Fund Advisors Inc. (administrator and distributor records), 787 Seventh
Avenue, New York, New York 10019, except that certain items will be maintained
at the following locations:
(a) Forum Accounting Services, LLC, Two Portland Square, Portland, Maine
04101 (fund accounting records).
(b) Forum Administrative Services, LLC, Two Portland Square, Portland, Maine
04101 (corporate minutes and all other records required under the
Subadministration Agreement).
(c) Boston Financial Data Services, Inc., Two Heritage Drive, North Quincy,
Massachusetts 02171 (transfer agent records).
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(b) Registrant undertakes to file a post-effective amendment, using
financial statements that need not be certified, within four to six
months from the latter of the effective date of Registrant's Securities
Act of 1933 Registration Statement relating to the prospectus offering
those shares or the commencement of the public offering of the
respective shares; and,
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders, if any, relating to the series or class thereof to which
the Prospectus relates upon request and without charge.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Pre-Effective Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, and State of New York on the
16th day of March, 1998.
SCHRODER SERIES TRUST II
By: /S/ CATHERINE A. MAZZA
-------------------------------
Catherine A. Mazza
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment to the Registration Statement has been signed below by the following
persons on the 16th day of March, 1998.
SIGNATURES TITLE
(a) Principal Executive Officer
/S/ LOUISE CROSET
--------------------------
Louise Croset President
(b) Principal Financial and
Accounting Officer
Fergal Cassidy Treasurer
By: /S/ THOMAS G. SHEEHAN
-----------------------------
Thomas G. Sheehan
Attorney-in-Fact
(c) The Trustees
/S/ I. PETER SEDGWICK
----------------------------
I. Peter Sedgwick Trustee and Chairman
/S/ PETER E. GUERNSEY
----------------------------
Peter E. Guernsey Trustee
/S/ JOHN I. HOWELL
----------------------------
John I. Howell Trustee
William L. Means Trustee
By: /S/ THOMAS G. SHEEHAN
------------------------------
Thomas G. Sheehan
Attorney-in-Fact
/S/ DAVID M. SALISBURY
--------------------------------
David M. Salisbury Trustee
/S/ LOUISE CROSET
-----------------------------------
Louise Croset Trustee
<PAGE>
INDEX TO EXHIBITS
EXHIBITS:
5 Investment Advisory and Asset Allocation Agreement between the Registrant
and Schroder Capital Management International Inc. dated as of December 9, 1997.
6 Distribution Agreement between the Registrant and Schroder Fund Advisors
Inc. dated as of December 9, 1997.
8 Global Custody Agreement between the Registrant and The Chase Manhattan
Bank dated as of December 9, 1997.
9(A) Administration Agreement between the Registrant and Schroder Fund Advisors
Inc.
9(B) Subadministration Agreement between the Registrant and Forum Administrative
Services, LLC.
9(C) Transfer Agency and Service Agreement between the Registrant and State
Street Bank and Trust Company.
9(D) Fund Accounting Agreement between the Registrant and Forum Accounting
Services, LLC.
10 Opinion and Consent of Smith, Katzenstein & Furlow, LLP, Counsel of
Registrant, dated March 16, 1998.
11 Consent of Coopers & Lybrand L.L.P., independent auditors of the
Registrant, dated March 16, 1998.
13 Agreement and Plan of Reorganization between Schroder Asian Growth Fund,
Inc. and the Registrant dated as of December 9, 1997.
88
EXHIBIT 5
SCHRODER SERIES TRUST II
INVESTMENT ADVISORY AGREEMENT
Agreement, dated and effective as of December 9, 1997, between Schroder
Series Trust II, a Delaware business trust (the "Trust") and Schroder Capital
Management International Inc., a New York corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act");
WHEREAS, the Adviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
is registered with the United Kingdom Investment Management Regulatory
Organisation ("IMRO");
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services to the Trust on behalf of Schroder All-Asia Fund (the "Fund")
in the manner and on the terms hereinafter set forth; and
WHEREAS, the Adviser is willing to render such investment advisory
services to the Trust;
NOW THEREFORE, in consideration of the promises and covenants
hereinafter contained, the Trust and the Adviser hereby agree as follows:
1. ENGAGEMENT OF THE ADVISER. The Trust hereby employs the Adviser to
act as the Fund's investment adviser and to provide the investment advisory
services described below, subject to the supervision of the Board of Trustees of
the Trust, for the period and on the terms and conditions set forth in this
Agreement. The Adviser hereby accepts such employment and agrees during such
period to render such services and to assume the obligations herein set forth
for the compensation provided for herein. The Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority hereunder to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
2. INVESTMENT ADVISORY SERVICES. Subject always to the Trust's Trust
Instrument, any Bylaws, and its registration statement filed on Form N-1A with
the SEC, as such registration statement may be amended from time to time (the
"Registration Statement"), the Adviser shall act as investment adviser to the
Trust and as such shall furnish continuously an investment program for the Fund
consistent with the Fund's investment objective, policies and restrictions. In
the performance of its duties hereunder, the Adviser shall:
a. determine from time to time which securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund
shall be held in various securities and assets in which the Trust
invests or in cash;
b. make decisions for the Fund with respect to foreign
currency matters and foreign exchange contracts, having regard to
foreign exchange controls, if any;
c. advise the Fund in connection with policy decisions to be
made by the Trust's Board of Trustees or any committee thereof with
respect to its investments and, as requested, furnish the Trust with
research, economic and statistical data in connection with the Fund's
investments and investment policies;
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d. submit such reports relating to the valuation of the
Fund's securities as the Trust's Board of Trustees or the Trust's
administrator or subadministrator may reasonably request;
e. place orders for the purchase, sale or exchange of
portfolio assets for the Fund's accounts with brokers or dealers
selected by the Adviser; provided, however, that in connection with the
placing of such orders and the selection of such brokers or dealers the
Adviser shall seek to obtain execution and pricing within the policy
guidelines established by the Trust's Board of Trustees and set forth
in the Registration Statement of the Trust as in effect from time to
time;
f. provide information in the Adviser's possession to
the Trust's administrator or subadministrator as the Trust's
administrator or subadministrator may request to maintain and preserve
the records required by the Investment Company Act;
g. obtain and evaluate such information relating to
economics, industries, businesses, securities markets and securities
as the Adviser may deem necessary or useful in the discharge of its
duties hereunder; and
h. from time to time, or at any time requested by the Trust's
Board of Trustees, make reports to the Trust concerning the Adviser's
performance of the foregoing services and furnish advice and
recommendations with respect to other aspects of the business and
affairs of the Trust or the Fund.
3. ALLOCATION OF CHARGES AND EXPENSES.
a. The Adviser shall pay for maintaining its staff and
personnel necessary to perform its obligations under this Agreement and
shall, at its own expense, maintain the office space, facilities,
equipment and personnel that are reasonably necessary to carry out its
obligations hereunder. In addition, the Adviser shall pay the
reasonable salaries, fees and expenses of such of the Trust's officers
and employees (including the Trust's share of payroll taxes) and any
fees and expenses of such of the Trust's Trustees as are directors,
officers or employees of the Adviser or of Forum Financial Group, LLC
("Forum") or their affiliates; provided, however, that the Trust, and
not the Adviser, shall bear out-of-pocket travel expenses of Trustees
and officers of the Trust or of Forum who are directors, officers or
employees of the Adviser or Forum to the extent that such expenses
relate to attendance at meetings of the Board of Trustees of the Trust
or any committees thereof.
b. The Trust assumes on the Fund's behalf and shall pay or
cause to be paid fees to the Adviser, administrator, subadministrator
and all other expenses of the Fund including, without limitation: (1)
charges and expenses of any custodian, subcustodian or depository
appointed by the Board of Trustees for the safekeeping of the Fund's
cash, securities or property and fees and expenses of any transfer
agent, dividend paying agent and registrar for the Fund; (2) charges
and expenses of accounting and auditing; (3) expenses and fees
associated with registering and qualifying securities issued by the
Fund for sale with the SEC and in various states and foreign
jurisdictions and expenses of preparing any share certificates and
other expenses in connection with the issuance, offering or
underwriting of such securities, including any stock exchange listing
fees and freight insurance and other charges in connection with the
shipment of the Fund's portfolio securities; (4) expenses of
stationery, preparing, printing and distributing reports, notices and
dividends and other documents to the Fund's shareholders, including,
without limitation, expenses of the administrator or subadministrator;
(5) interest on any indebtedness of the Fund; (6) governmental fees and
taxes of the Fund, including any stock transfer tax payable on a
portfolio security of the Fund; (7) brokerage commissions and other
expenses incurred in acquiring or disposing of the Fund's portfolio
securities; (8) costs of Trustee's and officers' insurance and fidelity
bonds; (9) compensation and expenses of the Trustees who are not
interested persons of the Adviser, including out-of-pocket travel
expenses; (10) costs and expenses incidental to holding meetings of the
Board of Trustees, or any committees thereof, or meetings of
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shareholders including out-of-pocket travel expenses of the Trustees
and officers of the Trust or Forum who are directors, officers or
employees of the Adviser or Forum to the extent that such expenses
relate to attendance at such meetings; (11) fees for legal, auditing
and consulting services and litigation expenses, including settlement
or arbitration costs; (12) dues and expenses incurred in connection
with membership in investment company organizations and expenses
relating to investor and public relations; and (13) costs, expenses and
fees incurred in connection with obtaining, maintaining, refinancing or
repaying indebtedness. It is understood that the organization, offering
and marketing expenses, including accounting, legal and printing
expenses and registration fees incurred by the Adviser or Forum on
behalf of the Trust in connection with the initial public offering of
the Trust's securities will be reimbursed to the Adviser or Forum by
the Trust.
4. COMPENSATION OF THE INVESTMENT ADVISER.
a. FEES.
(i). In consideration of the foregoing, the Trust
shall pay the Adviser a fee at an annual rate of 0.90% of the average
daily net assets of that portion of the assets of the Fund that are not
invested in another registered open-end management investment company,
or separate series thereof, in accordance with Section 12(d)(1)(G) of
the Investment Company Act of 1940, the rules thereunder or an
applicable order of the Securities and Exchange Commission, granting an
exemption from the prohibitions of Rule 12(d)(1) of that Act. No fee
shall be payable under this subparagraph (i) during any period in which
the Trust invests all (or substantially all) of its investment assets
in a registered, open-end management investment company, or a separate
series thereof, in accordance with Section 12(d)(1)(E) of the
Investment Company Act.
(ii). In the event that investment assets of the
Trust are invested in another registered open-end management investment
company, or separate series thereof, the Trust shall pay the Adviser a
fee on such assets at an annual rate of 0.20% of the average daily net
assets of the Trust. Such fees shall be accrued daily and shall be
payable monthly in arrears on the first day of each calendar month for
services performed hereunder during any prior calendar month.
b. EXPENSE LIMITATIONS. In the event the operating expenses of
the Fund, including amounts payable to the Adviser pursuant to
subsection (a) hereof, for any fiscal year of the Trust ending on a
date on which this Agreement is in effect, exceed the expense
limitations applicable to the Trust imposed by applicable state
securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, the Adviser shall reduce its
management fee by the extent of such excess and, if required pursuant
to any such laws or regulations, will reimburse the Fund in the amount
of such excess; provided, however, to the extent permitted by law,
there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions and extraordinary expenses (including, but
not limited to, legal claims and liabilities and litigation costs,
including settlement or arbitration costs, and any indemnification
related thereto) paid or payable by the Trust. Whenever the expenses of
the Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such
limitations shall be applicable as an offset against the monthly
payment of the management fee due to the Adviser. Should two or more
expense limitations be applicable as of the end of the last business
day of the month, that expense limitation which results in the largest
reduction in the Adviser's fee shall be applicable.
5. LIMITATION OF LIABILITY OF THE ADVISER.
a. The Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for
any act or omission in the execution and management of the Fund, except
for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this Section 5, the term
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"Adviser" shall include any affiliates of the Adviser performing
services for the Fund contemplated hereby and directors, officers and
employees of the Adviser as well as that corporation itself.
b. The Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot or
damage caused by nature or due to other events for which it is not
responsible (e.g., strike, lock-out or losses caused by the imposition
of foreign exchange controls, expropriation of assets or other acts of
domestic or foreign authorities).
c. The presence of exculpatory language in this Agreement
shall not be deemed by the Trust, the Adviser or any other party
appointed pursuant to this Agreement, including, without limitation,
any custodian, as in any way limiting causes of action and remedies
that, notwithstanding such language, may be available to the Trust or
Fund either under common law or statutory law principles applicable to
fiduciary relationships or under the federal securities laws.
6. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES.
a. Nothing herein contained shall prevent the Adviser or any
of its affiliates from engaging in any other business or from acting as
investment adviser or investment manager for any other person or
entity, whether or not having investment policies or portfolios similar
to that of the Fund or Trust; and it is specifically understood that
officers, directors and employees of the Adviser and its affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies whether or not registered, and to
other investment advisory clients. When other investment companies or
clients of the Adviser desire to purchase or sell a security at the
same time such security is purchased or sold for the Fund, such
purchases and sales will, to the extent feasible, be allocated among
the Fund and such other investment companies or clients in a manner
believed by the Adviser to be equitable to the Trust and such other
investment companies clients.
b. The Adviser reserves the right to grant the use of the name
"SCHRODER" or any derivative thereof to any other investment company or
business enterprise. The Adviser reserves the right to withdraw from
the Trust the use of the name "SCHRODER" and the use of its registered
service mark; at such time of withdrawal of the right to use the name
"SCHRODER," the Adviser agrees that the question of continuing this
Agreement may be submitted to a vote of the Fund's shareholders. In the
event of such withdrawal or the termination of this Agreement, for any
reason, the Trust will, on the written request of the Adviser, take
such action as may be necessary to change its name and eliminate all
reference to the word "SCHRODER" in any form, and will no longer use
such registered service mark.
7. LIMITATION OF LIABILITY OF THE TRUST'S TRUSTEES. The Trustees of the
Trust and the shareholders of the Trust shall not be liable for any obligations
of the Fund or Trust under this Agreement, and the Adviser agrees that, in
asserting any rights or claims under this Agreement, it shall look only to the
assets and property of the Trust to which the Adviser's rights or claims relate
in settlement of such rights or claims, and not to the Trustees of the Trust or
the shareholders of the Trust.
8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until the second anniversary of the effective date of this
Agreement first set forth above and from year to year thereafter, but only so
long as such continuance is approved at least annually by: (1) the vote of a
majority of the Trustees of the Trust who are not parties to the Agreement or
interested persons of the Adviser or interested persons of any such party (other
than as Trustees of the Trust), cast in person at a meeting called for the
purpose of voting on such approval; and (2) the vote of either: (a) the Board of
Trustees of the Trust, or (b) a majority of the outstanding voting securities of
the Fund. This Agreement may be terminated at any time, without payment of any
penalty, by the Trust either by the vote of the Board of Trustees of the Trust
or by the vote of a majority of the outstanding voting securities of the Fund on
sixty (60) days' written notice to the Adviser, and by the Adviser on sixty (60)
days' written notice to the Trust. This Agreement shall automatically terminate
in the event of its assignment by
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either party. In interpreting the provisions of this Section 8, the definitions
contained in Section 2(a) of the Investment Company Act (particularly the
definitions of "assignments," "interested person" and "voting security") shall
be applied.
9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by the vote of: (1) the Board of Trustees of the Trust, including a
majority of the Trustees who are not parties to this Agreement or interested
persons of the Adviser or interested persons of any such party (other than as
Trustees of the Trust), cast in person at a meeting called for the purpose of
voting on such approval; and (2) a majority of the outstanding voting securities
of the Fund.
10. NOTICE. Any notice or other communication required to be given to
this Agreement shall be in writing or by fax, with hard copy to follow, and
shall be effective upon receipt. Notices and communications shall be given to:
(1) the Trust at Two Portland Square, Portland, Maine 04101; and (2) the Adviser
at c/o Schroder Capital Management International Inc., 787 Seventh Avenue, 34th
Floor, New York, New York 10019, Attention: Louise Croset.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
Investment Company Act. To the extent applicable laws of the State of Delaware,
or any of the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The Investment Adviser confirms that the Trust is a Non-private
Customer as defined in the rules of IMRO and is being treated with the same
standard of care as an employee benefit plan subject to regulation under the
Employee Retirement Income Security Act of 1974, as amended.
The Trust confirms that it has been provided with independent legal
advice on this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SCHRODER SERIES TRUST II
By: /S/ CATHERINE A. MAZZA
----------------------------
Catherine A. Mazza
Vice President
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
By: /S/ SHARON L. HAUGH
-----------------------------
Sharon L. Haugh
Chairman and Director
93
EXHIBIT 6
SCHRODER SERIES TRUST II
DISTRIBUTION AGREEMENT
Agreement, dated and effective as of December 9, 1997, between Schroder
Series Trust II, a Delaware business trust (the "Trust") and Schroder Fund
Advisors Inc., a New York corporation (the "Adviser").
1. The Trust is an open-end investment company organized as a Delaware
business trust and is authorized to issue shares of beneficial interest
("shares") in separate series and classes (each, a "Fund"). This Agreement shall
pertain to such Fund or Funds as shall be designated in the Appendix to this
Agreement, as further agreed between the Trust and the Distributor. The Trust
engages in the business of investing and reinvesting the assets of each Fund in
the manner and in accordance with the investment objective, policies and
restrictions specified in the currently effective prospectus or prospectuses and
statement of additional information (collectively, the "Prospectus") relating to
each Fund of the Trust included in the Trust's Registration Statement, as
amended from time to time (the "Registration Statement"), filed with the
Securities and Exchange Commission (the "Commission") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the Securities Act of 1933
(the "1933 Act"). Copies of the documents referred to in the preceding sentence
have been furnished to the Distributor. Any amendment to those documents shall
be furnished to the Distributor promptly. The Trust has entered into an
investment advisory agreement or agreements on behalf of the Funds with such
advisers as are designated therein (each such adviser, an "Adviser") and an
administration agreement with the Distributor with respect to the Funds.
2. As the Trust's agent, the Distributor shall be the exclusive
distributor (except as provided in paragraph 5) for the unsold portion of shares
pertaining to the Funds as may from time to time be registered under the 1933
Act.
3. The Trust shall sell though the Distributor, as the Trust's agent,
shares to the eligible investors as described in the Prospectus. All orders
through the Distributor shall be subject to acceptance and confirmation by the
Trust.
4. As the Trust's agent, the Distributor may sell and distribute shares
in such manner not inconsistent with the provisions hereof and the Trust's
Prospectus as the Distributor may determine from time to time. In this
connection, the Distributor shall comply with all laws, rules and regulations
applicable to it, including, without limiting the generality of the foregoing,
all applicable rules or regulations under the 1940 Act and the Securities
Exchange Act of 1934 (the "1934 Act") and any self regulatory organization of
which it is a member.
5. The Trust reserves the right to sell shares to purchasers to the
extent that it or the transfer agent for its shares receives purchase requests
therefor.
6. All shares offered for sale and sold by the Distributor shall be
offered for sale and sold by the Distributor to designated investors at the
price per share (the "offering price") specified and determined as provided in
the Prospectus. The Trust shall determine and promptly furnish to the
Distributor a statement of the offering price at least once on each day on which
the New York Stock Exchange is open for trading and on each additional day on
which a Fund's net asset value might be materially affected by changes in the
value of its portfolio securities. Each offering price shall become effective at
the time and shall remain in effect during the period specified in the
statement. Each such statement shall show the basis of its computation.
7. The Trust shall furnish the Distributor from time to time, for use
in connection with the sale of shares, such written information with respect to
the Trust as the Distributor may reasonably request. In each case such written
information shall be signed by an authorized officer of the Trust. The Trust
represents and warrants
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that such information, when signed by one of its officers, shall be true and
correct. The Trust also shall furnish to the Distributor copies of its reports
to the Trust's shareholders and such additional information regarding the
Trust's financial condition as the Distributor may reasonably request from time
to time.
8. The Registration Statement and the Prospectus have been or will be,
as the case may be, prepared in conformity with the 1933 Act, the 1940 Act and
the rules and regulations of the Commission. The Trust represents and warrants
to the Distributor that the Registration Statement and the Prospectus contain or
will contain all statements required to be stated therein in accordance with the
1933 Act, the 1940 Act and the rules and regulations thereunder, that all
statements of fact contained or to be contained therein are or will be true and
correct at the time indicated or the effective date, as the case may be, and
that neither the Registrations Statement nor the Prospectus, when it shall
become effective under the 1933 Act or be authorized for use, shall include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading to
a purchaser of shares. The Trust shall from time to time file such amendment or
amendments to the Registration Statement and the Prospectus as, in the light of
future developments, shall, in the opinion of the Trust's counsel, be necessary
in order to have the Registration Statement and the Prospectus at all times
contain all material facts required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of shares. If the Trust
shall not file such an amendment or amendments within 15 days after receipt by
the Trust of a written request from the Distributor to do so, the Distributor
may, at its option, terminate this Agreement immediately. The Trust shall not
file any amendment to the Registration Statement or the Prospectus without
giving the Distributor reasonable notice thereof in advance, provided that
nothing in this Agreement shall in any way limit the Trust's right to file at
any time such amendments to the Registration Statement or the Prospectus as the
Trust may deem advisable. The Trust represents and warrants to the Distributor
that any amendment to the Registration Statement or the Prospectus filed
hereafter by the Trust will, when it becomes effective under the 1933 Act,
contain all statements required to be stated therein in accordance with the 1933
Act, the 1940 Act and the rules and regulations thereunder, that all statements
of fact contained therein will, when the same shall become effective, be true
and correct, and that no such amendment, when it becomes effective, will include
an untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading to a purchaser of shares.
9. The Trust shall prepare and furnish to the Distributor from time to
time such number of copies of the most recent form of the Prospectus filed with
the SEC as the Distributor may reasonably request. The Trust authorizes the
Distributor to use the Prospectus, in the form furnished to the Distributor from
time to time, in connection with the sale of shares. The Trust shall indemnify,
defend and hold harmless the Distributor, its officers and trustees and any
person who controls the Distributor within the meaning of the 1933 Act, from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the Distributor, its
officers and trustees or any such controlling person may incur under the 1933
Act, the 1940 Act, common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus or arising out of or based upon any alleged omission
to state a material fact required to be stated in either or necessary to make
the statements in either not misleading. This Agreement shall not be construed
to protect the Distributor against any liability to the Trust or its
shareholders to which the Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement and shall not be construed to provide indemnification to
the extent that indemnification under the circumstances would be prohibited by
the 1933 Act or the 1940 Act. Indemnification under this paragraph 9 is
expressly conditioned upon the Trust being notified of any action brought
against the Distributor, its officers or Trustees or any such controlling
person, which notification shall be given by letter, telex or facsimile
addressed to the Trust at its principal office in Portland, Maine, and sent to
the Trust by the person against whom such actions is brought within 10 days
after the summons or other first legal process shall have been served. The
failure to notify the Trust of any such action shall not relieve the Trust from
any liability that it may have to the person against whom such action is brought
by reason of any such alleged untrue statement or omission otherwise than on
account of the indemnity agreement contained in this paragraph 9. The Trust
shall be entitled to assume the defense of any suit brought to enforce any such
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claim, demand or liability, but, in such case, the defense shall be conducted by
counsel chosen by the Trust and approved by the Distributor,such approval not to
which approval shall be unreasonably withheldnot be withheld unreasonably. If
the Trust elects to assume the defense of any such suit and retain counsel
approved by the Distributor, the defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of them, but in
case the Trust does not elect to assume the defense of any such suit, or in case
the Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse the Distributor, its officers and trustees or the
controlling person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by the Distributor or them. In
addition, the Distributor shall have the right to employ counsel to represent
it, its officers and trustees and any such controlling person who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Distributor against the Trust hereunder if is the reasonable
judgment of the Distributor it is advisable for the Distributor, its officers
and trustees or such controlling person to be represented by separate counsel,
in which event the fees and expenses of such separate counsel shall be borne by
the Trust. The indemnification in this paragraph 9 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, its officers and trustees or any such controlling person. The
indemnification in this paragraph 9 shall inure exclusively to the benefit of
the Distributor and its successors, the Distributor's officers and trustees and
their respective estates and any such controlling persons and their successors
and estates. The Trust shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any shares.
10. The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers and trustees and any person who controls the Trust within
the meaning of the 1933 Act, from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) that the Trust, its officers or trustees or any such controlling
person, may incur under the 1933 Act, the 1940 Act, common law or otherwise, but
only to the extent that such liability or expense incurred by the Trust, its
officers or trustees or such controlling person resulting from such claims or
demands shall arise out of or be based upon (a) any alleged untrue statement of
a material fact contained in information furnished in writing by the Distributor
to the Trust specifically for use in the Registration Statement or the
Prospectus or shall arise out of or be based upon any alleged omission to state
a material fact in connection with such information required to be stated in the
Registration Statement or the Prospectus or necessary to make such information
not misleading and (b) any alleged act or omission on the Distributor's part as
the Trust's agent that has not been expressly authorized by the Trust in
writing. This indemnification in paragraph 10 is expressly conditioned upon the
Distributor being notified of any action brought against the Trust, its officers
or trustees or any such controlling person, which notification shall be given by
letter, telex or facsimile, addressed to the Distributor at its principal office
in New York, New York, and sent to the Distributor by the person against whom
such action is brought, within 10 days after the summons or other first legal
process shall have been served. The failure to notify the Distributor of any
such action shall not relieve the Distributor from any liability that it may
have to the Trust, its officers or Trustees or such controlling person by reason
of any such alleged misstatement or omission on the Distributor's part otherwise
than on account of the indemnification contained in this paragraph 10. The
Distributor shall have a right to control the defense of such action with
counsel of its own choosing and approved by the Trust,such approval not to which
approval shall be unreasonably withheldnot be withheld unreasonably, if such
action is based solely upon such alleged misstatement or omission on the
Distributor's part, and in any other event the Trust, its officers and trustees
or such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action at their own expense.
11. No shares shall be sold through the Distributor or by the Trust
under this Agreement, and no orders for the purchase of shares shall be
confirmed or accepted by the Trust if and so long as the effectiveness of the
Registration Statement shall be suspended under any of the provisions of the
1933 Act. Nothing contained in this paragraph 11 shall in any way restrict,
limit or have any application to or bearing upon the Trust's obligation to
redeem shares from any shareholder in accordance with the provisions of its
Trust Instrument and the 1940 Act. The Trust will use its best efforts at all
times to have shares effectively registered under the 1933 Act.
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12. The Trust agrees to advise the Distributor immediately:
(a) of any request by the Commission for amendments to the
Registration Statement or the Prospectus or for additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
Prospectus under the 1933 Act or the initiation of any proceedings for
that purpose;
(c) of the happening of any material event that makes untrue
any statement made in the Registration Statement or the Prospectus or
that requires the making of a change in either thereof in order to make
the statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendments to the Registration Statement or the Prospectus that may
from time to time be filed with the Commission under the 1933 Act or
the 1940 Act.
13. Insofar as they concern the Trust, the Trust shall comply with all
applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules or regulations made or adopted pursuant
to the 1933 Act, the 1940 Act or by any securities association registered under
the 1934 Act applicable to it.
14. The Distributor may, if it desires and at its own cost and expense,
appoint or employ agents to assist it in carrying out its obligations under this
Agreement, but no such appointment or employment shall relieve the Distributor
of any of its responsibilities or obligations to the Trust under this Agreement.
15. (a) The Distributor shall from time to time employ or associate
with it such persons as it believes necessary to assist it in carrying
out its obligations under this Agreement. The compensation of such
persons shall be paid by the Distributor.
(b) The Distributor shall pay all expenses incurred in
connection with its qualification as a dealer or broker under federal
or state law.
(c) The Trust shall pay all expenses incurred in connection
with: (i) the preparation, printing and distribution to shareholders of
the Prospectus and reports and other communications to shareholder;
(ii) future registrations of shares under the 1933 Act and the 1940
Act; (iii) amendments of the Registration Statement subsequent to the
initial public offering of shares; (iv) qualification of shares for
sale in jurisdictions designated by the Distributor; (v) qualification
of the Trust as a dealer or broker under the laws of jurisdictions
designated by Distributor; (vi) qualification of the Trust as a foreign
corporation authorized to do business in any jurisdiction if the
Distributor determines that such qualification is necessary or
desirable for the purpose of facilitating sales of shares; (vii)
maintaining facilities for the issue and transfer of shares; and (viii)
supplying information, prices and other data to be furnished by the
Trust under this Agreement.
(d) The Trust shall pay any original issue taxes or transfer
taxes applicable to the sale or delivery of shares or certificates
therefor.
(e) The Trust shall execute all documents and furnish any
information that may be reasonably necessary in connection with the
qualification of shares of the Trust for sale in jurisdictions
designated by the Distributor.
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16. Except to the extent set forth in paragraph 15, the Distributor
will render all service hereunder without compensation or reimbursement,
provided, however, that notwithstanding anything set forth in paragraphs 14 and
15 and this paragraph 16 to the contrary, if the Trust in the future adopts a
Rule 12b-1 distribution plan with respect to any Fund or a class thereof, the
Distributor shall be entitled to seek reimbursement from such Funds or class for
any costs or expenses incurred by it in connection with its services rendered in
distributing and marketing shares of the Funds or classes to the extent provided
for in the plan, subject in all cases to the limitations on payments and
reimbursements pertaining to each Fund or class as set forth in the plan.
17. This Agreement shall become effective with respect to the Trust and
each Fund as of December 9, 1997 and shall continue in effect thereafter,
PROVIDED that this Agreement shall continue in effect for a period of more than
one year only so long as such continuance is specifically approved at least
annually by: (a) the Trust's Board of Trustees or by the vote of a majority of
such Fund's outstanding voting securities (as defined in the 1940 Act); and (b)
by the vote, cast in person at a meeting called for the purpose, of a majority
of the Trust's Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the 1940
Act). This Agreement may, in any event, be terminated at any time, without the
payment of any penalty, by the Trust upon 60 days' written notice to the
Distributor and by the Distributor upon 60 days' written notice to the Trust.
18. Except to the extent necessary to perform the Distributor's
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the right of the Distributor, or any affiliate of the Distributor, or
any employee of the Distributor to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.
19. This Agreement shall be construed and its provisions interpreted,
in accordance with the laws of the state of New York.
If the foregoing correctly sets forth the agreement between the Trust
and the Distributor, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
SCHRODER SERIES TRUST II
By: /S/ CATHERINE A. MAZZA
-------------------------------
Catherine A. Mazza
Vice President
SCHRODER FUND ADVISORS INC.
By: /S/ ALEXANDRA POE
-----------------------------
Alexandra Poe
Senior Vice President
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SCHRODER SERIES TRUST II
DISTRIBUTION AGREEMENT
APPENDIX
AS OF DECEMBER 9, 1997
Schroder All-Asia Fund
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EXHIBIT 8
SCHRODER SERIES TRUST II
GLOBAL CUSTODY AGREEMENT
AGREEMENT, dated as of December 9, 1997, between The Chase Manhattan
Bank (the "Bank") and Schroder Series Trust II (the "Customer") on behalf of
each series of the Customer listed in Schedule A hereto (each series, a "Fund").
SECTION 1. CUSTOMER ACCOUNTS
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody
Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of
money, bullion, coin and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any
other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by
the Bank or its Subcustodian (as defined in Section 3) for the
account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit
Account") for any and all cash in any currency received by the
Bank or its Subcustodian for the account of the Customer,
which cash shall not be subject to withdrawal by draft or
check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the same
class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
SECTION 2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction
in which the principal trading market for such Securities is
located, where such Securities are to be presented for payment
or where such Securities are acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is
the legal currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
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If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
SECTION 3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES
The Bank may act under this Agreement through the Subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank to
hold Assets in the Accounts in accounts which the Bank has established with one
or more of its branches or Subcustodians. The Bank and Subcustodians are
authorized to hold any of the Securities in their account with any securities
depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of any
amendment to Schedule B. Upon request by the Customer, the Bank will identify
the name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Act;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a
country other than the United States that is regulated as such by
that country's government or an agency thereof and that has
shareholders' equity in excess of $200 million in U.S. currency
(or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws
of a country other than the United States and that has
shareholders' equity in excess of $100 million in U.S. currency
(or a foreign currency equivalent thereof) (iii) a banking
institution or trust company incorporated or organized under the
laws of a country other than the United States or a majority
owned direct or indirect subsidiary of a qualified U.S. bank or
bank holding company that is incorporated or organized under the
laws of a country other than the United States which has such
other qualifications as shall be specified in Instructions and
approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate
action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under
the laws of a country other than the United States, which
operates (i) the central system for handling securities or
equivalent book-entries in that country, or (ii) a transnational
system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Trustees has approved each of
the Subcustodians listed in Schedule B to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as to Schedule B, and further represents that its Board has determined that the
use of each Subcustodian and the terms of each subcustody agreement are
consistent with the best interests of the Fund(s) and its (their) shareholders.
The Bank will supply the Customer with any amendment to Schedule B for approval.
The Customer has supplied or will supply the Bank with certified copies of its
Board of Trustees resolutions(s) with respect to the foregoing prior to placing
Assets with any Subcustodian so approved.
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SECTION 4. USE OF SUBCUSTODIAN
(a) The Bank will identify such Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts
identified on such Subcustodian's books as special custody
accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be
subject only to the instructions of the Bank or its agent. Any
Securities held in a securities depository for the account of
a Subcustodian will be subject only to the instructions of
such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for
holding its customer's assets shall provide that such assets
will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of such Subcustodian except
for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without
the payment of money or value other than for safe custody or
administration. The foregoing shall not apply to the extent of
any special agreement or arrangement made by the Customer with
any particular Subcustodian.
SECTION 5. DEPOSIT ACCOUNT TRANSACTIONS
(a) The Bank or its Subcustodians will make payments from a Deposit
Account upon receipt of Instructions that include all information
required by the Bank. Instructions must be received from one or
more Authorized Person(s) and countersigned or confirmed in
writing by one or more Authorized Person(s) who are different
than the Authorized Person(s) that originated or drafted the
Instructions.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in a Deposit Account, the Bank, in
its discretion, may advance the Customer such excess amount which
shall be deemed a loan payable on demand, bearing interest at the
rate customarily charged by the Bank on similar loans.
(c) If the Bank credits a Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to that
Deposit Account, with interest, dividends, redemptions or any
other amount due, the Customer will promptly return any such
amount upon oral or written notification: (i) that such amount
has not been received in the ordinary course of business or (ii)
that such amount was incorrectly credited. If the Customer does
not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the
Customer, to reverse such credit by debiting the Deposit Account
for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such
amount, but may act for the Customer upon Instructions after
consultation with the Customer.
SECTION 6. CUSTODY ACCOUNT TRANSACTIONS
(a) Securities will be transferred, exchanged or delivered by the
Bank or its Subcustodian upon receipt by the Bank of Instructions
which include all information required by the Bank. Settlement
and payment for Securities received for, and delivery of
Securities out of, a Custody Account may be made in accordance
with the customary or established securities trading or
securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
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including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery.
Delivery of Securities out of a Custody Account may also be made
in any manner specifically required by Instructions acceptable to
the Bank.
(b) The Bank, in its discretion, may credit or debit an Account on a
contractual settlement date with cash or Securities with respect
to any sale, exchange or purchase of Securities. Otherwise, such
transactions will be credited or debited to the Account on the
date cash or Securities are actually received by the Bank and
reconciled to the Account.
(i) The Bank may reverse credits or debits made to an
Account in its discretion if the related transaction
fails to settle within a reasonable period,
determined by the Bank in its discretion, after the
contractual settlement date for the related
transaction.
(ii) If any Securities delivered pursuant to this Section
6 are returned by the recipient thereof, the Bank may
reverse the credits and debits of the particular
transaction at any time.
SECTION 7. ACTIONS OF THE BANK
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed
or retired or otherwise become payable and all coupons and
other income items which call for payment upon presentation,
to the extent that the Bank or Subcustodian is actually aware
of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect
of Securities.
(c) Exchange interim receipts or temporary Securities for
definitive Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the
Bank or any Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed
upon, identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer sends the Bank a written exception or objection to
any Bank statement within sixty (60) days of receipt, the Customer shall be
deemed to have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
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SECTION 8. CORPORATE ACTIONS; PROXIES
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person as defined in Section
10, but if Instructions are not received in time for the Bank to take timely
actions, or actual notice of such Corporate Action was received too late to seek
Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the Deposit Account with the proceeds or take
any other action it deems, in good faith, to be appropriate in which case it
shall be held harmless for any such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
SECTION 9. NOMINEES
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities depository,
as the case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising from their status as a mere record
holder of Securities in the Custody Account.
SECTION 10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.
SECTION 11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank that the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
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Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or
readjustment;
(d) Upon conversion of Securities pursuant to their terms into
other securities;
(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts
borrowed;
(h) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall
reflect any restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of beneficial interest of
the Customer and the delivery to, or the crediting to the
account of, the Bank, its Subcustodian or the Customer's
transfer agent, such shares to be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the
Customer's transfer agent of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any
agreement among the Customer, the Bank and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer;
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(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be
released only upon payment to the Bank of monies for the premium
due and a receipt for the Securities which are to be held in
escrow. Upon exercise of the option, or at expiration, the Bank
will receive from brokers the Securities previously deposited.
The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not
returned promptly when due other than to make proper request for
such return;
(m) For spot or forward foreign exchange transactions to
facilitate security trading, receipt of income from Securities
or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a
statement of the purpose for which the delivery or payment is
to be made, the amount of the payment or specific Securities
to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that
the purpose is a proper purpose under the instruments
governing the Customer; and
(o) Upon the termination of this Agreement as set forth in
Section 14(i).
SECTION 12. STANDARD OF CARE; LIABILITIES
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly
contained in Instructions which are consistent with the
provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
Assets. The Bank shall be liable to the Customer for
any loss which shall occur as the result of the failure
of a Subcustodian to exercise reasonable care with
respect to the safekeeping of such Assets to the same
extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the
event of any loss to the Customer by reason of the
failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the
customer only to the extent of the Customer's direct
damages, to be determined based on the market value of
the property which is the subject of the loss at the
date of discovery of such loss and without reference to
any special conditions or circumstances.
(ii) The Bank will not be responsible for any act,
omission, default or for the solvency of any broker
or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad
faith.
(iii) The Bank shall be indemnified by, and without
liability to the Customer for any actions taken or
omitted by the Bank whether pursuant to Instructions
or otherwise within the scope of this Agreement if
such act or omission was in good faith, without
negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of
any document which it believes in good faith to have
been validly executed.
(iv) The Customer agrees to pay for and hold the Bank
harmless from any liability or loss resulting from
the imposition or assessment of any taxes or other
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<PAGE>
governmental charges, and any related expenses with
respect to income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon
the advice of counsel (who may be counsel for the
Customer) on all matters and shall be without liability
for any action reasonably taken or omitted pursuant to
such advice.
(vi) The Bank need not maintain any insurance for the
benefit of the Customer.
(vii)Without limiting the foregoing, the Bank shall not be
liable for any loss which results from: 1) the general
risk of investing, or 2) investing or holding Assets in
a particular country including, but not limited to,
losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking
or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any
loss due to forces beyond their control including, but
not limited to strikes or work stoppages, acts of war
or terrorism, revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of
this Section 12, it is specifically acknowledged that the Bank
shall have no duty or responsibility to:
(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such
Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii)advise the Customer or an Authorized Person regarding
any default in the payment of principal or income of
any security other than as provided in Section 5(c) of
this Agreement;
(iv) evaluate or report to the Customer or an Authorized
Person regarding the financial condition of any broker,
agent or other party (except for brokers, agents other
than subcustodians or depositories or other parties
selected by the Bank, except in markets where there is
only one registered or otherwise qualified broker,
agent or other party) to which Securities are delivered
or payments are made pursuant to this Agreement; or
(v) review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as
defined in Section 10) issuing Instructions shall bear
any responsibility to review such confirmations against
Instructions issued to and statements issued by the
Bank.
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(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or
circumstances are such that the Bank may have a potential
conflict of duty or interest including the fact that the Bank or
any of its affiliates may provide brokerage services to other
customers, act as financial advisor to the issuer of Securities,
act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material
interest in the issue of Securities, or earn profits from any of
the activities listed herein.
(d) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by
each of its branches, each branch of a qualified U.S. bank, each
eligible foreign custodian and each eligible foreign securities
depository holding the Customer's Securities pursuant to this
Agreement afford protection for such Securities at least equal to
that afforded by the Bank's established procedures with respect
to similar securities held by the Bank and its securities
depositories in New York.
SECTION 13. FEES AND EXPENSES
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement, so long as such lien does not contravene the provisions of SEC
Release #40-12053, as amended from time to time. No fee shall be payable
hereunder with respect to any Fund during any period in which such Fund invests
all (or substantially all) of its investment assets in a registered, open-end
management investment company, or separate series thereof, in accordance with
section 12(d)(1)(E) under the Investment Company Act of 1940.
SECTION 14. MISCELLANEOUS
(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration
of the Customer's trading and investment activity, the Bank is
authorized to enter into spot or forward foreign exchange
contracts with the Customer or an Authorized Person for the
Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to
such contracts, but the Bank may establish rules or limitations
concerning any foreign exchange facility made available. In all
cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to
an Account, the terms and conditions of the then current foreign
exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement
shall apply to such transaction.
(b) CERTIFICATION OF RESIDENCY, ETC. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank
of any changes in residency. The Bank may rely upon this
certification or the certification of such other facts as may be
required to administer the Bank's obligations under this
Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or
indirectly from any such certifications.
(c) ACCESS TO RECORDS. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of
the Bank relating to the Assets as is required in connection with
their examination of books and records pertaining to the
customer's affairs. Subject to restrictions under applicable law,
the Bank shall also obtain an undertaking to permit the
Customer's independent public accountants reasonable access to
the records of any Subcustodian which has physical possession of
any Assets as may be required in connection with the examination
of the Customer's books and records. Upon reasonable request from
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the Customer, the Bank shall furnish the Customer such reports
(or portions thereof) of the Bank's system of internal accounting
controls applicable to the Bank's duties under this Agreement.
The Bank shall endeavor to obtain and furnish the Customer with
such similar reports as it may reasonably request with respect to
each Subcustodian and securities depository holding the
Customer's assets.
(d) GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of New York and shall not be
assignable by either party, but shall bind the successors in
interest of the Customer and the Bank.
(e) ENTIRE AGREEMENT; APPLICABLE RIDERS. Customer represents that the
Assets deposited in the Accounts are (Check one):
___ Employee Benefit Plan or other assets subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA");
_X_ Mutual Fund assets subject to certain Securities and
Exchange Commission ("SEC")rules and regulations;
___ Neither of the above.
This Agreement consists exclusively of this document together with Schedule A,
Schedule B, and the following Rider(s) (check applicable rider(s)):
___ ERISA
_X_ MUTUAL FUND
_X_ SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) SEVERABILITY. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any
respect on the basis of any particular circumstances or in any
jurisdiction, the validity, legality and enforceability of
such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions will not
in any way be affected or impaired.
(g) WAIVER. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any
power or right under this Agreement operates as a waiver, nor
does any single or partial exercise of any power or right
preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party or any provision of
this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against
whom the waiver is to be enforced.
(h) NOTICES. All notices under this Agreement shall be effective
when actually received. Any notices or other communications
which may be required under this Agreement are to be sent to
the parties at the following addresses or such other addresses
as may subsequently be given to the other party in writing:
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Bank: The Chase Manhattan Bank
Attention: Global Custody Division
Woolgate House, Coleman Street
London, EC2P 2HD, United Kingdom
or telex:
Customer: Schroder Series Trust II
c/o Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
or telex: (207) 879-6050
(i) TERMINATION. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other,
provided that such notice to the Bank shall specify the names of
the persons to whom the Bank shall deliver the assets in the
Accounts. If notice of termination is given by the Bank, the
Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of
the persons to whom the Bank shall deliver the Assets. In either
case, the Bank will deliver the Assets to the persons so
specified, after deducting any amounts which the Bank determines
in good faith to be owed to it under Section 13. If within sixty
(60) days following receipt of a notice of termination by the
Bank, the Bank does not receive Instructions from the Customer
specifying the names of the persons to whom the Bank shall
deliver the Assets, the Bank, at its election, may deliver the
Assets to a bank or trust company doing business in the State of
New York to be held and disposed of pursuant to the provisions of
this Agreement, or to Authorized Persons, or may continue to hold
the Assets until Instructions are provided to the Bank.
(j) A copy of the Trust Instrument of the Schroder Series Trust II is
on file with the Secretary of the State of Delaware and notice is
hereby given that the Agreement is not binding upon any of the
trustees, officers, or shareholders of the Customer individually,
but are binding only upon the assets and property of the
applicable Fund. The Bank agrees that no shareholder, trustee, or
officer of the Customer or any Fund may be held personally liable
or responsible for any obligations of any fund arising out of the
Agreement. With respect to the obligations of a Fund arising out
of the Agreement, the Bank shall look for payment or satisfaction
of any claim solely to the assets and property of that Fund, and
not to the assets of any other series of the Trust.
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SCHRODER SERIES TRUST II
On behalf of each fund
listed in Schedule A.
By: /S/ CATHERINE A. MAZZA
---------------------------------
Catherine A. Mazza
Vice President
THE CHASE MANHATTAN BANK
By:/s/ Helen Bairsto
------------------------------------
Helen Bairsto
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SCHRODER SERIES TRUST II
GLOBAL CUSTODY AGREEMENT
SCHEDULE A
(as of December 9, 1997)
FUND NAME
---------
Schroder All-Asia Fund
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<PAGE>
SCHRODER SERIES TRUST II
GLOBAL CUSTODY AGREEMENT
SCHEDULE B
MATERIALS FURNISHED BY CHASE
----------------------------
<TABLE>
<S> <C> <C>
COUNTRY NAME OF SUBCUSTODIAN NAME OF CENTRAL DEPOSITORY
- ------- -------------------- --------------------------
Cedel N/A Cedel Bank S.A., Luxembourg City
China Hongkong and Shanghai Banking Shanghai Securities Central Clearing &
Corporation Limited, Shanghai Registration Corporation
Hong Kong and Shanghai Banking Shenzen Securities Clearing Co., Ltd.
Corporation Limited, Shenzen
Hong Kong The Chase Manhattan Bank, Hong Kong Securities Clearing Co., Ltd.
S.A.R. Hong Kong
India Hongkong and Shanghai Banking
Corporation Limited, Bombay
Deutsche Bank, A.G., Bombay
Indonesia Hongkong and Shanghai Banking
Corporation Limited, Jakarta
Standard Chartered Bank, Jakarta
Japan The Fuji Bank, Limited, Tokyo Japan Securities Depository Center
Korea Hongkong and Shanghai Banking Corporation Korea Securities Depository Corporation
Limited, Seoul
Malaysia The Chase Manhattan Bank (M) Berhad, Malaysian Central Depository Sdn. Bhd.
Kuala Lumpar
Pakistan Citibank, N.A. Karachi Central Depository Company of Pakistan,
Ltd.
Deutsche Bank, A.G. Karachi
Philippines Hongkong and Shanghai Banking Corporation Philippines Central Depository Inc.
Limited, Manila
Singapore The Chase Manhattan Bank, Singapore Central Depository Pte. Ltd.
Standard Chartered Bank plc, Singapore
Sri Lanka Hongkong and Shanghai Banking Corporation Central Depository System Limited
Limited, Columbo
Taiwan The Chase Manhattan Bank, Taipei Taiwan Securities Central Depository Co.,
Ltd.
</TABLE>
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<TABLE>
<S> <C> <C>
COUNTRY NAME OF SUBCUSTODIAN NAME OF CENTRAL DEPOSITORY
- ------- ------------------- ---------------------------
Thailand The Chase Manhattan Bank, Bangkok Thailand Securities Depository Company
Ltd.
United Kingdom The Chase Manhattan Bank. London CREST
First Chicago NBD Corporation, London
</TABLE>
The materials include generally with respect to each country:
1. A description from Chase covering the applicable subcustodian's equity, its
background, depository arrangements, branch offices, operational
capabilities and certain regulatory and legal matters.
2. A form of the agreement that each foreign subcustodian has entered into
with Chase.
3. A disk copy of an opinion of counsel addressing the legal matters required
to be considered pursuant to Rule 17f-5.
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SPECIAL TERMS AND CONDITIONS
These Special Terms and Conditions supplement the Agreement by and
between The Chase Manhattan Bank (the "Bank") and Schroder Series Trust
II (the "Customer") effective December 9, 1997. To the extent that any
term or provision of the Agreement is inconsistent with these Special
Terms and Conditions, the Special Terms and Conditions shall control.
In order to properly allocate the responsibilities of the parties, the
term "Customer" shall have the meanings designated below.
a) In the following sections of the Agreement, the term "Customer"
shall mean "each Fund":
-- Section 1(a) & (b)
-- Section 2
-- Section 4
-- Section 13, and
-- Section 14(c)
b) In the following sections of the Agreement the term "Customer"
shall refer to the Customer on behalf of a Fund.
-- Section 1; the last paragraphs
-- Section 3
-- Section 4
-- Section 5(c)
-- Section 7(b) & (e)
-- Section 7; the last paragraph
-- Section 8
-- Section 10
-- Section 11, and
-- Section 14(a) & (i)
c) In sections 9 and 12 of the Agreement, the term "Customer"
shall mean the Customer or the Fund.
115
EXHIBIT 9(A)
SCHRODER SERIES TRUST II
ADMINISTRATION AGREEMENT
Agreement, dated and effective as of the 9th day of December, 1997,
between Schroder Series Trust II (the "Trust"), a Delaware business trust with
its principal place of business at Two Portland Square, Portland, Maine 04101,
and Schroder Fund Advisors Inc. ("Schroder Advisors"), a Maryland corporation
with its principal place of business at 787 Seventh Avenue, 34th Floor, New
York, New York 10019.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and is authorized to issue shares of beneficial interest in separate series and
classes;
WHEREAS, the Trust has entered into an Investment Advisory Agreement
with Schroder Capital Management International Inc. (the "Adviser"), pursuant to
which the Adviser provides investment advisory services for the Trust's series;
WHEREAS, the Trust desires that Schroder Advisors perform certain
administrative services for each series of the Trust as listed in Appendix A
hereto (each, a "Fund") and each class of shares of each Fund, if any, and
Schroder Advisors is willing to provide these services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, the Trust and Schroder Advisors agree as follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints Schroder Advisors as
administrator of the Trust and of each Fund and any class of shares thereof, and
Schroder Advisors hereby accepts such appointment, all in accordance with the
terms and conditions of this Agreement. In connection therewith, the Trust has
delivered to Schroder Advisors copies of its Trust Instrument and the Trust's
registration statement on Form N-1A, and all amendments thereto, filed pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), or the 1940
Act (the "Registration Statement"), and the current prospectus and statement of
additional information of each Fund and any class thereof (collectively, as
currently in effect and as amended or supplemented, the "Prospectus"), all in
such manner and to such extent as may from time to time be authorized by the
Trust's Board of Trustees (the "Board"), and shall promptly furnish Schroder
Advisors with all amendments of or supplements to the foregoing.
SECTION 2. FURNISHING OF EXISTING ACCOUNTS AND RECORDS. The Trust shall
promptly turn over to Schroder Advisors such of the accounts and records
previously maintained by or for it as are necessary for Schroder Advisors to
perform its functions under this Agreement. The Trust authorizes Schroder
Advisors to rely on such accounts and records turned over to it and hereby
indemnifies and will hold Schroder Advisors, its successors and assigns,
harmless of and from any and all expenses, damages, claims, suits, liabilities,
actions, demands and losses whatsoever arising out of or in connection with any
error, omission, inaccuracy or other deficiency of such accounts and records or
in the failure of the Trust to provide any portion of such or to provide any
information needed by Schroder Advisors to knowledgeably perform its functions.
SECTION 3. ADMINISTRATIVE DUTIES
(a) Subject to the direction and control of the Board and in
cooperation with the Adviser, Schroder Advisors shall provide, or oversee, as
applicable, administrative services necessary for the Trust's operations with
respect to each Fund except those services that are the responsibility of the
Adviser or the Trust's custodian or transfer agent, all in such manner and to
such extent as may be authorized by the Board.
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(b) With respect to the Trust, each Fund and any class thereof, as
applicable, Schroder Advisors shall:
(i) oversee: (A) the preparation and maintenance by the
Adviser and the Trust's subadministrator, custodian, transfer
agent, dividend disbursing agent and fund accountant in such
form, for such periods and in such locations as may be
required by applicable law, of all documents and records
relating to the operation of the Trust or a Fund required to
be prepared or maintained by the Trust or its agents pursuant
to applicable law; (B) the reconciliation of account
information and balances among the Adviser and the Trust's
custodian, transfer agent, dividend disbursing agent and fund
accountant; (C) the transmission of purchase and redemption
orders for shares; (D) the notification to the Adviser of
available funds for investment; and (E) the performance of
fund accounting, including the calculation of the net asset
value of the shares;
(ii) oversee the performance of administrative and
professional services rendered to the Trust by others,
including its subadministrator, custodian, transfer agent and
dividend disbursing agent as well as legal, auditing and
shareholder servicing and other services performed for each
Fund or class thereof;
(iii) oversee the preparation and the printing of the
periodic updating of the Registration Statement and
Prospectus, tax returns, and reports to shareholders, the
Securities and Exchange Commission and state securities
commissions;
(iv) oversee the preparation of proxy and
information statements and any other communications to
shareholders;
(v) at the request of the Board, provide the Trust
with adequate general office space and facilities and provide
persons suitable to the Board to serve as officers of the
Trust;
(vi) provide the Trust, at the Trust's request, with
the services of persons who are competent to perform such
supervisory or administrative functions as are necessary for
effective operation of the Trust;
(vii) oversee the preparation, filing and maintenance
of the Trust's governing documents, including the Trust
Instrument and minutes of meetings of Trustees and
shareholders;
(viii) oversee with the cooperation of the Trust's
counsel, the Adviser, and other relevant parties, preparation
and dissemination of materials for Board meetings;
(ix) monitor sales of shares and ensure that such
shares are properly and duly registered with the Securities
and Exchange Commission and applicable state securities
commissions;
(x) oversee the calculation of performance data for
dissemination to information services covering the investment
company industry, for sales literature of the Trust and other
appropriate purposes;
(xi) oversee the determination of the amount of, and
supervise the payment of, dividends and other distributions to
shareholders as necessary to, among other things, maintain the
qualification of each Fund as a regulated investment company
under the Internal Revenue Code of 1986, as amended, and
prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other
distributions to shareholders; and
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<PAGE>
(xii) advise the Trust and its Board on matters
concerning the affairs of the Trust or a Fund.
(c) Schroder Advisors shall oversee the preparation and maintenance, or
cause to be prepared and maintained, records in such form for such periods and
in such locations as may be required by applicable regulations, all documents
and records relating to the services provided to the Trust pursuant to this
Agreement required to be maintained pursuant to the 1940 Act, rules and
regulations of the Securities and Exchange Commission, the Internal Revenue
Service and any other national, state or local government entity with
jurisdiction over the Trust. The accounts and records pertaining to the Trust
that are in possession of Schroder Advisors, or an entity subcontracted by
Schroder Advisors, shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such accounts and records at
all times during Schroder Advisors', or its subcontractor's, normal business
hours. Upon the reasonable request of the Trust, copies of any such accounts and
records shall be provided promptly by Schroder Advisors to the Trust or the
Trust's authorized representatives. In the event the Trust designates a
successor to any of Schroder Advisors' obligations under this agreement,
Schroder Advisors shall, at the expense and direction of the Trust, transfer to
such successor all relevant books, records and other data established or
maintained by Schroder Advisors, or its subcontractor, under this Agreement.
SECTION 4. STANDARD OF CARE
(a) Schroder Advisors, in performing under the terms and conditions of
this Agreement, shall use its best judgment and efforts in rendering the
services described herein, and shall incur no liability for its status under
this Agreement or for any reasonable actions taken or omitted in good faith. As
an inducement to Schroder Advisors' undertaking to render these services, the
Trust hereby agrees to indemnify and hold harmless Schroder Advisors, its
employees, agents, officers and directors, from any and all loss, liability and
expense, including any legal expenses, arising out of Schroder Advisors'
performance under this Agreement, or status, or any act or omission of Schroder
Advisors, its employees, agents, officers and directors; provided that this
indemnification shall not apply to Schroder Advisors' actions taken or failures
to act in cases of Schroder Advisors' own bad faith, willful misconduct or gross
negligence in the performance of its duties under this Agreement; and further
provided, that Schroder Advisors shall give the Trust notice and reasonable
opportunity to defend against any such loss, claim, damage, liability or expense
in the name of the Trust or Schroder Advisors, or both. The Trust will be
entitled to assume the defense of any suit brought to enforce any such claim or
demand, and to retain counsel of good standing chosen by the Trust and approved
by Schroder Advisors,such approval not to which approval shall be unreasonably
withheldnot be withheld unreasonably. In the event the Trust does elect to
assume the defense of any such suit and retain counsel of good standing approved
by Schroder Advisors, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but in case
the Trust does not elect to assume the defense of any such suit, or in case
Schroder Advisors does not approve of counsel chosen by the Trust or Schroder
Advisors has been advised that it may have available defenses or claims that are
not available or conflict with those available to the Trust, the Trust will
reimburse Schroder Advisors, its employees, agents, officers and directors for
the fees and expenses of any one counsellaw firm retained as counsel by Schroder
Advisors or them. Schroder Advisors may, at any time, waive its right to
indemnification under this agreement and assume its own defense. The provisions
of paragraphs (b) through (d) of this Section 4 should not in any way limit the
foregoing:
(a) Schroder Advisors may rely upon the advice of the Trust or of
counsel, who may be counsel for the Trust or counsel for Schroder Advisors, and
upon statements of accountants, brokers and other persons believed by it in good
faith to be expert in the matters upon which they are consulted, and Schroder
Advisors shall not be liable to anyone for any actions taken in good faith upon
such statements.
(b) Schroder Advisors may act upon any oral instruction that it
receives and that it believes in good faith was transmitted by the person or
persons authorized by the Board to give such oral instruction. Schroder Advisors
shall have no duty or obligation to make any inquiry or effort of certification
of such oral instruction.
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(c) Schroder Advisors shall not be liable for any action taken in good
faith reliance upon any written instruction or certified copy of any resolution
of the Board, and Schroder Advisors may rely upon the genuineness of any such
document or copy thereof reasonably believed in good faith by Schroder Advisors
to have been validly executed.
(d) Schroder Advisors may rely and shall be protected in acting upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper document believed by it to be genuine and to have been signed or presented
by the purchaser, Trust or other proper party or parties.
SECTION 5. EXPENSES
(a) Subject to any agreement by Schroder Advisors or other person to
reimburse any expenses of the Trust that relate to any Fund, the Trust shall be
responsible for and assume the obligation for payment of all of its expenses,
including: (a) the fee payable under Section 6 hereof; (b) any fees payable to
the Adviser; (c) any fees payable to Schroder Advisors; (d) expenses of issue,
repurchase and redemption of shares; (e) interest charges, taxes and brokerage
fees and commissions; (f) the cost (or appropriate share thereof) of reasonable
premiums for errors and omissions and other liability insurance policy of FFSI;
(g) premiums of insurance for the Trust, its Trustees and officers and fidelity
bond premiums; (hg) fees, interest charges and expenses of third parties,
including the Trust's custodian, transfer agent, dividend disbursing agent and
fund accountant; (ih) fees of pricing, interest, dividend, credit and other
reporting services; (ij) costs of membership in trade associations; (kj)
telecommunications expenses; (l) funds transmission expenses; (m) auditing,
legal and compliance expenses; (n) costs of forming the Trust and maintaining
its existence; (o) to the extent permitted by the 1940 Act, costs of preparing
and printing the Funds' Prospectuses, application forms and shareholder reports
and delivering them to existing shareholders; (p) expenses of meetings of
shareholders and proxy solicitations therefor; (q) costs of maintaining books of
original entry for portfolio and fund accounting and other required books and
accounts, of calculating the net asset value of shares of a Fund of the Trust
and of preparing tax returns; (r) costs of reproduction, stationery and
supplies; (s) fees and expenses of the Trust's Trustees; (t) compensation of the
Trust's officers and employees who are not employees of the Adviser or Sub-
Schroder Advisors or their respective affiliated persons, and costs of other
personnel (who may be employees of the Adviser, Schroder Advisors or their
respective affiliated persons) performing services for the Trust; (u) costs of
Trustee meetings; (v) Securities and Exchange Commission registration fees and
related expenses; (w) state or foreign securities laws registration fees and
related expenses; and (x) all fees and expenses paid by the Trust in accordance
with any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act or
under any shareholder service plan or agreement.
(b) If the aggregate expenses of every character incurred by, or
allocated to, a Fund in any fiscal year, other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, other expenditures that
are capitalized in accordance with generally accepted accounting principles, and
any extraordinary expense (including, without limitation, litigation and
indemnification expense), but including the fees provided for in Section 6 and
under an investment advisory agreement with respect to a Fund ("includable
expenses"), shall exceed the expense limitations applicable to that Fund imposed
by state securities law or regulations thereunder, as these limitations may be
raised or lowered from time to time, Schroder Advisors shall pay that Fund an
amount equal to a percentage of that excess ("Schroder Advisors'
reimbursement"), such Schroder Advisors' reimbursement to be in an amount
proportionate to the total fees payable on behalf of that Fund to Schroder
Advisors and the Adviser. With respect to portions of a fiscal year in which
this Agreement shall be in effect, the foregoing limitations shall be prorated
according to the proportion which that portion of the fiscal year bear to the
full fiscal year. At the end of each month of the Trust's fiscal year, Schroder
Advisors will review the includable expenses accrued during that fiscal year to
the end of the period and shall estimate the contemplated includable expenses
for the balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includable expenses will exceed the
limitations referred to in this Section 5(b) for a fiscal year, the monthly fees
payable to Schroder Advisors under this Agreement for such month shall be
reduced, subject to a later reimbursement to reflect actual expenses, by an
amount equal to a percentage (which shall be equal to Schroder Advisors'
reimbursement) of a pro rata portion
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(prorated on the basis of the remaining months of the fiscal year, including the
month just ended) of the amount by which the includable expenses for the fiscal
year (less an amount equal to the aggregate of actual reductions made pursuant
to this provision with respect to prior months of the fiscal year) are expected
to exceed the limitations provided in this Section 5(b). For purposes of the
foregoing, the value of the net assets of each Fund shall be computed in the
manner specified in Section 6, and any payments required to be made by Schroder
Advisors shall be made once a year promptly after the end of the Fund's fiscal
year.
SECTION 6. COMPENSATION
(a) In consideration of the services performed by Schroder Advisors
under this Agreement, the Trust will pay Schroder Advisors, with respect to each
Fund, a fee at the annual rate listed in Appendix B hereto. Such fee shall be
accrued by the Trust daily and shall be payable monthly in arrears on the first
day of each calendar month for services performed under this Agreement during
the prior calendar month. (a) For the administrative services provided by the
Sub-Administrator pursuant to this AgreementIf the fees payable pursuant to this
provision begin to accrue before the end of any month or if this Agreement
terminates before the end of any month, the fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement, the Trust shall pay
to Sub- Schroder AdvisorsAdministrat such compensation as shall be payable prior
to the effective date of such termination.
(b) In the event that this Agreement is terminated, Schroder Advisors
shall be reimbursed for reasonable charges and disbursements associated with
promptly transferring to its successor as designated by the Trust the original
or copies of all accounts and records maintained by Schroder Advisors under this
Agreement, and cooperating with, and providing reasonable assistance to its
successor in the establishment of the accounts and records necessary to carry
out the successor's or other person's responsibilities.
(c) Notwithstanding anything in this Agreement to the contrary,
Schroder Advisors and its affiliated persons may receive compensation or
reimbursement from the Trust with respect to: (i) the provision of services on
behalf of a Fund or a class thereof in accordance with any distribution plan
adopted by the Trust with respect to such Fund or class, pursuant to Rule 12b-1
under the 1940 Act: or (ii) the provision of shareholder support or other
services, including shareholder subaccounting services or (iii) service as a
Director or officer of the Fund.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date first above
written with respect to each Fund of the Trust then existing and shall relate to
every other fund created as of the later of the date on which the Trust's
Registration Statement relating to the shares of such fund becomes effective or
the fund commences operations.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be automatically renewed each year for an additional term of
one year.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty: (i) by the Board on 60 days' written
notice to Schroder Advisors, or (ii) by Schroder Advisors on 60 days' written
notice to the Trust. Upon receiving notice of termination by Schroder Advisors,
the Trust shall use its best efforts to obtain a successor administrator. Upon
receipt of written notice from the Trust of the appointment of a successor and
upon payment to Schroder Advisors of all fees owed through the effective
termination date, and reimbursement for reasonable charges and disbursements,
Schroder Advisors shall promptly transfer to the successor administrator the
original or copies of all accounts and records maintained by Schroder Advisors
under this Agreement including, in the case of records maintained on computer
systems, copies of such records in machine-readable form, and shall cooperate
with, and provide reasonable assistance to, the successor administrator in the
establishment of the accounts and records necessary to carry out the successor
administrator's responsibilities.
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For so long as Schroder Advisors continues to perform any of the services
contemplated by this Agreement after termination of this Agreement as agreed to
by the Trust and Schroder Advisors, the provisions of Sections 4 and 6 hereof
shall continue in full force and effect.
SECTION 8. ACTIVITIES OF SCHRODER ADVISORS
(a) Except to the extent necessary to perform Schroder Advisors'
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the right of Schroder Advisors, or any affiliate of Schroder Advisors,
or any employee of the Schroder Advisors, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
(b) Schroder Advisors may subcontract any or all of its functions or
responsibilities pursuant to this Agreement to one or more corporations, trusts,
firms, individuals or associations, which may be affiliates of Schroder
Advisors, who agree to comply with the terms of this Agreement. Schroder
Advisors may pay those persons for their services, but no such payment will
increase Schroder Advisors' compensation from the Trust.
SECTION 9. COOPERATION WITH INDEPENDENT AUDITORS. Schroder Advisors
shall cooperate, if applicable, with the Trust's independent auditors and shall
take reasonable action to make all necessary information available to such
auditors for the performance of their duties.
SECTION 10. SERVICE DAYS. Nothing contained in this Agreement is
intended to or shall require Schroder Advisors, in any capacity under this
agreement, to perform any functions or duties on any day other than a business
day of the Trust or of a Fund or class thereof. Functions or duties normally
scheduled to be performed on any day that is not a business day of the Trust or
of a Fund shall be performed on, and as of, the next business day, unless
otherwise required by law.
SECTION 11. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to the
Trust shall be given as follows or at such other address as the Trust may
designate in writing:
Schroder Series Trust II
Two Portland Square
Portland, Maine 04101
Notice to Schroder Advisors shall be given as follows or at such other
address as Schroder Advisors may designate in writing:
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
Notices and other communications received by the parties at the
addresses listed above shall be deemed to have been properly given.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY. The
Trustees of the Trust and the shareholders of each Fund shall not be liable for
any obligations of the Trust or of the Fund under this Agreement, and Schroder
Advisors agrees that, in asserting any rights or claims under this Agreement, it
shall look only to the assets and property of the Trust or the Fund to which
Schroder Advisors' rights or claims relate in settlement of such rights or
claims, and not to the Trustees of the Trust or the shareholders of the Fund.
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SECTION 13. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) This Agreement may be executed in two or more counterparts, each of
which, when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(d) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the written
consent of Schroder Advisors, or by Schroder Advisors, without the written
consent of the Trust authorized or approved by a resolution of the Board.
(f) This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER SERIES TRUST II
By: /S/ CATHERINE A. MAZZA
-------------------------------
Catherine A. Mazza
Vice President
SCHRODER FUND ADVISORS INC.
By: /S/ ALEXANDRA POE
--------------------------------
Alexandra Poe
Senior Vice President
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SCHRODER SERIES TRUST II
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
Schroder All-Asia Fund
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SCHRODER SERIES TRUST II
ADMINISTRATION AGREEMENT
APPENDIX A
ADMINISTRATION FEES
Fee as % of the Average Annual
FUNDS OF THE TRUST DAILY NET ASSETS OF THE FUND
- ----------------- ------------------------------
Schroder All-Asia Fund 0.05%
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EXHIBIT 9(B)
SCHRODER SERIES TRUST II
SUBADMINISTRATION AGREEMENT
THIS AGREEMENT dated as of theAgreement, dated and effective as of
December 9, 1997, between Schroder Series Trust II, a Delaware business trust
(the "Trust") with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Forum Administrative Services, LLC (the
"Subadministrator"), a limited liability company organized under Delaware law.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and is authorized to issue shares of beneficial interest in separate series and
classes;
WHEREAS, the Trust has entered into an Investment Advisory Agreement with
Schroder Capital Management International Inc. (the "Adviser")and an
Administration Agreement with Schroder Fund Advisors Inc. (The "Administrator"),
pursuant to which the Adviser and Administrator provide certain management and
administrative services for the Trust;
WHEREAS, the Fund desires that the Subadministrator perform certain
administrative services for each series of the Trust as listed in Appendix A
hereto (each, a "Fund") and each class of shares of each Fund, if any, and the
Subadministrator is willing to provide these services on the terms and
conditions set forth in this Agreement;;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Subadministrator agree as
follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints the Subadministrator
as subadministrator of the Trust and of each Fund and any class of shares
thereof, and the Subadministrator hereby accepts such appointment, all in
accordance with the terms and conditions of this Agreement. In connection
therewith, the Trust has delivered to the Subadministrator copies of its Trust
Instrument and the Trust's registration statement on Form N-1A, and all
amendments thereto, filed pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), or the 1940 Act (the "Registration Statement"), and the
current prospectus and statement of additional information of each Fund and any
class thereof (collectively, as currently in effect and as amended or
supplemented, the "Prospectus"), all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board"),
and shall promptly furnish the Subadministrator with all amendments of or
supplements to the foregoing.
SECTION 2. FURNISHING OF EXISTING ACCOUNTS AND RECORDS. The Trust shall
promptly turn over to the Subadministrator such of the accounts and records
previously maintained by or for it as are necessary for the Subadministrator to
perform its functions under this Agreement. The Trust authorizes the
Subadministrator to rely on such accounts and records turned over to it and
hereby indemnifies and will hold the Subadministrator, its successors and
assigns, harmless of and from any and all expenses, damages, claims, suits,
liabilities, actions, demands and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency of such
accounts and records or in the failure of the Trust to provide any portion of
such or to provide any information needed by the Subadministrator to
knowledgeably perform its functions.
SECTION 3. ADMINISTRATIVE DUTIES
(a) Subject to the direction and control of the Board and in
cooperation with the Adviser and Administrator, the Subadministrator shall
provide, or oversee, as applicable, administrative services necessary for the
Trust's operations with respect to each Fund except those services that are the
responsibility of the Adviser,
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Administrator or the Trust's custodian or transfer agent, all in such manner and
to such extent as may be authorized by the Board.
(b) With respect to the Trust, each Fund and any class thereof, as
applicable, the Subadministrator shall:
(i) oversee: (A) the preparation and maintenance by the
Adviser and the Trust's custodian, transfer agent, dividend
disbursing agent and fund accountant in such form, for such
periods and in such locations as may be required by applicable
law, of all documents and records relating to the operation of
the Trust or a Fund required to be prepared or maintained by
the Trust or its agents pursuant to applicable law; (B) the
reconciliation of account information and balances among the
Adviser and the Trust's custodian, transfer agent, dividend
disbursing agent and fund accountant; (C) the transmission of
purchase and redemption orders for shares; (D) the
notification to the Adviser of available funds for investment;
and (E) the performance of fund accounting, including the
calculation of the net asset value of the shares;
(ii) oversee the performance of administrative and
professional services rendered to the Trust by others,
including its custodian, transfer agent and dividend
disbursing agent as well as legal, auditing and shareholder
servicing and other services performed for each Fund or class
thereof;
(iii) be responsible for the preparation and the
printing of the periodic updating of the Registration
Statement and Prospectus, tax returns, and reports to
shareholders, the Securities and Exchange Commission and state
securities commissions;
(iv) be responsible for the preparation of proxy
and information statements and any other communications to
shareholders;
(v) at the request of the Board, provide the Trust
with adequate general office space and facilities and provide
persons suitable to the Board to serve as officers of the
Trust;
(vi) provide the Trust, at the Trust's request, with
the services of persons who are competent to perform such
supervisory or administrative functions as are necessary for
effective operation of the Trust;
(vii) prepare, file and maintain the Trust's
governing documents, including the Trust Instrument and
minutes of meetings of Trustees and shareholders;
(viii) with the cooperation of the Trust's counsel,
the Adviser, the Administrator and other relevant parties,
preparation and dissemination of materials for Board meetings;
(ix) monitor sales of shares and ensure that such
shares are properly and duly registered with the Securities
and Exchange Commission and applicable state securities
commissions;
(x) oversee the calculation of (or calculate)
performance data for dissemination to information services
covering the investment company industry, for sales literature
of the Trust and other appropriate purposes;
(xi) oversee the determination of (or determine) the
amount of, and supervise the payment of, dividends and other
distributions to shareholders as necessary to, among other
things, maintain the qualification of each Fund as a regulated
investment company under the Internal
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Revenue Code of 1986, as amended, and prepare and distribute to
appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders; and
(xii) advise the Trust and its Board on matters
concerning the affairs of the Trust or a Fund.
(c) The Subadministrator shall prepare and maintain, or cause to be
prepared and maintained, records in such form for such periods and in such
locations as may be required by applicable regulations, all documents and
records relating to the services provided to the Trust pursuant to this
Agreement required to be maintained pursuant to the 1940 Act, rules and
regulations of the Securities and Exchange Commission, the Internal Revenue
Service and any other national, state or local government entity with
jurisdiction over the Trust. The accounts and records pertaining to the Trust
that are in possession of the Subadministrator, or an entity subcontracted by
the Subadministrator, shall be the property of the Trust. The Trust, or the
Trust's authorized representatives, shall have access to such accounts and
records at all times during the Subadministrator's, or its subcontractor's,
normal business hours. Upon the reasonable request of the Trust, copies of any
such accounts and records shall be provided promptly by the Subadministrator to
the Trust or the Trust's authorized representatives. In the event the Trust
designates a successor to any of the Subadministrator's obligations under this
agreement, the Subadministrator shall, at the expense and direction of the
Trust, transfer to such successor all relevant books, records and other data
established or maintained by the Subadministrator, or its subcontractor, under
this Agreement.
SECTION 4. STANDARD OF CARE
(a) The Subadministrator, in performing under the terms and conditions
of this Agreement, shall use its best judgment and efforts in rendering the
services described herein, and shall incur no liability for its status under
this Agreement or for any reasonable actions taken or omitted in good faith. As
an inducement to the Subadministrator's undertaking to render these services,
the Trust hereby agrees to indemnify and hold harmless the Subadministrator, its
employees, agents, officers and directors, from any and all loss, liability and
expense, including any legal expenses, arising out of the Subadministrator's
performance under this Agreement, or status, or any act or omission of the
Subadministrator, its employees, agents, officers and directors; provided that
this indemnification shall not apply to the Subadministrator's actions taken or
failures to act in cases the Subadministrator's own bad faith, willful
misconduct or gross negligence in the performance of its duties under this
Agreement; and further provided, that the Subadministrator shall give the Trust
notice and reasonable opportunity to defend against any such loss, claim,
damage, liability or expense in the name of the Trust or the Subadministrator,
or both. The Trust will be entitled to assume the defense of any suit brought to
enforce any such claim or demand, and to retain counsel of good standing chosen
by the Trust and approved by the Subadministrator,such approval not to which
approval shall be unreasonably withheldnot be withheld unreasonably. In the
event the Trust does elect to assume the defense of any such suit and retain
counsel of good standing approved by the Subadministrator, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Trust does not elect to assume
the defense of any such suit, or in case the Subadministrator does not approve
of counsel chosen by the Trust or the Subadministrator has been advised that it
may have available defenses or claims that are not available or conflict with
those available to the Trust, the Trust will reimburse the Subadministrator, its
employees, agents, officers and directors for the fees and expenses of any one
counsellaw firm retained as counsel by the Subadministrator or them. The
Subadministrator may, at any time, waive its right to indemnification under this
agreement and assume its own defense. The provisions of paragraphs (b) through
(d) of this Section 4 should not in any way limit the foregoing:
(a) The Subadministrator may rely upon the advice of the Trust or of
counsel, who may be counsel for the Trust or counsel for the Subadministrator,
and upon statements of accountants, brokers and other persons believed by it in
good faith to be expert in the matters upon which they are consulted, and the
Subadministrator shall not be liable to anyone for any actions taken in good
faith upon such statements.
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(b) The Subadministrator may act upon any oral instruction that it
receives and that it believes in good faith was transmitted by the person or
persons authorized by the Board to give such oral instruction. The
Subadministrator shall have no duty or obligation to make any inquiry or effort
of certification of such oral instruction.
(c) The Subadministrator shall not be liable for any action taken in
good faith reliance upon any written instruction or certified copy of any
resolution of the Board, and the Subadministrator may rely upon the genuineness
of any such document or copy thereof reasonably believed in good faith by the
Subadministrator to have been validly executed.
(d) The Subadministrator may rely and shall be protected in acting upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper document believed by it to be genuine and to have been signed or presented
by the purchaser, Trust or other proper party or parties.
SECTION 5. EXPENSES. Subject to any agreement by the Subadministrator
or other person to reimburse any expenses of the Trust that relate to any Fund,
the Trust shall be responsible for and assume the obligation for payment of all
of its expenses, including: (a) the fee payable under Section 6 hereof; (b) any
fees payable to the Adviser; (c) any fees payable to the Administrator; (d)
expenses of issue, repurchase and redemption of shares; (e) interest charges,
taxes and brokerage fees and commissions; (f) the cost (or appropriate share
thereof) of reasonable premiums for errors and omissions and other liability
insurance policy of FFSI; (g) premiums of insurance for the Trust, its Trustees
and officers and fidelity bond premiums; (hg) fees, interest charges and
expenses of third parties, including the Trust's custodian, transfer agent,
dividend disbursing agent and fund accountant; (ih) fees of pricing, interest,
dividend, credit and other reporting services; (ij) costs of membership in trade
associations; (kj) telecommunications expenses; (l) funds transmission expenses;
(m) auditing, legal and compliance expenses; (n) costs of forming the Trust and
maintaining its existence; (o) to the extent permitted by the 1940 Act, costs of
preparing and printing the Funds' Prospectuses, application forms and
shareholder reports and delivering them to existing shareholders; (p) expenses
of meetings of shareholders and proxy solicitations therefor; (q) costs of
maintaining books of original entry for portfolio and fund accounting and other
required books and accounts, of calculating the net asset value of shares of a
Fund of the Trust and of preparing tax returns; (r) costs of reproduction,
stationery and supplies; (s) fees and expenses of the Trust's Trustees; (t)
compensation of the Trust's officers and employees who are not employees of the
Adviser, the Administrator or Sub- the Subadministrator or their respective
affiliated persons, and costs of other personnel (who may be employees of the
Adviser, the Administrator, or the Subadministrator or their respective
affiliated persons) performing services for the Trust; (u) costs of Trustee
meetings; (v) Securities and Exchange Commission registration fees and related
expenses; (w) state or foreign securities laws registration fees and related
expenses; and (x) all fees and expenses paid by the Trust in accordance with any
distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act or under any
shareholder service plan or agreement.
In the event that this Agreement is terminated, the Subadministrator
shall be reimbursed for reasonable charges and disbursements associated with
promptly transferring to the Administrator or successor subadministrator the
original or copies of all accounts and records maintained by the
Subadministrator hereunder, and cooperating with, and providing reasonable
assistance to, the Administrator or successor subadministrator in the
establishment of the accounts and records necessary to carry out the
Administrator's or successor subadministrator's responsibilities.
SECTION 6. COMPENSATION
(a) In consideration of the services performed by the Subadministrator
under this Agreement, the Trust will pay the Subadministrator, with respect to
each Fund, a fee at the annual rate listed in Appendix B hereto. Such fee shall
be accrued by the Trust daily and shall be payable monthly in arrears on the
first day of each calendar month for services performed under this Agreement
during the prior calendar month. (a) For the administrative services provided by
the Sub-Administrator pursuant to this AgreementIf the fees payable pursuant to
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this provision begin to accrue before the end of any month or if this Agreement
terminates before the end of any month, the fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement, the Trust shall pay
to Sub- the Subadministrator such compensation as shall be payable prior to the
effective date of such termination.
(b) In the event that this Agreement is terminated, the
Subadministrator shall be reimbursed for reasonable charges and disbursements
associated with promptly transferring to its successor as designated by the
Trust the original or copies of all accounts and records maintained by the
Subadministrator under this Agreement, and cooperating with, and providing
reasonable assistance to its successor in the establishment of the accounts and
records necessary to carry out the successor's or other person's
responsibilities.
(c) Notwithstanding anything in this Agreement to the contrary, the
Subadministrator and its affiliated persons may receive compensation or
reimbursement from the Trust with respect to: (i) the provision of services on
behalf of a Fund or a class thereof in accordance with any distribution plan
adopted by the Trust with respect to such Fund or class, pursuant to Rule 12b-1
under the 1940 Act: or (ii) the provision of shareholder support or other
services, including shareholder subaccounting services or (iii) service as a
Director or officer of the Fund.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date first above
written with respect to each Fund of the Trust then existing and shall relate to
every other fund created as of the later of the date on which the Trust's
Registration Statement relating to the shares of such fund becomes effective or
the fund commences operations.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be automatically renewed each year for an additional term of
one year.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty: (i) by the Board on 60 days' written
notice to the Subadministrator, or (ii) by the Subadministrator on 60 days'
written notice to the Trust. Upon receiving notice of termination by the
Subadministrator, the Trust shall use its best efforts to obtain a successor
administrator. Upon receipt of written notice from the Trust of the appointment
of a successor and upon payment to the Subadministrator of all fees owed through
the effective termination date, and reimbursement for reasonable charges and
disbursements, the Subadministrator shall promptly transfer to the successor
administrator the original or copies of all accounts and records maintained by
the Subadministrator under this Agreement including, in the case of records
maintained on computer systems, copies of such records in machine-readable form,
and shall cooperate with, and provide reasonable assistance to, the successor
administrator in the establishment of the accounts and records necessary to
carry out the successor administrator's responsibilities. For so long as the
Subadministrator continues to perform any of the services contemplated by this
Agreement after termination of this Agreement as agreed to by the Trust and the
Subadministrator, the provisions of Sections 4 and 6 hereof shall continue in
full force and effect.
SECTION 8. ACTIVITIES OF SCHRODER ADVISORS
(a) Except to the extent necessary to perform the Subadministrator's
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the right of the Subadministrator, or any affiliate of the
Subadministrator, or any employee of the Subadministrator, to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm, individual or
association.
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(b) The Subadministrator may subcontract any or all of its functions or
responsibilities pursuant to this Agreement to one or more corporations, trusts,
firms, individuals or associations, which may be affiliates of the
Subadministrator, who agree to comply with the terms of this Agreement. The
Subadministrator may pay those persons for their services, but no such payment
will increase the Subadministrator's compensation from the Trust.
SECTION 9. COOPERATION WITH INDEPENDENT AUDITORS. The Subadministrator
shall cooperate, if applicable, with the Trust's independent auditors and shall
take reasonable action to make all necessary information available to such
auditors for the performance of their duties.
SECTION 10. SERVICE DAYS. Nothing contained in this Agreement is
intended to or shall require the Subadministrator, in any capacity under this
agreement, to perform any functions or duties on any day other than a business
day of the Trust or of a Fund or class thereof. Functions or duties normally
scheduled to be performed on any day that is not a business day of the Trust or
of a Fund shall be performed on, and as of, the next business day, unless
otherwise required by law.
SECTION 11. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to the
Trust shall be given as follows or at such other address as the Trust may
designate in writing:
Schroder Series Trust II
Two Portland Square
Portland, Maine 04101
Notice to the Subadministrator shall be given as follows or at such
other address as Schroder Advisors may designate in writing:
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
Notices and other communications received by the parties at the
addresses listed above shall be deemed to have been properly given.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Fund under this Agreement,
and the Subadministrator agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Fund to which the Subadministrator's rights or claims relate in settlement
of such rights or claims, and not to the Trustees of the Trust or the
shareholders of the Fund.
SECTION 13. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) This Agreement may be executed in two or more counterparts, each of
which, when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
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(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(d) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the written
consent of the Subadministrator, or by the Subadministrator, without the written
consent of the Trust authorized or approved by a resolution of the Board.
(f) This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER SERIES TRUST II
By: /S/ CATHERINE A. MAZZA
------------------------------
Catherine A. Mazza
Vice President
FORUM ADMINISTRATIVE SERVICES, LLC
By: /S/ DAVID I. GOLDSTEIN
-------------------------------
David I Goldstein,
Managing Director
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SCHRODER SERIES TRUST II
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
Schroder All-Asia Fund
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SCHRODER SERIES TRUST II
ADMINISTRATION AGREEMENT
APPENDIX A
ADMINISTRATION FEES
Fee as % of the Average Annual
FUNDS OF THE TRUST DAILY NET ASSETS OF THE FUND
- ------------------ ------------------------------
Schroder All-Asia Fund 0.05%
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EXHIBIT 9(C)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
SCHRODER SERIES TRUST II
and
STATE STREET BANK AND TRUST COMPANY
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TABLE OF CONTENTS
<TABLE>
<S> <C>
PAGE
1. Terms of Appointment; Duties of the Bank........................................................1
2. Fees and Expenses...............................................................................3
3. Representations and Warranties of the Bank......................................................4
4. Representations and Warranties of the Fund......................................................4
5. Wire Transfer Operating Guidelines..............................................................5
6. Data Access and Proprietary Information.........................................................6
7. Indemnification.................................................................................8
8. Standard of Care................................................................................9
9. Confidentiality ................................................................................9
10. Covenants of the Fund and the Bank.............................................................10
11. Termination of Agreement.......................................................................10
12. Additional Funds...............................................................................10
13. Assignment.....................................................................................11
14. Amendment......................................................................................11
15. Massachusetts Law to Apply.....................................................................11
16. Force Majeure..................................................................................11
17. Consequential Damages..........................................................................11
18. Merger of Agreement............................................................................11
19. Limitations of Liability of the Trustees
or Shareholders................................................................................12
20. Counterparts...................................................................................12
21. Reproduction of Documents......................................................................12
</TABLE>
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EXHIBIT 9(C)
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 20th day of March, 1998, by and between SCHRODER SERIES
TRUST II, a Delaware business trust, having its principal office and place of
business at 787 Seventh Avenue, 34th Floor, New York, New York 10019-6016 (the
"Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in one (1) series, such
series shall be named in the attached Schedule A which may be amended by the
parties from time to time (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 13, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund, on behalf of the Portfolios, hereby employs and appoints the
Bank to act as, and the Bank agrees to act as its transfer agent for
the Fund's authorized and issued shares of its beneficial interest, $
par value, ("Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any
accumulation, open-account or similar plans provided to the
shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective prospectus
and statement of additional information ("prospectus") of the Fund on
behalf of the applicable Portfolio, including without limitation any
periodic investment plan or periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time
by agreement between the Fund on behalf of each of the
Portfolios, as applicable and the Bank, the Bank shall:
(i) receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and
appropriate documentation thereof to the Custodian
of the Fund authorized pursuant to the Declaration
of Trust of the Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;
(iii) receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
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(iv) in respect to the transactions in items (i), (ii)
and (iii) above, the Bank shall execute
transactions directly with broker-dealers
authorized by the Fund;
(v) at the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over
in the appropriate manner such monies as instructed
by the redeeming Shareholders;
(vi) effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;
(vii) prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio;
(viii) issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at
its option, may issue replacement certificates in
place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(x) record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total
number of shares of the Fund which are authorized,
based upon data provided to it by the Fund, and issued
and outstanding. The Bank shall also provide the Fund
on a regular basis with the total number of shares
which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance
of shares, to monitor the issuance of such shares or to
take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall:
(i) perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic
investment plan or periodic withdrawal program), including but
not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing Shareholder proxies,
Shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information
and (ii) provide a system which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue
sky reporting for each State and (ii) verify the establishment of
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transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by
the Fund and the reporting of such transactions to the Fund as
provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement
between the Fund on behalf of each Portfolio and the Bank per the
attached service responsibility schedule. The Bank may at times
perform only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(e.g., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the
initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below may be
changed from time to time subject to mutual written agreement between
the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees
on behalf of each of the Portfolios to reimburse the Bank for
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche, mailing
and tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by the Bank at the request or
with the consent of the Fund, will be reimbursed by the Fund on
behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees
and reimbursable expenses within five days following the receipt of
the respective billing notice. Postage for mailing of dividends,
proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to the Bank by the Fund at least seven (7) days
prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good
standing under the laws of The Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in The Commonwealth
of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
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3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
4.2 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.4 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended
on behalf of each of the Portfolios is currently effective and will
remain effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all Shares of
the Fund being offered for sale.
5. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM
COMMERCIAL CODE
5.1 The Bank is authorized to promptly debit the appropriate Fund
account(s) upon the receipt of a payment order in compliance with the
selected security procedure (the "Security Procedure") chosen for
funds transfer and in the amount of money that the Bank has been
instructed to transfer. The Bank shall execute payment orders in
compliance with the Security Procedure and with the Fund instructions
on the execution date provided that such payment order is received by
the customary deadline for processing such a request, unless the
payment order specifies a later time. All payment orders and
communications received after this the customary deadline will be
deemed to have been received the next business day.
5.2 The Fund acknowledges that the Security Procedure it has designated
on the Fund Selection Form was selected by the Fund from security
procedures offered by the Bank. The Fund shall restrict access to
confidential information relating to the Security Procedure to
authorized persons as communicated to the Bank in writing. The Fund
must notify the Bank immediately if it has reason to believe
unauthorized persons may have obtained access to such information or
of any change in the Fund's authorized personnel. The Bank shall
verify the authenticity of all Fund instructions according to the
Security Procedure.
5.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account
number, the account number shall take precedence and govern.
5.4 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected
balance in the account to be charged at the time of the Bank's
receipt of such payment order; (b) if initiating such payment order
would cause the Bank, in the Bank's sole judgement, to exceed any
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volume, aggregate dollar, network, time, credit or similar limits
which are applicable to the Bank; or (c) if the Bank, in good faith,
is unable to satisfy itself that the transaction has been properly
authorized.
5.5 The Bank shall use reasonable efforts to act on all authorized
requests to cancel or amend payment orders received in compliance
with the Security Procedure provided that such requests are received
in a timely manner affording the Bank reasonable opportunity to act.
However, the Bank assumes no liability if the request for amendment
or cancellation cannot be satisfied.
5.6 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the
payment order instructions as received and the Bank complies with the
Security Procedure. The Security Procedure is established for the
purpose of authenticating payment orders only and not for the
detection of errors in payment orders.
5.7 The Bank shall assume no responsibility for lost interest with
respect to the refundable amount of any unauthorized payment order,
unless the Bank is notified of the unauthorized payment order within
thirty (30) days of notification by the Bank of the acceptance of
such payment order. In no event (including failure to execute a
payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such
damages.
5.8 When the Fund initiates or receives Automated Clearing House credit
and debit entries pursuant to these guidelines and the rules of the
National Automated Clearing House Association and the New England
Clearing House Association, the Bank will act as an Originating
Depository Financial Institution and/or receiving depository
Financial Institution, as the case may be, with respect to such
entries. Credits given by the Bank with respect to an ACH credit
entry are provisional until the Bank receives final settlement for
such entry from the Federal Reserve Bank. If the Bank does not
receive such final settlement, the Fund agrees that the Bank shall
receive a refund of the amount credited to the Fund in connection
with such entry, and the party making payment to the Fund via such
entry shall not be deemed to have paid the amount of the entry.
5.9 Confirmation of Bank's execution of payment orders shall ordinarily
be provided within twenty four (24) hours notice of which may be
delivered through the Bank's proprietary information systems, or by
facsimile or call-back. Fund must report any objections to the
execution of an order within thirty (30) days.
6. DATA ACCESS AND PROPRIETARY INFORMATION
6.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Bank as part of
the Fund's ability to access certain Fund-related data ("Customer
Data") maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all
Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person
or organization except as may be provided hereunder. Without limiting
the foregoing, the Fund agrees for itself and its employees and
agents:
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(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance
with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion
of the Proprietary Information, and if such access is
inadvertently obtained, to inform in a timely manner of such
fact and dispose of such information in accordance with the
Bank's instructions;
(d) to refrain from causing or allowing the data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal
copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 6. The obligations of this Section shall
survive any earlier termination of this Agreement.
6.2 If the Fund notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make
no claim against the Bank arising out of the contents of such
third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES
EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
6.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, then in such event the
Bank shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long as
such instruction is undertaken in conformity with security procedures
established by the Bank from time to time.
7. INDEMNIFICATION
7.1 The Bank shall not be responsible for, and the Fund shall on behalf
of the applicable Portfolio indemnify and hold the Bank harmless from
and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable
to:
(a) all actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without
negligence or willful misconduct;
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(b) the Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any
representation or warranty of the Fund hereunder;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or
services which (i) are received by the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Fund or any other person or firm on behalf
of the Fund including but not limited to any previous
transfer agent or registrar;
(d) the reliance on, or the carrying out by the Bank or its
agents or subcontractors of any instructions or requests of
the Fund on behalf of the applicable Portfolio;
(e) the offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be
registered or in violation of any stop order or other
determination or ruling by any federal or any state agency
with respect to the offer or sale of such Shares;
(f) the negotiations and processing of checks made payable to
prospective or existing Shareholders tendered to the Bank
for the purchase of Shares, such checks are commonly known
as "third party checks"; and
(g) upon the Fund's request entering into any agreements
required by the National Securities Clearing Corporation
(the "NSCC") required by the NSCC for the transmission of
Fund or Shareholder data through the NSCC clearing systems.
7.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the
Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the
Fund on behalf of the applicable Portfolio for any action taken or
omitted by it in reliance upon such instructions or upon the opinion
of such counsel. The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document,
reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data,
records or documents provided the Bank or its agents or
subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt
of written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
7.3 In order that the indemnification provisions contained in this
Section 7 shall apply, upon the assertion of a claim for which the
Fund may be required to indemnify the Bank, the Bank shall promptly
notify the Fund of such assertion, and shall keep the Fund advised
with respect to all developments concerning such claim. The Fund
shall have the option to participate with the Bank in the defense of
such claim or to defend against said claim in its own name or in the
name of the Bank. The Bank shall in no case confess any claim or make
any compromise in any case in which the Fund may be required to
indemnify the Bank except with the Fund's prior written consent.
8. STANDARD OF CARE
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The Bank shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees.
9. CONFIDENTIALITY
9.1 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out
of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required
by law.
9.2 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the
Fund and to secure instructions from an authorized officer of the
Fund as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person whenever it is advised
by its counsel that it may be held liable for the failure to exhibit
the Shareholder records to such person.
10. COVENANTS OF THE FUND AND THE BANK
10.1 The Fund shall on behalf of each of the Portfolios promptly furnish
to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees
of the Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the
Fund and all amendments thereto.
10.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices.
10.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Fund Act of 1940, as
amended, and the Rules thereunder, the Bank agrees that all such
records prepared or maintained by the Bank relating to the services
to be performed by the Bank hereunder are the property of the Fund
and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the
Fund on and in accordance with its request.
11. TERMINATION OF AGREEMENT
11.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
11.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
borne by the Fund on behalf of the applicable Portfolio(s).
Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination and a charge
equivalent to the average of three (3) months' fees.
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12. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares
in addition to the attached Schedule A with respect to which it
desires to have the Bank render services as transfer agent under the
terms hereof, it shall so notify the Bank in writing, and if the Bank
agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
13. ASSIGNMENT
13.1 Except as provided in Section 13.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party.
13.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
13.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"),
(ii) a BFDS subsidiary duly registered as a transfer agent pursuant
to Section 17A(c)(2) or (iii) a BFDS affiliate; provided, however,
that the Bank shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and
omissions.
14. AMENDMENT
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution
of the Board of Trustees of the Fund.
15. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
16. FORCE MAJEURE
In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes.
17. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or
for any consequential damages arising out of any act or failure to
act hereunder.
18. MERGER OF AGREEMENT
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This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
19. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and
property of the Fund.
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20. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
21. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar
process. The parties hereto each agree that any such reproduction
shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is
in existence and whether or not such reproduction was made by a party
in the regular course of business, and that any enlargement,
facsimile or further reproduction shall likewise be admissible in
evidence.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
SCHRODER SERIES TRUST II
BY: /S/ CATHERINE A. MAZZA
-----------------------------
Catherine A. Mazza,
Vice President
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
----------------------------
Ronald E. Logue,
Executive Vice President
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STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
<TABLE>
<S> <C> <C>
SERVICE PERFORMED RESPONSIBILITY
- ----------------- ---------------
BANK FUND
---- ----
1. Receives orders for the purchase X
of Shares.
2. Issue Shares and hold Shares in X Shareholders accounts.
3. Receive redemption requests. X
4. Effect transactions 1-3 above X directly with broker-dealers.
5. Pay over monies to redeeming X Shareholders.
6. Effect transfers of Shares. X
7. Prepare and transmit dividends X X and distributions.
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X X
10. Maintain records of account. X
11. Maintain and keep a current and X
accurate control book for each
issue of securities.
12. Mail proxies. X X
13. Mail Shareholder reports. X X
14. Mail prospectuses to current X X Shareholders.
15. Withhold taxes on U.S. resident X and non-resident alien accounts.
</TABLE>
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<TABLE>
<S> <C> <C>
SERVICE PERFORMED RESPONSIBILITY
- ----------------- --------------
BANK FUND
---- ----
16. Prepare and file U.S. Treasury X X Department forms.
17. Prepare and mail account and X
confirmation statements for
Shareholders.
18. Provide Shareholder account X information.
19. Blue sky reporting. X X
</TABLE>
* Such services are more fully described in Section 1.2 (a), (b) and (c) of the
Agreement.
SCHRODER SERIES TRUST II
BY: /S/ CATHERINE A. MAZZA
-----------------------------
Catherine A. Mazza,
Vice President
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
----------------------------
Ronald E. Logue,
Executive Vice President
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SCHEDULE A
Schroder All-Asia Fund
150
EXHIBIT 9(D)
SCHRODER SERIES TRUST II
FUND ACCOUNTING AGREEMENT
Agreement, dated and effective as of December 9, 1997, between Schroder
Series Trust II, a Delaware business trust (the "Trust") with its principal
place of business at Two Portland Square, Portland, Maine 04101, and Forum
Accounting Services, LLC (the "Subadministrator"), a limited liability company
organized under Delaware law.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and is authorized to issue shares of beneficial interest in separate series and
classes;
WHEREAS, the Trust offers shares in various series listed in Appendix A
hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, a "Fund" and collectively, the "Funds") and the Trust offers shares
of various classes of each Fund as listed in Appendix A hereto (each such class,
together with all other classes subsequently established by the Trust in a Fund,
a "Class" and collectively, the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof, and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies
of: (i) the Trust's Trust Instrument (collectively, as amended from time to
time, "Trust Instrument"); (ii) the Trust's registration statement and all
amendments thereto filed on Form N-1A with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act (the "Registration Statement"); (iii) the
Trust's current prospectus and statement of additional information of each Fund
(collectively, as currently in effect and as amended or supplemented, the
"Prospectus"); and (iv) all procedures adopted by the Trust with respect to the
Funds (i.e., repurchase agreement procedures), and the Trust shall promptly
furnish Forum with all amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF FORUM
(a) Forum and the Trust's administrator, Schroder Fund Advisors Inc.,
or subadministrator, Forum Administrative Services, LLC (together, the
"Administrator") from time to time may adopt such procedures as they agree upon
to implement the terms of this Section. With respect to each Fund, Forum shall
perform the following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
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(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports: (A) a current security position
report; (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order); and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either: (A) a
valuation of the assets of the Fund (unless otherwise specified in or
in accordance with this Agreement, based upon the use of outside
services normally used and contracted for this purpose by Forum in the
case of securities for which information and market price or yield
quotations are readily available and based upon evaluations conducted
in accordance with the Trust's instructions in the case of all other
assets); or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized-cost value of those
assets by more than a specified percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
auditors and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment adviser,
as applicable;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that are required to update the Trust's registration
statement;
(xiv) provide the Trust or independent auditors with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
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(xvi) produce quarterly compliance reports for investment adviser, as
applicable, to the Trust and the Board and provide information to the
Administrator, investment adviser and other appropriate persons with
respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from the Trust's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xix) periodically reconcile all appropriate data with the Trust's
custodian;
(xx) verify investment trade tickets when received from the investment
adviser, as applicable, and maintain individual ledgers and historical
tax lots for each security; and
(xxi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. The books and records pertaining to the Trust
that are in possession of Forum shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during Forum's normal business hours. Upon the reasonable
request of the Trust or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the
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event the Trust designates a successor that shall assume any of Forum's
obligations hereunder, Forum shall, at the expense and direction of the Trust,
transfer to such successor all relevant books, records and other data
established or maintained by Forum under this Agreement.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(c)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction that it receives and that it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(d) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
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<PAGE>
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for: (i) any loss to the Trust if a net asset value ("NAV") Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.001 (1/10 of 1%); or (ii) any loss to a shareholder of the Trust if the NAV
Difference for which Forum would otherwise be liable under this Agreement is
less than or equal to 0.005 (1/2 of 1%) or if the loss in the shareholder's
account with the Trust is less than or equal to $10. Any loss for which Forum is
determined to be liable hereunder shall be reduced by the amount of gain which
inures to shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement: (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV; (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated; (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted; and (iv) in calculating any NAV
Difference for which Forum would otherwise be liable under this Agreement for a
particular NAV error that continues for a period covering more than one NAV
determination, Fund losses and gains for the period shall be netted.
(g) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Fund to act in contravention of its Prospectus or any
provision of the 1940 Act. Except as otherwise specifically provided herein, the
Trust assumes all responsibility for ensuring that the Trust complies with all
applicable requirements of the Securities Act, the 1940 Act and any laws, rules
and regulations of governmental authorities with jurisdiction over the Trust.
All references to any law in this Agreement shall be deemed to include reference
to the applicable rules and regulations promulgated under authority of the law
and all official interpretations of such law or rules or regulations.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent auditors if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
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(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix B hereto. In addition, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all expenses and
employee time (at 150% of salary) attributable to any review of the Trust's
accounts and records by the Trust's independent auditors or any regulatory body
outside of routine and normal periodic reviews. Should the Trust exercise its
right to terminate this Agreement, the Trust, on behalf of the applicable Fund,
shall reimburse Forum for all out-of-pocket expenses and employee time (at 150%
of salary) associated with the copying and movement of records and material to
any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds. This Agreement shall continue in effect with
respect to a Fund until terminated as provided for herein. This Agreement may be
terminated with respect to a Fund at any time, without the payment of any
penalty: (i) by the Board on 60 days' written notice to Forum, or (ii) by Forum
on 60 days' written notice to the Trust. The obligations of Sections 3 and 4
shall survive any termination of this Agreement. This Agreement and the rights
and duties under this Agreement otherwise shall not be assignable by either
Forum or the Trust except by the specific written consent of the other party.
All terms and provisions of this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series or classes
of shares after the effectiveness of this Agreement, such series or classes of
shares, as the case may be, shall become Funds and Classes under this Agreement.
Forum or the Trust may elect not to make any such series or classes subject to
this Agreement.
SECTION 7. CONFIDENTIALITY. Forum agrees to treat all records and other
information related to the Trust as proprietary information of the Trust and, on
behalf of itself and its employees, to keep confidential all such information,
except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
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SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
auditors and shall take reasonable action to make all necessary information
available to the auditors for the performance of the auditors' duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the Trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
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(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof, and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
SCHRODER SERIES TRUST II
By: /S/ CATHERINE A. MAZZA
------------------------------
Catherine A. Mazza
Vice President
FORUM ACCOUNTING SERVICES, LLC
By: /S/ DAVID I. GOLDSTEIN
-------------------------------
David I Goldstein,
Managing Director
159
<PAGE>
SCHRODER SERIES TRUST II
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
----------------------------------------------------------------------
FUND
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF DECEMBER 9, 1997
----------------------------------------------------------------------
Schroder All-Asia Fund
----------------------------------------------------------------------
160
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
APPENDIX B
<TABLE>
<S> <C>
Standard Fee per Fund with one Class $36,000/year
Fee for each additional Class $12,000/year
Plus additional surcharges for each of:
Global or International Funds $24,000/year
Tax Free Money Market Funds $12,000/year
Fund with more than 25% of net assets
invested in asset backed securities $1000/month
Fund with more than 50% of net assets
invested in asset backed securities $1000/month
Fund with more than 100 security positions $1,000/month
Fund with a monthly portfolio turnover
rate of 10% or greater $1,000/month
</TABLE>
Monthly surcharges are determined based upon the total assets or
security positions as of the end of the prior month and on the portfolio
turnover rate for the prior month. Portfolio turnover rate shall have the
meaning ascribed thereto in Securities and Exchange Commission Form N-1A.
The rates set forth above shall remain fixed through December 31, 1998.
On January 1, 1998, and on each successive January 1, the rates shall be
adjusted to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of Labor
Statistics.
161
EXHIBIT 10
[Letterhead of Smith Katzenstein & Furlow]
The Corporate Plaza
800 Delaware Avenue
P.O. Box 410
Wilmington, Delaware 19899
Phone (302) 652-8400
Fax (302) 652-8405
Smith
Katzenstein
Furlow LLP
Attorneys at Law
March 16, 1998
Schroder Series Trust II
Two Portland Square
Portland, Maine 04102
RE: ISSUANCE OF SHARES BY SCHRODER SERIES TRUST II
Ladies and Gentlemen:
We are furnishing this opinion in connection with the issuance by Schroder
Series Trust II, a Delaware business trust (the "Trust"), of an indefinite
number of shares of beneficial interest of each of the following separate and
distinct series of the Trust: Schroder All-Asia Fund (the "Fund"). The
indefinite number of shares of beneficial interest of the Fund is referred to
collectively as the "Shares". The Shares will be issued pursuant to the
provisions of Rule 24f-2 (the "Rule") under the Investment Company Act of 1940,
as amended (the "1940 Act").
In connection with this opinion, we have examined:
(a) A copy of the Trust Instrument of the Trust dated December 4,
1997 (the "Trust Instrument"), certified by the Assistant
Secretary of the Trust;
(b) Certificate of the Secretary of State of the State of
Delaware, dated March 13, 1998, certifying as to the due
formation, good standing and legal existence of the Trust
under the laws of the State of Delaware;
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(c) A certificate of the Assistant Secretary of the Trust, dated
the date hereof, as to, among other things, certain actions of
the Trust; and
(d) Such other certificates, documents, and records as we have
deemed necessary for the purpose of giving this opinion.
We have also examined: (i) a copy of the Registration Statement on Form N-1A
(the "Form") as filed on December 22, 1997 by you with the Securities and
Exchange Commission relating to your registration of the Shares of the Fund
pursuant to the Securities Act of 1933, as amended (the "1933 Act") and of the
Trust as a registered investment company under the 1940 Act ; and (ii) a draft
of the Prospectus to be dated March 20, 1998 relating to the offer and sale of
Shares.
We have assumed that the statements and information set forth in the documents
which we reviewed are true, complete and accurate in all material respects. We
have made such examination of Delaware law as we have deemed relevant for
purposes of this opinion. We express no opinion as to the effect of laws, rules,
and regulations of any state or jurisdiction other than the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that: (i) the
Trust is a duly organized and validly formed Delaware business trust in good
standing under the laws of the State of Delaware; and (ii) the unlimited number
of unissued Shares that are currently being registered may be validly issued
from time to time in accordance with the Trust Instrument and the Form, and,
subject to compliance with applicable laws regulating the offer and sale of
securities, and receipt by the Trust of the full consideration for the Shares as
contemplated by the Prospectus, when so issued, the Shares will be validly
issued, fully paid and nonassessable by the Trust.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission (the "SEC") in connection with the Form to be filed with the SEC.
Very truly yours,
SMITH, KATZENSTEIN & FURLOW
By: /S/ STEPHEN M. MILLER
----------------------------
Stephen M Miller
163
EXHIBIT 11
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Pre-Effective Amendment No. 1 to the
Registration Statement of Schroder Series Trust II, a Form N-1A (File No.
333-42943) of our report dated December 4, 1997, on our audit of the financial
statements and financial highlights of Schroder Asian Growth Fund, Inc., which
report is included in the Annual Report to Shareholders for the year ended
October 31, 1997.
We also consent to the reference to our firm under the caption "Independent
Accountant" in the Statement of Additional Information.
/S/ COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
New York, New York
March 16, 1998
164
EXHIBIT 13
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated
as of December 9, 1997, between SCHRODER ASIAN GROWTH FUND, INC. (the "Fund"), a
corporation formed under the laws of the State of Maryland, and SCHRODER SERIES
TRUST II, a business trust formed under the laws of the State of Delaware, on
behalf of its initial series, Schroder All-Asia Fund (the "Trust").
WHEREAS, this Agreement is intended to effect the reorganization
of the Fund into a Delaware business trust by the transfer of all of the assets
of the Fund to the Trust solely in exchange for assumption by the Trust of all
of the liabilities of the Fund and issuance to the Fund of shares of beneficial
interest of the Trust (the "Class A Shares"), followed by the distribution, on
the Closing Date, as hereinafter defined, of the Class A Shares of the Trust to
the holders of shares of the Fund (the "Stockholders") and by the dissolution of
the Fund as provided herein, all upon the terms and conditions hereinafter set
forth; and
WHEREAS, the Reorganization, as hereinafter defined, is intended
to qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW THEREFORE, in consideration of the promises and the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. STOCKHOLDER APPROVAL.
A special meeting (the "Special Meeting") of the stockholders of
the Fund shall have been called and held for the purpose of approving this
Agreement and the transactions contemplated herein.
2. REORGANIZATION.
The transactions described in this section are hereinafter
referred to as the "Reorganization." The Reorganization shall occur with respect
to the Fund and the Trust.
2.1. Subject to the terms and conditions set forth herein and on
the basis of the representations and warranties contained herein, the Fund
agrees to transfer substantially all of its assets as set forth in paragraph 2.2
to the Trust by filing Articles of Transfer with the State of Maryland to become
effective at the close of business on the Closing Date. The Trust agrees in
exchange therefor (1) that the Trust shall assume all of the Fund's liabilities,
whether contingent or otherwise, existing as of the Closing Date, and further
(2) that on the Closing Date the Trust shall deliver to the Fund the number of
full and fractional Class A Shares equal to the value and number of full and
fractional shares of the Fund outstanding on the Closing Date. The Fund and the
Trust will execute a cross-receipt evidencing the transactions contemplated by
this paragraph 2.1.
2.2. The assets of the Fund transferred to the Trust shall
include, without limitation, all cash, cash equivalents, securities, receivables
(including interest and dividend receivables), claims or rights of action or
rights to register shares under applicable securities laws, books and records of
the Fund, all other property owned by the Fund and all deferred or prepaid
expenses shown as assets on the books of the Fund on the Closing Date.
2.3 Immediately upon delivery of the Class A Shares to the Fund
pursuant to paragraph 2.1 above, any officer of the Fund is authorized, on
behalf of the Fund as sole shareholder of the Trust, (1) to elect as trustees of
the Trust ("Trustees") the persons who currently serve as directors of the Fund;
and (2) to approve (I) the investment advisory agreement between Schroder
Capital Management International Inc., the investment adviser of the Fund (the
"Adviser"), and the Trust, which shall have been approved by the stockholders of
the Fund, and (II) the continuation for the Trust's fiscal year ending October
31, 1998 of the engagement of Coopers & Lybrand L.L.P., the independent
accountants who currently serve in that capacity for the Fund.
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2.4. Upon consummation of the transactions described in paragraph
2.1 above, the Fund will distribute to each Fund Stockholder of record Class A
Shares of the Trust pro rata in proportion to each Fund Stockholder's interest
in the Fund. The Trust will not issue certificates evidencing Class A Shares
except upon written request.
2.5. As soon as is practicable following the distribution of Class
A Shares to Fund Stockholders pursuant to paragraph 2.4 above, the Fund shall be
dissolved by filing Articles of Dissolution with the State of Maryland.
2.6. Ownership of Class A Shares by the former Fund Stockholders
will be reflected on the books of the Trust's transfer agent.
2.7. Any reporting responsibility of the Fund is and shall remain
its responsibility up to and including the later of the Closing Date and any
date on which the Fund may be dissolved.
3. CLOSING AND CLOSING DATE.
3.1. The transfer of substantially all of the Fund's assets in
exchange for the assumption by the Trust of the liabilities of the Fund and the
issuance of Class A Shares, as described above, together with all related acts
necessary to consummate such acts (the "Closing"), shall occur on March 20, 1998
(the "Closing Date") at the offices of Forum Financial Services, Inc.,
sub-administrator of the Trust, Two Portland Square, Portland, Maine, or at such
other place or later date as the parties may agree. All acts taking place at the
Closing shall be deemed to take place simultaneously as of the last
determination of the Fund's net asset value or at such other time and place as
the parties may agree.
3.2. In the event that on the Closing Date (A) the New York Stock
Exchange is closed to trading, or trading thereon is restricted, or (B) trading
or reporting of trading on said exchange or in any market in which portfolio
securities of the Fund are traded is disrupted so that accurate appraisal of the
value of the total net assets of the Fund is impracticable, the Closing shall be
postponed until the first business day upon which trading shall have been fully
resumed and reporting shall have been restored. For purposes of this Agreement,
a "business day" shall mean each day that the New York Stock Exchange is open
for trading.
3.3. The Fund shall deliver at the Closing a certificate of an
authorized officer of the Fund stating that it has notified the custodian of the
Fund of the transfer of the assets of the Fund to the Trust.
3.4. The transfer agent for the Fund shall deliver at the Closing
a certificate as to the closing of the transfer books of the Fund prior to the
Closing Date and to the transfer of the Fund Stockholders' accounts to the
transfer agent of the Trust. The Trust shall issue and deliver a confirmation to
the Fund of the number of Class A Shares to be credited to the Fund with respect
to the Trust on the Closing Date or provide evidence satisfactory to the Fund
that such Class A Shares have been credited to the Fund's account on the books
of the Trust.
3.5. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, stock certificates, receipts, instructions
and other documents as such party may deem appropriate or as such other party
may reasonably request.
4. VALUATION.
4.1. The value of the Fund's net assets to be acquired by the
Trust shall be the net asset value computed as of the close of business on the
Closing Date, using the valuation procedures set forth in the Fund's then
current prospectus.
4.2. The number, value and denominations of full and fractional
Class A Shares to be issued in exchange for the Fund's net assets shall be equal
to the number, value and denominations of full and fractional Fund shares
outstanding as of the close of business on the Closing Date.
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<PAGE>
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND.
5.1. ORGANIZATION, EXISTENCE, ETC. The Fund is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and has the power to carry on its business as it is now being
conducted. The Fund has all necessary Federal, state and local authorizations to
own all of its properties and assets and to carry on its business as it is now
being conducted.
5.2. REGISTRATION AS AN INVESTMENT COMPANY. The Fund is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
closed-end management investment company; such registration has not been revoked
or rescinded and is in full force and effect.
5.3. CAPITALIZATION. The authorized stock of the Fund consists of
100,000,000 shares of Common Stock, each having a par value of $.01 per share,
and 16,107,100 shares are issued and outstanding.
5.4. FINANCIAL STATEMENTS. The audited financial statements of the
Fund for the fiscal year ended October 31, 1997 (the "Financial Statements")
fairly present the financial position of the Fund as of the date thereof and the
results of its operations and changes in its net assets for the periods
indicated.
5.5. FUND SHARES. The outstanding shares of the Fund are duly
and validly issued and outstanding, fully paid and nonassessable.
5.6. AUTHORITY RELATIVE TO THIS AGREEMENT. The Fund has the power
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Fund's Board
of Directors and by the Fund Stockholders at the Special Meeting, and no other
corporate proceedings by the Fund are necessary to authorize the performance of
this Agreement and the transactions contemplated hereby.
5.7. LIABILITIES. There are no liabilities of the Fund, whether or
not determined or determinable, other than liabilities disclosed or provided for
in the Financial Statements or incurred in the ordinary course of business
subsequent to October 31, 1997, none of which has been materially adverse to the
business, assets or results of operations of the Fund. All liabilities of the
Fund to be assumed by the Trust were incurred by the Fund in the ordinary course
of business.
5.8. LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of the Fund, threatened which would
adversely affect the Fund's assets or business or which would prevent or hinder
consummation of the transactions contemplated hereby. The Fund is not under the
jurisdiction of a court in a proceeding under Title 11 of the United States Code
or similar case within the meaning of section 368(a)(3)(A) of the Code.
5.9. CONTRACTS. Except for contracts and agreements disclosed in
the initial prospectus of the Fund or as otherwise described in the Fund's
reports required under the Securities Exchange Act of 1934, as amended, or as
otherwise disclosed to the Trust, under which no material default exists, the
Fund is not a party to or subject to any material contract, debt instrument,
plan, lease, franchise, license or permit of any kind or nature whatsoever.
5.10. TAXES. The Fund has filed all federal income tax returns of
the Fund required to be filed by it, and all taxes payable pursuant to such
returns have been paid. The Fund has qualified as a regulated investment company
("RIC") under Subchapter M of the Code for each taxable year since it commenced
operations and will continue to meet all the requirements for such qualification
for its current taxable year through the Closing Date.
5.11. DISSOLUTION. As soon as practicable following the
distribution of Class A Shares to Fund Stockholders pursuant to paragraph 2.4
above, the Fund shall be dissolved by filing Articles of Dissolution with the
State of Maryland.
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6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TRUST.
The Trust represents and warrants to the Fund as follows:
6.1. ORGANIZATION, EXISTENCE, ETC. The Trust is a Delaware
business trust duly organized, validly existing and in good standing under the
laws of the State of Delaware, and the Trust has filed its Trust Certificate
with the Secretary of State of Delaware.
6.2. REGISTRATION AS AN INVESTMENT COMPANY. On the Closing Date,
the Trust will be registered under the 1940 Act as an open-end management
investment company.
6.3. CAPITALIZATION. Prior to the Closing Date, there shall be no
issued and outstanding Class A Shares. Class A Shares issued on the Closing Date
in connection with the transactions contemplated herein will be duly and validly
issued and outstanding, fully paid and non-assessable under Delaware law.
6.4. COMMENCEMENT OF OPERATIONS. The Trust has not commenced
operations and will not commence operations until after the Closing.
6.5. AUTHORITY RELATIVE TO THIS AGREEMENT. The Trust has the power
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Trustees, and
no other proceedings are necessary to authorize its officers to effectuate this
Agreement and the transactions contemplated hereby. The Trust is not a party to
or obligated under any charter, bylaw, indenture or contract provision or any
other commitment or obligation, or subject to any order or decree, which would
be violated by its executing and carrying out this Agreement.
6.6. LIABILITIES. There are no liabilities of the Trust, whether
or not determined or determinable, other than liabilities otherwise previously
disclosed to the Fund, none of which has been materially adverse to the
business, assets or results of operations of the Trust.
6.7. LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the knowledge of the Trust, threatened which would
adversely affect the Trust or its assets or business or which would prevent or
hinder consummation of the transactions contemplated hereby.
6.8. CONTRACTS. Except for contracts and agreements disclosed to
the Fund, under which no default exists, the Trust is not a party to or subject
to any material contract, debt instrument, plan, lease, franchise, license or
permit of any kind or nature whatsoever.
6.9. TAXES. The Trust intends that it will meet all the
requirements to qualify as a RIC under Subchapter M of the Code for each of the
taxable years ending after the Reorganization.
6.10. CONTINUATION OF THE FUND'S BUSINESS. The Trust has no plan
or intention to issue additional Class A Shares following the Reorganization
except for shares issued in the ordinary course of the Trust's business as an
open-end investment company; nor does the Trust have any plan or intention to
redeem or otherwise reacquire any Class A Shares issued to Fund Stockholders
pursuant to the Reorganization, other than through redemptions arising in the
ordinary course of that business. The Trust will actively continue the Fund's
business.
7. CONDITIONS TO OBLIGATIONS OF THE TRUST.
The obligations of the Trust hereunder with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
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7.1. APPROVAL BY STOCKHOLDERS. This Agreement and the transactions
contemplated hereby, including, as necessary, any amendment of any investment
restrictions of the Fund that might otherwise preclude the consummation of the
Reorganization, shall have been approved by the affirmative vote of holders of
two-thirds of the outstanding shares of the Fund.
7.2. COVENANTS, WARRANTIES AND REPRESENTATIONS. The Fund shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Closing Date, there shall have been no material adverse
change in the financial condition, results of operations, business, properties
or assets of the Fund since October 31, 1997, and the Trust shall have received
a certificate of the President of the Fund satisfactory in form and substance to
the Trust so stating.
7.3. TAX OPINION. The Fund and the Trust shall have received an
opinion of their tax counsel, dated on or before the Closing Date, to the effect
that, on the basis of existing provisions of the Code, current Treasury
Regulations issued thereunder, administrative interpretations thereof and court
decisions, for Federal income tax purposes: (I) no gain or loss will be
recognized by the Trust or the Fund upon the transfer of the assets of the Fund
to the Trust in exchange for Class A Shares of the Trust; and (II) no gain or
loss will be recognized by Fund Stockholders on the exchange of shares of the
Fund for Class A Shares of the Trust and the holding period and tax basis of the
Class A Shares of the Trust received by each Stockholder of the Fund will be the
same as the holding period and tax basis of the Stockholder's Fund shares held
immediately prior to the exchange. For purposes of rendering their opinion, tax
counsel may rely exclusively, and without independent verification as to factual
matters, upon the statements made in this Agreement, upon the proxy statement
distributed to Fund Stockholders in connection with the Reorganization, and upon
such other written representations as the Trust and the Fund shall make as of
the Closing Date.
7.4. OPINION OF COUNSEL TO THE FUND. The Fund and the Trust shall
have received the opinion of Ballard Spahr Andrews & Ingersoll, Maryland counsel
to the Fund, dated as of the Closing Date and addressed to each of them, to the
effect that: (I) the Fund is a corporation duly organized and existing under the
laws of the State of Maryland; (II) the Fund is a closed-end management
investment company registered under the 1940 Act; and (III) this Agreement and
the Reorganization provided for herein and the execution of this Agreement have
been duly authorized and approved by all requisite action of the Fund, and this
Agreement has been duly executed and delivered by the Fund, and is a valid and
binding obligation of the Fund, subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding enforcement
of creditors' rights generally and to general principles of equity.
7.5. OPINION OF COUNSEL TO THE TRUST. The Fund and the Trust shall
have received the opinion of counsel to the Trust, dated as of the Closing Date
and addressed to each of them, to the effect that: (I) the Trust is a Delaware
business trust duly organized and validly existing under the laws of the State
of Delaware; (II) the Trust is an open-end management investment company
registered under the 1940 Act; (III) this Agreement and the Reorganization
provided for herein and the execution of this Agreement have been duly
authorized and approved by all requisite action of the Trust, and this Agreement
has been duly executed and delivered by the Trust, and is a valid and binding
obligation of the Trust, subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding enforcement
of creditors' rights generally and to general principles of equity; (IV) the
Trust's Registration Statement has been declared effective under the Securities
Act and, to the best of counsel's knowledge after reasonable investigation, no
stop order has been issued or threatened suspending its effectiveness; and (V)
the Class A Shares of the Trust to be issued in the Reorganization have been
duly authorized and upon issuance thereof will be validly issued, fully paid and
nonassessable.
8. CONDITIONS TO OBLIGATIONS OF THE FUND.
The obligations of the Fund hereunder with respect to the
consummation of the Reorganization as it relates to the Fund are subject to the
satisfaction of the following conditions:
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8.1. COVENANTS, WARRANTIES AND REPRESENTATIONS. The Trust shall
have complied with each of its covenants contained herein, and each of the
representations and warranties contained herein shall be true in all material
respects as of the Closing Date.
8.2. REGULATORY APPROVAL. All approvals, registrations, and
exemptions under Federal and state laws required to effect the Reorganization
and the transactions contemplated hereby shall have been obtained.
8.3. TAX OPINION. The Fund and the Trust shall have received
the opinion referred to in paragraph 7.3 of this Agreement.
9. AMENDMENTS; WAIVERS; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
9.1. AMENDMENTS. This Agreement may be amended at any time by
action of the directors of either party hereto notwithstanding approval thereof
by the Fund Stockholders, provided that no amendment shall have a material
adverse effect on the interests of such stockholders.
9.2. WAIVERS. At any time prior to the Closing Date either of the
parties may waive compliance with any of the covenants or conditions made for
its benefit contained herein.
9.3. TERMINATION BY EITHER PARTY. This Agreement may be terminated
at any time prior to the Closing Date without liability on the part of either
party hereto or its respective Trustees, Directors, officers or stockholders by
any party on notice to the other party.
9.4. SURVIVAL. No representations, warranties or covenants made in
or pursuant to this Agreement (including certifications of officers) shall
survive the Reorganization.
10. EXPENSES/LIABILITIES.
The Fund and the Trust shall each be responsible for all of their
expenses in connection with the Reorganization.
11. GENERAL.
This Agreement supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement of the
terms of the Agreement between the parties and may not be changed or terminated
orally. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more counterparts have been executed by the Trust and the Fund and
delivered to each of the parties hereto. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
under or by reason of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
Attest: SCHRODER ASIAN GROWTH FUND, INC.
By: /S/ ALEXANDRA POE By: /S/ LOUISE CROSET
----------------------- -----------------------------
Alexandra Poe Louise Croset
Attest: SCHRODER SERIES TRUST II,
on behalf of its series
Schroder All-Asia Fund
By: /S/ ALEXANDRA POE By: /S/ LOUISE CROSET
-------------------------- ----------------------------
Alexandra Poe Louise Croset
COPIES OF THE TRUST INSTRUMENT, AS AMENDED, ESTABLISHING THE TRUST ARE ON FILE
WITH THE SECRETARY OF THE TRUST, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT
AND PLAN OF REORGANIZATION IS EXECUTED ON BEHALF OF THE TRUST BY OFFICERS OF THE
TRUST AS OFFICERS AND NOT INDIVIDUALLY AND THAT THE OBLIGATIONS OF OR ARISING
OUT OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE TRUSTEES, OFFICERS,
SHAREHOLDERS, EMPLOYEES OR AGENTS OF THE TRUST INDIVIDUALLY BUT ARE BINDING ONLY
UPON THE ASSETS AND PROPERTY OF THE TRUST.
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