<PAGE>
As filed with the Securities and Exchange Commission on February 28, 1997
File No. 2-34215
File No. 811-1911
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 59
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 40
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SCHRODER CAPITAL FUNDS (DELAWARE)
(FORMERLY SCHRODER CAPITAL FUNDS, INC.)
(Exact Name of Registrant as Specified in Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: 207-879-1900
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Catherine S. Wooledge, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)
Copies of Communications to:
Scott M. Shepard, Esq.
Jacobs Persinger & Parker
77 Water Street, New York, New York 10005
Alexandra Poe, Esq.
Schroder Capital Management International Inc.
787 seventh Avenue, 34th Floor
New York, New York 10019
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It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485, paragraph (b)
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on [ ] pursuant to Rule 485, paragraph (b)
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60 days after filing pursuant to Rule 485, paragraph (a)(i)
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on _________ pursuant to Rule 485, paragraph (a)(i)
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X 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
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on [ ] pursuant to Rule 485, paragraph (a)(ii)
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this post-effective amendment designates a new effective date for a
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previously filed post-effective amendment.
The Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 (the "1933 Act") pursuant to Rule
24f-2 under the Investment Company Act of 1940 (the "1940 Act"). Accordingly,
no fee is payable herewith. A Rule 24f-2 Notice for the Registrant's fiscal
year ended October 31, 1996 was filed with the Commission on about December 27,
1996. SCHRODER INTERNATIONAL FUND, SCHRODER EMERGING MARKETS FUND INSTITUTIONAL
PORTFOLIO, SCHRODER U.S. SMALLER COMPANIES FUND, SCHRODER INTERNATIONAL SMALLER
COMPANIES FUND AND SCHRODER CASH RESERVES FUND OF REGISTRANT ARE STRUCTURED AS
MASTER-FEEDER FUNDS. THIS AMENDMENT INCLUDES A MANUALLY EXECUTED SIGNATURE PAGE
FOR THE MASTER FUNDS.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))
PART A
(Prospectuses offering Investor Shares and Advisor Shares
of Schroder Cash Reserves Fund.)
Form N-1A Location in Prospectus
Item No. (Caption) (Caption)
- --------- ------------------ ----------------------
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Information Not Applicable
4. General Description of Investment Objective and
Registrant Policies; Additional
Investment Policies and
Risk Considerations
5. Management of the Fund Management of the Fund -
Board of Trustees;
Investment Adviser and
Portfolio Manager;
Administrative Services;
Distribution Plan &
Shareholder Services
Plan; Expenses; Portfolio
Transactions
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities Other Information -
Capitalization and
Voting; Shareholder
Inquiries; Dividends,
Other Distributions
and Taxes
7. Purchase of Securities Investment in the Fund -
Purchase of Shares;
Retirement Plans;
Individual Retirement
Accounts; Net Asset Value
8. Redemption or Repurchase Investment in the Fund -
Redemption of Shares; Net
Asset Value
9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))
PART A
(All other Prospectuses)
Not Applicable in this Filing
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))
PART B
(SAI offering shares of Schroder Cash Reserves Fund)
Location in
Form N-1A Statement of Additional
Item No. (Caption) Information (Caption)
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Other Information -
Organization
13. Investment Objectives and Policies Investment Policies;
Investment Restrictions
14. Management of the Fund Management - Officers and
Directors
15. Control Persons and Principal Not Applicable
Holders of Securities
16. Investment Advisory and Management - Investment
Other Services Adviser; Officers and
Trustees; Administrative
Services; Distribution of
Fund Shares; Service
Organizations; Portfolio
Accounting; Fees and
Expenses; Portfolio
Transactions - Investment
Decisions; Brokerage and
Research Services; Other
Information - Custodian;
Transfer Agent and
Dividend Disbursing
Agent; Legal Counsel;
Independent Accountants
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other Securities Other Information -
Capitalization and Voting
19. Purchase, Redemption and Pricing of Determination of Net
Securities Being Offered Asset Value Per Share
20. Tax Status Taxation
21. Underwriters Management - Distribution
of Fund Shares; Fees and
Expenses
22. Calculation of Performance Data Other Information -
Performance Information
23. Financial Statements Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))
PART B
(All other SAIs)
Not Applicable in this Filing
<PAGE>
SCHRODER CASH RESERVES FUND
Investor Shares
This fund seeks to provide high current income, to the extent consistent with
the preservation of capital and the maintenance of liquidity, by investing in a
broad spectrum of high quality money market instruments of United States and
foreign issuers.
[GRAPHIC OF WORLD MAP]
Schroder Cash Reserves Fund (the "Fund"), a separate diversified money market
series of Schroder Capital Funds (Delaware), seeks to achieve its investment
objective by investing substantially all of its investable assets in Cash
Reserves Portfolio, (the "Portfolio"), a separately managed, diversified series
of Core Trust (Delaware) ("Core Trust"), an open-end, management investment
company registered under the 1940 Act, which invests primarily in a broad
spectrum of high quality money market instruments of United States and foreign
issuers. The Portfolio has an identical investment objective and substantially
similar investment policies as the Fund (see "Other Information - Fund
Structure"). Accordingly, the Fund's investment experience will correspond
directly with the Portfolio's investment experience.
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 May [ ], 1997, as amended from time to time has been filed with
the Securities and Exchange Commission ("SEC") and is available along with other
related materials for reference on their Internet Web Site (http://www.sec.gov)
or may be obtained without charge from the Trust by writing to Two Portland
Square, Portland, Maine 04101 or by calling 1-800-290-9826. 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. THE SHARES 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.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
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
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MAY [ ], 1997
<PAGE>
PROSPECTUS SUMMARY
OBJECTIVE: High current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.
STRATEGY: Invests primarily in a broad spectrum of high quality money market
instruments of United States and foreign issuers.
This prospectus offers Investor Class shares ("Investor Shares" or "Shares") of
the Fund. The Fund is a separately managed, diversified series of the Trust, an
open-end, management investment company registered under the Investment Company
Act of 1940 (the "1940 Act").
INVESTMENT ADVISERS. The Fund's investment adviser (the "Adviser") is Schroder
Capital Management International Inc. ("Schroder"). As the Fund invests all of
its assets in the Portfolio, the Fund does not actively employ the Adviser to
manage its investment portfolio. See "Management - Investment Advisory
Services." Schroder serves as the Trust's transfer agent, dividend disbursing
agent and custodian. See "Management - Shareholder Servicing and Custody."
The Portfolio's investment adviser is Norwest Investment Management
("NIM"), a part of Norwest Bank Minnesota, N.A. ("Norwest"), Sixth Street and
Marquette, Minneapolis, Minnesota 55479, a registered investment adviser under
the Investment Advisers Act of 1940. The Fund (and indirectly its shareholders)
bears a pro rata portion of the investment advisory fee the Portfolio pays to
NIM. See "Management of the Fund -- Investment Adviser and Portfolio Manager."
Norwest and the Adviser are sometimes referred to collectively as the
"Advisers".
ADMINISTRATIVE SERVICES. Schroder Fund Advisors Inc. ("Schroder Advisors")
serves as administrator and distributor of the Fund, and Forum Administrative
Services, Limited Liability Company ("Forum") serves as the Fund's
sub-administrator.
PURCHASES AND REDEMPTIONS OF SHARES. Shares may be purchased or redeemed by
mail, by bank-wire and through your broker-dealer or other financial
institution. The minimum initial investment is $100,000. There is no minimum for
subsequent investments. 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 net realized
short-term capital gain, 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 seeking high current income, to the extent consistent
with the preservation of capital and the maintenance of liquidity; who are
willing to accept additional risks, such as investments in foreign issuers. The
amount of income earned by the Fund will tend to vary with changes in
<PAGE>
prevailing interest rates.
[GRAPHIC] UNDERSTANDING MUTUAL FUNDS
- (SOME SORT OF CALL-OUT BOX EXPLAINING THE DIFFERENCES AMONG
MONEY MARKET, BOND, EQUITY, ASSET-ALLOCATION FUNDS? OR
SOMETHING ELSE?)
-
[GRAPHIC OF WORLD MAP]
-
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.
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
Management Fees (after fee waivers)(2)(3). . . . . . . . . . . . . .[0.00]%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (after expense reimbursements)(3) . . . . . . . . . .[0.00]%
Total Fund Operating Expenses(3) . . . . . . . . . . . . . . . . . .[0.00]%
(1) Annual Fund Operating Expenses are based on estimated annualized
expenses for the Fund's first fiscal year of operations. The Fund's
expenses include the Fund's pro rata portion of all operating expenses
of the Portfolio. The Trust's Board of Trustees believes that the
aggregate per share expenses of the Fund and the Portfolio (after fee
waivers and expense reimbursements) will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in
the type of securities held by the Portfolio.
(2) Management Fees reflect the fees paid by the Portfolio and the Fund
for investment advisory and administrative services.
(3) Without fee waivers and expense reimbursements, Management Fees, Other
Expenses and Total Operating Expenses would be ______%, ______%, and
_____%, respectively.
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
<PAGE>
_____% 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."
EXAMPLE
The table below indicates how much you would pay in total expenses on a $1,000
investment in the Fund, assuming a 5% annual return and reinvestment of all
dividends and distributions. The example is based on the expenses listed above.
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.
After 1 Year $__
After 3 Years $__
After 5 Years $__
After 10 Years $___
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
The Fund is not a complete investment program The Fund currently seeks to
achieve this investment objective by investing all of its investable assets in
the Portfolio, which has substantially the same investment objective and
policies as the Fund. There can be no assurance that the Fund or Portfolio will
achieve its investment objective. The investment objective of the Portfolio may
not be changed without approval of the holders of a majority of the outstanding
voting interests (defined in the same manner as the phrase "vote of a majority
of the outstanding voting securities" is defined in the 1940 Act) of the
Portfolio.
INVESTMENT POLICIES
Although the following information describes the investment policies of the
Portfolio and the responsibilities of Core Trust's Board of Trustees (the "Core
Trust Board"), it applies equally to the Fund and the Trust's Board of Trustees
(the "Trust Board"). Additional information concerning the investment policies
of the Fund and the Portfolio is contained in the SAI.
The investment objective, and the investment policies of the Portfolio that are
designated as fundamental, may not be changed without approval of the holders of
a majority of the outstanding voting securities of the Portfolio. A majority of
outstanding voting securities means the lesser of (i) 67% of the shares present
or represented at a shareholder meeting at which the
<PAGE>
holders of more than 50% of the outstanding shares are present or represented,
or (ii) more than 50% of outstanding shares. Unless otherwise indicated, all
investment policies of the Fund are not fundamental and may be changed by the
Trust Board without approval of the shareholders of the Fund. Likewise,
nonfundamental investment policies of the Portfolio may be changed by the Core
Trust Board without approval of the Portfolio's interest holders.
The Portfolio will invest only in high quality, short-term money market
instruments that are determined by the Adviser, pursuant to procedures adopted
by the Core Trust Board, to be eligible for purchase and to present minimal
credit risks. The Portfolio will invest only in U.S. dollar-denominated
instruments that have a remaining maturity of 397 days or less (as calculated
pursuant to Rule 2a-7 under the 1940 Act) and will maintain a dollar-weighted
average portfolio maturity of 90 days or less. Securities with ultimate
maturities of greater than 397 days may be purchased in accordance with Rule
2a-7. Under that Rule, only those long-term instruments that have demand
features which comply with certain requirements and certain variable rate U.S.
Government Securities, as described below, may be purchased. The securities in
which the Portfolio may invest may have fixed, variable or floating rates of
interest.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, the Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. Also, the Portfolio may not purchase
a security if the value of all securities held by the Portfolio and issued or
guaranteed by the same issuer (including letters of credit in support of a
security) would exceed 10% of the Portfolio's total assets. In addition, to
ensure adequate liquidity, the Portfolio may not invest more than 10% of its net
assets in illiquid securities, including repurchase agreements maturing in more
than seven days. Under the supervision of the Core Trust Board, the Adviser
determines and monitors the liquidity of portfolio securities.
As used herein, high quality instruments include those that (i) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO or (ii) are otherwise unrated and determined by
the Adviser, pursuant to guidelines adopted by the Core Trust Board, to be of
comparable quality. The Portfolio will invest at least 95% of its total assets
in securities in the highest rating category as determined pursuant to Rule
2a-7. A description of the rating categories of Standard & Poor's, Moody's
Investors Service and certain other NRSROs is contained in the SAI.
The market value of the interest-bearing debt securities held by the Portfolio,
including municipal securities, will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
i.e., a decline in interest rates produces an increase in market value, while an
increase in rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. In addition, changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of an issuer's creditworthiness will also affect the market
value of the debt securities of that issuer. Obligations of issuers of debt
<PAGE>
securities, including municipal securities, are also subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. The possibility exists, therefore, that, as a result of bankruptcy,
litigation or other conditions, the ability of any issuer to pay, when due, the
principal of and interest on its debt securities may be materially affected.
Although the Portfolio only invests in high quality money market instruments, an
investment in the Fund is subject to risk even if all securities in the
Portfolio's investment portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value as a
result of changes in interest rates and/or the issuer's actual or perceived
creditworthiness.
The Portfolio invests in a broad spectrum of high quality money market
instruments of United States and foreign issuers.
The following specific policies and limitations are considered at the time of
any purchase; NIM may not buy these instruments or use these techniques unless
it believes that they are consistent with the Portfolio's objective. The Fund's
financial reports are sent to shareholders twice a year. For a free Annual or
Semi-Annual Report or SAI, please call 1-800-290-9826.
OBLIGATIONS OF FINANCIAL INSTITUTIONS. The Portfolio may invest in obligations
of financial institutions. These include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of U.S. banks (including
savings banks and savings associations), foreign branches of U.S. banks, foreign
banks and their non-U.S. branches (Eurodollars), U.S. branches and agencies of
foreign banks (Yankee dollars), and wholly-owned banking-related subsidiaries of
foreign banks.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period. Bank
notes are a debt obligation of a bank. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a customer and are
usually backed by goods in international trade. Time deposits are non-negotiable
deposits with a banking institution that earn a specified interest rate over a
given period. Certificates of deposit and fixed time deposits, which are payable
at the stated maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Portfolio but may be subject to early withdrawal
penalties which could reduce the Portfolio's yield. Unless there is a readily
available market for them, deposits that are subject to early withdrawal
penalties or that mature in more than seven days are treated as illiquid
securities.
The Portfolio will limit its investments in obligations of financial
institutions (including their branches, agencies and subsidiaries) to
institutions which at the time of investment have total assets in excess of one
and a half billion dollars, or the equivalent in other currencies. The
Portfolio's investments in the obligations of foreign banks and their branches,
agencies or subsidiaries may be obligations of the parent, of the issuing
branch, agency or subsidiary, or both. Investments in foreign bank obligations
are limited to banks, branches and subsidiaries located in countries which the
Adviser believes do not present undue risk.
<PAGE>
The Portfolio normally will invest more than 25% of its total assets in the
obligations of domestic and foreign financial institutions, their holding
companies, and their subsidiaries. This concentration may result in increased
exposure to risks pertaining to the banking industry. These risks include a
sustained increase in interest rates, which can adversely affect the
availability and cost of a bank's lending activities; exposure to credit losses
during times of economic decline; concentration of loan portfolios in certain
industries; regulatory developments; and competition among financial
institutions. The Portfolio may not invest more than 25% of its total assets in
any other single industry.
UNITED STATES GOVERNMENT SECURITIES AND RELATED ZERO-COUPON SECURITIES. The
Portfolio may invest without limit in obligations issued or guaranteed as to
principal and interest by the United States Government or by any of its agencies
and instrumentalities ("U.S. Government Securities"). The Portfolio may also
invest in repurchase agreements and certain zero-coupon securities secured by
U.S. Government Securities. Under normal circumstances, however, the Portfolio
will invest at least 65% of its total assets in U.S. Government Securities.
UNITED STATES GOVERNMENT SECURITIES. The U.S. Government Securities in which the
Portfolio may invest include U.S. Treasury Securities and obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are backed by
the full faith and credit of the U.S. Government, such as those guaranteed by
the Small Business Administration or issued by the Government National Mortgage
Association. In addition, the U.S. Government Securities in which the Portfolio
may invest include securities supported primarily or solely by the
creditworthiness of the issuer, such as securities of the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation and the
Tennessee Valley Authority. There is no guarantee that the U.S. Government will
support securities not backed by its full faith and credit. Accordingly,
although these securities have historically involved little risk of loss of
principal if held to maturity, they may involve more risk than securities backed
by the U.S. Government's full faith and credit.
U.S. GOVERNMENT AND OTHER RELATED ZERO-COUPON SECURITIES. The Portfolio may
invest in separately traded principal and interest components of securities
issued or guaranteed by the U.S. Treasury under the Treasury's Separate Trading
of Registered Interest and Principal of Securities ("STRIPS") program. In
addition, the Portfolio may invest in other types of related zero-coupon
securities. For instance, a number of banks and brokerage firms separate the
principal and interest portions of U.S. Treasury securities and sell them
separately in the form of receipts or certificates representing undivided
interests in these instruments. These instruments are generally held by a bank
in a custodial or trust account on behalf of the owners of the securities and
are known by various names, including Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS"). The Portfolio will not invest more than 35% of its total
assets in zero-coupon securities other than those issued through the STRIPS
program.
FOREIGN GOVERNMENT SECURITIES. The Portfolio may invest in U.S. dollar
denominated obligations issued or guaranteed by the governments of countries
which the Adviser believes do not present undue risk or of those countries'
political subdivisions, agencies or instrumentalities.
<PAGE>
The Portfolio may also invest in the obligations of supranational organizations
such as the International Bank for Reconstruction and Development (the "World
Bank") and the Inter-American Development Bank.
MUNICIPAL SECURITIES. The municipal securities in which the Portfolio may invest
include short-term municipal bonds and municipal notes and leases. These
municipal securities may have fixed, variable or floating rates of interest and
may be zero-coupon securities.
When the assets and revenues of an issuing agency, authority, instrumentality or
other political subdivision are separate from those of the government creating
the issuing entity and a security is backed only by the assets and revenues of
the entity, the entity will be deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds, that is backed only by the assets and revenues of the
non-governmental user, the non-governmental user will be deemed to be the sole
issuer of the security.
The Portfolio may invest without limit in (i) industrial development bonds and
in participation interests therein issued by banks; and (ii) obligations of
issuers located in one state. If the Portfolio concentrates its investments in
this manner, it will be more susceptible to factors adversely affecting issuers
of those municipal securities than would be a more geographically diverse
municipal securities portfolio. These risks arise from the financial condition
of the particular state and its political subdivisions.
MUNICIPAL BONDS. Municipal bonds can be classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by a
municipality's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are usually payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other tax, but not from general
tax revenues. Municipal bonds include industrial development bonds. Municipal
bonds may also be "moral obligation" bonds, which are normally issued by special
purpose public authorities. If the issuer is unable to meet its obligations
under the bonds from current revenues, it may draw on a reserve fund that is
backed by the moral commitment (but not the legal obligation) of the state or
municipality that created the issuer.
The Portfolio may invest in tax-exempt industrial development bonds, which in
most cases are revenue bonds and generally do not have the pledge of the credit
of the municipality. The payment of the principal and interest on these bonds is
dependent solely on the ability of an initial or subsequent user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment. The Portfolio will acquire private activity securities only if the
interest payments on the security are exempt from Federal income taxation (other
than the Alternative Minimum Tax (AMT)).
MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities, are intended to fulfill short-term capital needs and
generally have original maturities not exceeding one year. They include tax
anticipation notes, revenue anticipation notes (which
<PAGE>
generally are issued in anticipation of various seasonal revenues), bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Tax-exempt commercial paper generally is issued with maturities of 270 days or
less at fixed rates of interest.
MUNICIPAL LEASES. Municipal leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Lease and
installment purchase or conditional sale contracts (which normally provide for
title to the leased assets to pass eventually to the government issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations of many state constitutions and statutes
are deemed to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease or contract
unless money is appropriated for such purpose by the appropriate legislative
body on a yearly or other periodic basis. Generally, the Portfolio will invest
in municipal lease obligations through certificates of participation.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. Yields on municipal securities are
dependent on a variety of factors, including the general conditions of the
municipal security markets and the fixed income markets in general, the size of
a particular offering, the maturity of the obligation and the rating of the
issue. The achievement of the Portfolio's investment objective is dependent in
part on the continuing ability of the issuers of municipal securities in which
the Portfolio invests to meet their obligations for the payment of principal and
interest when due. Under current Federal tax law, interest on certain municipal
securities issued after August 7, 1986 to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular Federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
It is anticipated that the municipal securities held by the Portfolio will be
supported by credit and liquidity enhancements, such as letters of credit (which
are not covered by Federal deposit insurance) or put or demand features, of
third party financial institutions, generally domestic and foreign banks.
Accordingly, to some extent, the credit quality and liquidity of the Portfolio
will be dependent in part upon the credit quality of the banks supporting the
Portfolio's investments. This will result in exposure to risks pertaining to the
banking industry, including the foreign banking industry. Brokerage firms and
insurance companies also provide certain liquidity and credit support. The
Portfolio's policy is to purchase municipal securities with third party credit
or liquidity support only after the Adviser has considered the creditworthiness
of the financial institution providing the support and believes that the
security presents minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with
<PAGE>
maturities of up to 40 years that are sold with a demand feature (an option for
the holder of the security to sell the security back to the issuer) which may be
exercised by the security holder at predetermined intervals, usually daily or
weekly. The interest rate on the security is typically reset by a remarketing or
similar agent at prevailing interest rates. VRDNs may be issued directly by the
municipal issuer or created by a bank, broker-dealer or other financial
institution by selling a previously issued long-term bond with a demand feature
attached. Similarly, tender option bonds (also referred to as certificates of
participation) are municipal securities with relatively long original maturities
and fixed rates of interest that are coupled with an agreement of a third party
financial institution under which the third party grants the security holders
the option to tender the securities to the institution and receive the face
value thereof. The option may be exercised at periodic intervals, usually six
months to a year. As consideration for providing the option, the financial
institution receives a fee equal to the difference between the underlying
municipal security's fixed rate and the rate, as determined by a remarketing or
similar agent, that would cause the securities, coupled with the tender option,
to trade at par on the date of the interest rate determination. These bonds
effectively provide the holder with a demand obligation that bears interest at
the prevailing short-term municipal securities interest rate. Tender option
bonds are generally held pursuant to a custodial arrangement.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
CORPORATE DEBT SECURITIES. The Portfolio may invest in corporate debt
obligations of domestic or foreign issuers, including commercial paper
(short-term promissory notes) issued by companies to finance their, or their
affiliates', current obligations and corporate notes and bonds. The Portfolio
may invest in privately issued commercial paper or other corporate instruments
which are restricted as to disposition under Federal securities law. Any sale of
this paper may not
<PAGE>
be made absent registration under the Securities Act of 1933 or the availability
of an appropriate exemption therefrom. Some of these restricted securities,
however, are eligible for resale to institutional investors, and accordingly, a
liquid market may exist for them. Pursuant to guidelines adopted by the Core
Trust Board, the Adviser will determine whether each such investment is liquid.
PARTICIPATION INTERESTS. The Portfolio may purchase from financial institutions
participations in loans or securities. A participation interest gives the
Portfolio an undivided interest in the loan or security in the proportion that
the Portfolio's interest bears to the total principal amount of the security.
For certain participation interests the Portfolio will have the right to demand
payment, on not more than seven days' notice, for all or a part of the
Portfolio's participation interest. The Portfolio intends to exercise any demand
rights they may have only upon default under the terms of the loan or security,
to provide liquidity or to maintain or improve the quality of the Portfolio's
investment portfolio. The Portfolio will not invest more than 10% of its total
assets in participation interests in which the Portfolio does not have demand
rights.
RISK CONSIDERATIONS
FOREIGN INVESTMENTS. All investments, domestic and foreign, involve risks:
investment in the securities of foreign issuers may involve risks in addition to
those normally associated with investments in the securities of U.S. issuers.
While the Portfolio will generally invest only in securities of companies and
governments in countries that NIM, in its judgment, considers both politically
and economically stable, 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, (i) dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income earned by the Portfolio; (ii)
commission rates payable on foreign portfolio transactions are generally higher
than in the United States; (iii) accounting, auditing and financial reporting
standards differ from those in the United States, which means that less
information about foreign companies may be available than is generally available
about issuers of comparable securities in the United States; (iv) foreign
securities often trade less frequently and with less volume than United States
securities and consequently may exhibit greater price volatility; and (v)
foreign securities trading practices, including those involving securities
settlement, may expose the Portfolio to increased risk in the event of a failed
trade or the insolvency of a foreign broker-dealer or registrar.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS.
The Fund may enter into repurchase agreements and into reverse repurchase
agreements (which are considered borrowings), may lend its securities and may
purchase securities on a forward commitment basis as described below. As a
fundamental policy, the Portfolio may borrow
<PAGE>
money for temporary or emergency purposes (including the meeting of redemption
requests), but not in excess of 33 1/3% of the value of the Portfolio's total
assets. Borrowing for other than meeting redemption requests will not exceed 5%
of the value of the Portfolio's net assets. The Fund is permitted to invest in
other investment companies which intend to comply with Rule 2a-7 and have
substantially similar investment objectives and policies.
The Portfolio's use of repurchase agreements, reverse repurchase agreements,
securities lending and forward commitments entails certain risks not associated
with direct investments in securities. For instance, in the event that
bankruptcy or similar proceedings were commenced against a counterparty in these
transactions or a counterparty defaulted on its obligations, the Portfolio might
suffer a loss. Failure by the other party to deliver a security purchased by the
Portfolio may result in a missed opportunity to make an alternative investment.
The Adviser monitors the creditworthiness of counterparties to these
transactions and intends to enter into these transactions only when it believes
the counterparties present minimal credit risks and the income to be earned from
the transaction justifies the attendant risks.
The Trust's custodian will set aside and maintain in a segregated account cash,
U.S. Government Securities and other liquid, high-grade debt securities with a
market value at all times at least equal to the amount of the Portfolio's
forward commitment and reverse repurchase agreement obligations in accordance
with SEC guidelines. As a result of entering forward commitments and reverse
repurchase agreements, as well as lending its portfolio securities, the
Portfolio is exposed to greater potential fluctuations in the value of their
assets.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase agreements, which
are a means of investing monies for a short period:, a seller -- a U.S. 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 values of the underlying securities purchased by
the Portfolio are monitored at all times by NIM to ensure that the total value
of the securities equals or exceeds the value of the repurchase agreement. The
Portfolio's custodian bank holds the securities until they are repurchased. If
the seller defaults under a repurchase agreement, the Portfolio may have
difficulty exercising its rights to the underlying securities and may incur
costs and experience time delays in disposing of them. To evaluate potential
risk, NIM reviews the creditworthiness of banks and dealers with which the
Portfolio enters into repurchase agreements.
LOANS OF PORTFOLIO SECURITIES. The Portfolio may lend portfolio securities
(otherwise than in repurchase transactions) 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 33 1/3% of
the Portfolio's total asset value. By so doing, the Portfolio attempts to earn
interest income. In the event of the other party bankruptcy, the Portfolio could
experience delays in recovering the securities it lent; if, in the meantime, the
value of the securities the Portfolio lent has increased, the Portfolio could
experience a loss.
<PAGE>
The Portfolio may lend its securities if it maintains collateral in a segregated
account liquid assets 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 will not
become part of its portfolio at the time of the loan; In the event of a default
by the borrower, the Portfolio will (if permitted by law) dispose of such
collateral except for such part thereof that is a security in which the
Portfolio is permitted to invest. While the securities are on loan, the borrower
will pay the Portfolio any accrued income on those securities, and the Portfolio
may invest the cash collateral and earn income or receive an agreed upon fee
from a borrower that has delivered cash equivalent collateral. Cash collateral
received by the Portfolio will be invested in U.S. Government securities and
liquid high grade debt obligations. The value of securities loaned will be
marked to market daily. Portfolio securities purchased with cash collateral are
subject to possible depreciation. Loans of securities by the Portfolio will be
subject to termination at the Portfolio'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 Trust's Board of Trustees.
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 or
delayed delivery basis. In addition, forward commitments will not be entered
into if the aggregate of the commitments exceeds 15% of the value of the
Portfolio's total assets. 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.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements, which are transactions in which the Portfolio sells a security and
simultaneously commits to repurchase that security from the buyer at an agreed
upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand agreements,
there is no specified repurchase date and interest payments are calculated
daily, often based upon the prevailing overnight repurchase rate. The Portfolio
will use the proceeds of reverse repurchase agreements only to fund redemptions
or to make investments which generally either mature or have a demand feature to
resell to the issuer on a date not later than the expiration of the agreement.
Interest costs on the money received in a reverse repurchase agreement may
exceed the return received on the investments made by the Portfolio with those
monies.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the
indexes or market rates upon which the interest rate adjustments are based.
Similar to fixed rate debt
<PAGE>
instruments, variable and floating rate instruments are subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. The rate of interest on securities purchased by the Portfolio
may be tied to Treasury or other government securities or indices on those
securities as well as any other rate of interest or index.
There may not be an active secondary market for any particular floating or
variable rate instrument which could make it difficult for the Portfolio to
dispose of the instrument if the issuer defaulted on its repayment obligation
during periods that the Portfolio is not entitled to exercise any demand rights
it may have. The Portfolio could, for this or other reasons, suffer a loss with
respect to an instrument. The Adviser monitors the liquidity of the Portfolio's
investment in variable and floating rate instruments, but there can be no
guarantee that an active secondary market will exist.
VARIABLE AND FLOATING RATE DEMAND NOTES. The Portfolio may purchase variable and
floating rate demand notes of corporations, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangement with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
their outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.
MORTGAGE- AND ASSET-BACKED SECURITIES. The Portfolio may purchase fixed or
adjustable rate mortgage or other asset-backed securities, including securities
backed by automobile loans, equipment leases or credit card receivables. These
securities may be U.S. Government Securities or, privately issued and directly
or indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities may include both interest and a partial payment of principal.
Prepayments of the principal of underlying loans may shorten the effective
maturities of these securities. Some adjustable rate securities (or the
underlying loans) are subject to caps or floors that limit the maximum change in
interest rate during a specified period or over the life of the security.
ZERO-COUPON SECURITIES. The Portfolio may invest in zero-coupon securities (such
as Treasury bills), which are securities that are sold at original issue
discount and pay no interest to holders prior to maturity, but the Portfolio
must include a portion of the original issue discount of the security as income.
Because the Portfolio distributes substantially all of its net investment
income, the Portfolio may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the Adviser would not have chosen
to sell such securities and which may result in a taxable gain or loss.
Zero-coupon securities may be subject to greater fluctuation of market value
than the other securities in which the Portfolio may invest.
<PAGE>
MANAGEMENT OF THE FUND
BOARDS OF TRUSTEES
The business and affairs of the Fund are managed under the direction of the
Trust Board and those of the Portfolio are managed under the direction of the
Core Trust Board (collectively the "Trusts"). Additional information regarding
the trustees and executive officers of the Trusts may be found in the SAI under
the heading "Management, Trustees and Officers."
INVESTMENT ADVISORY SERVICES
The Fund currently invests all of its assets in the Portfolio and has since its
inception. The Fund may withdraw its investment from the Portfolio, for which
NIM serves as investment adviser, 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 -- Core Trust Structure"-- Certain Risks of Investing in the
Portfolio." Accordingly, the Fund has retained the Adviser as its investment
adviser and NIM as its investment subadviser to manage the Fund's assets in the
event the Fund so withdraws its investment. Neither the Adviser or NIM will
receive any advisory or subadvisory fees with respect to the Fund as long as the
Fund remains completely invested in the Portfolio or any other investment
company.
INVESTMENT ADVISER AND PORTFOLIO MANAGER
As investment adviser to the Portfolio, NIM manages the Portfolio and
continuously reviews, supervises and administers its investments. In this
regard, NIM is responsible for making decisions relating to the Portfolio's
investments and placing purchase and sale orders regarding such investments with
brokers or dealers selected by it in its discretion. For its services with
respect to the Portfolio, the Investment Advisory Agreement between NIM and Core
Trust provides that NIM will receive a monthly advisory fee at the annual rate
of [_____]% of the Portfolio's average daily net assets, which the Fund
indirectly bears through its investment in the Portfolio.
NIM which is located at Norwest Center, Sixth Street and Marquette, Minneapolis,
Minnesota 55479-0063, is a part of Norwest, a subsidiary of Norwest Corporation,
which is a multi-bank holding company that was incorporated under the laws of
Delaware in 1929. As of June 30, 1996, Norwest Corporation was the 12th largest
bank holding company in the United States in terms of assets. As of that date,
the Adviser managed or provided investment advice with respect to assets
totaling approximately $22 billion.
The Adviser provides investment management services to the Fund pursuant to an
investment advisory agreement between Schroder and the Trust. Subject to the
general supervision of the Board, Schroder would continuously review, supervise
and administer the Fund's investment program or oversee the investment decisions
of the investment subadviser, as applicable, if the Fund were to invest directly
in securities. For the Adviser's services, Schroder receives from the Fund an
advisory fee at an annual rate of [_____]% of the average daily net assets for
the first
<PAGE>
$300 million of net assets of the Fund, [_____]% of the average daily net assets
for the next $400 million net assets of the Fund, and [_____]% of the average
daily net assets of the Fund's remaining net assets.
The Adviser, whose principal business address is 787 Seventh Avenue, New York,
New York 10019, is a wholly-owned U.S. subsidiary of Schroders Incorporated, the
wholly-owned U.S. holding company subsidiary of Schroders plc. Schroders plc is
the holding company parent of a large worldwide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in eighteen countries.
The Schroder Group specializes in providing investment management services and,
as of December 31, 1996, had assets under management of approximately $130
billion.
PORTFOLIO MANAGERS. The Fund invests all of its assets in the Portfolio and,
accordingly, there is currently no portfolio manager for the Fund. Many persons
on the advisory staff of the Adviser contribute to the investment services
provided to the Portfolio. David D. Sylvester and Laurie R. White are primarily
responsible for the day-to-day management of the Portfolio. Mr. Sylvester has
been associated with Norwest for 15 years, the last 7 years as a Vice President
and Senior Portfolio Manager. He has over 20 years' experience in managing
securities portfolios. Ms. White has been a Vice President and Senior Portfolio
Manger of Norwest since 1991; from 1989 to 1991, she was a Portfolio Manager at
Richfield Bank and Trust. Mr. Sylvester and Ms. White have served as portfolio
managers of the Portfolio since its inception.
The Fund began pursuing its investment objective through investment in the
Portfolio on [____ __, 1997]. 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 Schroder as its investment
adviser to manage the Fund's assets in the event the Fund withdraws its
investment. Schroder does not receive an investment advisory fee with respect to
the Fund so long as the Fund remains completely invested in the Portfolio (or
any other investment company). If the Fund resumes directly investing in
portfolio securities, the Fund will pay Schroder a monthly advisory fee equal on
an annual basis to [0.50]% of the first $100 million of the Fund's average daily
net assets; [0.40]% of the next $150 million of average daily net assets; and
[0.35]% of average daily net assets in excess of $250 million. The investment
advisory contract between Schroder and the Trust with respect to the Fund is the
same in all material respects as the investment advisory contract between
Schroder and Core Trust with respect to the Portfolio (except as to the parties,
the fees payable thereunder, the circumstances under which fees will be paid and
the jurisdiction whose laws govern the agreement).
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administrative services
contract with Schroder Advisors, 787 Seventh Avenue, New York, New York 10019.
On behalf of the Portfolio, the Trust has also entered into a sub-administration
agreement with Forum, Two Portland Square, Portland, Maine 04101. Pursuant to
these agreements, Schroder Advisors and Forum provide certain management and
administrative services necessary for the Fund's
<PAGE>
operations. Schroder Advisors is compensated at the annual rate of [0.00]% of
the Portfolio's average daily net assets. Forum is compensated at the annual
rate of [0.00]% of the Portfolio's average daily net assets.
Schroder Advisors and Forum provide similar services to the Portfolio, for which
the Portfolio pays Schroder Advisors at an annual rate of [0.000]% of the
Portfolio's average daily net assets and pays Forum a monthly fee at the annual
rate of [0.000]% of the Portfolio's average daily net assets.
EXPENSES
SCMI and Schroder Advisors have voluntarily undertaken to waive a portion of
their fees or assume certain expenses of the Fund in order to limit total Fund
expenses (excluding taxes, interest, brokerage commissions and other portfolio
transaction expenses and extraordinary expenses) chargeable to Investor Shares
to [0.00]% of the average daily net assets of the Fund attributable to those
shares. This expense limitation cannot be modified or withdrawn except by a
majority vote of the Trustees of the Trust who are not affiliated persons (as
defined in the 1940 Act) of the Trust. If expense reimbursements are required,
they will be made on a monthly basis; SCMI will reimburse the Fund for
four-fifths of the amount required and Schroder Advisors will reimburse the Fund
for the remaining one-fifth.
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 may also be made
through Service Organizations that assist their customers in purchasing shares
of the Fund. Such Service Organizations may charge their customers a service fee
for processing orders to purchase or sell shares of the Fund. Investors wishing
to purchase shares through their accounts at a Service Organization should
contact that organization directly for appropriate instructions.
Shares of the Fund are offered at the net asset value next determined after
receipt of a completed Account Application (at the address set forth below). The
minimum initial investment is $100,000. There is no minimum for subsequent
investments. 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
Cash Reserves Fund, to:
Schroder Cash Reserves Fund -- Investor Shares
P.O. Box 446
Portland, Maine 04112
<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.
Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:
Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Financial Corp.
Acct. No.: 910-2-718187
Ref.: Schroder Cash Reserves Fund -- Investor Shares
Account of: (shareholder name)
Account Number: (shareholder account number)
The wire order must specify the name of the Fund, the Shares' class (I.E.,
Investor), the account name and number, address, confirmation number, amount to
be wired, name of the wiring bank, and name and telephone number of the person
to be contacted in connection with the order. If the initial investment is by
wire, an account number will be assigned and an Account Application must be
completed and mailed to the Fund before any account becomes active. Wire orders
received prior to 4:00 p.m. (Eastern Time) on each day that the New York Stock
Exchange is open for trading (a "Fund Business Day") will be processed at the
net asset value determined as of that day. Wire orders received after 4:00 p.m.
(Eastern Time) will be processed at the net asset value determined as of the
next Fund Business Day. See "Net Asset Value" below.
The Fund's Transfer Agent, as the shareholder's agent, establishes for each
shareholder of record, an open account to which, all shares purchased and all
dividends and capital gain distributions that are reinvested in additional
shares are credited. Although most shareholders elect not to receive share
certificates, certificates for full shares can be obtained by specific written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and capital gains are reinvested. In addition, the amount
of any outstanding checks for dividends and capital gains that have been
returned to the Transfer Agent will be reinvested and such checks will be
canceled.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Shares of the Fund are offered in connection with tax-deferred retirement plans.
Application forms and further information about these plans, including
applicable fees, are available upon
<PAGE>
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
(and their spouses) who receive compensation or earned income whether or not
they are active participants in a tax-qualified or government-approved
retirement plan. An IRA contribution by an individual or spouse who participates
in a tax-qualified or government-approved retirement plan may not be deductible,
depending upon the individual's income. Individuals also may establish an IRA to
receive a "rollover" contribution of distributions from another IRA or a
qualified plan. Tax advice should be obtained before effecting a rollover.
STATEMENT OF INTENTION
Investor Share investors also may meet the minimum initial investment
requirement based on cumulative purchases by means of a written Statement of
Intention, expressing the investor's intention to invest $100,000 or more in
Investor Shares of the Fund within a period of 13 months.
Investors wishing to enter into a Statement of Intention in conjunction with
their initial investment in shares of the Fund should complete the appropriate
portion 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 shares of the Fund for shares of any other series of
Schroder Capital Funds (Delaware) so long as they maintain the respective
minimum account balance in each Fund in which they own shares. Exchanges between
each Fund are at net asset value.
An exchange is considered to be a sale of shares for Federal income tax purposes
on which a shareholder may realize a capital gain or loss. An exchange may be
made by calling FFC at (800) 344-8332 or by mailing written instructions to
Schroder Capital Funds (Delaware), P.O. Box 446, Portland, Maine 04112. Exchange
privileges may be exercised only in those states where shares of the other
series of Schroder Capital Funds (Delaware) may legally be sold, and may be
amended or terminated at any time upon sixty (60) days' notice.
<PAGE>
REDEMPTION OF SHARES
Shares of the Fund are redeemed at their next determined net asset value after
receipt by the Fund (at the address set forth above under "Purchase of Shares")
of a redemption request in proper form. Redemption requests may be made between
9:00 a.m. and 6:00 p.m. (Eastern Time) on each Fund Business Day. Redemption
requests that are received prior to 4:00 p.m. (Eastern Time) will be processed
at the net asset value determined as of that day. Redemption requests that are
received after 4:00 p.m. (Eastern Time) will be processed at the net asset value
determined the next Fund Business Day. See "Net Asset Value" below.
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 such instructions are genuine.
The Transfer Agent and the Trust generally will not be liable for any losses due
to unauthorized or fraudulent redemption requests, but may be liable if they do
not follow these procedures. Shares for which certificates have been issued may
not be redeemed by telephone. In times of drastic economic or market changes, it
may be difficult to make redemptions by telephone. If a shareholder cannot reach
the Transfer Agent by telephone, redemption requests may be mailed or
hand-delivered to the Transfer Agent.
WRITTEN REQUESTS. Redemptions may be made by letter to the Fund specifying the
class of shares, the dollar amount or number of Shares to be redeemed, and the
shareholder account number. The letter must also be signed in exactly the same
way the account is registered (if there is more than one owner of the Shares,
all must 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.
<PAGE>
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds will normally
be mailed within seven days. No redemption proceeds will be mailed until checks
in payment for the purchase of the Shares to be redeemed have been cleared,
which may take up to 15 calendar days from the purchase date. Unless other
instructions are given in proper form, a check for the proceeds of a redemption
will be sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or that exchange is closed, (ii)
the SEC has by order permitted such suspension, or (iii) an emergency, as
defined by rules of the SEC, exists making disposal of portfolio investments or
determination of the Fund's net asset value not reasonably practicable.
If the Trust Board determines that it would be detrimental to the best interest
of the remaining shareholders of the Fund to make payment wholly or partly in
cash, the Fund may redeem Shares in whole or in part by a distribution in kind
of portfolio securities (from the investment portfolio of the Portfolio or of
the Fund), in lieu of cash, in conformity with applicable rules of the SEC. The
Fund will, however, redeem Shares solely in cash up to the lesser of $250,000 or
1% of net assets during any 90-day period for any one shareholder. In the event
that payment for redeemed Shares is made wholly or partly in portfolio
securities, the shareholder may be subject to additional risks and costs in
converting the securities to cash. See "Additional Purchase and Redemption
Information--Redemption in Kind" in the SAI.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for Federal income tax
purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem Shares in any account (other than an IRA) if at any
time the account does not have a value of at least $10,000, 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 $10,000
and be allowed at least 30 days to make an additional investment to increase the
account balance to at least $10,000.
NET ASSET VALUE
The net asset value per share of the Fund is calculated separately for each
class of Shares of the Fund at 3:00 p.m. (Eastern Time), Monday through Friday,
each Fund Business Day, which excludes the following U.S. holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Net asset value per Share is calculated by
dividing the aggregate value of the Fund's assets less all Fund liabilities, if
any, by the number of Shares of the Fund outstanding.
In order to maintain a stable net asset value per share of $1.00, the Fund's
portfolio securities are valued at their amortized cost. Amortized cost
valuation involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. If the market
value of a Fund's portfolio deviates more than 1/2 of 1% from the value
determined
<PAGE>
on the basis of amortized cost, the Board will consider whether any action
should be initiated to prevent any material dilutive effect on shareholders.
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 Subchapter M of the Internal
Revenue Code of 1986, as amended, applicable to regulated investment companies.
By complying therewith, the Fund will be relieved of Federal income tax on that
part of its investment company taxable income or net realized capital gain that
is distributed to shareholders (consisting generally of its share of the
Portfolio's net investment income and net short-term capital gain); and that
part of its net long-term capital gain that is distributed to shareholders. The
Fund intends to distribute substantially all of its investment company taxable
income and its net realized long-term capital gain at least annually and,
therefore, intends not to be subject to Federal income tax. The Fund also may
make an additional dividend or other distribution if necessary to avoid a 4%
excise tax on certain undistributed income and gain. 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 distributions in cash.
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 12b-1 fees and other
compensation payable to Service Organizations for distribution assistance and
shareholder servicing for the Advisor Shares.
Dividends from the Fund's taxable income generally will be taxable to
shareholders as ordinary income whether dividends are invested in additional
Shares or received in cash. Distributions by the Fund of any net capital gain
designated by the Fund as such will be taxable to a shareholder as long-term
capital gain regardless of how long the shareholder has held the Shares and
whether they are invested in additional Shares or received in cash. Each year
the Trust will notify shareholders of the tax status of dividends and other
distributions.
As of the date of this Prospectus, and subject to changes in the tax law, 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 adjusted basis for 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.
<PAGE>
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. Shareholders should consult their own tax
advisors as to the tax consequences of their ownership of Share.
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.
THE PORTFOLIO
The Portfolio will not be required to pay Federal income tax on its net
investment income and capital foreign currency gains 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 its holdings in the Portfolio, regardless of whether such
interest, dividends or gains have been distributed by the Portfolio.
The Portfolio intends to conduct its operations so as to enable the Fund to
qualify as a regulated investment company. Investment income or gains received
by the Portfolio from sources within foreign countries may be subject to foreign
income or other taxes, which will reduce the return on such investments.
OTHER INFORMATION
CAPITALIZATION AND VOTING
The Trust was organized as a Maryland corporation (called Schroder Capital
Funds, Inc.) on July 30, 1969 and on January 9, 1996 was reorganized 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
will be borne by the Trust. The Trust currently consists of nine separate
portfolios, each of which has separate investment objectives and policies. The
Fund currently consists of two classes of Shares.
Each share of the Fund is entitled to participate equally in dividends and other
distributions and the proceeds of any liquidation except that, due to the
differing expenses borne by the classes, dividends and liquidation proceeds for
each class will likely differ. Shares are fully paid and non-assessable, and
have no pre-emptive 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
<PAGE>
has equal voting rights, except that if a matter affects only the shareholders
of a particular class only shareholders of that class shall have a right to
vote. On Trust matters requiring shareholder approval, shareholders of the Trust
are entitled to vote only with respect to matters that affect the interests of
the Fund or the class of shares they hold, except as otherwise required by
applicable law.
There will normally be no meetings of shareholders to elect Trustees unless and
until such time as less than a majority of the Trustees holding office have been
elected by shareholders. However, the holders of not less than a majority of the
outstanding shares of the Trust may remove any person serving as a Trustee and
the Trust Board will call a special meeting of shareholders to consider removal
of one or more Trustees if requested in writing to do so by the holders of not
less than 10% of the outstanding shares of the Trust. From time to time, certain
shareholders may own a large percentage of the shares of the Fund. Accordingly,
those shareholders may be able to greatly affect (if not determine) the outcome
of a shareholder vote.
REPORTS
The Trust sends to each Fund shareholder a semi-annual report and an audited
annual report containing the Fund's financial statements.
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of yield, which is
based on historical results and is not intended to indicate future performance.
The Fund's yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. To calculate standardized
yield, the Fund takes the interest income it earned from its investments for a
7-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the 7-day period.
The Fund's advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar Inc., Lipper
Analytical Services, Inc. or IBC/Donoghue, Inc. In addition, the performance of
the Fund may be compared to recognized indices of market performance. The
comparative material found in the Fund's advertisements, sales literature or
reports to shareholders may contain performance ratings. This material is not to
be considered representative or indicative of future performance. All
performance information for the Fund is calculated on a class basis.
CUSTODIAN AND TRANSFER AGENT
Norwest also serves as custodian of the Fund's and of the Portfolio's assets.
For its custodial services, Norwest is compensated at an annual rate of up to
0.03% of the average daily net assets of the Fund. Forum Financial Corp. serves
as the Fund's transfer and dividend disbursing agent.
<PAGE>
SHAREHOLDER INQUIRIES
Inquiries about the Fund, including its past performance, should be directed to:
Schroder Cash Reserves 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.
SERVICE ORGANIZATIONS
The Glass-Steagall Act and other applicable laws and regulations provide that
banks may not engage in the business of underwriting, selling or distributing
securities. There is currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service Organizations.
However, judicial or administrative decisions or interpretations of such laws,
as well as changes in either Federal or state regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform all or part of
its servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders of the Fund and
alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.
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 than Investor Shares. Except for certain differences,
each share of each class represents an undivided, proportionate interest in the
Fund. Each share of the Fund is entitled to participate equally in dividends and
other distributions and the proceeds of any liquidation of the Fund except that,
due to the differing expenses borne by the two classes, the amount of dividends
and other distributions will differ between the classes. Information about
Advisor Shares is available from the Fund by calling Schroder Advisors at (800)
730-2932.
THE PORTFOLIO. The Fund seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which has substantially the same
investment objective and 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 Core Trust (Delaware)
("Core Trust"), a business trust organized under the laws of the State of
Delaware in September 1994. Core Trust is registered under the 1940 Act as an
open-end management investment company and currently has [NINE] separate series.
The assets of the Portfolio, a diversified portfolio, belong only to, and the
liabilities of the Portfolio are borne solely by, the
<PAGE>
Portfolio and no other portfolio of Core Trust.
The investment objective and fundamental investment policies of the Fund and the
Portfolio can be changed only with shareholder or interestholder approval,
respectively. See "Investment Objective, "Investment Policies," and "Management
of the Fund" for a complete description of the Portfolio's investment objective,
policies, restrictions, management, and expenses.
The Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. As of ________________ __, 1997, the Fund is the only
institutional investor in the Portfolio. The Portfolio may permit other
investment companies or institutional 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 will be entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On most issues
subject to a vote of investors, as required by the 1940 Act and other applicable
law, the Fund will solicit proxies from its shareholders and will vote its
interest in the Portfolio in proportion to the votes cast by its shareholders.
If there are other investors in the Portfolio, there can be no assurance that
any issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all investors in the Portfolio; indeed, if
other investors hold a majority interest in the Portfolio, they could have
voting control of the Portfolio.
The Portfolio will not sell its shares directly to members of the general
public. Another investor in the Portfolio, such as an investment company, that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund and could have
different advisory and other fees and expenses than the Fund. Therefore, Fund
shareholders may have different returns than shareholders in another investment
company that invests exclusively in the Portfolio. There is currently no such
other investment company that offers its shares to members of the general
public. Information regarding any such funds in the future will be available
from Core Trust by calling Forum Financial Corp. at (207) 879-8903.
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement or omission of a material fact in the
registration statement. Core Trust, its Trustees and certain of its officers are
required to sign the registration statement of the Trust and may be required to
sign the registration statements of certain other publicly offered investors in
the Portfolio. In addition, under federal securities law, Core Trust could be
liable for misstatements or omissions of a material fact in any proxy soliciting
material of a publicly offered investor in Core Trust, including the Fund. Each
investor in the Portfolio, including the Trust, will indemnify Core Trust and
its Trustees and officers ("Core Trust Indemnitees") against certain claims.
Indemnified claims are those brought against Core Trust Indemnitees based on a
misstatement or omission of a material fact in the investor's registration
statement or proxy materials. No indemnification need be made, however, if such
alleged misstatement or omission relates to
<PAGE>
information about Core Trust and was supplied to the investor by Core Trust.
Similarly, Core Trust 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 Core Trust that is supplied to the investor by Core Trust. In addition,
each registered investment company investor in the Portfolio will indemnify each
Core Trust 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 Core Trust. The purpose of these
cross-indemnity provisions is principally to limit the liability of Core Trust
to information that it knows or should know and can control. With respect to
other prospectuses and other offering documents and proxy materials of investors
in Core Trust, 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 NIM, 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 NIM to manage the
Fund's assets, could have a significant impact on shareholders of the Fund.
Each investor in the Portfolio, including the Fund, is 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 NIM considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
INVESTMENT SUB-ADVISER
Norwest Investment Management
Norwest Center
Sixth Street and Marquette
Minneapolis, Minnesota 55479
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
SUB-ADMINISTRATOR
Forum Administrative Services, Limited Liability Company
Two Portland Square
Portland, Maine 04101
CUSTODIAN
Norwest Bank Minnesota, N.A.
Norwest Center
Sixth Street and Marquette
Minneapolis, Minnesota 55479
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
INDEPENDENT ACCOUNTANTS
_________________, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
Table of Contents
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . .
FEE TABLE . . . . . . . . . . . . . . . . . . . .
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . .
INVESTMENT OBJECTIVE. . . . . . . . . . . . . . .
INVESTMENT POLICIES . . . . . . . . . . . . . . .
RISK CONSIDERATIONS . . . . . . . . . . . . . . .
MANAGEMENT OF THE FUND. . . . . . . . . . . . . .
Board of Trustees . . . . . . . . . . . . . . . .
Investment Adviser and Portfolio Manager. . . . .
Administrative Services . . . . . . . . . . . . .
Expenses. . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions. . . . . . . . . . . . . .
Code of Ethics. . . . . . . . . . . . . . . . . .
INVESTMENT IN THE FUND. . . . . . . . . . . . . .
Purchase of Shares. . . . . . . . . . . . . . . .
Retirement Plans and Individual
Retirement Accounts . . . . . . . . . . . . . .
Statement of Intention. . . . . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . .
Redemption of Shares. . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS
AND TAXES . . . . . . . . . . . . . . . . . . .
The Fund. . . . . . . . . . . . . . . . . . . . .
The Portfolio . . . . . . . . . . . . . . . . . .
OTHER INFORMATION . . . . . . . . . . . . . . . .
Capitalization and Voting . . . . . . . . . . . .
Reports . . . . . . . . . . . . . . . . . . . . .
Performance . . . . . . . . . . . . . . . . . . .
Custodian and Transfer Agent. . . . . . . . . . .
Shareholder Inquiries . . . . . . . . . . . . . .
Service Organizations . . . . . . . . . . . . . .
Fund Structure. . . . . . . . . . . . . . . . . .
<PAGE>
SCHRODER CASH RESERVES FUND
Advisor Shares
This fund seeks to provide high current income, to the extent consistent with
the preservation of capital and the maintenance of liquidity, by investing in a
broad spectrum of high quality money market instruments of United States and
foreign issuers.
[GRAPHIC OF WORLD MAP]
Schroder Cash Reserves Fund (the "Fund"), a separate diversified money market
series of Schroder Capital Funds (Delaware), seeks to achieve its investment
objective by investing substantially all of its investable assets in Cash
Reserves Portfolio, (the "Portfolio"), a separately managed, diversified series
of Core Trust (Delaware) ("Core Trust"), an open-end, management investment
company registered under the 1940 Act, which invests primarily in a broad
spectrum of high quality money market instruments of United States and foreign
issuers. The Portfolio has an identical investment objective and substantially
similar investment policies as the Fund (see "Other Information - Fund
Structure"). Accordingly, the Fund's investment experience will correspond
directly with the Portfolio's investment experience
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 May [ ], 1997, as amended from time to time has been filed with
the Securities and Exchange Commission ("SEC") and is available along with other
related materials for reference on their Internet Web Site (http://www.sec.gov)
or may be obtained without charge from the Trust by writing to Two Portland
Square, Portland, Maine 04101 or by calling 1-800-290-9826. 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. THE SHARES ALSO
ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR GUARANTEED BY, ANY
BANK OR ITS AFFILIATES. MUTUAL FUND SHARES ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
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
<PAGE>
MAY [ ], 1997
<PAGE>
PROSPECTUS SUMMARY
OBJECTIVE: High current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.
STRATEGY: Invests primarily in a broad spectrum of high quality money market
instruments of United States and foreign issuers.
This prospectus offers Advisor Class shares ("Advisor Shares" or "Shares") of
the Fund. The Fund is a separately managed, diversified series of the Trust, an
open-end, management investment company registered under the Investment Company
Act of 1940 (the "1940 Act").
INVESTMENT ADVISERS. The Fund's investment adviser (the "Adviser") is Schroder
Capital Management International Inc. ("Schroder"). As the Fund invests all of
its assets in the Portfolio, the Fund does not actively employ the Adviser to
manage its investment portfolio. See "Management - Investment Advisory
Services." Schroder serves as the Trust's transfer agent, dividend disbursing
agent and custodian. See "Management - Shareholder Servicing and Custody."
The Portfolio's investment adviser is Norwest Investment Management
("NIM"), a part of Norwest Bank Minnesota, N.A. ("Norwest"), Sixth Street and
Marquette, Minneapolis, Minnesota 55479, a registered investment adviser under
the Investment Advisers Act of 1940. The Fund (and indirectly its shareholders)
bears a pro rata portion of the investment advisory fee the Portfolio pays to
NIM. See "Management of the Fund -- Investment Adviser and Portfolio Manager."
Norwest and the Adviser are sometimes referred to collectively as the
"Advisers".
ADMINISTRATIVE SERVICES. Schroder Fund Advisors Inc. ("Schroder Advisors")
serves as administrator and distributor of the Fund, and Forum Administrative
Services, Limited Liability Company ("Forum") serves as the Fund's
sub-administrator.
PURCHASES AND REDEMPTIONS OF SHARES. Shares may be purchased or redeemed by
mail, by bank-wire and through your broker-dealer or other financial
institution. The minimum initial investment is $100,000. There is no minimum for
subsequent investments. 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 net realized
short-term capital gain, and at least annually distributes any net realized
long-term capital gain. Dividends and long-term capital gain distributions are
reinvested automatically in additional Advisor 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 seeking high current income, to the extent consistent
with the preservation of capital and the maintenance of liquidity; who are
willing to accept additional risks, such as investments
<PAGE>
in foreign issuers. The amount of income earned by the Fund will tend to vary
with changes in prevailing interest rates.
[GRAPHIC] UNDERSTANDING MUTUAL FUNDS
- (SOME SORT OF CALL-OUT BOX EXPLAINING THE DIFFERENCES AMONG
MONEY MARKET, BOND, EQUITY, ASSET-ALLOCATION FUNDS? OR
SOMETHING ELSE?)
-
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EXPENSES OF INVESTING IN THE FUND
FEE TABLE
The table below is intended to assist you in understanding the expenses that an
investor in Advisor Shares of the Fund would incur. There are no transaction
expenses associated with purchases or redemptions of Advisor Shares.
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
Management Fees (after fee waivers)(2)(3). . . . . . . . . . . . . . [0.00]%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (after expense reimbursements)(3) . . . . . . . . . . [0.00]%
Total Fund Operating Expenses(3) . . . . . . . . . . . . . . . . . . [0.00]%
(1) Annual Fund Operating Expenses are based on estimated annualized
expenses for the Fund's first fiscal year of operations. The Fund's
expenses include the Fund's pro rata portion of all operating expenses
of the Portfolio. The Trust's Board of Trustees believes that the
aggregate per share expenses of the Fund and the Portfolio (after fee
waivers and expense reimbursements) will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in
the type of securities held by the Portfolio.
(2) Management Fees reflect the fees paid by the Portfolio and the Fund
for investment advisory and administrative services.
(3) Without fee waivers and expense reimbursements, Management Fees, Other
Expenses and Total Operating Expenses would be ______%, ______%, and
_____%, respectively.
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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 _____% 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."
EXAMPLE
The table below indicates how much you would pay in total expenses on a $1,000
investment in the Fund, assuming a 5% annual return and reinvestment of all
dividends and distributions. The example is based on the expenses listed above.
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.
After 1 Year $__
After 3 Years $__
After 5 Years $__
After 10 Years $___
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
The Fund is not a complete investment program The Fund currently seeks to
achieve this investment objective by investing all of its investable assets in
the Portfolio, which has substantially the same investment objective and
policies as the Fund. There can be no assurance that the Fund or Portfolio will
achieve its investment objective. The investment objective of the Portfolio may
not be changed without approval of the holders of a majority of the outstanding
voting interests (defined in the same manner as the phrase "vote of a majority
of the outstanding voting securities" is defined in the 1940 Act) of the
Portfolio.
INVESTMENT POLICIES
Although the following information describes the investment policies of the
Portfolio and the responsibilities of Core Trust's Board of Trustees (the "Core
Trust Board"), it applies equally to the Fund and the Trust's Board of Trustees
(the "Trust Board"). Additional information concerning the investment policies
of the Fund and the Portfolio is contained in the SAI.
The investment objective, and the investment policies of the Portfolio that are
designated as fundamental, may not be changed without approval of the holders of
a majority of the outstanding voting securities of the Portfolio. A majority of
outstanding voting securities means
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the lesser of (i) 67% of the shares present or represented at a shareholder
meeting at which the holders of more than 50% of the outstanding shares are
present or represented, or (ii) more than 50% of outstanding shares. Unless
otherwise indicated, all investment policies of the Fund are not fundamental and
may be changed by the Trust Board without approval of the shareholders of the
Fund. Likewise, nonfundamental investment policies of the Portfolio may be
changed by the Core Trust Board without approval of the Portfolio's interest
holders.
The Portfolio will invest only in high quality, short-term money market
instruments that are determined by the Adviser, pursuant to procedures adopted
by the Core Trust Board, to be eligible for purchase and to present minimal
credit risks. The Portfolio will invest only in U.S. dollar-denominated
instruments that have a remaining maturity of 397 days or less (as calculated
pursuant to Rule 2a-7 under the 1940 Act) and will maintain a dollar-weighted
average portfolio maturity of 90 days or less. Securities with ultimate
maturities of greater than 397 days may be purchased in accordance with Rule
2a-7. Under that Rule, only those long-term instruments that have demand
features which comply with certain requirements and certain variable rate U.S.
Government Securities, as described below, may be purchased. The securities in
which the Portfolio may invest may have fixed, variable or floating rates of
interest.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, the Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. Also, the Portfolio may not purchase
a security if the value of all securities held by the Portfolio and issued or
guaranteed by the same issuer (including letters of credit in support of a
security) would exceed 10% of the Portfolio's total assets. In addition, to
ensure adequate liquidity, the Portfolio may not invest more than 10% of its net
assets in illiquid securities, including repurchase agreements maturing in more
than seven days. Under the supervision of the Core Trust Board, the Adviser
determines and monitors the liquidity of portfolio securities.
As used herein, high quality instruments include those that (i) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO or (ii) are otherwise unrated and determined by
the Adviser, pursuant to guidelines adopted by the Core Trust Board, to be of
comparable quality. The Portfolio will invest at least 95% of its total assets
in securities in the highest rating category as determined pursuant to Rule
2a-7. A description of the rating categories of Standard & Poor's, Moody's
Investors Service and certain other NRSROs is contained in the SAI.
The market value of the interest-bearing debt securities held by the Portfolio,
including municipal securities, will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
i.e., a decline in interest rates produces an increase in market value, while an
increase in rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. In addition, changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of an issuer's creditworthiness will also
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affect the market value of the debt securities of that issuer. Obligations of
issuers of debt securities, including municipal securities, are also subject to
the provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors. The possibility exists, therefore, that, as a result of
bankruptcy, litigation or other conditions, the ability of any issuer to pay,
when due, the principal of and interest on its debt securities may be materially
affected.
Although the Portfolio only invests in high quality money market instruments, an
investment in the Fund is subject to risk even if all securities in the
Portfolio's investment portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value as a
result of changes in interest rates and/or the issuer's actual or perceived
creditworthiness.
The Portfolio invests in a broad spectrum of high quality money market
instruments of United States and foreign issuers.
The following specific policies and limitations are considered at the time of
any purchase; NIM may not buy these instruments or use these techniques unless
it believes that they are consistent with the Portfolio's objective. The Fund's
financial reports are sent to shareholders twice a year. For a free Annual or
Semi-Annual Report or SAI, please call 1-800-290-9826.
OBLIGATIONS OF FINANCIAL INSTITUTIONS. The Portfolio may invest in obligations
of financial institutions. These include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of U.S. banks (including
savings banks and savings associations), foreign branches of U.S. banks, foreign
banks and their non-U.S. branches (Eurodollars), U.S. branches and agencies of
foreign banks (Yankee dollars), and wholly-owned banking-related subsidiaries of
foreign banks.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period. Bank
notes are a debt obligation of a bank. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a customer and are
usually backed by goods in international trade. Time deposits are non-negotiable
deposits with a banking institution that earn a specified interest rate over a
given period. Certificates of deposit and fixed time deposits, which are payable
at the stated maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Portfolio but may be subject to early withdrawal
penalties which could reduce the Portfolio's yield. Unless there is a readily
available market for them, deposits that are subject to early withdrawal
penalties or that mature in more than seven days are treated as illiquid
securities.
The Portfolio will limit its investments in obligations of financial
institutions (including their branches, agencies and subsidiaries) to
institutions which at the time of investment have total assets in excess of one
and a half billion dollars, or the equivalent in other currencies. The
Portfolio's investments in the obligations of foreign banks and their branches,
agencies or subsidiaries may be obligations of the parent, of the issuing
branch, agency or subsidiary, or both. Investments in foreign bank obligations
are limited to banks, branches and subsidiaries located in countries which the
Adviser believes do not present undue risk.
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The Portfolio normally will invest more than 25% of its total assets in the
obligations of domestic and foreign financial institutions, their holding
companies, and their subsidiaries. This concentration may result in increased
exposure to risks pertaining to the banking industry. These risks include a
sustained increase in interest rates, which can adversely affect the
availability and cost of a bank's lending activities; exposure to credit losses
during times of economic decline; concentration of loan portfolios in certain
industries; regulatory developments; and competition among financial
institutions. The Portfolio may not invest more than 25% of its total assets in
any other single industry.
UNITED STATES GOVERNMENT SECURITIES AND RELATED ZERO-COUPON SECURITIES. The
Portfolio may invest without limit in obligations issued or guaranteed as to
principal and interest by the United States Government or by any of its agencies
and instrumentalities ("U.S. Government Securities"). The Portfolio may also
invest in repurchase agreements and certain zero-coupon securities secured by
U.S. Government Securities. Under normal circumstances, however, the Portfolio
will invest at least 65% of its total assets in U.S. Government Securities.
UNITED STATES GOVERNMENT SECURITIES. The U.S. Government Securities in which the
Portfolio may invest include U.S. Treasury Securities and obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are backed by
the full faith and credit of the U.S. Government, such as those guaranteed by
the Small Business Administration or issued by the Government National Mortgage
Association. In addition, the U.S. Government Securities in which the Portfolio
may invest include securities supported primarily or solely by the
creditworthiness of the issuer, such as securities of the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation and the
Tennessee Valley Authority. There is no guarantee that the U.S. Government will
support securities not backed by its full faith and credit. Accordingly,
although these securities have historically involved little risk of loss of
principal if held to maturity, they may involve more risk than securities backed
by the U.S. Government's full faith and credit.
U.S. GOVERNMENT AND OTHER RELATED ZERO-COUPON SECURITIES. The Portfolio may
invest in separately traded principal and interest components of securities
issued or guaranteed by the U.S. Treasury under the Treasury's Separate Trading
of Registered Interest and Principal of Securities ("STRIPS") program. In
addition, the Portfolio may invest in other types of related zero-coupon
securities. For instance, a number of banks and brokerage firms separate the
principal and interest portions of U.S. Treasury securities and sell them
separately in the form of receipts or certificates representing undivided
interests in these instruments. These instruments are generally held by a bank
in a custodial or trust account on behalf of the owners of the securities and
are known by various names, including Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS"). The Portfolio will not invest more than 35% of its total
assets in zero-coupon securities other than those issued through the STRIPS
program.
FOREIGN GOVERNMENT SECURITIES. The Portfolio may invest in U.S. dollar
denominated obligations issued or guaranteed by the governments of countries
which the Adviser believes do
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not present undue risk or of those countries' political subdivisions, agencies
or instrumentalities. The Portfolio may also invest in the obligations of
supranational organizations such as the International Bank for Reconstruction
and Development (the "World Bank") and the Inter-American Development Bank.
MUNICIPAL SECURITIES. The municipal securities in which the Portfolio may invest
include short-term municipal bonds and municipal notes and leases. These
municipal securities may have fixed, variable or floating rates of interest and
may be zero-coupon securities.
When the assets and revenues of an issuing agency, authority, instrumentality or
other political subdivision are separate from those of the government creating
the issuing entity and a security is backed only by the assets and revenues of
the entity, the entity will be deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds, that is backed only by the assets and revenues of the
non-governmental user, the non-governmental user will be deemed to be the sole
issuer of the security.
The Portfolio may invest without limit in (i) industrial development bonds and
in participation interests therein issued by banks; and (ii) obligations of
issuers located in one state. If the Portfolio concentrates its investments in
this manner, it will be more susceptible to factors adversely affecting issuers
of those municipal securities than would be a more geographically diverse
municipal securities portfolio. These risks arise from the financial condition
of the particular state and its political subdivisions.
MUNICIPAL BONDS. Municipal bonds can be classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by a
municipality's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are usually payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other tax, but not from general
tax revenues. Municipal bonds include industrial development bonds. Municipal
bonds may also be "moral obligation" bonds, which are normally issued by special
purpose public authorities. If the issuer is unable to meet its obligations
under the bonds from current revenues, it may draw on a reserve fund that is
backed by the moral commitment (but not the legal obligation) of the state or
municipality that created the issuer.
The Portfolio may invest in tax-exempt industrial development bonds, which in
most cases are revenue bonds and generally do not have the pledge of the credit
of the municipality. The payment of the principal and interest on these bonds is
dependent solely on the ability of an initial or subsequent user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment. The Portfolio will acquire private activity securities only if the
interest payments on the security are exempt from Federal income taxation (other
than the Alternative Minimum Tax (AMT)).
MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities, are intended to fulfill short-term capital needs and
generally have original maturities
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not exceeding one year. They include tax anticipation notes, revenue
anticipation notes (which generally are issued in anticipation of various
seasonal revenues), bond anticipation notes, construction loan notes and
tax-exempt commercial paper. Tax-exempt commercial paper generally is issued
with maturities of 270 days or less at fixed rates of interest.
MUNICIPAL LEASES. Municipal leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Lease and
installment purchase or conditional sale contracts (which normally provide for
title to the leased assets to pass eventually to the government issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations of many state constitutions and statutes
are deemed to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease or contract
unless money is appropriated for such purpose by the appropriate legislative
body on a yearly or other periodic basis. Generally, the Portfolio will invest
in municipal lease obligations through certificates of participation.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. Yields on municipal securities are
dependent on a variety of factors, including the general conditions of the
municipal security markets and the fixed income markets in general, the size of
a particular offering, the maturity of the obligation and the rating of the
issue. The achievement of the Portfolio's investment objective is dependent in
part on the continuing ability of the issuers of municipal securities in which
the Portfolio invests to meet their obligations for the payment of principal and
interest when due. Under current Federal tax law, interest on certain municipal
securities issued after August 7, 1986 to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular Federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
It is anticipated that the municipal securities held by the Portfolio will be
supported by credit and liquidity enhancements, such as letters of credit (which
are not covered by Federal deposit insurance) or put or demand features, of
third party financial institutions, generally domestic and foreign banks.
Accordingly, to some extent, the credit quality and liquidity of the Portfolio
will be dependent in part upon the credit quality of the banks supporting the
Portfolio's investments. This will result in exposure to risks pertaining to the
banking industry, including the foreign banking industry. Brokerage firms and
insurance companies also provide certain liquidity and credit support. The
Portfolio's policy is to purchase municipal securities with third party credit
or liquidity support only after the Adviser has considered the creditworthiness
of the financial institution providing the support and believes that the
security presents minimal credit risk.
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The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate. Tender option bonds are generally held pursuant to a
custodial arrangement.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
CORPORATE DEBT SECURITIES. The Portfolio may invest in corporate debt
obligations of domestic or foreign issuers, including commercial paper
(short-term promissory notes) issued by companies to finance their, or their
affiliates', current obligations and corporate notes and bonds.
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The Portfolio may invest in privately issued commercial paper or other corporate
instruments which are restricted as to disposition under Federal securities law.
Any sale of this paper may not be made absent registration under the Securities
Act of 1933 or the availability of an appropriate exemption therefrom. Some of
these restricted securities, however, are eligible for resale to institutional
investors, and accordingly, a liquid market may exist for them. Pursuant to
guidelines adopted by the Core Trust Board, the Adviser will determine whether
each such investment is liquid.
PARTICIPATION INTERESTS. The Portfolio may purchase from financial institutions
participations in loans or securities. A participation interest gives the
Portfolio an undivided interest in the loan or security in the proportion that
the Portfolio's interest bears to the total principal amount of the security.
For certain participation interests the Portfolio will have the right to demand
payment, on not more than seven days' notice, for all or a part of the
Portfolio's participation interest. The Portfolio intends to exercise any demand
rights they may have only upon default under the terms of the loan or security,
to provide liquidity or to maintain or improve the quality of the Portfolio's
investment portfolio. The Portfolio will not invest more than 10% of its total
assets in participation interests in which the Portfolio does not have demand
rights.
RISK CONSIDERATIONS
FOREIGN INVESTMENTS. All investments, domestic and foreign, involve risks:
investment in the securities of foreign issuers may involve risks in addition to
those normally associated with investments in the securities of U.S. issuers.
While the Portfolio will generally invest only in securities of companies and
governments in countries that NIM, in its judgment, considers both politically
and economically stable, 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, (i) dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income earned by the Portfolio; (ii)
commission rates payable on foreign portfolio transactions are generally higher
than in the United States; (iii) accounting, auditing and financial reporting
standards differ from those in the United States, which means that less
information about foreign companies may be available than is generally available
about issuers of comparable securities in the United States; (iv) foreign
securities often trade less frequently and with less volume than United States
securities and consequently may exhibit greater price volatility; and (v)
foreign securities trading practices, including those involving securities
settlement, may expose the Portfolio to increased risk in the event of a failed
trade or the insolvency of a foreign broker-dealer or registrar.
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ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS.
The Fund may enter into repurchase agreements and into reverse repurchase
agreements (which are considered borrowings), may lend its securities and may
purchase securities on a forward commitment basis as described below. As a
fundamental policy, the Portfolio may borrow money for temporary or emergency
purposes (including the meeting of redemption requests), but not in excess of 33
1/3% of the value of the Portfolio's total assets. Borrowing for other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
net assets. The Fund is permitted to invest in other investment companies which
intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies.
The Portfolio's use of repurchase agreements, reverse repurchase agreements,
securities lending and forward commitments entails certain risks not associated
with direct investments in securities. For instance, in the event that
bankruptcy or similar proceedings were commenced against a counterparty in these
transactions or a counterparty defaulted on its obligations, the Portfolio might
suffer a loss. Failure by the other party to deliver a security purchased by the
Portfolio may result in a missed opportunity to make an alternative investment.
The Adviser monitors the creditworthiness of counterparties to these
transactions and intends to enter into these transactions only when it believes
the counterparties present minimal credit risks and the income to be earned from
the transaction justifies the attendant risks.
The Trust's custodian will set aside and maintain in a segregated account cash,
U.S. Government Securities and other liquid, high-grade debt securities with a
market value at all times at least equal to the amount of the Portfolio's
forward commitment and reverse repurchase agreement obligations in accordance
with SEC guidelines. As a result of entering forward commitments and reverse
repurchase agreements, as well as lending its portfolio securities, the
Portfolio is exposed to greater potential fluctuations in the value of their
assets.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase agreements, which
are a means of investing monies for a short period:, a seller -- a U.S. 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 values of the underlying securities purchased by
the Portfolio are monitored at all times by NIM to ensure that the total value
of the securities equals or exceeds the value of the repurchase agreement. The
Portfolio's custodian bank holds the securities until they are repurchased. If
the seller defaults under a repurchase agreement, the Portfolio may have
difficulty exercising its rights to the underlying securities and may incur
costs and experience time delays in disposing of them. To evaluate potential
risk, NIM reviews the creditworthiness of banks and dealers with which the
Portfolio enters into repurchase agreements.
LOANS OF PORTFOLIO SECURITIES. The Portfolio may lend portfolio securities
(otherwise than in repurchase transactions) 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 33 1/3% of
the Portfolio's total asset value. By so doing, the Portfolio attempts to earn
interest income. In
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the event of the other party bankruptcy, the Portfolio could experience delays
in recovering the securities it lent; if, in the meantime, the value of the
securities the Portfolio lent has increased, the Portfolio could experience a
loss.
The Portfolio may lend its securities if it maintains collateral in a segregated
account liquid assets 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 will not
become part of its portfolio at the time of the loan; In the event of a default
by the borrower, the Portfolio will (if permitted by law) dispose of such
collateral except for such part thereof that is a security in which the
Portfolio is permitted to invest. While the securities are on loan, the borrower
will pay the Portfolio any accrued income on those securities, and the Portfolio
may invest the cash collateral and earn income or receive an agreed upon fee
from a borrower that has delivered cash equivalent collateral. Cash collateral
received by the Portfolio will be invested in U.S. Government securities and
liquid high grade debt obligations. The value of securities loaned will be
marked to market daily. Portfolio securities purchased with cash collateral are
subject to possible depreciation. Loans of securities by the Portfolio will be
subject to termination at the Portfolio'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 Trust's Board of Trustees.
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 or
delayed delivery basis. In addition, forward commitments will not be entered
into if the aggregate of the commitments exceeds 15% of the value of the
Portfolio's total assets. 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.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements, which are transactions in which the Portfolio sells a security and
simultaneously commits to repurchase that security from the buyer at an agreed
upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand agreements,
there is no specified repurchase date and interest payments are calculated
daily, often based upon the prevailing overnight repurchase rate. The Portfolio
will use the proceeds of reverse repurchase agreements only to fund redemptions
or to make investments which generally either mature or have a demand feature to
resell to the issuer on a date not later than the expiration of the agreement.
Interest costs on the money received in a reverse repurchase agreement may
exceed the return received on the investments made by the Portfolio with those
monies.
<PAGE>
VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the
indexes or market rates upon which the interest rate adjustments are based.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness. The rate of interest on securities
purchased by the Portfolio may be tied to Treasury or other government
securities or indices on those securities as well as any other rate of interest
or index.
There may not be an active secondary market for any particular floating or
variable rate instrument which could make it difficult for the Portfolio to
dispose of the instrument if the issuer defaulted on its repayment obligation
during periods that the Portfolio is not entitled to exercise any demand rights
it may have. The Portfolio could, for this or other reasons, suffer a loss with
respect to an instrument. The Adviser monitors the liquidity of the Portfolio's
investment in variable and floating rate instruments, but there can be no
guarantee that an active secondary market will exist.
VARIABLE AND FLOATING RATE DEMAND NOTES. The Portfolio may purchase variable and
floating rate demand notes of corporations, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangement with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
their outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.
MORTGAGE- AND ASSET-BACKED SECURITIES. The Portfolio may purchase fixed or
adjustable rate mortgage or other asset-backed securities, including securities
backed by automobile loans, equipment leases or credit card receivables. These
securities may be U.S. Government Securities or, privately issued and directly
or indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities may include both interest and a partial payment of principal.
Prepayments of the principal of underlying loans may shorten the effective
maturities of these securities. Some adjustable rate securities (or the
underlying loans) are subject to caps or floors that limit the maximum change in
interest rate during a specified period or over the life of the security.
ZERO-COUPON SECURITIES. The Portfolio may invest in zero-coupon securities (such
as Treasury bills), which are securities that are sold at original issue
discount and pay no interest to holders prior to maturity, but the Portfolio
must include a portion of the original issue discount of the security as income.
Because the Portfolio distributes substantially all of its net investment
income, the Portfolio may have to sell portfolio securities to distribute
imputed income, which
<PAGE>
may occur at a time when the Adviser would not have chosen to sell such
securities and which may result in a taxable gain or loss. Zero-coupon
securities may be subject to greater fluctuation of market value than the other
securities in which the Portfolio may invest.
MANAGEMENT OF THE FUND
BOARDS OF TRUSTEES
The business and affairs of the Fund are managed under the direction of the
Trust Board and those of the Portfolio are managed under the direction of the
Core Trust Board (collectively the "Trusts"). Additional information regarding
the trustees and executive officers of the Trusts may be found in the SAI under
the heading "Management, Trustees and Officers."
INVESTMENT ADVISORY SERVICES
The Fund currently invests all of its assets in the Portfolio and has since its
inception. The Fund may withdraw its investment from the Portfolio, for which
NIM serves as investment adviser, 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 -- Core Trust Structure"-- Certain Risks of Investing in the
Portfolio." Accordingly, the Fund has retained the Adviser as its investment
adviser and NIM as its investment subadviser to manage the Fund's assets in the
event the Fund so withdraws its investment. Neither the Adviser or NIM will
receive any advisory or subadvisory fees with respect to the Fund as long as the
Fund remains completely invested in the Portfolio or any other investment
company.
INVESTMENT ADVISER AND PORTFOLIO MANAGER
As investment adviser to the Portfolio, NIM manages the Portfolio and
continuously reviews, supervises and administers its investments. In this
regard, NIM is responsible for making decisions relating to the Portfolio's
investments and placing purchase and sale orders regarding such investments with
brokers or dealers selected by it in its discretion. For its services with
respect to the Portfolio, the Investment Advisory Agreement between NIM and Core
Trust provides that NIM will receive a monthly advisory fee at the annual rate
of [_____]% of the Portfolio's average daily net assets, which the Fund
indirectly bears through its investment in the Portfolio.
NIM which is located at Norwest Center, Sixth Street and Marquette, Minneapolis,
Minnesota 55479-0063, is a part of Norwest, a subsidiary of Norwest Corporation,
which is a multi-bank holding company that was incorporated under the laws of
Delaware in 1929. As of June 30, 1996, Norwest Corporation was the 12th largest
bank holding company in the United States in terms of assets. As of that date,
the Adviser managed or provided investment advice with respect to assets
totaling approximately $22 billion.
The Adviser provides investment management services to the Fund pursuant to an
investment advisory agreement between Schroder and the Trust. Subject to the
general supervision of the
<PAGE>
Board, Schroder would continuously review, supervise and administer the Fund's
investment program or oversee the investment decisions of the investment
subadviser, as applicable, if the Fund were to invest directly in securities.
For the Adviser's services, Schroder receives from the Fund an advisory fee at
an annual rate of [_____]% of the average daily net assets for the first $300
million of net assets of the Fund, [_____]% of the average daily net assets for
the next $400 million net assets of the Fund, and [_____]% of the average daily
net assets of the Fund's remaining net assets.
The Adviser, whose principal business address is 787 Seventh Avenue, New York,
New York 10019, is a wholly-owned U.S. subsidiary of Schroders Incorporated, the
wholly-owned U.S. holding company subsidiary of Schroders plc. Schroders plc is
the holding company parent of a large worldwide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in eighteen countries.
The Schroder Group specializes in providing investment management services and,
as of December 31, 1996, had assets under management of approximately $130
billion.
PORTFOLIO MANAGERS. The Fund invests all of its assets in the Portfolio and,
accordingly, there is currently no portfolio manager for the Fund. Many persons
on the advisory staff of the Adviser contribute to the investment services
provided to the Portfolio. David D. Sylvester and Laurie R. White are primarily
responsible for the day-to-day management of the Portfolio. Mr. Sylvester has
been associated with Norwest for 15 years, the last 7 years as a Vice President
and Senior Portfolio Manager. He has over 20 years' experience in managing
securities portfolios. Ms. White has been a Vice President and Senior Portfolio
Manger of Norwest since 1991; from 1989 to 1991, she was a Portfolio Manager at
Richfield Bank and Trust. Mr. Sylvester and Ms. White have served as portfolio
managers of the Portfolio since its inception.
The Fund began pursuing its investment objective through investment in the
Portfolio on [____ __, 1997]. 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 Schroder as its investment
adviser to manage the Fund's assets in the event the Fund withdraws its
investment. Schroder does not receive an investment advisory fee with respect to
the Fund so long as the Fund remains completely invested in the Portfolio (or
any other investment company). If the Fund resumes directly investing in
portfolio securities, the Fund will pay Schroder a monthly advisory fee equal on
an annual basis to [0.50]% of the first $100 million of the Fund's average daily
net assets; [0.40]% of the next $150 million of average daily net assets; and
[0.35]% of average daily net assets in excess of $250 million. The investment
advisory contract between Schroder and the Trust with respect to the Fund is the
same in all material respects as the investment advisory contract between
Schroder and Core Trust with respect to the Portfolio (except as to the parties,
the fees payable thereunder, the circumstances under which fees will be paid and
the jurisdiction whose laws govern the agreement).
<PAGE>
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administrative services
contract with Schroder Advisors, 787 Seventh Avenue, New York, New York 10019.
On behalf of the Portfolio, the Trust has also entered into a sub-administration
agreement with Forum, Two Portland Square, Portland, Maine 04101. Pursuant to
these agreements, Schroder Advisors and Forum provide certain management and
administrative services necessary for the Fund's operations. Schroder Advisors
is compensated at the annual rate of [0.00]% of the Portfolio's average daily
net assets. Forum is compensated at the annual rate of [0.00]% of the
Portfolio's average daily net assets.
Schroder Advisors and Forum provide similar services to the Portfolio, for which
the Portfolio pays Schroder Advisors at an annual rate of [0.000]% of the
Portfolio's average daily net assets and pays Forum a monthly fee at the annual
rate of [0.000]% of the Portfolio's average daily net assets.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Schroder Advisors acts as distributor of the Fund's shares. Schroder Advisors
was organized in 1989 and registered as a broker-dealer to serve as an
administrator and distributor of the Fund and other mutual funds. Under a
distribution plan, adopted pursuant to Rule 12b-1 under the 1940 Act (the
"Distribution Plan") by the Trust on behalf of the Advisor Shares of the Fund,
the Trust each month may compensate Schroder Advisors or others for costs and
reimburse expenses incurred in connection with the distribution of Advisor
Shares. This payment is subject to a limit of an annual rate of 0.50% of the
Fund's average daily net assets attributable to Advisor Shares. The maximum
annual amount payable under the Distribution Plan is currently 0.25%, but no
payments will be made under the Distribution Plan with respect to Advisor Shares
until the Board so authorizes.
Payments under the Distribution Plan may be for various types of costs,
including: (i) advertising expenses, (ii) costs of printing prospectuses and
other materials to be given or sent to prospective investors, (iii) expenses of
sales employees or agents of Schroder Advisors, including salary, commissions,
travel and related expenses in connection with the distribution of Advisor
Shares, (iv) payments to broker-dealers who advise shareholders regarding the
purchase, sale, or retention of Advisor Shares, and (v) payments to banks, trust
companies, broker-dealers (other than Schroder Advisors) or other financial
organizations (collectively, "Service Organizations"). Payments to Service
Organizations under the Distribution Plan are calculated by reference to the
average daily net assets of Advisor Shares held by shareholders who have a
brokerage or other service relationship with the Service Organization. The Fund
will not be liable for distribution expenditures made by Schroder Advisors in
any given year in excess of the maximum amount payable under the Distribution
Plan in that year. Costs or expenses in excess of the annual limit may not be
carried forward to future years. Salary expenses of sales personnel who are
responsible for marketing various shares of portfolios of the Trust may be
allocated to those portfolios, including the Advisor Shares of the Fund, that
have adopted a plan similar to that of
<PAGE>
the Fund on the basis of average daily net assets. Travel expenses may be
allocated to, or divided among, the particular portfolios of the Trust for which
they are incurred.
The Trust, on behalf of the Fund, has also adopted a shareholder services plan
(the "Shareholder Services Plan"), pursuant to which Schroder Advisors is
authorized to pay Service Organizations a servicing fee. Payments under the
Shareholder Services Plan may be for various types of services, including: (i)
answering customer inquiries regarding the manner in which purchases, exchanges
and redemptions of shares of the Fund may be effected and other matters
pertaining to the Fund's services, (ii) providing necessary personnel and
facilities to establish and maintain shareholder accounts and records, (iii)
assisting shareholders in arranging for processing purchase, exchange and
redemption transactions, (iv) arranging for the wiring of funds, (v)
guaranteeing shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts, (vi) integrating
periodic statements with other customer transactions and (vii) providing such
other related services as the shareholder may request. The maximum amount
payable under the Shareholder Services Plan to Schroder Advisors is 0.25% of the
Fund's average daily net assets attributable to Advisor Shares.
Payments to Service Organizations under the Shareholder Services Plan are
calculated by reference to the average daily net assets of Advisor Shares held
by shareholders who have a brokerage or other service relationship with the
Service Organization. Some Service Organizations may impose additional or
different conditions on their clients, such as requiring their clients to invest
more than the minimum or subsequent investments specified by the Fund or
charging a direct fee for servicing. If imposed, these fees would be in addition
to any amounts which might be paid to the Service Organization by Schroder
Advisors. Each Service Organization has agreed to transmit to its clients a
schedule of any such fees. Shareholders using Service Organizations are urged to
consult them regarding any such fees or conditions.
EXPENSES
SCMI and Schroder Advisors have voluntarily undertaken to waive a portion of
their fees or assume certain expenses of the Fund in order to limit total Fund
expenses (excluding taxes, interest, brokerage commissions and other portfolio
transaction expenses and extraordinary expenses) chargeable to Advisor Shares to
[0.00]% of the average daily net assets of the Fund attributable to those
shares. This expense limitation cannot be modified or withdrawn except by a
majority vote of the Trustees of the Trust who are not affiliated persons (as
defined in the 1940 Act) of the Trust. If expense reimbursements are required,
they will be made on a monthly basis; SCMI will reimburse the Fund for
four-fifths of the amount required and Schroder Advisors will reimburse the Fund
for the remaining one-fifth.
INVESTMENT IN THE FUND
PURCHASE OF SHARES
Investors may purchase Advisor Shares directly from the Trust. Prospectuses,
sales material and Account Applications can be obtained from the Trust or
through Forum Financial Corp., the
<PAGE>
Fund's transfer agent (the "Transfer Agent"). (See "Other Information --
Shareholder Inquiries"). Investments may also be made through Service
Organizations that assist their customers in purchasing shares of the Fund. Such
Service Organizations may charge their customers a service fee for processing
orders to purchase or sell shares of the Fund. Investors wishing to purchase
shares through their accounts at a Service Organization should contact that
organization directly for appropriate instructions.
Shares of the Fund are offered at the net asset value next determined after
receipt of a completed Account Application (at the address set forth below). The
minimum initial investment is $100,000. There is no minimum for subsequent
investments. 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
Cash Reserves Fund, to:
Schroder Cash Reserves Fund -- Advisor Shares
P.O. Box 446
Portland, Maine 04112
For initial purchases, the check must be accompanied by a completed Account
Application in proper form. Further documentation, 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.
Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:
Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Financial Corp.
Acct. No.: 910-2-718187
Ref.: Schroder Cash Reserves Fund -- Advisor Shares
Account of: (shareholder name)
Account Number: (shareholder account number)
The wire order must specify the name of the Fund, the Shares' class (I.E.,
Advisor), the account name and number, address, confirmation number, amount to
be wired, name of the wiring bank, and name and telephone number of the person
to be contacted in connection with the order. If the initial investment is by
wire, an account number will be assigned and an Account Application must be
completed and mailed to the Fund before any account becomes active. Wire orders
received prior to 4:00 p.m. (Eastern Time) on each day that the New York Stock
Exchange is open for trading (a "Fund Business Day") will be processed at the
net asset value determined as
<PAGE>
of that day. Wire orders received after 4:00 p.m. (Eastern Time) will be
processed at the net asset value determined as of the next Fund Business Day.
See "Net Asset Value" below.
The Fund's Transfer Agent, as the shareholder's agent, establishes for each
shareholder of record, an open account to which, all shares purchased and all
dividends and capital gain distributions that are reinvested in additional
shares are credited. Although most shareholders elect not to receive share
certificates, certificates for full shares can be obtained by specific written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and capital gains are reinvested. In addition, the amount
of any outstanding checks for dividends and capital gains that have been
returned to the Transfer Agent will be reinvested and such checks will be
canceled.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Shares of the Fund 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
(and their spouses) who receive compensation or earned income whether or not
they are active participants in a tax-qualified or government-approved
retirement plan. An IRA contribution by an individual or spouse who participates
in a tax-qualified or government-approved retirement plan may not be deductible,
depending upon the individual's income. Individuals also may establish an IRA to
receive a "rollover" contribution of distributions from another IRA or a
qualified plan. Tax advice should be obtained before effecting a rollover.]
EXCHANGES
Shareholders may exchange shares of the Fund for shares of any other series of
Schroder Capital Funds (Delaware) so long as they maintain the respective
minimum account balance in each Fund in which they own shares. Exchanges between
each Fund are at net asset value.
An exchange is considered to be a sale of shares for Federal income tax purposes
on which a shareholder may realize a capital gain or loss. An exchange may be
made by calling FFC at (800) 344-8332 or by mailing written instructions to
Schroder Capital Funds (Delaware), P.O. Box 446, Portland, Maine 04112. Exchange
privileges may be exercised only in those states where shares of the other
series of Schroder Capital Funds (Delaware) may legally be sold, and may be
amended or terminated at any time upon sixty (60) days' notice.
<PAGE>
REDEMPTION OF SHARES
Shares of the Fund are redeemed at their next determined net asset value after
receipt by the Fund (at the address set forth above under "Purchase of Shares")
of a redemption request in proper form. Redemption requests may be made between
9:00 a.m. and 6:00 p.m. (Eastern Time) on each Fund Business Day. Redemption
requests that are received prior to 4:00 p.m. (Eastern Time) will be processed
at the net asset value determined as of that day. Redemption requests that are
received after 4:00 p.m. (Eastern Time) will be processed at the net asset value
determined the next Fund Business Day. See "Net Asset Value" below.
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 such instructions are genuine.
The Transfer Agent and the Trust generally will not be liable for any losses due
to unauthorized or fraudulent redemption requests, but may be liable if they do
not follow these procedures. Shares for which certificates have been issued may
not be redeemed by telephone. In times of drastic economic or market changes, it
may be difficult to make redemptions by telephone. If a shareholder cannot reach
the Transfer Agent by telephone, redemption requests may be mailed or
hand-delivered to the Transfer Agent.
WRITTEN REQUESTS. Redemptions may be made by letter to the Fund specifying the
class of shares, the dollar amount or number of Shares to be redeemed, and the
shareholder account number. The letter must also be signed in exactly the same
way the account is registered (if there is more than one owner of the Shares,
all must 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.
<PAGE>
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds will normally
be mailed within seven days. No redemption proceeds will be mailed until checks
in payment for the purchase of the Shares to be redeemed have been cleared,
which may take up to 15 calendar days from the purchase date. Unless other
instructions are given in proper form, a check for the proceeds of a redemption
will be sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or that exchange is closed, (ii)
the SEC has by order permitted such suspension, or (iii) an emergency, as
defined by rules of the SEC, exists making disposal of portfolio investments or
determination of the Fund's net asset value not reasonably practicable.
If the Trust Board determines that it would be detrimental to the best interest
of the remaining shareholders of the Fund to make payment wholly or partly in
cash, the Fund may redeem Shares in whole or in part by a distribution in kind
of portfolio securities (from the investment portfolio of the Portfolio or of
the Fund), in lieu of cash, in conformity with applicable rules of the SEC. The
Fund will, however, redeem Shares solely in cash up to the lesser of $250,000 or
1% of net assets during any 90-day period for any one shareholder. In the event
that payment for redeemed Shares is made wholly or partly in portfolio
securities, the shareholder may be subject to additional risks and costs in
converting the securities to cash. See "Additional Purchase and Redemption
Information -- Redemption in Kind" in the SAI.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for Federal income tax
purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem Shares in any account (other than an IRA) if at any
time the account does not have a value of at least $10,000, 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 $10,000
and be allowed at least 30 days to make an additional investment to increase the
account balance to at least $10,000.
NET ASSET VALUE
The net asset value per share of the Fund is calculated separately for each
class of Shares of the Fund at 3:00 p.m. (Eastern Time), Monday through Friday,
each Fund Business Day, which excludes the following U.S. holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Net asset value per Share is calculated by
dividing the aggregate value of the Fund's assets less all Fund liabilities, if
any, by the number of Shares of the Fund outstanding.
In order to maintain a stable net asset value per share of $1.00, the Fund's
portfolio securities are valued at their amortized cost. Amortized cost
valuation involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. If
<PAGE>
the market value of a Fund's portfolio deviates more than 1/2 of 1% from the
value determined on the basis of amortized cost, the Board will consider whether
any action should be initiated to prevent any material dilutive effect on
shareholders.
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 Subchapter M of the Internal
Revenue Code of 1986, as amended, applicable to regulated investment companies.
By complying therewith, the Fund will be relieved of Federal income tax on that
part of its investment company taxable income or net realized capital gain that
is distributed to shareholders (consisting generally of its share of the
Portfolio's net investment income and net short-term capital gain); and that
part of its net long-term capital gain that is distributed to shareholders. The
Fund intends to distribute substantially all of its investment company taxable
income and its net realized long-term capital gain at least annually and,
therefore, intends not to be subject to Federal income tax. The Fund also may
make an additional dividend or other distribution if necessary to avoid a 4%
excise tax on certain undistributed income and gain. Dividends and capital gain
distributions on Advisor Shares are reinvested automatically in additional
Advisor Shares at net asset value unless the shareholder has elected in the
Account Application or otherwise in writing to receive distributions in cash.
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 12b-1 fees and other
compensation payable to Service Organizations for distribution assistance and
shareholder servicing for the Advisor Shares.
Dividends from the Fund's taxable income generally will be taxable to
shareholders as ordinary income whether dividends are invested in additional
Shares or received in cash. Distributions by the Fund of any net capital gain
designated by the Fund as such will be taxable to a shareholder as long-term
capital gain regardless of how long the shareholder has held the Shares and
whether they are invested in additional Shares or received in cash. Each year
the Trust will notify shareholders of the tax status of dividends and other
distributions.
As of the date of this Prospectus, and subject to changes in the tax law, 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 adjusted basis for 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.
<PAGE>
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. Shareholders should consult their own tax
advisors as to the tax consequences of their ownership of Share.
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.
THE PORTFOLIO
The Portfolio will not be required to pay Federal income tax on its net
investment income and capital foreign currency gains 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 its holdings in the Portfolio, regardless of whether such
interest, dividends or gains have been distributed by the Portfolio.
The Portfolio intends to conduct its operations so as to enable the Fund to
qualify as a regulated investment company. Investment income or gains received
by the Portfolio from sources within foreign countries may be subject to foreign
income or other taxes, which will reduce the return on such investments.
OTHER INFORMATION
CAPITALIZATION AND VOTING
The Trust was organized as a Maryland corporation (called Schroder Capital
Funds, Inc.) on July 30, 1969 and on January 9, 1996 was reorganized 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 Advisor Shares), and the costs of doing so
will be borne by the Trust. The Trust currently consists of nine separate
portfolios, each of which has separate investment objectives and policies. The
Fund currently consists of two classes of Shares.
Each share of the Fund is entitled to participate equally in dividends and other
distributions and the proceeds of any liquidation except that, due to the
differing expenses borne by the classes, dividends and liquidation proceeds for
each class will likely differ. Shares are fully paid and non-assessable, and
have no pre-emptive 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
<PAGE>
each full share held (and a fractional vote for each fractional share held).
Each share of the Fund has equal voting rights, except that if a matter affects
only the shareholders of a particular class only shareholders of that class
shall have a right to vote. On Trust matters requiring shareholder approval,
shareholders of the Trust are entitled to vote only with respect to matters that
affect the interests of the Fund or the class of shares they hold, except as
otherwise required by applicable law.
There will normally be no meetings of shareholders to elect Trustees unless and
until such time as less than a majority of the Trustees holding office have been
elected by shareholders. However, the holders of not less than a majority of the
outstanding shares of the Trust may remove any person serving as a Trustee and
the Trust Board will call a special meeting of shareholders to consider removal
of one or more Trustees if requested in writing to do so by the holders of not
less than 10% of the outstanding shares of the Trust. From time to time, certain
shareholders may own a large percentage of the shares of the Fund. Accordingly,
those shareholders may be able to greatly affect (if not determine) the outcome
of a shareholder vote.
REPORTS
The Trust sends to each Fund shareholder a semi-annual report and an audited
annual report containing the Fund's financial statements.
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of yield, which is
based on historical results and is not intended to indicate future performance.
The Fund's yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. To calculate standardized
yield, the Fund takes the interest income it earned from its investments for a
7-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the 7-day period.
The Fund's advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar Inc., Lipper
Analytical Services, Inc. or IBC/Donoghue, Inc. In addition, the performance of
the Fund may be compared to recognized indices of market performance. The
comparative material found in the Fund's advertisements, sales literature or
reports to shareholders may contain performance ratings. This material is not to
be considered representative or indicative of future performance. All
performance information for the Fund is calculated on a class basis.
CUSTODIAN AND TRANSFER AGENT
Norwest also serves as custodian of the Fund's and of the Portfolio's assets.
For its custodial services, Norwest is compensated at an annual rate of up to
0.03% of the average daily net assets of the Fund. Forum Financial Corp. serves
as the Fund's transfer and dividend disbursing agent.
<PAGE>
SHAREHOLDER INQUIRIES
Inquiries about the Fund, including its past performance, should be directed to:
Schroder Cash Reserves 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.
SERVICE ORGANIZATIONS
The Glass-Steagall Act and other applicable laws and regulations provide that
banks may not engage in the business of underwriting, selling or distributing
securities. There is currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service Organizations.
However, judicial or administrative decisions or interpretations of such laws,
as well as changes in either Federal or state regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform all or part of
its servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders of the Fund and
alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.
FUND STRUCTURE
CLASSES OF SHARES. The Fund has two classes of shares, Investor Shares and
Advisor Shares. Investor Shares are offered by a separate prospectus to
individual investors, in most cases through Service Organizations. Advisor
Shares incur more expenses than Investor Shares. Except for certain differences,
each share of each class represents an undivided, proportionate interest in the
Fund. Each share of the Fund is entitled to participate equally in dividends and
other distributions and the proceeds of any liquidation of the Fund except that,
due to the differing expenses borne by the two classes, the amount of dividends
and other distributions will differ between the classes. Information about
Advisor Shares is available from the Fund by calling Schroder Advisors at (800)
730-2932.
THE PORTFOLIO. The Fund seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which has substantially the same
investment objective and 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 Core Trust (Delaware)
("Core Trust"), a business trust organized under the laws of the State of
Delaware in September 1994. Core Trust is registered under the 1940 Act as an
open-end management investment company and currently has [NINE] separate series.
The assets of the Portfolio, a diversified portfolio, belong only to, and the
liabilities of the Portfolio are borne solely by, the Portfolio and no other
portfolio of Core Trust.
<PAGE>
The investment objective and fundamental investment policies of the Fund and the
Portfolio can be changed only with shareholder or interestholder approval,
respectively. See "Investment Objective, "Investment Policies," and "Management
of the Fund" for a complete description of the Portfolio's investment objective,
policies, restrictions, management, and expenses.
The Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. As of ________________ __, 1997, the Fund is the only
institutional investor in the Portfolio. The Portfolio may permit other
investment companies or institutional 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 will be entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On most issues
subject to a vote of investors, as required by the 1940 Act and other applicable
law, the Fund will solicit proxies from its shareholders and will vote its
interest in the Portfolio in proportion to the votes cast by its shareholders.
If there are other investors in the Portfolio, there can be no assurance that
any issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all investors in the Portfolio; indeed, if
other investors hold a majority interest in the Portfolio, they could have
voting control of the Portfolio.
The Portfolio will not sell its shares directly to members of the general
public. Another investor in the Portfolio, such as an investment company, that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund and could have
different advisory and other fees and expenses than the Fund. Therefore, Fund
shareholders may have different returns than shareholders in another investment
company that invests exclusively in the Portfolio. There is currently no such
other investment company that offers its shares to members of the general
public. Information regarding any such funds in the future will be available
from Core Trust by calling Forum Financial Corp. at (207) 879-8903.
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement or omission of a material fact in the
registration statement. Core Trust, its Trustees and certain of its officers are
required to sign the registration statement of the Trust and may be required to
sign the registration statements of certain other publicly offered investors in
the Portfolio. In addition, under federal securities law, Core Trust could be
liable for misstatements or omissions of a material fact in any proxy soliciting
material of a publicly offered investor in Core Trust, including the Fund. Each
investor in the Portfolio, including the Trust, will indemnify Core Trust and
its Trustees and officers ("Core Trust Indemnitees") against certain claims.
Indemnified claims are those brought against Core Trust Indemnitees based on a
misstatement or omission of a material fact in the investor's registration
statement or proxy materials. No indemnification need be made, however, if such
alleged misstatement or omission relates to information about Core Trust and was
supplied to the investor by Core Trust. Similarly, Core
<PAGE>
Trust 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 Core Trust that is
supplied to the investor by Core Trust. In addition, each registered investment
company investor in the Portfolio will indemnify each Core Trust 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 Core Trust. The purpose of these cross-indemnity
provisions is principally to limit the liability of Core Trust to information
that it knows or should know and can control. With respect to other prospectuses
and other offering documents and proxy materials of investors in Core Trust, 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 NIM, 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 NIM to manage the
Fund's assets, could have a significant impact on shareholders of the Fund.
Each investor in the Portfolio, including the Fund, is 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 NIM considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
INVESTMENT SUB-ADVISER
Norwest Investment Management
Norwest Center
Sixth Street and Marquette
Minneapolis, Minnesota 55479
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
SUB-ADMINISTRATOR
Forum Administrative Services, Limited Liability Company
Two Portland Square
Portland, Maine 04101
CUSTODIAN
Norwest Bank Minnesota, N.A.
Norwest Center
Sixth Street and Marquette
Minneapolis, Minnesota 55479
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
INDEPENDENT ACCOUNTANTS
_________________, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
Table of Contents
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . .
FEE TABLE . . . . . . . . . . . . . . . . . . . .
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . .
INVESTMENT OBJECTIVE. . . . . . . . . . . . . . .
INVESTMENT POLICIES . . . . . . . . . . . . . . .
RISK CONSIDERATIONS . . . . . . . . . . . . . . .
MANAGEMENT OF THE FUND. . . . . . . . . . . . . .
Board of Trustees . . . . . . . . . . . . . . . .
Investment Adviser and Portfolio Manager. . . . .
Administrative Services . . . . . . . . . . . . .
Expenses. . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions. . . . . . . . . . . . . .
Code of Ethics. . . . . . . . . . . . . . . . . .
INVESTMENT IN THE FUND. . . . . . . . . . . . . .
Purchase of Shares. . . . . . . . . . . . . . . .
Retirement Plans and Individual
Retirement Accounts. . . . . . . . . . . . . .
Statement of Intention. . . . . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . .
Redemption of Shares. . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS
AND TAXES. . . . . . . . . . . . . . . . . . .
The Fund. . . . . . . . . . . . . . . . . . . . .
The Portfolio . . . . . . . . . . . . . . . . . .
OTHER INFORMATION . . . . . . . . . . . . . . . .
Capitalization and Voting . . . . . . . . . . . .
Reports . . . . . . . . . . . . . . . . . . . . .
Performance . . . . . . . . . . . . . . . . . . .
Custodian and Transfer Agent. . . . . . . . . . .
Shareholder Inquiries . . . . . . . . . . . . . .
Service Organizations . . . . . . . . . . . . . .
Fund Structure. . . . . . . . . . . . . . . . . .
<PAGE>
SCHRODER CASH RESERVES FUND
STATEMENT OF ADDITIONAL INFORMATION
MAY [ ], 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information ("SAI") is not a prospectus and is only
authorized for distribution when preceded or accompanied by the current
Prospectus for the Fund dated May [ ], 1997 (the "Prospectus"). This SAI
contains additional and more detailed information than that set forth in the
Prospectus and should be read in conjunction with the Prospectus and retained
for future reference. You may obtain an additional copy of the Prospectus
without charge by writing to the Funds at _____ or calling 1-800-____.
TABLE OF CONTENTS PAGE
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Restrictions . . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . .
Additional Purchase and Redemption Information. . . . . . . . . .
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements. . . . . . . . . . . . . . . . . . . . . . .
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT ADVISOR
Schroder Capital Management International Inc. ("Schroder")
INVESTMENT SUB-ADVISOR
Norwest Investment Management ("NIM")
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors, Inc. ("Schroder Advisors")
SUB-ADMINISTRATOR
Forum Administrative Services, Limited Liability Company ("FAS")
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Forum Financial Corp. ("Forum")
GENERAL INFORMATION: (207) 879-8903
ACCOUNT INFORMATION: (800) 344-8332
FAX: (207) 879-6206
- --------------------------------------------------------------------------------
<PAGE>
INTRODUCTION
Schroder Cash Reserves Fund (the "Fund"), is a separately managed, non-
diversified fund of Schroder Capital Funds (Delaware) (the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940 (the "1940 Act"). The Trust currently consists of eleven separate funds,
each of which has different investment objectives and policies.
Schroder Cash Reserves Fund seeks to achieve its investment objective by
investing substantially all of its investable assets in Cash Reserves Portfolio,
(the "Portfolio"), a separately managed, diversified series of Core Trust
(Delaware) ("Core Trust"), an open-end, management investment company registered
under the 1940 Act, which invests primarily in a broad spectrum of high quality
money market instruments of United States and foreign issuers. The Portfolio has
an identical investment objective and substantially similar investment policies
as the Fund (see "Other Information - Fund Structure"). Accordingly, the Fund's
investment experience will correspond directly with the Portfolio's investment
experience.
INVESTMENT POLICIES
The following information supplements the discussion found under "Investment
Objective" and "Investment Policies" in the Prospectus. The Fund currently
seeks to achieve its investment objective by investing primarily in the
Portfolio. As the Fund has virtually the same investment policies as the
Portfolio, investment policies are discussed with respect to the Portfolio only.
The investment objective, and the investment policies of the Portfolio that are
designated as fundamental, may not be changed without approval of the holders of
a majority of the outstanding voting securities of the Portfolio. A majority of
outstanding voting securities means the lesser of (i) 67% of the shares present
or represented at a shareholder meeting at which the holders of more than 50% of
the outstanding shares are present or represented, or (ii) more than 50% of
outstanding shares. Unless otherwise indicated, all investment policies of the
Fund are not fundamental and may be changed by the Trust Board without approval
of the shareholders of the Fund. Likewise, nonfundamental investment policies of
the Portfolio may be changed by the Core Trust Board without approval of the
Portfolio's interest holders.
The Portfolio will invest only in high quality, short-term money market
instruments that are determined by the Adviser, pursuant to procedures adopted
by the Core Trust Board, to be eligible for purchase and to present minimal
credit risks. The Portfolio will invest only in U.S. dollar-denominated
instruments that have a remaining maturity of 397 days or less (as calculated
pursuant to Rule 2a-7 under the 1940 Act) and will maintain a dollar-weighted
average portfolio maturity of 90 days or less. Securities with ultimate
maturities of greater than 397 days may be purchased in accordance with Rule 2a-
7. Under that Rule, only those long-term instruments that have demand features
which comply with certain requirements and certain variable rate U.S. Government
Securities, as described below, may be purchased. The securities in which the
Portfolio may invest may have fixed, variable or floating rates of interest.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, the Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. Also, the Portfolio may not purchase
a security if the value of all securities held by the Portfolio and issued or
guaranteed by the same issuer (including letters of credit in support of a
security) would exceed 10% of the Portfolio's total assets. In addition, to
ensure adequate liquidity, the Portfolio may not invest more than 10% of its net
assets in illiquid securities, including repurchase agreements maturing in more
than seven days. Under the supervision of the Core Trust Board, the Adviser
determines and monitors the liquidity of portfolio securities.
- 2 -
<PAGE>
As used herein, high quality instruments include those that (i) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO or (ii) are otherwise unrated and determined by
the Adviser, pursuant to guidelines adopted by the Core Trust Board, to be of
comparable quality. The Portfolio will invest at least 95% of its total assets
in securities in the highest rating category as determined pursuant to Rule 2a-
7. A description of the rating categories of Standard & Poor's, Moody's
Investors Service and certain other NRSROs is contained in the SAI.
The market value of the interest-bearing debt securities held by the Portfolio,
including municipal securities, will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
i.e., a decline in interest rates produces an increase in market value, while an
increase in rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. In addition, changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of an issuer's creditworthiness will also affect the market
value of the debt securities of that issuer. Obligations of issuers of debt
securities, including municipal securities, are also subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. The possibility exists, therefore, that, as a result of bankruptcy,
litigation or other conditions, the ability of any issuer to pay, when due, the
principal of and interest on its debt securities may be materially affected.
Although the Portfolio only invests in high quality money market instruments, an
investment in the Fund is subject to risk even if all securities in the
Portfolio's investment portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value as a
result of changes in interest rates and/or the issuer's actual or perceived
creditworthiness.
The Portfolio invests in a broad spectrum of high quality money market
instruments of United States and foreign issuers.
The following specific policies and limitations are considered at the time of
any purchase; NIM may not buy these instruments or use these techniques unless
it believes that they are consistent with the Portfolio's objective. The Fund's
financial reports are sent to shareholders twice a year. For a free Annual or
Semi-Annual Report or SAI, please call 1-800-290-9826.
INVESTMENT BY FEDERAL CREDIT UNIONS
U.S. Government Fund and Treasury Fund limit their investments, as described in
the Prospectus for those Funds, to investments that are legally permissible for
Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act (including 12 U.S.C. Section 1757(7), (8) and (15)) and the
applicable rules and regulations of the National Credit Union Administration
(including 12 C.F.R. Part 703, Investment and Deposit Activities), as such
statutes and rules and regulations may be amended. Treasury Fund limits its
investments to Treasury obligations, including Treasury STRIPS with a maturity
of less than 13 months. U.S. Government Fund limits its investments to U.S.
Government Securities (including Treasury STRIPS), repurchase agreements fully
collateralized by U.S. Government Securities and other government related zero-
coupon securities, such as TIGRs and CATs. All zero-coupon securities in which
the Fund invests will have a maturity of less than 13 months. Certain U.S.
Government Securities owned by the Fund may be mortgage or asset backed, but,
except to reduce interest rate risk, no such security will be (i) a stripped
mortgage backed security ("SMBS"), (ii) a collateralized mortgage obligation
("CMO") or real estate mortgage investment conduit ("REMIC") that meets any of
the tests outlined in 12 C.F.R. Section 703.5(g) or (iii) a residual interest in
a CMO or REMIC. In order to reduce interest rate risk the Fund may purchase a
SMBS, CMO, REMIC or residual interest in a CMO or REMIC but only in accordance
with 12 C.F.R. Section 703.5(i). Each Fund also may invest in reverse
repurchase agreements in accordance with 12 C.F.R. 703.4(e).
- 3 -
<PAGE>
U.S. GOVERNMENT SECURITIES
In addition to obligations of the U.S. Treasury, each of the Funds (except
Treasury Fund) may invest in U.S. Government Securities. Obligations of certain
agencies and instrumentalities of the U.S. government are supported by the full
faith and credit of the U.S. Government such as those guaranteed by the Small
Business Administration or issued by the Government National Mortgage
Association; others are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations; and still others are supported
primarily or solely by the creditworthiness of the issuer, such as securities of
the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation and the Tennessee Valley Authority. No assurance can be given that
the U.S. government would provide financial support to U.S. government-sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Accordingly, although these securities have historically involved little risk of
loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit. A Fund will
invest in the obligations of such agencies or instrumentalities only when the
Adviser believes that the credit risk with respect thereto is consistent with
the Fund's investment policies.
BANK OBLIGATIONS
Each Fund may, in accordance with the policies described in its Prospectus,
invest in obligations of financial institutions, including negotiable
certificates of deposit, bankers' acceptances and time deposits of U.S. banks
(including savings banks and savings associations), foreign branches of U.S.
banks, foreign banks and their non-U.S. branches (Eurodollars), U.S. branches
and agencies of foreign banks (Yankee dollars), and wholly-owned banking-related
subsidiaries of foreign banks. A Fund's investments in the obligations of
foreign banks and their branches, agencies or subsidiaries may be obligations of
the parent, of the issuing branch, agency or subsidiary, or both. Investments
in foreign bank obligations are limited to banks and branches located in
countries which the Fund's Adviser believes do not present undue risk.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution
that earn a specified interest rate over a given period. Certificates of
deposit and fixed time deposits, which are payable at the stated maturity date
and bear a fixed rate of interest, generally may be withdrawn on demand by the
Fund but may be subject to early withdrawal penalties which vary depending upon
market conditions and the remaining maturity of the obligation and could reduce
the Fund's yield. Although fixed-time deposits do not in all cases have a
secondary market, there are no contractual restrictions on the Fund's right to
transfer a beneficial interest in the deposits to third parties. Deposits
subject to early withdrawal penalties or that mature in more than seven days are
treated as illiquid securities if there is no readily available market for the
securities.
The Funds may invest in Euro dollar certificates of deposit, which are U.S.
dollar denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States; Eurodollar time
deposits ("ETDs"), which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; and Canadian time deposits, which are
basically the same as ETDs except they are issued by Canadian offices of major
Canadian banks.
Investments that a Fund may make in securities of foreign banks, branches or
subsidiaries may involve certain risks, including future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on such securities, the possible seizure or nationalization of
foreign deposits, differences from domestic banks in applicable accounting,
auditing and financial reporting standards, and the possible establishment of
exchange controls or other foreign governmental laws or restrictions applicable
to the payment of certificates of deposit or time deposits which might affect
adversely the payment of principal and interest on such securities held by the
Fund.
- 4 -
<PAGE>
ZERO COUPON SECURITIES
Zero coupon securities are sold at original issue discount and pay no interest
to holders prior to maturity. Accordingly, these securities usually trade at a
deep discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make current distributions of
interest. Federal tax law requires that a Fund accrue a portion of the discount
at which a zero-coupon security was purchased as income each year even though
the Fund receives no interest payment in cash on the security during the year.
Interest on these securities, however, is reported as income by the Fund and
must be distributed to its shareholders. The Funds distribute all of their net
investment income, and may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the Investment Adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.
Currently U.S. Treasury securities issued without coupons include Treasury bills
and separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. These stripped components are traded
independently under the Treasury's Separate Trading of Registered Interest and
Principal of Securities ("STRIPS") program or as Coupons Under Book Entry
Safekeeping ("CUBES"). A number of banks and brokerage firms separate the
principal and interest portions of U.S. Treasury securities and sell them
separately in the form of receipts or certificates representing undivided
interests in these instruments. These instruments are generally held by a bank
in a custodial or trust account on behalf of the owners of the securities and
are known by various names, including Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS"). In addition, corporate debt securities may be zero coupon
securities. For the purpose solely of an investment policy of investing at
least 65% of a Fund's assets in U.S. Government Securities, such securities are
currently not deemed to be U.S. Government Securities but rather securities
issued by the bank or brokerage firm involved.
REPURCHASE AGREEMENTS
The Funds maintain procedures for evaluating and monitoring the creditworthiness
of vendors of repurchase agreements. In addition, each Fund that may enter into
repurchase agreements requires continual maintenance of collateral held by its
custodian with a market value at least equal to the repurchase price.
Counterparties to a Money Market Fund's repurchase agreements must be a primary
dealer that reports to the Federal Reserve Bank of New York ("primary dealers")
or one of the largest 100 commercial banks in the United States.
Under the terms of a repurchase agreement, a Fund purchases securities from
registered broker-dealers, banks or their affiliates subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price generally equals the price paid by the Fund plus
interest negotiated on the basis of current short-term rates, which may be more
or less than the rate on the underlying portfolio securities. The seller under
a repurchase agreement is required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). If the seller were to default on its repurchase obligation
or become insolvent, the Fund holding such obligation would suffer a loss to the
extent that the proceeds from a sale of the underlying portfolio securities were
less than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent confirming that a Fund
would be entitled, as against a claim by such seller or its receiver or trustee
in bankruptcy, to retain the underlying securities, although the Fund's believe
that, under the regular procedures normally in effect for custody of a Fund's
securities subject to repurchase agreements, and under Federal laws, a court of
competent jurisdiction would rule in favor of the Fund if presented with the
question. Securities subject to repurchase agreements will be held by the
Fund's custodian or another qualified custodian or in the Federal Reserve book-
entry system. Repurchase agreements are considered to be loans by a Fund for
certain purposes under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a security
and simultaneously commits to repurchase that security from the buyer at an
agreed upon price on an agreed upon future date. The resale price in a
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reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate.
Counterparties to a Money Market Fund's reverse repurchase agreements must be a
primary dealer that reports to the Federal Reserve Bank of New York ("primary
dealers") or one of the largest 100 commercial banks in the United States.
Generally, a reverse repurchase agreement enables the Fund to recover for the
term of the reverse repurchase agreement all or most of the cash invested in the
portfolio securities sold and to keep the interest income associated with those
portfolio securities. Such transactions are only advantageous if the interest
cost to the Fund of the reverse repurchase transaction is less than the cost of
obtaining the cash otherwise. In addition, interest costs on the money received
in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies. The use of reverse repurchase
agreement proceeds to make investments may be considered to be a speculative
technique.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Investment decisions for the Portfolios and for the other investment advisory
clients of SCMI are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in addition to
basic suitability for the particular client involved. Thus, a particular
security may be bought or sold for certain clients even though it could have
been bought or sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling the security. In some instances, one client may sell a particular
security to another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as is possible, averaged as to price
and allocated between such clients in a manner which in SCMI's opinion is
equitable to each and in accordance with the amount being purchased or sold by
each. There may be circumstances when purchases or sales of securities for one
or more clients will have an adverse effect on other clients.
PERFORMANCE INFORMATION
A Fund may, from time to time, include quotations of its total return in
advertisements or reports to shareholders or prospective investors. Quotations
of average annual total return for a Fund will be expressed in terms of the
average annual compounded rate of return of hypothetical investments in a Fund
over a period of 1, 5 and 10 years (or, as appropriate, the life of a Fund)
pursuant to the following formula:
n
P(1+T) =ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n= the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period).
Total return quotations reflect the deduction of a proportional share of a
Fund's expenses (on an annual basis), assume reinvestment of all dividends and
distributions, and do not reflect the effect of taxes.
A Fund may also be compared to various unmanaged securities indices, groups of
mutual funds tracked by mutual fund ratings services, or other general economic
indicators. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses. Of course, performance information for a Fund represents only past
performance and does not necessarily indicate future results.
Current performance information is not included because the Funds commenced
operations on _______.
Investors who purchase and redeem shares of a Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Services
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Organization and the investor, with respect to the customer services provided by
the Service Organization: account fees (a fixed amount per month or per year);
transaction fees (a fixed amount per transaction processed); compensating
balance requirements (a minimum dollar amount a customer must maintain in order
to obtain the services offered); or account maintenance fees (a periodic charge
based upon a percentage of the assets in the account or of the dividends paid on
these assets). Such fees will have the effect of reducing the average annual
total return of a Fund for those investors.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Detailed information pertaining to the purchase of shares of a Fund, redemption
of shares and the determination of the net asset value of a Fund's shares is set
forth in the Prospectus under "Investment in A Fund."
REDEMPTION IN KIND
In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, brokerage costs may be incurred by the shareholder in
converting the securities to cash. An in kind distribution of portfolio
securities will be less liquid than cash. The shareholder may have difficulty
in finding a buyer for portfolio securities received in payment for redeemed
shares. Portfolio securities may decline in value between the time of receipt
by the shareholder and conversion to cash. A redemption in kind of a Fund's
portfolio securities could result in a less diversified portfolio of investments
for a Fund and could affect adversely the liquidity of a Fund's portfolio.
TAXATION
The Funds intend to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). To
qualify as a regulated investment company, the Funds intend to distribute to
shareholders at least 90% of its net investment income (which includes, among
other items, dividends, interest and the excess of any net short-term capital
gains over net long-term capital losses), and to meet certain diversification of
assets, source of income, and other requirements of the Code. By so doing, the
Funds will not be subject to Federal income tax on their net investment income
and net realized capital gains (the excess of net long-term capital gains over
net short-term capital losses) distributed to shareholders. If the Funds do not
meet all of these Code requirements, it will be taxed as an ordinary
corporation, and its distributions will be taxable to shareholders as ordinary
income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Funds must distribute for each
calendar year an amount equal to the sum of (1) at least 98% its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the one-
year period ending _________, of such year, and (3) all such ordinary income and
capital gains for previous years that were not distributed during such years. A
distribution will be treated as paid during the calendar year if it is declared
by the Funds in OCTOBER, NOVEMBER OR DECEMBER of the year with a record date in
such month and paid by the Funds during JANUARY of the following year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time a Fund accrues interest or other receivable or
accrues expenses or other liabilities denominated in a foreign currency and the
time a Fund actually collects such receivable or pays such liabilities generally
are treated as ordinary income or ordinary loss. Similarly, gains or losses on
disposition of debt securities denominated in a foreign currency attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security and the date of disposition as well as gains or
losses from certain foreign currency transactions and options on certain foreign
currency transactions, generally are treated as ordinary gain or loss. These
gains or losses, referred to under the Code as "Section 988" gains or losses,
may increase or decrease the amount of a Fund's net investment income to be
distributed to its shareholders as ordinary income.
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Generally, the hedging transactions undertaken by a Fund may be deemed
"straddles" for Federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by a Fund. In addition, losses realized
by a Fund on positions that are part of a straddle may be deferred under the
straddle rules, rather than being taken into account in calculating the taxable
income for the taxable year in which the losses are realized. Because only a
few regulations implementing the straddle rules have been promulgated, the tax
consequences to a Fund of hedging transactions are not entirely clear. The
hedging transactions may increase the amount of short-term capital gain realized
by a Fund which is taxed as ordinary income when distributed to shareholders.
A Fund may make one or more of the elections available under the Code which are
applicable to straddles. If a Fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders and which will be taxed to shareholders as ordinary income or long-
term capital gain, may be increased or decreased as compared to a Fund that did
not engage in such hedging transactions.
The requirements applicable to regulated investment companies such as a Fund may
limit the extent to which a Fund will be able to engage in transactions in
options and forward contracts.
Distributions of net investment income (including realized net short-term
capital gain) are taxable to shareholders as ordinary income. It is not
expected that such distributions will be eligible for the dividends received
deduction available to corporations.
Distributions of net long-term capital gain are taxable to shareholders as long-
term capital gain, regardless of the length of time a Fund's shares have been
held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of a Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss although
such shares may have been held by the shareholder for one year or less.
Further, a loss realized on a disposition will be disallowed to the extent the
shares disposed of are replaced (whether by reinvestment or distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
All distributions are taxable to the shareholder whether reinvested in
additional shares or received in cash. Shareholders receiving distributions in
the form of additional shares will have a cost basis for Federal income tax
purposes in each share received, equal to the net asset value of a share of a
Fund on the reinvestment date. Shareholders will be notified annually as to the
Federal tax status of distributions.
Distributions by a Fund reduce the net asset value of a Fund's shares. Should a
distribution reduce the net asset value below a shareholder's cost basis, such
distribution nevertheless would be taxable to the shareholder as ordinary income
or capital gain as described above, even though, from an investment standpoint,
it may constitute a partial return of capital. In particular, investors should
be careful to consider the tax implications of buying shares just prior to a
distribution. The price of shares purchased at that time includes the amount of
the forthcoming distribution. Those investors purchasing shares just prior to a
distribution will receive a taxable distribution.
Upon redemption or sale of her shares, a shareholder will realize a taxable gain
or loss depending upon her basis in her shares. Such gain or loss generally
will be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. Such gain or loss generally will be long-term or short-
term depending upon the shareholder's holding period for the shares.
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The Funds intend to minimize foreign income and withholding taxes by investing
in obligations the payments with respect to which will be subject to minimal or
no such taxes insofar as this objective is consistent with a Fund's income
objective. However, since a Fund may incur foreign taxes, it intends, if it is
eligible to do so, to elect under Section 853 of the Code to treat each
shareholder as having received an additional distribution from a Fund, in the
amount indicated in a notice furnished to her, as her pro rata portion of income
taxes paid to or withheld by foreign governments with respect to interest,
dividends and gain on a Fund's foreign portfolio investments. The shareholder
then may take the amount of such foreign taxes paid or withheld as a credit
against her Federal income tax, subject to certain limitations. If the
shareholder finds it more to her advantage to do so, she may, in the
alternative, deduct the foreign tax withheld as an itemized deduction, in
computing her taxable income. Each shareholder is referred to her tax advisor
with respect to the availability of the foreign tax credit.
A Fund will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of a Fund's
shares, except in the case of certain exempt shareholders. All such
distributions and proceeds generally will be subject to withholding of Federal
income tax at a rate of 31% ("backup withholding") in the case of nonexempt
shareholders if (1) the shareholder fails to furnish a Fund with and to certify
the shareholder's correct taxpayer identification number or social security
number, (2) the IRS notifies a Fund that the shareholder has failed to report
properly certain interest and dividend income to the IRS and to respond to
notices to that effect, or (3) when required to do so, the shareholder fails to
certify that she is not subject to backup withholding. If the withholding
provisions are applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will be reduced by the amount
required to be withheld. Any amounts withheld may be credited against the
shareholder's Federal income tax liability. Investors may wish to consult their
tax advisors about the applicability of the backup withholding provisions.
The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by a Fund also may be subject
to state and local taxes, and their treatment under state and local income tax
laws may differ from the Federal income tax treatment. Shareholders should
consult their tax advisors with respect to particular questions of Federal,
state and local taxation. Shareholders who are not U.S. persons should consult
their tax advisors regarding U.S. and foreign tax consequences of ownership of
shares of a Fund including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or a lower rate under a tax
treaty).
INVESTMENT RESTRICTIONS
The following investment restrictions restate or are in addition to those
described under "Investment Restrictions" and "Investment Policies" in the
Prospectus. The investment restrictions that are fundamental may not be changed
without approval of the holders of a majority of the outstanding voting
securities as defined in the 1940 Act. THE FOLLOWING INVESTMENT RESTRICTIONS OF
THE FUND, WHICH ARE THE SAME AS THOSE OF THE PORTFOLIO, ARE FUNDAMENTAL POLICIES
AND MAY ONLY BE CHANGED BY SHAREHOLDER VOTE. THE FUND MAY NOT:
FUNDAMENTAL LIMITATIONS
(1) DIVERSIFICATION
The Fund may not, with respect to 75% of its assets, purchase a
security (other than a U.S. Government Security or a security of
an investment company) if, as a result, (i) more than 5% of the
Fund's total assets would be invested in the securities of a
single issuer or (ii) the Fund would own more than 10% of the
outstanding voting securities of any single issuer.
(2) CONCENTRATION
The Fund may not purchase a security if, as a result, more than
25% of the Fund's total assets would be invested in securities of
issuers conducting their principal business activities in the
same industry; provided that the Fund will invest more than 25%
of the value of the Fund's total assets in obligations of
domestic and foreign financial institutions and their holding
companies. For
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purposes of this limitation (i) there is no limit on investments
in U.S. Government Securities, in repurchase agreements covering
U.S. Government Securities, in securities issued by the states,
territories of possessions of the United States ("municipal
securities") or in foreign government securities, (ii) "mortgage
related securities," as that term is defined in the 1934 Act, are
treated as an issuer in the industry of the primary type of asset
backing the security, (iii) there is no limit on investment in
issuers domiciled in a single country or single state, (iv)
financial service companies are classified according to the end
users of their services (for example, automobile finance, bank
finance and diversified finance) and (v) utility companies are
classified according to their services (for example, gas, gas
transmission, electric and gas, electric and telephone).
Notwithstanding anything to the contrary, the Fund may invest, to
the extent permitted by the 1940 Act, all or a portion of its
assets in one or more open-end management investment companies.
To the extent the Fund invests more than 25% of its total assets
in investment companies, for purposes of this limitation, the
Fund will look to the industries of the issuers of the securities
held by the investment companies in which the Fund invests.
(3) BORROWING
The Fund may not borrow money if, as a result, outstanding
borrowings would exceed an amount equal to 33 1/3% of the Fund's
total assets. For purposes of this limitation, the following are
not treated as borrowings (i) the delayed delivery of purchased
securities (such as the purchase of when-issued securities), (ii)
reverse repurchase agreements, (iii) dollar-roll transactions and
(iv) the lending of securities.
(4) REAL ESTATE
The Fund may not purchase or sell real estate unless acquired as
a result of ownership of securities or other instruments (but
this shall not prevent the fund from investing in securities or
other Instruments backed by real estate or securities of
companies engaged in the real estate business).
(5) LENDING
The Fund may not make loans to other parties. For purposes of
this limitation, entering into repurchase agreements, lending
securities or acquiring any debt security is not deemed to be the
making of a loan.
(6) COMMODITIES
The Fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other
instruments (but this shall not prevent the fund from purchasing
or selling options and futures contracts or from investing in
securities or other instruments backed by physical commodities).
(7) UNDERWRITING
The Fund may not underwrite (as that term is defined in the 1933
Act) securities issued by other persons except to the extent that
in connection with the disposition of the Fund's assets the Fund
may be deemed to be an underwriter.
(8) SENIOR SECURITIES
The Fund may not issue senior securities except to the extent
permitted by the 1940 Act.
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NONFUNDAMENTAL LIMITATIONS
The Fund has adopted the following investment limitations which are not
fundamental policies of the Fund. These policies may be changed by the Board,
or in the case of International Portfolio, the Core Trust Board.
1. The Fund may not borrow money if, as a result, outstanding borrowings other
than for temporary or emergency purposes would exceed an amount equal to 5%
of the Fund's total assets. The Fund may not purchase or otherwise acquire
any security if outstanding borrowings made for temporary or emergency
purposes would exceed an amount equal to 5% of the Fund's total assets.
2. At no time may more than 10% of the Fund's net assets be invested in
illiquid assets such as (i) securities that cannot be disposed of within
seven days at their then-current value, (ii) repurchase agreements not
entitling the holder to payment of principal within seven days and (iii)
securities subject to restrictions on the sale of the securities to the
public without registration under the 1933 Act ("restricted securities")
that are not readily marketable. The Fund may treat certain restricted
securities as liquid securities pursuant to guidelines adopted by the Board
of Trustees.
3. The Fund may not sell securities short, unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold
short (short sales "against the box"), and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
4. The Fund may not purchase securities on margin, except that the Fund may
obtain such short-term credits as are necessary for the clearance of
transactions, and provided that initial and variation margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
5. The Fund may not enter into short sales if, as a result, more that 25% of
the Fund's total assets would be so invested or the Fund's short positions
(other than those positions "against the box") would represent more than 2%
of the outstanding voting securities of any single issuer or of any class
of securities of any single issuer.
6. The Fund may not invest directly in interests in oil, gas or other mineral
exploration, resource, lease, or development programs, but the Fund may
invest in securities of issuers which operate, invest in, or sponsor such
programs.
7. The Fund may not invest in or retain the securities of any investment
company except to the extent permitted by the 1940 Act.
8. The Fund may not lend a security if, as a result, the amount of loaned
securities would exceed an amount equal to 33 1/3% of the Fund's total
assets.
9. The Fund may not invest in securities (other than fully-collateralized debt
obligations) issued by companies that have conducted continuous operations
for less than three years, including the operations of predecessors, unless
guaranteed as to principal and interest by an issuer in whose securities
the Fund could invest, if, as a result, more than 5% of the value of the
Fund's total assets would be so invested; provided, that each Fund may
invest all or a portion of its assets in another diversified, open-end
management investment company with substantially the same investment
objective, policies and restrictions as the Fund.
10. The Fund may pledge, mortgage, hypothecate or encumber any of its assets
except to secure permitted borrowings or to secure other permitted
transactions.
11. The Fund may not lend a security if, as a result, the amount of loaned
securities would exceed an amount equal to 33 1/3% of the Fund's total
assets.
12. The Fund may not invest in options, futures contracts or options on futures
contracts.
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MANAGEMENT
OFFICERS AND TRUSTEES
The following information relates to the principal occupations during the past
five years of each Trustee and executive officer of the Trust and shows the
nature of any affiliation with SCMI. Each of these individuals currently serves
in the same capacity for Schroder Core.
PETER E. GUERNSEY, Oyster Bay, New York - Trustee of the Trust - Insurance
Consultant since August 1986; prior thereto Senior Vice President, Marsh &
McLennan, Inc., insurance brokers.
RALPH E. HANSMANN (Honorary), 40 Wall Street, New York, New York - Honorary
Trustee of the Trust - Private investor; Director, First Eagle Fund of America,
Inc.; Director, Verde Exploration, Ltd.; Trustee Emeritus, Institute for
Advanced Study; Trustee and Treasurer, New York Public Library; Life Trustee,
Hamilton College.
JOHN I. HOWELL, 7 Riverside Road, Greenwich, Connecticut - Trustee of the
Trust - Private Consultant since February 1987; Director, American
International Group, Inc.; Director, American International Life Assurance
Company of New York.
CLARENCE F. MICHALIS, 44 East 64th Street, New York, New York - Trustee of the
Trust - Chairman of the Board of Directors, Josiah Macy, Jr. Foundation
(charitable foundation).
HERMANN C. SCHWAB, 787 Seventh Avenue, New York, New York - Chairman (Honorary)
and Trustee of the Trust - retired since March, 1988; prior thereto, consultant
to SCMI since February 1, 1984.
MARK J. SMITH(a) (b), 33 Gutter Lane, London, England - a Vice President and
Trustee of the Trust - First Vice President of SCMI since April 1990; Director
and Vice President, Schroder Advisors since 1989.
ROBERT G. DAVY, 787 Seventh Avenue, New York, New York - a Vice-President of the
Trust - Director of SCMI and Schroder Capital Management International Ltd.
since 1994; First Vice President of SCMI since July, 1992; prior thereto,
employed by various affiliates of Schroders plc in various positions in the
investment research and portfolio management areas since 1986.
MARGARET H. DOUGLAS-HAMILTON(b) (c), 787 Seventh Avenue, New York, New York -
Secretary of the Trust - Secretary of SCM since July 1995; Secretary of Schroder
Advisers since April 1990; First Vice President and General Counsel of Schroders
Incorporated(b) since May 1987; prior thereto, partner of Sullivan & Worcester,
a law firm.
RICHARD R. FOULKES, 787 Seventh Avenue, New York, New York - a Vice President of
the Trust; Deputy Chairman of SCMI since October 1995; Director and Executive
Vice President of Schroder Capital Management International Ltd. since 1989.
DAVID I. GOLDSTEIN, 2 Portland Square, Portland, Maine - Assistant Treasurer and
Assistant Secretary of the Trust - Counsel, Forum Financial Services, Inc. Since
1991; prior thereto, associate at Kirkpatrick & Lockhart, Washington, D.C.
BARBARA GOTTLIEB(c), 787 Seventh Avenue, New York, New York - Assistant
Secretary of the Trust - Assistant Vice President of SWIS since July 1995 prior
thereto held various positions with SWIS affiliates.
ROBERT JACKOWITZ(b) (c), 787 Seventh Avenue, New York, New York - Treasurer of
the Trust - Vice President of SCM since September 1995; Treasurer of SCM and
Schroder Advisers since July 1995; Vice President of SCMI since June 1995; and
Assistant Treasurer of Schroders Incorporated since January 1993.
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<PAGE>
JOHN Y. KEFFER, 2 Portland Square, Portland, Maine - Vice President of the
Trust. President of Forum Financial Services, Inc., the Fund's sub-
administrator, and Forum Financial Corp., the Fund's transfer and dividend
disbursing agent and fund accountant.
JANE P. LUCAS, (c) 787 Seventh Avenue, New York, New York - Vice President of
the Trust - Director and Senior Vice President SCMI; Director of SCM since
September 1995; Assistant Director Schroder Investment Management Ltd. since
June 1991.
GERARDO MACHADO, 787 Seventh Avenue, New York, New York - Assistant Secretary of
the Trust - Associate, SCMI.
CATHERINE A. MAZZA, 787 Seventh Avenue, New York, New York - Vice President of
the Trust - President of Schroder Advisors since 1997; First Vice President of
SCMI and SCM since 1996; prior thereto, held various marketing positions at
Alliance Capital, an investment adviser, since July 1985.
THOMAS G. SHEEHAN, 2 Portland Square, Portland, Maine - Assistant Treasurer and
Assistant Secretary of the Trust - Counsel, Forum Financial Services, Inc. since
1993; prior thereto, Special Counsel, U.S. Securities and Exchange Commission,
Division of Investment Management, Washington, D.C.
FARIBA TALEBI, 787 Seventh Avenue, New York, New York - Vice President of the
Trust - First Vice President of SCMI since April 1993, employed in various
positions in the investment research and portfolio management areas since 1987.
JOHN A. TROIANO(b), 787 Seventh Avenue, New York, New York - Vice President of
the Trust - Managing Director and Senior Vice President of SCMI since October
1995; Director of Schroder Advisors since October 1992; Director of SCMI since
1991; prior thereto, employed by various affiliates of SCMI in various positions
in the investment research and portfolio management areas since 1981.
IRA L. UNSCHULD, 787 Seventh Avenue, New York, New York - Vice President of the
Trust - Vice President of SCMI since April, 1993 and an Associate from July,
1990 to April, 1993; prior to July, 1990, employed by various financial
institutions as a securities or financial analyst.
(a) Interested Trustee of the Trust within the meaning of the 1940 Act.
(b) Schroder Fund Advisors, Inc. ("Schroder Advisors") is a wholly-owned
subsidiary of SCMI, which is a wholly-owned subsidiary of Schroders
Incorporated, which in turn is an indirect, wholly-owned U.S. subsidiary of
Schroders plc.
(c) Schroder Capital Management, Inc. ("SCM") is a wholly-owned subsidiary of
Schroder Wertheim Holdings Incorporated which is a wholly-owned subsidiary
of Schroders, Incorporated, which in turn is an indirect wholly-owned U.S.
subsidiary of Schroders plc.
Officers and Trustees who are interested persons of the Trust receive no salary,
fees or compensation from the Fund. Independent Trustees of the Trust receive
an annual fee of $1,000 and a fee of $250 for each meeting of the Board attended
by them except in the case of Mr. Schwab, who receives an annual fee of $1,500
and a fee of $500 for each meeting attended. The Fund has no bonus, profit
sharing, pension or retirement plans.
Although the Trust is a Delaware business trust, certain of its Trustees or
officers are residents of the United Kingdom and substantially all of their
assets may be located outside of the U.S. As a result it may be difficult for
U.S. investors to effect service upon such persons within the U.S., or to
realize U.S. civil judgments against them. Civil remedies and criminal penalties
under U.S. federal securities law may be unenforceable in the U.K. Extradition
treaties now in effect between the U.S. and the United Kingdom might not subject
such persons to effective enforcement of the criminal penalties of such acts.
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INVESTMENT ADVISER
As investment adviser to the Portfolio, NIM manages the Portfolio and
continuously reviews, supervises and administers its investments. In this
regard, NIM is responsible for making decisions relating to the Portfolio's
investments and placing purchase and sale orders regarding such investments with
brokers or dealers selected by it in its discretion. For its services with
respect to the Portfolio, the Investment Advisory Agreement between NIM and Core
Trust provides that NIM will receive a monthly advisory fee at the annual rate
of [_____]% of the Portfolio's average daily net assets, which the Fund
indirectly bears through its investment in the Portfolio.
NIM which is located at Norwest Center, Sixth Street and Marquette, Minneapolis,
Minnesota 55479-0063, is a part of Norwest, a subsidiary of Norwest Corporation,
which is a multi-bank holding company that was incorporated under the laws of
Delaware in 1929. As of June 30, 1996, Norwest Corporation was the 12th largest
bank holding company in the United States in terms of assets. As of that date,
the Adviser managed or provided investment advice with respect to assets
totaling approximately $22 billion.
The Adviser provides investment management services to the Fund pursuant to an
investment advisory agreement between Schroder and the Trust. Subject to the
general supervision of the Board, Schroder would continuously review, supervise
and administer the Fund's investment program or oversee the investment decisions
of the investment subadviser, as applicable, if the Fund were to invest directly
in securities. For the Adviser's services, Schroder receives from the Fund an
advisory fee at an annual rate of [_____]% of the average daily net assets for
the first $300 million of net assets of the Fund, [_____]% of the average daily
net assets for the next $400 million net assets of the Fund, and [_____]% of the
average daily net assets of the Fund's remaining net assets.
The Adviser, whose principal business address is 787 Seventh Avenue, New York,
New York 10019, is a wholly-owned U.S. subsidiary of Schroders Incorporated, the
wholly-owned U.S. holding company subsidiary of Schroders plc. Schroders plc is
the holding company parent of a large worldwide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in eighteen countries.
The Schroder Group specializes in providing investment management services and,
as of December 31, 1996, had assets under management of approximately $130
billion.
The Investment Advisory Contract will continue in effect provided such
continuance is approved annually (i) by the holders of a majority of the
outstanding voting securities of the Fund or by the Trust Board and (ii) by a
majority of the Trustees who are not parties to such Contract or "interested
persons" (as defined in the 1940 Act) of any such party. The Investment
Advisory Contract may be terminated without penalty by vote of the Trustees or
the shareholders of the Fund on 60 days' written notice to the Adviser, or by
the Adviser on 60 days' written notice to the Trust, and it will terminate
automatically if assigned. The Investment Advisory Contract also provides that,
with respect to the Fund, neither SCMI nor its personnel shall be liable for any
error of judgment or mistake of law or for any act or omission in the
performance of its or their duties to the Fund, except for willful misfeasance,
bad faith or gross negligence in the performance of the its or their duties or
by reason of reckless disregard of its or their obligations and duties under the
Investment Advisory Contract.
The Fund currently invests all of its assets in the Portfolio. SCMI will 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).
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. Accordingly, the Fund retains SCMI as its investment adviser to manage
the Fund's assets in the event the Fund so withdraws its investment.
The investment advisory contract between Schroder Core and SCMI with respect to
the Portfolio is the same in all material respects as the Fund's Investment
Advisory Contract (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 administrative services
contract with Schroder Advisors, 787
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Seventh Avenue, New York, New York 10019. On behalf of the Portfolio, the Trust
has also entered into a sub-administration agreement with Forum, Two Portland
Square, Portland, Maine 04101. Pursuant to these agreements, Schroder Advisors
and Forum provide certain management and administrative services necessary for
the Fund's operations. Schroder Advisors is compensated at the annual rate of
[0.00]% of the Portfolio's average daily net assets. Forum is compensated at the
annual rate of [0.00]% of the Portfolio's average daily net assets.
Schroder Advisors and Forum provide similar services to the Portfolio, for which
the Portfolio pays Schroder Advisors at an annual rate of [0.000]% of the
Portfolio's average daily net assets and pays Forum a monthly fee at the annual
rate of [0.000]% of the Portfolio's average daily net assets.
The Administrative Services Contract is terminable with respect to the Fund
without penalty, at any time, by vote of a majority of the Trustees who are not
"interested persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or in the
Administrative Services Contract, upon not more than 60 days' written notice to
Schroder Advisors or by vote of the holders of a majority of the shares of the
Fund, or upon 60 days' notice by Schroder Advisors. The Administrative Services
Contract will terminate automatically in the event of its assignment.
The Trust and Schroder Advisors have entered into a Sub-Administration Agreement
with Forum Administrative Services, Limited Liability Company ("Forum").
Pursuant to the Sub-Administration Agreement, Forum assists Schroder Advisors
with certain of its responsibilities under the Administrative Services
Agreement, including shareholder reporting and regulatory compliance. Payment
for Forum's services is made by Schroder Advisors and is not a separate expense
of the Fund.
The Sub-Administration Agreement is terminable with respect to the Fund without
penalty, at any time, by the Board, Schroder Advisors and the Adviser upon 60
days' written notice to Forum or by Forum upon 60 days' written notice to the
Fund and Schroder Advisors, and the Adviser, as appropriate.
Schroder Advisors and Forum provide similar services to the Portfolio pursuant
to administrative services agreements between Schroder Core and each of these
entities, for which Schroder Advisors and Forum are separately compensated at an
annual rate of 0.075% of the average daily net assets of the Portfolio. The
administrative services agreements are the same in all material respects as the
Fund's respective agreements except as to the parties, the circumstances under
which fees will be paid, the fees payable thereunder and the jurisdiction whose
laws govern the agreements.
The fees paid by the Fund to SCMI and Schroder Advisors may equal up to 1.25% of
the Fund's average daily net assets. Such fees as a whole are higher than
advisory and management fees charged to mutual funds which invest primarily in
U.S. securities but not necessarily higher than those charged to funds with
investment objectives similar to that of the Fund.
DISTRIBUTION OF FUND SHARES
Under a Distribution Plan (the "Plan") adopted by the Fund, with respect to
Adviser Shares only, the Trust may pay directly or may reimburse the Investment
Adviser or a broker-dealer registered under the Securities Exchange Act of 1934
(the Investment Adviser or such registered broker-dealer, if so designated,
being a "Distributor" of the Fund's shares) monthly (subject to a limit of 0.50%
per annum of the Fund's average daily net assets) for the sum of (a) advertising
expenses including advertising by radio, television, newspapers, magazines,
brochures, sales literature or direct mail, (b) costs of printing prospectuses
and other materials to be given or sent to prospective investors, (c) expenses
of sales employees or agents of the Distributor, including salary, commissions,
travel, and related expenses in connection with the distribution of Fund shares,
and (d) payments to broker-dealers (other than the Distributor) or other
organizations (other than banks) for services rendered in the distribution of
the Fund's shares, including payments in amounts based on the average daily
value of Fund shares owned by shareholders in respect of which the broker-dealer
or organization has a distributing relationship. Any payment or reimbursement
made pursuant to the Plan is contingent upon the Board's approval. The Fund
will not be liable for distribution expenditures made by the Distributor in any
given year in excess of the maximum amount (0.50% per annum of the
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Fund's average daily net assets) payable under the Plan in that year. Salary
expenses of sales staff responsible for marketing shares of the Fund may be
allocated among various portfolios of the Trust that have adopted a Plan similar
to that of the Fund on the basis of average net assets; travel expenses are
allocated among the portfolios of the Trust. The Board has concluded that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
Without shareholder approval, the Plan may not be amended to increase materially
the costs that the Fund may bear. Other material amendments to the Plan must be
approved by the Board, and by the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any related agreement, by
vote cast in person at a meeting called for the purpose of considering such
amendments. The selection and nomination of the Trustees of the Trust has been
committed to the discretion of the Trustees who are not "interested persons" of
the Trust. The Plan has been approved, and is subject to annual approval, by
the Trust Board and by the Trustees who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan, by vote cast
in person at a meeting called for the purpose of voting on the Plan. The Fund
will make no payments under the Distribution Plan until the Board specifically
so authorizes. The Plan is terminable with respect to the Fund at any time by a
vote of a majority of the Trustees who are not "interested persons" of the Trust
and who have no direct or indirect financial interest in the operation of the
Plan or by vote of the holders of a majority of the shares of the Fund.
Schroder Advisors acts as Distributor of the Fund's shares.
SERVICE ORGANIZATIONS
The Fund may also contract with banks, trust companies, broker-dealers or other
financial organizations ("Service Organizations") to provide certain
administrative services for the Fund. The Fund may pay fees (which vary
depending upon the services provided) to Service Organizations in amounts up to
an annual rate of 0.25% of the daily net asset value of the Fund's shares owned
by shareholders with whom the Service Organization had a servicing relationship.
Services provided by Service Organizations may include: providing personnel and
facilities necessary to establish and maintain certain shareholder accounts and
records; assisting in processing purchase and redemption transactions; arranging
for the wiring of funds; transmitting and receiving funds in connection with
client orders to purchase or redeem shares; verifying and guaranteeing client
signatures in connection with redemption orders, transfers among and changes in
client-designated accounts; providing periodic statements of a client's account
balances and, to the extent practicable, integrating such information with other
client transactions; furnishing periodic and annual statements and confirmations
of all purchases and redemptions of shares in a client's account; transmitting
proxy statements, annual reports, and updating prospectuses and other
communications from the Fund to clients; and such other services as the Fund or
a client reasonably may request, to the extent permitted by applicable statute,
rule or regulation. Neither SCMI nor Schroder Advisors will be a Service
Organization or receive fees for servicing. The Fund has no intention of making
any such payments to Service Organizations with respect to accounts of
institutional investors, and in any event will make no such payments until the
Board specifically so authorizes.
Some Service Organizations could impose additional or different conditions on
their clients, such as requiring them to invest more than the minimum
investments specified by the Fund or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts that might be paid to
the Service Organization by the Fund. Each Service Organization would agree to
transmit to its clients a schedule of any such fees. Shareholders using Service
Organizations would be urged to consult them regarding any such fees or
conditions.
The Glass-Steagall Act and other applicable laws provide that banks may not
engage in the business of underwriting, selling or distributing securities.
There currently is no precedent prohibiting banks from performing administrative
and shareholder servicing functions as Service Organizations. However, judicial
or administrative decisions or interpretations of such laws, as well as changes
in either federal or state statutes or regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could prevent a bank
service organization from continuing to perform all or a part of its servicing
activities. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders of the Fund and alternative means for
continuing the
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servicing of such shareholders would be sought. In that event, changes in the
operation of the Fund might occur and a shareholder serviced by such a bank
might no longer be able to avail itself of any services then being provided by
the bank. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these occurrences.
PORTFOLIO ACCOUNTING
FFC, an affiliate of Forum, performs portfolio accounting services for each Fund
pursuant to a Fund Accounting Agreement with the Trust. The Fund Accounting
Agreement will continue in effect only if such continuance is specifically
approved at least annually by the Board or by a vote of the shareholders of the
Trust and in either case by a majority of the Trustees who are not parties to
the Fund Accounting Agreement or interested persons of any such party, at a
meeting called for the purpose of voting on the Fund Accounting Agreement.
Under the Fund Accounting Agreement, FFC prepares and maintains books and
records of each Fund on behalf of the Trust that are required to be maintained
under the 1940 Act, calculates the net asset value per share of each Fund (and
class thereof) and dividends and capital gain distributions and prepares
periodic reports to shareholders and the SEC. For its services, FFC receives
from the Trust with respect to each Fund a fee of $36,000 per year plus, for
each class of the Fund above one, $12,000 per year. In addition, FFC is paid an
additional $12,000 per year with respect to tax-free money market funds, global
and international funds (such as International Fund) and funds with more than
25% of their total assets invested in asset backed securities, that have more
than 100 security positions or that have a monthly portfolio turnover rate of
10% or greater. Under International Fund's Fund Accounting Agreement so long as
all of the Fund's investments consist solely of securities of International
Portfolio or any other registered investment company, the Fund pays $12,000 per
year plus $12,000 for each class of shares above one.
FFC is required to use its best judgment and efforts in rendering fund
accounting services and is not be liable to the Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence. FFC is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and the Trust has agreed to
indemnify and hold harmless FFC, its employees, agents, officers and directors
against and from any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way related to FFC's actions
taken or failures to act with respect to a Fund or based, if applicable, upon
information, instructions or requests with respect to a Fund given or made to
FFC by an officer of the Trust duly authorized. This indemnification does not
apply to FFC's actions taken or failures to act in cases of FFC's own bad faith,
willful misconduct or gross negligence.
FEES AND EXPENSES
As compensation for the advisory, administrative and management services
rendered to the Fund, SCMI and Schroder Advisors will each earn monthly fees at
the following annual rates:
Fee Rate
Portion of average daily value Advisory Administrative
of the Fund's net assets Fee Fee
------------------------ --- ---
% % %
SCMI and Schroder Advisors have voluntarily undertaken to assume certain
expenses of the Fund. This undertaking is designed limit Fund expenses
(including all fees to be paid to SCMI and Schroder Advisors but excluding
taxes, interest, brokerage commissions and other portfolio transaction expenses
and extraordinary expenses) to 0.50% and 0.75% with respect to Investor Shares
and Advisor Shares, respectively, of the Fund's daily net assets. This expense
limitation may be withdrawn by a majority vote of the Trustees of the Trust who
are not "interested persons". If expense reimbursements are required, they will
be made on a monthly basis. SCMI will reimburse the Fund for four-fifths of the
amount required and Schroder Advisors, the remaining one-fifth. This
undertaking to reimburse expenses supplements any applicable state expense
limitation.
The Fund bears all costs of its operations other than expenses specifically
assumed by Schroder Advisors or SCMI, including those expenses it indirectly
bears through its investment in the Portfolio. The costs borne by the Fund
include legal and accounting expenses; Trustees' fees and expenses; insurance
premiums, custodian and
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transfer agent fees and expenses; brokerage fees and expenses; expenses of
registering and qualifying the Fund's shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on
portfolio securities and pricing of the Fund's shares; 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
portfolios of the Trust in relation to the net assets of each portfolio.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Purchases and sales of portfolio securities for the Fund usually are principal
transactions. Portfolio securities are normally purchased directly from the
issuer or from an underwriter or market maker for the securities. There usually
are no brokerage commissions paid for such purchases. Purchases from
underwriters of portfolio securities include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers serving as market
makers include the spread between the bid and asked price. In the case of
securities traded in the foreign and domestic over-the-counter markets, there is
generally no stated commission, but the price usually includes an undisclosed
commission or markup. In underwritten offerings, the price includes a disclosed
fixed commission or discount. Allocations of transactions to brokers and dealers
and the frequency of transactions are determined by the Investment Advisers in
their best judgment and in a manner deemed to be in the best interest of
shareholders of each Fund rather than by any formula. The primary consideration
is prompt execution of orders in an effective manner and at the most favorable
price available to the Fund. In transactions on stock exchanges in the United
States, these commissions are negotiated, whereas on foreign stock exchanges
these commissions are generally fixed. Where transactions are executed in the
over-the-counter market, the Fund and Portfolio will seek to deal with the
primary market makers; but when necessary in order to obtain best execution,
they will utilize the services of others. In all cases the Fund and Portfolio
will attempt to negotiate best execution.
The Trust does not anticipate that the Fund will effect purchases and sales
through brokers who charge commissions.
Investment decisions for the Fund and for the other investment advisory clients
of SCMI are made to achieve their respective investment objectives. Investment
decisions are the product of many factors in addition to basic suitability for
the particular client involved and, a particular security may be bought or sold
for certain clients and not bought or sold for other clients. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In some instances, one client may sell a
particular security to another client. It also sometimes happens that two or
more clients simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as is possible, averaged
as to price and allocated between such clients in a manner which in SCMI's
opinion is equitable to each and in accordance with the amount being purchased
or sold by each. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES
Transactions on U.S. stock exchanges and other agency transactions involve the
payment by the Fund of negotiated brokerage commissions. Such commissions vary
among brokers. Also, a particular broker may charge different commissions
according to the difficulty and size of the transaction; for example,
transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the U.S. Since
most brokerage transactions for the fund will be placed with foreign broker-
dealers, certain portfolio transaction costs for the Fund may be higher than
fees for similar transactions executed on U.S. securities exchanges. However,
the Fund will seek to achieve the best net results in effecting its portfolio
transactions. There is generally less governmental supervision and regulation
of foreign stock exchanges and brokers than in the United States. There is
generally no stated commission in the case of securities traded in the over-the-
counter markets, but the price paid by the Fund usually includes an undisclosed
dealer commission or mark-up. In underwritten
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<PAGE>
offerings, the price paid by the Fund includes a disclosed, fixed commission or
discount retained by the underwriter or dealer.
The Investment Advisory Contract authorizes and directs SCMI to place orders for
the purchase and sale of the Fund's investments with brokers or dealers it
selects and to seek "best execution" of such portfolio transactions. SCMI
places all such orders for the purchase and sale of portfolio securities and
buys and sells securities for the Fund through a substantial number of brokers
and dealers. In so doing, SCMI uses its best efforts to obtain for the Fund the
most favorable price and execution available. The Fund may, however, pay higher
than the lowest available commission rates when SCMI believes it is reasonable
to do so in light of the value of the brokerage and research services provided
by the broker effecting the transaction. In seeking the most favorable price
and execution, SCMI considers all factors it may deem relevant (including price,
transaction size, the nature of the market for the security, the commission
amount, the timing of the transaction (taking into account market prices and
trends), the reputation, experience and financial stability of the broker-
dealers involved, and the quality of service rendered by the broker-dealers in
other transactions).
It has for many years been a common practice in the investment advisory business
for advisers of investment companies and other institutional investors to
receive research services from broker-dealers that execute portfolio
transactions for the clients of such advisers. Consistent with this practice,
SCMI may receive research services from broker-dealers with which SCMI places
the Fund's portfolio transactions. These services, which in some cases may also
be purchased for cash, include such items as general economic and security
market reviews, industry and company reviews, evaluations of securities and
recommendations as to the purchase and sale of securities. Some of these
services are of value to SCMI in advising various of its clients (including the
Fund), although not all of these services are necessarily useful and of value in
managing the Fund. The investment advisory fee paid by the Fund is not reduced
because SCMI and its affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, SCMI may
cause the Fund to pay a broker-dealer that provides SCMI with "brokerage and
research services" (as defined in the Act) an amount of disclosed commission for
effecting a securities transaction for the Fund in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
In addition, SCMI may allocate brokerage transactions to broker-dealers who have
entered into arrangements under which the broker-dealer allocates a portion of
the commissions paid by the Fund toward payment of Fund expenses, such as
custodian fees.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, SCMI may
consider sales of shares of the Fund as a factor in the selection of broker-
dealers to execute portfolio transactions for the Fund.
Subject to the general policies of the Fund regarding allocation of portfolio
brokerage as set forth above, the Trust Board has authorized SCMI to employ (a)
Schroder Wertheim & Company, Incorporated ("Schroder Wertheim") an affiliate of
SCMI, to effect securities transactions of the Fund on the New York Stock
Exchange only, and (b) Schroder Securities Limited and its affiliates
(collectively, "Schroder Securities"), affiliates of SCMI, to effect securities
transactions of the Fund on various foreign securities exchanges on which
Schroder Securities has trading privileges, provided certain other conditions
are satisfied as described below.
Payment of brokerage commissions to Schroder Wertheim or Schroder Securities for
effecting such transactions is subject to Section 17(e) of the 1940 Act, which
requires, among other things, that commissions for transactions on a securities
exchange paid by a registered investment company to a broker which is an
affiliated person of such investment company (or an affiliated person of another
person so affiliated) not exceed the usual and customary broker's commissions
for such transactions. It is the Fund's policy that commissions paid to
Schroder Wertheim or Schroder Securities will in SCMI's be (i) at least as
favorable as commissions contemporaneously charged by Schroder Wertheim or
Schroder Securities, as the case may be, on comparable transactions for their
most favored unaffiliated customers and (ii) at least as favorable as those
which would be charged on comparable transactions by other qualified brokers
having comparable execution capability. The Trust Board, including a majority
of the non-interested Trustees, has adopted procedures pursuant to Rule 17e-1
promulgated by the Securities and Exchange
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<PAGE>
Commission under Section 17(e) to ensure that commissions paid to Schroder
Wertheim or Schroder Securities by the Fund satisfy the foregoing standards.
Such procedures will be reviewed at least annually by the Board, including a
majority of the non-interested Trustees. The Board will also review all
transactions at least quarterly for compliance with such procedures.
It is further a policy of the Fund that all such transactions effected for the
Fund by Schroder Wertheim on the New York Stock Exchange be in accordance with
Rule 11a2-2(T) promulgated under the 1934 Act, which requires in substance that
a member of such exchange not associated with Schroder Wertheim actually execute
the transaction on the exchange floor or through the exchange facilities. Thus,
while Schroder Wertheim will bear responsibility for determining important
elements of execution such as timing and order size, another firm will actually
execute the transaction.
Schroder Wertheim will pay a portion of the brokerage commissions it receives
from the Fund to the brokers executing the Fund's transactions on the New York
Stock Exchange. In accordance with Rule 11a2-2(T), the Trust has entered into
an agreement with Schroder Wertheim permitting it to retain a portion of the
brokerage commissions paid to it by the Fund. This agreement has been approved
by the Board, including a majority of the non-interested Trustees.
The Fund has no understanding or arrangement to direct any specific portion of
its brokerage to Schroder Wertheim or Schroder Securities and will not direct
brokerage to Schroder Wertheim or Schroder Securities in recognition of research
services.
From time to time, the Fund may purchase securities of a broker or dealer
through which its regularly engages in securities transactions.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DETERMINATION OF NET ASSET VALUE PER SHARE
Pursuant to the rules of the SEC, the Board has established procedures to
stabilize the Funds' net asset value at $1.00 per share. These procedures
include a review of the extent of any deviation of net asset value per share as
a result of fluctuating interest rates, based on available market rates, from
the Fund's $1.00 amortized cost price per share. Should that deviation exceed
1/2 of 1%, the Board will consider whether any action should be initiated to
eliminate or reduce material dilution or other unfair results to shareholders.
Such action may include redemption of shares in kind, selling portfolio
securities prior to maturity, reducing or withholding dividends and utilizing a
net asset value per share as determined by using available market quotations.
The Fund will maintain a dollar-weighted average portfolio maturity of 90 days
or less, will not purchase any instrument with a remaining maturity greater than
397 days or subject to a repurchase agreement having a duration of greater than
397 days, will limit portfolio investments, including repurchase agreements, to
those U.S. dollar-denominated instruments that the Board has determined present
minimal credit risks and will comply with certain reporting and recordkeeping
procedures. The Trust has also established procedures to ensure that portfolio
securities meet the Funds' high quality criteria.
REDEMPTION IN KIND
In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, shareholders may incur brokerage costs in converting the
securities to cash. An in kind distribution of portfolio securities will be
less liquid than cash. The shareholder may have difficulty finding a buyer for
portfolio securities received in payment for redeemed shares. Portfolio
securities may decline in value between the time of receipt by the shareholder
and conversion to cash. A redemption in kind of the Fund's portfolio securities
could result in a less diversified portfolio of investments for the Fund and
could affect adversely the liquidity of the Fund's portfolio.
TAXATION
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Under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund and
each other portfolio established from time to time by the Board will be treated
as a separate taxpayer for Federal income tax purposes with the result that: (a)
each such portfolio must meet separately the income and distribution
requirements for qualification as a regulated investment company, and (b) the
amounts of investment income and capital gains earned will be determined on a
portfolio-by-portfolio (rather than on a Trust-wide) basis.
Since the Fund expects to derive substantially all of its gross income
(exclusive of capital gains) from sources other than dividends, it is expected
that none of the Fund's dividends or distributions will qualify for the
dividends-received deduction for corporations.
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Code. To do so, the Fund intends to distribute to shareholders at least
90% of its "investment company taxable income" as defined in the Code (which
includes dividends, interest and the excess of any net short-term capital gains
over net long-term capital losses), and to meet certain diversification of
assets, source of income, and other requirements of the Code. The Fund will
therefore not be subject to Federal income tax on its investment company taxable
income and "net capital gains" (the excess of net long-term capital gains over
net short-term capital losses) distributed to shareholders. If the Fund does
not meet all of these Code requirements, it will be taxed as an ordinary
corporation, and its distributions will be taxable to shareholders as ordinary
income.
Amounts not distributed on a timely basis (in accordance with a calendar year
distribution requirement) are subject to a 4% nondeductible excise tax. To
prevent this, the Fund must distribute for each calendar year an amount equal to
the sum of (1) at least 98% of its ordinary income (excluding any capital gains
or losses) for the calendar year, (2) at least 98% of the excess of its capital
gains over capital losses realized during the one-year period ending October 31
of such year, and (3) all such ordinary income and capital gains for previous
years that were not distributed during such years. A distribution will be
treated as paid during the calendar year if it is declared by the Fund in
October, November or December of the year with a record date in such month and
paid by the Fund during January of the following year. Such distributions will
be taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Distributions of investment company taxable income (including realized net
short-term capital gain) are taxable to shareholders as ordinary income.
Generally, it is not expected that such distributions will be eligible for the
dividends received deduction available to corporations. However, if the Fund
acquires at least 10% of the stock of a foreign corporation that has U.S. source
income, a portion of the Fund's ordinary income dividends attributable to such
income may be eligible for such deduction, if certain requirements are met.
Distributions of net long-term capital gain are taxable to shareholders as long-
term capital gain, regardless of the length of time the Fund shares have been
held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of the Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss (even
though such shares may have been held by the shareholder for one year or less).
Further, a loss realized on a disposition will be disallowed to the extent the
shares disposed of are replaced (whether by reinvestment or distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.
All distributions to shareholders are taxable whether reinvested in additional
shares or received in cash. Shareholders that reinvest distributions will have
for federal income tax purposes a cost basis in each share received equal to the
net asset value of a share of the Fund on the reinvestment date. Shareholders
will be notified annually as to the Federal tax status of distributions.
Distributions by the Fund reduce the net asset value of the Fund's shares. If a
distribution reduces the net asset value below a shareholder's cost basis, such
distribution nevertheless would be taxable to the shareholder as ordinary income
or capital gain as described above, even though, from an investment standpoint,
it may constitute a partial return of capital. In particular, investors should
be careful to consider the tax implications of buying shares
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<PAGE>
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution which will be returned to
the investor in the form of a taxable distribution.
Upon redemption or sale of shares, a shareholder will realize a taxable gain or
loss, which will be treated as capital gain or loss if the shares are capital
assets in the shareholder's hands. Such gain or loss generally will be long-
term or short-term depending upon the shareholder's holding period for the
shares.
Ordinary income dividends paid by the Fund to shareholders who are nonresident
aliens will be subject to a 30% U.S. withholding tax under existing provisions
of the Code applicable to foreign individuals and entities unless a reduced rate
of withholding or a withholding exemption is provided under applicable treaty
law. Nonresident shareholders are urged to consult their own tax advisers
concerning the applicability of the U.S. withholding tax.
Dividends and interest received (and, in certain circumstances, capital gains
realized) by the Fund may give rise to withholding and other taxes imposed by
foreign countries. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% in value of the Fund's total
assets at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible and intends to file an election with the
Internal Revenue Service ("IRS") pursuant to which shareholders of the Fund will
be required to include their proportionate share of such withholding taxes in
their U.S. income tax returns as gross income; treat such proportionate share as
taxes paid by them; and, subject to certain limitations, deduct such
proportionate share in computing their taxable incomes or, alternatively, use
them as foreign tax credits against their U.S. income taxes. No deductions for
foreign taxes, however, may be claimed by noncorporate shareholders who do not
itemize deductions. A shareholder that is a nonresident alien individual or a
foreign corporation may be subject to U.S. withholding tax on the income
resulting from the Fund's election described in this paragraph but may not be
able to claim a credit or deduction against such U.S. tax for the foreign taxes
treated as having been paid by such shareholder. The Fund will report annually
to its shareholders the amount per share of such withholding taxes.
One of the requirements for qualification as a regulated investment company is
that less than 30% of the Fund's gross income may be derived from gains from the
sale or other disposition of securities held for less than three months.
Accordingly, the Fund may be restricted in effecting closing transactions within
three months after entering into an option or futures contract.
The Trust will be required to report to the IRS all distributions and gross
proceeds from the redemption of Fund shares (except in the case of certain
exempt shareholders). All such distributions and proceeds generally will be
subject to the withholding of Federal income tax at a rate of 31% ("backup
withholding") in the case of non-exempt shareholders if (1) the shareholder
fails to furnish the Trust with and to certify the shareholder's correct
taxpayer identification number or social security number, (2) the IRS notifies
the Trust that the shareholder has failed to report properly certain interest
and dividend income to the IRS and to respond to notices to that effect, or (3)
when required to do so, the shareholder fails to certify that they are not
subject to backup withholding. If the withholding provisions are applicable,
any such distributions or proceeds, whether reinvested in additional shares or
taken in cash, will be reduced by the amount required to be withheld. Any
amounts withheld may be credited against the shareholder's Federal income tax
liability. Investors may wish to consult their tax advisers about the
applicability of the backup withholding provisions.
Distributions by the Fund also may be subject to state and local taxes, and
their treatment under state and local income tax laws may differ from the
Federal income tax treatment. Shareholders should consult their tax advisers
with respect to particular questions of Federal, foreign, state and local
taxation.
OTHER INFORMATION
ORGANIZATION
The Trust was originally organized as a Maryland corporation on July 30, 1969.
On February 29, 1988, the Trust was recapitalized to enable its Board to
establish a series of separately managed investment portfolios, each having
different investment objectives and policies. At the time of the
recapitalization, the Trust's name was changed from
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<PAGE>
"The Cheapside Dollar Fund Limited" to "Schroder Capital Funds, Inc." On
January 9, 1996, the Trust was reorganized as a Delaware business trust. At
that time, the Trust's name was changed from "Schroder Capital Funds, Inc." to
its present name. The Trust is registered as an open-end management investment
company under the Act.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The securities regulators of some states, however,
have indicated that they and the courts in their state may decline to apply
Delaware law on this point. To guard against this risk, the Trust Instrument
contains an express disclaimer of shareholder liability for the debts,
liabilities, obligations, and expenses of the Trust. The Trust Instrument
provides for indemnification out of each series' property of any shareholder or
former shareholder held personally liable for the obligations of the series.
The Trust Instrument also provides that each series shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply (or no contractual limitation
of liability was in effect) and the portfolio is unable to meet its obligations.
Forum believes that, in view of the above, there is no risk of personal
liability to shareholders.
CAPITALIZATION AND VOTING
The Trust has an unlimited number of authorized shares of beneficial interest.
The 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, and the costs of doing
so will be borne by the Trust. The Trust currently consists of five separate
portfolios, each of which has separate investment objectives and policies, and
two classes.
Shares of the Fund are fully paid and nonassessable, and have no preferences as
to conversion, exchange, dividends, retirement or other features. Shares have no
preemptive rights and have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Trustees can
elect 100% of the Trustees if they choose to do so. Each shareholder of record
is entitled to one vote for each full share held (and a fractional vote for each
fractional share held). Shares of each class vote separately to approve
investment advisory agreements or changes in investment objectives and other
fundamental policies affecting the portfolio to which they pertain, but all
classes vote together in the election of Trustees and ratification of the
selection of independent accountants. Shareholders of any particular class are
not entitled to vote on any matters as to which such class are not affected.
The Trust will not hold annual meetings of shareholders. The matters considered
at an annual meeting typically include the reelection of Trustees, approval of
an investment advisory agreement, and the ratification of the selection of
independent accountants. These matters will not be submitted to shareholders
unless a meeting of shareholders is held for some other reason, such as those
indicated below. Each of the Trustees will serve until death, resignation or
removal. Vacancies will be filled by the remaining Trustees, subject to the
provisions of the 1940 Act requiring a meeting of shareholders for election of
Trustees to fill vacancies when less than a majority of Trustees then in office
have been elected by shareholders. Similarly, the selection of accountants and
renewal of investment advisory agreements for future years will be performed
annually by the Board. Future shareholder meetings will be held to elect
Trustees if required by the 1940 Act, to obtain shareholder approval of changes
in fundamental investment policies, to obtain shareholder approval of material
changes in investment advisory agreements, to select new accountants if the
employment of the Trust's accountants has been terminated, and to seek any other
shareholder approval required under the 1940 Act. The Trust Board has the power
to call a meeting of shareholders at any time when it believes it is necessary
or appropriate. In addition, the Trust Instrument provides that a special
meeting of shareholders may be called at any time for any purpose by the holders
of at least 10% of the outstanding shares entitled to be voted at such meeting.
In addition to the foregoing rights, the Trust Instrument provides that holders
of at least two-thirds of the outstanding shares of the Trust may remove any
person serving as a Trustee either by declaration in writing or at a meeting
called for such purpose. Further, the Trust Board is required to call a
shareholders meeting for the purpose of considering the removal of one or more
Trustees if requested in writing to do so by the holders of not less than
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<PAGE>
10% of the outstanding shares of the Trust. In addition, the Trust Board is
required, if requested in writing to do so by ten or more shareholders of record
(who have been such for at least six months), holding in the aggregate the
lesser of (i) shares of the Trust having a total net asset value of at least
$25,000 or (ii) 1% of the outstanding shares of the Trust, to help such holders
communicate with other shareholders of the Trust with a view to obtaining the
requisite signatures to request a special meeting to consider Trustee removal.
CUSTODIAN
Norwest Bank Minnesota, N.A. acts as custodian of the Fund's assets, but plays
no role in making decisions as to the purchase or sale of portfolio securities
for the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Norwest Bank Minnesota, N.A. acts as the Fund's transfer agent and dividend
disbursing agent.
PERFORMANCE INFORMATION
Yield quotations for the Fund will include an annualized historical yield,
carried at least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and are calculated by dividing the net change during
the seven-day period in the value of an account having a balance of one share at
the beginning of the period by the value of the account at the beginning of the
period, and multiplying the quotient by 365/7. For this purpose, the net change
in account value reflects the value of additional shares purchased with
dividends declared on the original share and dividends declared on both the
original share and any such additional shares, but would not reflect any
realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any
effective annualized yield quotation used by the Fund is calculated by
compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result. The standardized tax equivalent yield is the rate an investor would have
to earn from a fully taxable investment in order to equal the Fund's yield after
taxes. Tax equivalent yields are calculated by dividing the Fund's yield by one
minus the stated Federal or combined Federal and state tax rate. If a portion
of a Fund's yield is tax-exempt, only that portion is adjusted in the
calculation.
The Fund may, from time to time, include quotations of its average annual total
return in advertisements or reports to shareholders or prospective investors.
Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund over periods of 1, 5 and 10 years (up to the life of the Fund), calculated
pursuant to the following formula:
n
P (1+T) = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses (net of certain
reimbursed expenses) on an annual basis, and will assume that all dividends and
distributions are reinvested when paid.
Quotations of total return will reflect only the performance of a hypothetical
investment in the Fund during the particular time period shown. Total return
for the Fund will vary based on changes in market conditions and the level of
the Fund's expenses, and no reported performance figure should be considered an
indication of performance which may be expected in the future.
In connection with communicating total return to current or prospective
investors, the Fund also may compare these figures to the performance of other
mutual funds tracked by mutual fund rating services or to other unmanaged
- 24 -
<PAGE>
indexes which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Investors who purchase and redeem shares of the Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Service Organization and the investor, with
respect to the customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a fixed amount
per transaction processed); compensating balance requirements (a minimum dollar
amount a customer must maintain in order to obtain the services offered); or
account maintenance fees (a periodic charge based upon a percentage of the
assets in the account or of the dividends paid on these assets). Such fees will
have the effect of reducing the average annual total return of the Fund for
those investors.
LEGAL COUNSEL
______________, counsel to the Fund, passes upon certain legal matters in
connection with the shares offered by the Fund.
INDEPENDENT ACCOUNTANTS
__________________. serves as independent accountants for the Fund.
___________________ provides audit services and consultation in connection with
review of U.S. Securities and Exchange Commission filings. Their address is One
Post Office Square, Boston, Massachusetts 02109.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Fund's registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933 with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The registration
statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.
- 25 -
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
Not Applicable
Financial Highlights.
Not Applicable
(b) EXHIBITS:
(1) Trust Instrument of Schroder Capital Funds (Delaware) (the "Trust") (filed
as Exhibit 1 to Registrant's Post-Effective Amendment No. 46 and incorporated
herein by reference).
(2) None.
(3) None.
(4) (a) Sections 2.04 and 2.06 of Registrant's Trust Instrument provide as
follows:
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the Trustees,
Shares shall be transferable on the records of the Trust only by the record
holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby shall consist of
one or more Series and separate and distinct records shall be maintained by the
Trust for each Series and the assets associated with any such Series shall be
held and accounted for separately from the assets of the Trust or any other
Series. The Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any
<PAGE>
Series shall be effective upon the adoption of a resolution by a majority of the
Trustees setting forth such establishment and designation and the relative
rights and preferences of the Shares of such Series. A Series may issue any
number of Shares and need not issue shares. At any time that there are no Shares
outstanding of any particular Series previously established and designated, the
Trustees may by a majority vote abolish that Series and the establishment and
designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be Shares
of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series. Each holder of Shares of a Series shall be
entitled to receive his pro rata share of all distributions made with respect to
such Series. Upon redemption of his Shares, such Shareholder shall be paid
solely out of the funds and property of such Series of the Trust."
(5) (a) Form of Investment Advisory Contract between the Trust and Schroder
Capital Management International Inc. (filed as Exhibit 5 to Registrant's
Post-Effective Amendment No. 46 and incorporated herein by reference).
(5) (b) Investment Advisory Agreement between the Trust and Schroder Capital
Management International Inc. with respect to Schroder Cash Reserves Fund (to be
filed).
(5) (c) Investment Sub-Advisory Agreement between the Trust and Norwest
Investment Management with respect to Schroder Cash Reserves Fund (to be filed).
(6) Form of Master Distribution Contract and Supplement to be between the Trust
and Schroder Fund Advisors Inc. (filed as Exhibit 6 to Registrant's
Post-Effective Amendment No. 46 and incorporated herein by reference).
(8) Form of Global Custody Agreement to be between the Trust and The Chase
Manhattan Bank, N.A. (filed as Exhibit 8 to Registrant's Post-Effective
Amendment No. 46 and incorporated herein by reference).
(9) (a) Form of Administration Agreement with Schroder Fund Advisors Inc.
(filed as Exhibit to Registrant's Post-Effective Amendment No. 46 and
incorporated herein by reference).
(9) (b) Form of Sub-Administration Agreement with Forum Financial Services,
Inc. (filed as Exhibit 9(b) to Registrant's Post - Effective Amendment No. 46
and incorporated herein by reference).
(9) (c) Form of Transfer Agency Agreement with Forum Financial Corp. (filed as
Exhibit 9(c) to Registrant's Post-Effective Amendment No. 46 and incorporated
herein by reference).
(9) (d) Form of Fund Accounting Agreement with Forum Financial Corp. (filed as
Exhibit 9(d) to Registrant's Post-Effective Amendment No. 46 and incorporated
herein by reference).
<PAGE>
(10) Opinion of Jacobs Persinger & Parker as to legality of shares to be issued
by the Trust (filed as Exhibit 10(d) to Registrant's Post - Effective Amendment
No. 46 and incorporated herein by reference).
(11) Not applicable to this filing.
(15) (a) Form of Master Distribution Plan adopted by Registrant (filed as
Exhibit 15(a) to Registrant's Post-Effective Amendment No. 46 and
incorporated herein by reference).
(b) Form of Distribution Plan Supplement (filed as Exhibit 15(b) to
Registrant's Post-Effective Amendment No. 46 and incorporated herein
by reference).
Other Exhibits:
Copies of Powers of Attorney pursuant to which Trustees have signed this
Post-Effective Amendment (filed as Other Exhibits to Post-Effective Amendment
No. 45 and incorporated herein by reference).
Copy of Power of Attorney pursuant to which Mr. Jackowitz has signed this
Post-Effective Amendment (filed as an Other Exhibit to Post-Effective Amendment
No. 45 and incorporated herein by reference).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Title of Class Number of Record
Holders as of
January 31, 1997
-------------- -------------------
Schroder U.S. Equity Fund 610
Schroder International Fund 1,099
Schroder U.S. Smaller Companies Fund 90
Schroder Emerging Markets Fund Institutional Portfolio 2
Schroder International Smaller Companies Fund 3
Schroder Latin America Fund 2
Schroder Global Asset Allocation Fund N/A
<PAGE>
ITEM 27. INDEMNIFICATION.
In accordance with Section 3803 of the Delaware Business Trust Act, SECTION 5.2
of the Registrant's Trust Instrument provides as follows:
"5.2. Indemnification.
"(a) Subject to the exceptions and limitations contained in Section (b) below:
"(i) Every Person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of being or having been a Trustee or officer and against amounts paid
or incurred by him in the settlement thereof;
"(ii) The words "claim," "action," "suit," or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened while in office or thereafter, and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
"(b) No indemnification shall be provided hereunder to a Covered Person:
"(i) Who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Holders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Covered Person's office or (B) not to have
acted in good faith in the reasonable belief that Covered Person's action was in
the best interest of the Trust; or
"(ii) In the event of a settlement, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
Trustee's or officer's office,
"(A) By the court or other body approving the settlement;
"(B) By at least a majority of those Trustees who are neither Interested Persons
of the Trust nor are parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or
"(C) By written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Holder may, by appropriate legal proceedings, challenge any
such determination by the Trustees or by independent counsel.
"(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
<PAGE>
Nothing contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be entitled
by contract or otherwise under law.
"(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 5.2 may be paid by the Trust or Series from time
to time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 5.2; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance payments
or (c) either a majority of the Trustees who are neither Interested Persons of
the Trust nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available facts
(as opposed to a trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to indemnification
under this Section 5.2.
"(e) Conditional advancing of indemnification monies under this Section 5.2 for
actions based upon the 1940 Act may be made only on the following conditions:
(i) the advances must be limited to amounts used, or to be used, for the
preparation or presentation of a defense to the action, including costs
connected with the preparation of a settlement; (ii) advances may be made only
upon receipt of a written promise by, or on behalf of, the recipient to repay
that amount of the advance which exceeds that amount which it is ultimately
determined that he is entitled to receive from the Trust by reason of
indemnification; and (iii) (a) such promise must be secured by a surety bond,
other suitable insurance or an equivalent form of security which assures that
any repayments may be obtained by the Trust without delay or litigation, which
bond, insurance or other form of security must be provided by the recipient of
the advance, or (b) a majority of a quorum of the Trust's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
"(f) In case any Holder or former Holder of any Series shall be held to be
personally liable solely by reason of the Holder or former Holder being or
having been a Holder of that Series and not because of the Holder or former
Holder acts or omissions or for some other reason, the Holder or former Holder
(or the Holder or former Holder's heirs, executors, administrators or other
legal representatives, or, in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets
belonging to the applicable Series to be held harmless from and indemnified
against all loss and expense arising from such liability. The Trust, on behalf
of the affected Series, shall, upon request by the Holder, assume the defense of
any claim made against the Holder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series."
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The following are the directors and principal officers of SCMI, including their
business connections of a substantial nature. The address of each company
listed, unless otherwise noted, is 33 Gutter Lane, London EC2V 8AS, United
Kingdom. Schroder Capital Management International Limited ("Schroder Ltd.") is
a United Kingdom affiliate of SCMI which provides investment management services
international clients located principally in the United States.
<PAGE>
David M. Salisbury. Chief Executive Officer, Director and Chairman of
Schroder Capital; Joint Chief Executive and Director of Schroder.
Richard R. Foulkes. Senior Vice President and Managing Director of Schroder
Capital.
John A. Troiano. Managing Director and Senior Vice President. Mr. Troiano
is also a Director of Schroder Ltd.
David Gibson. Senior Vice President and Director of Schroder Capital.
Director of Schroder Wertheim Investment Services Inc.
John S. Ager. Senior Vice President and Director of Schroder Capital.
Sharon L. Haugh. Senior Vice President and Director of Schroder Capital,
Director and Chairman of Schroder Advisors Inc.
Gavin D.L. Ralston. Senior Vice President and Director of Schroder Capital.
Mark J. Smith. Senior Vice President and Director of Schroder Capital.
Robert G. Davy. Senior Vice President. Mr. Davy is also a Director of
Schroder Ltd. and an officer of open end investment companies for which
SCMI and/or its affiliates provide investment services.
Jane P. Lucas. Senior Vice President and Director of Schroder Capital;
Director of Schroder Advisors Inc.; Director of Schroder Wertheim
Investment Services, Inc.
C. John Govett. Director of Schroder Capital; Group Managing Director of
Schroder Investment Management Ltd. And Director of Schroders plc.
Phillipa J. Gould. Senior Vice President and Director of Schroder Capital.
Louise Croset. First Vice President and Director of Schroder Capital.
Abdallah Nauphal, Group Vice President and Director.
ITEM 29. PRINCIPAL UNDERWRITERS.
(A) Schroder Fund Advisors Inc., the Registrant's principal underwriter, also
serves as principal underwriter for WSIS Series Trust.
(B) Following is information with respect to each officer and director of
Schroder Fund Advisors Inc., the Distributor of the shares of Schroder
International Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies
Fund, Schroder Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder International Bond Fund and
Schroder Latin America Fund (each a series of the Registrant):
<PAGE>
Catherine A. Mazza, President
Mark J. Smith, Director and Vice President.
John A. Troiano, Director and Vice President
Sharon L. Haugh, Director
Robert Jackowitz, Treasurer
Margaret H. Douglas-Hamilton, Secretary
* Address for each is 787 Seventh Avenue, New York, New York 10019 except for
John A. Troiano and Mark J. Smith each of whose address is 33 Gutter Lane,
London, England.
(C) Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by Registrant
with respect to Schroder Cash Reserves Fund pursuant to Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder will be maintained at
the offices of Schroder Capital Management International Inc. and Schroder Fund
Advisors Inc., 787 Seventh Avenue, New York, New York 10019, except that certain
items will be maintained at the following locations:
(a) Forum Financial Corp., Two Portland Square, Portland, Maine 04101
(shareholder records).
(B) Forum Financial Services, Inc., Two Portland Square, Portland, Maine 04101
(corporate minute book).
ITEM 31. MANAGEMENT SERVICES.
Inapplicable.
ITEM 32. UNDERTAKINGS.
(i) Registrant undertakes to file a post-effective amendment, using financial
statements which need not be certified, within four to six months from the
latter of the effective date of Registrant's Securities Act of 1933
Registration Statement relating to the prospectuses offering those shares
or the commencement of public shares of the respective shares; and,
(ii) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof to which the
prospectus relates upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of New York, State of New York, on the 17th day of
January, 1997.
SCHRODER CAPITAL FUNDS (DELAWARE)
By: /s/ Mark J. Smith
----------------------------
Mark J. Smith
President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 17th day of January, 1997.
Signatures Title
(a) Principal Executive Officer
/s/ Mark J. Smith President
------------------------------
Mark J. Smith
(b) Principal Financial and
Accounting Officer
ROBERT JACKOWITZ* Treasurer
*By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan, Attorney-in-Fact
(c) Majority of the Trustees
PETER E. GUERNSEY* Trustee
JOHN I. HOWELL* Trustee
HERMANN C. SCHWAB* Trustee
CLARENCE F. MICHALIS* Trustee
*By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan, Attorney-in-Fact
<PAGE>
SIGNATURES
On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Schroder Capital Funds
(Delaware) to be signed in the City of Portland, State of Maine on the 14th day
of February, 1997.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
-----------------------------
John Y. Keffer, President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 14th day of February, 1997.
Signatures Title
(a) Principal Executive Officer
/s/ John Y. Keffer Chairman
------------------------ and President
John Y. Keffer
(b) Principal Financial and Accounting Officer
/s/ Richard C. Butt Treasurer
------------------------
Richard C. Butt
(c) A majority of the Trustees
/s/ John Y. Keffer Trustee
------------------------
John Y. Keffer
Costas Azariadis* Trustee
J. Michael Parish* Trustee
James C. Cheng* Trustee
By: /s/ John Y. Keffer
--------------------
John Y. Keffer
Attorney in Fact*
