SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
INVESTOR SHARES
This fund's investment objective is long-term capital appreciation through
investment in markets outside the United States. It seeks to achieve its
investment objective by investing primarily in equity securities, which may be
denominated in foreign or U.S. currency, of companies domiciled outside of the
United States that have market capitalizations of $1.5 billion or less at the
time of investment. It is intended for long-term investors seeking international
diversification and willing to accept the risks associated with investment in
smaller companies of foreign markets.
Schroder International Smaller Companies Fund (the "Fund"), a series of Schroder
Capital Funds (Delaware) (the "Trust"), seeks to achieve its investment
objective by investing substantially all of its assets in Schroder International
Smaller Companies Portfolio (the "Portfolio"), which has an identical investment
objective and substantially similar investment policies and strategies as the
Fund. Accordingly, the Fund's investment experience corresponds directly with
the Portfolio's investment experience. The Portfolio is a series of Schroder
Capital Funds ("Schroder Core"). (See "Other Information -- Fund Structure".)
This Prospectus sets forth concisely the information you should know before
investing and should be retained for future reference. To learn more about the
Fund, you may obtain a copy of the Fund's current Statement of Additional
Information (the "SAI"), which is incorporated by reference into this
Prospectus. The SAI dated June 27, 1997, as amended from time to time, has been
filed with the Securities and Exchange Commission ("SEC") and is available along
with other related materials for reference on their Internet Web Site
(http://www.sec.gov) or may be obtained without charge from the Trust by writing
to Two Portland Square, Portland, Maine 04101 or by calling (800) 290-9826. The
Fund has not authorized anyone to provide you with information that is different
from what is contained in this Prospectus or in other documents to which this
Prospectus refers you.
MUTUAL FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FDIC, THE FEDERAL RESERVE SYSTEM OR ANY OTHER GOVERNMENT AGENCY AND ALSO ARE NOT
OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR GUARANTEED BY, ANY BANK OR
ITS AFFILIATES. MUTUAL FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS
JUNE 27, 1997
AS AMENDED
OCTOBER 9, 1997
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FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
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SCHRODER CAPITAL FUNDS (DELAWARE) (800) 290-9826 SCHRODER SERIES TRUST (800) 464-3108
SCHRODER EMERGING MARKETS FUND-- SCHRODER EQUITY VALUE FUND
INSTITUTIONAL PORTFOLIO SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER INTERNATIONAL FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND
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PROSPECTUS SUMMARY
This Prospectus offers Investor Class shares ("Investor Shares" or, at
times, "Shares") of the Fund, which is a separately managed, diversified series
of the Trust, an open-end, management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). The Fund invests substantially
all of its assets in the Portfolio, a separately managed, diversified series of
Schroder Core, an open-end, management investment company registered under the
1940 Act. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION CONTAINED IN THIS PROSPECTUS.
OBJECTIVE. Seeks long-term capital appreciation through investment in
securities markets outside the United States.
STRATEGY. Invests at least 65%, and normally intends to invest
substantially all, of its total assets in by investing primarily in equity
securities, which may be denominated in foreign or U.S. currency, of companies
domiciled outside of the United States that have market capitalizations of $1.5
billion or less at the time of investment.
INVESTMENT ADVISER. The Portfolio's investment adviser is Schroder
Capital Management International Inc. ("SCMI"), 787 Seventh Avenue, New York,
New York 10019. The Fund (and indirectly its shareholders) bears a pro rata
portion of the investment advisory fee the Portfolio pays to SCMI. Prior to
November 1, 1997, the Fund had no operating history. The historical performance
of the Adviser's commingled investment fund for tax-exempt pension and profit
sharing trusts which has substantially similar policies, strategies and risks,
managed by Schroder Capital, the portfolio manager of the Portfolio, is
presented in Appendix A.
ADMINISTRATIVE SERVICES. Schroder Fund Advisors Inc. ("Schroder Advisors")
serves as administrator and distributor of the Fund, and Forum Administrative
Services, Limited Liability Company ("Forum") serves as the Fund's
subadministrator.
PURCHASES AND REDEMPTIONS OF SHARES. Shares may be purchased or
redeemed by mail, by bank-wire or through your broker-dealer or other financial
institution. The minimum initial investment is $10,000, except that the minimum
for an Individual Retirement Account ("IRA") is $2,000. The minimum subsequent
investment is $2,500 except that for IRAs the minimum is $250. (See "Investment
in the Fund -- Purchase of Shares" and "--Redemption of Shares".)
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund annually declares and pays
as a dividend substantially all of its net investment income and any net
realized short-term capital gain and at least annually distributes any net
realized long-term capital gain and gains from foreign currency transactions.
Dividends and capital-gain distributions are reinvested automatically in
additional Investor Shares of the Fund at net asset value unless you elect in
your account application, or otherwise in writing, to receive dividends and
other distributions in cash. (See "Dividends, Distributions and Taxes".)
RISK CONSIDERATIONS. Alone, the Fund is not a balanced investment plan.
It is intended for long-term investors seeking international diversification who
are willing to accept the risks of foreign investing and the risks of investing
in smaller capitalization companies, Investments in smaller capitalization
companies involves risks in addition to those normally associated with investing
in equity securities of large capitalization companies. In addition, investments
in securities of non-U.S. issuers involve certain risks not associated with
domestic investing, such as uncertain political and economic developments, and
the possible imposition of exchange controls or other foreign governmental, laws
or restrictions. Of course, as with any mutual fund, there is no assurance that
the Fund or Portfolio will achieve its investment objective. (See "Investment
Policies" and "Risk Considerations".)
The Fund's net asset value ("NAV") varies because the market value of
the Portfolio's investments will change with changes in market conditions,
interest rates, currency rates, or political or economic events. When you sell
your shares, they may be worth more or less than what you paid for them. (For
further information, see "Risk Considerations".)
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EXPENSES OF INVESTING IN THE FUND
FEE TABLE
The table below is intended to assist you in understanding the expenses
that an investor in Investor Shares of the Fund would incur. There are no
transaction expenses associated with purchases or redemptions of Investor
Shares.
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Annual Fund Operating Expenses (as a percentage of average net assets)(1)
Management Fees (after waivers)(2)(3)................................................................0.00%
12b-1 Fees ...........................................................................................None
OTHER EXPENSES (AFTER WAIVERS AND REIMBURSEMENTS)(2)(3)...............................................1.50
------------------------------------------------------- ----
Total Fund Operating Expenses (after waivers and reimbursements)(2)(3)...............................1.50%
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(1) The Fund's expenses include its pro rata portion of all operating
expenses of the Portfolio.
(2) Management Fees reflect the fees paid by the Portfolio and the Fund
for investment advisory and administrative services.
(3) SCMI and Schroder Advisors have undertaken voluntarily to waive all or
a portion of their fees and assume certain expenses of the Fund during
the current fiscal year in order to limit the Fund's investment
advisory fee to 0.75% and Total Fund Operating Expenses to 1.50% of
the Fund's average daily net assets. This undertaking cannot be
withdrawn except by a majority vote of the Trust's Board of Trustees.
(See "Management of the Fund --Expenses".) Without waivers and
reimbursements, Management Fees, Other Expenses and Total Fund
Operating Expenses would be 1.00%, 3.04%, and 4.04%, respectively.
EXAMPLE
The table below indicates how much you would pay in total expenses on a
$1,000 investment in the Fund, assuming: (i) a 5% annual return; and (ii)
redemption at the end of each time period. The example is based on the expenses
listed above and assumes the reinvestment of all dividends and other
distributions. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURNS; ACTUAL EXPENSES OR RETURNS MAY VARY FROM THOSE
SHOWN. The 5% annual return is not a prediction of the Fund's return but is the
percentage required by the SEC for use in this example.
1 YEAR.............................................................$15
3 YEARS............................................................$47
5 YEARS............................................................$82
10 YEARS...........................................................$179
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FINANCIAL HIGHLIGHTS
The financial highlights of the Fund are presented below to assist you
in evaluating per share performance of Investor Shares of the Fund for the
period shown. The Fund's unaudited financial statements for the six-month period
ended April 30, 1997 are contained in the Fund's Semi-Annual Report to
Shareholders and are incorporated by reference into the SAI. The Semi-Annual
Report to Shareholders may be obtained without charge by writing the Fund at Two
Portland Square, Portland, Maine 04101 or by calling (800) 290-9826.
Period Ended
April 30,
1997 (a)
-----------------
Net Asset Value, Beginning of period $10.00
Investment Operations:
Net investment Income (Loss) -- (c)
Net realized and Unrealized Gain (Loss) on
Investments (0.64)
------
Total from Investment Operations (0.64)
------
Distributions from
Net Investment Income (0.01)
Net Asset Value, End of period $9.35
Total Return (6.43%)
Ratios/Supplementary Data:
Net Assets at End of period (000s omitted) $6,990 Ratios to Average Net
Assets:
Expenses including reimbursement/waiver 1.47%(b)(c)
Expenses excluding reimbursement/waiver 1.90%(b)(c)
Net investment income (loss) including
reimbursement/waiver (0.05)%(b)(c)
Portfolio Turnover Rate 8.64%(d)
Average Brokerage Commissions $0.0366(e)
(a) The Fund commenced operations on November 4, 1996.
(b) Annualized.
(c) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(d) Portfolio turnover rate represents the rate of portfolio activity for the
period ended April 30, 1997 of the Portfolio.
(e) Amount represents the average commission per share paid to brokers on the
purchase and sale of the portfolio securities of the Portfolio.
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INVESTMENT OBJECTIVE
This Fund's investment objective is long-term capital appreciation
through investment in markets outside the United States. It seeks to achieve its
investment objective by investing at least 65%, and normally intends to invest
substantially all, of its total assets in equity securities, which may be
denominated in foreign or U.S. currency, of companies domiciled outside of the
United States that have market capitalizations of $1.5 billion or less at the
time of investment.
The Fund currently seeks to achieve its investment objective by
investing substantially all of its assets in the Portfolio, which has an
identical investment objective and substantially similar policies and strategies
as the Fund. There can be no assurance that the Fund or Portfolio will achieve
its investment objective.
INVESTMENT POLICIES
Although the following information describes the investment policies of
the Portfolio and the responsibilities of Schroder Core's Board of Trustees (the
"Schroder Core Board"), it applies equally to the Fund and the Trust's Board of
Trustees (the "Trust Board"). Additional information concerning the investment
policies and restrictions of the Fund and the Portfolio is contained in the SAI.
The investment objective and fundamental investment policies may not be
changed without approval of the holders of a majority of the outstanding voting
securities of the Portfolio. A majority of outstanding voting securities means
the lesser of: (i) 67% of the shares present or represented at a shareholder
meeting at which the holders of more than 50% of the outstanding shares are
present or represented; or (ii) more than 50% of outstanding shares. Unless
otherwise indicated, all investment policies of the Portfolio are not
fundamental. Non-fundamental investment policies may be changed by the Schroder
Core Board without approval of the investors in the Portfolio.
The Portfolio normally invests in equity securities of issuers that
have market capitalizations under $1.5 billion or less at the time of
investment. Investments by the Portfolio are selected by Schroder Capital on the
basis of their potential for capital appreciation without regard for current
income. Schroder Capital generally considers the following factors in
determining the potential for capital appreciation: (i) issuers' potential for
long-term growth; (ii) issuers' financial conditions; (iii) valuation; (iv)
issuers' sensitivity to cyclical factors; and (v) whether issuers' management
holds a significant equity position in the issuer.
The Portfolio may purchase preferred stock and convertible securities,
including warrants and convertible preferred stock, and may purchase American
Depositary Receipts, European Depositary Receipts, Global Depositary Receipts or
other similar securities (collectively, "Depositary Receipts") of foreign
issuers. Depositary receipts typically are receipts issued by a financial
institution or trust company evidencing ownership of underlying securities. For
temporary defensive purposes, the Portfolio may invest without limitation in (or
enter into repurchase agreements maturing in seven days or less with U.S. banks
and broker-dealers with respect to) short-term debt securities, including U.S.
government securities and certificates of deposit and bankers' acceptances of
U.S. banks. The Portfolio may also hold cash and time deposits in foreign banks
denominated in any major foreign currency. (See "Additional Investment Policies
and Risk Considerations" in the Prospectus and "Investment Policies" in the SAI
for further information about all these types of investments.)
Countries in which the Portfolio may invest include, but are not
limited to, Japan, Germany, the United Kingdom, France, Italy, Belgium, Austria,
Finland, Ireland, New Zealand, Switzerland, the Netherlands, Hong Kong,
Singapore, Malaysia, Australia, Sweden, Norway, Denmark and Spain. The Portfolio
has a non-fundamental policy to invest in the securities of foreign issuers
domiciled in at least three foreign countries. In general, the Portfolio invests
only in securities of companies and governments in countries that Schroder
Capital, in its judgment, considers both politically and economically stable.
The Portfolio may invest more than 25% of its total assets in issuers located in
any one country. To the extent it invests in issuers located in one country, the
Portfolio may be susceptible to factors adversely affecting that country. (See
"Additional Investment Policies and Risk Considerations".)
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In selecting securities denominated in foreign currencies, Schroder
Capital considers, among other factors, the effect of movement in currency
exchange rates on the U.S.-dollar value of such securities. An increase in the
value of a currency will increase the total return to the Portfolio of
securities denominated in such currency. Conversely, a decline in the value of
the currency will reduce the total return. The Portfolio may also enter into
foreign exchange contracts, including forward contracts to purchase or sell
foreign currencies, in anticipation of its currency requirements and to protect
against possible adverse movements in foreign exchange rates. Although such
contracts may reduce the risk of loss to the Portfolio from adverse movements in
currency values, the contracts also limit possible gains from favorable
movements. (See "Additional Investment Policies and Risk Considerations".)
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
COMMON AND PREFERRED STOCK AND WARRANTS. The Portfolio may invest in
common and preferred stock. Common stockholders are the owners of the company
issuing the stock and, accordingly, vote on various corporate governance matters
such as mergers. They are not creditors of the company, but rather, upon
liquidation of the company, are entitled to their pro rata share of the
company's assets after creditors (including fixed income security holders) and
preferred stockholders, if any, are paid. Preferred stock is a class of stock
having a preference over common stock as to dividends and, generally, as to the
recovery of investment. A preferred stockholder is a shareholder in a company
and not a creditor of the company, as is a holder of the company's fixed-income
securities. Dividends paid to common and preferred stockholders are
distributions of the earnings of the company and not interest payments, which
are expenses of the company. Equity securities owned by the Portfolio may be
traded in the over-the counter market or on a securities exchange but may not be
traded every day or in the volume typical of securities traded on a major U.S.
national securities exchange. As a result, disposition by the Portfolio of a
security to meet withdrawals by interest holders or otherwise may require the
Portfolio to sell these securities at a discount from market prices, to sell
during periods when disposition is not desirable, or to make many small sales
over a lengthy period of time. The market value of all securities, including
equity securities, is based upon the market's perception of value and not
necessarily the book value of an issuer or other objective measure of a
company's worth.
The Portfolio may also invest in warrants, which are options to
purchase an equity security at a specified price (usually representing a premium
over the applicable market value of the underlying equity security at the time
of the warrant's issuance) and usually during a specified period of time.
OPTIONS AND FUTURES TRANSACTIONS. While the Portfolio does not
presently intend to do so, it may write covered call options and purchase
certain put and call options, stock-index futures, and options on stock-index
futures and broadly-based stock indices, all of which are referred to as
"Hedging Instruments". In general, the Portfolio may use Hedging Instruments:
(i) to attempt to protect against declines in the market value of the
portfolio's securities, and thus protect the Fund's net asset value per share
against downward market trends; or (ii) to establish a position in the equities
markets as a temporary substitute for purchasing particular equity securities.
The Portfolio will not use Hedging Instruments for speculation. The Hedging
Instruments that the Portfolio is authorized to use have certain risks
associated with them. Principal among such risks are: (i) the possible failure
of such instruments as hedging techniques in cases where the price movements of
the securities underlying the options or futures do not follow the price
movements of the portfolio securities subject to the hedge; (ii) potentially
unlimited loss associated with futures transactions and the possible lack of a
liquid secondary market for closing out a futures position; and (iii) possible
losses resulting from the inability of the investment adviser to correctly
predict the direction of stock prices, interests rates and other economic
factors. The Hedging Instruments that the Portfolio may use and the risks
associated with them are described in greater detail under "Options and Futures
Transactions" in the SAI.
SHORT SALES AGAINST-THE-BOX. The Portfolio may not sell securities
short except in "short sales against-the-box". For federal income tax purposes,
short sales against-the-box may be made to defer recognition of gain or loss on
the sale of securities "in the box", and no income can result and no gain can be
realized from securities sold short against-the-box until the short position is
closed out. Such short sales are subject to the limits described under
"Fundamental Restrictions". (See "Short Sales Against-the-Box" in the SAI for
further details.)
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DEPOSITARY RECEIPTS. The Portfolio may invest in certain issuers
exclusively or primarily through the purchase of sponsored and unsponsored
Depositary Receipts, including American Depositary Receipts ("ADRs")and other
similar securities, such as European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") or International Depositary Receipts ("IDRs"), or
through investment in government-approved investment companies or other
vehicles. ADRs are receipts typically issued by U.S. banks evidencing ownership
of the underlying securities, into which they are convertible. These securities
may or may not be denominated in the same currency as the underlying securities.
Unsponsored ADRs may be created without the participation of the foreign issuer.
Holders of these ADRs generally bear all the costs of the ADR facility, whereas
foreign issuers typically bear certain costs in a sponsored ADR. The bank or
trust company depositary of an unsponsored ADR may be under no obligation to
distribute shareholder communications received from the foreign issuer or to
pass through voting rights. EDRs, GDRs and IDRs are similar to ADRs and are
designed for use in foreign markets.
FOREIGN EXCHANGE CONTRACTS. Changes in foreign currency exchange rates
affect the U.S.-dollar values of securities denominated in currencies other than
the U.S. dollar. The rate of exchange between the U.S. dollar and other
currencies fluctuates in response to forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors, many of which may be difficult if not impossible
to predict. When investing in foreign securities, the Portfolio usually effects
currency exchange transactions on a spot (I.E., cash) basis at the spot rate
prevailing in the foreign exchange market. The Portfolio incurs foreign exchange
expenses in converting assets from one currency to another.
The Portfolio may enter into foreign currency forward contracts or
currency futures or options contracts for the purchase or sale of foreign
currency to "lock in" the U.S. dollar price of the securities denominated in a
foreign currency or the U.S. dollar value of interest and dividends to be paid
on such securities, or to hedge against the possibility that the currency of a
foreign country in which the Portfolio has investments may suffer a decline
against the U.S. dollar. A forward 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. This method of attempting to hedge the
value of portfolio securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities and may
expose the Portfolio to the risk that the counterparty is unable to perform.
Although the strategy of engaging in foreign currency transactions could reduce
the risk of loss due to a decline in the value of the hedged currency, it could
also limit the potential gain from an increase in the value of the currency. The
Portfolio does not intend to maintain a net exposure to such contracts where the
fulfillment of obligations under such contracts would obligate it to deliver an
amount of foreign currency in excess of the value of its portfolio securities or
other assets denominated in the currency. The Portfolio will not enter into
these contracts for speculative purposes and will not enter into non-hedging
currency contracts. These contracts involve a risk of loss if Schroder Capital
fails to predict currency values correctly.
The Portfolio is required to distribute substantially all of its
investment income in U.S. dollars. Because most of the Portfolio's income is
received and realized in foreign currencies; a decline in the value of a
particular foreign currency against the U.S. dollar occurring after the
Portfolio's income has been earned may require the Portfolio to liquidate some
portfolio securities to acquire sufficient U.S. dollars to make such
distributions. Similarly, if the exchange rate declines between the time the
Portfolio incurs expenses in U.S. dollars and the time such expenses are paid,
the Portfolio may be required to liquidate additional foreign securities to
purchase the U.S. dollars required to meet such expenses.
FIRM- AND STANDBY-COMMITMENT AGREEMENTS AND WHEN-ISSUED SECURITIES. New
issues of certain debt securities are often offered on a when-issued basis. That
is, the payment obligation and the interest rate are fixed at the time the buyer
enters into the commitment, but delivery and payment for the securities normally
take place after the date of the commitment to purchase. Firm- and
standby-commitment agreements call for the purchase of securities at an
agreed-upon price on a specified future date. The transactions are entered into
in order to secure what is considered to be an advantageous price and yield to
the Portfolio and not for purposes of leveraging the
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Portfolio's assets. However, the Portfolio will not accrue any income on these
securities prior to delivery. The value of when-issued securities and firm- and
standby-commitment agreements may vary prior to and after delivery depending on
market conditions and changes in interest-rate levels. There is a risk that a
party with whom the Portfolio has entered into such transactions will not
perform its commitment, which could result in a gain or loss to the Portfolio.
DEBT SECURITIES. The Portfolio may also invest in debt obligations of
the United States and its subdivisions, foreign governments, international
organizations and foreign corporations. The Portfolio may from time to time
invest up to 5% of its total assets in debt securities with high risk and high
yields (as compared to other debt securities meeting the Portfolio's investment
criteria). The debt securities in which the Portfolio invests may be unrated but
will not be in default at the time of purchase. The value of debt securities
generally varies inversely with interest rate changes. (See "Additional
Investment Policies and Risk Considerations".)
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS. The Portfolio may
invest in certificates of deposit, time deposits, bankers' acceptances, and
other short-term debt obligations issued by commercial banks and in certificates
of deposit, time deposits, and other short-term obligations issued by savings
and loan associations ("S&Ls"). Certificates of deposit are receipts from a bank
or S&L for funds deposited for a specified period of time at a specified rate of
return. Time deposits in banks or S&Ls are generally similar to certificates of
deposit, but are uncertificated. Bankers' acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection with international
commercial transactions. The Portfolio will limit its investment in time
deposits for which there is a penalty for early withdrawal to 15% of its net
assets.
ILLIQUID AND RESTRICTED SECURITIES. As a non-fundamental policy, the
Portfolio will not purchase or otherwise acquire any security if, as a result,
more than 15% of its net assets (taken at current value) would be invested in
securities that are illiquid by virtue of the absence of a readily available
market or because of legal or contractual restrictions on resale ("restricted
securities"). There may be undesirable delays in selling illiquid securities at
prices representing their fair value. This policy includes over-the-counter
options held by the Portfolio and the "in the money" portion of the assets used
to cover such options. The limitation on investing in restricted securities does
not include securities that may not be resold to the general public but may be
resold to qualified institutional purchasers pursuant to Rule 144A under the
Securities Act of 1933, as amended. If SCMI determines that a "Rule 144A
security" is liquid pursuant to guidelines adopted by the Trust Board, the
security will not be deemed illiquid. These guidelines take into account trading
activity for the securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in a
particular Rule 144A security, that security may become illiquid, which could
affect the Portfolio's liquidity. (See "Investment Policies -- Illiquid and
Restricted Securities" in the SAI for further information.)
LENDING OF PORTFOLIO SECURITIES. The Portfolio may lend its investment
securities to brokers, dealers and financial institutions for the purpose of
realizing additional income. The total market value of securities loaned will
not at any time exceed 25% of the value of the total assets of the Portfolio.
The risk in lending portfolio securities, as with other extensions of credit, is
the possible loss of rights in the collateral should the borrower fail
financially. In determining whether to lend securities, the Portfolio's
investment adviser will consider all relevant facts and circumstances, including
the creditworthiness of the borrower.
COMMERCIAL PAPER. The Portfolio may invest in commercial paper, which
represents short-term unsecured promissory notes issued by banks or bank holding
companies, corporations and finance companies. The Portfolio may invest in
commercial paper primarily rated at the time of investment "P-1" by Moody's
Investor Service ("Moody's") or "A-1" by Standard and Poor's ("S&P"), or, if
unrated by Moody's or S&P, deemed comparable in quality by the Portfolio's
investment adviser. The Portfolio may also invest in commercial paper rated
below "A-1"/ "P-1"; however, such investments are subject to the Portfolio's 10%
limit on high-yield, high-risk securities. (See "Appendix A -- Description of
Securities Ratings" to the SAI.)
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REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase
agreements. A repurchase agreement is a means of investing monies for a short
period. In a repurchase agreement, a seller -- a U.S. bank or recognized
broker-dealer -- sells securities to the Portfolio and agrees to repurchase the
securities at the Portfolio's cost plus interest within a specified period
(normally one day). In these transactions, the values of the underlying
securities purchased by the Portfolio are monitored at all times by SCMI to
ensure that the total value of the securities equals or exceeds the value of the
repurchase agreement, and the Portfolio `s custodian bank holds the securities
until they are repurchased. In the event of default by the seller under the
repurchase agreement, the Portfolio may have difficulties in exercising its
rights to the underlying securities and may incur costs and experience time
delays in disposing of them. To evaluate potential risks, SCMI reviews the
creditworthiness of those banks and dealers with which the Portfolio enters into
repurchase agreements.
TEMPORARY DEFENSIVE INVESTMENTS. For temporary defensive purposes, the
Portfolio may invest without limitation in (or enter into repurchase agreements
maturing in seven days or less with U.S. banks and broker-dealers with respect
to) short-term debt securities, including commercial paper, U.S. Treasury bills,
other short-term U.S. Government securities, certificates of deposit and
bankers' acceptances of U.S. banks. U.S. Government securities are obligations
of, or guaranteed by, the U.S. Government or its agencies, instrumentalities or
government-sponsored enterprises. The Portfolio also may hold cash and time
deposits in U.S. banks. In transactions involving "repurchase agreements," the
Portfolio purchases securities from a bank or broker-dealer who agrees to
repurchase the security at the Portfolio's cost plus interest within a specified
time. The securities purchased by the Portfolio have a total value in excess of
the value of the repurchase agreement and are held by the Portfolio's custodian
bank until repurchased. (See "Investment Policies" in Part B for further
information about all these securities.)
RISK CONSIDERATIONS
FOREIGN INVESTMENTS. Investments in foreign securities involve certain
risks not associated with domestic investments, including fluctuations in
foreign exchange rates, uncertain political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws or
restrictions.
Foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as economic growth rates, rates of inflation, capital
reinvestment, resources, self-sufficiency and balance of payments positions.
Certain foreign investments may also be subject to foreign withholding taxes,
thereby reducing the income available for distribution to the Portfolio's
interestholders. Additionally, commission rates payable on foreign portfolio
transactions may often be higher than in the U.S. Because international
investments generally involve risks in addition to those risks associated with
investments in the U.S., the Fund should be considered only as a vehicle for
international diversification and not as a complete investment program.
Issuers of securities in foreign jurisdictions are generally not
subject to the same degree of regulation as are U.S. issuers with respect to
such matters as insider trading rules, restrictions on market manipulation,
shareholder proxy requirements and timely disclosure of information. Often,
available information about issuers and their securities is less extensive in
foreign markets, particularly emerging market countries, than in the United
States. In addition, laws in foreign countries governing business organizations,
bankruptcy and insolvency may provide less protection to security holders such
as the Portfolio than that provided by U.S.
laws.
Moreover: (i) interest payable on foreign securities may be subject to
foreign withholding taxes, thereby reducing the income earned by the Portfolio;
(ii) accounting, auditing and financial reporting standards differ from those in
the U.S., which means that less information about foreign companies may be
available than is generally available about issuers of comparable securities in
the U.S.; (iii) foreign securities may trade less frequently and/or with less
volume than U.S. securities and consequently may exhibit greater price
volatility; and (iv) foreign securities trading practices, including those
involving securities settlement, may expose the Portfolio to increased risk in
the event of a failed trade or the insolvency of a foreign broker-dealer or
registrar.
<PAGE>
GEOGRAPHIC CONCENTRATION. The Portfolio may invest more than 25% of its
total assets in issuers located in any one country. To the extent that it
invests in issuers located in one country, the Portfolio is susceptible to
factors adversely affecting that country, including the political and economic
developments and foreign exchange rate fluctuations discussed above. As a result
of investing substantially in one country, the value of the Portfolio's assets
may fluctuate more widely than the value of shares of a comparable fund with a
lesser degree of geographic concentration.
CURRENCY FLUCTUATIONS AND DEVALUATIONS. Because the Portfolio will
invest in non-U.S. dollar denominated securities, changes in foreign currency
exchange rates will affect the value of the Portfolio's investments. A decline
against the dollar in the value of currencies in which the Portfolio's
investments are denominated will result in a corresponding decline in the dollar
value of its assets. Exchange rates are influenced generally by the forces of
supply and demand in the foreign currency markets and by numerous other
political and economic events occurring outside the United States, many of which
may be difficult, if not impossible, to predict.
The Portfolio may enter into foreign currency forward contracts to
purchase or sell foreign currencies in anticipation of its currency requirements
and to protect against possible adverse movements in foreign exchange rates.
Although such contracts may reduce the risk of loss to the Portfolio due to a
decline in the value of the currency sold, they also limit any possible gain
that might result should the value of such currency rise. (See "Options and
Futures Transactions".)
SMALLER COMPANIES. Investments in smaller capitalization companies
involve greater risks than those associated with investments in larger
capitalization companies. Smaller capitalization companies generally experience
higher growth rates and higher failure rates than do larger capitalization
companies. The trading volume of securities of smaller capitalization companies
is normally less than that of larger capitalization companies and, consequently,
generally has a disproportionate effect on their market price, tending to make
them rise more in response to buying demand and fall more in response to selling
pressure than is the case with larger capitalization companies.
Investments in small, unseasoned issuers generally involve greater risk
than is customarily associated with larger, more seasoned companies. Such
issuers often have products and management personnel which have not been
thoroughly tested by time or the marketplace and their financial resources may
not be as substantial as those of more established companies. Their securities,
which the Portfolio may purchase when they are offered to the public for the
first time, may have a limited trading market, which may adversely affect their
sale by the Portfolio and can result in such securities being priced lower than
otherwise might be the case. If other institutional investors engage in trading
this type of security, the Portfolio may be forced to dispose of its holdings at
prices lower than might otherwise be obtained.
FIXED-INCOME SECURITIES AND THEIR CHARACTERISTICS. Fixed-income
securities generally are subject to market risk and credit risk. Market risk
refers to the change in the market value of investments by the Portfolio in
fixed income securities, including money market instruments, when there is a
change in interest rates or the issuer's actual or perceived creditworthiness or
ability to meet its obligations. There is normally an inverse relationship
between the market value of fixed-rate debt securities and changes in interest
rates. In other words, an increase in interest rates produces a decrease in
market value. Moreover, the longer the remaining maturity of a security, the
greater will be the effect of interest rate changes on the market value of that
security. The Portfolio's investments are subject to "credit risk" relating to
the financial condition of the issuers of the securities that the Portfolio
holds. Credit risk refers to changes in the ability of an issuer to make
payments of interest and principal when due and changes in the market's
perception of an issuer's creditworthiness that affect the value of the debt
securities of that issuer.
<PAGE>
MANAGEMENT OF THE FUND
SCHRODER GROUP ASSETS UNDER MANAGEMENT WORLDWIDE AS OF DECEMBER 31,1996- OVER
$150 BILLION
[WORLD GRAPHIC]
THE SCHRODER INVESTMENT MANAGEMENT GROUP INVESTMENT AND REPRESENTATIVE OFFICES
WORLDWIDE INCLUDE NEW YORK, LONDON, BOSTON, ZURICH, WARSAW, TOKYO, HONG KONG,
BEIJING, SHANGHAI, TAIPEI, SEOUL, BANGKOK, KUALA LUMPUR, SINGAPORE, JAKARTA,
SYDNEY, BUENOS AIRES, SAO PAULO, AND BOGOTA.
TOGETHER, SCHRODER CAPITAL MANAGEMENT INTERNATIONAL AND SCHRODER CAPITAL
MANAGEMENT INC. MANAGE OVER $24 BILLION
BOARDS OF TRUSTEES
The business and affairs of the Fund are managed under the direction of
the Trust Board. The business and affairs of the Portfolio are managed under the
direction of the Schroder Core Board. Additional information regarding the
Trustees and executive officers of the Trust, as well as Schroder Core's
trustees and executive officers, may be found in the SAI under the heading
"Management, Trustees and Officers".
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
As investment adviser to the Portfolio, SCMI manages the Portfolio and
continuously reviews, supervises and administers its investments. SCMI is
responsible for making decisions relating to the Portfolio's investments and
placing purchase and sale orders regarding such investments with brokers or
dealers it selects. For these services, the Investment Advisory Agreement
between SCMI and the Trust provides that SCMI is entitled to receive a monthly
advisory fee at the annual rate of 0.85% of the Portfolio's average daily net
assets, which the Fund indirectly bears through investment in the Portfolio.
SCMI has agreed, however, to waive 0.10% of the advisory fees payable under the
Investment Advisory Agreement by the Portfolio. Such fee limitation arrangement
shall remain in effect until its elimination is approved by the Schroder Core
Board. The Fund bears no separate investment advisory fee directly. Prior to
November 1, 1996, the Fund had no operating history. The historical performance
of the Adviser's commingled investment fund for tax-exempt pension and profit
sharing trusts which has substantially similar policies, strategies and risks,
managed by Schroder Capital, the portfolio manager of the Portfolio, is
presented in Appendix A.
SCMI is a wholly owned U.S. subsidiary of Schroders Incorporated, the
wholly owned U.S. holding company subsidiary of Schroders plc. Schroders plc is
the holding company parent of a large world-wide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in eighteen countries
world-wide. The Schroder Group specializes in providing investment management
services.
<PAGE>
As of the date of this Prospectus, Schroder Capital has been investing
in international small companies as a specialist area for over 20 years and has
14 analysts dedicated to following small company stock. Schroders' analysts
maintain contact with over 1,500 small companies in a typical year and conduct
over 900 exclusive on-site company visits.
Richard R. Foulkes, a Vice President of the Trust and Deputy Chairman of
SCMI, with the assistance of an SCMI investment committee, is primarily
responsible for the day-to-day management of the Portfolio's investments. Mr.
Foulkes has managed the Portfolio's investment portfolio since January 1997. Mr.
Foulkes has been a Director and Executive Vice President of Schroder Capital
Management International Ltd. since 1989 and a Deputy Chairman/Executive Vice
President of Schroder Capital Management Inc. since October 1995.
The Fund pursues its investment objective through investment in the
Portfolio. The Fund may withdraw its investment from the Portfolio at any time
if the Trust Board determines that it is in the best interests of the Fund and
its shareholders to do so. (See "Other Information -- Fund Structure".)
Accordingly, the Fund has retained SCMI as its investment adviser to manage the
Fund's assets in the event the Fund withdraws its investment. SCMI does not
receive an investment advisory fee with respect to the Fund so long as the Fund
remains completely invested in the Portfolio (or any other investment company).
If the Fund resumes directly investing in portfolio securities, the Fund will
pay SCMI a monthly advisory fee at the annual rate of 0.75% of the Fund's
average daily net assets. The investment advisory agreement between SCMI and the
Trust with respect to the Fund is the same in all material respects as the
investment advisory contract between SCMI and Schroder Core with respect to the
Portfolio (except as to the parties, the fees payable thereunder, the
circumstances under which fees will be paid and the jurisdiction whose laws
govern the agreement).
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Advisors, 787 Seventh Avenue, 34th Floor, New York, New
York 10019. On behalf of the Portfolio, the Trust has also entered into a
subadministration agreement with Forum, Two Portland Square, Portland, Maine
04101. Pursuant to these agreements, Schroder Advisors and Forum provide certain
management and administrative services necessary for the Fund's operations,
other than the investment management and administrative services provided to the
Portfolio by SCMI. Schroder Advisors is compensated at the annual rate of 0.10%
of the Fund's average daily net assets. Forum is compensated at the annual rate
of 0.075% of the Fund's average daily net assets.
Schroder Advisors and Forum provide similar services to the Portfolio,
for which the Portfolio pays Schroder Advisors at the annual rate of 0.15% of
the Portfolio's average daily net assets and pays Forum at the annual rate of
0.075% of the Portfolio's average daily net assets.
EXPENSES
SCMI and Schroder Advisors have undertaken voluntarily to waive a
portion of their fees or assume certain expenses of the Fund in order to limit
total Fund expenses excluding taxes, interest, brokerage commissions and other
portfolio transaction expenses and extraordinary expenses chargeable to Investor
Shares to 1.50% of the average daily net assets of the Fund attributable to
those shares. This expense limitation cannot be modified or withdrawn except by
a majority vote of the Trustees of the Trust who are not affiliated persons (as
defined in the 1940 Act) of the Trust. If expense reimbursements are required,
they will be made on a monthly basis. Forum has agreed to waive, up to 0.025%, a
pro rata portion of its fees at the Fund level as necessary to keep the total
expense ratio for the Fund, including indirect expenses borne by the Fund as a
result of investing in the Portfolio, at 1.50% of the average daily net assets
of the Fund.
<PAGE>
PORTFOLIO TRANSACTIONS
SCMI places orders for the purchase and sale of the Portfolio's
investments with brokers and dealers selected by SCMI in its discretion and
seeks "best execution" of such portfolio transactions. The Portfolio may pay
higher than the lowest available commission rates when SCMI believes it is
reasonable to do so in light of the value of the brokerage and research services
provided by the broker effecting the transaction. Commission rates for brokerage
transactions are fixed on many foreign securities exchanges, and this may cause
higher brokerage expenses to accrue to the Portfolio than would be the case for
comparable transactions effected on U.S.
securities exchanges.
Subject to the Portfolio's policy of obtaining the best price
consistent with quality of execution on transactions, SCMI may employ Schroder
Securities Limited and its affiliates (collectively, "Schroder Securities")
affiliates of SCMI to effect transactions of the Portfolio on certain foreign
securities exchanges. Because of the affiliation between SCMI and Schroder
Securities, the Portfolio's payment of commissions to Schroder Securities is
subject to procedures adopted by the Schroder Core Board designed to ensure that
such commissions will not exceed the usual and customary brokers' commissions.
No specific portion of the Portfolio's brokerage will be directed to Schroder
Securities and in no event will Schroder Securities receive such brokerage in
recognition of research services.
Although the Portfolio does not currently engage in directed brokerage
arrangements to pay expenses, it may do so in the future. These are arrangements
whereby brokers executing the Portfolio's portfolio transactions would agree to
pay designated expenses of the Portfolio if brokerage commissions generated by
the Portfolio reached certain levels. These arrangements might reduce the
Portfolio's expenses (and, indirectly, the Fund's expenses). As anticipated,
these arrangements would not materially increase the brokerage commissions paid
by the Portfolio.
CODE OF ETHICS
The Trust, Schroder Core, SCMI, Schroder Advisors, and Schroders
Incorporated have each adopted a code of ethics that contains a policy on
personal securities transactions by "access persons," including portfolio
managers and investment analysts. That policy complies in all material respects
with the recommendations set forth in the Report of the Advisory Group on
Personal Investing of the Investment Company Institute, of which the Trust is a
member.
INVESTMENT IN THE FUND
PURCHASE OF SHARES
Investors may purchase Investor Shares directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Financial Corp., the Fund's transfer agent (the "Transfer
Agent"). (See "Other Information -- Shareholder Inquiries".) Investments also
may be made through broker-dealers and other financial institutions that assist
their customers in purchasing Fund Shares ("Financial Institutions"). Financial
Institutions may charge their customers a service fee for processing orders to
purchase or sell shares. Investors wishing to purchase Shares through a
Financial Institution should contact that organization directly for appropriate
instructions.
Shares of the Fund are offered at the net asset value next determined
after receipt of a completed account application (at the address set forth
below). The minimum initial investment is $100,000. There is no minimum
subsequent investment. SCMI reserves the right to waive the minimum initial
investment at its discretion. All purchase payments are invested in full and
fractional shares. The Fund is authorized to reject any purchase order.
Purchases may be made by mailing a check (in U.S. dollars), payable to
"Schroder International Smaller Companies Fund" to:
Schroder International Smaller Companies Fund - Investor Shares
P.O. Box 446
Portland, Maine 04112
For initial purchases, the check must be accompanied by a completed
account application in proper form. Further documentation, may be requested from
corporations, administrators, executors, personal representatives, directors or
custodians to evidence the authority of the person or entity making the
investment.
Investors may transmit purchase payments by Federal Reserve Bank wire
directly to the Fund as follows:
Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Financial Corp.
Account No.: 910-2-718187
Ref.: Schroder International Smaller Companies Fund - Investor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class
(I.E., Investor Shares), the account name and number, address, confirmation
number, amount to be wired, name of the wiring bank and name and telephone
number of the person to be contacted in connection with the order. If the
initial investment is by wire, an account number will be assigned and an account
application must be completed and mailed to the Fund before any account becomes
active. Wire orders received prior to 4:00 p.m. (Eastern time) on each day that
the New York Stock Exchange is open for trading (a "Fund Business Day") will be
processed at the net asset value determined as of that day. Wire orders received
after 4:00 p.m. (Eastern time) will be processed at the net asset value
determined as of the next Fund Business Day. (See "Net Asset Value".)
The Fund's Transfer Agent establishes for each shareholder of record an
open account to which all shares purchased and all reinvested dividends and
other distributions are credited. Although most shareholders elect not to
receive share certificates, certificates for full shares can be obtained by
specific written request to the Fund's Transfer Agent. No certificates are
issued for fractional shares.
The Transfer Agent will deem an account lost if six months have passed
since correspondence to the shareholder's address of record is returned, unless
the Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions will automatically be reinvested.
In addition, the amount of any outstanding checks for dividends and capital-gain
distributions that have been returned to the Transfer Agent will be reinvested,
and the checks will be canceled.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Shares of the Fund are offered in connection with tax-deferred
retirement plans. Applications forms and further information about these plans,
including applicable fees, are available upon request. Before investing in the
Fund through one of these plans, investors should consult their tax advisors.
The Fund may be used as an investment vehicle for an IRA including SEP-IRA.
An IRA naming The First National Bank of Boston as custodian is available from
the Trust or the Transfer Agent. The minimum initial investment for an IRA is
$25,000. There is no minimum subsequent investment amount. Under certain
circumstances contributions to an IRA may be tax deductible. IRAs are available
to individuals (and their spouses) who receive compensation or earned income
whether or not they are active participants in a tax-qualified or
government-approved retirement plan. An IRA contribution by an individual or
spouse who participates in a tax-qualified or government-approved retirement
plan may not be deductible, depending upon the
<PAGE>
individual's income. Individuals also may establish an IRA to receive a
"rollover" contribution of distributions from another IRA or a qualified plan.
Tax advice should be obtained before effecting a rollover.
STATEMENT OF INTENTION
Investor Share investors also may meet the minimum initial investment
requirement based on cumulative purchases by means of a written Statement of
Intention, expressing the investor's intention to invest $100,000 or more in
Investor Shares of the Fund within a period of 13 months.
Investors wishing to enter into a Statement of Intention in conjunction
with their initial investment in shares of the Fund should complete the
appropriate portion of the account application form. Current Fund shareholders
can obtain a Statement of Intention form by contacting the Transfer Agent.
The Fund reserves the right to redeem shares in any account if, at the
end of the Statement of Intention period, the account does not have a value of
at least the minimum investment amount.
EXCHANGES
Shareholders may exchange Investor Shares of the Fund for Investor
Shares of any other fund of the Trust so long as they meet the initial
investment minimum of the fund being purchased and maintain the respective
minimum account balance in each fund in which they own shares. Exchanges between
each fund are at net asset value.
For federal income tax purposes an exchange is considered to be a sale
of shares on which a shareholder may realize a capital gain or loss. An exchange
may be made by calling the Transfer Agent at (800) 344-8332 or by mailing
written instructions to Schroder Capital Funds (Delaware), P.O. Box 446,
Portland, Maine 04112. Exchange privileges may be exercised only in those states
where shares of the other series of the Trust may legally be sold. Exchange
privileges may be amended or terminated at any time upon sixty (60) days'
notice.
REDEMPTION OF SHARES
Shares of the Fund are redeemed at their next determined net asset
value after receipt by the Fund (at the address set forth above under "Purchase
of Shares") of a redemption request in proper form. Redemption requests may be
made between 9:00 a.m. and 6:00 p.m. (Eastern time) on each Fund Business Day.
Redemption requests that are received prior to 4:00 p.m. (Eastern time) will be
processed at the net asset value determined as of that day. Redemption requests
that are received after 4:00 p.m. (Eastern time) will be processed at the net
asset value determined the next Fund Business Day. (See "Net Asset Value".)
BY TELEPHONE. Redemption requests may be made by telephoning the
Transfer Agent at the telephone number on the cover page of this Prospectus. A
shareholder must provide the Transfer Agent with the class of shares, the dollar
amount or number of shares to be redeemed, shareholder account number, and some
additional form of identification such as a password. A redemption by telephone
may be made only if the telephone redemption privilege option has been elected
on the account application or otherwise in writing. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, reasonable
procedures will be followed by the Transfer Agent to confirm that telephone
instructions are genuine. The Transfer Agent and the Trust generally will not be
liable for any losses due to unauthorized or fraudulent redemption requests, but
may be liable if they do not follow these procedures. Shares for which
certificates have been issued may not be redeemed by telephone. In times of
drastic economic or market changes, it may be difficult to make redemptions by
telephone.
If a shareholder cannot reach the Transfer Agent by telephone, redemption
requests may be mailed or hand-delivered to the Transfer Agent.
WRITTEN REQUESTS. Redemptions may be made by letter to the Fund
specifying the class of shares, the dollar amount or number of shares to be
redeemed and the shareholder account number. The letter must also be signed in
exactly the same way the account is registered (if there is more than one owner
of the shares, all must
<PAGE>
sign) and, in certain cases, signatures must be guaranteed by an institution
that is acceptable to the Transfer Agent. Such institutions include certain
banks, brokers, dealers (including municipal and government securities brokers
and dealers), credit unions and savings associations. Notaries public are not
acceptable. Further documentation may be requested to evidence the authority of
the person or entity making the redemption request. Questions concerning the
need for signature guarantees or documentation of authority should be directed
to the Fund at the above address or by calling the telephone number appearing on
the cover of this Prospectus.
If shares to be redeemed are held in certificate form, the certificates
must be enclosed with the redemption request and the assignment form on the back
of the certificates and the assignment form on the back of the certificates (or
an assignment separate from the certificates but accompanied by the
certificates), must be signed by all owners in exactly the same way the owners'
names are written on the face of the certificates. Requirements for signature
guarantees and/or documentation of authority as described above could also
apply. For your protection, the Fund suggests that certificates be sent by
registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds will
normally be mailed within seven days. No redemption proceeds will be mailed
until checks in payment for the purchase of the shares to be redeemed have been
cleared, which may take up to 15 calendar days from the purchase date. Unless
other instructions are given in proper form, a check for the proceeds of a
redemption will be sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when:
(i) trading on the New York Stock Exchange is restricted or that exchange is
closed; (ii) the SEC has by order permitted such suspension; or (iii) 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 the Trust Board determines that it would be detrimental to the best
interest of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may redeem shares in whole or in part by a distribution
in kind of portfolio securities (from the investment portfolio of the Portfolio
or of the Fund), in lieu of cash. The Fund will, however, redeem shares solely
in cash up to the lesser of $250,000 or 1% of net assets during any 90-day
period for any one shareholder. In the event that payment for redeemed shares is
made wholly or partly in portfolio securities, the shareholder may be subject to
additional risks and costs in converting the securities to cash. (See
"Additional Purchase and Redemption Information -- Redemption in Kind" in the
SAI.)
The proceeds of a redemption may be more or less than the amount
invested and, therefore, a redemption may result in a gain or loss for federal
income tax purposes.
Due to the relatively high cost of maintaining smaller accounts, the
Fund reserves the right to redeem shares in any account (other than an IRA) if
at any time the account does not have a value of at least $2,000, unless the
value of the account falls below that amount solely as a result of market
activity. Shareholders will be notified that the value of the account is less
than $2,000 and be allowed at least 30 days to make an additional investment to
increase the account balance to at least $2,000.
NET ASSET VALUE
The net asset value per share of the Fund is calculated separately for
each class of shares of the Fund at 4:00 p.m. (Eastern time), Monday through
Friday, each Fund Business Day, which excludes the following U.S. holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Net asset value per share is calculated
by dividing the aggregate value of the Fund's assets less all Fund liabilities,
if any, by the number of shares of the Fund outstanding.
The net asset value per share of the Fund is calculated separately for
each class of Shares of the Fund at 4:00 p.m. (Eastern time), Monday through
Friday, each Fund Business Day, which excludes the following U.S. holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day,
<PAGE>
Thanksgiving Day and Christmas Day. Net asset value per Share is calculated by
dividing the aggregate value of the Fund's assets less all Fund liabilities, if
any, by the number of Shares of the Fund outstanding.
Generally, securities held by the Portfolio that are listed on
recognized stock exchanges are valued at the last reported sale price, on the
day when the securities are valued (the "Valuation Day"), on the primary
exchange on which the securities are principally traded. Listed securities
traded on recognized stock exchanges for which there were no sales on the
Valuation Day are valued at the last sale price on the proceeding trading day or
at closing mid-market prices. Securities traded in over-the-counter markets are
valued at the most recent reported mid-market price. Other securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith using methods approved by the Schroder Core Board.
Trading in securities on non-U.S. exchanges and over-the-counter
markets may not take place on every day that the New York Stock Exchange is open
for trading. Furthermore, trading takes place in various foreign markets on days
on which the Fund's net asset value is not calculated. If events materially
affecting the value of foreign securities occur between the time when their
price is determined and the time when net asset value is calculated, such
securities will be valued at fair value as determined in good faith by using
methods approved by the Schroder Core Board.
All assets and liabilities of the Portfolio denominated in foreign
currencies are valued in U.S. dollars based on the exchange rate last quoted by
a major bank prior to the time when the net asset value of the Fund is
calculated.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THE FUND
The Fund intends to comply with the provisions of Internal Revenue Code
of 1986, as amended, applicable to regulated investment companies. By complying
therewith, the Fund will not have to pay federal income tax on that part of its
investment income or net realized capital gain that is distributed to
shareholders. The Fund intends to distribute substantially all of its income and
net realized capital gain and, therefore, intends not to be subject to federal
income tax.
Dividends and capital-gain distributions on a class of shares are
reinvested automatically in additional shares of the same class at net asset
value unless the shareholder has elected in the account application, or
otherwise in writing, to receive dividends and other distributions in cash.
After every dividend and other distribution, the value of a share
declines by the amount of the distribution. Purchases made shortly before a
dividend or other distribution include in the purchase price the amount of the
distribution, which will be returned to the investor in the form of a taxable
distribution.
Dividends and other distributions paid by the Fund with respect to both
classes of its shares are calculated in the same manner and at the same time.
The per share dividends on Advisor Shares are expected to be lower than the per
share dividends on Investor Shares as a result of any compensation payable to
Service Organizations for shareholder servicing for the Advisor Shares.
Dividends from the Fund's income generally are taxable to shareholders
as ordinary income whether dividends are invested in additional shares or
received in cash. Distributions by the Fund of any net capital gain is taxable
to a shareholder as long-term capital gain, regardless of how long the
shareholder has held the shares. Each year the Trust will notify shareholders of
the tax status of dividends and other distributions.
Dividends from the Fund will qualify for the dividends-received
deduction for corporate shareholders to the extent dividends do not exceed the
aggregate amount of dividends received by the Fund from domestic corporations,
provided the Fund shares are held for more than 45 days. If securities held by
the Fund are considered to be debt-financed (generally, acquired with borrowed
funds); are held by the Fund for fewer than 46 days (91 days
<PAGE>
in the case of certain preferred stock); or are subject to certain forms of
hedges or short sales, then the portion of the dividends paid by the Fund
attributable to such securities will not be eligible for the dividends-received
deduction.
A redemption of shares may result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's basis in the redeemed shares. If shares are redeemed
at a loss after being held for six months or less, the loss will be treated as a
long-term, rather than a short-term, capital loss to the extent of any
capital-gain distributions received on those shares.
The Fund must withhold 31% from dividends, capital-gain distributions
and redemption proceeds payable to any individuals and certain other
noncorporate shareholders who do not furnish the Fund with a correct taxpayer
identification number. Withholding at that rate also is required from dividends
and capital-gain distributions payable to such shareholders who otherwise are
subject to backup withholding. Depending on the residence of a shareholder for
tax purposes, distributions from the Fund may also be subject to state and local
taxes, including withholding taxes.
In an effort to adhere to certain tax requirements, the Fund may have
to limit its investment activity in some types of instruments.
If the Fund's dividends exceed its taxable income in any year, all or a
portion of the Fund's dividends may be treated as a return of capital to
shareholders for tax purposes. Any return of capital will reduce the cost basis
of your shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. Shareholders will be notified
by the Trust if a distribution included a return of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the
Portfolio and its investments, which generally reduce the Fund's income.
However, an offsetting tax credit or deduction may be available to you. If so,
your tax statement will show more taxable income or capital gain than was
actually distributed by the Fund but will also show the amount of the available
offsetting credit or deduction.
If the Fund is eligible to do so, it 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 Portfolio. If the Fund does make such an election, its
shareholders would include as gross income in their federal income tax returns
both: (i) distributions received from the Fund; and (ii) 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 Portfolio from its
foreign investments. Shareholders then would be entitled, subject to certain
limitations, to take a foreign tax credit against their federal income tax
liability for the amount of such foreign taxes or else to deduct such foreign
taxes as an itemized deduction from gross income.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders; see the SAI
for further information. Shareholders should consult their own tax advisors as
to the tax consequences of their ownership of shares.
THE PORTFOLIO
The Portfolio is not required to pay federal income tax because it is
classified as a partnership for federal income tax purposes. All interest,
dividends and gains and losses of the Portfolio will be deemed to have been
"passed through" to the Fund in proportion to its holdings in the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio. The Portfolio intends to conduct its operations so as to enable
the Fund to qualify as a regulated investment company.
<PAGE>
OTHER INFORMATION
CAPITALIZATION AND VOTING
The Trust was organized as a Maryland corporation on July 30, 1969;
reorganized on February 29, 1988, as Schroder Capital Funds, Inc.; and
reorganized on January 9, 1996, as a Delaware business trust. The Trust has
authority to issue an unlimited number of shares of beneficial interest. The
Trust Board may, without shareholder approval, divide the authorized shares into
an unlimited number of separate portfolios or series (such as the Fund) and may
divide portfolios or series into classes of shares (such as the Investor
Shares), and the costs of doing so will be borne by the Trust. The Trust
currently consists of seven separate portfolios, each of which has separate
investment objectives and policies.
The Fund currently consists of two classes of shares. Each share of the
Fund is entitled to participate equally in dividends and other distributions and
the proceeds of any liquidation except that, due to the differing expenses borne
by the classes, dividends and liquidation proceeds for each class will likely
differ.
Shares are fully paid, non-assessable, and have no preemptive rights.
Shareholders have non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of Trustees can elect 100%
of the Trustees if they choose to do so. A shareholder is entitled to one vote
for each full share held (and a fractional vote for each fractional share held).
Each share of the Fund has equal voting rights, except that if a matter affects
only the shareholders of a particular class only shareholders of that class
shall have a right to vote. On Trust matters requiring shareholder approval,
shareholders of the Trust are entitled to vote only with respect to matters that
affect the interests of the Fund or the class of shares they hold, except as
otherwise required by applicable law.
There will normally be no meetings of shareholders to elect Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by shareholders. However, the holders of not less than
a majority of the outstanding shares of the Trust may remove any person serving
as a Trustee and the Trust Board will call a special meeting of shareholders to
consider removal of one or more Trustees if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the Trust. From time
to time, certain shareholders may own a large percentage of the shares of the
Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.
REPORTS
The Trust sends each shareholder a semi-annual report and an audited
annual report containing the Fund's financial statements.
PERFORMANCE
The Fund may include quotations of its average annual total return,
cumulative total return and other performance measures in advertisements or
reports to shareholders or prospective investors. Average annual total return of
a class of shares is based upon the overall dollar or percentage change in value
of a hypothetical investment each year over specified periods. Average annual
total returns reflect the deduction of a proportional share of a Fund's expenses
(on an annual basis) and assumes investment and reinvestment of all dividends
and distributions at NAV. Cumulative total returns are calculated similarly
except that the total return is aggregated over the relevant period instead of
annualized.
Performance quotations are calculated separately for each class of
shares of the Fund. The Fund may also be compared to various unmanaged
securities indices, groups of mutual funds tracked by mutual fund ratings
services, or other general economic indicators. Unmanaged indices may assume the
reinvestment of dividends but do not reflect deductions for administrative and
management costs and expenses.
<PAGE>
Performance information represents only past performance and does not
necessarily indicate future results. For a description of the methods used to
determine total return and other performance measures for the Fund, see the SAI.
CUSTODIAN AND TRANSFER AGENT
The Chase Manhattan Bank is custodian of the Fund's and the Portfolio's
assets. Forum Financial Corp. serves as the Fund's transfer and dividend
disbursing agent.
SHAREHOLDER INQUIRIES
Inquiries about the Fund, including its past performance, should be
directed to:
Schroder International Smaller Companies Fund
P.O. Box 446
Portland, Maine 04112
Information about specific shareholder accounts may be obtained from
the Transfer Agent by calling (800) 344-8332.
FUND STRUCTURE
CLASSES OF SHARES. The Fund has two classes of shares, Investor Shares
and Advisor Shares. Advisor Shares are offered by a separate prospectus to
individual investors, in most cases through Service Organizations. Advisor
Shares have lower investment minimums and incur more expenses than Investor
Shares. Except for certain differences, each share of each class represents an
undivided, proportionate interest in the Fund. Each share of the Fund is
entitled to participate equally in dividends and other distributions and the
proceeds of any liquidation of the Fund except that, due to the differing
expenses borne by the two classes, the amount of dividends and other
distributions will differ between the classes. Information about Advisor Shares
is available from the Fund by calling Schroder Advisors at (800) 730-2932.
THE PORTFOLIO. The Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, which has substantially
the same investment objective and substantially similar policies as the Fund.
Accordingly, the Portfolio directly acquires its own securities and the Fund
acquires an indirect interest in those securities. The Portfolio is a separate
series of Schroder Core, a business trust organized under the laws of the State
of Delaware in December 1996. Schroder Core is registered under the 1940 Act as
an open-end management investment company and currently has four separate
portfolios. The assets of the Portfolio, a diversified portfolio, belong only
to, and the liabilities of the Portfolio are borne solely by, the Portfolio and
no other portfolio of Schroder Core.
The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. As of November 4, 1996, there were two
institutional investors in the Portfolio. The Portfolio may permit other
investment companies or qualified investors to invest in it. All other investors
in the Portfolio will invest on the same terms and conditions as the Fund. All
investors in the Portfolio bear a proportionate share of the Portfolio's
expenses.
The Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in the Portfolio will be entitled to
vote in proportion to its relative beneficial interest in the Portfolio. On most
issues subject to a vote of investors, as required by the 1940 Act and other
applicable law, the Fund will solicit proxies from its shareholders and will
vote its interest in the Portfolio in proportion to the votes cast by its
shareholders. If there are other investors in the Portfolio, 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 investors in the
Portfolio; indeed, if other investors hold a majority interest in the Portfolio,
they could have voting control of the Portfolio.
<PAGE>
The Portfolio will not sell its shares directly to members of the
general public. Another investor in the Portfolio, such as an investment
company, that might sell its shares to members of the general public would not
be required to sell its shares at the same public offering price as the Fund and
could have different advisory and other fees and expenses than the Fund.
Therefore, Fund shareholders may have different returns than shareholders in
another investment company that invests exclusively in the Portfolio. There is
currently no such other investment company that offers its shares to members of
the general public. Information regarding any such funds in the future will be
available from Schroder Core by calling Forum Financial Corp. at (207) 879-8903.
Under federal securities law, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. Schroder Core, its Trustees and
certain of its officers are required to sign the registration statement of the
Trust and may be required to sign the registration statements of certain other
investors in the Portfolio. In addition, under federal securities law, Schroder
Core may be liable for misstatements or omissions of a material fact in any
proxy soliciting material of an investor in Schroder Core, including the Fund.
Each investor in the Portfolio, including the Trust, will indemnify Schroder
Core and its Trustees and officers ("Schroder Core Indemnitees") against certain
claims.
Indemnified claims are those brought against the Schroder Core
Indemnitees based on a misstatement or omission of a material fact in the
investor's registration statement or proxy materials. No indemnification need be
made, however, if such alleged misstatement or omission relates to information
about Schroder Core and was supplied to the investor by Schroder Core.
Similarly, Schroder Core will indemnify each investor in the Portfolio,
including the Fund, for any claims brought against the investor with respect to
the investor's registration statement or proxy materials, to the extent the
claim is based on a misstatement or omission of a material fact relating to
information about Schroder Core that is supplied to the investor by Schroder
Core. In addition, each registered investment company investor in the Portfolio
will indemnify each Schroder Core Indemnitee against any claim based on a
misstatement or omission of a material fact relating to information about a
series of the registered investment company that did not invest in Schroder
Core. The purpose of these cross-indemnity provisions is to limit the liability
of Schroder Core to information that it knows or should know and can control.
With respect to other prospectuses and other offering documents and proxy
materials of investors in Schroder Core, its liability is similarly limited to
information about and supplied by it.
CERTAIN RISKS OF INVESTING IN THE PORTFOLIO. The Fund's investment in
the Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if the Portfolio had a large investor other than
the Fund that redeemed its interest in the Portfolio, the Portfolio's remaining
investors (including the Fund) might, as a result, experience higher pro rata
operating expenses, thereby producing lower returns.
The Fund may withdraw its entire investment from the Portfolio at any
time, if the Trust Board determines that it is in the best interests of the Fund
and its shareholders to do so. The Fund might withdraw, for example, if there
were other investors in the Portfolio with power to, and who did by a vote of
the shareholders of all investors (including the Fund), change the investment
objective or policies of the Portfolio in a manner not acceptable to the Trust
Board. A withdrawal could result in a distribution in kind of portfolio
securities (as opposed to a cash distribution) by the Portfolio. That
distribution could result in a less diversified portfolio of investments for the
Fund and could affect adversely the liquidity of the Fund's portfolio. If the
Fund decided to convert those securities to cash, it usually would likely incur
brokerage fees or other transaction costs. If the Fund withdrew its investment
from the Portfolio, the Trust Board would consider appropriate alternatives,
including the management of the Fund's assets in accordance with its investment
objective and policies by SCMI, or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Trust Board decided not to
permit SCMI to manage the Fund's assets, could have a significant impact on
shareholders of the Fund.
Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
<PAGE>
APPENDIX A
PRIOR PERFORMANCE OF SCMI
The following table sets forth SCMI's composite performance data
relating to the historical performance of a commingled investment fund for
tax-exempt pension and profit sharing trusts that is managed by the investment
adviser and is the only account managed by the investment adviser with an
investment objective, policies, strategies and risks substantially similar to
those of the Portfolio. The commingled fund commenced operations in May, 1989,
and as of September 30, 1996, had total net assets of approximately $980
million. THE DATA ARE PROVIDED TO ILLUSTRATE THE PAST PERFORMANCE OF SCMI IN
MANAGING SUBSTANTIALLY SIMILAR ACCOUNTS AS MEASURED AGAINST SPECIFIED MARKET
INDICES AND DO NOT REPRESENT THE PERFORMANCE OF THE PORTFOLIO. INVESTORS SHOULD
NOT CONSIDER THIS PERFORMANCE DATA AS AN INDICATION OF FUTURE PERFORMANCE OF THE
PORTFOLIO, OF THE FUND OR OF THE INVESTMENT ADVISER.
SCMI's composite performance data shown below were calculated in
accordance with recommended standards of the Association for Investment
Management and Research ("AIMR"), respectively applied to all time periods. AIMR
is a non-profit membership and education organization with more than 60,000
members worldwide that, among other things, has formulated a set of performance
presentation standards for investment advisers. These AIMR performance
presentation standards are intended to: (i) promote full and fair presentations
by investment advisers of their performance results; and (ii) ensure uniformity
in reporting so that performance results of investment advisers are directly
comparable. All returns presented were calculated on a total return basis and
include all dividends and interest, accrued income and realized and unrealized
gains and losses. Returns do not reflect the deduction of investment advisory
fees, custody fees, brokerage commissions and execution costs paid by the
account, without provision for federal or state taxes. Securities transactions
are accounted for on the trade date and accrual accounting is utilized. Cash and
equivalents are included in performance returns. The monthly returns combine the
accounts' returns (calculated on a time-weighted rate of return that is revalued
whenever cash flows exceed $500) by asset-weighting each account's asset value
as of the beginning of the month. Quarterly and yearly returns are calculated by
linking the monthly and quarterly returns, respectively, in accordance with AIMR
standards.
The commingled investment fund that is included in the investment
adviser's composite is not subject to the same types of expenses to which the
Portfolio is subject nor to the diversification requirements, specific tax
restrictions and investment limitations imposed on the Portfolio by the
Investment Company Act of 1940 or the Internal Revenue Code. The performance
results for SCMI's composite could have been adversely affected if the
commingled investment fund had been subject to such regulation.
The investment results of the commingled investment fund are audited annually.
Presenting the performance of such fund here is not intended to predict or
suggest the returns that might be experienced by the Portfolio, the Fund or an
individual investor investing in the Fund. Investors should also be aware that
the use of a methodology different from that used below to calculate performance
could result in different performance data.
Annual Rates of Return
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/1/96 - 5/31/89 -
9/30/96 1995 1994 1993 1992 1991 1990 12/31/89
----------- ------- -------- --------- --------- ------- --------- -----------
Adviser's Composite 13.6% 6.2% 4.4% 30.0% -9.3% 8.4% -2.3% 36.8%
Salomon Brothers
Extended Market Index (1) 7.7% 4.8% 9.4% 30.7% -15.3% 6.5% -22.6% 24.9%
</TABLE>
(1) The Salomon Brothers Extended Market Index ("EMI") is the portion of the
Salomon Brothers Broad Market Index ("BMI") related to companies with small
market capitalization in approximately 22 countries. Only issues that non-local
investors may purchase are included. In establishing the EMI, Salomon Brothers
ranks all companies in the BMI (I.E., companies with available market capital
greater than U.S. $100 million) within each country by their total (unadjusted)
market capital. The EMI represents the smallest companies in each country based
on total market capital having in the aggregate 20% of the cumulative available
market capital in such country.
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
SUBADMINISTRATOR
Forum Administrative Services, Limited Liability Company
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The Chase Manhattan Bank
Global Custody Division
Woolgate House, Coleman Street
London EC2P 2HD, United Kingdom
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
Table of Contents
PROSPECTUS SUMMARY.............................3
EXPENSES OF INVESTING
IN THE FUND................................4
Fee Table......................................4
Example........................................4
FINANCIAL HIGHLIGHTS...........................5
INVESTMENT OBJECTIVE...........................6
INVESTMENT POLICIES............................6
ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS....................7
RISK CONSIDERATIONS...........................10
MANAGEMENT OF THE FUND........................12
Boards of Trustees............................12
Investment Adviser and
Portfolio Managers........................12
Administrative Services.......................13
Expenses......................................13
Portfolio Transactions........................14
Code of Ethics................................14
INVESTMENT IN THE FUND........................14
Purchase of Shares............................14
Retirement Plans and Individual
Retirement Accounts.........................15
Statement of Intention........................16
Exchanges.....................................16
Redemption of Shares..........................16
Net Asset Value...............................17
DIVIDENDS, DISTRIBUTIONS
AND TAXES...................................18
The Fund......................................18
The Portfolio.................................19
OTHER INFORMATION.............................20
Capitalization and Voting.....................20
Reports.......................................20
Performance...................................20
Custodian and Transfer Agent..................21
Shareholder Inquiries.........................21
Fund Structure................................21
Appendix A...................................A-1
