<PAGE>
As filed with the Securities and Exchange Commission on February 29, 2000
Investment Company Act File No. 811-8567, Securities Act File Nos. 333-42943
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 4 [X]
and/or
AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 5 [X]
SCHRODER SERIES TRUST II
787 Seventh Avenue, New York, New York 10019
(212) 492-6000
Alexandra Poe, Esq.
Schroder Investment Management North America Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
Copies to:
Julie Tedesco, Esq.
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105-1713
Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
It is proposed that this filing will become effective (check appropriate box):
[x] Immediately upon filing pursuant |_| On (date) pursuant to paragraph (b)
to paragraph (b)
|_| 60 days after filing pursuant |_| On (date) pursuant to paragraph (a)(1)
to paragraph (a)(1)
|_| 75 days after filing pursuant |_| On (date) pursuant to paragraph
to paragraph (a)(2) (a)(2) of Rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
SCHRODER ALL-ASIA FUND
CLASS A SHARES
This Prospectus describes Schroder All-Asia Fund, a mutual fund offered by
Schroder Series Trust II. The Fund seeks long-term capital appreciation through
investment primarily in equity securities of Asian companies.
THE FUND CURRENTLY SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING
SUBSTANTIALLY ALL OF ITS ASSETS IN SCHRODER ASIAN GROWTH FUND PORTFOLIO AND
SCHRODER JAPAN PORTFOLIO (EACH A "PORTFOLIO"). THE PORTFOLIOS ARE SEPARATELY
MANAGED, NON-DIVERSIFIED INVESTMENT COMPANIES. EACH PORTFOLIO'S INVESTMENT
OBJECTIVE IS TO SEEK LONG-TERM CAPITAL APPRECIATION. SCHRODER ASIAN GROWTH FUND
PORTFOLIO FOCUSES ITS INVESTMENTS IN ASIAN COUNTRIES OTHER THAN JAPAN; SCHRODER
JAPAN PORTFOLIO FOCUSES ITS INVESTMENTS IN JAPAN. SCHRODER WILL INCREASE OR
DECREASE THE FUND'S EXPOSURE TO JAPAN BY INCREASING OR DECREASING THE AMOUNT OF
ITS ASSETS INVESTED IN SCHRODER JAPAN PORTFOLIO. THE FUND MAY WITHDRAW SOME OR
ALL OF ITS INVESTMENTS IN THE PORTFOLIOS AND INVEST DIRECTLY IN EQUITY
SECURITIES OF ASIAN COMPANIES AT ANY TIME.
Schroder Investment Management North America Inc. ("Schroder") manages the Fund.
You can call the Trust at (800) 464-3108 to find out more about the Fund and
other funds in the Schroder family.
This Prospectus explains what you should know about the Fund before you invest.
Please read it carefully.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS
MARCH 1, 2000
<PAGE>
(This page has been left blank intentionally.)
2
<PAGE>
SUMMARY INFORMATION
This summary identifies the investment objective, principal investment
strategies, and principal risks of Schroder All-Asia Fund. The Fund's investment
objective may not be changed without shareholder approval. The investment
policies of the Fund may, unless otherwise specifically stated, be changed by
the Trustees of the Trust without a vote of the Fund's shareholders.
IN REVIEWING THE FUND'S INVESTMENT OBJECTIVE AND POLICIES BELOW, YOU SHOULD
ASSUME THAT THE INVESTMENT OBJECTIVE AND POLICIES OF THE PORTFOLIOS, TAKEN
TOGETHER, ARE THE SAME IN ALL MATERIAL RESPECTS AS THOSE OF THE FUND. IN THIS
REGARD, REFERENCES TO THE FUND'S INVESTMENTS BELOW REFER TO INVESTMENTS MADE BY
THE PORTFOLIOS. SCHRODER IS THE INVESTMENT ADVISER TO THE FUND AND TO EACH
PORTFOLIO.
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., which was a closed-end management investment company. This
summary includes a bar chart that shows how the investment returns of the Fund
have varied from year to year, including the investment returns of Schroder
Asian Growth Fund, Inc. from its inception through March 20, 1998. Only full
calendar year performance is shown. The table following the bar chart shows how
the Fund's average annual returns (including the average annual returns of
Schroder Asian Growth Fund, Inc. from its inception through March 20, 1998) for
the last year, for the last five years, and for the life of the Fund compare to
broad-based securities market indices. The bar chart and table provide some
indication of the risks of investing in the Fund by showing the variability of
its returns and by comparing the Fund's performance to a broad measure of market
performance. NEITHER THE PERFORMANCE OF SCHRODER ASIAN GROWTH FUND, INC. NOR THE
FUND'S PAST PERFORMANCE IS NECESSARILY AN INDICATION OF THE FUND'S FUTURE
PERFORMANCE. It is possible to lose money on investments in the Fund.
- INVESTMENT OBJECTIVE. To seek long-term capital appreciation through
investment primarily in equity securities of Asian companies.
- PRINCIPAL INVESTMENT STRATEGIES. 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. "Asian companies" include: (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,
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 investors to participate in their stock markets
(collectively, "Asian countries"); and (2) companies, wherever organized, that
Schroder determines at the time of investment either (a) derive at least 75% of
their revenues from goods produced or sold, investments made, or services
performed in Asian countries or (b) maintain at least 75% of their assets in
Asian countries. The Fund invests in a variety of equity securities, including
common and preferred stocks, securities convertible into common and preferred
stocks, and warrants to purchase common and preferred stocks.
The Fund normally invests directly in equity securities of companies located
in at least five Asian countries.
3
<PAGE>
The Fund invests in issuers and countries that Schroder believes offer the
potential for capital growth. In identifying candidates for investment, Schroder
considers a variety of factors, including the issuer's likelihood of above
average earnings growth, the securities' attractive relative valuation, and
whether the issuer has any proprietary advantages. In addition, Schroder
considers the risk of local political and/or economic instability associated
with particular countries and regions and the liquidity of local markets. The
Fund generally sells securities when they reach fair valuation or when
significantly more attractive investment candidates become available.
The Fund also may do the following:
- Invest in 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.
- Invest indirectly in equity securities by investing in other
investment companies or similar pooled vehicles that invest primarily
in equity securities of Asian companies.
- PRINCIPAL RISKS.
- INVESTMENTS IN ASIA. Because the Fund's investments are concentrated
in Asian countries, the Fund's investment performance is particularly
sensitive to political, economic, market, and other factors affecting
those countries and issuers in those countries. Significant economic
and political volatility in certain Asian countries, such as those
experienced recently, could have an adverse effect on the value of
the Fund's investments in those countries. Due to its concentration
in the geographic region that is Asia (which may involve
concentration in particular Asian countries), the Fund will generally
be subject to higher levels of risk and volatility than if it
invested in a more geographically diversified portfolio.
The values of the Fund's assets denominated in Asian and other
foreign currencies may be affected favorably or unfavorably by
currency exchange rates, currency exchange control regulations,
foreign withholding taxes, and restrictions or prohibitions on the
repatriation of foreign currencies. The Fund's investments include
securities issued by Malaysian companies. Currency restrictions
imposed by the Malaysian government currently impose a 10% exit levy
on capital gains.
- FOREIGN SECURITIES. Investments in foreign securities entail risks
not present in domestic investments including, among others, risks
related to political or economic instability, currency exchange, and
taxation.
- EMERGING MARKETS. The Fund may invest in "emerging market" countries
whose securities markets may experience heightened levels of
volatility. The risks of investing in emerging markets include
greater political and economic uncertainties than in foreign
developed markets, currency transfer restrictions, a more limited
number of potential buyers, and an emerging market country's
dependence on revenue from particular commodities or international
aid. Additionally, 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. Emerging
4
<PAGE>
market countries may experience extremely high levels of inflation,
which may adversely affect those countries' economies, currencies,
and securities markets.
- NON-DIVERSIFIED MUTUAL FUND. The Fund is a "non-diversified" mutual
fund, and will invest its assets in a more limited number of issuers
than may diversified investment companies. To the extent the Fund
focuses on fewer issuers, its risk of loss increases if the market
value of a security declines or if an issuer is not able to meet its
obligations.
- EQUITY SECURITIES. Another risk of investing in the Fund is the risk
that the value of the equity securities in the portfolio will fall,
or will not appreciate as anticipated by Schroder, due to factors
that adversely affect markets generally or particular companies in
the portfolio.
- SMALL COMPANIES. The Fund may invest a substantial portion of its
assets in small companies, which tend to be more vulnerable to
adverse developments than larger companies. Small companies may have
limited product lines, markets, or financial resources, or may depend
on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities of
larger, more widely traded companies. Also, there may be less
publicly available information about small companies or less market
interest in their securities as compared to larger companies, and it
may take longer for the prices of the securities to reflect the full
value of their issuers' earnings potential or assets.
5
<PAGE>
For the periods listed, the bar chart and table below present performance
information for the Fund (for periods from March 23, 1998 through December 31,
1999) and for the Fund's predecessor, Schroder Asian Growth Fund, Inc. (a
closed-end management investment company) for periods through March 20, 1998.
Performance information through March 20, 1998 reflects the fees and annual
operating expenses incurred by Schroder Asian Growth Fund, Inc., which were
lower than those the Fund incurs. THE RETURNS LISTED IN THE BAR CHART AND TABLE
THROUGH MARCH 20, 1998 WOULD BE LOWER THAN THOSE SHOWN IF THEY REFLECTED THE
FUND'S CURRENT FEES AND EXPENSES, AND NOT THE LOWER FEES AND EXPENSES PREVIOUSLY
PAID BY SCHRODER ASIAN GROWTH FUND, INC. The bar chart does not reflect the
sales charge imposed on purchases of the Fund's Class A Shares. IF THE BAR CHART
DID REFLECT THE SALES CHARGE, RETURNS WOULD BE LESS THAN THOSE SHOWN.
SCHRODER ALL-ASIA FUND - CLASS A SHARES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN
<S> <C>
1994 -8.42%
1995 1.40%
1996 5.61%
1997 -38.28%
1998 -9.67%
1999 67.10%
Calendar Year End
</TABLE>
During the periods shown above, the highest quarterly return was 28.53% for
the quarter ended June 30, 1999, and the lowest was -25.81% for the quarter
ended December 31, 1997.
6
<PAGE>
<TABLE>
<CAPTION>
LIFE OF FUND
FIVE YEARS (SINCE INCEPTION
AVERAGE ANNUAL TOTAL (INCLUDES FUND'S OF FUND'S
RETURNS (FOR PERIODS PREDECESSOR PREDECESSOR
ENDED DECEMBER 31, 1999)* ONE YEAR THROUGH 3/20/98) ON 12/23/93)
- ------------------------- --------------- ---------------- ----------------
<S> <C> <C> <C>
Schroder All-Asia Fund................... 58.40% -1.12% -2.38%
**Morgan Stanley Capital International
All Country Asia Free ex-Japan Index.... 61.95% -1.28% 1.35%
***50% Morgan Stanley Capital
International Japan Index/50% Morgan
Stanley Capital International All
Country Asia Free ex-Japan (+ Malaysia)
Index................................... 66.17% 2.58% 2.40%
</TABLE>
- ---------------------------
* The Fund's average annual total returns shown above reflect a maximum sales
charge of 5.25% on all purchases of the Fund's Class A Shares. The indices
to which the Fund's average annual returns are compared do not reflect the
imposition of any sales charge.
** The Morgan Stanley Capital International (MSCI) All Country Asia Free
ex-Japan Index is an unmanaged market capitalization index constructed by
aggregating the appropriate MSCI country indices; it represents 12 developed
and emerging markets of the Asia region but excludes Japan. The index
reflects actual buyable opportunities for the non-domestic investor by
taking into account local market restrictions on share ownership by
foreigners.
*** The MSCI Japan Index is an unmanaged index that groups Japanese securities
by industry and the most "investable" stocks (as determined by size, long-
and short-term volume, and free float). The index reflects actual buyable
opportunities for the non-domestic investor by taking into account local
market restrictions on share ownership by foreigners. The MSCI All Country
Asia Free ex-Japan Index is described in the preceding footnote. The 50%
MSCI Japan Index/50% MSCI All Country Asia Free ex-Japan (+ Malaysia) Index
used by Schroder represents an average of the returns of each Index and is
intended to reflect a hypothetical equal allocation between the Portfolios
in which the Fund invests its assets. Since December 1, 1998, the MSCI All
Country Asia Free ex-Japan Index has excluded Malaysia. The returns above
include Malaysia in that Index for all periods. As of December 31, 1999, the
Fund had allocated approximately 67.60% of its total assets to Schroder
Asian Growth Fund Portfolio and 32.40% to Schroder Japan Portfolio. Schroder
adjusts those percentages from time to time in response to market and other
factors.
7
<PAGE>
FEES AND EXPENSES
These tables describe the fees and expenses that you may pay if you buy and
hold Class A Shares of the Fund. The Annual Fund Operating Expenses include the
Fund's pro rata portion of all operating expenses of the two Portfolios in which
the Fund invests.
<TABLE>
<S> <C>
SHAREHOLDER FEES (paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage
of offering price)(1).................................... 5.25%
Maximum Deferred Sales Load............................... None
Maximum Sales Load Imposed on Reinvested Dividends........ None
Redemption Fee............................................ None
Exchange Fee.............................................. None
</TABLE>
- ---------------------
(1) The maximum sales load applies to purchases of less than $25,000.
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
Fund assets):
Management Fees(2)........................................ 0.95%
Distribution (12b-1) Fees................................. None
Other Expenses(3)......................................... 1.32%
----
Total Annual Fund Operating Expenses...................... 2.27%
Fee Waiver and/or Expense Limitation(4)................... 0.32%
----
Net Expenses(4)........................................... 1.95%
====
</TABLE>
- ---------------------------
(2) Management Fees include all fees payable to Schroder and its affiliates for
asset allocation and fund administration services. The Fund pays asset
allocation fees to Schroder at the annual rate of 0.20% of the Fund's
average daily net assets invested in the Portfolios. The Fund pays
administration fees to Schroder Fund Advisors Inc. at the annual rate of
0.05% of the Fund's 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 Schroder Fund
Advisors Inc. by each Portfolio at the annual rate of 0.05% of its average
daily net assets. The expenses shown in the table have been calculated on
the basis of a recent actual allocation of the Fund's assets between
Schroder Asian Growth Fund Portfolio and Schroder Japan Portfolio.
Allocations of the Fund's assets between the two Portfolios, and the Fund's
associated expenses, will vary.
(3) Other Expenses include a 0.25% shareholder servicing fee.
(4) The Net Expenses shown above reflect the effect of contractually imposed
expense limitations and/or fee waivers, in effect through October 31, 2000,
on the Total Annual Fund Operating Expenses of the Fund.
8
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Class A Shares of the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods, and that you pay the maximum sales load of 5.25% at the time of
purchase. The Example also assumes that your investment earns a 5% return each
year and that the Fund's Total Annual Fund Operating Expenses remain the same as
those set forth on the previous page (absent the noted Fee Waiver and/or Expense
Limitation). Your actual costs may be higher or lower. Based on these
assumptions, your costs would be*:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------ -------- -------- --------
<S> <C> <C> <C>
$751 $1,210 $1,693 $3,019
</TABLE>
* Assuming that the Fund's operating expenses remain the same as Net Expenses
set forth on the previous page, based on the other assumptions described
above, your costs would be as follows for 1 year, 3 years, 5 years, and
10 years, respectively: $720, $1,115, $1,535, and $2,700.
9
<PAGE>
OTHER INVESTMENT STRATEGIES AND RISKS
The Fund may not achieve its objective in all circumstances. The following
provides more detail about the Fund's principal risks and the circumstances
which could adversely affect the value of the Fund's shares or its total return
or yield. It is possible to lose money by investing in the Fund.
RISKS OF INVESTING IN THE FUND
INVESTMENT IN ASIA. Asian markets are susceptible to periods of significant
volatility. Certain Asian markets have experienced devaluation during the past
several years. The Fund may invest more than 25% of its total assets in issuers
located in any one Asian country. To the extent that the Fund focuses its
investments in particular Asian countries, the Fund will be susceptible to
adverse political, economic and market developments in those countries.
FOREIGN SECURITIES AND CURRENCIES. Except as otherwise noted in this
Prospectus, there is no limit on the amount of the Fund's assets that may be
invested in foreign securities. Investments in foreign securities entail certain
risks. There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and diplomatic
developments that could affect the value of the Fund's investments in certain
foreign countries. Since foreign securities normally are denominated and traded
in foreign currencies, the values of the Fund's assets may be affected favorably
or unfavorably by currency exchange rates, currency exchange control
regulations, foreign withholding taxes, and restrictions or prohibitions on the
repatriation 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. 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 delivery of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign countries
may be more limited than those available to investors in the United States or in
other foreign countries. The willingness and ability of foreign governmental
entities to pay principal and interest on government securities depends on
various economic factors, including 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. If a foreign governmental
entity defaults on its obligations on the securities, the Fund may have limited
recourse available to it. The laws of some foreign countries may limit the
Fund's ability to invest in securities of certain issuers located in those
countries.
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 available
for distribution. Officials in foreign countries may from time to time take
actions in respect of their currencies which could significantly affect the
value of a Fund's assets denominated in those currencies or the liquidity of
such investments. For example, a foreign government may unilaterally devalue its
currency against other currencies, which would typically have the effect of
10
<PAGE>
reducing the U.S. dollar value of investments denominated in that currency. A
foreign government may also limit the convertibility or repatriation of its
currency or assets denominated in its currency, which would adversely affect the
U.S. dollar value and liquidity of investments denominated in that currency. In
addition, although at times most of the Fund's income may be received or
realized in these currencies, the Fund will be required to compute and
distribute its income in U.S. dollars. As a result, if the exchange rate for any
such currency declines after the Fund's income has been earned and translated
into U.S. dollars but before payment to shareholders, the Fund could be required
to liquidate portfolio securities to make such distributions. Similarly, if the
Fund incurs an expense in U.S. dollars and the exchange rate declines before the
expense is paid, the Fund would have to convert a greater amount of U.S. dollars
to pay for the expense at that time than it would have had to convert at the
time the Fund incurred the expense. The Fund may, but is not required to, 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 the Fund's assets in foreign securities, Schroder considers the likely
impact of foreign taxes on the net investment return 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 the Fund will reduce its
income available for distribution to shareholders. In certain circumstances, the
Fund may be able to pass through to shareholders credits for foreign taxes paid.
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 may present
market, credit, currency, liquidity, legal, political, and other risks different
from, or greater than, the risks of investing in developed foreign countries.
See "Foreign Securities and Currencies" above. 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 those countries' economies
and securities markets.
DEBT SECURITIES. The Fund may invest in debt securities, which are subject
to the risk of fluctuation of market value in response to changes in interest
rates and the risk that the issuer may default on the timely payment of
principal and interest. Additionally, the Fund may invest in junk bonds, which
are lower-quality, high-yielding debt securities rated below Baa or BBB by
11
<PAGE>
Moody's Investors Service, Inc. or Standard & Poor's Ratings Services (or, if
they are unrated, determined by Schroder to be of comparable quality). See the
Statement of Additional Information for further descriptions of securities
ratings assigned by Moody's and Standard & Poor's. Lower-rated debt securities
are predominantly speculative and tend to be more susceptible than other debt
securities to adverse changes in the financial condition of the issuer, general
economic conditions, or an unanticipated rise in interest rates, which may
affect an issuer's ability to pay interest and principal. This would likely make
the values of the securities held by the Fund more volatile and could limit the
Fund's ability to liquidate its securities. Changes by recognized rating
services in their ratings of any fixed-income security and in the perceived
ability of an issuer to make payments of interest and principal also may affect
the value of these investments.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include a variety of
securities that differ in their interest rates, maturities, and dates of issue.
Securities issued or guaranteed by agencies or instrumentalities of the U.S.
Government may or may not be supported by the full faith and credit of the
United States or by the right of the issuer to borrow from the U.S. Treasury.
RISKS OF SMALLER CAPITALIZATION COMPANIES. The Fund may invest in companies
which are smaller and less well-known than larger, more widely held companies.
Small and mid-cap companies may offer greater opportunities for capital
appreciation than larger companies, but may also involve certain special risks.
They are more likely than larger companies to have limited product lines,
markets or financial resources, or to depend on a small, inexperienced
management group. Securities of smaller companies may trade less frequently and
in lesser volume than more widely held securities and their values may fluctuate
more sharply than other securities. They may also trade in the over-the-counter
market or on a regional exchange, or may otherwise have limited liquidity. These
securities may therefore be more vulnerable to adverse developments than
securities of larger companies and the Fund may have difficulty establishing or
closing out its securities positions in smaller companies at prevailing market
prices. Also, there may be less publicly available information about smaller
companies or less market interest in their securities as compared to larger
companies, and it may take longer for the prices of the securities to reflect
the full value of their issuers' earnings potential or assets.
OTHER INVESTMENT STRATEGIES AND TECHNIQUES
In addition to the principal investment strategies described in the Summary
Information section above, the Fund may at times, but is not required to, use
the strategies and techniques described below, which involve certain special
risks. This Prospectus does not attempt to disclose all of the various
investment techniques and types of securities that Schroder might use in
managing the Fund. As in any mutual fund, investors must rely on the
professional investment judgment and skill of the Fund's adviser.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates
will affect the U.S. dollar value of Fund assets, including 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 political, economic, and financial conditions, which may
be difficult to predict. The Fund may engage in currency exchange transactions
to protect
12
<PAGE>
against unfavorable fluctuations in exchange rates.
In particular, the Fund may enter into foreign currency exchange
transactions to protect against a change in exchange rates that may occur
between the date on which the Fund contracts to trade a security and the
settlement date ("transaction hedging") or in anticipation of placing a trade
("anticipatory hedging"); to "lock in" the U.S. dollar value of interest and
dividends to be paid in a foreign currency; or 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").
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 not then
denominated ("cross hedging"). The Fund may also engage in "proxy" hedging,
whereby the Fund would seek to hedge the value of portfolio holdings denominated
in one currency by entering into an exchange contract on a second currency, the
valuation of which Schroder believes correlates to the value of the first
currency.
The Fund may buy or sell currencies in "spot" or forward transactions.
"Spot" transactions are executed contemporaneously on a cash basis at the
then-prevailing market rate. 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 incurs foreign exchange expenses in converting assets from one
currency to another. Although there is no limit on the amount of the Fund's
assets that may be invested in foreign currency exchange and foreign currency
forward contracts, the Fund may engage in foreign currency exchange transactions
only to the extent necessary to effect the hedging transactions described above.
Suitable foreign currency hedging transactions may not be available in all
circumstances and there can be no assurance that the Fund will utilize hedging
transactions at any time.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Fund
may lend portfolio securities to broker-dealers up to one-third of the Fund's
total assets. The Fund may also 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 the collateral. The Fund may also
enter into contracts to purchase securities for a fixed price at a future date
beyond customary settlement time, 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies or pooled vehicles, including closed-end funds, that are
advised by Schroder or its affiliates or by unaffiliated parties. When investing
in another investment company, the Fund may pay a premium above such investment
company's 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 advisory and administrative fees, and would at the same time continue
to pay its own fees and expenses.
13
<PAGE>
DERIVATIVE INSTRUMENTS. To the extent permitted by the Fund's investment
policies as set forth in this Prospectus or listed in the Statement of
Additional Information, instead of investing directly in the types of portfolio
securities described in the Summary Information section above, the Fund may buy
or sell a variety of "derivative" instruments to gain exposure to particular
securities or markets, in connection with hedging transactions, and to increase
total return. These may include options, futures, and indices, for example.
Derivatives involve the risk that they may not work as intended due to
unanticipated developments in market conditions or other causes. Also,
derivatives often involve the risk that the other party to the transaction will
be unable to meet its obligations or that the Fund will be unable to close out
the position at any particular time or at an acceptable price.
PORTFOLIO TURNOVER. The length of time the Fund has held a particular
security is not generally a consideration in investment decisions. The
investment policies of the Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by the Fund is known as "portfolio turnover." Portfolio
turnover generally involves some expense to the Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestment in other securities. Such sales may increase the
amount of capital gains (and, in particular, short-term gains) realized by the
Fund, on which shareholders may pay tax.
TEMPORARY DEFENSIVE STRATEGIES. At times, Schroder may judge that conditions
in the securities markets make pursuing the Fund's basic investment strategy
inconsistent with the best interests of its shareholders. At such times,
Schroder may temporarily use alternate investment strategies primarily designed
to reduce fluctuations in the value of the Fund's assets. In implementing these
"defensive" strategies, the Fund would invest in high-quality fixed-income
securities, cash, or money market instruments to any extent Schroder considers
consistent with such defensive strategies. It is impossible to predict when, or
for how long, the Fund will use these alternate strategies. One risk of taking
such temporary defensive positions is that the Fund may not achieve its
investment objective.
OTHER INVESTMENTS. The Fund may also invest in other types of securities and
utilize a variety of investment techniques and strategies which are not
described in this Prospectus. These securities and techniques may subject the
Fund to additional risks. Please see the Statement of Additional Information for
additional information about the securities and investment techniques described
in this Prospectus and about additional techniques and strategies that may be
used by the Fund.
MANAGEMENT OF THE FUND
The Trust is governed by a Board of Trustees, which has retained Schroder to
manage the investments of the Fund. Subject to the control of the Trustees,
Schroder also manages the Fund's other affairs and business.
Each of Schroder Asian Growth Fund Portfolio and Schroder Japan Portfolio is
managed under the direction of a board of trustees of Schroder Capital Funds.
Schroder (itself and its predecessors) has been an investment manager since
1962, and currently serves as investment adviser to the Fund, the Portfolios,
other mutual funds, and a broad range of institutional investors.
Schroder's ultimate parent, Schroders plc, and its affiliates currently
engage in the investment banking and asset management
14
<PAGE>
businesses, and as of June 30, 1999, had in the aggregate assets under
management of approximately $208 billion. In January 2000, Schroders plc agreed
to sell its worldwide investment banking business to Salomon Smith Barney. The
transaction, which is expected to be completed by May 2000, is subject to
regulatory approvals and satisfaction of closing conditions. Schroders plc will
retain its asset management businesses.
INVESTMENT ADVISORY FEES. The Portfolios pay investment advisory fees to
Schroder at the following annual rates (based on the average daily net assets of
each Portfolio taken separately): SCHRODER ASIAN GROWTH FUND PORTFOLIO-0.70%;
SCHRODER JAPAN PORTFOLIO-0.55%. The Fund, because of its investments in the
Portfolios, bears a proportionate share of the investment advisory fees (and
other expenses) paid by each Portfolio (based on the percentage of the
Portfolio's average daily net assets attributable to the Fund). For the fiscal
year ended October 31, 1999, the Fund (taking into account the Fund's share of
fees paid to Schroder by the Portfolios) paid Schroder an investment advisory
fee of 0.54% based on the average daily net assets of the Fund. This amount
reflects the expense limitation and/or fee waiver in place for the Fund
described below.
The Trust has entered into an investment advisory and asset allocation
agreement with Schroder under which Schroder is entitled to receive a monthly
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). Schroder does not receive an additional
investment advisory fee directly from the Fund for any of the Fund's assets
invested in the Portfolios. The investment advisory and asset allocation
agreement also provides that Schroder would manage the Fund's assets directly if
the Fund were to cease investing substantially all of its assets in the
Portfolios. In that event, the Fund would pay Schroder a monthly fee at the
annual contractual rate of 0.90% of the Fund's average daily net assets managed
by Schroder directly at the Fund level, which is higher than the contractual
advisory fee rate payable by either Portfolio as described above. Therefore, the
Fund's effective contractual advisory fee rate would increase if the Fund ceased
to invest substantially all of its assets in the Portfolios. Other than these
differences in fee rates, the investment advisory and asset allocation agreement
is otherwise the same in all material respects as the advisory agreements under
which Schroder acts as investment adviser to the Portfolios. Aside from the
asset allocation fee described above, Schroder will not receive any other
investment advisory fees under the agreement so long as the Fund continues to
invest substantially all of its assets in the Portfolios or in other investment
companies.
EXPENSE LIMITATION AND WAIVER. In order to limit the Fund's expenses,
Schroder is contractually obligated to reduce its compensation (and, if
necessary, to pay certain other Fund expenses) until October 31, 2000 to the
extent that the Fund's total operating expenses attributable to its Class A
Shares exceed the annual rate of 1.95% (based on the average daily net assets of
the Fund).
15
<PAGE>
PORTFOLIO MANAGERS. Schroder's investment decisions for the Fund (and for
the Portfolios) are generally made by the investment team listed below, with the
assistance of an investment committee. The following portfolio managers have had
primary responsibility for making investment decisions for the Fund and the
Portfolios since the years shown below. Their recent professional experience is
also shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO MANAGER SINCE RECENT PROFESSIONAL EXPERIENCE
- ----------------- ----- ------------------------------
<S> <C> <C>
Louise Croset 1997 Employed as an investment professional at Schroder
since 1993. Ms. Croset is also a Trustee and
President of the Trust, and a Director and a Senior
Vice President of Schroder.
Heather Crighton Inception (1993) Employed as an investment professional at Schroder
since 1993. Ms. Crighton is also a Vice President
of the Trust, and a Director and a Senior Vice
President of Schroder.
Donald H.M. 1998 Employed as an investment professional at Schroder
Farquharson since 1988. Mr. Farquharson is also a Vice
President of the Trust and a Senior Vice President
of Schroder.
</TABLE>
- --------------------------------------------------------------------------------
HOW THE FUND'S SHARES
ARE PRICED
The Fund calculates the net asset value of its Class A Shares by dividing
the total value of its assets attributable to its Class A Shares, less its
liabilities attributable to those shares, by the number of Class A Shares
outstanding. Shares are valued as of the close of trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern Time) each day the Exchange is open. The
Trust expects that days, other than weekend days, that the Exchange will not be
open are New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. The Fund values its portfolio securities for which market
quotations are readily available at market value. Short-term investments that
will mature in 60 days or less are stated at amortized cost, which approximates
market value. The Fund values securities and assets for which market values are
not ascertainable at their fair values as determined in accordance with
procedures adopted by the Board of Trustees. All assets and liabilities of the
Fund denominated in foreign currencies are translated into U.S. dollars based on
the mid-market price of such currencies against the U.S. dollar at the time when
last quoted. Because certain of the securities in which the Fund may invest may
trade on days when the Fund does not price its Class A Shares, the net asset
value of the Fund's Class A Shares may change on days when shareholders will not
be able to purchase or redeem their Class A Shares.
HOW TO BUY SHARES
You may purchase Class A Shares of the Fund directly from the Trust (through
Schroder Fund Advisors Inc., the distributor of the Trust's shares), or through
a service organization such as a bank, trust company, broker-dealer, or other
financial organization (a "Service Organization") having an arrangement with
Schroder Fund Advisors Inc. If you do not have a Service Organization, Schroder
16
<PAGE>
Fund Advisors Inc. can provide you with a list of available firms. Your Service
Organization is responsible for forwarding all of the necessary documentation to
the Trust, and may charge you separately for its services.
Class A Shares of the Fund are sold at their net asset value next determined
after the Trust receives your order, plus an initial sales charge. No sales
charge applies to the reinvestment of dividends or distributions. In order for
you to receive the Fund's next determined net asset value, the Trust must
receive your order before the close of trading on the New York Stock Exchange.
If the Class A Shares you purchase will be held in your own name (rather
than in the name of your Service Organization), your payment for the shares must
be accompanied by a completed Account Application in proper form. Account
Applications may be obtained from the Trust's transfer agent, Boston Financial
Data Services, Inc. (the "Transfer Agent"), at the addresses listed below under
"Purchases by Check", by calling the Trust at (800) 464-3108, or from your
Service Organization. The Trust or the Transfer Agent may request and delay
acceptance of your order pending receipt of additional documentation, such as
copies of corporate resolutions and instruments of authority, from corporations,
administrators, executors, personal representatives, directors, or custodians.
INVESTMENT MINIMUMS
The minimum investments for initial and additional purchases of Class A
Shares of the Fund are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
INVESTMENT INVESTMENTS
---------- -----------
<S> <C> <C>
Regular Accounts..... $2,500 $250
Traditional IRAs..... $2,000 $250
</TABLE>
The Trust may, in its discretion, accept smaller initial or subsequent
investments. The Fund does not issue share certificates.
The Trust is authorized to reject any purchase order and to suspend the
offering of its shares for any period of time. The Trust may also change or
waive any investment minimum from time to time.
PURCHASES BY CHECK
You may purchase shares of the Fund by mailing a check (in U.S. dollars)
payable to the Fund. Third-party checks will not be accepted.
For initial purchases, your check must be accompanied by a completed Account
Application in proper form.
You should direct your check and your completed Account Application as
follows:
Regular Mail
Schroder Mutual Funds
P.O. Box 8507
Boston, MA 02266
Overnight or Express Mail
Boston Financial Data Services, Inc.
Attn: Schroder Mutual Funds
66 Brooks Drive
Braintree, MA 02184
Your payments should clearly indicate the shareholder's name and account
number, if applicable.
PURCHASES BY BANK WIRE/TELEPHONE
If you make your initial investment by wire, your order must be preceded by
a completed Account Application. Upon receipt of the Application, the Trust will
assign you an account number and your account will become active. Wire orders
received prior to the close of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern Time)
17
<PAGE>
on each day the Exchange is open for trading will be processed at the net asset
value next determined as of the end of that day. Wire orders received after that
time will be processed at the net asset value next determined thereafter.
Once you have an account number, you may purchase Class A Shares through
your Service Organization, or directly from the Trust by telephoning the
Transfer Agent at (800) 464-3108, to give notice that you will be sending funds
by wire, and then arranging with your bank to wire funds to the Trust. In order
to purchase shares by telephone, you must complete the appropriate section of
the Account Application. Your purchase will not be processed until the Trust has
received the wired funds.
Federal Reserve Bank wire instructions are as follows:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA No.: 011000028
Attn: Schroder Mutual Funds
DDA No.: 9904-650-0
FBO: Account Registration
A/C:Mutual Fund Account Number
Schroder All-Asia Fund
The wire order must specify the name of the Fund, the share 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.
In an effort to prevent unauthorized or fraudulent purchase or redemption
requests by telephone, the Transfer Agent will follow reasonable procedures 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 purchase or redemption requests, but either or both may be liable if
they do not follow these procedures.
If six months have passed since correspondence to the shareholder's address
of record is returned then, unless the Transfer Agent determines the
shareholder's new address, dividends and other distributions that have been
returned to the Transfer Agent will be reinvested in the Fund, and the checks
will be canceled.
AUTOMATIC PURCHASES
If you purchase shares directly from the Trust and the shares are held in
your own name, you can make regular investments of $100 or more per month or
quarter in Class A Shares of the Fund through automatic deductions from your
bank account. Please complete the appropriate section of the Account Application
if you would like to utilize this option. For more information, please call the
Trust at (800) 464-3108. If you purchase shares through a Service Organization,
your firm may also provide automatic purchase options. Please contact your
Service Organization for details.
18
<PAGE>
SALES CHARGES
The offering price of the Fund's Class A Shares is the net asset value next
determined after the Trust receives your order plus an initial sales charge
assessed as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A BROKER-DEALERS'
PERCENTAGE OF REALLOWANCE
------------------------- AS A
OFFERING NET AMOUNT PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED* OFFERING PRICE
- ------------------------------------------------------------------------------------------------------
<S> <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% 1.00%
</TABLE>
* Rounded to the nearest one-hundredth percent.
REDUCED INITIAL SALES CHARGES
If you notify the Transfer Agent or your Service Organization, you may
include the Class A Shares of the Fund you already own (valued at the maximum
offering price) in calculating the price applicable to your current purchase.
Additionally, you may obtain reduced sales charges based on cumulative
purchases by executing a Statement of Intention to invest $25,000 or more in the
Fund's Class A Shares within a 13-month period. To do so, complete the Statement
of Intention form that is part of the Account Application, or call the Transfer
Agent at (800) 464-3108 to obtain a form. A Statement of Intention is not a
binding obligation to purchase the full amount indicated. The Trust reserves the
right to redeem your shares if you do not invest the full intended amount by the
end of the Statement of Intention period (taking into account amounts you redeem
during the period). If the full amount indicated is not so purchased, the Trust
will charge you for the additional sales charge applicable to the amount
actually purchased, as necessary.
Certain classes of investors may purchase Class A Shares of the Fund at net
asset value without any sales charge. Additionally, you may be eligible to
purchase Class A Shares at net asset value without any sales charge if you are
investing the proceeds from a redemption of the Fund's Class A Shares or shares
of another open-end investment company on which you paid an initial sales
charge, and you make your investment within 60 days of that redemption. Call the
Trust at (800) 464-3108 to find out whether you are eligible to purchase
Class A Shares without any sales charge.
To qualify for a reduced sales charge, you or your Service Organization must
notify the Transfer Agent at the time of purchase of your intention to qualify
and must provide the Transfer Agent with sufficient information to verify that
your 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 your eligibility for sales charge break
points, you will be credited with the number of Class A Shares you hold as a
result of the conversion of Schroder Asian Growth Fund, Inc., the Fund's
predecessor.
19
<PAGE>
BROKER-DEALERS' REALLOWANCE. Schroder Fund Advisors Inc. ("Schroder
Advisors"), the Fund's distributor, 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 for which 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.
Schroder and/or Schroder Advisors may make additional payments (out of their
respective resources) to selected broker-dealers or other Service Organizations.
This compensation may be made available only to certain dealers or other
intermediaries who have sold or are expected to sell significant amounts of
Class A Shares or who charge an asset-based fee to their clients (whether or not
they have a fiduciary relationship with their clients). If you purchase or sell
shares through an intermediary, the intermediary may charge a separate fee for
its services. Consult your intermediary for information.
OTHER PURCHASE INFORMATION
Class A Shares of the Fund may be purchased for cash or in exchange for
securities held by the investor, subject to the determination by Schroder that
the securities are acceptable. Investors interested in purchases through
exchange should telephone the Trust at (800) 464-3108.
Schroder reserves the right to reject any investment. A pattern of purchases
and redemptions of Fund shares characteristic of "market timing" strategies may
be deemed by Schroder to be detrimental to the Fund. Currently, the Trust limits
the number of "round trip" purchases an investor may make. An investor makes a
"round trip" purchase when the investor purchases shares of the Fund,
subsequently redeems those shares (including in connection with exchanges for
other Schroder funds), and then again purchases shares of the Fund. If an
investor completes four round trip purchases in any twelve-month period, the
Trust may refuse any subsequent purchase or exchange order by that investor.
HOW TO SELL SHARES
You may sell your Class A Shares back to the Fund on any day the New York
Stock Exchange is open, either through your Service Organization or directly to
the Fund. If your shares are held in the name of a Service Organization, you may
only sell the shares through that Service Organization. The Service Organization
may charge you for its services. If you choose to sell your shares directly to
the Fund, you may do so by sending a letter of instruction or stock power form
to the Trust, or by calling the Transfer Agent at (800) 464-3108.
The price you will receive is the net asset value next determined after
receipt of your redemption request in good order. A redemption request is in
good order if it includes the exact name in which the shares are registered, the
investor's account number, and the number of shares or the dollar amount of
shares to be redeemed, and, for written requests, if it is signed exactly in
accordance with the registration form. If you hold your Class A Shares in
certificate form,
20
<PAGE>
you must submit the certificates and sign the assignment form on the back of the
certificates. Signatures must be guaranteed by a bank, broker-dealer, or certain
other financial institutions. You may redeem your Class A Shares by telephone
only if you elected the telephone redemption privilege option on your Account
Application or otherwise in writing. Unless otherwise agreed to by the Trust,
the telephone redemption privilege may only be exercised to redeem shares worth
$1,000 or more and not more than $25,000. Shares for which certificates have
been issued may not be redeemed by telephone. The Trust may require additional
documentation from shareholders that are corporations, partnerships, agents,
fiduciaries, or surviving joint owners, or those acting through powers of
attorney or similar delegation.
If you redeem shares through your Service Organization, your Service
Organization is responsible for ensuring that the Transfer Agent receives your
redemption request in proper form and at the appropriate time. If your Service
Organization receives Federal Reserve wires, you may instruct that your
redemption proceeds be forwarded by wire to your account with your Service
Organization; you may also instruct that your redemption proceeds be forwarded
to you by a wire transfer. Please indicate your Service Organization's or your
own complete wiring instructions. Your Service Organization may charge you
separately for this service.
The Trust will pay you for your redemptions as promptly as possible and in
any event within seven days after the request for redemption is received in
writing in good order. (The Trust generally sends payment for shares the
business day after a request is received.) Under unusual circumstances, the
Trust may suspend redemptions or postpone payment for more than seven days, as
permitted by law. If you paid for your shares by check, you will not be sent
redemption proceeds until the check you used to pay for the shares has cleared,
which may take up to 15 calendar days from the purchase date.
If, because of your redemptions, your account balance falls below a minimum
amount set by the Trustees (presently $2,000) of the Fund, the Trust may choose
to redeem your shares in the Fund and pay you for them. You will receive at
least 30 days written notice before the Trust redeems your shares, and you may
purchase additional shares at any time to avoid a redemption. The Trust may also
redeem shares if you own shares of the Fund above a maximum amount set by the
Trustees. There is currently no maximum, but the Trustees may establish one at
any time, which could apply to both present and future shareholders.
The Trust may suspend the right of redemption during any period when:
(1) trading on the New York Stock Exchange is restricted or the Exchange is
closed; (2) the Securities and Exchange Commission ("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
net asset value not reasonably practicable.
If you request that your redemption proceeds be sent to you at an address
other than your address of record, or to another party, you must include a
signature guarantee for each such signature by an eligible signature guarantor,
such as a member firm of a national securities exchange or a commercial bank or
trust company located in the United States. If you are a resident of a foreign
country, another type of certification may be required. Please contact the
Transfer Agent for more details at (800) 464-3108. Corporations, fiduciaries,
and other types of shareholders may be required to supply additional
21
<PAGE>
documents which support their authority to effect a redemption.
SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Servicing Plan (the "Service Plan") for
Class A Shares of the Fund. Under the Service Plan, the Fund pays fees to
Schroder Advisors at an annual rate of up to 0.25% of the average daily net
assets of the Fund represented by Class A Shares. Schroder Advisors may enter
into shareholder service agreements with Service Organizations pursuant to which
the Service Organizations provide administrative support services to their
customers who are Fund shareholders. In return for providing these support
services, a Service Organization may receive payments from Schroder Advisors at
a rate not exceeding 0.25% of the average daily net assets of the Class A Shares
of the Fund for which the Service Organization is the holder of record. Some
Service Organizations may impose additional conditions or fees. For instance, a
Service Organization may require its clients to invest more than the minimum
amounts required by the Trust for initial or subsequent investments or may
charge a direct fee for its services. These fees would be in addition to any
amounts which you pay as a shareholder of the Fund or amounts which might be
paid to the Service Organization by Schroder Advisors. Please contact your
Service Organization for details. Schroder intends that payments made under the
Service Plan be used for administrative support services, and not for
distribution of the Fund's Class A Shares.
EXCHANGES
You can exchange your Class A Shares of the Fund for Advisor Shares of most
other funds in the Schroder family at any time at their respective net asset
values, as long as your investment meets the investment minimum and account
balance minimum of the fund whose Advisor Shares you are purchasing. The
exchange would be treated as a sale of your Class A Shares and any gain on the
exchange may be subject to tax. For a listing of the Schroder funds available
for exchange and to exchange shares, please contact your Service Organization or
call the Trust directly at (800) 464-3108. In order to exchange shares by
telephone, you must complete the appropriate section of the Account Application.
The Trust reserves the right to change or suspend the exchange privilege at any
time. Shareholders would be notified of any such change or suspension.
DIVIDENDS AND DISTRIBUTIONS
The Fund distributes any net investment income and any net realized capital
gain at least annually. Distributions from net capital gain are made after
applying any available capital loss carryovers.
YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS:
- Reinvest all distributions in additional Class A Shares of the Fund;
- Receive distributions from net investment income in cash while reinvesting
capital gain distributions in additional Class A Shares of the Fund;
- Receive distributions from net investment income in additional Class A
Shares of the Fund while receiving capital gain distributions in cash; or
- Receive all distributions in cash.
You can change your distribution option by notifying the Transfer Agent in
writing. If you do not select an option when you open your account, all
distributions by the Fund will be reinvested in Class A Shares of the Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.
22
<PAGE>
TAXES
TAXES ON DIVIDENDS AND DISTRIBUTIONS. For federal income tax purposes,
distributions of investment income are taxable as ordinary income. Taxes on
distributions of capital gains are determined by how long the Fund owned the
investments that generated the gains, rather than how long you have owned your
shares. Distributions are taxable to you even if they are paid from income or
gains earned by the Fund before you invested (and thus were included in the
price you paid for your shares). Distributions of gains from investments that
the Fund owned for more than 12 months will be taxable as long-term capital
gains. Distributions of gains from investments that the Fund owned for 12 months
or less will be taxable as ordinary income. Distributions are taxable whether
you received them in cash or reinvested them in additional shares of the Fund.
TAXES WHEN YOU SELL OR EXCHANGE YOUR SHARES. Any gain resulting from the
sale or exchange of your shares in the Fund will also generally be subject to
federal income tax at either short-term or long-term capital gain rates
depending on how long you have owned your shares.
FOREIGN TAXES. Foreign governments may impose taxes on the Fund and its
investments, which generally would reduce the Fund's income. However, an
offsetting tax credit or deduction may be available to shareholders. The Fund,
provided that it is eligible to do so, intends to elect to permit its
shareholders to take a credit (or a deduction) 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 U.S. 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 (including,
with respect to a foreign tax credit, a holding period requirement), to take a
foreign tax credit against their U.S. 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.
TAX TREATMENT OF THE PORTFOLIOS. Neither Portfolio is required to pay
federal income tax because each 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, gains, or losses have been distributed by the Portfolio. Each
Portfolio intends to conduct its operations so that the Fund, if it invests all
of its assets in the Portfolios, may qualify as a regulated investment company.
CONSULT YOUR TAX ADVISOR ABOUT OTHER POSSIBLE TAX CONSEQUENCES. This is a
summary of certain federal tax consequences of investing in the Fund. You should
consult your tax advisor for more information on your own tax situation,
including possible state and local tax liability.
23
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
financial performance of the Fund for the past 5 years. Certain information
reflects financial results for a single Fund share. The total returns represent
the total return for an investment in Class A Shares of the Fund, assuming
reinvestment of all dividends and distributions. The financial highlights
presented below have been audited by PricewaterhouseCoopers LLP, independent
accountants to the Fund. The audited financial statements for the Fund and the
related independent accountants' report are contained in the Fund's Annual
Report and are incorporated by reference into the Statement of Additional
Information. Copies of the Annual Report may be obtained without charge by
writing the Trust at P.O. Box 8507, Boston Massachusetts 02266 (regular mail) or
66 Brooks Drive, Braintree, Massachusetts 02184 (overnight or express mail), or
by calling (800) 464-3108.
SCHRODER ALL-ASIA FUND - CLASS A SHARES
Selected per share data and ratios for a Class A share outstanding throughout
each period: (1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
OCTOBER 31
----------------------------------------------------------
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 6.95 $ 9.34 $ 13.15 $ 12.62 $ 13.84
Investment Operations (2):
Net Investment Income (Loss) (0.05) 0.02 (0.05) (0.03) 0.02
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions 3.86 (2.57) (3.66) 0.56 (1.24)
------- ------- -------- -------- --------
Total from Investment Operations 3.81 (2.55) (3.71) 0.53 (1.22)
------- ------- -------- -------- --------
Distributions from Net Investment Income (0.01) -- (0.09) -- --
------- ------- -------- -------- --------
Tender offer costs charged to paid-in-capital in
excess of par -- -- (0.01) -- --
------- ------- -------- -------- --------
Redemption Fee -- 0.16 -- -- --
------- ------- -------- -------- --------
Net Asset Value, End of Period $ 10.75 $ 6.95 $ 9.34 $ 13.15 $ 12.62
======= ======= ======== ======== ========
Market Value, End of Period N/A N/A $ 8.50 $ 12.00 $ 11.13
======= ======= ======== ======== ========
Total investment return based on:
Market Value N/A N/A (28.62)% 7.87% (7.29)%
======= ======= ======== ======== ========
Net Asset Value (3) 54.92%(5) (25.59)%(5) (28.43)% 4.20% (8.82)%
======= ======= ======== ======== ========
Rates and Supplementary Data:
Net Assets, End of Period (in thousands) $45,215 $42,787 $150,406 $257,840 $247,490
Ratios to Average Net Assets(2):
Expenses including reimbursement/waiver of fees 1.95% 1.90% 1.78% 1.57% 1.65%
Expenses excluding reimbursement/waiver of fees 2.27% 2.13% 1.78% 1.57% 1.65%
Net Investment Income (Loss) including
reimbursement/waiver (0.49)% 0.28% (0.31)% (0.19)% 0.12%
Portfolio Turnover Rate N/A(4) N/A(4) 39% 35% 67%
</TABLE>
- ------------
(1) The Fund converted from Schroder Asian Growth Fund, Inc., a closed-end fund,
on March 20, 1998. See Note 1 to the Fund's financial statements. For
information prior to March 20, 1998, data refers to shares of Schroder Asian
Growth Fund, Inc.
(2) Includes the Fund's proportionate share of income, expenses and gains/losses
of the underlying Portfolios, Schroder Asian Growth Fund Portfolio and
Schroder Japan Portfolio, which commenced operations on March 23, 1998.
(3) Total returns would have been lower had certain expenses not been reduced
during the periods shown. See Note 3 to the Fund's financial statements.
(4) The Fund currently invests all of its investible assets in Schroder Asian
Growth Fund Portfolio and Schroder Japan Portfolio and did not have any
direct portfolio turnover for the periods after March 23, 1998. The
portfolio turnover rates of Schroder Asian Growth Fund Portfolio were 73%
and 100% and of Schroder Japan Portfolio were 16% and 36% for 1999 and 1998,
respectively. See Note 1 to the Fund's financial statements.
(5) Total return does not reflect sales charges.
24
<PAGE>
<TABLE>
<S> <C>
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL (800) 464-3108 FOR COMPLETE INFORMATION AND TO OBTAIN THE RELEVANT PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
SCHRODER SERIES TRUST II
SCHRODER ALL-ASIA FUND
SCHRODER CAPITAL FUNDS (DELAWARE) SCHRODER SERIES TRUST
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER MIDCAP VALUE FUND
SCHRODER GREATER CHINA FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
</TABLE>
<PAGE>
INVESTMENT ADVISER
Schroder Investment Management North America Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
SUBADMINISTRATOR AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
66 Brooks Drive
Braintree, Massachusetts 02184
(800) 464-3108
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
Schroder All-Asia Fund's statement of additional information (SAI) and annual
and semi-annual reports to shareholders include additional information about the
Fund. The SAI and the financial statements included in the Fund's most recent
annual report to shareholders are incorporated by reference into this
prospectus, which means they are part of this prospectus for legal purposes. The
Fund's annual report discusses the market conditions and investment strategies
that significantly affected the Fund's performance during its last fiscal year.
You may get free copies of these materials, request other information about the
Fund, or make shareholder inquiries by calling (800) 464-3108.
You may review and copy information about the Trust and the Fund, including the
SAI, at the Securities and Exchange Commission's public reference room in
Washington, D.C. You may call the Commission at (800) SEC-0330 for information
about the operation of the public reference room. You may also access reports
and other information about the Trust and the Fund on the Commission's Internet
site at WWW.SEC.GOV. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-08567.
<TABLE>
TABLE OF CONTENTS
<S> <C>
SUMMARY INFORMATION........................... 3
FEES AND EXPENSES............................. 8
OTHER INVESTMENT STRATEGIES AND RISKS......... 10
MANAGEMENT OF THE FUND........................ 14
HOW THE FUND'S SHARES ARE PRICED.............. 16
HOW TO BUY SHARES............................. 16
HOW TO SELL SHARES............................ 20
SHAREHOLDER SERVICING PLAN.................... 22
EXCHANGES..................................... 22
DIVIDENDS AND DISTRIBUTIONS................... 22
TAXES......................................... 23
FINANCIAL HIGHLIGHTS.......................... 24
</TABLE>
Schroder Series Trust II
P.O. Box 8507
Boston, MA 02266
(800) 464-3108
SAA300P
File No. 811-08567
[LOGO]
Schroder
All-Asia
Fund
Class A Shares
PROSPECTUS
March 1, 2000
Schroder Series Trust II
<PAGE>
SCHRODER SERIES TRUST II
SCHRODER ALL-ASIA FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 2000
This Statement of Additional Information (SAI) is not a prospectus and is only
authorized for distribution when accompanied or preceded by a Prospectus for
Schroder All-Asia Fund, as amended or supplemented from time to time. This SAI
relates to the Fund's Class A Shares, which are offered through a Prospectus
dated March 1, 2000. This SAI contains information which may be useful to
investors but which is not included in the Prospectus. Investors may obtain free
copies of the Prospectus by calling the Trust at 800-464-3108.
Certain disclosure has been incorporated by reference into this SAI from the
Fund's annual report. For a free copy of the annual report, please call
800-464-3108.
<PAGE>
TABLE OF CONTENTS
TRUST HISTORY 1
FUND CLASSIFICATION 1
CAPITALIZATION AND SHARE CLASSES 1
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS 1
INVESTMENT RESTRICTIONS 14
TRUSTEES AND OFFICERS 17
SCHRODER AND ITS AFFILIATES 19
INVESTMENT ADVISORY AGREEMENT 20
ADMINISTRATIVE SERVICES 22
DISTRIBUTOR 23
FUND ACCOUNTING 24
EXPENSES 24
BROKERAGE ALLOCATION AND OTHER PRACTICES 24
DETERMINATION OF NET ASSET VALUE 26
SALES AT NET ASSET VALUE 27
REDEMPTIONS IN KIND 28
TAXES 28
PRINCIPAL HOLDERS OF SECURITIES 30
THE PORTFOLIOS 32
CUSTODIAN 32
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT 33
INDEPENDENT ACCOUNTANTS 33
LEGAL COUNSEL 33
SHAREHOLDER LIABILITY 33
FINANCIAL STATEMENTS 33
APPENDIX A A-1
<PAGE>
SCHRODER SERIES TRUST II
STATEMENT OF ADDITIONAL INFORMATION
TRUST HISTORY
Schroder Series Trust II was organized as a Delaware business trust on
December 5, 1997. The Trust's Trust Instrument, which is governed by Delaware
law, is on file with the Secretary of State of the State of Delaware. Schroder
Investment Management North America Inc. ("Schroder") and its corporate
predecessors have served as investment adviser to the Trust since its inception.
FUND CLASSIFICATION
The Trust currently offers shares of beneficial interest of Schroder
All-Asia Fund (the "Fund"), which are offered pursuant to the Prospectus and
this SAI. The Fund currently seeks to achieve its investment objective by
investing substantially all of its assets in Schroder Asian Growth Fund
Portfolio and Schroder Japan Portfolio (each a "Portfolio"). The Portfolios are
separately managed, non-diversified investment companies advised by Schroder.
The Fund may withdraw some or all of its investments in the Portfolios and
invest directly in equity securities of Asian companies at any time. The Fund is
a "non-diversified" investment company under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and therefore may invest its assets
in a more limited number of issuers than may diversified investment companies.
To the extent the Fund invests a significant portion of its assets in the
securities of a particular issuer, it will be subject to an increased risk of
loss if the market value of the issuer's securities declines.
CAPITALIZATION AND SHARE CLASSES
The Trust has an unlimited number of shares of beneficial interest that
may, without shareholder approval, be divided into an unlimited number of series
of such shares, which, in turn, may be divided into an unlimited number of
classes of such shares. The Trust currently consists of one series, the Fund.
The Fund currently has one class of shares, Class A Shares. The Fund may suspend
the sale of shares at any time.
Shares entitle their holders to one vote per share, with fractional
shares voting proportionally. Shares have noncumulative voting rights.
Although the Trust is not required to hold annual meetings of its
shareholders, shareholders have the right to call a meeting to elect or
remove Trustees or to take other actions as provided in the Trust Instrument.
Shares have no preemptive or subscription rights, and are transferable.
Shares are entitled to dividends as declared by the Trustees, and if the Fund
were liquidated, each class of shares of the Fund (if there were more than
one class) would receive the net assets of the Fund attributable to the class.
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS
In addition to the principal investment strategies and the principal
risks of the Fund described in the Prospectus, the Fund may employ other
investment practices and may be subject to additional risks, which are
described below. Unless a strategy or policy described below is specifically
prohibited by the investment restrictions listed in the Prospectus, under
"Investment Restrictions" in this SAI, or by applicable law, the Fund may
engage in each of the practices described below.
CERTAIN DERIVATIVE INSTRUMENTS
<PAGE>
Derivative instruments are financial instruments whose value depends
upon, or is derived from, the value of an underlying asset, such as a
security, index or currency. As described below, to the extent permitted
under "Investment Restrictions" below and in the Prospectus, the Fund may
engage in a variety of transactions involving the use of derivative
instruments, including options and futures contracts on securities and
securities indices and options on futures contracts. These transactions may
be used by the Fund for hedging purposes or, to the extent permitted by
applicable law, to increase its current return. The Fund may also engage in
derivative transactions involving foreign currencies. See "Foreign Currency
Transactions."
OPTIONS
The Fund may purchase and sell covered put and call options on its
portfolio securities to enhance investment performance and to protect against
changes in market prices.
COVERED CALL OPTIONS. The Fund may write covered call options on its
portfolio securities to realize a greater current return through the receipt
of premiums than it would realize on its securities alone. Such option
transactions may also be used as a limited form of hedging against a decline
in the price of securities owned by the Fund.
A call option gives the holder the right to purchase, and obligates
the writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times while
obligated as a writer, either owns the underlying securities (or comparable
securities satisfying the cover requirements of the securities exchanges), or
has the right to acquire such securities through immediate conversion of
securities.
In return for the premium received when it writes a covered call
option, the Fund gives up some or all of the opportunity to profit from an
increase in the market price of the securities covering the call option
during the life of the option. The Fund retains the risk of loss should the
price of such securities decline. If the option expires unexercised, the Fund
realizes a gain equal to the premium, which may be offset by a decline in
price of the underlying security. If the option is exercised, the Fund
realizes a gain or loss equal to the difference between the Fund's cost for
the underlying security and the proceeds of the sale (exercise price minus
commissions) plus the amount of the premium.
The Fund may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. The Fund may enter
into closing purchase transactions in order to free itself to sell the
underlying security or to write another call on the security, realize a
profit on a previously written call option, or protect a security from being
called in an unexpected market rise. Any profits from a closing purchase
transaction may be offset by a decline in the value of the underlying
security. Conversely, because increases in the market price of a call option
will generally reflect increases in the market price of the underlying
security, any loss resulting from a closing purchase transaction is likely to
be offset in whole or in part by unrealized appreciation of the underlying
security owned by the Fund.
COVERED PUT OPTIONS. The Fund may write covered put options in order
to enhance its current return. Such options transactions may also be used as
a limited form of hedging against an increase in the price of securities that
the Fund plans to purchase. A put option gives the holder the right to sell,
and obligates the writer to buy, a security at the exercise price at any time
before the expiration date. A put option is "covered" if the writer
segregates cash and high-grade short-term debt obligations or other
permissible collateral equal to the price to be paid if the option is
exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, the Fund also
receives interest on the cash and debt securities maintained to
<PAGE>
cover the exercise price of the option. By writing a put option, the Fund
assumes the risk that it may be required to purchase the underlying security
for an exercise price higher than its then current market value, resulting in
a potential capital loss unless the security later appreciates in value.
The Fund may terminate a put option that it has written before it
expires by a closing purchase transaction. Any loss from this transaction may
be partially or entirely offset by the premium received on the terminated
option.
PURCHASING PUT AND CALL OPTIONS. The Fund may also purchase put options
to protect portfolio holdings against a decline in market value. This
protection lasts for the life of the put option because the Fund, as a holder
of the option, may sell the underlying security at the exercise price
regardless of any decline in its market price. In order for a put option to
be profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and transaction
costs that the Fund must pay. These costs will reduce any profit the Fund
might have realized had it sold the underlying security instead of buying the
put option.
The Fund may purchase call options to hedge against an increase in
the price of securities that the Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as
holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover
the premium and transaction costs. These costs will reduce any profit the
Fund might have realized had it bought the underlying security at the time it
purchased the call option.
The Fund may also purchase put and call options to enhance its
current return. The Fund may also buy and sell combinations of put and call
options on the same underlying security to earn additional income.
OPTIONS ON FOREIGN SECURITIES. The Fund may purchase and sell
options on foreign securities if in Schroder's opinion the investment
characteristics of such options, including the risks of investing in such
options, are consistent with the Fund's investment objectives. It is expected
that risks related to such options will not differ materially from risks
related to options on U.S. securities. However, position limits and other
rules of foreign exchanges may differ from those in the U.S. In addition,
options markets in some countries, many of which are relatively new, may be
less liquid than comparable markets in the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that Schroder will not forecast interest
rate or market movements correctly, that the Fund may be unable at times to
close out such positions, or that hedging transactions may not accomplish
their purpose because of imperfect market correlations. The successful use of
these strategies depends on the ability of Schroder to forecast market and
interest rate movements correctly.
An exchange-listed option may be closed out only on an exchange that
provides a secondary market for an option of the same series. Although the
Fund will enter into an option position only if Schroder believes that a
liquid secondary market exists, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option or at any
particular time. If no secondary market were to exist, it would be impossible
to enter into a closing transaction to close out an option position. As a
result, the Fund may be forced to continue to hold, or to purchase at a fixed
price, a security on which it has sold an option at a time when Schroder
believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other
unforeseen events might cause The Options Clearing Corporation or an exchange
to institute special trading procedures or restrictions that
<PAGE>
might restrict the Fund's use of options. The exchanges have established
limitations on the maximum number of calls and puts of each class that may be
held or written by an investor or group of investors acting in concert. It is
possible that the Fund and other clients of Schroder may be considered such a
group. These position limits may restrict the Fund's ability to purchase or
sell options on particular securities.
As described below, the Fund generally expects that its options
transactions will be conducted on recognized exchanges. In certain instances,
however, the Fund may purchase and sell options in the over-the-counter
markets. Options which are not traded on national securities exchanges may be
closed out only with the other party to the option transaction. For that
reason, it may be more difficult to close out over-the-counter options than
exchange-traded options. Options in the over-the-counter market may also
involve the risk that securities dealers participating in such transactions
would be unable to meet their obligations to the Fund. Furthermore,
over-the-counter options are not subject to the protection afforded
purchasers of exchange-traded options by The Options Clearing Corporation.
The Fund will, however, engage in over-the-counter options transactions only
when appropriate exchange-traded options transactions are unavailable and
when, in the opinion of Schroder, 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.
Government regulations, particularly the requirements for
qualification as a "regulated investment company" under the United States
Internal Revenue Code of 1986, may also restrict the Trust's use of options.
FUTURES CONTRACTS
In order to hedge against the effects of adverse market changes, the
Fund may buy and sell futures contracts on U.S. Government securities and
other debt securities in which the Fund may invest, and on indices of debt
securities. In addition, the Fund may purchase and sell stock index futures
to hedge against changes in stock market prices. The Fund may also, to the
extent permitted by applicable law, buy and sell futures contracts and
options on futures contracts to increase the Fund's current return. All such
futures and related options will, as may be required by applicable law, be
traded on exchanges that are licensed and regulated by the Commodity Futures
Trading Commission (the "CFTC"). Depending upon the change in the value of
the underlying security or index when the Fund enters into or terminates a
futures contract, the Fund may realize a gain or loss.
FUTURES ON DEBT SECURITIES AND RELATED OPTIONS. A futures contract
on a debt security is a binding contractual commitment which, if held to
maturity, will result in an obligation to make or accept delivery, during a
particular month, of securities having a standardized face value and rate of
return. By purchasing futures on debt securities -- assuming a "long"
position -- the Fund will legally obligate itself to accept the future
delivery of the underlying security and pay the agreed price. By selling
futures on debt securities -- assuming a "short" position -- it will legally
obligate itself to make the future delivery of the security against payment
of the agreed price. Open futures positions on debt securities will be valued
at the most recent settlement price, unless that price does not, in the
judgment of persons acting at the direction of the Trustees as to the
valuation of the Fund's assets, reflect the fair value of the contract, in
which case the positions will be valued by the Trustees or such persons.
Positions taken in the futures markets are not normally held to
maturity, but are instead liquidated through offsetting transactions that may
result in a profit or a loss. While futures positions taken by the Fund will
usually be liquidated in this manner, the Fund may instead make or take
delivery of the underlying securities whenever it appears economically
advantageous to the Fund to do so. A clearing
<PAGE>
corporation associated with the exchange on which futures are traded assumes
responsibility for such closing transactions and guarantees that the Fund's
sale and purchase obligations under closed-out positions will be performed at
the termination of the contract.
Hedging by use of futures on debt securities seeks to establish more
certainly than would otherwise be possible the effective rate of return on
portfolio securities. The Fund may, for example, take a "short" position in
the futures market by selling contracts for the future delivery of debt
securities held by the Fund (or securities having characteristics similar to
those held by the Fund) in order to hedge against an anticipated rise in
interest rates that would adversely affect the value of the Fund's portfolio
securities. When hedging of this character is successful, any depreciation in
the value of portfolio securities may substantially be offset by appreciation
in the value of the futures position.
On other occasions, the Fund may take a "long" position by
purchasing futures on debt securities. This would be done, for example, when
the Fund expects to purchase particular securities when it has the necessary
cash, but expects the rate of return available in the securities markets at
that time to be less favorable than rates currently available in the futures
markets. If the anticipated rise in the price of the securities should occur
(with its concomitant reduction in yield), the increased cost to the Fund of
purchasing the securities may be offset, at least to some extent, by the rise
in the value of the futures position taken in anticipation of the subsequent
securities purchase.
Successful use by the Fund of futures contracts on debt securities
is subject to Schroder's ability to predict correctly movements in the
direction of interest rates and other factors affecting markets for debt
securities. For example, if the Fund has hedged against the possibility of an
increase in interest rates which would adversely affect the market prices of
debt securities held by it and the prices of such securities increase
instead, the Fund will lose part or all of the benefit of the increased value
of its securities which it has hedged because it will have offsetting losses
in its futures positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily maintenance
margin requirements. The Fund may have to sell securities at a time when it
may be disadvantageous to do so.
The Fund may purchase and write put and call options on certain debt
futures contracts, as they become available. Such options are similar to
options on securities except that options on futures contracts give 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 period of the option. As with options on securities, the holder or
writer of an option may terminate his position by selling or purchasing an
option of the same series. There is no guarantee that such closing
transactions can be effected. The Fund will be required to deposit initial
margin and maintenance margin with respect to put and call options on futures
contracts written by it pursuant to brokers' requirements, and, in addition,
net option premiums received will be included as initial margin deposits. See
"Margin Payments" below. Compared to the purchase or sale of futures
contracts, the purchase of call or put options on futures contracts involves
less potential risk to the Fund because the maximum amount at risk is the
premium paid for the options plus transactions costs. However, there may be
circumstances when the purchase of call or put options on a futures contract
would result in a loss to the Fund when the purchase or sale of the futures
contracts would not, such as when there is no movement in the prices of debt
securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
INDEX FUTURES CONTRACTS AND OPTIONS. The Fund may invest in debt index
futures contracts and stock index futures contracts, and in related options.
A debt index futures contract is a contract to buy or sell units of a
specified debt index at a specified future date at a price agreed upon when
the contract is made. A unit is the current value of the index. A stock index
futures contract is a contract to buy or sell units of a stock index at a
specified future date at a price agreed upon when the contract is made. A
unit is
<PAGE>
the current value of the stock index.
Depending on the change in the value of the index between the time
when the Fund enters into and terminates an index futures transaction, the
Fund may realize a gain or loss. The following example illustrates generally
the manner in which index futures contracts operate. The Standard & Poor's
100 Stock Index is composed of 100 selected common stocks, most of which are
listed on the New York Stock Exchange. The S&P 100 Index assigns relative
weightings to the common stocks included in the Index, and the Index
fluctuates with changes in the market values of those common stocks. In the
case of the S&P 100 Index, contracts are to buy or sell 100 units. Thus, if
the value of the S&P 100 Index were $180, one contract would be worth $18,000
(100 units x $180). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take place. Instead,
settlement in cash must occur upon the termination of the contract, with the
settlement being the difference between the contract price and the actual
level of the stock index at the expiration of the contract. For example, if
the Fund enters into a futures contract to buy 100 units of the S&P 100 Index
at a specified future date at a contract price of $180 and the S&P 100 Index
is at $184 on that future date, the Fund will gain $400 (100 units x gain of
$4). If the Fund enters into a futures contract to sell 100 units of the
stock index at a specified future date at a contract price of $180 and the
S&P 100 Index is at $182 on that future date, the Fund will lose $200 (100
units x loss of $2).
The Fund may purchase or sell futures contracts with respect to any
securities indices. Positions in index futures may be closed out only on an
exchange or board of trade that provides a secondary market for such futures.
In order to hedge the Fund's investments successfully using futures
contracts and related options, the Fund must invest in futures contracts with
respect to indices or sub-indices the movements of which will, in Schroder's
judgment, have a significant correlation with movements in the prices of the
Fund's portfolio securities.
Options on index futures contracts are similar to options on
securities except that options on index futures contracts give the purchaser
the right, in return for the premium paid, to assume a position in an index
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 period of the option. Upon exercise of the option, the holder
would assume the underlying futures position and would receive a variation
margin payment of cash or securities approximating the increase in the value
of the holder's option position. If an option is exercised on the last
trading day prior to the expiration date of the option, the settlement will
be made entirely in cash based on the difference between the exercise price
of the option and the closing level of the index on which the futures
contract is based on the expiration date. Purchasers of options who fail to
exercise their options prior to the exercise date suffer a loss of the
premium paid.
As an alternative to purchasing and selling call and put options on
index futures contracts, the Fund that may purchase and sell index futures
contracts may purchase and sell call and put options on the underlying
indices themselves to the extent that such options are traded on national
securities exchanges. Index options are similar to options on individual
securities in that the purchaser of an index option acquires the right to buy
(in the case of a call) or sell (in the case of a put), and the writer
undertakes the obligation to sell or buy (as the case may be), units of an
index at a stated exercise price during the term of the option. Instead of
giving the right to take or make actual delivery of securities, the holder of
an index option has the right to receive a cash "exercise settlement amount".
This amount is equal to the amount by which the fixed exercise price of the
option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of the exercise,
multiplied by a fixed "index multiplier".
<PAGE>
The Fund may purchase or sell options on stock indices in order to
close out its outstanding positions in options on stock indices that it has
purchased. The Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase
of call or put options on an index involves less potential risk to the Fund
because the maximum amount at risk is the premium paid for the options plus
transactions costs. The writing of a put or call option on an index involves
risks similar to those risks relating to the purchase or sale of index
futures contracts.
The Fund may also purchase warrants, issued by banks and other
financial institutions, whose values are based on the values from time to
time of one or more securities indices.
MARGIN PAYMENTS. When the Fund purchases or sells a futures
contract, it is required to deposit with its custodian an amount of cash,
U.S. Treasury bills, or other permissible collateral equal to a small
percentage of the amount of the futures contract. This amount is known as
"initial margin". The nature of initial margin is different from that of
margin in security transactions in that it does not involve borrowing money
to finance transactions. Rather, initial margin is similar to a performance
bond or good faith deposit that is returned to the Fund upon termination of
the contract, assuming the Fund satisfies its contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in
a process known as "marking to market". These payments are called "variation
margin" and are made as the value of the underlying futures contract
fluctuates. For example, when the Fund sells a futures contract and the price
of the underlying debt security rises above the delivery price, the Fund's
position declines in value. The Fund then pays the broker a variation margin
payment equal to the difference between the delivery price of the futures
contract and the market price of the securities underlying the futures
contract. Conversely, if the price of the underlying security falls below the
delivery price of the contract, the Fund's futures position increases in
value. The broker then must make a variation margin payment equal to the
difference between the delivery price of the futures contract and the market
price of the securities underlying the futures contract.
When the Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to
the Fund, and the Fund realizes a loss or a gain. Such closing transactions
involve additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out
only on an exchange or board of trade that provides a secondary market for
such futures. Although the Fund intends to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange
or board of trade will exist for any particular contract or at any particular
time. If there is not a liquid secondary market at a particular time, it may
not be possible to close a futures position at such time and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin. However, in the event financial futures
are used to hedge portfolio securities, such securities will not generally be
sold until the financial futures can be terminated. In such circumstances, an
increase in the price of the portfolio securities, if any, may partially or
completely offset losses on the financial futures.
In addition to the risks that apply to all options transactions,
there are several special risks relating to options on futures contracts. The
ability to establish and close out positions in such options will be subject
to the development and maintenance of a liquid secondary market. It is not
certain that such a
<PAGE>
market will develop. Although the Fund generally will purchase only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market
exists for particular options, it might not be possible to effect closing
transactions in such options with the result that the Fund would have to
exercise the options in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by
the Fund of futures contracts and related options as a hedging device. One
risk arises because of the imperfect correlation between movements in the
prices of the futures contracts and options and movements in the underlying
securities or index or in the prices of the Fund's securities that are the
subject of a hedge. Schroder will, however, attempt to reduce this risk by
purchasing and selling, to the extent possible, futures contracts and related
options on securities and indices the movements of which will, in its
judgment, correlate closely with movements in the prices of the underlying
securities or index and the Fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by the Fund for hedging
purposes is also subject to Schroder's ability to predict correctly movements
in the direction of the market. It is possible that, where the Fund has
purchased puts on futures contracts to hedge its portfolio against a decline
in the market, the securities or index on which the puts are purchased may
increase in value and the value of securities held in the portfolio may
decline. If this occurred, the Fund would lose money on the puts and also
experience a decline in value in its portfolio securities. In addition, the
prices of futures, for a number of reasons, may not correlate perfectly with
movements in the underlying securities or index due to certain market
distortions. First, all participants in the futures market are subject to
margin deposit requirements. Such requirements may cause investors to close
futures contracts through offsetting transactions that could distort the
normal relationship between the underlying security or index and futures
markets. Second, the margin requirements in the futures markets are less
onerous than margin requirements in the securities markets in general, and as
a result the futures markets may attract more speculators than the securities
markets do. Increased participation by speculators in the futures markets may
also cause temporary price distortions. Due to the possibility of price
distortion, even a correct forecast of general market trends by Schroder may
still not result in a successful hedging transaction over a very short time
period.
LACK OF AVAILABILITY. Because the markets for certain options and futures
contracts and other derivative instruments in which the Fund may invest
(including markets located in foreign countries) are relatively new and still
developing and may be subject to regulatory restraints, the Fund's ability to
engage in transactions using such instruments may be limited. Suitable
derivative transactions may not be available in all circumstances and there
is no assurance that the Fund will engage in such transactions at any time or
from time to time. The Fund's ability to engage in hedging transactions may
also be limited by certain regulatory and tax considerations.
OTHER RISKS. The Fund will incur brokerage fees in connection with
its futures and options transactions. In addition, while futures contracts
and options on futures may be purchased and sold to reduce certain risks,
those transactions themselves entail certain other risks. Thus, while the
Fund may benefit from the use of futures and related options, unanticipated
changes in interest rates or stock price movements may result in a poorer
overall performance for the Fund than if it had not entered into any futures
contracts or options transactions. Moreover, in the event of an imperfect
correlation between the futures position and the portfolio position which is
intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.
FORWARD COMMITMENTS
The Fund may enter into contracts to purchase securities for a fixed
price at a future date beyond
<PAGE>
customary settlement time ("forward commitments") if the Fund holds, and
maintains until the settlement date in a segregated account, cash or liquid
securities in an amount sufficient to meet the purchase price, or if the Fund
enters into offsetting contracts for the forward sale of other securities it
owns. Forward commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of
decline in the value of the Fund's other assets. Where such purchases are
made through dealers, the Fund relies on the dealer to consummate the sale.
The dealer's failure to do so may result in the loss to the Fund of an
advantageous yield or price.
Although the Fund will generally enter into forward commitments with
the intention of acquiring securities for its portfolio or for delivery
pursuant to options contracts it has entered into, the Fund may dispose of a
commitment prior to settlement if Schroder deems it appropriate to do so. The
Fund may realize short-term profits or losses upon the sale of forward
commitments.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. A repurchase agreement is
a contract under which the Fund acquires a security for a relatively short
period (usually not more than one week) subject to the obligation of the
seller to repurchase and the Fund to resell such security at a fixed time and
price (representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust, and only with respect to obligations of the U.S. Government or its
agencies or instrumentalities or other high quality short-term debt
obligations. Repurchase agreements may also be viewed as loans made by the
Fund which are collateralized by the securities subject to repurchase.
Schroder will monitor such transactions to ensure that the value of the
underlying securities will be at least equal at all times to the total amount
of the repurchase obligation, including the interest factor. If the seller
defaults, the Fund could realize a loss on the sale of the underlying
security to the extent that the proceeds of sale including accrued interest
are less than the resale price provided in the agreement including interest.
In addition, if the seller should be involved in bankruptcy or insolvency
proceedings, the Fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the Fund is
treated as an unsecured creditor and required to return the underlying
collateral to the seller's estate.
WHEN-ISSUED SECURITIES
The Fund may from time to time purchase securities on a "when-issued"
basis. Debt securities are often issued on this basis. The price of such
securities, which may be expressed in yield terms, is fixed at the time a
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between purchase and
settlement, no payment is made by the Fund and no interest accrues to the
Fund. To the extent that assets of the Fund are held in cash pending the
settlement of a purchase of securities, the Fund would earn no income. While
the Fund may sell its right to acquire when-issued securities prior to the
settlement date, the Fund intends actually to acquire such securities unless
a sale prior to settlement appears desirable for investment reasons. At the
time the Fund makes the commitment to purchase a security on a when-issued
basis, it will record the transaction and reflect the amount due and the
value of the security in determining the Fund's net asset value. The market
value of the when-issued securities may be more or less than the purchase
price payable at the settlement date. The Fund will establish a segregated
account in which it will maintain cash and U.S. Government securities or
other liquid securities at least equal in value to commitments for
when-issued securities. Such segregated securities either will mature or, if
necessary, be sold on or before the settlement date.
<PAGE>
LOANS OF FUND PORTFOLIO SECURITIES
The Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash, or cash equivalents adjusted daily to have market value at least equal
to the current market value of the securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will
receive any interest or dividends paid on the loaned securities; and (4) the
aggregate market value of the Fund's portfolio securities loaned will not at
any time exceed one-third of the total assets of the Fund. In addition, it is
anticipated that the Fund may share with the borrower some of the income
received on the collateral for the loan or that it will be paid a premium for
the loan. Before the Fund enters into a loan, Schroder considers all relevant
facts and circumstances, including the creditworthiness of the borrower. The
risks in lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. Although
voting rights or rights to consent with respect to the loaned securities pass
to the borrower, the Fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be
voted by the Fund if the holders of such securities are asked to vote upon or
consent to matters materially affecting the investment. The Fund will not
lend portfolio securities to borrowers affiliated with the Fund.
FOREIGN SECURITIES
The Fund may invest without limit in securities principally traded in
foreign markets. The Fund may also invest without limit in Eurodollar
certificates of deposit and other certificates of deposit issued by United
States branches of foreign banks and foreign branches of United States banks.
Investments in foreign securities may involve risks and considerations
different from or in addition to investments in domestic securities. There
may be less information publicly available about a foreign company than about
a U.S. company, and foreign companies 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
companies are less liquid and at times more volatile than securities of
comparable U.S. companies. 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 delivery of securities or in the recovery of the Fund's assets
held abroad) and expenses not present in the settlement of domestic
investments. Also, because 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 and exchange control
regulations, and the Fund may incur costs in connection with conversion
between currencies.
In addition, with respect to certain foreign countries, there is a
possibility of nationalization or expropriation of assets, imposition of
currency exchange controls, adoption of foreign governmental restrictions
affecting the payment of principal and interest, imposition of withholding or
confiscatory taxes, political or financial instability, and adverse
political, diplomatic or economic developments which could affect the values
of investments in those countries. In certain countries, legal remedies
available to investors may be more limited than those available with respect
to investments in the United States or other countries and it may be more
difficult to obtain and enforce a judgment against a foreign issuer. Also,
the laws of some foreign countries may limit the Fund's ability to invest in
securities of certain issuers located in those countries. Special tax
considerations apply to foreign securities.
In determining whether to invest in securities of foreign issuers,
Schroder will consider the likely impact of foreign taxes on the net yield
available to the Fund and its shareholders. Income 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
<PAGE>
such taxes. It is impossible to determine the effective rate of foreign tax
in advance since the amount of the Fund's assets to be invested in various
countries is not known, and tax laws and their interpretations may change
from time to time and may change without advance notice. Any such taxes paid
by the Fund will reduce its net income available for distribution to
shareholders.
EMERGING MARKET SECURITIES
The Fund invests in securities of companies determined by Schroder to be
"emerging market" issuers. The risks of investing in foreign securities are
particularly high when securities of issuers based in developing or emerging
market countries are involved. Investing in emerging market countries
involves certain risks not typically associated with investing in U.S.
securities, and imposes risks greater than, or in addition to, risks of
investing in foreign, developed countries. These risks include: greater risks
of nationalization or expropriation of assets or confiscatory taxation;
currency devaluations and other currency exchange rate fluctuations; greater
social, economic and political uncertainty and instability (including the
risk of war); more substantial government involvement in the economy; less
government supervision and regulation of the securities markets and
participants in those markets; controls on foreign investment and limitations
on repatriation of invested capital and on a Fund's ability to exchange local
currencies for U.S. dollars; unavailability of currency hedging techniques in
certain emerging market countries; the fact that companies in emerging market
countries may be smaller, less seasoned and newly organized companies; the
difference in, or lack of, auditing and financial reporting standards, which
may result in unavailability of material information about issuers; the risk
that it may be more difficult to obtain and/or enforce a judgment in a court
outside the United States; and greater price volatility, substantially less
liquidity, and significantly smaller market capitalization of securities
markets. Also, any change in the leadership or politics of emerging market
countries, or the countries that exercise a significant influence over those
countries, may halt the expansion of or reverse the liberalization of foreign
investment policies now occurring and adversely affect existing investment
opportunities.
In addition, a number of emerging market countries restrict, to various
degrees, foreign investment in securities. Furthermore, high rates of
inflation and rapid fluctuations in inflation rates have had, and may
continue to have, negative effects on the economies and securities markets of
certain emerging market countries.
FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future foreign currency exchange rates and to
increase current return. The Fund may engage in both "transaction hedging"
and "position hedging".
When it engages in transaction hedging, the Fund enters into foreign
currency transactions with respect to specific receivables or payables of the
Fund generally arising in connection with the purchase or sale of its
portfolio securities. The Fund will engage in transaction hedging when it
desires to "lock in" the U.S. dollar price of a security it has agreed to
purchase or sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging, the Fund will attempt
to protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the applicable foreign currency
during the period between the date on which the security is purchased or sold
or on which the dividend or interest payment is declared, and the date on
which such payments are made or received.
The Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging. The
Fund may also enter into contracts to purchase or sell
<PAGE>
foreign currencies at a future date ("forward contracts") and purchase and
sell foreign currency futures contracts.
For transaction hedging purposes, the Fund may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures
contract gives the Fund the right to assume a short position in the futures
contract until expiration of the option. A put option on currency gives the
Fund the right to sell a currency at an exercise price until the expiration
of the option. A call option on a futures contract gives the Fund the right
to assume a long position in the futures contract until the expiration of the
option. A call option on currency gives the Fund the right to purchase a
currency at the exercise price until the expiration of the option. The Fund
will engage in over-the-counter transactions only when appropriate
exchange-traded transactions are unavailable and when, in Schroder's opinion,
the pricing mechanism and liquidity are satisfactory and the participants are
responsible parties likely to meet their contractual obligations.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in the values of
the foreign currencies in which securities held by the Fund are denominated
or are quoted in their principal trading markets or an increase in the value
of currency for securities which the Fund expects to purchase. In connection
with position hedging, the Fund may purchase put or call options on foreign
currency and foreign currency futures contracts and buy or sell forward
contracts and foreign currency futures contracts. The Fund may also purchase
or sell foreign currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of the
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is
less than the amount of foreign currency the Fund is obligated to deliver and
if a decision is made to sell the security or securities and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security or securities of the Fund if the market value of such security or
securities exceeds the amount of foreign currency the Fund is obligated to
deliver.
To offset some of the costs to the Fund of hedging against fluctuations
in currency exchange rates, the Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities that the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at
some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they tend to limit any potential gain which might result from the
increase in the value of such currency. Also, suitable foreign currency
hedging transactions may not be available in all circumstances and there can
be no assurance that the Fund will utilize hedging transactions at any time
or from time to time.
The Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, and by purchasing and selling
options on foreign currencies and on foreign currency futures contracts, and
by purchasing and selling foreign currency forward contracts.
<PAGE>
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves 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 as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable forward contract, the holder has
the unilateral right to cancel the contract at maturity by paying a specified
fee. The contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A foreign currency futures
contract is a standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at the time of
the contract. Foreign currency futures contracts traded in the United States
are designed by and traded on exchanges regulated by the CFTC, such as the
New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a
given month. Forward contracts may be in any amounts agreed upon by the
parties rather than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin or
other deposit.
At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in foreign currency futures contracts and related options may
be closed out only on an exchange or board of trade which provides a
secondary market in such contracts or options. Although the Fund will
normally purchase or sell foreign currency futures contracts and related
options only on exchanges or boards of trade where there appears to be an
active secondary market, there is no assurance that a secondary market on an
exchange or board of trade will exist for any particular contract or option
or at any particular time. In such event, it may not be possible to close a
futures or related option position and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments
of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate similarly
to options on securities, and are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Such options will be purchased or written only when
Schroder believes that a liquid secondary market exists for such options.
There can be no assurance that a liquid secondary market will exist for a
particular option at any specific time. Options on foreign currencies are
affected by all of those factors which influence exchange rates and
investments generally.
The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. 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 and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised
<PAGE>
on a timely basis. Available quotation information is generally
representative of very large transactions in the interbank market and thus
may not reflect relatively smaller transactions (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 cannot be reflected in the U.S. options markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do
not charge a fee for currency conversion, they do realize a profit based on
the difference (the "spread") between prices at which they buy and sell
various currencies. Thus, a dealer may offer to sell a foreign currency to
the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to resell that currency to the dealer.
WARRANTS TO PURCHASE SECURITIES.
The Fund may invest in warrants to purchase securities. Bonds issued with
warrants attached to purchase equity securities have many characteristics of
convertible bonds and their prices may, to some degree, reflect the
performance of the underlying stock. Bonds also may be issued with warrants
attached to purchase additional fixed income securities at the same coupon
rate. A decline in interest rates would permit the Fund to buy additional
bonds at the favorable rate or to sell the warrants at a profit. If interest
rates rise, the warrants would generally expire with no value
ZERO-COUPON SECURITIES
Zero-coupon securities in which the Fund may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity.
Zero-coupon securities usually trade at a deep discount from their face or
par value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities which make
current distributions of interest. As a result, the net asset value of shares
of the Fund investing in zero-coupon securities may fluctuate over a greater
range than shares of other mutual funds investing in securities making
current distributions of interest and having similar maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly by
the U.S. Treasury or other short-term debt obligations, and longer-term bonds
or notes and their unmatured interest coupons which have been separated by
their holder, typically a custodian bank or investment brokerage firm. A
number of securities firms and banks have stripped the interest coupons from
the underlying principal (the "corpus") of U.S. Treasury securities and
resold them in custodial receipt programs with a number of different names,
including Treasury Income Growth Receipts ("TIGRS") and Certificates of
Accrual on Treasuries ("CATS"). CATS and TIGRS are not considered U.S.
Government securities. The underlying U.S. Treasury bonds and notes
themselves are held in book-entry form at the Federal Reserve Bank or, in the
case of bearer securities (I.E., unregistered securities which are owned
ostensibly by the bearer or holder thereof), in trust on behalf of the owners
thereof.
In addition, the Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the beneficial ownership
of particular interest coupons and corpus payments on Treasury securities
through the Federal Reserve book-entry record-keeping system. The Federal
Reserve program as established by the Treasury Department is known as
"STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, the Fund will be able to have its
beneficial ownership of U.S. Treasury zero-coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying U.S. Treasury
securities.
<PAGE>
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The
principal or corpus is sold at a deep discount because the buyer receives
only the right to receive a future fixed payment on the security and does not
receive any rights to periodic cash interest payments. Once stripped or
separated, the corpus and coupons may be sold separately. Typically, the
coupons are sold separately or grouped with other coupons with like maturity
dates and sold in such bundled form. Purchasers of stripped obligations
acquire, in effect, discount obligations that are economically identical to
the zero-coupon securities issued directly by the obligor.
TEMPORARY DEFENSIVE STRATEGIES
As described in the Prospectus, Schroder may at times judge that
conditions in the securities markets make pursuing the Fund's basic
investment strategies inconsistent with the best interests of its
shareholders and may temporarily use alternate investment strategies
primarily designed to reduce fluctuations in the value of the Fund's assets.
In implementing these "defensive" strategies, the Fund would invest in
high-quality debt securities, cash, or money market instruments to any extent
Schroder considers consistent with such defensive strategies. It is
impossible to predict when, or for how long, the Fund will use these
alternate strategies. One risk of taking such temporary defensive positions
is that the Fund may not achieve its investment objective.
INVESTMENT RESTRICTIONS
The Trust has adopted the following fundamental and non-fundamental
investment restrictions for the Fund. The Fund's fundamental investment
restrictions may not be changed without the affirmative vote of a "majority
of the outstanding voting securities" of the Fund, which is defined in the
Investment Company Act to mean the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares and (2) 67% or more of the shares present
at a meeting if more than 50% of the outstanding shares are represented at
the meeting in person or by proxy. The non-fundamental investment policies
described in the Prospectus and this SAI are not fundamental and may be
changed by the Trustees without shareholder approval.
THE PORTFOLIOS IN WHICH SCHRODER ALL-ASIA FUND INVESTS HAVE SUBSTANTIALLY
THE SAME INVESTMENT RESTRICTIONS AS THE FUND. IN REVIEWING THE DESCRIPTION OF
THE FUND'S INVESTMENT RESTRICTIONS BELOW, YOU SHOULD ASSUME THAT THE
INVESTMENT RESTRICTIONS OF THE PORTFOLIOS ARE THE SAME IN ALL MATERIAL
RESPECTS AS THOSE OF THE FUND.
FUNDAMENTAL RESTRICTIONS
The Fund will not:
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
<PAGE>
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 futures contracts or
other financial instruments; or (3) any purchase, sale or
other permitted transaction in options, forward contracts,
futures contracts, options on futures 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 (4) 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)
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
<PAGE>
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)
and other financial 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 Investment Company 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 Investment Company 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 will not:
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
Securities Act of 1933, as amended ("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.
-------------------
All percentage limitations on investments (other than limitations on
borrowing and illiquid securities) will apply at the time of investment and
shall not be considered violated unless an excess or deficiency occurs or
exists immediately after and as a result of such investment.
TRUSTEES AND OFFICERS
The Trustees of the Trust are responsible for the general oversight of
the Trust's business. Subject to such policies as the Trustees may determine,
Schroder furnishes a continuing investment program for the Fund and makes
investment decisions on its behalf. Subject to the control of the Trustees,
Schroder also manages the Fund's other affairs and business.
<PAGE>
The Trustees and executive officers of the Trust and their principal
occupations during the last five years are set forth below. The mailing
address for each of the Officers and Trustees, 787 Seventh Avenue, New York,
New York, 10019.
(*) Nancy A. Curtin, Trustee and Chairman of the Trust, 42. Trustee and
Chairman, Schroder Capital Funds, Schroder Capital Funds (Delaware), and
Schroder Series Trust. Managing Director, Schroder. Director, Schroder
Investment Management North America Limited. President and Director, Schroder
Fund Advisors Inc. Formerly, Director, Barings Asset Management.
(*) David M. Salisbury, Vice Chairman and Trustee, 47. Chairman,
Schroder. Director, Schroders plc.
Peter E. Guernsey, Trustee, 78. Trustee, Schroder Capital Funds, Schroder
Capital Funds (Delaware), and Schroder Series Trust. Formerly, Senior Vice
President, Marsh & McLennan, Inc.
John I. Howell, Trustee. 83. Trustee, Schroder Capital Funds, Schroder
Capital Funds II, Schroder Capital Funds (Delaware). Director, American
International Life Assurance Company of New York. Private consultant since
1987.
William L. Means, Trustee. 60. Trustee, Schroder Capital Foods, Schroder
Capital Funds (Delaware), and Schroder Series Trust. Formerly, Chief
Investment Officer, Alaska Permanent Fund Corporation.
(*) Louise Croset, Trustee and President of the Trust. 43. Senior Vice
President and Director; Schroder.
Heather F. Crighton, Vice President of the Trust. 36. Director and Senior
Vice President, Schroder.
Donald H.M. Farquharson, Vice President of the Trust. 36. 33 Senior Vice
President, Schroder.
Fergal Cassidy, Treasurer and Chief Financial Officer of the Trust. 30.
Assistant Treasurer, Schroder Capital Funds, Schroder Capital Funds
(Delaware), an Schroder Series Trust. Vice President and Treasurer, Schroder.
Treasurer and Chief Financial Officer, Schroder Fund Advisors Inc., Schroder
Series Trust. Formerly, Senior Accountant, Concurrency Management Corp.
Margaret H. Douglas-Hamilton, Secretary of the Trust. 58. Senior Vice
President and General Counsel; Schroder's U.S. Holdings Inc. Director and
Secretary; Schroder.
Alan Mandel, Assistant Treasurer of the Trust. 42 Secretary, Treasurer,
and Chief Financial Officer of the Trust. Secretary, Schroder Capital Funds,
Schroder Capital Funds (Delaware) and Clerk, Schroder Series Trust. Treasurer
and Chief Financial Officer, Schroder Capital Funds, Schroder Capital Funds
(Delaware), and Schroder Series Trust. First Vice President, Schroder.
Formerly, Director of Mutual Fund Administration for Salomon Brothers Asset
Management, and prior thereto, Chief Financial Officer and Vice President of
Hyperion Capital Management.
Catherine A. Mazza, Vice President and Assistant Secretary of the Trust.
40. Director and
<PAGE>
Senior Vice President, Executive Vice President and Director, Schroder Fund
Advisors Inc. Vice President, Schroder Capital Funds, Schroder Capital Funds
(Delaware), and Schroder Series Trust. Formerly, Vice President, Alliance
Capital Management L.P.
Carin Muhlbaum, Assistant Secretary of the Trust. 37. Assistant
Secretary, Schroder Capital Funds, Schroder Capital Funds (Delaware) and
Assistant Clerk, Schroder Series Trust. Vice President, Schroder. Formerly,
an investment management attorney with Seward & Kissel and prior thereto,
with Gordon Altman Butowsky Weitzen Shalov & Wein.
Alexandra Poe, Assistant Secretary of the Trust. 39. First Vice
President, Schroder. Senior Vice President, Secretary and General Counsel,
Schroder Fund Advisors, Inc. President, Schroder Capital Funds, Schroder
Capital Trust (Delaware) and Schroder Series Trust. Formerly, Attorney,
Gordon , Altman, Butowsky, Weitzen, Shalov & Wein and Vice President and
Counsel, Citibank, N.A
Nicholas Rossi, Assistant Secretary of the Trust. 36. Assistant
Secretary, Schroder Capital Funds and Schroder Capital Funds (Delaware),
Assistant Clerk, Schroder Series Trust. Associate, Schroder. Assistant Vice
President, Schroder Fund Advisors Inc. Formerly, Mutual Fund Specialist,
Wilkie Farr & Gallagher and Fund Administrator, Furman Selz LLC.
(*) Interested Trustee of the Trust within the meaning of the Investment
Company Act.
Except as otherwise noted, the principal occupations of the Trustees and
officers for the last five years have been with the employers shown above,
although in some cases they have held different positions with such employers
or their affiliates.
TRUSTEE COMPENSATION
The table below sets forth information regarding compensation paid to
Trustees who are not "interested persons" (as defined in the Investment
Company Act) of the Trust, Schroder, or Schroder Fund Advisors Inc.
("Disinterested Trustees") for the fiscal year ended October 31, 1999 by the
Trust and other funds in the Schroder "Fund Complex" (as defined below).
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3)
NAME OF TOTAL COMPENSATION
TRUSTEE AGGREGATE FROM TRUST AND
COMPENSATION FUND COMPLEX PAID TO
FROM TRUST TRUSTEES*
------- ----------- --------------------
<S> <C> <C>
Peter E. Guernsey $9,500 $26,500
John I. Howell $9,500 $29,000
William L. Means $9,500 $26,500
</TABLE>
* The Total Compensation listed in column (3) for each Trustee
includes compensation for services as a Trustee of the Trust, Schroder
Capital Funds ("SCF"), Schroder Capital Funds II ("SCF II"), Schroder
Capital Funds (Delaware) ("SCFD") and
<PAGE>
Schroder Series Trust II ("SST"). The Trust, SCF, SCF II, SCFD, and SST
are considered part of the same "Fund Complex" for these purposes. SCF II
ceased operations and was substantially liquidated in July, 1999.
As of February 23, 2000, the Trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund.
The Trust's Trust Instrument provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with
the Trust, except if it is determined in the manner specified in the Trust
Instrument that they have not acted in good faith in the reasonable belief
that their actions were in the best interests of the Trust or that such
indemnification would relieve any officer or Trustee of any liability to the
Trust or its shareholders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties. The Trust, at its
expense, provides liability insurance for the benefit of its Trustees and
officers.
SCHRODER AND ITS AFFILIATES
Schroder (together with its predecessors) has served as the investment
adviser for the Fund and the Portfolios since their inception. Schroder is a
wholly-owned subsidiary of Schroder U.S. Holdings Inc., which engages through
its subsidiary firms in the investment banking, asset management, and
securities businesses. Affiliates of Schroder U.S. Holdings Inc. (or their
predecessors) have been investment managers since 1927. Schroder U.S.
Holdings Inc. is an indirect, wholly-owned U.S. subsidiary of Schroders plc,
a publicly owned holding company organized under the laws of England.
Schroders plc and its affiliates currently engage in worldwide investment
banking and asset management businesses, and as of June 30, 1999, had under
management assets of approximately $208 billion. Schroder's address is 787
Seventh Avenue, New York, New York 10019.
In January 2000, Schroders plc agreed to sell its worldwide investment
banking business to Salomon Smith Barney. The transaction, which is expected
to be completed by May 2000, is subject to regulatory approvals and
satisfaction of closing conditions. Schroders plc will retain its asset
management businesses.
Schroder Fund Advisors Inc., the Trust's principal underwriter, is a
wholly-owned subsidiary of Schroder Investment Management North America, Inc.
INVESTMENT ADVISORY AGREEMENT
Under an Investment Advisory Agreement between the Trust and Schroder
(the "Advisory Agreement"), Schroder, at its expense, provides the Fund with
investment advisory services and advises and assists the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of its Trustees regarding the conduct of business of the Trust and
the Fund. As long as the Fund invests all of its assets in the Portfolios
(or another investment company), Schroder is not entitled to receive any
advisory fees pursuant to the Advisory Agreement, except that Schroder is
entitled to a monthly fee for asset allocation services at an annual rate of
0.20% of the Fund's average daily net assets invested in the Portfolios. In
the event that the Fund did not invest all of its assets in the Portfolios or
another investment company, Schroder would be entitled to receive advisory
fees monthly at the annual rate of 0.90% of the Fund's average daily net
assets managed by Schroder directly at the Fund level.
Under the Advisory Agreement, Schroder is required to regularly provide
the Fund with
<PAGE>
investment research, advice, and supervision and continuously furnishes
investment programs consistent with the investment objectives and policies of
the Fund, and determines what securities shall be purchased, what securities
shall be held or sold, and what portion of the Fund's assets shall be held
uninvested, subject always to the provisions of the Trust's Trust Instrument
and By-laws, and of the Investment Company Act, and to the Fund's investment
objectives, policies, and restrictions, and subject further to such policies
and instructions as the Trustees may from time to time establish.
Schroder makes available to the Trust, without additional expense to the
Trust, the services of such of its directors, officers, and employees as may
duly be elected Trustees or officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. Schroder
pays the compensation and expenses of officers and executive employees of the
Trust. Schroder also provides investment advisory research and statistical
facilities and all clerical services relating to such research, statistical,
and investment work. Schroder pays the Trust's office rent.
Under the Advisory Agreement, the Trust is responsible for all its other
expenses, including clerical salaries not related to investment activities;
fees and expenses incurred in connection with membership in investment
company organizations; brokers' commissions; payment for portfolio pricing
services to a pricing agent, if any; legal expenses; auditing expenses;
accounting expenses; taxes and governmental fees; fees and expenses of the
transfer agent and investor servicing agent of the Trust; the cost of
preparing share certificates or any other expenses, including clerical
expenses, incurred in connection with the issue, sale, underwriting,
redemption, or repurchase of shares; the expenses of and fees for registering
or qualifying securities for sale; the fees and expenses of the Trustees of
the Trust who are not affiliated with Schroder; the cost of preparing and
distributing reports and notices to shareholders; public and investor
relations expenses; and fees and disbursements of custodians of the Fund's
assets. The Trust is also responsible for its expenses incurred in connection
with litigation, proceedings, and claims and the legal obligation it may have
to indemnify its officers and Trustees with respect thereto.
Schroder's compensation under the Advisory Agreement may be reduced
in any year if the Fund's expenses exceed the limits on investment company
expenses imposed by any statute or regulatory authority of any jurisdiction
in which shares of the Fund are qualified for offer or sale.
The Advisory Agreement provides that Schroder shall not be subject
to any liability for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with rendering services to the Trust in
the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of its duties.
The Advisory Agreement may be terminated without penalty by vote of
the Trustees, by the shareholders of the Fund, or by Schroder on 60 days'
written notice. The Advisory Agreement also terminates without payment of any
penalty in the event of its assignment. In addition, the Advisory Agreement
may be amended only by a vote of the shareholders of the Fund, and the
Advisory Agreement provides that it will continue in effect from year to year
only so long as such continuance is approved at least annually with respect
to the Fund by vote of either the Trustees or the shareholders of the Fund,
and, in either case, by a majority of the Trustees who are not "interested
persons" of Schroder. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the outstanding voting
securities" as defined in the Investment Company Act .
THE PORTFOLIOS
The Fund currently invests all of its assets in the Portfolios,
which together have substantially the same investment objective and
substantially the same investment policies as the Fund. The Fund may withdraw
its investment from either Portfolio or both Portfolios at any time if the
Trust's Board of Trustees determines that it
<PAGE>
is in the best interests of the Fund and its shareholders to do so. In that
event, under the Advisory Agreement, the Fund would pay Schroder 0.90% of the
Fund's average daily net assets managed by Schroder directly at the Fund
level.
Schroder is the investment advisor to the Portfolios pursuant to an
investment advisory agreement (the "Portfolio Advisory Agreement") between
Schroder and Schroder Capital Funds, on behalf of the Portfolios. The
Portfolio Advisory Agreement provides that Schroder is entitled to receive
monthly advisory fees at the annual rates of 0.70% and 0.55%, respectively,
of Schroder Asian Growth Fund Portfolio and Schroder Japan Portfolio. The
Portfolio Advisory Agreement is the same in all other material respects as the
Investment Advisory Agreement between the Trust on behalf of the Fund and
Schroder. The Fund bears a proportionate part of the management fees paid by
each Portfolio (based on the percentage of each Portfolio's assets
attributable to the Fund).
RECENT INVESTMENT ADVISORY FEES. of the total investment advisory fees
paid by the Portfolios to Schroders, the portion borne indirectly by the Fund
together with the asset allocation fees paid directly to Schroder by the Fund
during the three most recent fiscal years is set forth in the following
table. For periods prior to the Fund's March 20, 1998 conversion from a
closed-end fund, the table lists the fees paid by the Fund's predecessor. The
fees listed in the table reflect reductions pursuant to expense limitations
in effect during such periods.
<TABLE>
<CAPTION>
Investment Advisory Fees Paid Investment Advisory Fees Investment Advisory Fees
for Fiscal Year Ended 10/31/99 Paid for Fiscal Year Ended Paid for Fiscal Year Ended
10/31/98* 10/31/97 (closed-end fund)
------------------------------- ---------------------------- ------------------------------
<S> <C> <C>
$235,723 $746,544 $2,301,847
</TABLE>
*Prior to March 20, 1998, the Fund's predecessor had a similar investment
advisory agreement with Schroder which provided for a monthly fee at the
annual rate of (1) 1.00% of the predecessor's average weekly net assets up to
and including $300 million, and (2) 0.85% of the predecessor's average weekly
net assets in excess of $300 million. The Fund's predecessor paid or accrued
fees to Schroder of $536,538 for the period November 1, 1997 to March 20,
1998, on which date the Fund was converted from closed-end to open end status.
FEE WAIVERS
Schroder voluntarily waived its fees in the following amounts during the
three most recent fiscal years pursuant to voluntary expense limitations
and/or waivers in effect during such periods. The portion of the amounts
waived with respect to the investment advisory fees indirectly borne by the
Fund (or paid by the Fund's predecessor prior to March 20, 1998) are as
follows:
<TABLE>
<CAPTION>
Fees Waived During Fees Waived During Fees Waived During
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended
10/31/99 10/31/98 10/31/97
-------------------------- ------------------------- ------------------------
<S> <C> <C>
$133,531 $107,720 $
</TABLE>
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Fund Advisors Inc., under which Schroder Fund
Advisors Inc. provides management and administrative
<PAGE>
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 its investment adviser, transfer agent, custodian,
independent accountants, legal counsel and others. Schroder Fund Advisors
Inc. is a wholly owned subsidiary of Schroder and is a registered
broker-dealer organized to act as administrator and distributor of mutual
funds.
For providing administrative services Schroder Fund Advisors Inc. is
entitled to receive a monthly fee 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 Trustees upon 60
days' written notice to Schroder Fund Advisors Inc. or by Schroder Fund
Advisors Inc. upon 60 days' written notice to the Trust.
In addition, the Trust has entered into a Sub-Administration Agreement
with State Street Bank and Trust Company ("State Street") and Schroder Fund
Advisors, Inc. Under the Agreement, State Street is entitled to receive an
annual fee from the Fund of $25,000 payable monthly. Prior to June 1, 1999,
the Fund paid sub-administration fees to Forum Administrative Services, LLC
("FadS") at the annual rate, payable monthly, of 0.05% of the Fund's average
daily net assets subject to an annual minimum charge of $25,000.
Effective June 1, 1999, each Portfolio entered into a subadministration
agreement with State Street. Under that agreement, the Portfolios, together
with all mutual funds managed by Schroder and certain related entities, pay
fees to State Street based on the combined average daily net assets of all
the funds in the Schroder complex, according to the following annual rates:
0.06% on the first $1.7 billion of such assets; 0.04% of the next $1.7
billion of such assets; and 0.02% of such assets in excess of $3.4 billion,
subject to certain minimum charges. Each Portfolio pays its pro rata portion
of such expenses. Prior to June 1, 1999, Schroder Fund Advisors Inc. and FAdS
provided similar services to each Portfolio, for which each was entitled to a
monthly fee at the annual rate of 0.05% of each Portfolio's average daily net
assets subject to an annual minimum charge of $25,000.
Prior to March 20, 1998, the Fund's predecessor retained Princeton
Administrators, L.P. ("Princeton") as administrator. Pursuant to its
administration agreement with the Fund's predecessor, Princeton received a
monthly fee equal to the greater of (a) $150,000 per annum or (b) an annual
rate of (1) 0.25% of the predecessor's average weekly net assets up to and
including $300 million, and (2) 0.22% of the predecessor's average weekly net
assets in excess of $300 million. The Fund's predecessor paid or accrued fees
to Princeton of $134,135 for the period November 1, 1997 through March 20,
1998.
During the three most recent fiscal years, the Fund (or the Fund's
predecessor) paid the following fees to Schroder Fund Advisors Inc.,
Princeton and FAdS pursuant to the administration and subadministration
agreement (in effect during such periods). The fees listed in the following
table reflect reductions pursuant to fee waivers and expense limitations in
effect during such periods.
<TABLE>
<CAPTION>
Administrative Fees Paid for Administrative Fees Paid for Administrative Fees Paid
Fiscal Year Ended 10/31/99 Fiscal Year Ended 10/31/98* for Fiscal Year Ended
10/31/97 (closed-end fund)
------------------------------ ------------------------------- --------------------------
<S> <C> <C>
Schroder Fund Advisors, Princeton $134,135 Princeton $575,461
Inc. $20,005
Schroder Fund Advisors
FadS $12,388 Inc. $19,058
FAdS $37,564
</TABLE>
<PAGE>
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Trust, Schroder Fund
Advisors Inc. (the "Distributor"), 787 Seventh Avenue, New York, New York
10019, serves as the distributor for the Trust's continually offered shares.
The Distributor pays all of its own expenses in performing its obligations
under the Distribution Agreement. The Distributor is not obligated to sell
any specific amount of shares of the Fund. Please see "Schroder and its
Affiliates " for ownership information regarding the Distributor.
SHAREHOLDER SERVICING PLAN FOR CLASS A SHARES. The Fund has also adopted
a Shareholder Servicing Plan (the "Service Plan") for its Class A Shares.
Under the Service Plan, the Fund pays fees to the Distributor at an annual
rate of up to 0.25% of the average daily net assets of the Fund attributable
to its Class A Shares. The Distributor may enter into shareholder service
agreements with Service Organizations pursuant to which the Service
Organizations provide administrative support services to their customers who
are Fund shareholders.
In return for providing these support services, a Service Organization
may receive payments from the Distributor at a rate not exceeding 0.25% of
the average daily net assets of the Class A Shares of the Fund for which the
Service Organization is the Service Organization of record. These
administrative services may include, but are not limited to, the following
functions: establishing and maintaining accounts and records relating to
clients of the Service Organization; answering shareholder inquiries
regarding the manner in which purchases, exchanges, and redemptions of Class
A Shares of the Trust may be effected and other matters pertaining to the
Trust's services; providing necessary personnel and facilities to establish
and maintain shareholder accounts and records; assisting shareholders in
arranging for processing purchase, exchange, and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request. Some Service Organizations may impose additional
conditions or fees, such as requiring clients to invest more than the minimum
amounts required by the Trust for initial or subsequent investments or
charging a direct fee for services. Such fees would be in addition to any
amounts which might be paid to the Service Organization by the Distributor.
Please contact your Service Organization for details.
The following table shows the aggregate amounts paid by the Fund under
the Service Plan during the three most recent fiscal years. All of such
amounts were, in turn, repaid by the Distributor to Service Organizations.
<TABLE>
<CAPTION>
Fees Paid Pursuant to Service Fees Paid Pursuant to Fees Paid Pursuant to
Plan During Fiscal Year Ended Service Plan During Service Plan During Fiscal
10/31/99 Fiscal Year Ended 10/31/98 Year Ended 10/31/97
(closed-end fund)
-------------------------------- --------------------------- --------------------------
<S> <C> <C>
$92,757 $50,048 $0
</TABLE>
FUND ACCOUNTING
Prior to June 1, 1999, the Fund paid fees for account services provided
by Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of Fads.
The tables below show the amount of fees paid after waivers and/or expense
limitations by the Fund to Forum Accounting during the three most recent
<PAGE>
fiscal years (or such shorter time the Fund has been operational).
<TABLE>
<CAPTION>
Accounting Fees Paid During Fiscal Accounting Fees Paid During Accounting Fees Paid During
Year Ended 10/31/99 Fiscal Year Ended 10/31/98 Fiscal Year Ended 10/31/97
- ------------------------------------- ----------------------------------- ---------------------------
<S> <C> <C>
$7,021 $59,242 $0
</TABLE>
EXPENSES
The Fund bears all costs of its operations other than expenses
specifically assumed by Schroder, and Schroder Fund Advisors Inc. 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
Schroder and its affiliates. From time to time, Schroder and Schroder Fund
Advisors Inc. may waive voluntarily all or a portion of its fees.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Schroder may place portfolio transactions with broker-dealers which
furnish, without cost, certain research, statistical, and quotation services
of value to Schroder and its affiliates in advising the Trust and other
clients, provided that it shall always seek best price and execution with
respect to transactions. Certain investments may be appropriate for the Trust
and for other clients advised by Schroder. Investment decisions for the Trust
and other clients are made with a view to achieving their respective
investment objectives and after consideration of such factors as their
current holdings, availability of cash for investment, and the size of their
investments generally. Frequently, a particular security may be bought or
sold for only one client or in different amounts and at different times for
more than one but less than all clients. Likewise, a particular security may
be bought for one or more clients when one or more other clients are selling
the security. In addition, purchases or sales of the same security may be
made for two or more clients of Schroder on the same day. In such event, such
transactions will be allocated among the clients in a manner believed by
Schroder to be equitable to each. In some cases, this procedure could have an
adverse effect on the price or amount of the securities purchased or sold by
the Trust. Purchase and sale orders for the Trust may be combined with those
of other clients of Schroder in the interest of achieving the most favorable
net results for the Trust.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock exchanges and
other agency transactions involve the payment by the Trust of negotiated
brokerage commissions. Such commissions vary among different brokers. Also, a
particular broker may charge different commissions according to such factors
as the difficulty and size of the transaction. Transactions in foreign
securities often involve the payment of fixed brokerage commissions, which
are generally higher than those in the United States, and therefore certain
portfolio transaction costs may be higher than the costs for similar
transactions executed on U.S. securities exchanges. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the price paid by the Trust usually includes an undisclosed
dealer commission or mark-up. In underwritten offerings, the price paid by
the Trust includes a disclosed, fixed commission or discount retained by the
underwriter or dealer.
Schroder places all orders for the purchase and sale of portfolio
securities and buys and sells
<PAGE>
securities through a substantial number of brokers and dealers. In so doing,
it uses its best efforts to obtain the best price and execution available. In
seeking the best price and execution, Schroder considers all factors it deems
relevant, including price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction (taking into account market prices and trends), the reputation,
experience, and financial stability of the broker-dealer involved, and the
quality of service rendered by the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive research, statistical, and quotation services from
broker-dealers that execute portfolio transactions for the clients of such
advisers. Consistent with this practice, Schroder receives research,
statistical, and quotation services from many broker-dealers with which it
places the Trust's portfolio transactions. These services, which in some
cases may also be purchased for cash, include such matters 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 Schroder and its
affiliates in advising various of their clients (including the Trust 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 the Portfolios is not reduced because Schroder and its
affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, (the "Securities Exchange Act"), and by the Advisory Agreements and
the Portfolio Advisory Agreements, Schroder may cause the Fund or the
Portfolios to pay a broker that provides brokerage and research services to
Schroder an amount of disclosed commission for effecting a securities
transaction for the Fund or the Portfolios in excess of the commission which
another broker would have charged for effecting that transaction. Schroder's
authority to cause the Fund or the Portfolios to pay any such greater
commissions is also subject to such policies as the Trustees (or the Trustees
of Schroder Capital Funds, in the case of the Portfolio) may adopt from time
to time.
To the extent permitted by law, the Fund or the Portfolios may engage in
brokerage transactions with Schroder & Co. Inc. ("Schroder & Co."), which is
an affiliate of Schroder, or with unaffiliated brokers who trade or clear
through Schroder & Co., or Lewco Securities Corp. ("Lewco") , or other
affiliate of Schroder, to effect securities transactions on the New York
Stock Exchange only, or Schroder Securities Limited and its affiliates
(collectively, "Schroder Securities"), affiliates of Schroder, to effect
securities transactions on various foreign securities exchanges on which
Schroder Securities has trading privileges. Consistent with regulations under
the Investment Company Act, the Fund and the Portfolios have adopted
procedures which are reasonably designed to provide that any commissions or
other remuneration the Fund or the Portfolios pay to any affiliated broker do
not exceed the usual and customary broker's commission. The procedures
require periodic review of these transactions by the Trustees. The procedures
require periodic review of these transactions by the Trustees. In addition,
the Funds will adhere to the rule, under the Securities Exchange Act,
governing floor trading. This rule permits the Fund and the Portfolios to
effect, but not execute, exchange listed securities transactions with an
affiliated broker that pays a portion of the brokerage commissions it
receives from the Fund or a Portfolios to the brokers executing the
transactions. Also, due to securities law limitations, the Fund or the
Portfolios may be required to limit purchases of securities in a public
offering if Schroder & Co., Lewco, or Schroder Securities or one of their
affiliates is a member of the syndicate for that offering.
Neither the Fund nor either Portfolio has any understanding or
arrangement to direct any specific portion of its brokerage to Schroder &
Co., Lewco, or Schroder Securities, and none will direct brokerage to
Schroder & Co., Lewco, or Schroder Securities in recognition of research
services.
The following table shows the aggregate brokerage commissions paid for
the three most recent
<PAGE>
fiscal years with respect to the Fund. The amounts listed represent aggregate
brokerage commissions paid by the Portfolios.
<TABLE>
<CAPTION>
Brokerage Commissions Paid Brokerage Commissions Paid Brokerage Commissions
During Fiscal Year Ended During Fiscal Year Ended Paid During Fiscal Year
10/31/99 10/31/98 Ended 10/31/97
----------------------------- ------------------------------ --------------------------
<S> <C> <C>
N/A $356,032 N/A
</TABLE>
For the fiscal year ended October 31, 1999, the Fund paid $[ ] in the
total brokerage commissions to brokers and dealers in transactions in the
amount of $[ ] identified for execution on the basis of research and other
services provided to the Fund. (This amount represents aggregate brokerage
commissions paid by the Portfolios. The amount represented approximately ___%
of the total brokerage commissions paid by the Fund and the Portfolios.)
The Fund and the Portfolios paid no brokerage commissions to Schroder &
Co., Lewco, or Schroder Securities in the three most recent fiscal years.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of Class A shares of the Fund is determined
daily as of the close of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern Time) on each day the Exchange is open for trading..
The Trustees have established procedures for the valuation of a Fund's
securities, which are summarized as follows:
Equities listed or traded on a domestic or foreign stock exchange
(including the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ")) for which last sales information is regularly
reported, are valued at their last reported sales prices on such exchange
on that day. In the absence of sales that day, such securities are valued
at the mean of the closing bid and ask prices (the "mid-market" price) or,
if none, the last sales price on the preceding trading day. (Where the
securities are traded on more than one exchange, they are valued on the
exchange on which the security is primarily traded, Securities purchased in
an initial public offering and which have not commenced trading in a
secondary market are valued at cost. Unlisted securities for which
over-the-counter market quotations are readily available generally are
valued at the most recently reported mid-market prices. Fixed income
securities with remaining maturities of more than 60 days are valued on the
basis of valuations provided by pricing services that determine valuations
for normal institutional size trading units of fixed income securities, or
through obtaining independent quotes from market makers. Short-term fixed
income securities with remaining maturities of 60 days or less are valued
at amortized cost, which approximates market value, unless Schroder
believes another valuation is more appropriate. Securities for which
current market quotations are not readily available are valued at fair value
pursuant to procedures established by the Trustees.
All assets and liabilities of the Fund denominated in foreign currencies
are translated into U.S. dollars based on the mid-market price of such
currencies against the U.S. dollar at the time when last quoted.
Long-term corporate bonds and notes, certain preferred stocks, tax-exempt
securities, or certain foreign securities may be stated at fair value on the
basis of valuations furnished by pricing services, which
<PAGE>
determine valuations for normal, institutional-size trading unites of such
securities using methods based on market transactions for comparable
securities.
If any securities held by a Fund are restricted as to resale, Schroder
will obtain a valuation based on the current bid for the restricted security
from one or more independent dealers or other parties reasonably familiar
with the facts and circumstances of the security. If Schroder is unable to
obtain a fair valuation for a restricted security from an independent dealer
or other independent party, a pricing committee (comprised of certain
directors and officers at Schroder) shall determine the bid value of such
security. The valuation procedures applied in any specific instance are
likely to vary from case to case. However, consideration is generally given
to the financial position of the issuer and other fundamental analytical data
relating to the investment and to the nature of the restrictions on
disposition of the securities (including any registration expenses that might
be borne by the Trust in connection with such disposition). In addition,
specific factors are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of the same class
(both at the time of purchase and at the time of valuation), the size of the
holding, the prices of any recent transactions or offers with respect to such
securities, and any available analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of these securities used in determining
the net asset value of the Trust's shares are computed as of such times.
Also, because of the amount of time required to collect and process trading
information as to large numbers of securities issues, the values of certain
securities (such as convertible bonds and U.S. Government securities) are
determined based on market quotations collected earlier in the day at the
latest practicable time prior to the close of the Exchange. Occasionally,
events affecting the value of such securities may occur between such times
and the close of the Exchange which will not be reflected in the computation
of the Trust's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value, in the manner described above.
The proceeds received by the Fund for each issue or sale of its shares,
and all income, earnings, profits, and proceeds thereof, subject only to the
rights of creditors, will be specifically allocated to the Fund, and
constitute the underlying assets of the Fund. The underlying assets of the
Fund will be segregated on the Trust's books of account, and will be charged
with the liabilities in respect of the Fund and with a share of the general
liabilities of the Trust. The Fund's assets will be further allocated among
its constituent classes of shares on the Trust's books of account.
SALES AT NET ASSET VALUE
As noted in the Prospectus, certain investors may purchase Class A Shares
at net asset value without imposition of sales charges. The following classes
of investors are currently qualified to do so: (1) trustees or other
fiduciaries purchasing shares for employee benefit plans which are sponsored
by organizations with at least 100 employees; (2) current or retired
Trustees, directors, and officers of the investment companies for which
Schroder serves as investment adviser; employees or retired employees of
Schroder or its affiliates; the spouses, children, siblings, and parents of
the persons listed in this clause (2) 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 Fund Advisors Inc., and the spouses, children,
siblings, and parents of such persons; and full-time employees of financial
institutions that directly, or indirectly through their affiliates, have
entered into dealer agreements with Schroder Fund Advisors Inc. (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 Fund
Advisors Inc.) 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)
<PAGE>
registered investment advisers 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 an agreement with Schroder Fund Advisors Inc.; (7) clients of
administrators of tax-qualified employee benefit plans which have entered
into agreements with Schroder Fund Advisors Inc.; and (8) retirement plan
participants who borrow from their retirement accounts by redeeming shares of
the Fund and subsequently repay such loans by purchasing Fund shares.
REDEMPTIONS IN KIND
The Trust has agreed to redeem shares of the Fund solely in cash up to
the lesser of $250,000 or 1% of the Fund's net assets during any 90-day
period for any one shareholder. In consideration of the best interests of the
remaining shareholders, the Trust may pay any redemption proceeds exceeding
this amount in whole or in part by a distribution in kind of securities held
by the Fund in lieu of cash. The Trust does not expect to redeem shares in
kind under normal circumstances. If your shares are redeemed in kind, you
should expect to incur transaction costs upon the disposition of the
securities received in the distribution.
TAXES
The Fund intends to qualify each year and elect to be taxed as a
regulated investment company under Subchapter M of the United States Internal
Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, the Fund will not be subject to federal income
tax on any of its net investment income or net realized capital gains that
are distributed to shareholders.
In order to qualify as a "regulated investment company," the Fund must,
among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from
the sale or other dispositions of stock, securities, or foreign currencies,
and other income (including gains from options, futures, or forward
contracts) derived with respect to its business of investing in such stock,
securities, or currencies, and (b) diversify its holdings so that, at the
close of each quarter of its taxable year, (i) at least 50% of the value of
its total assets consists of cash, cash items, U.S. Government securities,
and other securities limited generally with respect to any one issuer to not
more than 5% of the total assets of the Fund and not more than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of its assets is invested in the securities of any issuer (other
than U.S. Government securities).
If the Fund fails to distribute in a calendar year substantially all of
its ordinary income for such year and substantially all of its capital gain
net income for the one-year period ending October 31 (or later if the Fund is
permitted so to elect and so elects), plus any retained amount from the prior
year, that Fund will be subject to a 4% excise tax on the undistributed
amounts. A dividend paid to shareholders by the Fund in January of a year
generally is deemed to have been paid by the Fund on December 31 of the
preceding year, if the dividend was declared and payable to shareholders of
record on a date in October, November, or December of that preceding year.
The Fund intends generally to make distributions sufficient to avoid
imposition of the 4% excise tax. In order to receive the favorable tax
treatment accorded regulated investment companies and their shareholders,
moreover, the Fund must in general distribute with respect to each taxable
year at least 90% of the sum of its taxable net investment income, its net
tax-exempt income, and, the excess, if any, of net short-term capital gains
over net long-term capital losses for such year.
<PAGE>
The Fund's distributions will be taxable to you as ordinary income to the
extent derived from the Fund's investment income and net short-term gains
(that is, net gains from capital assets held for no more than one year).
Distributions designated by the Fund as deriving from net gains on capital
assets held for more than one year will be taxable to you as long-term
capital gains (generally subject to a 20% tax rate), regardless of how long
you have held the shares. Distributions will be taxable to you as described
above whether received in cash or in shares through the reinvestment of
distributions. Early in each year the Trust will notify each shareholder of
the amount and tax status of distributions paid to the shareholder by the
Fund for the preceding year. Dividends and distributions on the Fund's shares
are generally subject to federal income tax as described herein to the extent
they do not exceed the Fund's realized income and gains, even though such
dividends and distributions may economically represent a return of a
particular shareholder's investment. Such distributions are likely to occur
in respect of shares purchased at a time when the Fund's net asset value
reflects gains that are either unrealized, or realized but not distributed.
Such realized gains may be required to be distributed even when the Fund's
net asset value also reflects unrealized losses.
Upon the disposition of shares of the Fund (whether by sale, exchange, or
redemption), a shareholder will realize a gain or loss. Such gain or loss
will be capital gain or loss if the shares are capital assets in the
shareholder's hands, and will be long-term or short-term generally depending
upon the shareholder's holding period for the shares. Long-term capital gains
will generally be taxed at a federal income tax rate of 20%. Any loss
realized by a shareholder on a disposition of shares held by the shareholder
for six months or less will be treated as a long-term capital loss to the
extent of any distributions of capital gain dividends received by the
shareholder with respect to such shares. In general, any loss realized upon a
taxable disposition of shares will be treated as long-term capital loss if
the shares have been held for more than one year, and otherwise as short-term
capital loss. In addition, any loss realized on a sale or exchange of shares
will be disallowed to the extent that you replace the disposed of shares with
shares of the same or another fund within a period of 61 days beginning 30
days before and ending 30 days after the date of disposition.
With respect to investment income and gains received by the Fund from
sources outside the United States, such income and gains may be subject to
foreign taxes which are withheld at the source. The effective rate of foreign
taxes in which the Fund will be subject depends on the specific countries in
which its assets will be invested and the extent of the assets invested in
each such country and, therefore, cannot be determined in advance. In
addition, the Fund's investments in foreign securities or foreign currencies
may increase or accelerate the Fund's recognition of ordinary income and may
affect the timing or amount of the Fund's distributions.
If the Fund engages in hedging transactions, including hedging
transactions in options, futures contracts, and straddles, or other similar
transactions, it will be subject to special tax rules (including constructive
sale, mark-to-market, straddle, wash sale, and short sale rules), the effect
of which may be to accelerate income to the Fund, defer losses to the Fund,
cause adjustments in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These rules could
therefore affect the amount, timing and character of distributions to
shareholders. The Fund will endeavor to make any available elections
pertaining to such transactions in a manner believed to be in the best
interests of the Fund
Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which the Fund has invested and
their face value ("original issue discount") is considered to be income to
the Fund each year, even though the Fund will not receive cash interest
payments from these securities. This original issue discount (imputed income)
will comprise a part of the net investment income of the Fund which must be
distributed to shareholders in order to maintain the qualification of the
Fund as a regulated investment company and to avoid federal income tax at the
level of
<PAGE>
the Fund. The Fund may be required to withhold 31% of certain of your
dividends if you have not provided the Fund with your correct taxpayer
identification number (normally your Social Security number), or if you are
otherwise subject to back-up withholding.
This discussion of the federal income tax and state tax treatment of the
Trust and its shareholders is based on the law as of the date of this SAI.
The foregoing is primarily a summary of certain federal tax consequences of
investing in the Fund. You should consult your tax advisor for more
information about your own tax situation, including possible state and local
taxes.
PRINCIPAL HOLDERS OF SECURITIES
To the knowledge of the Trust, as of February 18, 2000, no [other]person
owned beneficially more than 25% of the outstanding voting securities of the
Fund [, except as follows: NOTE: ADD ANY 25% OWNERS AND THEIR PERCENTAGES.]
[These persons may be deemed to control the Fund.] The Trust is not aware of
any other person that may control the Fund.
To the knowledge of the Trust, as of February 23, 2000, the Trustees of
the Trust and the officers of the Trust, as a group, owned less than 1% of
the outstanding shares of the Fund.
To the knowledge of the Trust, as of February 18, 2000, no other person
owned or record or beneficially more than 5% of the outstanding class A
shares of the Fund other than as set forth below. Because these shareholders
hold a substantial number of shares, they may be able to require that the
Trust hold special shareholder meetings and may be able to determine the
outcome of any shareholder vote.
<TABLE>
<CAPTION>
RECEIVED OR BENEFICIAL OWNER % OF OUTSTANDING CLASS A
SHARES OWNED
--------------------------------------------- --------------------------------
<S> <C>
Merrill Lynch Pierce Fenner & Smith
101 Hudson Street 32.56%
Jersey City, New Jersey 07302-3915
</TABLE>
PERFORMANCE INFORMATION
Average annual total return of a class of shares of the Fund for one-,
five-, and ten-year periods (or for such shorter periods as shares of that
class of shares of the Fund have been offered) is determined by calculating
the actual dollar amount of investment return on a $1,000 investment in that
class of shares at the beginning of the period, and then calculating the
annual compounded rate of return which would produce that amount. Total
return for a period of one year or less is equal to the actual return during
that period. Total return calculations assume reinvestment of all Fund
distributions at net asset value on their respective reinvestment dates.
Total return may be presented for other periods.
ALL PERFORMANCE DATA IS BASED ON PAST INVESTMENT RESULTS AND DOES NOT
PREDICT FUTURE PERFORMANCE. The Fund is the successor to Schroder Asian
Growth Fund, Inc., a closed-end management investment company that commenced
operations on December 23, 1993. Total return data relating to the Fund
includes data relating to Schroder Asian Growth Fund, Inc. for periods prior
to the commencement of the Fund's operations. The Fund's investment
performance will be affected by a number of factors, including its investment
objective and policies, fees, expenses, applicable sales charges, the size of
the Fund, cash flows into and out of the Fund, and market conditions.
Investment performance for a mutual fund also often reflects the risks
associated with the fund's investment objectives and policies. Quotations of
total return for any period when an expense limitation is in effect will be
greater than if the limitation had not been in effect. These factors should
be considered when comparing the investment results of the Fund's Class A
shares to those of various classes of other mutual funds and
<PAGE>
other investment vehicles. The Fund's performance may be compared to various
indices.
Although the investment objectives and policies of Schroder Asian Growth
Fund Inc. were substantially the same of those of the Fund, there can be no
assurance that the investment performance of Schroder Asian Growth Fund, Inc.
is indicative of the investment performance the Fund will achieve, and
differences among the factors outlined above and other factors will affect
the performance of the Fund relative to the historical performance of
Schroder Asian Growth Fund, Inc. For example:
As an open-end investment company, the Fund must invest most of its
assets in liquid securities in order to meet possible shareholder redemption
requests. Schroder's investment decisions for the Fund may at times be
affected by the cash flows, or anticipated cash flows, into or out of the
Fund. As a closed-end company, Schroder Asian Growth Fund, Inc. was not
subject to this factor.
The performance data listed in the table below reflects the deduction at
the beginning of each period of an initial sales load of 5.25%, the maximum
sales load applicable to the Fund, and does not reflect the underwriting
discount applicable to the initial offering of shares by Schroder Asian
Growth Fund, Inc.
The operating expenses incurred by Schroder Asian Growth Fund, Inc. for
the period prior to its reorganization into the Fund were less than those the
Fund expects to incur during its current fiscal year. For example, total fund
operating expenses of Schroder Asian Growth Fund, Inc. for its fiscal year
ended October 31, 1997 were 1.78%; the Fund's net operating expenses for the
current fiscal year are expected to be 1.95% (or, in the absence of
applicable fee waivers and expense limitations, are currently expected to be
2.27%). The performance information of Schroder Asian Growth Fund, Inc. has
not been restated to reflect differences in the operating expenses incurred
by it and those expected to be incurred by the Fund. If Schroder Asian Growth
Fund, Inc. had incurred operating expenses at the same rate as the Fund is
expected to incur expenses during the current fiscal year, the total returns
shown below, would be lower for periods including performance of Schroder
Asian Growth Fund, Inc.
For the periods shown, the table below sets forth the total return of
Class A Shares of the Fund since March 23, 1998, the inception date of the
Fund, Schroder Asian Growth Fund, Inc. for periods prior to March 23, 1998
(and since the commencement of the Schroder Asian Growth Fund, Inc.'s
operations until October 31, 1999). The table also sets forth total return
information for the Fund's Class A Shares since inception of the Fund.
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
SINCE INCEPTION
OF SCHRODER ASIAN INCEPTION DATE INCEPTION DATE
CLASS 1 YEAR 5 YEARS GROWTH FUND, INC. OF FUND OF CLASS
(12/23/93)
(ANNUALIZED)
----- ------ ------- ------------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Class A Shares 46.69% -5.92% -5.29% 12/30/93 3/23/98
</TABLE>
From time to time, Schroder, or any of its affiliates that provide
services to the Fund may reduce their compensation or assume expenses of the
Fund in order to reduce the Fund's expenses, as described in the Trust's
current Prospectus. Any such waiver or assumption would increase the Fund's
total return during the period of the waiver or assumption.
<PAGE>
THE PORTFOLIOS
Each of the Portfolios is a separate series of Schroder Capital Funds, an
open-end management investment company. Schroder Capital Funds is a business
trust organized under the laws of the State of Delaware.
The Fund's investment in the Portfolios is in the form of a
non-transferable beneficial interest. The Portfolios may have other
investors, each of whom will invest on the same conditions as the related
Fund and will pay a proportionate share of the Portfolio's expenses.
The Portfolios normally will not hold meetings of investors except as
required by the Investment Company Act. Each investor in a Portfolio is
entitled to vote in proportion to its relative beneficial interest in the
Portfolio. If the Portfolio has investors other than the Fund, there can be
no assurance that any issue that receives a majority of the votes cast by
Fund shareholders will receive a majority of votes cast by all Portfolio
shareholders. If other investors hold a majority interest of a Portfolio,
they could have voting control of the Portfolio.
The Portfolios do not sell their shares directly to the public. Another
investor (such as an investment company) in a Portfolio that might sell its
shares to the public would not be required to sell its shares at the same
offering price as the Fund, and could have different fees and expenses than
the Fund. Therefore, the Fund's shareholders may have different returns than
shareholders of another investment company that invests in the Portfolio.
The investors in each Portfolio, including the related Fund, have agreed
to indemnify Schroder Capital Funds, and such trust's trustees and officers,
against certain claims.
CERTAIN RISKS OF INVESTING IN THE PORTFOLIOS. The Fund's investment in
the Portfolios may be affected by the actions of other large investors in the
Portfolios, if any. For example, if a Portfolio has a large investor other
than the Fund and that investor redeems its interests in the Portfolio, the
Portfolio's remaining investors (including the Fund) might bear a larger
portion of the Portfolio's operating expenses. This would result in lower
returns for the Fund.
The Fund may withdraw its entire investment from the Portfolios at any
time, if the Trustees determine that it is in the best interests of the Fund
and its shareholders to do so. Such a withdrawal may result in a distribution
in kind of portfolio securities by a Portfolio, which could adversely affect
the liquidity of the Fund's assets. If the Fund converted those securities to
cash, it would likely incur brokerage fees or other transaction costs. In the
event that the Fund withdraws its entire investment from a Portfolio, the
Fund's inability to find a suitable replacement investment could have a
significant negative impact on the Fund's shareholders.
Each investor in a Portfolio, including the Fund, may be liable for all
obligations of the Portfolio. The risk that this would cause an investor
financial loss, however, is limited to circumstances in which the Portfolio
would be unable to meet its obligations. Schroder considers this risk to be
remote. Upon liquidation of the Portfolio, investors in the Portfolio
(including the Fund) would be entitled to share pro rata in the Portfolio's
net assets available for distribution to investors.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the custodian of the assets of the Fund. The
custodian's responsibilities include safeguarding and controlling the Fund's
cash and securities, handling the receipt and delivery of securities, and
collecting interest and
<PAGE>
dividends on the Fund's investments. The custodian does not determine the
investment policies of the Fund or decide which securities the Fund will buy
or sell.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc., 66 Brooks Drive, Braintree,
Massachusetts 02184, is the Trust's registrar, transfer agent and dividend
disbursing agent.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, the Trust's independent accountants, provide
audit services and tax return preparation services. Their address is One Post
Office Square, Boston, Massachusetts 02109.
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
serves as counsel to the Trust.
SHAREHOLDER LIABILITY
Under Delaware law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Trust Instrument disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Trust or
the Trustees. The Trust's Trust Instrument provides for indemnification out
of the Fund's property for all loss and expense of any shareholder held
personally liable for the obligations of the Fund. Thus the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to meet its
obligations.
FINANCIAL STATEMENTS
The fiscal year end of the Fund is October 31.
The Report of Independent Accountants, financial highlights, and
financial statements in respect of the Fund and each Portfolio in which the
Fund invests are included in the Trust's Annual Report for the fiscal year
ended October 31, 1999 on Form N-30D under the Investment Company Act filed
electronically with the Securities and Exchange Commission on December 30,
1999 (Accession Number: 0000912057-99-011025). That information is
incorporated by reference into this Statement of Additional Information.
<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.
"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
<PAGE>
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 SERVICES ("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>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Trust Instrument of Schroder Series Trust II (see Note 1).
(b) Bylaws are filed herewith.
(c) See the following Articles and Sections in the Trust Instrument filed as
Exhibit (a): Article II, Sections 2.03, 2.04, 2.06, 2.08, 2.09, 2.10, 2.11,
Article III, Section 3.08; Article VII; Article IX; and Article X, Section
10.03.
(d) Amended and Restated Investment Advisory Agreement for Schroder All-Asia
Fund is filed herewith.
(e) Distribution Agreement between the Registrant and Schroder Fund Advisors
Inc. is filed herewith.
(f) Not Applicable.
(g) Custodian Contract and Addendum between the Registrant and State Street
Bank and Trust Company are filed herewith.
(h) (i) Amended and Restated Administration Agreement between the Registrant
and Schroder Fund Advisors Inc. is filed herewith.
(ii) Subadministration Agreement among Schroder Fund Advisors Inc., the
Registrant and State Street Bank and Trust Company is filed herewith.
(iii) Transfer Agency and Service Agreement between the Registrant and
State Street Bank and Trust Company (see Note 2).
(i) Opinion of Morris, Nichols, Arsht & Tunnell, dated February 22,
2000 is filed herewith.
(j) Consent of PricewaterhouseCoopers LLP is filed herewith.
(k) Not Applicable
(l) Agreement and Plan of Reorganization between Schroder Asian Growth Fund,
Inc. and the Registrant (see Note 2).
(m) Not Applicable.
(n) Not Applicable.
<PAGE>
(o) (i) Power of Attorney for Nancy A. Curtin, David M. Salisbury, Peter E.
Guernsey, John I. Howell, William L. Means and Alan M. Mandel is filed
herewith.
Notes:
1. Exhibit incorporated by reference as filed in initial registration statement
via EDGAR on December 22, 1997, accession number 0001004402-97-000270.
2. Exhibit incorporated by reference as filed in Pre-Effective Amendment No. 1
via EDGAR on March 17, 1998, accession number 0001004402-98-000185.
3. Exhibit incorporated by reference as filed in Post-Effective Amendment No. 1
via EDGAR on August 3, 1998, accession number 0001004402-98-000422.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable.
ITEM 25. INDEMNIFICATION
Section 10.02 of the Registrant's Trust Instrument reads as follows:
(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
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Schroder Investment Management North America Inc. The directors and officers
of Schroder Investment Management North America Inc. ("SIM N.A.") have been
engaged during the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors, officers or employees of SIM
N.A. or certain of its corporate affiliates, except the following, whose
principal occupations during that period, other than as directors or officers of
SIM N.A. or certain of its corporate affiliates are as follows: Stefan Bottcher,
Director of SIM N.A., who was Director, Robert Fleming; Robert R. Coby, Director
of SIM N.A., who was President and Chief Operating Officer at Lynch & Mayer;
Nancy A. Curtin, Managing Director and Senior Vice President of SIM N.A., who
was Director, Barings Asset Management; Barbara Brooke Manning, First
<PAGE>
Vice President and Chief Compliance Officer of SIM N.A., who was Senior Manager,
Ernst & Young LLP; and Robert C. Michele, Director and Managing Director of SIM
N.A., who was Managing Director, BlackRock Financial Management. The address of
SIM N.A. and Schroder Fund Advisors is 787 Seventh Avenue, 34th Floor, New York,
NY 10019.
The addresses of the corporate affiliates of SIM N.A. are as follows:
Schroder Ltd. and Schroders plc. are located at 31 Gresham St., London EC2V
7QA, United Kingdom. Each of Schroder Investment Management Limited, Schroder
Investment Management (UK) Limited, Schroder Investment Management (Europe),
Korea Schroder Fund Management Limited and Schroder Personal Investment
Management, are located at 33 Gutter Lane, London EC2V 8AS United Kingdom.
Schroder Investment Management (Singapore) Limited is located at #47-01 OCBC
Centre, Singapore. Schroder Investment Management (Hong Kong) Limited is
located at 8 Connaight Place, Hong Kong. Schroder Investment Management
(Australasia) Limited is located at 225 George Place, Sydney Australia. PT
Schroder Investment Management Indonesia is located at Lippo Plaza Bldg., 25
Jakarta, 12820. Schroders (C.I.) Limited is located at St. Peter Port,
Guernsey, Channel Islands, GY1 3UF. Schroder Properties Limited is located at
Senator House, 85 Queen Victoria Street, London EC4V 4EJ, United Kingdom.
Schroder Fund Advisors Inc. and SIM N.A. are located at 787 Seventh Avenue,
34th Floor, New York, NY 10019.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Schroder Fund Advisors Inc. currently acts as the principal underwriter
for each Fund of Registrant and each series of Schroder Capital Funds
(Delaware) and Schroder Series Trust.
(b) The directors and officers of the registrant's principal underwriter as
as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
NAME POSITION WITH UNDERWRITER POSITION WITH REGISTRANT
- -----------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------
Nancy A. Curtin Vice Chairman and Director Chairman and Trustee
- -----------------------------------------------------------------------------------
Catherine A. Mazza Executive Vice President and Vice President
Director
- -----------------------------------------------------------------------------------
Sharon L. Haugh Chairman and Director Trustee
- -----------------------------------------------------------------------------------
Fergal Cassidy Treasurer and Chief Financial None
Officer
- -----------------------------------------------------------------------------------
Alexandra Poe General Counsel, Senior Vice President
President, Secretary and
Director
- -----------------------------------------------------------------------------------
Alan M. Mandel Senior Vice President and Treasurer and Clerk
Director
- -----------------------------------------------------------------------------------
Frances Selby Senior Vice President and None
Director
- -----------------------------------------------------------------------------------
David Robertson Senior Vice President and None
Director
- -----------------------------------------------------------------------------------
</TABLE>
The principal business address of each person listed above is 787 Seventh
Avenue, New York, New York 10019
(c) Inapplicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of SIM N.A. (investment management records) and
Schroder Fund Advisors Inc. (administrator and distributor records), 787 Seventh
Avenue, New York, New York 10019, except that certain items are maintained at
State Street Bank and Trust Company, 2 Avenue de Lafayette, Boston,
Massachusetts 02111 and Two Heritage Drive, N. Quincy, Massachusetts 02171.
ITEM 29. MANAGEMENT SERVICES
None.
ITEM 30. UNDERTAKINGS
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration statement
under rule 485(b) under the Securities Act of 1933, as amended, and has duly
caused this post-effective amendment number 4 to the Registrant's registration
statement to be signed on its behalf by the undersigned, duly authorized in the
City of New York, State of New York on February 29, 2000.
SCHRODER SERIES TRUST II
By:/s/ Catherine A. Mazza
Name: Catherine A. Mazza
Title: Vice President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons on
February 29, 2000.
By:/s/ Catherine A. Mazza
Name: Catherine A. Mazza
Title: Vice President
By:/s/ Alan M. Mandel
Name: Alan M. Mandel
Title: Treasurer
A majority of the Trustees
Nancy A. Curtin, Trustee and Chairman*
Peter E. Guernsey, Trustee*
John I. Howell, Trustee*
William L. Means, Trustee*
David M. Salisbury, Trustee*
By: /s/ Alexandra Poe
Alexandra Poe Attorney-in-Fact*
*Pursuant to powers of attorney filed as Other Exhibits to this Registration
Statement.
<PAGE>
EXHIBIT INDEX
(b) Bylaws
(d) Amended and Restated Investment Advisory
Agreement
(e) Distribution Agreement
(g) Custodian Contract and Addendum
(h)(i) Amended and Restated Administration Agreement
(h)(ii) Subadministration Agreement
(i) Opinion of Morris, Nichols, Arsht &
Tunnell
(j) Consent of PricewaterCoopers LLP
(o)(i) Power of Attorney
<PAGE>
SCHRODER SERIES TRUST II
BYLAWS
DATED DECEMBER 9, 1997
<PAGE>
SCHRODER SERIES TRUST II
BYLAWS
These Bylaws of Schroder Series Trust II (the "Trust"), a Delaware
business trust, are subject to the Trust Instrument of the Trust dated December
, 1997, as from time to time amended, supplemented or restated (the "Trust
Instrument"). Capitalized terms used herein which are defined in the Trust
Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in Portland, Maine, or
such other location as the Trustees may, from time to time, determine. The
Trust may establish and maintain such other offices and places of business as
the Trustees may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
SECTION 2.01 OFFICERS. The officers of the Trust shall be a President, a
Treasurer, a Secretary and such other officers as the Trustees may from time
to time elect. The Trustees may delegate to any officer or committee the
power to appoint any subordinate officers or agents. It shall not be
necessary for any Trustee or other officer to be a holder of Shares in the
Trust.
SECTION 2.02 ELECTION OF OFFICERS. The Treasurer and Secretary shall be
chosen by the Trustees. The President shall be chosen by and from the
Trustees. Two or more offices may be held by a single person except the
offices of President and Secretary. Subject to the provisions of Section 3.13
hereof, the President, the Treasurer and the Secretary shall each hold office
until their successors are chosen and qualified and all other officers shall
hold office at the pleasure of the Trustees.
SECTION 2.03 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 2.02 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect
on being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by, or under the direction of, the Trustees, and they
shall have all powers necessary and desirable to carry out their
responsibilities, so far as such powers are not inconsistent with the laws of
the State of Delaware, the Trust Instrument or with these Bylaws.
1
<PAGE>
SECTION 3.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect
from their own number an executive committee, which shall have any or all the
powers of the Trustees while the Trustees are not in session. The Trustees may
also elect from their own number other committees from time to time. The number
composing such committees and the powers conferred upon the same are to be
determined by vote of a majority of the Trustees. All members of such committees
shall hold such offices at the pleasure of the Trustees. The Trustees may
abolish any such committee at any time. Any committee to which the Trustees
delegate any of their powers or duties shall keep records of its meetings and
shall report its actions to the Trustees. The Trustees shall have power to
rescind any action of any committee, but no such rescission shall have
retroactive effect.
SECTION 3.03 COMPENSATION. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses
as may be fixed from time to time by resolution of the Trustees.
SECTION 3.04 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint from
among their number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the Shareholders
and the Trustees, and he may, subject to the approval of the Trustees,
appoint a Trustee to preside at such meetings in his absence. He shall
perform such other duties as the Trustees may from time to time designate.
SECTION 3.05 PRESIDENT. The President shall be the chief executive
officer of the Trust and, subject to the direction of the Trustees, shall
have general administration of the business and policies of the Trust. Except
as the Trustees may otherwise order, the President shall have the power to
grant, issue, execute or sign such powers of attorney, proxies, agreements or
other documents as may be deemed advisable or necessary in the furtherance of
the interests of the Trust or any Series thereof. He shall also have the
power to employ attorneys, accountants and other advisors and agents and
counsel for the Trust. The President shall perform such duties additional to
all of the foregoing as the Trustees may from time to time designate.
SECTION 3.06 TREASURER. The Treasurer shall be the principal financial
and accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company as the
Trustees shall employ as Custodian in accordance with the Trust Instrument
and applicable provisions of law. He shall make annual reports regarding the
business and condition of the Trust, which reports shall be preserved in
Trust records, and he may from time to time require. The Treasurer shall
perform such additional duties as the Trustees may from time to time
designate.
SECTION 3.07 SECRETARY. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at
their respective meetings. He shall have the custody of the seal of the
Trust. The Secretary shall perform such additional duties as the Trustees may
from time to time designate.
SECTION 3.08 VICE PRESIDENT. Any Vice President of the Trust shall
perform such duties as the Trustees or the President may from time to time
designate. At the request or in the absence or disability of the President,
the Vice President (or, if there are two or more Vice
2
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Presidents, then the senior of the Vice Presidents present and able to act)
may perform all the duties of the President and, when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
SECTION 3.09 ASSISTANT TREASURER. Any Assistant treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to
time designate, and, in the absence of the Treasurer, the senior Assistant
Treasurer, present and able to act, may perform all the duties of the
Treasurer.
SECTION 3.10 ASSISTANT SECRETARY. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to
time designate, and, in the absence of the Secretary, the senior Assistant
Secretary, present and able to act, may perform all the duties of the
Secretary.
SECTION 3.11 SUBORDINATE OFFICERS. The Trustees from time to time may
appoint such officers or agents as they may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the Trustees may determine. The Trustees from time to
time may delegate to one or more officers or committees of Trustees the power
to appoint any such subordinate officers or agents and to prescribe their
respective terms of office, authorities and duties.
SECTION 3.12 SURETY BONDS. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Commission) to
the Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the
Trust including responsibility for negligence and for the accounting of any
of the Trust's property, funds or securities that may come into his hands.
SECTION 3.13 REMOVAL. Any officer may be removed from office whenever in
the judgment of the Trustees the best interest of the Trust will be served
thereby, by a vote of a majority of the Trustees given at any regular meeting
or any special meeting of the Trustees. In addition, any officer or agent
appointed in accordance with the provisions of Section 3.10 hereof may be
removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Trustees.
SECTION 3.14 REMUNERATION. The salaries or other compensation, if any, of
the officers of the Trust shall be fixed from time to time by resolution of
the Trustees.
ARTICLE IV
SHAREHOLDER'S MEETINGS
SECTION 4.01 SPECIAL MEETINGS. A special meeting of the shareholders
shall be called by the Secretary whenever (a) ordered by the Trustees or (b)
requested in writing by the holder or holders of at least 10% of the
Outstanding Shares entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than 30 days to call such special
meeting, the Trustees or the Shareholders so requesting, may, in the name of
the Secretary, call the meeting
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by giving notice thereof in the manner required when notice is given by the
Secretary. If the meeting is a meeting of the Shareholders of one or more
Series or classes of Shares, but not a meeting of all Shareholders of the
Trust, then only special meetings of the Shareholders of such one or more
Series or classes shall be called and only the shareholders of such one or
more Series or classes shall be entitled to notice of and to vote at such
meeting.
SECTION 4.02 NOTICES. Except as provided in Section 4.01, notices of any
meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said
meeting, written or printed notification of such meeting at least fifteen
(15) days before the meeting, to such address as may be registered with the
Trust by the Shareholder. Notice of any Shareholder meeting need not be given
to any Shareholder if a written waiver of notice, executed before or after
such meeting, is filed with the record of such meeting, or to any Shareholder
who shall attend such meeting in person or by proxy. Notice of adjournment of
a Shareholder's meeting to another time or place need not be given, if such
time and place are announced at the meeting or reasonable notice is given to
persons present at the meeting and the adjourned meeting is held within a
reasonable time after the date set for the original meeting.
SECTION 4.03 VOTING-PROXIES. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by
proxy, provided that either (a) an instrument authorizing such proxy to act
is executed by the Shareholder in writing and dated not more than eleven (11)
months before the meeting, unless the instrument specifically provides for a
longer period or (b) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act which authorization is received not
more than eleven (11) months before the meeting. Proxies shall be delivered
to the Secretary of the Trust or other person responsible for recording the
proceedings before being voted. A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by one of them unless
at or prior to exercise of such proxy the Trust receives a specific written
notice to the contract from any one of them. Unless otherwise specifically
limited by their terms, proxies shall entitle the holder thereof to vote at
any adjournment of a meeting. A proxy purporting to be exercised by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger. At all meetings of the Shareholders, unless the voting is
conducted by inspectors, all questions relating to the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein or in the Trust Instrument, as these Bylaws or such Trust Instrument
may be amended or supplemented from time to time, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and
the Shareholders were shareholder of a Delaware corporation.
SECTION 4.04 PLACE OF MEETING. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or at such
other place in the United States as the Trustees may designate.
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SECTION 4.05 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to
vote on the matter consent to the action in writing and the written consents
are filed with the records of meetings of Shareholders of the Trust. Such
consent shall be treated for all purposes as a vote at a meeting of the
Shareholders held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 5.01 SPECIAL MEETINGS. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or any
two other Trustees.
SECTION 5.02 REGULAR MEETINGS. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed a party
calling the meeting and no call or notice will be required to such Trustee
provided that any Trustee who is absent when such determination is made shall
be given notice of the determination by the Chairman or any two other
Trustees, as provided for in Section 4.04 of the Trust Instrument.
SECTION 5.03 QUORUM. A majority of the Trustees shall constitute a quorum
for the transaction of business and an action of a majority of the quorum
shall constitute action of the Trustees.
SECTION 5.04 NOTICE. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the party calling the meeting to
each Trustee, as provided for the Section 4.04 of the Trust Instrument. A
written notice may be mailed, postage prepaid, addressed to him at his
address as registered on the books of the Trust or, if not so registered, at
his last known address
SECTION 5.05 PLACE OF MEETING. All special meetings of the Trustees shall
be held at the principal place of business of the Trust or such other place
as the Trustees may designate. Any meeting may adjourn to any place.
SECTION 5.06 SPECIAL ACTION. When all the Trustees shall be present at
any meeting, however called or wherever held, or shall assent to the holding
of the meeting without notice, or shall sign a written assent thereto filed
with the record of such meeting, the acts of such meeting shall be valid as
if such meeting had been regularly held.
SECTION 5.07 ACTION BY CONSENT. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees
and filed with the records of the Trustees' meeting. Such consent shall be
treated, for all purposes, as a vote at a meeting of the Trustees held at the
principal place of business of the Trustees.
SECTION 5.08 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Trustees
may participate in a meeting of Trustees by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and
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such participation shall constitute presence in person at such meeting. Any
meeting conducted by telephone shall be deemed to take place at and from the
principal office of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.01 BENEFICIAL INTEREST. The beneficial interest in the Trust
shall at all times divided into such transferable Shares of one or more
separate and distinct Series, or classes thereof, as the Trustees shall from
time to time create and establish. The number of Shares is unlimited, and
each Share of each Series or class thereof shall be without par value and
shall represent an equal proportionate interest with each other Share in the
Series, none having priority or preference over another, except to the extent
that such priorities or preference are established with respect to one or
more classes of shares consistent with applicable law and any rule or order
of the Commission.
SECTION 6.02 TRANSFER OF SHARES. The Shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by transfer
recorded on the books of the Trust, in person or by attorney.
SECTION 6.03 EQUITABLE INTEREST NOT RECOGNIZED. The Trust shall be
entitled to treat the holder of record of any Share or Shares of beneficial
interest as equitable or other claim or interest in such Share or Shares on
the part of any other person except as may be otherwise expressly provided by
law.
SECTION 6.04 SHARE CERTIFICATE. No certificates certifying the ownership
of Shares shall be issued except as the Trustees may otherwise authorize. The
Trustees may issue certificates to a Shareholder of any Series or class
thereof for any purpose and the issuance of a certificate to one or more
Shareholders shall not require the issuance of certificates generally. In the
event that the Trustees authorize the issuance of Share certificates, such
certificate shall be in the form proscribed from time to time by the Trustees
and shall be signed by the President or a Vice President and by the
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary. Such
signatures may be facsimiles if the certificate is signed by a transfer or
shareholder services agent or by a registrar, other than a Trustee, officer
or employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its
issue.
In lieu of issuing certificates for Shares, the Trustees or the transfer
or shareholder services agent may either issue receipts therefore or may keep
accounts upon the books of the Trusts for the record holders of such Shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
SECTION 6.05 LOSS OF CERTIFICATES. In the case of the alleged loss or
destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
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SECTION 6.06 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may
at any time discontinue the issuance of Share certificates and may, by
written notice to each Shareholder, require the surrender of Share
certificates to the Trust for cancellation. Such surrender and cancellation
shall not affect the ownership of Shares in the Trust.
ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust, shall be deemed to
hold legal and beneficial ownership of any income earned on securities held
by the Trust issued by any business entity formed, organized or existing
under the laws of any jurisdiction other than a state, commonwealth,
possession or colony of the United States or the laws of the United States.
ARTICLE VIII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be open
to the inspection of the Shareholder; and no Shareholder shall have any right
to inspect any account or book or document of the Trust except as conferred
by law or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE IX
INSURANCE OF OFFICES, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered
Person or employee of the Trust, including any Covered Person or employee of
the Trust who is or was serving at the request of the Trust as a Trustee,
officer or employee of a corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether or not
the Trustees would have the power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance that
protects or purports to protect any Trustee or officer of the Trust against
any liability to the Trust of its Shareholders to which he would otherwise be
subject by reason or willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form bearing the inscription:
"SCHRODER SERIES TRUST II
THE STATE OF DELAWARE"
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SCHRODER SERIES TRUST II
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
Agreement, dated and effective as of December 9, 1997, as amended and
restated as of September 15, 1999, between Schroder Series Trust II, a
Delaware business trust (the "Trust") and Schroder Investment Management
North America Inc., a Delaware 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 and the Fund;
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
<PAGE>
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:
1. 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;
2. make decisions for the Fund with respect to foreign currency
matters and foreign exchange contracts, having regard to foreign exchange
controls, if any;
3. 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;
4. 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;
5. 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;
6. 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;
7. 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
8. 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.
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1. 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 Schroder Fund
Advisors Inc. 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 Schroder Fund Advisors Inc. who are directors,
officers or employees of the Adviser or Schroder Fund Advisors Inc. to the
extent that such expenses relate to attendance at meetings of the Board of
Trustees of the Trust or any committees thereof.
2. 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 Trustees' 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 shareholders
including out-of-pocket travel expenses of the Trustees and officers of
the Trust or Schroder Fund Advisors Inc. who are directors, officers or
employees of the Adviser or Schroder Fund Advisors Inc. 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
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incurred by the Adviser or Schroder Fund Advisors Inc. on behalf of the
Trust in connection with the initial public offering of the Trust's
securities will be reimbursed to the Adviser or Schroder Fund Advisors
Inc. by the Trust.
4. COMPENSATION OF THE INVESTMENT ADVISER.
1. FEES.
(1). 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, 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.
(2). 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.
2. 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.
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5. LIMITATION OF LIABILITY OF THE ADVISER.
1. 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 "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.
2. 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).
3. 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 of the United States.
6. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES.
1. 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.
2. 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
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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 initial effective date of
this Agreement (December 9, 1997) and from year to year thereafter, but only
so long as such continuance is approved at lease 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
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 787 Seventh Avenue, 34th Floor,
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New York, New York 10019, Attention: Ms. Alexandra Poe; and (2) the Adviser
at c/o Schroder Investment Management North America Inc., 787 Seventh Avenue,
34th Floor, New York, New York 10019, Attention: Ms. Catherine Mazza.
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 Amended and
Restated Investment Advisory Agreement to be executed as of September 15,
1999.
SCHRODER SERIES TRUST II
By: /S/ Catherine A. Mazza
-----------------------
Name: Catherine A. Mazza
Title: Vice President
SCHRODER INVESTMENT MANAGEMENT
NORTH AMERICA INC.
By: /S/ Paul M. Morris
-------------------
Name: Paul M. Morris
Title: Director
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<PAGE>
SCHRODER SERIES TRUST II
DISTRIBUTION AGREEMENT
This Agreement is made as of the 15th day of September, 1999, by and
between Schroder Series Trust II, a Delaware business trust (the "Trust"), and
Schroder Fund Advisors Inc., a New York corporation (the "Distributor").
1. The Trust hereby appoints the Distributor as a distributor of shares
of beneficial interest ("Shares") of each of the current series of the Trust
(each, a "Fund"), and the Distributor hereby accepts such appointment. Upon the
approval of the Trust, this Agreement shall apply to any additional series of
the Trust as may be established from time to time, each of which shall become a
Fund hereunder.
2. The Distributor will have the right, as principal, to sell Shares of
each Fund to investment dealers against orders therefor at the public
offering price less any discount determined by the Distributor, which
discount will not exceed the amount of the sales charge, if any, referred to
below. The Distributor will have the right, as principal, to purchase Shares
from the Trust at their net asset value and to sell such Shares to the public
against orders therefor at the public offering price. Upon receipt of an
order to purchase Shares of a Fund from a bank or dealer with whom the
Distributor has a sales contract, the Distributor will promptly purchase
Shares of such Fund from the Trust to fill such order. Upon receipt of
registration instructions in proper form and payment for such Shares, the
Distributor will transmit such instructions to the Trust or its agent for
registration of the Shares purchased. The Distributor will also have the
right, as agent for the Trust, to sell Shares at the public offering price to
such persons and upon such conditions as the Trustees of the Trust may from
time to time determine.
The public offering price shall be the net asset value of the Shares in
question then in effect, plus the applicable sales charge, if any, determined
in the manner set forth in the then current prospectus and statement of
additional information of the Trust or as permitted by the Investment Company
Act of 1940, as amended, and the rules and regulations promulgated thereunder
(the "1940 Act"). The net asset value of Shares shall be determined in the
manner provided in the then current prospectus and statement of additional
information of the Trust and when determined shall be applicable to
transactions as provided for in such prospectus and statement of additional
information.
On every sale of Shares, the Trust, on behalf of the Fund in question,
shall receive the applicable net asset value of the Shares.
3. The Trust reserves the right to issue Shares at any time directly to
its shareholders as a stock dividend or stock split and to sell Shares to its
shareholders or to other persons approved by the Distributor at not less than
net asset value.
<PAGE>
4. The Distributor will use its best efforts to place Shares sold by it
on an investment basis. The Distributor does not agree to sell any specific
number of Shares. Shares will be sold by the Distributor only against orders
therefor. The Distributor will not purchase Shares from anyone other than the
Trust and will not take "long" or "short" positions in Shares contrary to the
instructions of the Trust or any applicable law, rule, or regulation.
5. The Distributor will be an independent contractor and neither the
Distributor nor any of its officers or employees, as such, is or shall be an
employee of the Trust. The Distributor is responsible for its own conduct and
the employment, control, and conduct of its agents and employees and for
injury to such agents or employees or to others through its agents or
employees. The Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all employer taxes
thereunder. The Distributor will maintain at its own expense insurance
against public liability in such an amount as the Trustees of the Trust may
from time to time reasonably request.
6. The Trust reserves the right to reject any order for the purchase of
Shares, provided, however, that the Trust agrees that it will not arbitrarily
or without reasonable cause refuse acceptance or confirmation of such orders.
7. The Trust covenants and agrees that it will, at its own expense:
(a) use its best efforts to keep authorized, but unissued, sufficient
Shares to meet the reasonable requirements of the Distributor;
(b) supply the Distributor with the net asset value per Share of each
Fund computed as at the times and in the manner prescribed by the
then current prospectus and statement of additional information of
the Trust and in compliance with all pertinent requirements of the
Trust Instrument of the Trust and applicable law;
(c) prepare, file, and keep effective registration statements,
prospectuses and licenses covering as many Shares as may be necessary
for distribution and sale of Shares in such jurisdictions where Shares
may lawfully be sold and as reasonably requested by the Distributor;
and
(d) maintain qualified personnel and adequate facilities for the
acceptance and confirmation of orders for the sale of Shares.
8. The Distributor will pay all expenses incident to the sale and
distribution of Shares issued or sold hereunder, including (i) expenses of
printing and distributing or disseminating any sales literature (including
prospectuses and annual reports), advertising, and selling aids in connection
with such offering of Shares for sale (except that such expenses shall not
include expenses incurred by the Trust in connection with the preparation,
printing, and
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<PAGE>
distribution of any prospectus, report or other communication to holders of
Shares in their capacity as such) and (ii) expenses of advertising in
connection with such offering.
9. The Distributor covenants and agrees that it will comply, at its own
expense, with the applicable Federal and state laws and regulations
regulating the affairs of broker-dealers, and will conduct its affairs with
the Trust and with dealers, brokers, and investors in accordance with the
Conduct Rules of The National Association of Securities Dealers, Inc., as
applicable.
10. (a) Except as provided in subsection (b) below, in the absence of
(i) any breach of its obligations under this Agreement (ii) willful
misfeasance, bad faith, or gross negligence on the part of the Distributor,
or (iii) reckless disregard by the Distributor of its obligations and duties
hereunder, the Distributor shall not be subject to any liability whatsoever
to the Trust, or to any shareholder of the Trust, for any error of judgment,
mistake of law, or any other act or omission in the course of, or connected
with, rendering services hereunder. The Trust agrees to indemnify and hold
harmless the Distributor and each person who controls the Distributor within
the meaning of the Securities Act of 1933, as amended (the "1933 Act"),
against any and all losses, claims, damages, or liabilities, joint or
several, to which they or any of them may become subject under the 1933 and
1940 Acts, the Securities Exchange Act of 1934, as amended, or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Trust's registration statement
for the registration of Shares as originally filed or in any amendment
thereof, or in the Trust's current prospectus filed as a part thereof, or in
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party for any legal
loss, claim, damage, liability, or action; provided, however, that the Trust
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any such untrue statement
or alleged untrue statement or omission or alleged omission made therein in
reliance upon information furnished to the Trust in writing by or on behalf
of the Distributor specifically for use in connection with the preparation
thereof.
(b) The Distributor agrees to indemnify and hold harmless the Trust and
each person who has been, is, or may hereafter be a Trustee of the Trust
against expenses incurred by any of them in connection with any claim or in
connection with any action, suit, or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of any alleged
misrepresentation or omission to state a material fact, or out of any alleged
misrepresentation or omission to state a material fact, on the part of the
Distributor or any agent or employee of the Distributor or any other person
for whose acts the Distributor is responsible or is alleged to be responsible
unless such misrepresentation or omissions was made in reliance upon written
information furnished by the Trust. The term "expenses" includes amounts paid
in satisfaction of judgments or in settlements which are made with the
Distributor's consent.
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<PAGE>
In addition, the Distributor agrees to indemnify and hold harmless the
Trust and each person who has been, is, or may hereafter be a Trustee of the
Trust and each person who controls the Trust or any Fund within the meaning
of the 1933 Act, against any and all losses, claims, damages, or liabilities,
joint or several, to which they or any of them may become subject under the
1933 and 1940 Acts, the Securities Exchange Act of 1934, as amended, or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Trust's
registration statement for the registration of Shares as originally filed or
in any amendment thereof, or in the Trust's current prospectus filed as a
part thereof, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party for any legal loss, claim, damage, liability, or action,
BUT ONLY to the extent that any such loss, claim, damage, or liability arises
out of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon information
furnished to the Trust in writing by or on behalf of the Distributor
specifically for use in connection with the preparation thereof.
(c) The foregoing rights of indemnification shall be in addition to any
other rights to which a person or entity may otherwise be entitled.
11. This Agreement shall become effective with respect to the Trust on
September 15, 1999, and shall continue in effect for one year, and thereafter
only so long as its continuance is specifically approved at least annually by
(i) the Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Trust and (ii) by vote
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 and have
no direct or indirect financial interest in the operation of this Agreement
or any plan to which this Agreement relates, cast in person at a meeting
called for the purpose of voting on such approval.
12. This Agreement shall terminate automatically in the event of its
assignment. This Agreement may be terminated at any time, without the payment
of any penalty, (i) by the Board of Trustees of the Trust, by vote 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 and have no
direct or indirect financial interest in the operation of this Agreement or
any plan to which this Agreement relates, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Trust by
thirty days' written notice addressed to the Distributor at its principal
place of business; and (ii) by the Distributor by thirty days' written notice
addressed to the Trust at its principal place of business.
13. This Agreement shall be construed and its provisions interpreted in
accordance with the laws of the state of New York.
-4-
<PAGE>
14. A copy of the Trust Instrument of the Trust is on file with the
Secretary of State of the State of Delaware, 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 or arising out of
this instrument are not binding upon any of the Trustees, officers, or
shareholders individually but are binding only upon the assets and property
of the Trust.
It is intended that this Agreement shall constitute a separate and
discrete contractual arrangement between the Distributor and the Trust on
behalf of each Fund separately and shall be construed in all respect so as to
give effect to this intention to the same extent as if the agreement between
the Distributor and the Trust on behalf of each such Fund were set out in a
separate writing. Without limiting the generality of the foregoing, no Fund
shall be liable or responsible for the acts, omissions, or liabilities of any
other Fund, or of the Trust on behalf or in respect of any other Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 15th day of September, 1999.
SCHRODER SERIES TRUST II
By: Catherine A. Mazza
-------------------
Title: Vice President
SCHRODER FUND ADVISORS INC.
By: Catherine A. Mazza
-------------------
Title: Executive Vice President
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<PAGE>
CUSTODIAN CONTRACT
This Contract between Schroder Series Trust II, a business trust
organized and existing under the laws of the State of Delaware, having its
principal place of business at 787 Seventh Avenue, 34th Floor, New York, New
York 10019 (the "Fund"), and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110 (the "Custodian"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares ("Interests") in
separate series of beneficial interests, with each such series representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Fund currently offers shares in one (1) series, Schroder
All-Asia Fund (such series together with each other series subsequently
established by the Fund and made subject to this Contract in accordance with
Article 18, being herein referred to as "Portfolios");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's Trust
Instrument (as further amended or restated, the "Trust Instrument"). The Fund on
behalf of the Portfolios agrees to deliver to the Custodian all securities and
cash of the Portfolios, and all payments of income, payments of principal or
capital distributions received by it with respect to all securities owned by the
Portfolios from time to time, and the cash consideration received by it for such
new Interests in the Portfolios as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Portfolio and not delivered to the Custodian. With respect to
uncertificated shares (the "Underlying Shares") of registered investment
companies in the same "group of investment companies" (as defined in Section
12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended, and the rules
and regulations thereunder (the "1940 Act")) as the Fund (the "Schroder Funds"),
the holding of confirmation statements that identify the Underlying Shares as
being recorded in the Custodian's name on behalf of the Portfolios will be
deemed custody for purposes hereof.
Upon receipt of "Proper Instructions" (within the meaning of Article
6), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians,
<PAGE>
located in the United States but only in accordance with an applicable vote by
the Board of Trustees of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign securities on
behalf of the applicable Portfolio(s) the foreign banking institutions and
foreign securities depositories designated in Schedule A and B hereto, but only
in accordance with the provisions of Articles 3 and 4.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities maintained in a U.S. Securities
System as defined in Section 2.9; (b) commercial paper of an issuer for
which State Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper System")
pursuant to Section 2.10; and (c) the Underlying Shares owned by the
Fund which are maintained pursuant to Section 2.11 in an account with
Boston Financial Data Services, Inc. or such other entity which may
from time to time act as a transfer agent for the Schroder Funds and
with respect to which the Custodian is provided with Proper
Instructions (the "Schroder Transfer Agent").
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
or in an account with the Schroder Transfer Agent only upon receipt of
Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate
by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.9
hereof;
4) To the depository agent in connection with tender or other
similar offers for securities held by the Portfolio;
2
<PAGE>
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.8 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1, in each case to the extent permitted by Section
2.3; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; PROVIDED that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; PROVIDED that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
PROVIDED that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; PROVIDED that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian, absent its negligence, misfeasance or misconduct,
will not be held liable or responsible for the delivery of
securities owned by the Portfolio prior to the receipt of such
collateral in accordance with standard market practice;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
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<PAGE>
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian 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 similar arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
a Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of Interests in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectuses and statements of
additional information for the Fund, related to the relevant
Portfolios (together, the "Prospectus"), in satisfaction of
requests by holders of Interests for repurchase or redemption;
15) In the case of a sale processed through the Schroder Transfer
Agent of Underlying Shares, in accordance with Section 2.11
hereof; and
16) For any other proper corporate purpose, BUT ONLY upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies or other investment pools or accounts
having the same investment adviser as the Portfolio, or has authorized
in writing that such securities may be registered in the name or
nominee name of any agent appointed pursuant to Section 2.8 or in the
name or nominee name of any sub-custodian appointed pursuant to Article
1. All securities accepted by the
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<PAGE>
Custodian on behalf of any Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form. If, however, the
Fund directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income
due the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, and tender or exchange
offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the 1940 Act. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
PROVIDED, however, that every such bank or trust company shall be
qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Trustees of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent and shall credit such income, as collected, to
such Portfolio's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the
Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio, but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company
5
<PAGE>
doing business in the United States or abroad which is
qualified under the 1940 Act to act us custodian and has been
designated by the Custodian as its agent for this purpose)
registered in the name of the Portfolio or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or
in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with
the conditions set forth in Section 2.9 hereof; (c) in the
case of a purchase of Underlying Shares, in accordance with
the conditions set forth in Section 2.11 hereof; (d) in the
case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.10; (e)
in the case of repurchase agreements entered into between the
Fund on behalf of the Portfolio and the Custodian, or another
bank, or a broker-dealer which is a member of the NASD, (i)
against delivery of the securities either in certificate form
or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (f) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant
to Proper Instructions from the Fund as defined in Article 6;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Interests issued by the
Portfolio as set forth in Article 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Interests in the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
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2.7 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by
the Custodian.
2.8 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which itself is qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this
Article 2 as the Custodian may from time to time direct; PROVIDED,
however, that the appointment of any such agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder and the
Custodian shall be as responsible for the acts of such agent as if the
Custodian performed them itself. The Schroder Transfer Agent shall not
be deemed an agent or subcustodian of the Custodian for purposes of
this Section 2.8 or any other provision of this Contract.
2.9 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Exchange Act which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (each a "U.S. Securities System")
in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account of the Custodian in the U.S.
Securities System ("U.S. Securities System Account") which
shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
(i) receipt of advice from the U.S. Securities System that
payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for
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the account of the Portfolio shall identify the Portfolio, be
maintained for the Portfolio by the Custodian and be provided
to the Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation of
each transfer to or from the account of the Portfolio in the
form of a written advice or notice and shall furnish to the
Fund on behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the U.S.
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Article 15 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees, or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
2.10 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account of the Custodian in the Direct Paper System
("Direct Paper System Account") which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
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4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control and procedures for safeguarding securities deposited
in the Direct Paper System as the Fund may reasonably request
from time to time.
2.11 DEPOSIT OF FUND ASSETS WITH THE SCHRODER TRANSFER AGENT. The Custodian
shall verify that Underlying Shares are deposited and/or maintained in
an account or accounts maintained with the Schroder Transfer Agent. The
Schroder Transfer Agent shall be deemed to be acting as if it is a
"securities depository" for purposes of Rule 17f-4 under the 1940 Act.
The Fund hereby directs the Custodian to deposit and/or maintain such
securities with the Schroder Transfer Agent, subject to the following
provisions:
1) The Custodian shall keep Underlying Shares owned by a
Portfolio with the Schroder Transfer Agent provided that such
securities are maintained in an account or accounts on the
books and records of the Schroder Transfer Agent in the name
of the Custodian as custodian for the Portfolio and the
account includes only assets held in the name of the Custodian
for its customers.
2) The records of the Custodian with respect to Underlying Shares
which are maintained with the Schroder Transfer Agent shall
identify by book-entry those Underlying Shares belonging to
each Portfolio;
3) The Custodian shall pay for Underlying Shares purchased for
the account of a Portfolio upon (i) receipt of advice from the
Portfolio's investment adviser that such Underlying Shares
have been purchased and will be transferred to the account of
the Custodian, on behalf of the Portfolio, on the books and
records of the Schroder Transfer Agent, and (ii) the making of
an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Portfolio. The
Custodian shall receive confirmation from the Schroder
Transfer Agent of the purchase of such securities and the
transfer of such securities to the Custodian's account with
the Schroder Transfer Agent only after such payment is made.
The Custodian shall
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transfer Underlying Shares redeemed for the account of a
Portfolio (i) upon receipt of an advice from the Portfolio's
investment adviser that such securities have been redeemed and
that payment for such securities will be transferred to the
Custodian and (ii) the making of an entry on the records of
the Custodian to reflect such transfer and payment for the
account of the Portfolio. The Custodian will receive
confirmation from the Schroder Transfer Agent of the
redemption of such securities and payment therefor only after
such securities are redeemed. Copies of all advices from the
Portfolio's investment adviser of purchases and sales of
Underlying Shares for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian, and be provided to the investment adviser at its
request. The Custodian shall promptly send to the Fund reports
it receives from the Schroder Transfer Agent on its system of
internal accounting control;
4) The Custodian shall be not be liable to the Fund or any
Portfolio for any loss or damage to the Fund or any Portfolio
resulting from maintenance of Underlying Shares with Schroder
Transfer Agent except for losses resulting directly from the
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.9 hereof, (i) in
accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other similar arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased,
sold or written by the Portfolio, (iii) for the purpose of compliance
by the Portfolio with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies, and (iv) for
other proper corporate purposes, BUT ONLY, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
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2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange offers
or any other similar transaction, the Custodian shall transmit promptly
to the Portfolio all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from
the party (or his agents) making the tender or exchange or similar
offer. If the Portfolio desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian of the action the Portfolio
desires the Custodian to take at least three business days prior to the
date on which the Custodian is to take such action.
3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
3.1 DEFINITIONS. The following capitalized terms shall have the indicated
meanings:
"Country Risk" means all factors reasonably related to the systemic
risk of holding Foreign Assets in a particular country including, but
not limited to, such country's political environment; economic and
financial infrastructure (including any Mandatory Securities
Depositories operating in the country); prevailing or developing
custody and settlement practices; and laws and regulations applicable
to the safekeeping and recovery of Foreign Assets held in custody in
that country.
"Eligible Foreign Custodian" has the meaning set forth in section
(a)(1) of Rule 17f-5 under the 1940 Act, including a majority-owned
direct or indirect subsidiary of a U.S. Bank (as defined in Rule
17f-5), a bank holding company meeting the requirements of an Eligible
Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC), or a foreign branch of a Bank (as defined in
Section 2(a)(5) of the 1940 Act) meeting the requirements of a
custodian under Section 17(f) of the 1940 Act, except that the term
does not include Mandatory Securities Depositories.
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"Foreign Assets" means any of the Portfolios' investments (including
foreign currencies) for which the primary market is outside the United
States and such cash and cash equivalents as are reasonably necessary
to effect the Portfolios' transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2)
of Rule 17f-5.
"Mandatory Securities Depository" means a foreign securities depository
or clearing agency that, either as a legal or practical matter, must be
used if the Fund, on the Portfolios' behalf, determines to place
Foreign Assets in a country outside the United States (i) because
required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency;
or (iii) because maintaining or effecting trades in securities outside
the foreign securities depository or clearing agency is not consistent
with applicable prevailing or developing custodial or market practices.
3.2 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Fund, in
accordance with a resolution adopted by its Board of Trustees, hereby
delegates to the Custodian with respect to the Portfolios, subject to
Section (b) of Rule 17f-5, the responsibilities set forth in this
Article 3 with respect to Foreign Assets of the Portfolios held outside
the United States, and the Custodian hereby accepts such delegation, as
Foreign Custody Manager with respect to the Portfolios.
3.3 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for
performing the delegated responsibilities defined below only with
respect to the countries and custody arrangements for each such country
listed on Schedule A to this Contract, which list of countries may be
amended from time to time by the Fund with the agreement of the Foreign
Custody Manager. The Foreign Custody Manager shall list on Schedule A
the Eligible Foreign Custodians selected by the Foreign Custody Manager
to maintain the assets of the Portfolios in each such country, which
list of Eligible Foreign Custodians may be amended from time to time in
the sole discretion of the Foreign Custody Manager. Mandatory
Securities Depositories and the countries in which each is located are
listed on Schedule B to this Contract, which Schedule B may be amended
from time to time by the Foreign Custody Manager by adding or removing
Mandatory Securities Depositories. The Foreign Custody Manager will
provide to the Fund amended versions of Schedules A and B in accordance
with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions
to open an account or to place or maintain Foreign Assets in a country
listed on Schedule A, and the fulfillment by the Fund on behalf of the
Portfolios of the applicable account opening requirements for such
country, the Foreign Custody Manager shall be deemed to have been
delegated by the Board on behalf of the Portfolios responsibility as
Foreign Custody Manager with respect to that country and to have
accepted such delegation. Following the receipt of Proper Instructions
directing the Foreign Custody Manager to close the
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account of a Portfolio with the Eligible Foreign Custodian selected by
the Foreign Custody Manager in a designated country, the delegation by
the Board of Trustees on behalf of the Portfolios to the Custodian as
Foreign Custody Manager for that country shall be deemed to have been
withdrawn and the Custodian shall immediately cease to be the Foreign
Custody Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written
notice to the Fund. Sixty days (or such longer period as to which the
parties agree in writing) after receipt of any such notice by the Fund,
the Custodian shall have no further responsibility as Foreign Custody
Manager to the Fund with respect to the country as to which the
Custodian's acceptance of delegation is withdrawn.
3.4 SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
provisions of this Article 3, the Portfolios' Foreign Custody
Manager may place and maintain Foreign Assets in the care of
the Eligible Foreign Custodian selected by the Foreign Custody
Manager in each country listed on Schedule A, as amended from
time to time. In performing its delegated responsibilities as
Foreign Custody Manager to place or maintain Foreign Assets
with an Eligible Foreign Custodian, the Foreign Custody
Manager shall determine that the Foreign Assets will be
subject to reasonable care, based on the standards applicable
to custodians in the relevant market, after considering all
factors relevant to the safekeeping of such assets, including,
without limitation, the factors specified in Rule 17f-5(c)(1),
as amended from time to time.
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign
Custody Manager shall ensure that a written contract (or rules
or established practices or procedures in the case of an
Eligible Foreign Custodian that is a foreign securities
depository or clearing agency) is or are in place governing
the foreign custody arrangements with each Eligible Foreign
Custodian selected by the Foreign Custody Manager and will
determine that such contract, rules or established practices
or procedures provide reasonable care for the Portfolio's
Foreign Assets based on the standards specified in Rule
17f-5(c)(1) and that the written contract satisfies all
requirements of Rule 17f-5(c)(2), each as amended from time to
time.
3.4.3. MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian
selected by the Foreign CustodyManager, the Foreign Custody
Manager shall establish a system to monitor the
appropriateness of (i) maintaining the Foreign Assets with
such Eligible Foreign Custodian under Rule
17f-5(c)(1) and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with
the Eligible Foreign Custodian (or the rules or established
practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody
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Manager which is a foreign securities depository or clearing
agency that is not a Mandatory Securities Depository) under
17f-5(c)(2). In the event the Foreign Custody Manager
determines that the custody arrangements with an Eligible
Foreign Custodian it has selected are no longer appropriate
or no longer meet the requirements of Rule 17f-5, the Foreign
Custody Manager shall notify the Fund's Board of Trustees in
accordance with Section 3.7 hereunder and assist the
Portfolios in withdrawing their assets from such Eligible
Foreign Custodian as soon as reasonably practicable.
3.5 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of
this Article 3, the Fund's Board of Trustees, or at its delegation the
Fund's investment adviser, shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and
maintaining the Foreign Assets in each country for which the Custodian
is serving as Foreign Custody Manager of the Portfolios. The Fund, on
behalf of the Portfolios, and the Fund's Board of Trustees, or at its
delegation the funds investment adviser, shall be deemed to be
monitoring on a continuing basis such Country Risk to the extent that
they consider necessary or appropriate. The Fund and the Custodian each
expressly acknowledge that the Foreign Custody Manager shall not be
delegated any responsibilities under this Article 3 with respect to
Mandatory Securities Depositories.
3.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS. In
performing the responsibilities delegated to it, the Foreign Custody
Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of
management investment companies registered under the 1940 Act would
exercise.
3.7 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the
withdrawal of the Foreign Assets from an Eligible Foreign Custodian and
the placement of such Foreign Assets with another Eligible Foreign
Custodian by providing to the Board amended Schedules A or B at the end
of the calendar quarter in which an amendment to either Schedule has
occurred or at such other times as the Board deems reasonable or
appropriate. The Foreign Custody Manager shall make written reports
notifying the Board of any other material change in the foreign custody
arrangements of the Portfolios described in this Article 3 as soon as
practicable after the occurrence of the material change.
3.8 OTHER REPRESENTATIONS WITH RESPECT TO RULE 17f-5. The Foreign Custody
Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that
the Fund's Board of Trustees has determined that it is reasonable for
the Board to rely on the Custodian to perform the responsibilities
delegated pursuant to this Contract to the Custodian as the Foreign
Custody Manager of the Portfolios.
3.9 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY
MANAGER. The Board's delegation to the Custodian as Foreign Custody
Manager of the Portfolios shall
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be effective as of the date of execution of this Contract and
shall remain in effect until terminated at any time, without penalty,
by written notice from the terminating party to the non-terminating
party, or upon the termination of this Contract in accordance with its
terms by either party, if earlier. Except as expressly provided
elsewhere in this Contract, termination will become effective no less
than thirty (30) days after receipt by the non-terminating party of
such notice. The provisions of Section 3.3 hereof shall govern the
delegation to and termination of the Custodian as Foreign Custody
Manager of the Portfolios with respect to designated countries.
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD
OUTSIDE OF THE UNITED STATES
4.1 DEFINITIONS. Capitalized terms in this Article 4 shall have the
following meanings:
"Foreign Securities System" means either a clearing agency or a
securities depository listed on Schedule A hereto or a Mandatory
Securities Depository listed on Schedule B hereto. Foreign Securities
Systems and U.S. Securities Systems are collectively referred to herein
as the "Securities Systems"
"Foreign Sub-Custodian" means a foreign banking institution serving as
an Eligible Foreign Custodian.
4.2 HOLDING SECURITIES. The Custodian shall identify on its books as
belonging to each Portfolio the respective foreign securities held by
each Foreign Sub-Custodian or Foreign Securities System. The Custodian
may hold foreign securities for all of its customers, including each
Portfolio, with any Foreign Sub-Custodian in an account that is
identified as belonging to the Custodian for the benefit of its
customers, PROVIDED HOWEVER, that (i) the records of the Custodian with
respect to the foreign securities of each Portfolio which are
maintained in such account shall identify those securities as belonging
to such Portfolio and (ii), to the extent permitted and customary in
the market in which the account is maintained, the Custodian shall
require that securities so held by the Foreign Sub-Custodian be held
separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian. The books and records of the
Custodian shall at all times indicate the beneficial ownership of the
applicable Portfolio.
4.3 FOREIGN SECURITIES SYSTEMS. Foreign Assets shall be maintained in a
Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country
pursuant to the terms of this Contract. Where possible, such
arrangements shall include entry into agreements containing the
provisions referenced in Section 3.4.2 hereof.
4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN SECURITIES. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of
the Portfolios held by such Foreign Sub-
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Custodian, or in a Foreign Securities System account, only upon
receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following
cases:
(i) upon the sale of such foreign securities for the
Portfolios in accordance with commercially reasonable
market practice in the country where such foreign
securities are held or traded, including, without
limitation: (A) delivery against expectation of
receiving later payment; or (B) in the case of a sale
effected through a Foreign Securities System in
accordance with the rules governing the operation of
the Foreign Securities System;
(ii) in connection with any repurchase agreement related
to foreign securities;
(iii) to the depository agent in connection with tender or
other similar offers for foreign securities of the
Portfolios;
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise
become payable;
(v) to the issuer thereof, or its agent, for transfer
into the name of the Custodian (or the name of the
respective Foreign Sub-Custodian or of any nominee of
the Custodian or such Foreign Sub-Custodian) or for
exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents
for examination or trade execution in accordance with
market custom; PROVIDED that in any such case the
Foreign Sub-Custodian shall have no responsibility or
liability for any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Foreign
Sub-Custodian's own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities;
(ix) for delivery as security in connection with any
borrowing by a Portfolio requiring a pledge of assets
by such Portfolio;
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(x) in connection with trading in options and futures
contracts, including delivery as original margin and
variation margin;
(xi) in connection with the lending of foreign securities;
and
(xii) for any other proper purpose, BUT ONLY upon receipt
of Proper Instructions specifying the foreign
securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such
purpose to be a proper Fund purpose, and naming the
person or persons to whom delivery of such securities
shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall pay out, or
direct the respective Foreign Sub-Custodian or the respective
Foreign Securities System to pay out, monies of a Portfolio in
the following cases only:
(i) upon the purchase of foreign securities for the
Portfolio, unless otherwise directed by Proper
Instructions, by (A) delivering money to the seller
thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving
later delivery of such foreign securities; or (B) in
the case of a purchase effected through a Foreign
Securities System, in accordance with the rules
governing the operation of such Foreign Securities
System;
(ii) in connection with the conversion, exchange or
surrender of foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the
Portfolio, including but not limited to the following
payments: interest, taxes, investment advisory fees,
transfer agency fees, fees under this Contract, legal
fees, accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or
foreign exchange contracts for the Portfolio,
including transactions executed with or through the
Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures
contracts, including delivery as original margin and
variation margin;
(vi) in connection with the borrowing or lending of
foreign securities;
(vii) for payment of part or all of the dividends received
in respect of securities sold short; and
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<PAGE>
(viii) for any other proper purpose, BUT ONLY upon receipt
of Proper Instructions specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a
proper Fund purpose, and naming the person or persons
to whom such payment is to be made.
4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this
Contract to the contrary, settlement and payment for Foreign
Assets received for the account of the Portfolios and delivery
of Foreign Assets maintained for the account of the Portfolios
may be effected in accordance with the customary established
securities trading or processing practices and procedures in
the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering Foreign Assets to
the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) with the expectation of receiving
later payment for such Foreign Assets from such purchaser or
dealer.
The Custodian shall provide to the Fund's Board of Trustees
the information with respect to custody and settlement
practices in countries in which the Custodian employs a
Foreign Sub-Custodian, including without limitation
information relating to Foreign Securities Systems, described
on Schedule C hereto at the time or times set forth on such
Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board
of Trustees being provided with substantively less information
than had been previously provided hereunder.
4.5 REGISTRATION OF FOREIGN SECURITIES. The Portfolio's foreign securities
maintained in the custody of a Foreign Sub-Custodian or Foreign
Securities System (other than bearer securities) shall be registered in
the name of the applicable Portfolio or in the name of the Custodian or
in the name of any Foreign Sub-Custodian or in the name of any nominee
of the foregoing (provided, however, that such registration indicates
such securities as having been held for the benefit of customers, and
not, in any event, for the benefit of a Foreign Sub-Custodian, and the
Fund on behalf of such Portfolio agrees to hold any such nominee
harmless from any liability as a holder of record of such foreign
securities absent such nominee's negligence, misfeasance, bad faith or
breach of obligation. The Custodian or a Foreign Sub-Custodian shall
not be obligated to accept securities on behalf of a Portfolio under
the terms of this Contract unless the form of such securities and the
manner in which they are delivered are in accordance with reasonable
market practice.
4.6 BANK ACCOUNTS. The Custodian shall identify on its books as belonging
to the Fund cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to
maintain, or market practice does not facilitate the maintenance of,
cash on the books of the Custodian, a bank account or bank accounts
opened and maintained outside the United States on behalf of a
Portfolio with a Foreign Sub-Custodian shall be subject only to draft
or order by the Custodian or such Foreign Sub-
18
<PAGE>
Custodian, acting pursuant to the terms of this Contract to hold cash
received by or from or for the account of the Portfolio.
4.7 COLLECTION OF INCOME. The Custodian shall use reasonable commercial
efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled
and shall credit such income, as collected, to the applicable
Portfolio. In the event that extraordinary measures are required to
collect such income, the Fund and the Custodian shall consult as to
such measures and as to the compensation and expenses of the Custodian
relating to such measures.
4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held
pursuant to this Contract, the Custodian will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder
rights, subject always to the laws, regulations and practical
constraints that may exist in the country where such securities are
issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other
factors may have the effect of severely limiting the ability of the
Fund to exercise shareholder rights.
4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall
transmit promptly to the Fund written information (including, without
limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign
securities being held for the account of the Portfolios. With respect
to tender or exchange offers, the Custodian shall transmit promptly to
the Fund written information so received by the Custodian from issuers
of the foreign securities whose tender or exchange is sought or from
the party (or its agents) making the tender or exchange offer. Absent
the Custodian's negligence, misfeasance or misconduct, the Custodian
shall not be liable for any untimely exercise of any tender, exchange
or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the
Custodian or the respective Foreign Sub-Custodian is in actual
possession of such foreign securities or property and (ii) the
Custodian receives Proper Instructions with regard to the exercise of
any such right or power, and both (i) and (ii) occur at least three
business days prior to the date on which the Custodian is to take
action to exercise such right or power.
4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a Foreign Sub-Custodian shall specify, to the
extent possible in accordance with that jurisdiction's legal
nomenclature, that the Foreign Sub-Custodian will exercise reasonable
care in the performance of its duties and, to the extent possible, to
indemnify, and hold harmless, the Custodian and each Portfolio from and
against any loss, damage, cost, expense, liability or claim arising out
of or in connection with the Foreign Sub-Custodian's performance of
such obligations. At the Fund's election, the Portfolios shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claims against a Foreign Sub-Custodian as a consequence of any
such loss, damage, cost,
19
<PAGE>
expense, liability or claim if and to the extent that the Fund and any
applicable Portfolios have not been made whole for any such loss,
damage, cost, expense, liability or claim.
4.11 TAX LAW. The Custodian shall be responsible to use reasonable
professional efforts to assist each Portfolio with respect to any claim
for exemption or refund under the tax law of jurisdictions in which the
Portfolio has invested. The Custodian and each Portfolio shall consult
and cooperate to facilitate the appropriate administration of tax
matters connected with the income and securities of each Portfolio to
which this Contract relates. The Custodian will be entitled to rely
without separate duty of inquiry on any representation or information
relating to tax status that it is supplied by a Portfolio.
4.12 CONFLICT. If the Custodian is delegated the responsibilities of Foreign
Custody Manager pursuant to the terms of Article 3 hereof, in the event
of any conflict between the provisions of Article 3 and 4
hereof, the provisions of Article 3 shall prevail.
5. PAYMENTS FOR SALES, REPURCHASES, REDEMPTIONS OR WITHDRAWALS OF
INTERESTS IN THE FUND
The Custodian shall receive from the distributor, or placement agent
for the Interests or from the Transfer Agent of the Fund and deposit into the
account of the appropriate Portfolio such payments as are received for Interests
in that Portfolio issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund on behalf of each such Portfolio
and the Transfer Agent of any receipt by it of payments for Interests in such
Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Trust Instrument and the Bylaws of the Fund and any
applicable votes of the Board of Trustees of the Fund pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of Interests which have delivered to the
Transfer Agent a request for redemption, repurchase or withdrawal of all or a
portion of their Interest(s). In connection with the redemption, repurchase or
withdrawal of all or a portion of the Interest(s) in a Portfolio, the Custodian
is authorized upon receipt of instructions from the Transfer Agent to wire funds
to or through a commercial bank designated by the redeeming holders of
Interests.
6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Trustees of
the Fund shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give Proper
Instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing (but the failure to provide such
confirmation shall not effect the validity of an oral instruction). Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Trustees and
the Custodian are satisfied that procedures are in place that
20
<PAGE>
afford adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.12.
7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the
Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees of the Fund.
8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of the Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or of
any action by the Board of Trustees pursuant to the Trust Instrument as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
Interest of the outstanding Interests in each Portfolio or, if directed in
writing to do so by the Fund on behalf of the Portfolio, shall itself keep such
books of account and/or compute such net asset value per Interest. If so
directed, the Custodian shall also calculate daily the net income of the
Portfolio as described in the Fund's Prospectus related to such Portfolio and
shall advise the Fund and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the Fund to do so,
shall advise the Transfer Agent periodically of the division of such net income
among its various
21
<PAGE>
components. The Fund acknowledges and agrees that, with respect to investments
maintained with the Schroder Transfer Agent, the Schroder Transfer Agent is the
sole source of information on the number of Underlying Shares held by it on
behalf of a Portfolio and that the Custodian has the right to reasonably rely on
holdings information furnished by the Schroder Transfer Agent to the Custodian
in performing its duties under this Contract, including without limitation, the
duties set forth in this Article 9 and in Article 10 hereof; PROVIDED, however,
that the Custodian shall be obligated to reconcile information as to purchases
and sales of Underlying Shares contained in trade instructions and confirmations
received by the Custodian and to report promptly any discrepancies to the
Schroder Transfer Agent. The calculations of the net asset value per Interest
and the daily income of each Portfolio shall be made by the Custodian at the
time or times described from time to time in the Fund's Prospectus related to
such Portfolio.
10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such a manner as will meet the Fund's obligations under Section 31 of the 1940
Act, with particular attention to Rules 31a-1, 31a-2, and 31a-3 thereunder. All
such records shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by each Portfolio and held
by the Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder including, without limitation, in connection with
the preparation of the Fund's Form N-1A, and Form N-SAR, or other annual reports
to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a U.S. Securities System, relating to the services provided by the Custodian
under this Contract; such reports shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.
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<PAGE>
13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence in carrying out
the provisions of this Contract. The Custodian shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. The Custodian shall be without liability to the Fund
and the Portfolios for any loss, liability, claim or expense to the extent that
it results from or is caused by a Country Risk.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent
of the Custodian, the Custodian shall be without liability to the Fund for any
loss, liability, claim or expense resulting from or caused by: (i) events or
circumstances beyond the reasonable control of the Custodian or any
sub-custodian or Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or expropriation,
imposition of currency controls or restrictions, the interruption, suspension or
restriction of trading on or the closure of any securities market, power or
other mechanical or technological failures or interruptions, computer viruses or
communications disruptions, acts of war or terrorism, riots, revolutions, work
stoppages, natural disasters or other similar events or acts; (ii) errors by the
Fund or any investment adviser of the Fund in its instructions to the Custodian
provided such instructions have been in accordance with this Contract; (iii) the
insolvency of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) delays or inability to perform its duties due to any
disorder in market infrastructure with respect to any particular security or
Securities System; and (vi) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall not be liable to the Fund for any loss resulting
from: (i) the insolvency of any Foreign Sub-Custodian (as defined in Article 4
hereof) which is not a branch or an affiliate of the Custodian; or (ii) any act
of any Foreign Sub-Custodian, except where such loss results from
23
<PAGE>
an error or omission by the Foreign Sub-Custodian or the failure by the
Sub-Custodian to use reasonable care in the performance of its duties based on
the standards applicable to custodians in the relevant market, or from the
fraud, willful default or negligence (measured in accordance with the standards
prevailing in the relevant market) of such Foreign Sub-Custodian in the
provision of custodial services by it.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money
other than cash held by the Custodian on behalf of the Fund pursuant to this
Contract or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money other than cash held by the Custodian on behalf of the Fund
pursuant to this Contract or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities other than cash or securities held by the
Custodian on behalf of the Fund pursuant to this Contract for any purpose for
the benefit of a Portfolio (including but not limited to securities settlements,
foreign exchange contracts and assumed settlement) or in the event that the
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect, unless
expressly provided otherwise in this Contract, not sooner than thirty (30) days
after the date of such delivery or mailing; PROVIDED, however that the Custodian
shall not with respect to a Portfolio act under Section 2.9 hereof in the
absence of receipt of a certificate of the Secretary or an Assistant Secretary
that the Board of Trustees of the Fund has approved the initial use of a
particular U.S. Securities System by such Portfolio or any changes thereto, and
that the Custodian shall not with respect to a Portfolio act under Section 2.10
hereof in the absence of receipt of a certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the initial use of
the Direct Paper System by such Portfolio or any changes thereto; PROVIDED
FURTHER, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Fund's Trust Instrument, and further provided, that the Fund on behalf of
one or more of the Portfolios may at any time by action of its Board of Trustees
(i) substitute another
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<PAGE>
bank or trust company for the Custodian by giving notice as described above to
the Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
reasonable costs, expenses and disbursements pursuant to this Contract.
16. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a U.S. Securities System or at the Schroder Transfer Agent.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts or New York, New York, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of each applicable Portfolio and all instruments held by
the Custodian relative thereto and all other property held by it under this
Contract on behalf of each applicable Portfolio and to transfer to an account of
such successor custodian all of the securities of each such Portfolio held in
any U.S. Securities System or at the Schroder Transfer Agent. Thereafter, such
bank or trust company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services (at a rate not greater than the
rate of compensation in effect immediately prior to termination) during such
period as the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
25
<PAGE>
17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Trust Instrument of the
Fund. No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
18. ADDITIONAL PORTFOLIOS
In the event that the Fund establishes one or more series of Interests
in addition to Schroder All-Asia Fund with respect to which it desires to have
the Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Interests shall become a Portfolio
hereunder.
19. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
21. REPRODUCTION OF DOCUMENTS
This Contract 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
all/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 of such reproduction shall likewise be admissible in
evidence.
22. YEAR 2000
Custodian will take reasonable steps to ensure that its products (and
those of its third-party suppliers) reflect the available state of the art
technology to offer products that are Year 2000 compliant, including, but not
limited to, century recognition of dates, calculations that correctly compute
same century and multi- century formulas and date values, and interface values
that reflect
26
<PAGE>
the date issues arising between now and the next one hundred years. If any
changes are required, Custodian will make the changes to its products at no cost
to the Fund and in a commercially reasonable time frame and will require
third-party suppliers to do likewise.
23. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
YES / / The Custodian is authorized to release the Fund's name,
address, and share positions.
NO /X/ The Custodian is not authorized to release the Fund's
name, address, and share positions.
24. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees and officers of the Fund and the Interest holders of the
Portfolios shall not be liable for any obligations of the Fund or of the
Portfolios under this Contract, and the Custodian agrees that, in asserting any
rights or claims under this Contract, it shall look only to the assets and
property of the Fund or the Portfolio(s) to which the Custodian's rights or
claims relate in settlement of such rights or claims, and not to the Trustees or
officers of the Fund or to the Interest holders of any Portfolio.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 31st day of May, 1999.
ATTEST SCHRODER SERIES TRUST II
/s/ Alexandra Poe By /s/ Catherine Mazza
- -------------------- -------------------------
Name: Alexandra Poe Name: Catherine Mazza
Title: Clerk Title: Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ MARC L. PARSONS By /s/ RONALD E. LOGUE
- -------------------- -------------------------
Marc L. Parsons Ronald E. Logue
Associate Counsel Vice Chairman
28
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. Deposito Central de Valores S.A.
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
3/25/99
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb d.d --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
3/25/99
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Iceland Icebank Ltd.
India Deutsche Bank AG --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Ltd.
Japan The Fuji Bank, Limited Japan Securities Depository
Center
Sumitomo Bank, Ltd.
Jordan British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking
Corporation Limited
Latvia JSC Hansabank-Latvija --
3/25/99
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Lebanon British Bank of the Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa -
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
3/25/99
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Poland Citibank (Poland) S.A. --
Bank Polska Kasa Opieki S.A.
Portugal Banco Comercial Portugues --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria d.d. Ljubljana --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
3/25/99
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ottoman Bank
Ukraine ING Bank, Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
</TABLE>
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
3/25/99
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and
Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle
de Depot et de Virement de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia (CBLC)
Bolsa de Valores de Rio de Janeiro
All SSB CLIENTS PRESENTLY USE CBLC
Central de Custodia e de Liquidacao
Financeira de Titulos
Bulgaria Central Depository AD
Bulgarian National Bank
Canada The Canadian Depository
for Securities Limited
People's Republic Shanghai Securities Central Clearing and
of China Registration Corporation
Shenzhen Securities Central Clearing
Co., Ltd.
Costa Rica Central de Valores S.A. (CEVAL)
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Croatia Ministry of Finance
National Bank of Croatia
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (the Danish
Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Central Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland The Finnish Central Securities
Depository
France Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM)
Germany Deutsche Borse Clearing AG
Greece The Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong The Central Clearing and
Settlement System
Central Money Markets Unit
Hungary The Central Depository and Clearing
House (Budapest) Ltd. (KELER)
[MANDATORY FOR GOV'T BONDS ONLY;
SSB DOES NOT USE FOR OTHER SECURITIES]
India The National Securities Depository Limited
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Indonesia Bank Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel The Tel Aviv Stock Exchange Clearing
House Ltd.
Bank of Israel
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica The Jamaican Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia The Latvian Central Depository
Lebanon The Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Lithuania The Central Securities Depository of Lithuania
Malaysia The Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
System
Mauritius The Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
De Nederlandsche Bank N.V.
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentralen (the Norwegian
Registry of Securities)
Oman Muscat Securities Market
Pakistan Central Depository Company of Pakistan Limited
Peru Caja de Valores y Liquidaciones S.A.
(CAVALI)
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Philippines The Philippines Central Depository, Inc.
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury
Poland The National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios (Central)
Romania National Securities Clearing, Settlement and
Depository Co.
Bucharest Stock Exchange Registry Division
Singapore The Central Depository (Pte)
Limited
Monetary Authority of Singapore
Slovak Republic Stredisko Cennych Papierov
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Sri Lanka Central Depository System
(Pvt) Limited
Sweden Vardepapperscentralen AB
(the Swedish Central Securities Depository)
Switzerland Schweizerische Effekten - Giro AG
Taiwan - R.O.C. The Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle de
Compensation et de Depot de
Valeurs Mobilieres
Central Bank of Tunisia
Tunisian Treasury
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine The National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Uruguay Central Bank of Uruguay
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Venezuela Central Bank of Venezuela
Zambia Lusaka Central Depository Limited
Bank of Zambia
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
11/20/98
<PAGE>
SCHEDULE C
MARKET INFORMATION
<TABLE>
<CAPTION>
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
- ------------------------------- -----------------
(FREQUENCY)
<S> <C>
THE GUIDE TO CUSTODY IN WORLD MARKETS An overview of safekeeping and settlement practices and
(annually) procedures in each market in which State Street Bank and
Trust Company offers custodial services.
GLOBAL CUSTODY NETWORK REVIEW Information relating to the operating history and structure of
(annually) depositories and subcustodians located in the markets in which
State Street Bank and Trust Company offers custodial services,
including transnational depositories.
GLOBAL LEGAL SURVEY With respect to each market in which State Street Bank and
(annually) Trust Company offers custodial services, opinions relating to
whether local law restricts (i) access of a fund's independent
public accountants to books and records of a Foreign Sub-Custodian
or Foreign Securities System, (ii) the Fund's ability to recover in the
event of bankruptcy or insolvency of a Foreign Sub-Custodian or Foreign
Securities System, (iii) the Fund's ability to recover in the event of a
loss by a Foreign Sub-Custodian or Foreign Securities System, and (iv)
the ability of a foreign investor to convert cash and cash equivalents to
U.S. dollars.
SUBCUSTODIAN AGREEMENTS Copies of the subcustodian contracts State Street Bank and
(annually) Trust Company has entered into with each subcustodian in the
markets in which State Street Bank and Trust Company offers
subcustody services to its US mutual fund clients.
Network Bulletins (weekly): Developments of interest to investors in the markets in which
State Street Bank and Trust Company offers custodial services.
Foreign Custody Advisories (as
necessary): With respect to markets in which State Street Bank and Trust Company
offers custodial services which exhibit special custody risks, developments
which may impact State Street's ability to deliver expected levels of service.
</TABLE>
<PAGE>
ADDENDUM TO CUSTODIAN CONTRACT
This Addendum amends and supplements the Custodian Contract, dated as
of May 31, 1999 (the "Contract"), by and between Schroder Series Trust II (the
"Fund") and State Street Bank and Trust Company (the "Custodian").
Capitalized terms used in this Addendum, unless otherwise defined
herein or the context clearly indicates otherwise, shall have meaning given to
such terms in the Contract. To the extent that any terms or conditions in this
Addendum are deemed to conflict with terms or conditions in the Contract, the
terms and conditions of the Addendum shall control and be binding on the parties
for all purposes.
1. TAIWAN REQUIREMENTS. The Fund and the Custodian hereby adopt the
attached "State Street Securities Operations - Taiwan: Special Operating
Requirements" (the "Taiwan Operating Requirements") and agree that the Taiwan
Operating Requirements shall apply and be followed by the Fund and the
Custodian.
2. ADDITIONAL PROCEDURES REGARDING PROPER INSTRUCTIONS. If the Custodian
receives a Proper Instruction that it cannot reasonably process (including,
without limitation, a Proper Instruction to deliver a security which is not held
in the relevant Portfolio account or is not held in a deliverable form;
instructions to purchase a security in a market where the Custodian is not able
to process trades for the relevant Portfolio, or a Proper Instruction which the
Custodian, acting reasonable, declines to act upon), the Custodian will notify
the Fund or such person as the Fund may designate, of the fact that the
Custodian believes a Proper Instruction to be unprocessable. Such notification
shall be given within 24 hours of the time that the Custodian received the
Proper Instruction that it believes to be unprocessable. If the 24 hour period
following receipt would expire on a day that is not a business day, it shall be
deemed to expire at the same time of day on the next business day.
If the Custodian is advised that a counterparty has instructions to
settle a trade with the Custodian, or any of its Foreign Sub-Custodians, which
the Custodian has identified as being for the account of any Portfolio and the
Custodian does not have corresponding Proper Instructions from the Fund ("a
Broker Alleged Trade"), the Custodian will notify the Fund of the Broker Alleged
Trade within 24 hours of the Custodian becoming aware of such Broker Alleged
Trade. If such 24 hour period would expire on a day that is not a business day,
it shall be deemed to expire at the same time of day on the next business day.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Addendum to be
executed in its name and behalf by its duly authorized representative as of the
31st day of May, 1999.
SCHRODER SERIES TRUST II
By /s/ Alexandra Poe
----------------------------------
Name: Alexandra Poe
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
By /s/ Ronald E. Logue
----------------------------------
Name: Ronald E. Logue
Title: Vice Chairman
2.
<PAGE>
STATE STREET
SECURITIES OPERATIONS
TAIWAN: SPECIAL OPERATING REQUIREMENTS
These procedures are specific and exclusive to transactions occurring in the
Taiwan market due to the structure of the market, short settlement timeframe,
and stiff penalties incurred for trade failures. All of the following procedures
will be processed on a "best efforts" basis and as outlined below. These
procedures are intended to address situations in which State Street is notified
by our local subcustody provider of a trade or trades for which we have no
instructions, or for which our instructions differ from those of the
counterparty
PREREQUISITES:
- - List of Specified Contacts: telephone (work and home)
- - Standing Instructions authorizing State Street to settle transactions in
the event that a Specified Contact cannot be reached .
I. PROCEDURES FOR NON-RECEIPT OF TRADE INSTRUCTIONS:
1. State Street is notified by local subcustody service provider of lack of
instructions on T+1.
2. State Street initiates the following processes concurrently:
A. Confirms reasonabilty of trade instructions:
- Secures copy of broker trade confirm from subcustodian.
- Confirms that in the case of a sale of shares that the client holds
sufficient shares of the underlying position. In the case of a
purchase, confirms that the client has a sufficient balance of local
currency available.
- Verifies through local sources that the value of trade is consistent
with current local values.
B. Begins the process of contacting those individuals specified by
agreement between client and State Street business unit.
3. In the event that State Street is able to contact a specified individual,
State Street relays relevant information and accepts authorization via
telephone to settle the transaction in accordance with instructions
contained in the broker confirmation.
4. In the event that State Street is unable to contact a specified individual,
State Street authorizes the subcustodian to settle the transaction in
accordance with the broker trade confirmation relying upon the Standing
Instructions from the client authorizing this course of action.
II. PROCEDURES FOR RESOLUTION OF DIFFERENCES IN TRADE INSTRUCTIONS:
1. State Street is notified by local subcustody service provider on T+1 of a
difference in trade instructions between those provided by State Street and
those known by the counterparty to the trade.
2. State Street initiates the following processes concurrently:
A. Confirms reasonability of corrected trade instructions as provided by
the local broker to the subcustodian during the prematch process:
- Secures copy of broker trade confirm from subcustodian
- Confirms that in the case of a sale of shares that the client holds
sufficient shares of the underlying position. In the case of a
purchase, confirms that the client has a sufficient balance of local
currency available.
<PAGE>
SCHRODER SERIES TRUST II
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
AGREEMENT, made effective the 9th day of December, 1997, as amended and
restated as of this 1st day of June, 1999, between Schroder Series Trust II (the
"Trust"), a Delaware business trust and Schroder Fund Advisors Inc.
("Schroders") , a Maryland corporation each with their respective 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 Investment Management North America Inc. (the "Adviser"), pursuant
to which the Adviser provides investment advisory services to the Trust's
series;
WHEREAS, the Trust desires that Schroder 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 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 agree as follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints Schroder as administrator of the Trust and of
each Fund and any Class thereof, and Schroder hereby accepts such appointment,
all in accordance with the terms and conditions of this Agreement. In connection
therewith, the Trust has delivered to Schroder copies of its Trust Instrument
and the Trust's Registration Statement, 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 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 such of the accounts and
records previously maintained by or for it as are necessary for Schroder to
perform its functions under this Agreement. The Trust authorizes Schroder to
rely on such accounts and records turned over to it and hereby indemnifies and
will hold Schroder, 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
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 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.
(b) With respect to the Trust, each Fund and any class thereof, as
applicable, Schroder shall:
(i) oversee: (A) the preparation and maintenance by the
Adviser and the Trust's
1
<PAGE>
subadministrator, custodian, transfer agent, dividend
disbursing agent, shareholder servicing 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, shareholder servicing 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;
(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 (the "SEC") 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 SEC 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
(xii) advise the Trust and its Board on matters concerning the
affairs of the Trust or a Fund.
(c) Schroder shall oversee the preparation and maintenance, or
cause to be prepared and records in such form for such periods and in such
locations as may be required by applicable all documents and records relating to
the services provided to the Trust pursuant to this Agreement be maintained
pursuant to the 1940 Act, rules and regulations of the SEC 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 or an entity Subcontracted by Schroder, shall
be the property of the Trust. The Trust or the Trust's authorized
2
<PAGE>
representatives. shall have access to such accounts and records at all times
during Schroder'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 Schroder to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor to any of
Schroder's obligations under this agreement, Schroder 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 , or its subcontractor,
under this Agreement.
SECTION 4. STANDARD OF CARE
(a) Schroder, 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's undertaking to render these services, the Trust hereby
agrees to indemnify and hold harmless Schroder, its employees, agents, officers
and directors, from any and all loss, liability and expense, including any legal
expenses, arising out of Schroder's performance under this Agreement, or status,
or any act or omission of Schroder, its employees, agents, officers and
directors; provided that this indemnification shall not apply to Schroder's
actions taken or failures to act in cases of Schroder's own bad faith, willful
misconduct or gross negligence in the performance of its duties under this
Agreement; and further provided, that Schroder 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, 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, which approval shall not 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, 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 does not approve of counsel chosen by the Trust or
Schroder 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, its employees, agents, officers and directors for the fees
and expenses of any one law firm retained as counsel by Schroder or them.
Schroder 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:
(b) Schroder may rely upon the advice of the Trust or of counsel, who
may be counsel for the Trust or counsel for Schroder. 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 shall not be liable
to anyone for any actions taken in good faith upon such statements.
(c) Schroder 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 shall have no
duty or obligation to make any inquiry or effort of certification of such oral
instruction.
(d) Schroder 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 may rely upon the genuineness of any such document or copy
thereof reasonably believed in good faith by Schroder to have been validly
executed.
(e) Schroder 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 or other person to reimburse
any expenses of the Trust that
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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;
(d) expenses of issue, repurchase and redemption of shares: (e) interest
charges. taxes and brokerage fees and commissions; (f) premiums of insurance for
the Trust, its Trustees and officers and fidelity, bond premiums; (g) fees,
interest charges and expenses of third parties, including the Trust's custodian,
transfer agent, dividend disbursing agent and fund accountant; (h) fees of
pricing, interest, dividend, credit and other reporting services; (i) costs of
membership in trade associations; (j) telecommunications expenses: (k) funds
transmission expenses; (l) auditing, legal and compliance expenses; (m) costs of
forming the Trust and maintaining its existence; (n) 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; (o) expenses of meetings of shareholders and proxy solicitations
therefor; (p) 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; (q)
costs of reproduction, stationery and supplies; (r) fees and expenses of the
Trust's Trustees; (s) compensation of the Trust's officers and employees who are
not employees of the Adviser or Schroder or their respective affiliated persons,
and costs of other personnel (who may be employees of the Adviser, Schroder or
their respective affiliated persons) performing services for the Trust; (t)
costs of Trustee meetings; (u) Securities and Exchange Commission registration
fees and related expenses; (v) state or foreign securities laws registration
fees and related expenses; and (w) all fees and expenses paid by the Trust in
accordance with any distribution plan adopted pursuant to Rule 12b-I 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 shall pay that Fund an amount
equal to a percentage of that excess ("Schroder's reimbursement"), such
Schroder's reimbursement to be in an amount proportionate to the total fees
payable on behalf of that Fund to Schroder 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 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 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's
reimbursement) of a pro rata portion (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 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 under this
Agreement, the Trust will pay Schroder, 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. If 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 Schroder such compensation as shall be payable
prior to the effective date of such termination.
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(b) In the event that this Agreement is terminated, Schroder shall be
reimbursed for 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 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 and its affiliated 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-I under the 1940 Act: or
(ii) the provision of shareholder support or other services. including
shareholder subaccounting services.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date first above
written with respect to each Fund is 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, or (ii) by Schroder on 60 days' written notice to
the Trust. Upon receiving notice of termination by Schroder, 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 of all fees owed through the effective termination date, and
reimbursement for reasonable charges and disbursements, Schroder shall promptly
transfer to the successor administrator the original or copies of all accounts
and records maintained by Schroder 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 Schroder continues to perform any of the
services contemplated by this Agreement after termination of this Agreement as
agreed to by the Trust and Schroder, the provisions of Sections 4 and 6 hereof
shall continue in full force and effect.
SECTION 8. ACTIVITIES OF SCHRODER
(a) Except to the extent necessary to perform Schroder's
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the right of Schroder, or any affiliate of Schroder, or any employee of
the Schroder, 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 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, who
agree to comply with the terms of this Agreement. Schroder may pay those persons
for their services, but no such payment will increase Schroder's compensation
from the Trust.
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SECTION 9. COOPERATION WITH INDEPENDENT AUDITORS
Schroder 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, 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
787 Seventh Avenue, 34th Floor
New York, New York 10019
Notice to Schroder shall be given as follows or at such other address as
Schroder 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 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'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.
(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.
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(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 or by Schroder 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
-------------------------
Name: Catherine A. Mazza
Title: Vice President
SCHRODER FUND ADVISORS INC
By: /s/ Alexandra Poe
-------------------------
Name: Alexandra Poe
Title: Senior Vice President
APPENDIX A
FUNDS OF THE TRUST
Schroder All-Asia Fund
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APPENDIX B
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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SUB-ADMINISTRATION AGREEMENT
Agreement dated as of June 1, 1999, among Schroder Fund Advisors Inc.
(the "Administrator"), Schroder Capital Funds, Schroder Capital Funds (Delaware)
and Schroder Series Trust II (hereinafter "The Schroder Capital Funds Family" or
the "Trusts") and State Street Bank and Trust Company, a Massachusetts trust
company (the "Bank").
WHEREAS, the Trusts are registered as open-end, management investment
companies under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Administrator acts as administrator to the Trusts;
WHEREAS, the Administrator and the Trusts desire to retain the Bank to
furnish certain administrative services to the Trusts, and the Bank is willing
to furnish such services, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF BANK
The Administrator and the Trusts hereby appoint the Bank to act as
sub-administrator with respect to the Trusts for purposes of providing certain
administrative services for the period and on the terms set forth in this
Agreement. The Bank accepts such appointment and agrees to render the services
stated herein.
The Trusts will initially consist of the portfolio(s) and/or class(es)
of shares (each an "Investment Fund") listed in Schedule A to this Agreement. In
the event that any Trust establishes one or more additional Investment Funds
with respect to which the Administrator and the Trust wish to retain the Bank to
act as administrator hereunder, the Administrator and such Trust shall notify
the Bank in writing. Upon written acceptance by the Bank, such Investment Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Investment Funds, except to the extent that such provisions
(including those relating to the compensation and expenses payable by the Trusts
and their Investment Funds) may be modified with respect to each additional
Investment Fund in writing by the Administrator, the Trusts and the Bank at the
time of the addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Trusts will promptly deliver to the Bank copies of each of the
following documents and all future amendments and supplements, if any:
a. Each Trust's Declaration of Trust or comparable document;
b. Each Trust's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), where
applicable, and the 1940 Act and each Trust's Prospectus(es) and
Statement(s) of Additional Information relating to all
<PAGE>
Investment Funds and all amendments and supplements thereto as in
effect from time to time;
c. Certified copies of the resolutions of the Board of Trustees of
each Trust (the "Board") authorizing (1) the Trust to enter into
this Agreement and (2) certain individuals on behalf of the Trust
to (a) give instructions to the Bank pursuant to this Agreement
and (b) sign checks and pay expenses on behalf of the Trust;
d. A copy of the investment advisory agreement between each Trust
and its investment adviser, including any sub-advisory agreement
between the Trust and its investment sub-adviser, if any; and
e. Such other certificates, documents or opinions which the Bank
may, in its reasonable discretion, deem necessary or appropriate
in the proper performance of its duties.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Trusts that:
a. It is a Massachusetts trust company, duly organized and
existing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted
or threatened which would impair the Bank's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement
or obligation of the Bank or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE TRUSTS
Each Trust represents and warrants to the Bank that:
a. With respect to Schroder Capital Funds, Schroder Capital
Funds (Delaware) and Schroder Series Trust II, each is a
business trust, duly organized, existing and in good
standing under the laws of the State of Delaware;
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b. It has the corporate power and authority under applicable
laws and under its Declaration of Trust and by-laws or
comparable documents to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the
1940 Act;
e. A registration statement under the 1933 Act, where
applicable, and the 1940 Act has been filed and will be
effective and remain effective during the term of this
Agreement. Each Trust also warrants to the Bank that as of
the effective date of this Agreement, all necessary filings
under the securities laws of the states in which the Trust
offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted
or threatened which would impair the Trust's ability to
perform its duties and obligations under this Agreement;
g. Its entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement
or obligation of the Trust or any law or regulation
applicable to it; and
h. As of the close of business on the date of this Agreement,
the Trust is authorized to issue shares of beneficial
interest in the authorized amounts as set forth in Schedule
A to this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Bank that:
a. It is a corporation, duly organized, existing and in good
standing under the laws of The State of New York;
b. It has the power and authority under New York law and by its
charter and by-laws to enter into and perform this
Agreement;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted
or threatened which would impair the Administrator's ability
to perform its duties and obligations under this Agreement;
and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement
or obligation of the Administrator or any law or regulation
applicable to it.
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6. ADMINISTRATION SERVICES
The Bank shall provide the following services, in each case, subject to
the control, supervision and direction of the Trusts and the Administrator and
the review and comment by each Trust's and the Administrator's auditors and
legal counsel and in accordance with procedures which may be established from
time to time among a Trust, the Administrator and the Bank:
a. Oversee the determination of each Investment Fund's net asset
value in accordance with each Investment Fund's policy as adopted
from time to time by the Board;
b. Prepare on a timely basis each Investment Fund's federal, state
and local income tax returns for review by the Investment Fund's
independent accountants and filing by each Investment Fund's
treasurer;
c. Review the calculation of, submit for approval by officers of
each Investment Fund and arrange for payment of each Investment
Fund's expenses;
d. Prepare on a timely basis for review and approval by officers of
each Investment Fund financial information for each Investment
Fund's semi-annual and annual reports, proxy statements and other
communications with shareholders required or otherwise to be sent
to Investment Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
e. Prepare on a timely basis reports relating to the business and
affairs of each Investment Fund as may be mutually agreed upon
and not otherwise prepared by each Investment Fund's investment
advisor, custodian, legal counsel or independent accountants;
f. Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may
reasonably request;
g. Make such reports and recommendations to the Board concerning the
performance and fees of each Investment Fund's custodian and
transfer and dividend disbursing agent ("Transfer Agent") as the
Board may reasonably request or deem appropriate;
h. Oversee and review calculations of fees paid to each Investment
Fund's investment advisor, custodian and Transfer Agent;
i. Consult with each Investment Fund's officers, independent
accountants, legal counsel, custodian and Transfer Agent in
establishing the accounting policies of the Investment Fund;
j. Respond to, or refer to each Investment Fund's officers or
Transfer Agent, shareholder inquiries relating to the Investment
Fund;
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k. Provide periodic testing of portfolios to assist each Investment
Fund's investment advisor in complying with Investment Fund
investment limitations as may be mutually agreed upon;
l. Blue Sky notice filing and reporting;
m. Oversee the maintenance of certain books and records of each
Trust as required under Rule 31a-1(b)(4) of the 1940 Act;
n. Prepare on a timely basis for review by an officer or the counsel
for each Trust the Trust's periodic financial report required to
be filed with the Securities and Exchange Commission (the "SEC")
on Form N-SAR and Form N-1A and such other reports, forms or
filings, as may be mutually agreed upon;
o. Provide periodic testing of the Investment Funds to assist the
Administrator in complying with Internal Revenue Code mandatory
qualification requirements, the requirements of the Investment
Company Act and Trust prospectus limitations as may be mutually
agreed upon and provide on a timely basis quarterly reports to
the Trustees as to such compliance;
p. Prepare on a timely basis recommendations of distributions to be
made by each of the Investment Funds in order to comply with the
requirements outlined in paragraph (o) above, for review by the
Investment Funds' auditors and officers;
LIMITED LEGAL SUPPORT:
q. Consult on Blue Sky matters;
r. Provide assistance with developing and maintaining an SEC filing
calendar; and
s. Process insurance renewals.
The Bank may provide additional legal services to the
Administrator and the Trusts for an additional fee as described in the
Fee Schedule. The Bank shall provide the office facilities and the
personnel required by it to perform the services contemplated herein.
The Bank will take reasonable steps to ensure that its products (and
those of its third-party suppliers) reflect the available state of the art
echnology to offer products that are Year 2000 compliant, including, but not
limited to, century recognition of dates, calculations that correctly compute
same century and multi- century formulas and date values, and interface values
that reflect the date issues arising between now and the next one hundred years.
If any changes are required, the Bank will make the changes to its products at
no cost to the Administrator or the Trusts and in a commercially reasonable time
frame and will require third-party suppliers to do likewise.
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6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Bank shall receive from each Trust such compensation for the Bank's
services provided pursuant to this Agreement as may be agreed to from time to
time in a written fee schedule approved by the parties and initially set forth
in the Fee Schedule to this Agreement. The fees are accrued daily and billed
monthly and shall be due and payable upon receipt of the invoice. Upon the
termination of this Agreement before the end of any month, the fee for the part
of the month before such termination shall be prorated according to the
proportion which such part bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. In addition, each Trust shall
reimburse the Bank for its reasonable out-of-pocket costs incurred in connection
with its performance of this Agreement in respect of that Trust.
The Trusts agree promptly to reimburse the Bank for any equipment and
supplies specially ordered by or for the Trusts, or the Administrator, through
the Bank and for any other expenses not contemplated by this Agreement that the
Bank may incur on any Trust's or the Administrator's behalf, at the Trust's or
the Administrator's request or with any Trust's or the Administrator's consent.
Each Trust will bear all expenses that are incurred in its operation
and not specifically assumed by the Bank. Expenses to be borne by the Trusts,
include, but are not limited to: organizational expenses; cost of services of
independent accountants and outside legal and tax counsel (including such
counsel's review of each Trust's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Bank under this Agreement); cost of any
services contracted for by the Trusts directly from parties other than the Bank;
cost of trading operations and brokerage fees, commissions and transfer taxes in
connection with the purchase and sale of securities for the Trusts; investment
advisory fees; taxes, insurance premiums and other fees and expenses applicable
to each Trust's operation; costs incidental to any meetings of shareholders
including, but not limited to, legal and accounting fees, proxy filing fees and
the costs of preparation, filing (including edgarization), printing and mailing
of any proxy materials; costs incidental to Board meetings, including fees and
expenses of Board members; the salary and expenses of any officer,
director/trustee or employee of the Trusts; costs incidental to the preparation,
filing (including edgarization), printing and distribution of each Trust's
registration statements and any amendments thereto, and shareholder reports;
cost of typesetting and printing of prospectuses; cost (other than internal
costs of the Bank in its performance of its obligations under this Agreement) of
preparation and filing of each Trust's tax returns, Form N-1A and Form N-SAR,
and all notices, registrations and amendments associated with applicable federal
and state tax and securities laws; all applicable registration fees and filing
fees required under federal and state securities laws; fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services used in computing each Trust's net asset value.
The Bank is authorized to and may employ or associate with such person
or persons as the Bank may deem desirable to assist it in performing its duties
under this Agreement; provided, however, that the compensation of such person or
persons shall be paid by the Bank and that the Bank shall be as fully
responsible to the Trusts for the acts and omissions of any such person or
persons as it is for its own acts and omissions.
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7. INSTRUCTIONS AND ADVICE
At any time, the Bank may apply to any officer of the Trusts or the
Administrator for instructions and may consult with its own outside legal
counsel or outside counsel for the Trusts or the independent accountants for the
Trusts at the expense of the Trusts, with respect to any matter arising in
connection with the services to be performed by the Bank under this Agreement.
The Bank shall not be liable, and shall be indemnified by the Trusts, for any
action taken or omitted by it in good faith in reliance upon any such
instructions or advice or upon any paper or document reasonably believed by it
to be genuine and to have been signed by the proper person or persons. The Bank
shall not be held to have notice of any change of authority of any person until
receipt of written notice thereof from the Trusts. Nothing in this paragraph
shall be construed as imposing upon the Bank any obligation to seek such
instructions or advice of counsel or independents accountants, or to act in
accordance with such advice or the Administrator when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement and, except as otherwise provided under
Section 6, shall have no responsibility for the actions or activities of any
other party, including other service providers. The Bank shall have no liability
for any error of judgment or mistake of law or for any loss or damage resulting
from the performance or nonperformance of its duties hereunder except to the
extent caused by or resulting from the negligence or willful misconduct of the
Bank, its officers or employees. Neither party shall be liable for any special,
indirect, incidental, or consequential damages of any kind whatsoever
(including, without limitation, attorneys' fees) under any provision of this
Agreement (including this Section 8) or for any such damages arising out of any
act or failure to act hereunder. In any event, the Bank's liability under this
Agreement shall be limited to two and one half (2 1/2) times its total annual
compensation earned and fees paid hereunder during the preceding twelve months
for any liability or loss suffered by the Administrator, the Trusts or the
Investment Funds, including, but not limited to, any liability relating to
qualification of any Trust as a regulated investment company or any liability
relating to any Trust's compliance with any federal or state tax or securities
statute, regulation or ruling. If this Agreement has been in effect for less
than twelve months, all fees paid during the period that the Agreement has been
in effect plus all fees payable for the remainder of the initial twelve month
period shall be used to calculate the limitation of liability hereunder.
The Bank 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 control, including without
limitation, work stoppage, power or other mechanical failure, computer virus,
natural disaster, governmental action or communication disruption.
The Administrator and the Trusts shall indemnify and hold the Bank
harmless from all loss, cost, damage and expense, including reasonable fees and
expenses for counsel, incurred by the Bank resulting from any claim, demand,
action or suit in connection with the Bank's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Administrator and the Trusts, provided that this
indemnification shall not apply to actions or omissions of the Bank, its
officers or employees in cases of its or their own negligence or willful
misconduct.
7
<PAGE>
The Administrator and the Trusts will be entitled to participate at
their own expense in the defense, or, if it so elects, to assume the defense of
any suit which might be the subject of the indemnification provided above. In
the event the Administrator and/or the Trusts elect to assume the defense of any
suit and retain such counsel, the Bank or any other person entitled to such
indemnification, named as defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
the Administrator or the Trusts have specifically authorized the retaining of
such counsel.
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Bank agrees that, except as otherwise required by law or in
connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential the terms of this Agreement and all records
and information in its possession relating to the Trusts or their shareholders
or shareholder accounts and will not disclose the same to any person except at
the request or with the written consent of the Trusts.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Trusts assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Bank agrees that all records which it maintains for the Trusts shall at all
times remain the property of the Trusts, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Bank further agrees that all
records which it maintains for the Trusts pursuant to Rule 31a-1 under the 1940
Act will be preserved for the periods prescribed by Rule 31a-2 under the 1940
Act unless any such records are earlier surrendered as provided above. Records
shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Bank to the Trusts are not to be deemed exclusive,
and the Bank shall be free to render similar services to others. The Bank shall
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Trusts from time to time, have no authority
to act or represent the Trusts in any way or otherwise be deemed an agent of the
Trusts.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on the date of its execution
and shall remain in full force and effect from the effective date for an
initial term of three years from the effective date and shall automatically
continue in full force and effect after such initial term unless any party
terminates this Agreement by written notice to the other parties at least
sixty (60) days prior to the expiration of the initial term. Any party may
terminate this Agreement at any time after the initial term upon at least
sixty (60) days' prior written notice to the other parties. In addition, a
Trust may terminate this Agreement without penalty as to any Investment Fund
during the initial term upon at least sixty (60) days' prior written notice
8
<PAGE>
to the other parties; provided, however, that, in the event of such
termination (other than following material breach by the Bank of this
Agreement not remedied within 30 days or following any assignment of this
Agreement by the Bank which is not reasonably acceptable to a Trust) the
Trust, on behalf of such Investment Fund, will pay to the Bank an amount
equal to the difference between (i) the fees that would have been payable by
such Investment Fund for the period prior to such termination if the fee
schedule for the third year of the initial term had been in effect during
such period and (ii) the fees actually paid by that Investment Fund for the
period. Termination of this Agreement with respect to any given Investment
Fund shall in no way affect the continued validity of this Agreement with
respect to any other Investment Fund. Upon termination of this Agreement, the
Trusts shall pay to the Bank such compensation and any reimbursable expenses
as may be due under the terms hereof as of the date of such termination,
including reasonable out-of-pocket expenses associated with such termination.
This Agreement may be modified or amended from time to time by mutual written
agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to any party shall be in writing and deemed to have been
given when delivered in person, by overnight courier or by confirmed facsimile,
or by certified mail, return receipt requested, to the following address (or
such other address as a party may specify by written notice to the other): If to
the Administrator: Schroder Fund Advisors Inc., 787 Seventh Avenue, 34th Floor,
New York, NY 10019, Attn: Catherine A. Mazza and Alexandra Poe, fax:
212-641-3897; if to the Trusts: c/o Schroder Capital Management International
Inc., 787 Seventh Avenue, 34th Floor, New York, NY 10019, Attn: Alexandra Poe;
fax: 212-641-3877; if to the Bank: State Street Bank and Trust Company, 1776
Heritage Drive, AFB-4, North Quincy, Massachusetts 02171, Attn: Fund
Administration Legal Department, fax: 617-537-2578.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by any party hereto without the
prior consent in writing of the other two parties, except that the Bank may
assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Bank.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Trusts, the Administrator and the Bank and their respective successors and
permitted assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding among the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
9
<PAGE>
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
18. LIMITATION OF LIABILITY OF TRUSTEES AND SHAREHOLDERS
Notice is hereby given that this Agreement is executed on behalf of the
Trustees of each Trust as Trustees and not individually and that the obligations
of this Agreement are not binding upon any of the Trustees or Shareholders of
any Trust individually but are binding only upon the assets and property of the
Investment Fund in question.
19. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
20. GOVERNING LAW
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
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
all/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 of such reproduction shall likewise be admissible in
evidence.
22. RIGHTS AND OBLIGATIONS OF THE FUNDS SEVERAL
The parties agree that this Agreement shall constitute a separate and
discrete agreement among the Bank, the Administrator and each Investment Fund,
as if set out in a separate writing executed by the Bank, the Administrator and
a Trust on behalf of each Investment Fund alone. Notwithstanding any other
provision of this Agreement, no Investment Fund shall have any obligation or
incur any liability (including without limitation by way of indemnification) in
respect of any action, omission or course of dealing of or in respect of, any
other Investment Fund. Any reference in this Agreement to a "Trust," the
"Trusts" or an "Investment Fund" shall be construed so as to give effect to the
foregoing.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
SCHRODER CAPITAL FUNDS
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER SERIES TRUST
By: /s/ Catherine Mazza
---------------------------
Name: Catherine Mazza
---------------------------
Title:Vice President
---------------------------
SCHRODER FUND ADVISORS, INC.
By: /s/ Alan M. Mandel
---------------------------
Name: Alan M. Mandel
---------------------------
Title:Senior Vice President
---------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathleen C. Cuocolo
---------------------------
Name: Kathleen C. Cuocolo
---------------------------
Title:Senior Vice President
---------------------------
11
<PAGE>
SUB-ADMINISTRATION AGREEMENT
SCHEDULE A
LISTING OF INVESTMENT FUNDS AND AUTHORIZED SHARES
INVESTMENT FUND AUTHORIZED SHARES
SCHRODER SERIES TRUST II Unlimited
- - Schroder All-Asia Fund
SCHRODER CAPITAL FUNDS Unlimited
- - Schroder Global Growth Portfolio
- - Schroder Japan Portfolio
- - Schroder Asian Growth Fund Portfolio
- - Schroder EM Core Portfolio
SCHRODER CAPITAL FUNDS (DELAWARE) Unlimited
- - Schroder US Smaller Companies Fund
- - Schroder International Fund
- - Schroder International Smaller Companies Fund
- - Schroder Emerging Markets Fund Institutional
Portfolio
- - Schroder Emerging Markets Fund
- - Schroder Micro Cap Fund
- - Schroder U.S. Diversified Growth Fund
- - Schroder Greater China Fund
12
<PAGE>
SUB-ADMINISTRATION AGREEMENT
SCHRODER CAPITAL FUNDS FAMILY
SCHEDULE B
NOTICE FILING WITH
STATE SECURITIES AUTHORITIES
AT THE SPECIFIC DIRECTION OF THE TRUSTS, THE BANK WILL PREPARE REQUIRED
DOCUMENTATION AND MAKE NOTICE FILINGS IN ACCORDANCE WITH THE SECURITIES LAWS OF
EACH JURISDICTION IN WHICH TRUST SHARES ARE TO BE OFFERED OR SOLD PURSUANT TO
INSTRUCTIONS GIVEN TO THE BANK BY THE TRUSTS.
THE TRUSTS SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (i) OF THOSE
JURISDICTIONS IN WHICH NOTICE FILINGS ARE TO BE SUBMITTED AND (ii) THE NUMBER OF
TRUST SHARES TO BE PERMITTED TO BE SOLD IN EACH SUCH JURISDICTION. IN THE EVENT
THAT THE BANK BECOMES AWARE OF (a) THE SALE OF TRUST SHARES IN A JURISDICTION IN
WHICH NO NOTICE FILING HAS BEEN MADE OR (b) THE SALE OF TRUST SHARES IN EXCESS
OF THE NUMBER OF TRUST SHARES PERMITTED TO BE SOLD IN SUCH JURISDICTION, THE
BANK SHALL REPORT SUCH INFORMATION TO THE TRUSTS, AND IT SHALL BE THE
RESPONSIBILITY OF THE TRUST IN QUESTION TO DETERMINE APPROPRIATE CORRECTIVE
ACTION AND INSTRUCT THE BANK WITH RESPECT THERETO.
The Blue Sky services provided by the Bank hereunder shall consist of the
following:
1. Filing of the Trusts' Initial Notice Filings, as directed by the
Trusts;
2. Filing of the Trusts' renewals and amendments as required;
3. Filing of amendments to the Trust's registration statement where
required;
4. Filing Trust sales reports where required;
5. Payment at the expense of the Trusts of all Trust Notice Filing fees;
6. Filing the Prospectuses and Statements of Additional Information of
the Trusts and any amendments or supplements thereto where required;
7. Filing of annual reports, supplements and stickers, and proxy
statements where required; and
8. The performance of such additional services as the Bank and the Trusts
may agree upon in writing.
Unless otherwise specified in writing by the Bank, Blue Sky services by the Bank
shall not include determining the availability of exemptions under a
jurisdiction's blue sky law. Any such determination shall be made by the Trusts
or their legal counsel. In connection with the services described herein, the
Trusts shall issue in favor of the Bank a power of attorney to submit Notice
Filings on behalf of the Trust, which power of attorney shall be substantially
in the form of Exhibit I attached hereto.
13
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of JUNE 1, 1999 that Schroder Capital Funds
with principal offices at 787 Seventh Avenue, New York, New York 10019-6016 (the
"Trust") makes, constitutes, and appoints STATE STREET BANK AND TRUST COMPANY
(the "Bank") with principal offices at 225 Franklin Street, Boston,
Massachusetts its lawful attorney-in-fact for it to do as if it were itself
acting, the following:
1. REGISTRATION OF TRUST SHARES. The power to register shares of the Trust in
each jurisdiction in which Trust's shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Trust applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgment of the Bank in connection with the registration
of Trust shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky Bank at
the Bank shall have authority to act on behalf of the Trust with respect to
item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Bank of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Bank as or otherwise authorize the Bank to act as an officer,
director or employee of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
SCHRODER CAPITAL FUNDS
By: /s/ Catherine Mazza
------------------------
Name: Catherine Mazza
---------------------
Title: Vice President
---------------------
14
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of JUNE 1, 1999 that Schroder Capital Funds
(Delaware) with principal offices at 787 Seventh Avenue, New York, New York
10019-6016 (the "Trust") makes, constitutes, and appoints STATE STREET BANK AND
TRUST COMPANY (the "Bank") with principal offices at 225 Franklin Street,
Boston, Massachusetts its lawful attorney-in-fact for it to do as if it were
itself acting, the following:
1. REGISTRATION OF TRUST SHARES. The power to register shares of the Trust in
each jurisdiction in which Trust's shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Trust applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgment of the Bank in connection with the registration
of Trust shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky Bank at
the Bank shall have authority to act on behalf of the Trust with respect to
item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Bank of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Bank as or otherwise authorize the Bank to act as an officer,
director or employee of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
SCHRODER CAPITAL FUNDS (DELAWARE)
By: /s/ Catherine Mazza
-----------------------
Name: Catherine Mazza
---------------------
Title: Vice President
---------------------
15
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of JUNE 1 , 1999 that Schroder Series Trust
II with principal offices at 787 Seventh Avenue, New York, New York 10019-6016
(the "Trust") makes, constitutes, and appoints STATE STREET BANK AND TRUST
COMPANY (the "Bank") with principal offices at 225 Franklin Street, Boston,
Massachusetts its lawful attorney-in-fact for it to do as if it were itself
acting, the following:
1. REGISTRATION OF TRUST SHARES. The power to register shares of the Trust in
each jurisdiction in which Trust's shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Trust applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgment of the Bank in connection with the registration
of Trust shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky Bank at
the Bank shall have authority to act on behalf of the Trust with respect to
item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Bank of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Bank as or otherwise authorize the Bank to act as an officer,
director or employee of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
SCHRODER SERIES TRUST II
By: /s/ Catherine Mazza
-----------------------
Name: Catherine Mazza
---------------------
Title: Vice President
---------------------
16
<PAGE>
February 22, 2000
Schroder Series Trust II
P.O. Box 8507
Boston, Massachusetts 02266
Re: SCHRODER SERIES TRUST II
------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to Schroder Series Trust II,
a Delaware business trust (the "Trust"), in connection with certain matters
relating to the issuance of Shares of the Trust. Capitalized terms used herein
and not otherwise herein defined are used as defined in the Trust Instrument of
the Trust dated December 4, 1997 (the "Governing Instrument").
In rendering this opinion, we have examined copies of the following
documents, each in the form provided to us: the Certificate of Trust of the
Trust as filed in the Office of the Secretary of State of Delaware (the "State
Office") on December 5, 1997; the Governing Instrument; the By-laws of the Trust
dated as of December 9, 1997 (the "By-laws" and, together with the Governing
Instrument and all of the foregoing actions by the Trustees of the Trust, the
"Governing Documents"); the Minutes of the Meeting of the Initial Board of
Trustees of the Trust dated as of December 4, 1997; the Trust's Notification of
Registration Filed Pursuant to Section 8(b) of the Investment Company Act of
1940 on Form N-8A as filed with the Securities and Exchange Commission on
December 19, 1997; and a certification of good standing of the Trust obtained as
of a recent date from the State Office. In such examinations, we have assumed
the genuineness of all signatures, the conformity to original documents of all
documents submitted to us as copies or drafts of documents to be executed, and
the legal capacity of natural persons to complete the execution of documents. We
have further assumed for the purpose of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity (other than the
Trust) that is a party to any of the documents reviewed by us under the laws of
the jurisdiction of its respective formation or organization; (ii) the due
adoption, authorization, execution and delivery by, or on behalf of, each of the
parties thereto of the above-referenced resolutions, instruments,
<PAGE>
Schroder Series Trust II
February 22, 2000
Page 2
certificates and other documents, and of all documents contemplated by the
Governing Documents to be executed by investors acquiring Shares; (iii) the
payment of consideration for Shares, and the application of such consideration,
as provided in the Governing Documents, and compliance with the other terms,
conditions and restrictions set forth in the Governing Documents in connection
with the issuance of Shares (including, without limitation, the taking of all
appropriate action by the Trustees to designate Series of Shares and the rights
and preferences attributable thereto as contemplated by the Governing
Instrument); (iv) that appropriate notation of the names and addresses of, the
number of Shares held by, and the consideration paid by, Shareholders will be
maintained in the appropriate registers and other books and records of the Trust
in connection with the issuance, redemption or transfer of Shares; (v) that no
event has occurred subsequent to the filing of the Certificate that would cause
a termination or reorganization of the Trust under Section 12.04 or Section
12.05 of Article XII of the Governing Instrument; (vi) that the Trust became,
prior to or within 180 days following the first issuance of beneficial interests
therein, a registered investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); (vii) that the activities of the Trust have
been and will be conducted in accordance with the terms of the Governing
Instrument and the Delaware Business Trust Act, 12 DEL. C. Sections 3801 ET SEQ.
(the "Delaware Act"); and (viii) that each of the documents examined by us is in
full force and effect and has not been amended, supplemented or otherwise
modified except as herein referenced. No opinion is expressed herein with
respect to the requirements of, or compliance with, federal or state securities
or blue sky laws. Further, we have not participated in the preparation of any
offering documentation relating to the Trust or the Shares and we assume no
responsibility for their contents. As to any facts material to our opinion,
other than those assumed, we have relied without independent investigation on
the above-referenced documents and on the accuracy, as of the date hereof, of
the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly formed and validly existing business trust in
good standing under the laws of the State of Delaware.
2. When issued to Shareholders in accordance with the terms,
conditions, requirements and procedures and for the consideration set forth in
the Governing Documents, the Shares will constitute legally issued, fully paid
and non-assessable Shares of beneficial interest in the Trust.
We hereby consent to the filing of a copy of this opinion with the
Securities and Exchange Commission as a post-effective amendment to the Trust's
Registration Statement on Form N-1A as filed with the Securities and Exchange
Commission. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as provided in this
paragraph, the opinion set forth above is expressed solely for the benefit of
the addressee hereof in connection with the matters
<PAGE>
Schroder Series Trust II
February 22, 2000
Page 3
contemplated hereby and may not be relied upon for any other purpose or by any
other person or entity without our prior written consent. This opinion speaks
only as of the date hereof and is based on our understandings and assumptions as
to present facts, and on the application of Delaware law as the same exists on
the date hereof, and we undertake no obligation to update or supplement this
opinion after the date hereof for the benefit of any person or entity with
respect to any facts or circumstances that may hereafter come to our attention
or any changes in facts or law that may hereafter occur or take effect.
Sincerely,
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A (File No.
333-42943) of our reports dated December 17, 1999, relating to the financial
statements and financial highlights which appear in the October 31, 1999
Annual Report to Shareholders of Schroder All-Asia Fund (the "Fund"), a
series of Schroder Series Trust II, including those of the Fund and of
Schroder Asian Growth Fund Portfolio and Schroder Japan Portfolio, all of
which are also incorporated by reference into the Registration Statement. We
also consent to the references to us under the headings "Financial
Highlights", "Independent Accountants" and "Financial Statements" in such
Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 29, 2000
<PAGE>
POWER OF ATTORNEY
We, the undersigned Trustees and officers of Schroder Series Trust II
(the "Trust"), hereby constitute and appoint Catherine A. Mazza, Alexandra Poe,
Carin F. Muhlbaum, Nancy A. Curtin, and Timothy W. Diggins as our true and
lawful attorneys, with full power to each of them individually and with full
power of substitution, to sign for us, and in each of our names and in the
capacities indicated below, any and all amendments to the Registration Statement
of the Trust on Form N-1A, including all post-effective amendments thereto, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys full power and authority to do and perform each and every act and
thing requisite or necessary to be done in the premises, as fully to all intents
and purposes as said attorney might or could do in person, hereby ratifying and
confirming all that said attorney lawfully could do or cause to be done by
virtue hereof. In executing this Power of Attorney, each of us hereby revokes
and rescinds all powers of attorney granted prior to the date hereof in each of
our capacities as a Trustee or officer of the Trust.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- ---- -------- ----
<S> <C> <C>
/s/ Nancy A. Curtin Trustee and Chairman June 2, 1999
- ------------------- ------------
Nancy A. Curtin
/s/ David M. Salisbury Trustee and Vice Chairman June 2, 1999
- ---------------------- ------------
David M. Salisbury
/s/ Peter E. Guernsey Trustee June 2, 1999
- --------------------- ------------
Peter E. Guernsey
/s/ John I. Howell Trustee June 2, 1999
- ------------------- ------------
John I. Howell
/s/ William L. Means Trustee June 2, 1999
- ------------------- ------------
William L. Means
/s/ Alan Mandel Treasurer and Principal June 2, 1999
- ------------------- Financial and Accounting ------------
Alan Mandel Officer
</TABLE>
