<PAGE>
SCHRODER EMERGING MARKETS FUND
INVESTOR SHARES
This fund's investment objective is to seek long-term capital appreciation. It
seeks to achieve this objective through investment in equity securities of
issuers domiciled or doing business in emerging market countries in regions such
as Southeast Asia, Latin America, and Eastern and Southern Europe. It is
intended for investors who seek the aggressive growth potential of emerging
world markets and are willing to bear the special risks of investing in those
markets.
Schroder Emerging Markets 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 EM Core Portfolio (the "Portfolio"),
a series of Schroder Capital Funds ("Schroder Core"). The Portfolio has an
identical investment objective and substantially similar investment policies as
the Fund. Accordingly, the Fund's investment experience corresponds directly
with the Portfolio's investment experience. (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 October 1, 1997, as amended October 31, 1997 and as
may be amended further 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 its 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
OCTOBER 1, 1997
AS AMENDED
OCTOBER 31,
1997
<PAGE>
<TABLE>
<CAPTION>
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.
<S> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) (800) 290-9826 SCHRODER SERIES TRUST (800) 464-3108
SCHRODER INTERNATIONAL BOND FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER MICRO CAP FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND
</TABLE>
2
<PAGE>
PROSPECTUS SUMMARY
This Prospectus offers Investor Class shares ("Investor Shares" or "Shares")
of the Fund, which is a separately managed, non-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, non-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. Long-term capital appreciation. The Fund seeks to achieve its
objective through investment in equity securities of issuers domiciled or doing
business in emerging market countries in regions such as Southeast Asia, Latin
America, and Eastern and Southern Europe.
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. (See "Management of the
Fund--Investment Adviser and Portfolio Managers".)
ADMINISTRATIVE SERVICES. Schroder Fund Advisors Inc. ("Schroder Advisors")
serves as administrator and distributor of the Fund, and Forum Administrative
Services, LLC ("Forum") serves as the Fund's subadministrator. (See "Management
of the Fund--Administrative Services".)
PURCHASES AND REDEMPTIONS OF SHARES. Shares may be purchased and redeemed by
mail, by bank-wire or through your broker-dealer or other financial institution.
The minimum initial investment is $10,000, and the minimum subsequent investment
is $2,500. (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 at least annually
distributes any net realized long-term capital gain. Dividends and long-term
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 investors who seek the aggressive growth potential of emerging
world markets and are willing to bear their special investment risks, including
but not limited to tightening of exchange controls and expropriation,
nationalization or confiscation of assets by local governments. The Fund is not
intended for investors whose objective is assured income or preservation of
capital: investments in the securities of foreign issuers, particularly in
countries with smaller, emerging capital markets, involve risks in addition to
risks associated with investments in the securities of U.S. issuers. Of course,
as with any mutual fund, there is no assurance that the Fund or Portfolio will
achieve its investment objective.
The Fund's net asset value ("NAV") will vary because the market value of the
Portfolio's investments will change with changes in the value of the securities
in which the Portfolio invests and with changes in market conditions, interest
rates, currency rates, or political or economic events. The Fund is
non-diversified, which means that it may invest a greater portion of its assets
in securities of individual issuers than a diversified fund. Consequently,
changes in the market value of a single issuer could cause greater fluctuations
in the Fund's NAV than would occur in a diversified fund. When you sell your
shares, they may be worth more or less than what you paid for them. (See "Risk
Considerations".)
3
<PAGE>
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. The Annual
Fund Operating Expenses have been estimated to reflect projected fees, expenses
and waivers for the Fund's current fiscal year ending May 31, 1998.
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
<TABLE>
<S> <C>
Management Fees (after fee waivers)(2)(3)................... 0.81%
12b-1 Fees.................................................. None
Other Expenses (after fee waivers and expense
reimbursements)(3)......................................... 0.89%
-------
Total Fund Operating Expenses (after fee waivers and expense
reimbursements)(3)......................................... 1.70%
</TABLE>
(1) The Fund's expenses include the Fund's pro rata portion of all operating
expenses of the Portfolio.
(2) Management Fees reflect the fees paid by the Portfolio and the Fund to SCMI
and Schroder Advisors for investment advisory and administrative services.
(3) SCMI and Schroder Advisors have voluntarily undertaken to waive a portion of
their fees and assume certain expenses of the Fund during the current fiscal
year in order to limit the Fund's total expenses to 1.70% 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 fee waivers, Management Fees, Other Expenses and
Total Fund Operating Expenses would be 1.25%, 0.91% and 2.16%, respectively.
EXAMPLE
The table below indicates how much you would pay in total expenses on a
$1,000 investment in the Fund, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period. The example is based on the expenses
listed above and assumes 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.
<TABLE>
<S> <C>
1 Year.................................. $ 17
3 Years................................. $ 54
</TABLE>
4
<PAGE>
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek long-term capital appreciation.
It seeks to achieve this objective through investment in equity securities of
issuers domiciled or doing business in emerging market countries in regions such
as Southeast Asia, Latin America, and Eastern and Southern Europe.
The Fund is designed for investors who seek the aggressive growth potential
of emerging markets and are willing to bear the special risks of investing a
portion of their assets in those markets. The Fund is not a complete investment
program, and investments in the securities of foreign issuers generally involve
risks in addition to the risks associated with investments in the securities of
U.S. issuers. The Fund is not intended for investors whose objective is assured
income or preservation of capital. (See "Risk Considerations".)
The Fund currently seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which has substantially the same
investment objective and similar policies 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"). The following investment policies and limitations
are considered at the time of purchase. Additional information concerning the
investment policies and restrictions of the Fund and the Portfolio is contained
in the SAI.
Under normal market conditions, the Portfolio invests at least 65% of its
total assets in emerging market equity securities, including common stocks,
preferred stocks, convertible preferred stocks, stock rights and warrants, and
convertible debt securities. (Investments in stock rights and warrants are not
considered for purposes of determining compliance with this policy.) The
Portfolio may invest up to 35% of its total assets in high-risk debt securities
that are unrated or rated below investment grade. (See "Debt Securities" and
"Risk Considerations".) The Portfolio may acquire emerging market securities
that are not denominated in emerging market currency. Under certain
circumstances, the Portfolio may invest indirectly in emerging market securities
by investing in other investment companies or vehicles. (See "Investment in
Other Investment Companies or Vehicles".)
In recent years, many emerging market countries have begun programs of
economic reform: removing import tariffs, dismantling trade barriers,
deregulating foreign investment, privatizing state-owned industries, permitting
the value of their currencies to float against the dollar and other major
currencies, and generally reducing the level of state intervention in industry
and commerce. Important intra-regional economic integration also holds the
promise of greater trade and growth. At the same time, significant progress has
been made in restructuring the heavy external debt burden that certain emerging
market countries accumulated during the 1970s and 1980s. While there is no
assurance that these trends will continue, the Portfolio's investment adviser
will seek out attractive investment opportunities in these countries.
"Emerging market" countries are all those not included in the Morgan Stanley
Capital International World Index ("MSCI World") of major world economies. If,
however, the investment adviser determines that the economy of an MSCI
World-listed country is an emerging market economy, the investment adviser may
include such country in the emerging market category. The following countries
are currently
5
<PAGE>
excluded from the Portfolio's emerging market category: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States of America. The Portfolio
does not necessarily seek to diversify investments on a geographic basis and may
invest more than 25% of its total assets in issuers located in any one country.
(See "Risk Considerations--Geographic Concentration".)
An issuer of a security will be considered to be domiciled or doing business
in an emerging market when: (1) it is organized under the laws of an emerging
market country; (2) its primary securities trading market is in an emerging
market country; (3) in the judgment of the investment adviser, at least 50% of
the issuer's revenues or profits are derived from goods produced or sold,
investments made, or services performed in emerging market countries; or (4) it
has at least 50% of its assets situated in emerging market countries. The
Portfolio's investment adviser may consider investment companies to be located
in the country or countries in which they primarily invest.
The following pages contain additional information about the securities in
which the Portfolio may invest, strategies SCMI may employ in pursuit of the
Portfolio's objective, and a summary of related risks. A complete listing of the
Portfolio's investment restrictions and more detailed information about the
Portfolio's investments is contained in the SAI. Policy limitations and
investment restrictions generally are considered at the time of purchase.
COMMON AND PREFERRED STOCK, CONVERTIBLE PREFERRED STOCK AND WARRANTS. The
Portfolio's investments include common or preferred stock of established
emerging market companies that are listed on recognized securities exchanges or
traded in other established markets. However, the Portfolio may make limited
investment in convertible preferred stock, warrants and stock rights.
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,
would be entitled to their pro rata share of the company's assets after
creditors (including fixed-income security holders) and any preferred
stockholders are paid. Preferred stock is a class of stock having a preference
over common stock as to dividends and, generally, as to the recovery of
investment. A preferred stockholder is also a shareholder and not a creditor of
the company. Emerging market equity securities may be traded in the over-
the-counter market or on a securities exchange, but such securities are not
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 interestholders 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.
Convertible preferred stock generally may be converted at a stated price
within a specific amount of time into a specified number of shares of common
stock. A convertible security entitles the holder to receive the dividend paid
on preferred stock until the convertible security is converted or exchanged.
Before conversion, convertible securities have characteristics similar to
non-convertible debt securities in that they ordinarily provide a stream of
income
6
<PAGE>
with generally higher yields than those of common stocks of the same or similar
issuers. These securities usually are senior to common stock in a company's
capital structure, but usually are subordinated to non-convertible debt
securities. In general, the value of a convertible security is a function of its
investment value as a fixed-income security and the value of the underlying
stock into which it will convert. As a fixed-income security, the value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise.
The Portfolio also may invest in warrants. Warrants 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.
AMERICAN DEPOSITARY RECEIPTS ("ADRS"). Due to the absence of established
securities markets in certain emerging market countries and restrictions in
certain countries on direct investment by foreign entities, the Portfolio may
invest in certain emerging market issuers through the purchase of sponsored and
unsponsored American Depositary Receipts or other similar securities, such as
American Depositary Shares, Global Depositary Shares or International Depositary
Receipts. ADRs are receipts typically issued by U.S. banks evidencing ownership
of the underlying securities into which they are convertible. These securities
may or may not be denominated in the same currency as the underlying securities.
Unsponsored ADRs may be created without the participation of the foreign issuer.
Holders of unsponsored ADRs generally bear all the costs of the ADR facility,
whereas foreign issuers typically bear certain costs in a sponsored ADR. The
bank or trust company depository of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights.
DEBT SECURITIES. The Portfolio may seek capital appreciation through
investment in emerging market convertible or non-convertible debt securities.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, in relative interest rate levels, or
in the creditworthiness of issuers. Because convertible debt is convertible into
stock under specified conditions, the value of convertible debt also is affected
normally by changes in the value of the issuer's equity securities. The receipt
of income from debt securities is incidental to the Portfolio's objective of
long-term capital appreciation. Such income can be used, however, to offset the
operating expenses of the Portfolio. The Portfolio also may invest to a certain
extent in debt securities in order to participate in debt-to-equity conversion
programs incident to corporate reorganizations.
The Portfolio may invest in debt securities issued or guaranteed by emerging
market governments (including countries, provinces and municipalities) or their
agencies and instrumentalities ("governmental entities"); debt securities issued
or guaranteed by international organizations designated or supported by multiple
foreign governmental entities (which are not obligations of foreign governments)
to promote economic reconstruction or development; and debt securities issued by
corporations or financial institutions.
The Portfolio may invest up to 35% of its total assets in non-convertible
investment-grade emerging market debt securities, including debt securities that
are unrated or are rated below investment grade (below "Baa" by Moody's or "BBB"
by S&P). (For a further description of S&P's and Moody's securities ratings,
please see the Appendix to the SAI.) Investors should note that even debt
securities rated "Baa" by Moody's are considered to have speculative
7
<PAGE>
characteristics. Below investment-grade securities (and unrated securities of
comparable quality) ("high yield/high risk securities") are predominantly
speculative with respect to the capacity to pay interest and repay principal,
and generally involve a greater volatility of price than securities in higher
rating categories. These securities are commonly referred to as "junk" bonds.
The risks associated with high yield/high risk securities are generally greater
than those associated with higher-rated securities. (See "Risk
Considerations--High Yield/ High Risk Securities".) The Portfolio is not
obligated to dispose of securities due to rating changes by the rating agencies.
The Portfolio is not authorized to purchase debt securities that are in default,
except for sovereign debt (discussed above) in which the Portfolio may invest no
more than 5% of its total assets while such sovereign debt securities are in
default.
BRADY BONDS. The Portfolio may invest a portion of its assets in Brady
Bonds, which are securities created through the exchange of existing commercial
bank loans to sovereign entities for new obligations in connection with debt
restructuring (under a debt restructuring plan introduced by former U.S.
Secretary of the Treasury, Nicholas F. Brady). Brady Bonds have been issued only
recently and, therefore, do not have a long payment history. Brady Bonds may
have collateralized and uncollateralized components, are issued in various
currencies and are actively traded in the over-the-counter secondary market.
Brady Bonds are not considered U.S. government securities. In light of the
residual risk associated with the uncollateralized portions of Brady Bonds and,
among other factors, the history of defaults with respect to commercial bank
loans by public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are considered speculative. Brady Bonds could be
subject to restructuring arrangements or to requests for new credit, which could
cause the Portfolio to suffer a loss of interest or principal on its holdings.
(For further information see "Brady Bonds" in the SAI.)
FOREIGN EXCHANGE CONTRACTS. Changes in currency exchange rates will affect
the U.S. dollar values of securities denominated in foreign currencies. Exchange
rates between the U.S. dollar and other currencies fluctuate in response to
forces of supply and demand in the foreign exchange markets. These forces are
affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation, and other factors,
many of which may be difficult (if not impossible) to predict. When investing in
foreign securities, the Portfolio usually effects currency exchange transactions
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange
market. The Portfolio incurs foreign exchange expenses in converting assets from
one currency to another.
The Portfolio may enter into forward contracts for the purchase or sale of
foreign currency: (1) 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 (2) to hedge against the possibility
that a foreign currency 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 against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of securities and exposes
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.
8
<PAGE>
The Portfolio does not intend to maintain a net exposure to such contracts
if the fulfillment of obligations under such contracts would obligate it to
deliver an amount of foreign currency in excess of the value of its portfolio
securities or other assets denominated in the currency. The Portfolio will not
enter into these contracts for speculative purposes and will not enter into
non-hedging currency contracts. The Portfolio will generally not enter into a
forward contract with a term of greater than one year. Forward contracts are not
exchange traded, and there can be no assurance that a liquid market will exist
at a time when the Portfolio seeks to close out a forward contract. Currently,
only a limited market, if any, exists for hedging transactions relating to
currencies in certain emerging markets or to securities of issuers domiciled or
principally engaged in business in certain emerging markets. This may limit the
Portfolio's ability to hedge its investments in those markets. These contracts
involve a risk of loss if SCMI fails to predict accurately changes in relative
currency values. (See "Risk Considerations--Currency Fluctuations and
Devaluations".)
OPTIONS AND FUTURES TRANSACTIONS. Although the Portfolio does not presently
intend to do so, it may: (1) write covered call options on portfolio securities,
and the U.S. dollar and emerging market currencies without limit; (2) write
covered put options on portfolio securities, the U.S. dollar and emerging market
currencies with the limitation that the aggregate value of the obligations
underlying the puts determined as of the date the options are sold will not
exceed 50% of the Portfolio's net assets; (3) purchase call and put options in
amounts up to 5% of its total assets; and (4)(a) purchase and sell
exchange-traded futures contracts on underlying portfolio securities, any
emerging market currency, U.S. and emerging market fixed-income securities and
such indices of U.S. or emerging market equity or fixed-income securities as may
exist or come into being, and (b) purchase and write call and put options on
such futures contracts, in all cases involving such futures contracts or options
on futures contracts for hedging purposes only, and without limit, except that
the Portfolio may not enter into futures contracts or purchase related options
if, immediately thereafter, the amount committed to margin plus the amount paid
for premiums for unexpired options on futures contracts generally exceeds 5% of
the value of the Portfolio's total assets. All of the foregoing are referred to
as "Hedging Instruments".
In general, the Portfolio may use Hedging Instruments: (1) to protect
against declines in the market value of the Portfolio's portfolio securities or
stock index futures, and the currencies in which they are denominated, or (2) to
establish a position in securities markets as a temporary substitute for
purchasing securities. The Portfolio will not use Hedging Instruments for
speculation. Hedging Instruments have certain risks associated with them,
including: (1) the possible failure of such instruments as hedging techniques in
cases where the price movement of the securities underlying the options or
futures does not follow the price movements of the portfolio securities subject
to the hedge; (2) potentially unlimited loss associated with futures
transactions and the possible lack of a liquid secondary market for closing out
a futures position; and (3) possible losses resulting from the inability of the
Portfolio's investment adviser to predict the direction of stock prices,
interest rates, relative currency values and other economic factors. In
addition, only a limited market, if any, currently exists for hedging
transactions relating to currencies in many emerging markets or to securities of
issuers domiciled or principally engaged in business in emerging markets. This
may limit the Portfolio's ability to hedge its investments in such emerging
market countries. The Portfolio has no plans to enter into currency futures or
options contracts but may do so in the
9
<PAGE>
future. (See "Options and Futures Transactions" in the SAI for additional
information on Hedging Instruments the Portfolio may use and the risks
associated with them.)
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. The
Portfolio may purchase securities on a when-issued or delayed delivery basis or
may purchase or sell securities on a forward-commitment basis. When such
transactions are negotiated, the price is fixed at the time of the commitment,
but delivery and payment may take place a month or more after the date of the
commitment. There is no overall limit on the percentage of the Portfolio's
assets that may be committed to the purchase of securities on a when-issued,
delayed delivery or forward-commitment basis. An increase in the percentage of
the Portfolio's assets committed to the purchase of securities on a when-issued,
delayed delivery or forward-commitment basis may increase the volatility of the
Portfolio's net asset value.
WHEN, AS AND IF ISSUED SECURITIES. The Portfolio may purchase securities on
a "when, as and if issued" basis under which the issuance of the security
depends upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization, leveraged buyout or debt restructuring. If the
anticipated event does not occur and the securities are not issued, the
Portfolio will have lost an investment opportunity. There is no overall limit to
the percentage of the Portfolio's assets that may be committed to the purchase
of securities on a "when, as and if issued" basis. An increase in the percentage
of the Portfolio's assets committed to the purchase of securities on a "when, as
and if issued" basis may increase the volatility of its net asset value.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase agreements,
which are a means of investing monies for a short period, whereby a seller--a
bank or recognized broker-dealer--sells securities to the Portfolio and agrees
to repurchase them (at the Portfolio's cost plus interest) within a specified
period (normally one day). The value of the underlying securities purchased by
the Portfolio is monitored at all times by SCMI to ensure that the total value
of the collateral given to secure the seller's repurchase obligation equals or
exceeds the value of the repurchase agreement. The Portfolio's custodian bank
holds the collateral until the repurchase agreement has matured. If the seller
defaults under a repurchase agreement, the Portfolio may have difficulty
exercising its rights to the underlying collateral and may incur costs and
experience time delays in disposing of it. To evaluate potential risk, SCMI
reviews the creditworthiness of banks and dealers with which the Portfolio
enters into repurchase agreements.
LOANS OF PORTFOLIO SECURITIES. The Portfolio may loan portfolio securities
to brokers, dealers and other financial institutions meeting specified credit
conditions if the loan is collateralized in accordance with applicable
regulatory requirements and if, after any loan, the value of the securities
loaned does not exceed one third of the Portfolio's total assets. By so doing,
the Portfolio seeks to earn income. In the event of the other party's
bankruptcy, the Portfolio could experience delays in recovering the securities
it loaned. If, in the meantime, the value of the loaned securities has declined,
the Portfolio could experience a loss.
The Portfolio is required to maintain in a segregated account liquid the
collateral in an amount equal to the current market value of the securities
loaned (including accrued interest thereon) plus the loan interest payable to
the Portfolio. Any securities that the Portfolio receives as collateral do not
become part of its investment portfolio at the time of the loan. In the event of
a default by the borrower, the Portfolio (to the extent permitted by law) will
dispose of such collateral except for such part
10
<PAGE>
thereof that is a security in which the Portfolio is permitted to invest. While
securities are on loan, the borrower pays the Portfolio any accrued income on
those securities. The Portfolio invests any cash collateral or earns income or
receives an agreed upon fee from a borrower that has delivered securities that
are permissible collateral. Cash collateral received by the Portfolio is
invested in U.S. government securities and high-grade liquid debt or equity
securities. The value of securities loaned is marked to market daily. The market
value of any securities purchased with cash collateral is subject to decline.
Securities loans are subject to termination at the Portfolio's SCMI's or the
borrower's option. The Portfolio may pay reasonable negotiated fees in
connection with loaned securities, so long as such fees are set forth in a
written contract and approved by the Schroder Core Board.
LIQUIDITY. The Portfolio will not invest more than 15% of its assets in
securities determined by SCMI to be illiquid. Certain securities that are
restricted as to resale may nonetheless be resold by the Portfolio under Rule
144A of the Securities Act of 1933, as amended, or Section 4(2) paper issued
under that Act that has an active secondary market may be determined by SCMI to
be liquid for purposes of compliance with the Portfolio's limitations on
illiquid investments. There is no guarantee that the Portfolio will be able to
sell such securities at any time when SCMI deems it advisable to do so or at
prices prevailing for comparable securities that are more widely held. (See
"Investment Policies--Liquidity" in the SAI for further information.)
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Portfolio is
permitted to invest in certain emerging markets through governmentally
authorized investment vehicles or companies. Pursuant to the 1940 Act, the
Portfolio may invest in the shares of other investment companies which invest in
securities that the Portfolio is permitted to purchase subject to the limits
permitted under the 1940 Act or any orders, rules or regulations thereunder.
When investing through investment companies, the Portfolio may pay substantial
premiums above such investment companies' net asset value per share. As a
shareholder in an investment company, the Portfolio would bear its ratable share
of the investment company's expenses, including its advisory and administrative
fees. At the same time, the Portfolio would continue to pay its own fees and
expenses.
TEMPORARY 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 banks and broker-dealers with respect to)
short-term debt securities, including commercial paper, U.S. Treasury bills,
other short-term U.S. government securities, certificates of deposit, and
bankers' acceptances of U.S. or foreign banks. The Portfolio also may hold cash
and time deposits denominated in any major foreign currency in foreign banks. To
the extent that the Portfolio assumes a temporary defensive position, it may not
be pursuing its investment objective. (See the SAI for further information about
these securities.)
INVESTMENT POLICY CHANGES. The investment objective and fundamental
investment policies of the Portfolio may not be changed without approval of the
holders of a majority of the outstanding voting securities of the Portfolio. A
majority of outstanding voting securities means the lesser of: (1) 67% of the
shares present or represented at a shareholder meeting at which the holders of
more than 50% of the outstanding shares are present or represented; or (2) more
than 50% of outstanding shares. In order to seek such approval by the
Portfolio's security holders, it may be necessary for the Fund to solicit
approval from its shareholders. (See "Fund Structure--The Portfolio".)
11
<PAGE>
Non-fundamental investment policies may be changed by the Schroder Core Board
without approval of the investors in the Portfolio. All investment policies are
non-fundamental unless stated otherwise.
RISK CONSIDERATIONS
INTERNATIONAL INVESTMENTS. All investments, domestic and foreign, involve
risk. Investment in the securities of foreign issuers may involve risks in
addition to those normally associated with investments in the securities of U.S.
issuers. All foreign investments are subject to risks of foreign political and
economic instability, adverse movements in foreign exchange rates, the
imposition or tightening of exchange controls, or other limitations on
repatriation of foreign capital. Foreign investments are subject to the risk of
changes in foreign governmental attitudes towards private investment that could
lead to nationalization, increased taxation or confiscation of Portfolio assets.
Moreover: (1) dividends payable on foreign securities may be subject to
foreign withholding taxes, thereby reducing the income earned by the Portfolio;
(2) commission rates payable on foreign portfolio transactions are generally
higher than in the U.S.; (3) 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.; (4) foreign securities often trade less
frequently and with lower volume than U.S. securities and consequently may
exhibit greater price volatility; and (5) 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.
REGULATION AND LIQUIDITY OF MARKETS. Government supervision and regulation
of exchanges and brokers in emerging market countries is typically less
extensive than in the U.S. These markets may have different clearance and
settlement procedures, and in certain cases, settlements have not kept pace with
the volume of securities transactions, making them difficult to conduct. Delays
in settlement could adversely affect or interrupt the Portfolio's intended
investment program or result in investment losses due to intervening declines in
security values.
Securities markets in emerging market countries are substantially smaller
than U.S. securities markets and have substantially lower trading volume,
resulting in diminished liquidity and greater price volatility. Reduced
secondary market liquidity may make it more difficult for the Portfolio to
determine the value of its portfolio securities or dispose of particular
instruments when necessary. Brokerage commissions and other transaction costs on
foreign securities exchanges are also generally higher.
EMERGING MARKETS. In any emerging market country, there is the possibility
of expropriation of assets, confiscatory taxation, nationalization of companies
or industries, foreign exchange controls, foreign investment controls on daily
stock market movements, default in foreign government securities, political or
social instability, or diplomatic developments that could affect investments in
those countries. In the event of expropriation, nationalization or other
confiscation, the Portfolio could lose its entire investment in a country. The
economies of developing countries generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be adversely
affected by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. There may also be less monitoring and
regulation of emerging markets and the activities of brokers there. Investing
may require that the Portfolio adopt
12
<PAGE>
special procedures, seek local government approvals or take other actions that
may incur costs for the Portfolio.
Certain emerging market countries may restrict investment by foreign
entities by limiting the size of foreign investment in certain issuers;
requiring prior approval of foreign investment by the government; imposing
additional tax on foreign investors; or limiting foreign investors to specific
classes of securities of an issuer that have less advantageous rights (with
regard to price or convertibility, for example) than classes available to
domiciliaries of the country. These restrictions or controls may at times limit
or preclude investment in certain securities and may increase the costs and
expenses of the Portfolio.
CURRENCY FLUCTUATIONS AND DEVALUATIONS. The Portfolio invests heavily in
securities denominated in non-U.S. currencies. 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. This
risk may be heightened in some emerging market countries.
The Portfolio may, at times, have to liquidate some portfolio securities to
acquire sufficient U.S. dollars to make fund redemptions, make distributions or
pay its expenses. Changes in foreign currency exchange rates may contribute to
the need to liquidate portfolio securities. The Portfolio incurs foreign
exchange expenses in converting assets from one currency to another.
INFLATION. Several emerging market countries have experienced high, and in
some periods extremely high, rates of inflation in recent years. Inflation and
rapid fluctuations in inflation rates may adversely affect these countries'
economies and securities markets. Further, inflation accounting rules in some
emerging market countries require, for companies that keep accounting records in
the local currency, that certain assets and liabilities be restated on the
company's balance sheet in order to express items in terms of current currency
purchasing power. Inflation accounting may indirectly generate losses or profits
for certain emerging market companies.
NON-DIVERSIFIED INVESTMENTS. Because suitable investments in emerging market
countries may be limited, the Portfolio, like the Fund, is classified as
"non-diversified" under the 1940 Act so that it may invest more than 5% of its
total assets in the securities of a single issuer. This classification may be
changed without a shareholder vote. However, so that investors in the Portfolio
may continue to qualify as a "regulated investment company" under Subchapter M
of the Internal Revenue Code of 1986, as amended, at the close of each quarter
of the taxable year: (1) not more than 25% of the market value of the
Portfolio's total assets will be invested in the securities of a single issuer;
(2) with respect to 50% of the market value of its total assets, not more than
5% will be invested in the securities of a single issuer; and (3) the Portfolio
will not own more than 10% of the outstanding voting securities of a single
issuer. (See "Dividends, Distributions and Taxes".)
To the extent the Portfolio makes investments in excess of 5% of its assets
in a particular issuer, its exposure to credit and market risks associated with
that issuer is increased. Also, since a relatively high percentage of the
Portfolio's assets may be invested in the securities of a limited number of
issuers, the Portfolio may be more susceptible to any single economic, political
or regulatory occurrence than a diversified investment company.
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 does
so, the Portfolio is susceptible to a range of factors that could adversely
13
<PAGE>
affect that country, including political and economic developments and foreign
exchange rate fluctuations as discussed above. As a result of investing
substantially in one country, the value of the Portfolio's assets may fluctuate
more widely than the value of shares of a comparable fund with a lesser degree
of geographic concentration.
DEBT SECURITIES. Debt securities are generally subject to two kinds of
risk--credit risk and market risk. Credit risk refers to the ability of the
debtor, and any other obligor, to pay principal and interest on the debt as it
becomes due. The Portfolio may, from time to time, invest 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.
Market risk refers to the tendency of the value of debt securities to vary
inversely with interest-rate changes. Certain debt instruments may also be
subject to extension risk, which refers to change in total return on a debt
instrument resulting from extension or abbreviation of the instrument's
maturity.
HIGH YIELD/HIGH RISK SECURITIES. High yield/high risk securities' market
values are affected more by individual issuer developments and are more
sensitive to adverse economic changes than are higher-rated securities. Issuers
of high yield/high risk securities may be highly leveraged and may not have more
traditional methods of financing available to them. During economic downturns or
substantial periods of rising interest rates, issuers of high yield/high risk
securities, especially highly leveraged ones, may be less able to service their
principal and interest payment obligations, meet their projected business goals,
or obtain additional financing. The risk of loss due to default by the issuer is
significantly greater for holders of high yield/high risk securities because
such securities may be unsecured and may be subordinated to other creditors of
the issuer. In addition, the Portfolio may incur additional expenses if it is
required to seek recovery upon a default by the issuer of such an obligation or
participate in the restructuring of such obligation.
Periods of economic uncertainty and change are likely to cause increased
volatility in the market prices of high yield/high risk securities and,
correspondingly, in the Portfolio's net asset value if it invests in such
securities. Market prices of such securities structured as zero coupon or
pay-in-kind securities are more affected by interest-rate changes and, thus,
tend to be more volatile than securities that pay interest periodically and in
cash.
High yield/high risk securities may have call or redemption features that
would permit an issuer to repurchase the securities from the Portfolio. If a
call were exercised by the issuer during a period of declining interest rates,
the Portfolio likely would have to replace called securities with lower yielding
securities, thus decreasing the Portfolio's net investment income and dividends
to shareholders.
While a secondary trading market for high yield/high risk securities does
exist, it is generally not as liquid as the secondary market for higher-rated
securities. In periods of reduced secondary market liquidity, prices of high
yield/ high risk securities may become volatile and experience sudden and
substantial price declines. The Portfolio may, therefore, have difficulty
disposing of particular issues to meet its liquidity needs or in response to a
specific economic event (such as a deterioration in the creditworthiness of the
issuer). Reduced secondary market liquidity for certain high yield/ high risk
securities also may make it more difficult for the Portfolio to obtain accurate
market quotations (for purposes of valuing the Portfolio's investment
portfolio): market quotations generally are available on many high yield/high
14
<PAGE>
risk securities only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Under such
conditions, high yield/high risk securities may have to be valued at fair value
as determined by the Schroder Core Board or SCMI under Board-approved
guidelines.
Adverse publicity and investor perceptions (which may not be based on
fundamental analysis) may decrease the value and liquidity of high yield/high
risk securities, particularly in a thinly traded market. Factors adversely
affecting the market value of high yield/high risk securities are likely to
adversely affect the Portfolio's, and thus the Fund's, net asset value.
SOVEREIGN DEBT. Investment in sovereign debt carries high risk. Certain
emerging market countries such as Argentina, Brazil and Mexico are among the
largest debtors to commercial banks and foreign governments. At times, certain
emerging market countries have declared moratoria on the payment of principal
and/or interest on outstanding debt. The governmental entity that controls the
repayment of sovereign debt may not be able or willing to repay the principal
and/or interest when due in accordance with the terms of such debt. A
governmental entity's willingness or ability to repay principal and interest
when it is due may be affected by many factors, such as its cash flow situation,
the extent of its foreign reserves, the availability of sufficient foreign
exchange, the relative size of the debt service burden to the economy as a
whole, and political restraints. The Portfolio, as a holder of sovereign debt,
may be asked to participate in the rescheduling of such debt and to extend
further loans to governmental entities. There is no bankruptcy proceeding by
which defaulted sovereign debt may be collected.
Sovereign debt instruments in which the Portfolio may invest involve great
risk and are deemed to be the equivalent in terms of quality to high yield/high
risk securities discussed above and are subject to many of the same risks as
such securities. Similarly, the Portfolio may have difficulty disposing of
certain sovereign debt obligations because there may be a thin trading market
for such securities. The Portfolio will not invest more than 5% of its total
assets in sovereign debt instruments that are in default.
PORTFOLIO TURNOVER. The Portfolio may engage in short-term trading, but its
portfolio turnover rate is not expected to exceed 100%. High portfolio turnover
and short-term trading involve correspondingly greater commission expenses,
transaction costs and potentially higher amounts of recognized gain for federal
income tax purposes. (See "Taxation" in the SAI.)
15
<PAGE>
MANAGEMENT OF THE FUND
THE SCHRODER INVESTMENT MANAGEMENT GROUP
ASSETS UNDER MANAGEMENT WORLDWIDE
AS OF SEPTEMBER 30, 1997--OVER $175 BILLION
[MAP]
THE SCHRODER INVESTMENT MANAGEMENT GROUP INVESTMENT AND REPRESENTATIVE OFFICES
WORLDWIDE INCLUDE NEW YORK, LONDON, BOSTON, TORONTO, ZURICH, WARSAW, TOKYO, HONG
KONG, BEIJING, SHANGHAI, TAIPEI, SEOUL, BANGKOK, KUALA LUMPUR, SINGAPORE,
JAKARTA, MANILA, SYDNEY, MEXICO CITY, BUENOS AIRES, SAO PAULO AND BOGOTA.
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. 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 "Management--Trustees and
Officers."
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
SCMI, the Portfolio's investment adviser, is a wholly owned U.S. subsidiary
of Schroders Incorporated (doing business in New York as Schroders Holdings),
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.
As investment adviser to the Portfolio, SCMI manages the Portfolio and
continuously selects, 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 Schroder Core provides that SCMI is entitled to receive a
monthly advisory fee at the annual rate of 1.00% of the Portfolio's average
daily net assets, which the Fund indirectly bears through its investment in the
Portfolio. The Fund bears no separate investment advisory fee directly.
16
<PAGE>
The Portfolio's current investment managers include John A. Troiano, a Vice
President of the Trust and Schroder Core, who has managed the Portfolio's assets
since its inception, assisted by the management team of Heather Crighton and
Mark Bridgeman, who are responsible for the day-to-day management of the
investment portfolio. Mr. Troiano, Chief Executive Officer of SCMI since July 1,
1997, has been a Managing Director of SCMI since October 1995 and has been
employed by various Schroder Group companies in the investment research and
portfolio management areas since 1981. Ms. Crighton is a Vice President of SCMI
and has been employed by SCMI in the investment research and portfolio
management areas since 1992. Mr. Bridgeman, also a Vice President of SCMI, has
been employed by various Schroder Group companies in the investment research and
portfolio management areas since 1990.
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 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, SCMI will be entitled
to a monthly advisory fee at the annual rate of 1.00% 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 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 and a subadministration agreement with Forum.
Under these agreements, Schroder Advisors and Forum provide certain management
and administrative services necessary for the Fund's operations. For providing
services for the Fund, Schroder Advisors and Forum are entitled to compensation
at the annual rates of 0.15% and 0.075%, respectively, of the Fund's average
daily net assets
Schroder Advisors and Forum provide similar services to the Portfolio, for
which Schroder Advisors and Forum are entitled to monthly fees at annual rates
of 0.10% and 0.075%, respectively, of the Portfolio's average daily net assets.
EXPENSES
The Fund bears all costs of its operations other than expenses specifically
assumed by Schroder Advisors or SCMI. 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 the Fund's shares; a portion of the expenses of maintaining the
Fund's legal existence and of shareholders' meetings; and expenses of
preparation and distribution to existing shareholders of reports, proxies and
prospectuses. Trust expenses directly attributed to the Fund are charged to the
Fund; other expenses are allocated proportionately among all the series of the
Trust in relation to the net assets of each series. SCMI
17
<PAGE>
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 Fund
transaction expenses and extraordinary expenses chargeable to Investor Shares,
to 1.70% of the average daily net assets of the Fund attributable to those
shares. This expense limitation can not be modified or withdrawn except by a
vote of the Trust Board. If expense reimbursements are required, they will be
made on a monthly basis. Forum may waive voluntarily all or a portion of its
fees, from time to time.
PORTFOLIO TRANSACTIONS
SCMI places orders for the purchase and sale of the Portfolio's investments
with brokers and dealers selected by SCMI and seeks "best execution" of such
portfolio transactions. The Portfolio may pay brokers higher than the lowest
available commission rates when SCMI believes it is reasonable to do so in light
of the value of the brokerage and research services provided. Commission rates
for brokerage transactions are fixed on many foreign securities exchanges, which
may cause higher brokerage expenses to accrue to the 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
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 any brokerage in
recognition of research services.
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 their
accounts at a Financial Institution should contact that organization directly
for appropriate instructions.
Fund Shares 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 $10,000, and the minimum subsequent investment is $2,500.
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 Emerging Markets Fund along with a completed account application (or
the investor's account number) to:
Schroder Emerging Markets Fund--
Investor Shares
P.O. Box 446
Portland, Maine 04112
18
<PAGE>
For initial purchases, the check must be accompanied by a completed account
application in proper form. Further documentation, such as corporate resolutions
and instruments of authority, may be requested from corporations,
administrators, executors, personal representatives, directors or custodians to
evidence the authority of the person or entity making the subscription request.
Purchase payments may be transmitted by Federal Reserve Bank wire directly
to the Fund as follows:
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Financial Corp.
Account. No.: 910-2-718187
Ref.: Schroder Emerging Markets
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 transaction will
be effected. 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") are
processed at the net asset value determined as of that day. Wire orders received
after 4:00 p.m. (Eastern time) are 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 written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
Subsequent purchases may be made by mailing a check, by sending a bank wire,
or through a shareholder's Financial Institution as indicated above. All
payments should clearly indicate the shareholder's name and account number.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions will automatically be reinvested.
In addition, the amount of any outstanding checks for dividends and other
distributions that have been returned to the Transfer Agent will be reinvested
and the checks will be canceled.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Fund Shares are offered in connection with tax-deferred retirement plans.
Application forms and further information about these plans, including
applicable fees, are available upon request. Before investing in the Fund
through one of these plans, investors should consult their tax advisors.
The Fund may be used as an investment vehicle for an IRA including SEP-IRA.
An IRA naming 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
$2,000; the minimum subsequent investment is $250. Under certain circumstances
contributions to an IRA may be tax deductible. IRAs are available to individuals
19
<PAGE>
(and their spouse) who receive compensation or earned income whether or not they
are active participants in a tax-qualified or government-approved retirement
plan. An IRA contribution by an individual or spouse who participates in a
tax-qualified or government-approved retirement plan may not be deductible,
depending upon the individual's income. Individuals also may establish an IRA to
receive a "rollover" contribution of distributions from another IRA or qualified
plan. Tax advice should be obtained before effecting a rollover.
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 $10,000 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 to 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 Fund Shares for 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.
Federal income tax purposes an exchange is considered to be a sale of shares
for 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 funds 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
Fund Shares are redeemed at their next determined net asset value after
receipt by the Fund see 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) are processed at
the net asset value determined as of that day. Redemption requests that are
received after 4:00 p.m. (Eastern time) are 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
20
<PAGE>
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 change it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.
WRITTEN REQUESTS. Redemptions may be made by letter to the Fund specifying
the class of shares, the dollar amount or number of Shares to be redeemed, and
the shareholder account number. The letter must also be signed in exactly the
same way the account is registered (if there is more than one owner of the
Shares, all must sign) and, in certain cases, signatures must be guaranteed by
an institution that is acceptable to the Transfer Agent. Such institutions
include certain banks, brokers, dealers (including municipal and government
securities brokers and dealers), credit unions and savings associations.
Notaries public are not acceptable. Further documentation may be requested to
evidence the authority of the person or entity making the redemption request.
Questions concerning the need for signature guarantees or documentation of
authority should be directed to the Fund at the above address or by calling the
telephone number appearing on the cover of this Prospectus.
If Shares to be redeemed are held in certificate form, the certificates must
be enclosed with the redemption request and the assignment form on the back of
the certificates (or an assignment separate from the certificates but
accompanied by the certificates) must be signed by all owners in exactly the
same way the owners' names are written on the face of the certificates.
Requirements for signature guarantees and/or documentation of authority as
described above could also apply. For your protection, the Fund suggests that
certificates be sent by registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally
are mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of the Shares to be redeemed have been cleared, which
may take up to 15 calendar days from the purchase date. Unless other
instructions are given in proper form, a check for the proceeds of a redemption
are sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when: (1)
trading on the New York Stock Exchange is restricted or that exchange is closed;
(2) the SEC has by order permitted such suspension; or (3) an emergency (as
defined by rules of the SEC) exists making disposal of portfolio investments or
determination of the Fund's 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" 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.
21
<PAGE>
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account (other than an IRA) if at any
time the account does not have a value of at least $2,000, unless the value of
the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.
NET ASSET VALUE
The net asset value per share of the Fund is calculated 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, , Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Net asset value per share for a class of shares is calculated by dividing the
aggregate value of the Fund's assets allocable to a particular class, less the
liabilities charged to that class, if any, by the number of outstanding shares
of that class.
Generally, securities that are listed on recognized stock exchanges are
valued at the last reported sale price, on the day when the securities are
valued (the "Valuation Day"), on the primary exchange on which the securities
are principally traded. Listed securities traded on recognized stock exchanges
for which there were no sales on the Valuation Day are valued at the last sale
price on the preceding trading day or at closing mid-market prices. Securities
traded in over-the-counter markets are valued at the most recent reported
mid-market price. Other securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith using
methods approved by the Schroder Core Board.
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 the Internal Revenue Code
of 1986, as amended, applicable to regulated investment companies. By complying
therewith, the Fund will not have to pay federal income tax on that part of its
income or net realized capital gain that is distributed to shareholders. The
Fund intends to distribute substantially all of its income and net realized
capital gain, and therefore, intends not to be subject to federal income tax.
Dividends and capital-gain distributions on Investor Shares are reinvested
automatically in additional Investor Shares 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.
22
<PAGE>
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 will be 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 compensation payable
to service organizations for shareholder servicing for the Advisor Shares.
Dividends from the Fund's income generally will be taxable to shareholders
as ordinary income, whether the dividends are invested in additional Shares or
received in cash. Distributions by the Fund of any net long-term capital gain
will be taxable to a shareholder as long-term capital gain regardless of how
long the shareholder has held the 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 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
23
<PAGE>
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: (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 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, gains and losses of the Portfolio will be deemed to have been "passed
through" to the Fund in proportion to the Fund's holdings in the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
The Portfolio intends to conduct its operations so as to enable the Fund to
qualify as a regulated investment company.
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 such portfolios or series into classes of shares (such as the Investor
Shares), and the costs of doing so are borne by the Trust or series in
accordance with the Trust Instrument. The Trust currently consists of nine
separate Funds, each of which has a separate investment objective and policies.
The Fund currently consists of two classes of shares, Investor Shares and
Advisor 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.
When issued in accordance with the terms of the prospectus, 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
24
<PAGE>
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.
REPORTS
The Trust sends each Fund shareholder a semi-annual report and an audited
annual report containing the Fund's financial statements.
PERFORMANCE
The Fund may include quotations of average annual total return, cumulative
total return and other performance measures for a class of shares 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. Performance calculations 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.
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 of the Portfolio's
assets. Forum Financial Corp. serves as the Fund's transfer and dividend
disbursing agent.
SHAREHOLDER INQUIRIES
Inquiries about the Fund should be directed to:
Schroder Emerging Markets 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 or (207) 879-1900.
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 incur more expenses but have lower investment minimums than Investor
Shares. Except for certain class 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
25
<PAGE>
classes, the amount of dividends and other distributions differs between the
classes. Information about the other class of 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 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 September 1995. Schroder Core is registered under the 1940 Act as
an open-end, management investment company and currently has four separate
series. The assets of the 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 October 31, 1997, the Fund is the only institutional
investor in the Portfolio. The Portfolio may permit other investment companies
or other qualified investors to invest in it. All other investors in the
Portfolio will invest on the same terms and conditions as the Fund and will pay
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 is 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 solicits proxies from its shareholders and votes 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 would receive a
majority of votes cast by all investors in the Portfolio; indeed, if other
investors hold a majority interest in the Portfolio, they could have voting
control of the Portfolio.
The Portfolio does 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 is available from
Schroder Core by calling Forum Financial Corp. at (800) 730-2932.
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement or omission of a material fact in the
registration statement. Schroder Core, its Trustees and certain of its officers
are required to sign the registration statement and amendments thereto of the
Trust and may be required to sign the registration statements of certain other
investors in the Portfolio. In addition, under federal securities law, Schroder
Core may be liable for misstatements or omissions of a material fact in any
proxy soliciting material of a publicly offered investor in Schroder Core,
including the Fund. Each investor in the Portfolio, including the Trust, has
agreed to indemnify Schroder Core and its Trustees and officers ("Schroder Core
Indemnitees") against certain claims.
Indemnified claims are those brought against Schroder Core Indemnitees based
on a misstatement or omission of a material fact in
26
<PAGE>
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 the Schroder
Core. The purpose of these cross-indemnity provisions is principally to limit
the liability of Schroder Core to information that it knows or should know and
can control. With respect to other prospectuses and other offering documents and
proxy materials of investors in Schroder Core, its liability is similarly
limited to information about and supplied by it.
CERTAIN RISKS OF INVESTING IN 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 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, if the Board decided not to permit SCMI to manage the
Fund's assets, could have a significant impact on shareholders of the Fund.
Each investor in 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.
27
<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, LLC
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 ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY........................................................ 3
EXPENSES OF INVESTING IN THE FUND......................................... 4
Fee Table................................................................. 4
Example................................................................... 4
INVESTMENT OBJECTIVE...................................................... 5
INVESTMENT POLICIES....................................................... 5
RISK CONSIDERATIONS....................................................... 12
MANAGEMENT OF THE FUND.................................................... 16
Boards of Trustees........................................................ 16
Investment Adviser and Portfolio Managers................................. 16
Administrative Services................................................... 17
Expenses.................................................................. 17
Portfolio Transactions.................................................... 18
INVESTMENT IN THE FUND.................................................... 18
Purchase of Shares........................................................ 18
Retirement Plans and Individual Retirement
Accounts................................................................. 19
Statement of Intention.................................................... 20
Exchanges................................................................. 20
Redemption of Shares...................................................... 20
Net Asset Value........................................................... 22
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................ 22
The Fund.................................................................. 22
The Portfolio............................................................. 24
OTHER INFORMATION......................................................... 24
Capitalization and Voting................................................. 24
Reports................................................................... 25
Performance............................................................... 25
Custodian and Transfer Agent.............................................. 25
Shareholder Inquiries..................................................... 25
Fund Structure............................................................ 25
</TABLE>
[LOGO]
Schroder
Emerging
Markets
Fund
Investor Shares
PROSPECTUS
October 1, 1997
as amended October 31, 1997
Schroder Capital Funds (Delaware)
