As filed with the Securities and Exchange Commission on February 27, 1998
File No. 2-34215
File No. 811-1911
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 66
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 46
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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:
Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Alexandra Poe, Esq.
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
__X__ immediately upon filing pursuant to Rule 485, paragraph (b) on [ ]
_____ pursuant to Rule 485, paragraph (b) 60 days after filing pursuant to
_____ Rule 485, paragraph (a)(i) on _________ pursuant to Rule 485, paragraph
_____ (a)(i) 75 days after filing pursuant to Rule 485, paragraph (a)(ii) on
_____ [ ] pursuant to Rule 485, paragraph (a)(ii)
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities being registered: Schroder International Fund, Schroder
International Smaller Companies Fund, Schroder Emerging Markets Fund, Schroder
International Bond Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller
Companies Fund, Schroder Micro Cap Fund and Schroder Emerging Markets Fund
Institutional Portfolio. All funds of the Registrant that are being registered
(except Schroder U.S. Equity fund and Schroder Micro Cap Fund) are structured as
master-feeder funds. This amendment is also executed by Schroder Capital Funds.
<PAGE>
CROSS REFERENCE SHEET
PART A
(Prospectuses offering Investor Shares and Advisor Shares of
Schroder International Fund, Schroder Emerging Markets Fund,
Schroder International Smaller Companies Fund, Schroder International Bond Fund,
Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies Fund, Schroder Micro
Cap Fund and Schroder Emerging Markets Fund Institutional Portfolio)
<TABLE>
<S> <C> <C>
Form N-1A
Item No. (Caption) Location in Prospectus (Caption)
- --------- --------- --------------------------------
1. Cover Page Cover Page
2. Synopsis FUND STRUCTURE
3. Condensed Financial Information FINANCIAL HIGHLIGHTS
4. General Description of INVESTMENT OBJECTIVES AND
Registrant POLICIES; MANAGEMENT OF THE TRUST
5. Management of the Fund MANAGEMENT OF THE TRUST
5A. Management's Discussion of` Not Applicable
Fund Performance
6. Capital Stock and Other Securities OTHER INFORMATION
7. Purchase of Securities Being Offered HOW TO BUY SHARES; OTHER INFORMATION
8. Redemption or Repurchase HOW TO SELL SHARES; OTHER INFORMATION
9. Pending Legal Proceedings None
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
PART B
(SAIs for Investor Shares and Advisor Shares of
Schroder International Fund, Schroder Emerging Markets Fund,
Schroder International Smaller Companies Fund, Schroder International Bond Fund,
Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies Fund, Schroder Micro
Cap Fund and Schroder Emerging Markets Fund Institutional Portfolio)
<TABLE>
<S> <C> <C>
Form N-1A Location in Statement of Additional
Item No. (Caption) Information (Caption)
- --------- --------- ---------------------
10. Cover Page Cover Page
11. Table of Contents TABLE OF CONTENTS
12. General Information and History OTHER INFORMATION
13. Investment Objectives and Policies INVESTMENT OBJECTIVES AND POLICIES OF THE
TRUST AND RISK CONSIDERATIONS
14. Management of the Fund MANAGEMENT
15. Control Persons and Principal MANAGEMENT
Holders of Securities
16. Investment Advisory and MANAGEMENT
Other Services
17. Brokerage Allocation and MANAGEMENT -- Portfolio Transactions
Other Practices
18. Capital Stock and Other Securities MANAGEMENT -- Other Information
19. Purchase, Redemption and Pricing of MANAGEMENT -- Additional Purchase
Securities Being Offered and Redemption Information
20. Tax Status MANAGEMENT --Taxation
21. Underwriters MANAGEMENT -- Distribution of Fund Shares
22. Calculation of Performance Data APPENDIX A -- Performance Information
23. Financial Statements Not Applicable
</TABLE>
<PAGE>
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
PROSPECTUS
MARCH 1, 1998
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTOR SHARES
SCHRODER INTERNATIONAL FUND
SCHRODER EMERGING MARKETS FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL BOND FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
The Schroder Capital Funds are mutual funds offering a wide range of investment
objectives: SCHRODER INTERNATIONAL FUND, SCHRODER INTERNATIONAL SMALLER
COMPANIES FUND, SCHRODER EMERGING MARKETS FUND, SCHRODER INTERNATIONAL BOND
FUND, SCHRODER U.S. EQUITY FUND, SCHRODER U.S. SMALLER COMPANIES FUND, and
SCHRODER MICRO CAP FUND. Each Fund is a series of shares of Schroder Capital
Funds (Delaware), and each Fund (other than the U.S. Equity Fund and the Micro
Cap Fund) currently invests substantially all of its assets in a separately
managed portfolio of Schroder Capital Funds or Schroder Capital Funds II, each
of which is a registered, open-end management investment company. Schroder
Capital Management International Inc. serves as investment adviser to each of
the Funds and to each portfolio. Each of the Funds, except the Emerging Markets
Fund and the International Bond Fund, is a diversified mutual fund.
This Prospectus explains concisely the information that a prospective investor
should know before investing in Investor Shares of the Funds. Please read it
carefully and keep it for future reference. INVESTORS CAN FIND MORE DETAILED
INFORMATION ABOUT SCHRODER CAPITAL FUNDS (DELAWARE) IN THE MARCH 1, 1998
STATEMENT OF ADDITIONAL INFORMATION, AS AMENDED FROM TIME TO TIME. FOR A FREE
COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, PLEASE CALL 1-800-290-9826. The
Statement of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference. The
Securities and Exchange Commission maintains an Internet World Wide Web site (at
http://www.sec.gov) that contains the Statement of Additional Information,
materials that are incorporated by reference into this Prospectus and the
Statement of Additional Information, and other information about the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FUND STRUCTURE.............................................................. 3
FINANCIAL HIGHLIGHTS........................................................ 6
INVESTMENT OBJECTIVES AND POLICIES.......................................... 14
HOW TO BUY SHARES........................................................... 25
HOW TO SELL SHARES.......................................................... 28
OTHER INFORMATION........................................................... 30
MANAGEMENT OF THE TRUST..................................................... 31
APPENDIX A.................................................................. A-1
Description of Securities Ratings
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
<S> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. EQUITY FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
</TABLE>
FUND STRUCTURE
Each of SCHRODER INTERNATIONAL FUND, SCHRODER EMERGING MARKETS FUND, SCHRODER
INTERNATIONAL SMALLER COMPANIES FUND, SCHRODER INTERNATIONAL BOND FUND and
SCHRODER U.S. SMALLER COMPANIES FUND seeks to achieve its investment objective
by investing all of its investable assets in a separate portfolio (a
"Portfolio") of either Schroder Capital Funds or Schroder Capital Funds II that
has the same investment objective as, and investment policies that are
substantially similar to those of, that Fund. Accordingly, the investment
experience of each Fund will correspond directly with the investment experience
of its corresponding Portfolio. See "Other Information - Information about the
Portfolios." The Funds and the Portfolios in which they invest are:
<TABLE>
<CAPTION>
FUNDS PORTFOLIOS
- ----------------------------------------------------- ---------------------------------------------------------
<S> <C>
SCHRODER INTERNATIONAL FUND INTERNATIONAL EQUITY FUND
(Schroder Capital Funds)
SCHRODER EMERGING MARKETS FUND SCHRODER EM CORE PORTFOLIO*
(Schroder Capital Funds)
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER INTERNATIONAL SMALLER COMPANIES PORTFOLIO
(Schroder Capital Funds)
SCHRODER INTERNATIONAL BOND FUND SCHRODER INTERNATIONAL BOND PORTFOLIO*
(Schroder Capital Funds II)
SCHRODER U.S. SMALLER COMPANIES FUND SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
(Schroder Capital Funds)
</TABLE>
Each of SCHRODER U.S. EQUITY FUND and SCHRODER MICRO CAP FUND seeks to achieve
its investment objective by investing directly in securities.
* Each of SCHRODER EM CORE PORTFOLIO and SCHRODER INTERNATIONAL BOND PORTFOLIO
is a non-diversified series of an open-end management investment company. Each
of the other Portfolios is a diversified series of an open-end management
investment company. See "Other Investment Practices and Risk Considerations -
Non-Diversification and Geographic Concentration."
3
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in Investor
Shares of the Funds. There are no "Shareholder Transaction Expenses" associated
with a purchase or redemption of Investor Shares of the Funds. "Annual Operating
Expenses" for each Fund other than the Emerging Markets Fund, the International
Bond Fund and the Micro Cap Fund show expenses incurred by each Fund with
respect to Investor Shares based on the Fund's expenses for the most recent
fiscal year. Annual Operating Expenses for the Emerging Markets Fund, the
International Bond Fund and the Micro Cap Fund are estimated based on
anticipated expenses for each Fund's current fiscal year. Annual Operating
Expenses of each Fund (other than the U.S. Equity Fund and Micro Cap Fund)
include the Fund's pro rata portion of all operating expenses of the Portfolio
of Schroder Capital Funds or Schroder Capital Funds II in which the Fund
invests. The Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in the Funds over specified periods.
SHAREHOLDER TRANSACTION EXPENSES NONE
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL EMERGING SMALLER INTERNATIONAL U.S. EQUITY U.S. SMALLER
FUND MARKETS FUND COMPANIES FUND BOND FUND FUND COMPANIES FUND
--------------- ------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees(1)
(after expense
limitation)(2) 0.61% 0.81% 0.00% 0.19% 0.57% 0.50%
12b-1 Fees None None None None None None
Other Expenses
(after expense
limitation)(2) 0.38 % 0.89 % 1.50 % 0.76 % 0.93 % 0.99 %
--- --- --- --- --- ---
Total Fund Operating
Expenses (after
expense
limitation)(2) 0.99 % 1.70 % 1.50 % 0.95 % 1.50 % 1.49 %
<CAPTION>
MICRO CAP
FUND
-------------
<S> <C>
Management Fees(1)
(after expense
limitation)(2) 0.61%
12b-1 Fees None
Other Expenses
(after expense
limitation)(2) 1.39 %
---
Total Fund Operating
Expenses (after
expense
limitation)(2) 2.00 %
</TABLE>
(1) Management Fees reflect the fees paid by the Portfolio and the Fund for
investment advisory and administrative services.
(2) The Management Fees and Total Fund Operating Expenses for each of the Funds
reflect expense limitations currently in effect. See "Management of the
Trust." Without the limitations, Management Fees, Other Expenses, and Total
Fund Operating Expenses for Investor Shares would be 0.675%, 0.385%, and
1.06%, respectively, in the case of the International Fund; 1.25%, 0.91%,
and 2.16%, respectively, in the case of the Emerging Markets Fund; 1.10%,
2.83%, and 3.93%, respectively, in the case of the International Smaller
Companies Fund; 0.70%, 2.18%, and 2.88%, respectively, in the case of the
International Bond Fund; 0.75%, 0.93%, and 1.68%, respectively, in the case
of the U.S. Equity Fund; 0.85%, 1.02%, and 1.87%, respectively, in the case
of the U.S. Smaller Companies Fund; and 1.50%, 1.39%, and 2.89%,
respectively, in the case of the Micro Cap Fund.
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Schroder International Fund $ 10 $ 32 $ 55 $ 121
Schroder Emerging Markets Fund $ 17 $ 54 N/A N/A
Schroder International Smaller Companies Fund $ 15 $ 47 $ 82 $ 179
Schroder International Bond Fund $ 10 $ 30 N/A N/A
Schroder U.S. Equity Fund $ 15 $ 47 $ 82 $ 179
Schroder U.S. Smaller Companies Fund $ 15 $ 47 $ 81 $ 178
Schroder Micro Cap Fund $ 20 $ 63 N/A N/A
</TABLE>
The Annual Operating Expenses table and Example are provided to help you
understand your share of the operating expenses of the Funds attributable to
Investor Shares. THE TABLE AND EXAMPLE DO NOT REPRESENT PAST OR FUTURE EXPENSE
LEVELS. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL ANNUAL
RETURNS WILL VARY.
4
<PAGE>
[This page has been intentionally left blank.]
5
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights presented below (other than those of Schroder Micro Cap
Fund and Schroder U.S. Smaller Companies Fund for the period ended November 30,
1997) have been audited by Coopers & Lybrand L.L.P., independent accountants to
the Funds. The financial statements for the fiscal year ended October 31, 1997
for each of Schroder International Fund, Schroder International Smaller
Companies Fund and Schroder U.S. Equity Fund and for the fiscal year ended May
31, 1997 for Schroder U.S. Smaller Companies Fund and the related independent
accountants' report are contained in each Fund's Annual
SCHRODER INTERNATIONAL FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1997 1996(A) 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $20.01 $20.91 $ 23.17 $ 20.38
------------- ------------- ------------- -------------
Investment Operations:
Net Investment Income (Loss)(b) 0.14 0.15 0.46 0.18
Net Realized and Unrealized Gain
(Loss) on Investments 1.31 1.74 (0.18 ) 2.69
------------- ------------- ------------- -------------
Total from Investment Operations 1.45 1.89 0.28 2.87
------------- ------------- ------------- -------------
Distributions from
Net Investment Income (0.46 ) (0.47 ) - (0.08 )
Net Realized Gain on Investments (2.63 ) (2.32 ) (2.54 ) -
------------- ------------- ------------- -------------
Total Distributions (3.09 ) (2.79 ) (2.54 ) (0.08 )
------------- ------------- ------------- -------------
Net Asset Value, End of Period $18.37 $20.01 $ 20.91 $ 23.17
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Total Return(c) 8.33 % 10.05 % 2.08 % 14.10 %
Ratios/Supplementary Data
Net Assets, End of Period (in
thousands) $191,219 $202,735 $212,330 $500,504
Ratios to Average Net Assets:
Expenses After Expense
Limitation(b) 0.99 % 0.99 % 0.91 % 0.90 %
Expenses Before Expense
Limitation(b) 1.06 % 1.04 % N/A N/A
Net Investment Income (Loss)(b) 0.67 % 0.86 % 0.99 % 0.94 %
Average Commission Rate Per
Share(d) $0.0280 $0.0256 N/A N/A
Portfolio Turnover Rate(f) 36.22 % 56.20 % 61.26 % 25.17 %
</TABLE>
(a) On November 1, 1995, the Fund converted to Core and
Gateway-Registered Trademark-. On May 16, 1996, the Fund began offering two
classes of shares, Investor Shares and Advisor Shares, and all then
outstanding shares of the Fund were designated as Investor Shares.
(b) For the years ending after October 31, 1995, includes the Fund's
proportionate share of income and expenses of the Portfolio.
(c) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(d) For the fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid to brokers on the
purchase and sale of equity securities on which commissions are charged. For
periods ending after October 31, 1995, the rate represents the average
commission per share paid by the Portfolio.
(e) Annualized.
(f) Portfolio turnover represents the rate of portfolio activity. For periods
ending after October 31, 1995, the rate represents the portfolio turnover
rate of the Portfolio.
<PAGE>
Report to Shareholders and are incorporated by reference into the Statement of
Additional Information (the "SAI"). The unaudited financial statements of
Schroder Micro Cap Fund and Schroder U.S. Smaller Companies Fund for the period
ended November 30, 1997 similarly are incorporated by reference into the SAI.
Neither Schroder International Bond Fund nor Schroder Emerging Markets Fund was
in operation during those periods. Copies of the Funds' Annual and Semi-Annual
Reports may be obtained without charge by writing the Funds at Two Portland
Square, Portland, Maine 04101 or by calling 1-800-290-9826.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, MONTH ENDED YEAR ENDED
---------------------------------------------------------- OCTOBER 31, SEPTEMBER 30,
1993 1992 1991 1990 1989 1989
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 15.15 $ 16.22 $ 17.70 $ 18.20 $ 18.95 $ 14.40
------------- ------------- ------------- ------------- ------------- -------------
Investment Operations:
Net Investment Income (Loss)(b) 0.08 0.25 0.25 0.15 0.03 0.20
Net Realized and Unrealized Gain
(Loss) on Investments 5.27 (1.04) (0.25) (0.12) (0.78) 4.44
------------- ------------- ------------- ------------- ------------- -------------
Total from Investment Operations 5.35 (0.79) 0.00 0.03 (0.75) 4.64
------------- ------------- ------------- ------------- ------------- -------------
Distributions from
Net Investment Income (0.12) (0.23) (0.25) (0.16) 0.00 (0.04)
Net Realized Gain on Investments - (0.05) (1.23) (0.37) 0.00 (0.05)
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions (0.12) (0.28) (1.48) (0.53) 0.00 (0.09)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 20.38 $ 15.15 $ 16.22 $ 17.70 $ 18.20 $ 18.95
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
Total Return(c) 35.54% (4.93%) 0.45% (0.07%) (4.01%) 32.2%
Ratios/Supplementary Data
Net Assets, End of Period (in
thousands) $320,550 $159,556 $108,398 $62,438 $49,740 $48,655
Ratios to Average Net Assets:
Expenses After Expense
Limitation(b) 0.91 % 0.93 % 1.07 % 1.12 % 1.12 (e) 1.12 %
Expenses Before Expense
Limitation(b) N/A N/A N/A N/A N/A N/A
Net Investment Income (Loss)(b) 0.87 % 1.62 % 1.59 % 0.83 % 2.29 (e) 1.27 %
Average Commission Rate Per
Share(d) N/A N/A N/A N/A N/A N/A
Portfolio Turnover Rate(f) 56.05 % 49.42 % 50.58 % 55.91 % 21.98 (e) 72.25 %
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
1988
-------------
<S> <C>
Net Asset Value, Beginning of
Period $ 18.02
-------------
Investment Operations:
Net Investment Income (Loss)(b) 0.05
Net Realized and Unrealized Gain
(Loss) on Investments (2.34)
-------------
Total from Investment Operations (2.29)
-------------
Distributions from
Net Investment Income 0.00
Net Realized Gain on Investments (1.33)
-------------
Total Distributions (1.33)
-------------
Net Asset Value, End of Period $ 14.40
-------------
-------------
Total Return(c) (0.12%)
Ratios/Supplementary Data
Net Assets, End of Period (in
thousands) $29,917
Ratios to Average Net Assets:
Expenses After Expense
Limitation(b) 1.30 %
Expenses Before Expense
Limitation(b) N/A
Net Investment Income (Loss)(b) 0.38 %
Average Commission Rate Per
Share(d) N/A
Portfolio Turnover Rate(f) 86.19 %
</TABLE>
7
<PAGE>
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31,
1997(A)
------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
------------
Investment Operations:
Net Investment Income (Loss)(b) 0.02
Net Realized and Unrealized Gain (Loss) on Investments (0.79 )
------------
Total from Investment Operations (0.77 )
------------
Distributions from
Net Investment Income (0.01 )
------------
Net Asset Value, End of Period $ 9.22
------------
------------
Total Return(c) (7.73 %)
Ratios/Supplementary Data
Net Assets, End of Period (in thousands) $6,836
Ratios to Average Net Assets:
Expenses After Expense Limitation(b)(d) 1.50 %
Expenses Before Expense Limitation(b)(d) 3.93 %
Net Investment Income (Loss) After Expense Limitation(b)(d) 0.21 %
Average Commission Rate Per Share(e) $0.0389
Portfolio Turnover Rate(f) 32.30 %
</TABLE>
(a) The Fund commenced operations on November 4, 1996.
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(c) Total returns would have been lower had certain expenses not been reduced
during the period shown.
(d) Annualized.
(e) Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities of the Portfolio on which commissions
are charged.
(f) Portfolio turnover represents the rate of portfolio activity of the
Portfolio.
8
<PAGE>
[This page has been intentionally left blank.]
9
<PAGE>
SCHRODER U.S. EQUITY FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1997 1996 1995 1994
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $9.76 $9.41 $ 8.52 $ 11.28
------ ------ ------ ------------
Investment Operations:
Net Investment Income (Loss) (0.01 ) 0.04 0.07 0.04
Net Realized and Unrealized Gain
(Loss) on Investments 2.20 1.62 1.33 (0.27 )
------ ------ ------ ------------
Total from Investment Operations 2.19 1.66 1.40 (0.23 )
------ ------ ------ ------------
Distributions from
Net Investment Income (0.02 ) (0.07 ) (0.05 ) (0.01 )
Net Realized Gain on Investments (2.11 ) (1.24 ) (0.46 ) (2.52 )
Paid-In Capital - - - -
Total Distributions (2.13 ) (1.31 ) (0.51 ) (2.53 )
------ ------ ------ ------------
Net Asset Value, End of Period $9.82 $9.76 $ 9.41 $ 8.52
------ ------ ------ ------------
------ ------ ------ ------------
Total Return(a) 26.49 % 19.45 % 17.68 % (2.01 %)
Ratios/Supplementary Data
Net Assets, End of Year (in
thousands) $13,861 $17,187 19,688 18,483
Ratios to Average Net Assets:
Expenses After Expense Limitation 1.50 % 1.40 % 1.40 % 1.31 %
Expenses Before Expense
Limitation 1.68 % 1.43 % N/A N/A
Net Investment Income (Loss)
After Expense Limitation (0.09 %) 0.43 % 0.78 % 0.41 %
Average Commission Rate Per
Share(b) $0.0563 $0.0599 N/A N/A
Portfolio Turnover Rate 44.28 % 56.80 % 57.21 % 27.43 %
</TABLE>
(a) Total return would have been lower had certain expenses not been reduced
during the periods shown.
(b) For the fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commission per share paid to brokers on the
purchase and sale of portfolio securities.
10
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
------------ ------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 10.51 $ 9.56 $ 7.05 $ 8.35 $ 7.49 $ 10.15
------------ ------------ ------ ------ ------ ------------
Investment Operations:
Net Investment Income (Loss) 0.05 0.02 0.09 0.11 0.17 0.18
Net Realized and Unrealized Gain
(Loss) on Investments 1.86 1.61 2.57 (0.77) 1.30 0.28
------------ ------------ ------ ------ ------ ------------
Total from Investment Operations 1.91 1.63 2.66 (0.66) 1.47 0.46
------------ ------------ ------ ------ ------ ------------
Distributions from
Net Investment Income (0.04) (0.04) (0.11) (0.11) (0.15) (0.18)
Net Realized Gain on Investments (1.10) (0.58) - (0.53) (0.46) (2.94)
Paid-In Capital - (0.06) (0.04) - - -
Total Distributions (1.14) (0.68) (0.15) (0.64) (0.61) (3.12)
------------ ------------ ------ ------ ------ ------------
Net Asset Value, End of Period $ 11.28 $ 10.51 $ 9.56 $ 7.05 $ 8.35 $ 7.49
------------ ------------ ------ ------ ------ ------------
------------ ------------ ------ ------ ------ ------------
Total Return(a) 19.49% 17.74% 38.16% (8.78%) 21.05% 7.74%
Ratios/Supplementary Data
Net Assets, End of Year (in
thousands) 21,865 19,882 20,234 18,290 23,838 25,569
Ratios to Average Net Assets:
Expenses After Expense Limitation 1.18 % 1.40 % 1.39 % 1.34 % 1.49 % 1.60 %
Expenses Before Expense
Limitation N/A N/A N/A N/A N/A N/A
Net Investment Income (Loss)
After Expense Limitation 0.51 % 0.42 % 1.30 % 1.59 % 1.99 % 1.89 %
Average Commission Rate Per
Share(b) N/A N/A N/A N/A N/A N/A
Portfolio Turnover Rate 57.78 % 31.33 % 29.98 % 28.31 % 40.35 % 18.42 %
</TABLE>
11
<PAGE>
SCHRODER U.S. SMALLER COMPANIES FUND
<TABLE>
<CAPTION>
FOR THE
PERIOD ENDED FOR THE YEAR ENDED OCTOBER 31,
MAY 31, ------------------------------------------------------
1997 1996(A)(B) 1995 1994 1993(B)
FOR THE ------------ ------------ ------------ ------------ ------------
PERIOD ENDED
NOVEMBER 30,
1997
-------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.26 $17.23 $15.14 $ 11.81 $ 10.99 $ 10.00
------------- ------------ ------------ ------------ ------------ ------------
Investment Operations:
Net Investment Income (Loss)(c) (0.04 ) (0.02 ) (0.06 ) (0.04 ) (0.07 ) (0.02 )
Net Realized and Unrealized Gain
(Loss) on Investments 1.96 1.88 4.10 3.78 0.97 1.01
------------- ------------ ------------ ------------ ------------ ------------
Total from Investment Operations 1.92 1.86 4.04 3.74 0.90 0.99
------------- ------------ ------------ ------------ ------------ ------------
Distributions from
Net Realized Gain on Investments - (5.83 ) (1.95 ) (0.41 ) (0.08 ) -
------------- ------------ ------------ ------------ ------------ ------------
Net Asset Value, End of Period $15.18 $13.26 $17.23 $ 15.14 $ 11.81 $ 10.99
------------- ------------ ------------ ------------ ------------ ------------
------------- ------------ ------------ ------------ ------------ ------------
Total Return(d) 14.48 % 14.73 % 29.35 % 32.84 % 8.26 % 9.90 %
Ratios/Supplementary Data
Net Assets, End of Period (in
thousands) $39,378 $26,104 $13,743 $15,287 $13,324 $12,489
Ratios to Average Net Assets:
Expenses After Expense
Limitation(c)(e) 1.43 % 1.49 % 1.49 % 1.49 % 1.45 % 2.03 %
Expenses Before Expense
Limitation(c)(e) 1.43 % 1.87 % N/A N/A N/A N/A
Net Investment Income (Loss) After
Expense Limitation(c)(e) (0.54 %) (0.42 %) (0.35 %) (0.30 %) (0.58 %) (0.99 %)
Average Commission Rate Per Share(f) $0.0588 $0.0584 $0.0583 N/A N/A N/A
Portfolio Turnover Rate(g) 28.71 % 34.45 % 58.50 % 92.68 % 70.82 % 12.58 %
</TABLE>
(a) On May 17, 1996, the Fund began offering two classes of shares, Investor
Shares and Advisor Shares, and all then outstanding shares of the Fund were
designated as Investor Shares.
(b) The Fund commenced operations on August 6, 1993 and converted to Core and
Gateway on August 15, 1996.
(c) For the periods ended November 30, 1997, May 31, 1997 and October 31, 1996,
includes the Fund's proportionate share of income and expenses of the
Portfolio.
(d) For the periods ended November 30, 1997 and May 31, 1997, the total returns
would have been lower had certain expenses not been reduced.
(e) Annualized.
(f) For the fiscal year beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid by the Portfolio to
brokers on the purchase and sale of equity securities on which commissions
are charged. For the periods after October 31, 1996, the rate represents the
average commission per share paid by the Portfolio.
(g) Portfolio turnover represents the rate of portfolio activity. For the
periods ending after October 31, 1996, the rate represents the portfolio
turnover rate of the Portfolio.
12
<PAGE>
SCHRODER MICRO CAP FUND
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1997(A)
-------------
(UNAUDITED)
<S> <C>
Net Asset Value, Beginning of Period
Investment Operations: $10.00
-------------
Net Investment Income (Loss) 0.01
Net Realized and Unrealized Gain (Loss) on Investments 0.36
-------------
Total from Investment Operations 0.37
-------------
Net Asset Value Value, End of Period $10.37
-------------
-------------
Total Return(b) 3.70 %
Ratios/Supplementary Data
Net Assets, End of Period (in thousands) $2,471
Ratios to Average Net Assets:
Expenses After Expense Limitation(c) 2.00 %
Expenses Before Expense Limitation(c) 11.42 %
Net Investment Income (Loss) After Expense Limitation(c) 0.07 %
Average Commission Rate Per Share(d) $0.0595
Portfolio Turnover Rate 32.64 %
</TABLE>
(a) The Fund commenced operations on October 15, 1997.
(b) Total returns would have been lower had certain expenses not been reduced
during the period shown.
(c) Annualized.
(d) Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities on which commissions are charged.
13
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective that it pursues through the
investment policies described below.
Because of the differences in objectives and policies among the Funds, the Funds
will achieve different investment returns and will be subject to varying degrees
of market and financial risk. There is no assurance that any Fund will achieve
its objective. None of the Funds is intended to be a complete investment
program.
EACH FUND (OTHER THAN THE U.S. EQUITY FUND AND THE MICRO CAP FUND) CURRENTLY
INVESTS SUBSTANTIALLY ALL OF ITS ASSETS IN A MANAGED PORTFOLIO OF SCHRODER
CAPITAL FUNDS OR SCHRODER CAPITAL FUNDS II. EACH SUCH PORTFOLIO IS REFERRED TO
IN THIS PROSPECTUS AS A "PORTFOLIO." IN REVIEWING THE DESCRIPTION OF A FUND'S
INVESTMENT OBJECTIVE AND POLICIES BELOW, INVESTORS SHOULD ASSUME THAT THE
INVESTMENT OBJECTIVE AND POLICIES OF THE CORRESPONDING PORTFOLIO ARE THE SAME IN
ALL MATERIAL RESPECTS AS THOSE OF THE FUND. SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC. ("SCMI") IS THE INVESTMENT ADVISER TO EACH FUND AND TO EACH
PORTFOLIO.
A Fund's investment objective may not be changed without shareholder approval.
The investment policies of each Fund may, unless otherwise specifically stated,
be changed by the Trustees of Schroder Capital Funds (Delaware) (the "Trust")
without a vote of the shareholders. All percentage limitations on investments
will apply at the time of investment and will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
the investment except that the policies stated with regard to borrowing and
liquidity will be observed at all times.
SCHRODER INTERNATIONAL FUND
SCHRODER INTERNATIONAL FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL
APPRECIATION THROUGH INVESTMENT IN SECURITIES MARKETS OUTSIDE THE UNITED STATES.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, securities convertible into common or preferred stocks, and rights or
warrants to purchase any of the foregoing. They may also include American
Depositary Receipts, European Depositary Receipts, and other similar instruments
providing for indirect investment in securities of foreign issuers. The Fund may
also invest in securities of closed-end investment companies that invest in turn
primarily in foreign securities.
The Fund normally will invest at least 65% of its assets in equity securities of
companies domiciled outside the United States and will invest in securities of
issuers domiciled in at least three countries other than the United States.
There is no limit on the amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. When the Fund has invested a
substantial portion of its assets in the securities of companies domiciled in a
single country, it will be more susceptible to the risks of investing in that
country than would a fund investing in a geographically more diversified
portfolio. The Fund normally invests a substantial portion of its assets in
countries included in the Morgan Stanley Capital International EAFE Index, which
is a market capitalization-weighted index of companies in developed market
countries in Europe, Australia and the Far East. Other countries in which the
Fund may invest may be considered "emerging markets" and involve special risks.
See "Other Investment Practices and Risk Considerations - Foreign Securities."
The Fund may invest in debt securities, including, for example, securities of
foreign governments (including provinces and municipalities) or their agencies
or instrumentalities, securities issued or guaranteed by international
organizations designated or supported by multiple foreign governmental entities
to promote economic reconstruction or development, and debt securities of
foreign corporations or financial institutions. The Fund may invest up to 5% of
its net assets in lower-quality, high yielding debt securities, which entail
certain risks. See "Other Investment Practices and Risk Considerations - Debt
Securities."
14
<PAGE>
SCHRODER EMERGING MARKETS FUND
SCHRODER EMERGING MARKETS FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM
CAPITAL APPRECIATION. The Fund invests primarily in equity securities of issuers
domiciled or doing business in emerging market countries in regions such as
Southeast Asia, Latin America, and Eastern and Southern Europe. The Fund will
normally invest in at least three countries other than the United States.
An "emerging market" country is any country not included at the time of
investment in the Morgan Stanley Capital International World Index of major
world economies. Those economies currently include: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States of America. SCMI may at
times determine based on its own analysis that an economy included in the Index
should nonetheless be considered an emerging market country; any such country
would then constitute an emerging market country for purposes of investment by
the Fund.
The Fund normally invests at least 65% of its assets in equity securities of
issuers determined by SCMI to be emerging market issuers. Equity securities
include common stocks, preferred stocks, securities convertible into common or
preferred stocks, and rights or warrants to purchase any of the foregoing
(although such rights and warrants will not be taken into account in determining
compliance with the 65% requirement described in the preceding sentence.) They
may also include American Depositary Receipts, European Depositary Receipts, and
other similar instruments providing for indirect investment in securities of
foreign issuers. The Fund may also invest in securities of closed-end investment
companies that invest in turn primarily in foreign securities. The Fund is a
non-diversified mutual fund. See "Non-Diversification and Geographic
Concentration."
The remainder of the Fund's assets may be invested in securities of issuers
located anywhere in the world. The Fund may invest up to 35% of its assets in
debt securities, including lower-quality, high-yielding debt securities, which
entail certain risks. The Fund would invest in debt securities principally in an
effort to realize capital appreciation due, for example, to a favorable change
in currency exchange or control rates, or in the creditworthiness of their
issuers. The Fund may invest up to 5% of its assets in sovereign debt securities
that are in default. See "Other Investment Practices and Risk Considerations -
Debt Securities."
An issuer of a security will be considered to be an emerging market issuer if
SCMI determines that: (1) it is organized under the laws of an emerging market
country; (2) its primary securities trading market is in an emerging market
country; (3) at least 50% of the issuer's revenues or profits are derived from
goods produced or sold, investments made, or services performed in emerging
market countries; or (4) at least 50% of its assets are situated in emerging
market countries. The Fund may consider investment companies to be located in
the country or countries in which SCMI determines they focus their investments.
There is no limit on the amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. When the Fund has invested a
substantial portion of its assets in the securities of companies domiciled in a
single country, it will be more susceptible to the risks of investing in that
country than would a Fund investing in a geographically more diversified
portfolio. The Fund will normally invest in issuers domiciled in at least three
different emerging market countries.
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND'S INVESTMENT OBJECTIVE IS
LONG-TERM CAPITAL APPRECIATION THROUGH INVESTMENT IN SECURITIES MARKETS OUTSIDE
THE UNITED STATES. The Fund normally invests at least 65% of its assets in
equity securities of companies domiciled outside the United States that have
market capitalizations of $1.5 billion or less at the time of investment. In
selecting investments for the Fund, SCMI considers a number of factors,
including, for example, the company's potential for long-term growth, the
15
<PAGE>
company's financial condition, its sensitivity to cyclical factors, the relative
value of the company's securities (to those of other companies and to the market
as a whole), and the extent to which the company's management owns equity in the
company.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, securities convertible into common or preferred stocks, and rights or
warrants to purchase any of the foregoing. They may also include American
Depositary Receipts, European Depositary Receipts, and other similar instruments
providing for indirect investment in securities of foreign issuers. The Fund may
also invest in securities of closed-end investment companies that invest in turn
primarily in foreign securities.
The Fund will invest in securities of issuers domiciled in at least three
countries other than the United States, although there is no limit on the amount
of the Fund's assets that may be invested in securities of issuers domiciled in
any one country. When the Fund has invested a substantial portion of its assets
in the securities of companies domiciled in a single country, it will be more
susceptible to the risks of investing in that country than would a fund
investing in a geographically more diversified portfolio. Other countries in
which the Fund may invest may be considered "emerging markets" and involve
special risks. See "Other Investment Practices and Risk Considerations - Foreign
Securities."
Smaller companies may present greater opportunities for investment return than
do larger companies, but also involve greater risks. Smaller companies may have
limited product lines, markets, or financial resources, or may depend on a
limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
than prices of securities of larger, more widely traded companies. See "Other
Investment Practices and Risk Considerations - Investments in Smaller
Companies."
The Fund may invest in debt securities, including, for example, securities of
foreign governments, international organizations, and foreign corporations and
U.S. government securities. The Fund may invest up to 5% of its total assets in
lower-quality, high yielding debt securities, which entail certain risks. See
"Other Investment Practices and Risk Considerations - Debt Securities."
SCHRODER INTERNATIONAL BOND FUND
SCHRODER INTERNATIONAL BOND FUND'S INVESTMENT OBJECTIVE IS TO SEEK A HIGH RATE
OF TOTAL RETURN. The Fund normally invests substantially all of its assets in
debt securities and debt-related investments of issuers domiciled outside the
United States.
"Total return" consists of current income, including interest payments and
discount accruals, plus any increases in the values of the Fund's investments
(less any decreases in the values of any of its investments and amortizations of
premiums). SCMI considers expected changes in foreign currency exchange rates in
determining the anticipated returns on securities denominated in foreign
currencies.
The Fund may invest in debt securities of foreign governments (including
provinces or municipalities) and their agencies and instrumentalities, debt
securities of supranational organizations, and debt securities of private
issuers. These bonds may pay interest at fixed, variable, or floating rates.
Certain securities in which the Fund invests may be convertible into common or
preferred stock, or they may be traded together with warrants for the purchase
of common stock. The rate of return on some debt obligations may be linked to
indices or stock prices or indexed to the level of exchange rates between the
U.S. dollar and a foreign currency or currencies. The Fund may invest up to 10%
of its net assets in lower quality, high-yielding debt securities. See "Other
Investment Practices and Risk Considerations - Debt Securities." The Fund is a
non-diversified mutual fund. See "Non-Diversification and Geographic
Concentration."
The Fund normally invests in securities of issuers in at least five countries
other than the United States, although there is no limit on the amount of the
Fund's assets that may be invested in securities of issuers domiciled in any one
country. When the Fund has invested a substantial portion of its assets in the
securities
16
<PAGE>
of companies domiciled in a single country, it will be more susceptible to the
risks of investing in that country than would a fund investing in a
geographically more diversified portfolio. At times, the Fund may invest a
substantial portion of its assets in securities of issuers in emerging market
countries, which involves special risks. See "Other Investment Practices and
Risk Considerations - Foreign Securities."
Generally, the Fund's average maturity will be shorter when SCMI expects
interest rates in markets where the Fund has invested to rise, and longer when
SCMI expects interest rates in those markets to fall. SCMI may use various
techniques to increase the interest-rate sensitivity of the Fund's portfolio,
including transactions in futures and options on futures, interest-rate swaps,
caps, floors, and short sales of securities.
SCMI believes that active currency management, through the use of any of the
foreign currency exchange transactions described below, can enhance portfolio
returns through opportunities arising from interest-rate differentials between
securities denominated in different currencies or changes in value between
currencies. SCMI also believes that active currency management can be employed
as an overall portfolio risk management tool. Foreign currency management can
also provide increased overall portfolio risk diversification. See "Other
Investment Practices and Risk Considerations - Foreign Currency Exchange
Transactions." The Fund may also borrow money to invest in additional
securities. Use of leverage involves special risks. See "Other Investment
Practices and Risk Considerations - Leverage."
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. EQUITY FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL. The Fund
normally invests substantially all of its assets in equity securities of
companies in the United States. Equity securities in which the Fund may invest
include common stocks, preferred stocks, securities convertible into common or
preferred stocks, and rights or warrants to purchase any of the foregoing.
The Fund does not limit its investments to any particular type of company,
although the Fund will not normally invest in securities of small capitalization
companies (companies with market capitalizations of $1.5 billion or less). The
Fund may invest in companies, large or small, that SCMI believes offer the
potential for capital growth. They may, for example, include companies whose
earnings are believed to be in a relatively strong growth trend, companies with
a proprietary advantage, or companies that are in industry segments that are
experiencing rapid growth; the Fund may also invest in companies in which
significant further growth is not anticipated but whose market value per share
is thought to be undervalued. The Fund may invest in relatively less well-known
companies that meet any of these characteristics or other characteristics
identified by SCMI.
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER U.S. SMALLER COMPANIES FUND'S INVESTMENT OBJECTIVE IS CAPITAL
APPRECIATION. The Fund invests at least 65% of its assets in equity securities
of U.S.-domiciled companies that have at the time of purchase market
capitalizations of $1.5 billion or less. In selecting investments for the Fund,
SCMI seeks to identify securities of companies with strong management that it
believes can generate above average earnings growth, and are selling at
favorable prices in relation to book values and earnings. Equity securities in
which the Fund may invest include common stocks, preferred stocks, securities
convertible into common or preferred stocks, and rights or warrants to purchase
any of the foregoing.
The Fund may also invest in equity securities of larger companies and in debt
securities, if SCMI believes such investments are consistent with the Fund's
investment objective. In addition, the Fund may invest up to 5% of its assets in
lower-quality, high yielding debt securities, which entail certain risks. See
"Other Investment Practices and Risk Considerations - Debt Securities."
Smaller companies may present greater opportunities for investment return than
do larger companies, but also involve greater risks. They may have limited
product lines, markets, or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and in limited
volume. As
17
<PAGE>
a result, the prices of these securities may fluctuate more than prices of
securities of larger, widely traded companies. See "Other Investment Practices
and Risk Considerations - Investments in Smaller Companies." The Fund intends to
invest no more than 25% of its total assets in securities of small companies
that, together with their predecessors, have been in operation for less than
three years.
SCHRODER MICRO CAP FUND
SCHRODER MICRO CAP FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL
APPRECIATION. It seeks to achieve its investment objective by investing at least
65% of its total assets in equity securities of U.S.-domiciled micro cap
companies. A micro cap company is a company with, at the time of initial
purchase, a market capitalization in the bottom one third of companies in the
Russell 2000 Growth Index (measured by capitalization); in addition, any company
with a market capitalization of $300 million or less will be considered a micro
cap company.
In the future, the Fund may seek to achieve its investment objective by
investing all or a portion of its assets in one or more registered investment
companies having substantially the same investment objective and similar
investment policies as the Fund (in accordance with the provisions of the 1940
Act, as amended, or any order, rule or regulation thereunder).
SCMI seeks to identify securities of companies that it believes offer the
potential for long-term capital appreciation, based on novel, superior or niche
products or services, operating characteristics, quality of management, an
entrepreneurial management team, companies that have gone public in recent
years, opportunities provided by mergers, divestitures or new management, or
other factors. The Fund may invest in securities of small, unseasoned companies,
as well as securities of more established companies. Up to 35% of the Fund's
assets may comprise other investments, including equity securities of larger
capitalization companies, if SCMI believes that they could help the Fund attain
its objective.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, securities convertible into common or preferred stocks, or rights or
warrants to purchase any of the foregoing. The Fund may also invest to a limited
degree in non-convertible debt securities when SCMI believes that such
investments are warranted to achieve the Fund's investment objective.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Funds may engage in the following investment practices, each of which
involves certain special risks. The SAI contains more detailed information about
these practices (some of which may be considered "derivative" investments).
FOREIGN SECURITIES. Investments in foreign securities entail certain risks.
There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and diplomatic
developments that could affect the value of a Fund's investments in certain
foreign countries. Since foreign securities are normally denominated and traded
in foreign currencies, the values of the Fund's assets may be affected favorably
or unfavorably by currency exchange rates, currency exchange control
regulations, foreign withholding taxes and restrictions or prohibitions on the
repatriation of foreign currencies. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign issuers
are not generally subject to accounting, auditing, and financial reporting
standards and practices comparable to those in the United States. The securities
of some foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage commissions and other
fees are also generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of a Fund's assets held
abroad) and expenses not present in the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign countries
may be more limited than those available with respect to investments in the
United States or in other foreign countries. The willingness and
18
<PAGE>
ability of sovereign issuers to pay principal and interest on government
securities depends on various economic factors, including, without limitation,
the issuer's balance of payments, overall debt level, and cash-flow
considerations related to the availability of tax or other revenues to satisfy
the issuer's obligations. If a foreign governmental entity is unable or
unwilling to meet its obligations on the securities in accordance with their
terms, a Fund may have limited recourse available to it in the event of default.
The laws of some foreign countries may limit a Fund's ability to invest in
securities of certain issuers located in those foreign countries. Special tax
considerations apply to foreign securities. Except as otherwise provided in this
Prospectus, there is no limit on the amount of a Fund's assets that may be
invested in foreign securities.
If a Fund purchases securities denominated in foreign currencies, a change in
the value of any such currency against the U.S. dollar will result in a change
in the U.S. dollar value of the Fund's assets and the Fund's income available
for distribution. In addition, although at times most of a Fund's income may be
received or realized in these currencies, the Fund will be required to compute
and distribute its income in U.S. dollars. Therefore, if the exchange rate for
any such currency declines after the Fund's income has been earned and
translated into U.S. dollars but before payment, the Fund could be required to
liquidate portfolio securities to make such distributions. Similarly, if an
exchange rate declines between the time the Fund incurs expenses in U.S. dollars
and the time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount in any such currency of such expenses at
the time they were incurred. A Fund may buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments.
In determining whether to invest in debt securities of foreign issuers, SCMI
considers the likely impact of foreign taxes on the net yield available to the
Fund and its shareholders. Income received by a Fund from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by a Fund will reduce its
net income available for distribution to shareholders. In certain circumstances,
a Fund may be able to pass through to shareholders credits for foreign taxes
paid. See "How to Sell Shares - Dividends, Distributions and Taxes."
Certain Funds may invest in securities of issuers in emerging market countries
with respect to some or all of their assets. The securities' prices and relative
currency values of emerging market investments are subject to greater volatility
than those of issuers in many more developed countries. Investments in emerging
market countries are subject to the same risks applicable to foreign investments
generally, although those risks may be increased due to conditions in such
countries. For example, the securities markets and legal systems in emerging
market countries may only be in a developmental stage and may provide few, or
none, of the advantages or protections of markets or legal systems available in
more developed countries. Although many of the securities in which the Funds may
invest are traded on securities exchanges, they may trade in limited volume, and
the exchanges may not provide all of the conveniences or protections provided by
securities exchanges in more developed markets. The Funds may also invest a
substantial portion of their assets in securities traded in the over-the-counter
markets in such countries and not on any exchange, which may affect the
liquidity of the investment and expose the Funds to the credit risk of their
counterparties in trading those investments. Emerging market countries may
experience extremely high rates of inflation, which may adversely affect these
countries' economies and securities markets.
19
<PAGE>
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates will
affect the U.S. dollar values of securities denominated in foreign currencies.
Exchange rates between the U.S. dollar and other currencies fluctuate in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation, and other
factors, many of which may be difficult (if not impossible) to predict. A Fund
may engage in foreign currency exchanges transactions to protect against
uncertainty in the level of future exchange rates. Although the strategy of
engaging in foreign currency exchange transactions could reduce the risk of loss
due to a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.
In particular, a Fund may enter into foreign currency exchange transactions to
protect against a change in exchange ratios that may occur between the date on
which the Fund contracts to trade a security and the settlement date
("transaction hedging") or in anticipation of placing a trade ("anticipation
hedging"); to "lock in" the U.S. dollar value of interest and dividends to be
paid in a foreign currency; or to hedge against the possibility that a foreign
currency in which portfolio securities are denominated or quoted may suffer a
decline against the U.S. dollar ("position hedging"). The International Bond
Fund may also enter into forward contracts to adjust the Fund's exposure to
various foreign currencies, either pending anticipated investments in securities
denominated in those currencies or as a hedge against anticipated market
changes.
SCMI may seek to enhance a Fund's investment return through active currency
management. SCMI may buy or sell foreign currencies for a Fund, on a spot or
forward basis, in an attempt to profit from inefficiencies in the pricing of
various currencies or of debt securities denominated in those currencies.
When investing in foreign securities, a Fund usually effects currency exchange
transactions on a "spot" (I.E., cash) basis at the spot rate prevailing in the
foreign exchange market. A Fund incurs foreign exchange expenses in converting
assets from one currency to another. In addition, the International Bond Fund
may, to a limited extent purchase forward contracts to increase exposure in
foreign currencies that are expected to appreciate and thereby increase total
return.
A forward currency contract is an obligation to purchase or sell a specific
currency at a future date (which may be any fixed number of days from the date
of the contract agreed upon by the parties) at a price set at the time of the
contract. Forward contracts do not eliminate fluctuations in the underlying
prices of securities and expose the Fund to the risk that the counterparty is
unable to perform.
Forward contracts are not exchange traded, and there can be no assurance that a
liquid market will exist at a time when a Fund seeks to close out a forward
contract. Currently, only a limited market, if any, exists for exchange
transactions relating to currencies in certain emerging markets or to securities
of issuers domiciled or principally engaged in business in certain emerging
markets. This may limit a Fund's ability to hedge its investments in those
markets. These contracts involve a risk of loss if SCMI fails to predict
accurately changes in relative currency values, the direction of stock prices or
interest rates and other economic factors.
From time to time, a Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign currency and
may at times involve currencies in which its portfolio securities are not then
denominated ("cross hedging"). From time to time, a Fund may also engage in
"proxy" hedging, whereby the Fund would seek to hedge the value of portfolio
holdings denominated in one currency by entering into an exchange contract on a
second currency, the valuation of which SCMI believes correlates to the value of
the first currency. Cross hedging and proxy hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions relate and changes in the value of the currency or other
asset or liability that is the subject of the hedge.
INVESTMENTS IN SMALLER COMPANIES. Certain Funds may invest all or a substantial
portion of their assets in securities issued by small companies. Such companies
may offer greater opportunities for capital appreciation than larger companies,
but investments in such companies may involve certain special risks. Such
20
<PAGE>
companies may have limited product lines, markets, or financial resources and
may be dependent on a limited management group. While the markets in securities
of such companies have grown rapidly in recent years, such securities may trade
less frequently and in smaller volume than more widely held securities. The
values of these securities may fluctuate more sharply than those of other
securities, and a Fund may experience some difficulty in establishing or closing
out positions in these securities at prevailing market prices. There may be less
publicly available information about the issuers of these securities or less
market interest in such securities than in the case of larger companies, and it
may take a longer period of time for the prices of such securities to reflect
the full value of their issuers' underlying earnings potential or assets.
Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of a Fund to dispose of such
securities may be greatly limited, and a Fund may have to continue to hold such
securities during periods when SCMI would otherwise have sold the securities. It
is possible that SCMI or its affiliates or clients may hold securities issued by
the same issuers, and may in some cases have acquired the securities at
different times, on more favorable terms, or at more favorable prices, than a
Fund.
LEVERAGE. The International Bond Fund may borrow money by engaging in reverse
repurchase agreements to invest in additional securities. "Reverse" repurchase
agreements generally involve the sale by the Fund of securities held by it and
an agreement to repurchase the securities at an agreed-upon price, date, and
interest payment. Certain other Funds may engage in forward commitments,
described below and in the SAI, which may have the same economic effect as if
the Funds had borrowed money.
The use of borrowed money, known as "leverage," increases the International Bond
Fund's market exposure and risk and may result in losses. When the Fund has
borrowed money for leverage and its investments increase or decrease in value,
its net asset value will normally increase or decrease more than if it had not
borrowed money for this purpose. The interest that the Fund must pay on borrowed
money will reduce its net investment income, and may also either offset any
potential capital gains or increase any losses. The Fund will not always borrow
money for investment, and the extent to which the Fund will borrow money and the
amount it may borrow, depends on market conditions and interest rates.
Successful use of leverage depends on SCMI's ability to predict market movements
correctly. The amount of leverage that can exist at any one time will not exceed
one-third of the value of the Fund's total assets (including the amount
borrowed). A Fund may be required to segregate certain assets against its
obligations under reverse repurchase agreements entered into by it.
DEBT SECURITIES. All of the Funds may invest in debt securities. A Fund may
invest in debt securities either to earn investment income or to benefit from
changes in the market values of such securities. Debt securities are subject to
market risk (the fluctuation of market value in response to changes in interest
rates) and to credit risks (the risk that the issuer may become unable or
unwilling to make timely payments of principal and interest).
Each Fund also may invest in lower-quality, high-yielding debt securities rated
below investment grade and in unrated debt securities determined by SCMI to be
of comparable quality. Lower-rated debt securities (commonly called "junk
bonds") are considered to be of poor standing and predominantly speculative.
Securities in the lowest rating categories may have extremely poor prospects of
attaining any real investment standing, and some of those securities in which a
Fund may invest may be in default. The rating services' descriptions of
securities in the lower rating categories, including their speculative
characteristics, are set forth in Appendix A to this Prospectus.
In addition, lower-rated securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the perceived ability of an issuer to make payments of interest and principal
may also affect the value of these investments. The inability (or perceived
inability) of issuers to make timely payments of interest and principal would
likely make the values of
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<PAGE>
securities held by the Fund more volatile and could limit the Fund's ability to
sell its securities at prices approximating the values the Fund had placed on
such securities. In the absence of a liquid trading market for securities held
by it, the Fund may be unable at times to establish the fair value of such
securities. The rating assigned to a security by a rating agency does not
reflect an assessment of the volatility of the security's market value or of the
liquidity of an investment in the security.
Each Fund may at times invest in so-called "zero coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity, rather than at intervals
during the life of the security. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. The values of zero-coupon bonds and payment-in-kind bonds are
subject to greater fluctuation in response to changes in market interest rates
than bonds which pay interest currently, and may involve greater credit risk
than such bonds. From time to time, a Fund may invest a portion of its assets in
Brady Bonds, which are securities created through the exchange of existing
commercial bank loans to sovereign entities for new obligations in connection
with debt restructuring. Brady Bonds have been issued only recently and,
therefore, do not have a long payment history.
A Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although SCMI will monitor the
investment to determine whether continued investment in the security will assist
in meeting the Fund's investment objective.
OPTIONS AND FUTURES TRANSACTIONS. Each Fund may engage in a variety of
transactions involving the use of options and futures contracts. A Fund may
engage in such transactions for hedging purposes or, to the extent permitted by
applicable law, to increase its current return.
A Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. A Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. A Fund may also buy and sell put and call options on such
securities for hedging purposes. When a Fund writes a call option on a portfolio
security, it gives up the opportunity to profit from any increase in the price
of the security above the exercise price of the option; when it writes a put
option, a Fund takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price of the
security. A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. A Fund may also from time
to time buy and sell combinations of put and call options on the same underlying
security to earn additional income.
A Fund may buy and sell index futures contracts. An "index future" is a contract
to buy or sell units of a particular index at an agreed price on a specified
future date. Depending on the change in value of the index between the time when
a Fund enters into and terminates an index future transaction, the Fund may
realize a gain or loss. A Fund may also purchase warrants, issued by banks or
other financial institutions, whose values are based on the values from time to
time of one or more securities indices.
A Fund may buy and sell futures contracts on U.S. Government securities or other
debt securities. A futures contract on a debt security is a contract to buy or
sell a certain amount of the debt security at an agreed price on a specified
future date. Depending on the change in the value of the security when the Fund
enters into and terminates a futures contract, the Fund realizes a gain or loss.
A Fund may purchase and sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.
A Fund may also purchase and sell put and call options on foreign currencies,
futures contracts on foreign currencies, and options on foreign currency futures
contracts as an alternative, or in addition to, the foreign
22
<PAGE>
currency exchange transactions described above. Such transactions are similar to
options and futures contracts on securities, except that they typically
contemplate that one party to a transaction will deliver one foreign currency to
the other in return for another currency (which may or may not be the U.S.
dollar).
RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that a Fund may be
unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that SCMI
may not forecast market movements correctly.
The effective use of options and futures strategies is dependent on, among other
things, a Fund's ability to terminate options and futures positions at times
when SCMI deems it desirable to do so. Although a Fund will enter into an option
or futures contract position only if SCMI believes that a liquid secondary
market exists for that option or futures contract, there is no assurance that a
Fund will be able to effect closing transactions at any particular time or at an
acceptable price.
Each Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter markets. A Fund's ability
to terminate options in the over-the-counter markets may be more limited than
for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to a Fund. A Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of SCMI, the pricing mechanism and liquidity of the
over-the-counter markets are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. A Fund will treat over-
the-counter options (and, in the case of options sold by the Fund, the
underlying securities held by the Fund) as illiquid investments as required by
applicable law.
The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities, index, or currency, or in
the prices of the securities that are the subject of a hedge. The successful use
of these strategies further depends on the ability of SCMI to forecast market
movements correctly.
Because the markets for certain options and futures contracts in which a Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, a Fund's
ability to engage in transactions using such investments may be limited. A
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. A Fund's hedging transactions may affect the
character or amount of its distributions. The tax consequences of certain
hedging transactions have been modified by the Taxpayer Relief Act of 1997.
For more information about any of the options or futures portfolio transactions
described above, see the SAI.
SWAP AGREEMENTS. The International Bond Fund may enter into interest-rate,
index, and currency exchange rate swap agreements for purposes of attempting to
obtain a particular desired return at a lower cost to the Fund than if the Fund
had invested directly in an instrument that yielded that desired return. Swap
agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
typical "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments. The gross returns to be exchanged or "swapped"
between the parties are calculated with respect to a "notional amount" (I.E. the
return on or increase in value of a particular dollar amount invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of
securities representing a particular index). Commonly used swap agreements
include interest-rate caps, under which, in return for a premium, one party
agrees to make payments to the other to the extent that interest rates exceed a
specified
23
<PAGE>
rate, or "cap"; interest-rate floors, under which, in return for a premium, one
party agrees to make payments to the other to the extent that interest rates
fall below a specified level, or "floor"; and interest-ratecollars, under which
a party sells a cap and purchases a floor or vice versa in an attempt to protect
itself against interest rate.
The use of swap agreements is a highly specialized activity that involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If SCMI is incorrect in its forecast of
market values, interest rates, exchange rates or other factors, the Fund's
investment performance would be less favorable than if the Fund had not used
such agreements.
SHORT SALES. The Micro Cap Fund may engage in "short sales", which are
transactions in which the Fund sells a security that it does not own in
anticipation of a decline in the market value of that security. To complete the
transaction, the Fund must borrow the security to make delivery to the
purchaser. The Fund is then obligated to replace the borrowed security through a
purchase of it at the market price at the time of replacement. The price at that
time may be more or less than the price at which the security was sold by the
Fund. The Fund incurs a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. The Fund realizes a gain if the security
declines in price between those dates. The result is the opposite of what one
would expect from a cash purchase of a long position in a security.
Until the security is replaced, the Fund is required to pay the lender amounts
equal to any dividend that accrues during the period of the loan. To borrow the
security, the Fund also may be required to pay a premium or specified amounts in
lieu of interest. The amount of any gain is decreased, and the amount of any
loss is increased, by any premium or amounts in lieu of interest the Fund is
required to pay. The proceeds of the short sale are retained by the broker, to
the extent necessary to meet margin requirements, until the short position is
closed out. No securities will be sold short, however, if thereafter the total
market value of all securities sold short would exceed 25% of the value of the
Fund's assets.
In addition, the Fund may make short sales "against-the-box", which means that
the Fund sells short a security that it already owns. The proceeds of the short
sale are held by a broker until the settlement date, at which time the Fund
delivers the security to close the short position. The Fund receives the net
proceeds from the short sale. It is anticipated that the Fund will make short
sales against-the-box to protect the value of its net assets. Further
information regarding limits of short sales is contained in the SAI.
NON-DIVERSIFICATION AND GEOGRAPHIC CONCENTRATION. Emerging Markets Fund and the
International Bond Fund are "non-diversified" mutual fund, and each Fund may
invest its assets in a more limited number of issuers than may other investment
companies. Under the Internal Revenue Code, an investment company, including a
non-diversified investment company, generally may not invest more than 25% of
its total assets in obligations of any one issuer other than U.S. Government
obligations and, with respect to 50% of its total assets, a Fund may not invest
more than 5% of its total assets in the securities of any one issuer (except
U.S. Government obligations). Thus, each Fund may invest up to 25% of its total
assets in the securities of each of any two issuers. This practice involves an
increased risk of loss to a Fund if the market value of a security should
decline or its issuer were otherwise not to meet its obligations.
Any of the Funds may invest more than 25% of its total assets in issuers located
in any one country. To the extent that it does so, the Fund is susceptible to a
range of factors that could adversely affect that country, including political
and economic developments and foreign exchange-rate fluctuations as discussed
above. As a result of investing substantially in one country, the value of the
Fund's assets may fluctuate more widely than the value of shares of a comparable
fund with a lesser degree of geographic concentration.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS. Each Fund may
lend portfolio securities to brokers, dealers and financial institutions meeting
specified credit conditions, and may enter into repurchase agreements without
limit such activities may create taxable income in excess of the cash
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<PAGE>
they generate. The percentage limitation on the amount of a Fund's total assets
that may be loaned in accordance with the approved procedures is as follows:
SCHRODER INTERNATIONAL FUND - 10%; SCHRODER INTERNATIONAL SMALLER COMPANIES
FUND, SCHRODER INTERNATIONAL BOND FUND, SCHRODER U.S. EQUITY FUND, SCHRODER U.S.
SMALLER COMPANIES and SCHRODER MICRO CAP FUND - 25%; and SCHRODER EMERGING
MARKETS FUND - 33 1/3%. These transactions must be fully collateralized at all
times but involve some risk to a Fund if the other party should default on its
obligation and the Fund is delayed or prevented from recovering its assets or
realizing on the collateral. Each Fund may also purchase securities for future
delivery, which may increase its overall investment exposure and involves a risk
of loss if the value of the securities declines prior to the settlement date.
INVESTMENT IN OTHER INVESTMENT COMPANIES. Each Fund is permitted to invest in
other investment companies or pooled vehicles, including closed-end funds, that
are advised by SCMI or its affiliates or by unaffiliated parties. A Fund may
invest in the shares of other investment companies that invest in securities in
which the Fund is permitted to invest, subject to the limits and conditions
required under the Investment Company Act of 1940, as amended, (the "1940 Act")
or any orders, rules or regulations thereunder. When investing through
investment companies, a Fund may pay a premium above such investment companies'
net asset value per share. As a shareholder in an investment company, the Fund
would bear its ratable share of the investment company's expenses, including its
advisory and administrative fees. At the same time, the Fund would continue to
pay its own fees and expenses.
LIQUIDITY. A Fund will not invest more than 15% (10%, in the case of the
International Fund and the U.S. Equity Fund) of its net assets in securities
determined by SCMI to be illiquid. Certain securities that are restricted as to
resale may nonetheless be resold by a Fund in accordance with Rule 144A under
the Securities Act of 1933, as amended. Such securities may be determined by
SCMI to be liquid for purposes of compliance with the limitation on a Fund's
investment in illiquid securities. There can, however, be no assurance that a
Fund will be able to sell such securities at any time when SCMI deems it
advisable to do so or at prices prevailing for comparable securities that are
more widely held.
ALTERNATIVE INVESTMENTS. At times, SCMI may judge that market conditions make
pursuing a Fund's basic investment strategy inconsistent with the best interests
of its shareholders. At such times, SCMI may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the values of the
Fund's assets. In implementing these "defensive" strategies, a Fund may invest
without limit in U.S. government obligations and other high-quality debt
instruments and any other investment SCMI considers to be consistent with such
defensive strategies, and may hold any portion of its assets in cash.
PORTFOLIO TURNOVER
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. The investment policies of a Fund may
lead to frequent changes in the Fund's investments, particularly in periods of
volatile market movements. A change in the securities held by a Fund is known as
"portfolio turnover." Portfolio turnover generally involves some expense to a
Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. Such
securities sales may result in realization of taxable capital gains.
HOW TO BUY SHARES
Investors may purchase Investor Shares of each Fund directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Shareholder Services, LLC, the Trust's transfer agent
(the "Transfer Agent"). Investments also may be made through broker-dealers and
other financial institutions ("Service Organizations"). Service Organizations
may charge their customers a service fee for processing orders to purchase or
sell shares. Investors wishing to purchase Shares through
25
<PAGE>
their accounts at a Service Organization should contact that organization
directly for appropriate instructions. A Service Organization is responsible for
forwarding all necessary documentation to the Trust, and may charge for its
services.
Each Fund's Investor Shares are offered at the net asset value next-determined
after receipt of your completed account application (at the address set forth
below) and your purchase request in good order. The minimum initial investment
and the minimum subsequent investment for each Fund is set forth in the table
below. A Service Organization may impose higher minimums on your initial or
subsequent investment. The Trust is authorized to reject any purchase order.
<TABLE>
<CAPTION>
INITIAL SUBSEQUENT
FUND INVESTMENT INVESTMENT
- -------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Schroder International Fund $ 10,000 $ 2,500
Schroder Emerging Markets Fund $ 10,000 $ 2,500
Schroder International Smaller Companies Fund $ 10,000 $ 2,500
Schroder International Bond Fund $ 10,000 $ 2,500
Schroder U.S. Equity Fund $ 10,000 $ 2,500
Schroder U.S. Smaller Companies Fund $ 10,000 $ 2,500
Schroder Micro Cap Fund $ 10,000 $ 2,500
</TABLE>
Purchases may be made by mailing a check (in U.S. dollars), payable to the Fund
to:
[Name of Fund] - Investor Shares
P.O. Box 446
Portland, Maine 04112
For initial purchases, the check must be accompanied by a completed account
application in proper form. Further documentation, 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.
You may make subsequent purchases by mailing a check, by sending a bank wire, or
through your Service Organization, as indicated. All payments should clearly
indicate the shareholder's name and account number.
Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
Ref.: [Name of the Fund] - Investor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class (I.E.,
Investor Shares), the account name and number, address, confirmation number,
amount to be wired, name of the wiring bank, and name and telephone number of
the person to be contacted in connection with the order. If the initial
investment is by wire, an account number will be assigned and a completed
account application must be mailed to the Fund before any transaction will be
effected. Wire orders received prior to the close of the New York Stock Exchange
on a day when the New York Stock Exchange is open for trading are processed at
the net asset value determined as of that day. Wire orders received after the
close of the New York Stock Exchange are processed at the net asset value next
determined.
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<PAGE>
The Fund's Transfer Agent establishes for each shareholder of record an open
account to which all shares purchased and all reinvested dividends and other
distributions are credited. Although most shareholders elect not to receive
share certificates, certificates for full shares can be obtained by written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions are automatically reinvested. In
addition, the amount of any outstanding checks for dividends and other
distributions that have been returned to the Transfer Agent are reinvested, and
the checks are canceled.
DISTRIBUTOR
Schroder Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York,
New York 10019, serves as Distributor of the Funds' shares. Schroder Advisors
was organized in 1989 as a registered broker-dealer to serve as an administrator
and distributor of each Fund and other mutual funds.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Investor Shares are offered in connection with tax-deferred retirement plans,
including traditional and Roth IRAs. Application forms and further information
about these plans, including applicable fees, are available upon request. Before
investing in a Fund through one of these plans, investors should consult their
tax advisors.
The Funds may be used as an investment vehicle for an IRA including a SEP-IRA.
An IRA naming Bank-Boston as custodian is available from the Trust or the
Transfer Agent. The minimum initial investment for an IRA and the minimum
subsequent investment for each Fund is set forth in the table below. Generally,
contributions and investment earnings in a traditional IRA grow tax-deferred
until withdrawn. In contrast, contributions to a Roth IRA are not
tax-deductible, but investment earnings generally grow tax-free. IRAs are
available to individuals (and their spouses) who receive compensation or earned
income whether or not they are active participants in a tax-qualified or
government-approved retirement plan. An IRA contribution by an individual or
spouse who participates in a tax-qualified or government-approved retirement
plan may not be deductible, depending upon the individual's income. Individuals
also may establish an IRA to receive a "rollover" contribution of distributions
from another IRA or qualified plan. Consult your tax advisor.
<TABLE>
<CAPTION>
INITIAL SUBSEQUENT
FUND INVESTMENT INVESTMENT
- --------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Schroder International Fund $ 2,000 $ 250
Schroder Emerging Markets Fund $ 2,000 $ 250
Schroder International Smaller Companies Fund $ 2,000 $ 250
Schroder International Bond Fund $ 2,000 $ 250
Schroder U.S. Equity Fund $ 2,000 $ 250
Schroder U.S. Smaller Companies Fund $ 2,000 $ 250
Schroder Micro Cap Fund $ 2,000 $ 250
</TABLE>
EXCHANGES
You may exchange a Fund's Investor Shares for Investor Shares of any fund
offered by the Schroder family of funds so long as your investment meets the
initial investment minimum of the fund being purchased, and you maintain the
respective minimum account balance in each fund in which you own shares.
Exchanges between funds are made at net asset value.
27
<PAGE>
For federal income tax purposes, an exchange is considered to be a sale of
shares on which you may realize a capital gain or loss. If you hold Investor
Shares directly, you may make an exchange by calling the Transfer Agent at
1-800-344-8332 (see "How to Sell Shares - By Telephone") or by mailing written
instructions to Schroder Capital Funds (Delaware), P.O. Box 446, Portland, Maine
04112. If you hold Investor Shares through a Service Organization, you must make
an exchange through the Service Organization. Exchange privileges may be
exercised only in those states where shares of the other funds of the Schroder
family of funds may legally be sold. Exchange privileges may be amended or
terminated at any time upon sixty (60) days' notice.
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 the minimum initial
investment or more in Investor Shares of a 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 a Fund should complete the appropriate
portion of the account application form. Current Fund shareholders can obtain a
Statement of Intention form by contacting the Transfer Agent.
The Trust 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 initial investment amount.
HOW TO SELL SHARES
You can sell your Investor Shares in a Fund to that Fund any day the New York
Stock Exchange is open, either through your Service Organization or directly to
the Fund. If your shares are held in the name of a Service Organization, you may
only sell the shares through that Service Organization. The Trust will only
redeem shares for which it has received payment.
Investor Shares are redeemed at their net asset value next determined after
receipt by the Fund (see the address set forth under "How to Buy Shares") of a
redemption request in proper form. Redemption requests that are received in good
order prior to the close of the Exchange on a day on which the Exchange is open
are processed at the net asset value determined as of that day. Redemption
requests that are received after the close of the Exchange are processed at the
net asset value next determined.
TELEPHONE REQUESTS
Redemption requests may be made by a shareholder of record by telephoning the
Transfer Agent at the telephone number on the cover page of this Prospectus. A
shareholder must provide the Transfer Agent with the class of shares, the dollar
amount or number of shares to be redeemed, shareholder account number, and some
additional form of identification such as a password. A redemption by telephone
may be made only if the telephone redemption privilege option has been elected
on the account application or otherwise in writing. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, reasonable
procedures will be followed by the Transfer Agent to confirm that telephone
instructions are genuine. The Transfer Agent and the Trust generally will not be
liable for any losses due to unauthorized or fraudulent redemption requests, but
either or both may be liable if they do not follow these procedures. Shares for
which certificates have been issued may not be redeemed by telephone. In times
of drastic economic or market change, it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.
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WRITTEN REQUESTS
Redemptions may be made by a shareholder of record by letter to a 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 1-800-290-9826.
If Investor Shares to be redeemed are held in certificate form, the certificates
must be enclosed with the redemption request, and the assignment form on the
back of the certificates (or an assignment separate from the certificates but
accompanied by the certificates) must be signed by all owners in exactly the
same way the owners' names are written on the face of the certificates.
Requirements for signature guarantees and/or documentation of authority as
described above could also apply. For your protection, the Trust suggests that
certificates be sent by registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally are
mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of Investor 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
is sent to the shareholder's address of record.
A Fund may suspend the right of redemption during any period when: (1) trading
on the New York Stock Exchange is restricted or the New York Stock Exchange is
closed; (2) the SEC has by order permitted such suspension; or (3) an emergency
(as defined by rules of the SEC) exists making disposal of portfolio investments
or determination of the Fund's net asset value not reasonably practicable.
If the Board of Trustees determines that it would be detrimental to the best
interest of the remaining shareholders of a Fund to make payment wholly or
partly in cash, a Fund may redeem Investor Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Investor 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 Investor Shares is made wholly or partly in portfolio
securities, the shareholder may be subject to additional risks and costs in
converting the securities to cash. See "Additional Purchase and Redemption
Information" in the SAI.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for federal income tax
purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account (other than an IRA) if at any
time the account does not have a value of at least $2,000, unless the value of
the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and will be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.
The Trust may also redeem shares if you own shares of any Fund above a maximum
amount set by the Trustees. There is currently no maximum, but the Trustees may
establish one at any time, which could apply to both present and future
shareholders.
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OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
EACH FUND CALCULATES THE NET ASSET VALUE OF ITS INVESTOR SHARES BY DIVIDING THE
TOTAL VALUE OF ITS ASSETS ATTRIBUTABLE TO ITS INVESTOR SHARES, LESS ITS
LIABILITIES ATTRIBUTABLE TO THOSE SHARES, BY THE NUMBER OF ITS INVESTOR SHARES
OUTSTANDING. Shares are valued as of the close of the New York Stock Exchange
(normally, 4:00 p.m. Eastern time) each day the Exchange is open. Portfolio
securities for which market quotations are readily available are stated at
market value. Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All other securities
and assets are valued at their fair values determined in accordance with
procedures approved by the Board of Trustees. The net asset value of a Fund's
Investor Shares will generally differ from that of its other class of shares due
to the variance in daily net income realized by and dividends paid on each class
of shares, and differences in the expenses of the different classes. All assets
and liabilities of a Fund denominated in foreign currencies are valued in U.S.
dollars based on the exchange rate last quoted by a major bank prior to the time
when the net asset value of the Fund is calculated.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund distributes any net investment income and any net realized capital
gain at least annually. Distributions from net capital gain are made after
applying any available capital loss carryovers.
YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS: (1) reinvest all distributions in
additional Investor Shares of your Fund; (2) receive distributions from net
investment income in cash while reinvesting capital-gain distributions in
additional Investor Shares of your Fund; (3) receive distributions from net
investment income in additional Investor Shares of your Fund while receiving
capital-gain distributions in cash; or (4) receive all distributions in cash.
You can change your distribution option by notifying the Transfer Agent in
writing. If you do not select an option when you open your account, all
distributions by a Fund will be reinvested in Investor Shares of that Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.
TAXES
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gain it distributes to
shareholders. A Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.
All Fund distributions will be taxable to you as ordinary income, except that
any distributions of net long-term capital gain will be taxed as such,
regardless of how long you have held the shares. Long-term capital gains will be
subject to a maximum rate of 28% or 20%, depending upon the holding period of
the portfolio investment generating the gains. Distributions will be taxable as
described above whether received in cash or in shares through the reinvestment
of distributions.
Early in each year the Trust will notify you of the amount and tax status of
distributions paid to you by each Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax advisor to determine the
precise effect of an investment in a Fund on your particular tax situation.
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CERTAIN INFORMATION REGARDING FOREIGN TAXES. Foreign governments may impose
taxes on the Funds and the Portfolios and their investments, which generally
would reduce the income of the Fund or Portfolio. However, an offsetting tax
credit or deduction may be available to you.
Each Fund that is eligible to do so intends to elect to permit its shareholders
to take a credit (or a deduction) for the Fund's share of qualified foreign
income taxes paid by the Portfolio in which that Fund invests its assets. If the
Fund does make such an election, its shareholders would include as gross income
in their federal income tax returns both: (1) distributions received from the
Fund; and (2) the amount that the Fund advises is their pro rata portion of
foreign income taxes paid with respect to or withheld from dividends and
interest paid to the Fund from its foreign investments. Shareholders then would
be entitled, subject to certain limitations, (including, with respect to a
foreign tax credit, a holding period requirement) to take a foreign tax credit
against their federal income tax liability for the amount of such foreign taxes
or else to deduct such foreign taxes as an itemized deduction from gross income.
THE PORTFOLIOS
The Portfolios are not required to pay federal income tax because they are
classified as partnerships for federal income tax purposes. All interest,
dividends, gain and losses of the Portfolios will be deemed to have been "passed
through" to the Funds in proportion to the Funds' holdings in the Portfolios
regardless of whether such interest, dividends or gain have been distributed by
the Portfolios.
Each Portfolio intends to conduct its operations so as to enable each Fund, if
each invests all of its assets in a Portfolio, to qualify as a regulated
investment company.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. The business and affairs of each Portfolio are
managed under the direction of the Board of Trustees of Schroder Capital Funds
or of Schroder Capital Funds II. Information regarding the trustees and
executive officers of the Trust, as well as the Trustees and executive officers
of Schroder Capital Funds and Schroder Capital Funds II, may be found in the
SAI.
Schroder Capital Management International Inc. ("SCMI") is the investment
adviser to each of the Funds. SCMI is a wholly owned U.S. subsidiary of
Schroders U.S. Holdings Inc., which engages through its subsidiary firms in the
investment banking, asset management and securities businesses. Affiliates of
Schroders U.S. Holdings Inc. (or their predecessors) have been investment
managers since 1927. SCMI and its United Kingdom affiliate, Schroder Capital
Management International, Ltd., have served as investment managers for
approximately $28 billion in the aggregate as of September 30, 1997. Schroders
U.S. Holdings Inc. is an indirect, wholly owned U.S. subsidiary of Schroders
plc, a publicly owned holding company organized under the laws of England.
Schroders plc and its affiliates engage in international merchant banking and
investment management businesses, and as of September 30, 1997, had under
management assets of over $175 billion. Schroder Fund Advisors Inc. ("Schroder
Advisors") is a wholly owned subsidiary of SCMI.
SCMI also serves as investment adviser to each of the Portfolios of Schroder
Capital Funds and Schroder Capital Funds II. Each of those Portfolios pays
advisory fees to SCMI monthly at the following annual rates (based on the assets
of each Portfolio taken separately): INTERNATIONAL EQUITY FUND - 0.45% of the
Portfolio's average daily net assets; SCHRODER INTERNATIONAL BOND PORTFOLIO -
0.50% of the Portfolio's average daily net assets; SCHRODER INTERNATIONAL
SMALLER COMPANIES PORTFOLIO - 0.85% of the Portfolio's average daily net assets;
SCHRODER EM CORE PORTFOLIO - 1.00% of the Portfolio's average daily net assets;
and
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SCHRODER U.S. SMALLER COMPANIES PORTFOLIO - 0.60% of the Portfolio's average
daily net assets. Each Fund, due to its investment in a Portfolio, bears a
proportionate part of the management fees paid by the Portfolio (based on the
percentage of the Portfolio's assets attributable to the Fund).
Each Fund (except Schroder U.S. Equity Fund and Schroder Micro Cap Fund) has
entered into an investment advisory agreement with SCMI pursuant to which SCMI
would manage the Fund's assets directly in the event that the Fund were to cease
investing substantially all of its assets in a Portfolio. SCMI will not receive
any fees under that agreement so long as a Fund continues to invest
substantially all of its assets in a Portfolio (or another investment company).
For further information on these dormant investment advisory agreements, see the
SAI.
SCHRODER U.S. EQUITY FUND pays advisory fees to SCMI monthly at the annual rates
of 0.75% of the first $100 million of the Fund's average daily net assets and
0.50% of the Fund's average daily net assets in excess of $100 million. Schroder
Micro Cap Fund pays advisory fees monthly to SCMI at the annual rate of 1.25% of
the Fund's average daily net assets.
ADMINISTRATIVE SERVICES. The Trust, on behalf of each Fund (other than the U.S.
Equity Fund), has entered into an administration agreement with Schroder
Advisors, pursuant to which Schroder Advisors provides certain management and
administrative services to those Funds. The Trust, on behalf of each Fund has
entered into subadministration agreements with Forum Administrative Services,
LLC, Two Portland Square, Portland, Maine 04101 ("FAdS"), pursuant to which FAdS
provides certain management and administrative services necessary for the Funds'
operations. The Trust pays fees to Schroder Advisors and to FAdS monthly at the
following annual rates: SCHRODER INTERNATIONAL FUND - 0.15% and 0.05%,
respectively, of the Fund's average daily net assets; SCHRODER EMERGING MARKETS
FUND - 0.15% and 0.075%, respectively, of the Fund's average daily net assets;
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND - 0.10% and 0.075%, respectively,
of the Fund's average daily net assets; SCHRODER INTERNATIONAL BOND FUND - 0.10%
and 0.075%, respectively, of the Fund's average daily net assets; SCHRODER U.S.
SMALLER COMPANIES FUND - 0.25% and 0.075%, respectively, of the Fund's average
daily net assets; and SCHRODER MICRO CAP FUND - 0.25% and 0.10%, respectively,
of the Fund's average daily net assets. Each of the Emerging Markets Fund, the
International Smaller Companies Fund and Micro Cap Fund also is subject to a
$25,000 minimum annual fee plus a $12,000 charge per class under the
subadministration agreement.
Schroder Advisors and FAdS also serve as administrator and subadministrator,
respectively, to each of the Portfolios of Schroder Capital Funds and Schroder
Capital Funds II. Each of those Portfolios pays administration fees to Schroder
Advisors and subadministration fees to FAdS monthly at the following annual
rates (based on the assets of each Portfolio taken separately): INTERNATIONAL
EQUITY FUND - % and %, respectively, of the Portfolio's average daily net
assets; SCHRODER INTERNATIONAL BOND PORTFOLIO - % and %, respectively, of
the Portfolio's average daily net assets; SCHRODER INTERNATIONAL SMALLER
COMPANIES PORTFOLIO - % and %, respectively, of the Portfolio's average
daily net assets; SCHRODER EM CORE PORTFOLIO - % and %, respectively, of
the Portfolio's daily net assets; and SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
- - % and %, respectively, of the Portfolio's average daily net assets.
Each Fund, due to its investment in a Portfolio, bears a proportionate part of
the administration and subadministration fees paid by the Portfolio (based on
the percentage of the Portfolio's assets attributable to the Fund).
In order to limit the Funds' expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of each of the Funds) with respect to each of the Funds to the
extent that a Fund's expenses chargeable to Investor Shares exceed the following
annual rates: SCHRODER INTERNATIONAL FUND - 0.99% of the Fund's average daily
net assets attributable to Investor Shares; SCHRODER EMERGING MARKETS FUND -
1.70% of the Fund's average daily net assets attributable to Investor Shares;
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND - 1.50% of the Fund's average
daily net assets attributable to Investor Shares; SCHRODER INTERNATIONAL BOND
FUND - 0.95% of the Fund's average daily net assets attributable to Investor
Shares; SCHRODER U.S. EQUITY FUND - 1.50% of the Fund's average daily net
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assets attributable to Investor Shares; SCHRODER U.S. SMALLER COMPANIES FUND -
1.49% of the Fund's average daily net assets attributable to Investor Shares;
and SCHRODER MICRO CAP FUND - 2.00% of the Fund's average daily net assets
attributable to Investor Shares. In addition, SCMI has agreed to limit the
advisory fees paid by THE U.S. EQUITY FUND to 0.65% of the Fund's average daily
net assets. FAdS may waive voluntarily all or a portion of its subadvisory fees,
from time to time. The Trust pays all expenses not assumed by SCMI and Schroder
Advisors, including Trustees' fees, auditing, legal, custodial, and investor
servicing, and shareholder reporting expenses.
SCMI's investment decisions for each Portfolio in which a Fund invests (or, for
the U.S. Equity Fund, for the Fund) are made by an investment manager or an
investment team, with the assistance of an investment committee at SCMI. The
Portfolio Managers for each Fund are as follows:
MICHAEL PERELSTEIN - Portfolio Manager since January 1997 of Schroder
International Equity Portfolio, in which Schroder International Fund invests,
and Portfolio Manager since 19XX of Schroder International Bond Portfolio, in
which Schroder International Bond Fund invests. Mr Perelstein is a Vice
President of the Trust and of Schroder Capital Funds and is a Director and
Senior Vice President of SCMI. He was previously a Managing Director,
MacKay-Shields Financial Corp.
MARK BRIDGEMAN - Portfolio Manager since inception of Schroder EM Core
Portfolio, in which Schroder Emerging Markets Fund invests. Mr. Bridgeman is a
Vice President of SCMI.
HEATHER CRIGHTON - Portfolio Manager since inception of Schroder EM Core
Portfolio, in which Schroder Emerging Markets Fund invests. Ms. Crighton is a
First Vice President of SCMI.
JOHN A. TROIANO - Portfolio Manager since inception of Schroder EM Core
Portfolio, in which Schroder Emerging Markets Fund invests. Mr. Troiano is a
Vice President of the Trust and of Schroder Capital Funds. He is also the Chief
Executive of SCMI.
RICHARD R. FOULKES - Portfolio Manager since January 1997 of Schroder
International Smaller Companies Portfolio, in which Schroder International
Smaller Companies Fund invests. Mr. Foulkes is a Vice President of the Trust and
of Schroder Capital Funds. He is also Deputy Chairman of SCMI.
MARK ASTLEY - Portfolio Manager since inception of Schroder International Bond
Portfolio, in which Schroder International Bond Fund invests. Mr. Astley is a
Vice President of the Trust and of Schroder Capital Funds II. He is also a First
Vice President of SCMI.
JANE P. LUCAS - Portfolio Manager since November 1995 of Schroder U.S. Equity
Fund. Ms. Lucas is a Vice President of the Trust and Senior Vice President of
SCMI.
PAUL MORRIS - Portfolio Manager since January 1997 of Schroder U.S. Equity Fund.
Mr. Morris is Senior Vice President of SCMI. He was previously Principal and
Senior Portfolio Manager, Weiss Peck & Greer, L.L.C., and Managing Director,
Equity Division, UBS Asset Management.
FARIBA TALEBI - Portfolio Manager since inception of Schroder Smaller Companies
Portfolio, in which Schroder U.S. Smaller Companies Fund invests. Ms. Talebi is
a Vice President of the Trust and Group Vice President of SCMI.
SCMI places all orders for purchases and sales of the Funds' securities. In
selecting broker-dealers, SCMI may consider research and brokerage services
furnished to it and its affiliates. Schroder & Co., Inc. and Schroder Securities
Limited, affiliates of SCMI, may receive brokerage commissions from the Funds in
accordance with procedures adopted by the Trustees under the 1940 Act which
require periodic review of these transactions. Subject to seeking the most
favorable price and execution available, SCMI may consider sales of shares of
the Funds as a factor in the selection of broker-dealers.
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YEAR 2000
The Funds receive services from the investment adviser, administrators,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the year 1999 because of the inability
of the software to distinguish the year 2000 form the year 1900. SCMI is taking
steps that it believes are reasonably designed to address this potential Year
2000 problem and to obtain satisfactory assurances that comparable steps are
being taken by each of the Funds' other major service providers. There can be no
assurance, however, that these steps will be sufficient to avoid any adverse
impact on the Funds from this problem.
PERFORMANCE INFORMATION
Yield (for Investor Shares of the International Bond Fund) and total return data
relating to Investor Shares of the Funds may from time to time be included in
advertisement about the Funds. The "yield" of a Fund's Investor Shares is
calculated by dividing the Fund's annualized net investment income per Investor
Shares during a recent 30-day period by the net asset value per Investor Shares
on the last day of that period. When a Fund's total return is advertised with
respect to Investor Shares, it will be calculated for the past year, the past
five years, and the past ten years (or if a Fund's Investor Shares have been
offered for a period shorter than one, five, or ten years, that period will be
substituted) since the establishment of the Fund, as more fully described in the
SAI. Total return quotations assume that all dividends and distributions are
reinvested when paid.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE
PERFORMANCE. Investment performance of a Fund's Investor Shares, which will
vary, is based on many factors, including market conditions, the composition of
the Fund's portfolio, and the Fund's operating expenses attributable to its
Investor Shares. Investment performance also often reflects the risks associated
with each Fund's investment objectives and policies. Quotations of yield or
total return for any period when an expense limitation is in effect will be
greater than if the limitation had not been in effect. These factors should be
considered when comparing the investment results of a Fund's Investor Shares to
those of various classes of other mutual funds and other investment vehicles.
Performance of each Fund's Investor Shares may be compared to various indices.
See the SAI for a fuller discussion of performance information.
ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust was organized as a Maryland corporation on July 30, 1969, reorganized
on February 29, 1988 as Schroder Capital Funds, Inc. and reorganized as a
Delaware business trust on January 9, 1996. The Trust has an unlimited number of
shares of beneficial interest that may, without shareholder approval, be divided
into an unlimited number of series of such shares, which, in turn, may be
divided into an unlimited number of classes of such shares. The Trust's shares
of beneficial interest are presently divided into nine different series. Each
Fund's shares are presently divided into two classes, Investor Shares, which are
offered through this Prospectus, and Advisor Shares, which are offered through a
separate prospectus. Unlike Investor Shares, Advisor Shares are subject to
shareholder service and distribution fees, which will affect their performance
relative to Investor Shares. To obtain more information about Advisor Shares,
contact Schroder Capital Funds (Delaware) at 1-800-290-9826. The Trust's
principal office is located at Two Portland Square, Portland, Maine 04101, and
its telephone number is 1-207-879-8903.
Each share has one vote, with fractional shares voting proportionally.
Shareholders of a class of shares or series generally have separate voting
rights with respect to matters that affect only that class or series. See
"Organization and Capitalization" in the SAI. Shares are freely transferable and
are entitled to dividends and other distributions as declared by the Trustees.
Dividends paid by the Funds on their two classes of shares will normally differ
in amount due to the differing expenses borne by the two classes. If a Fund were
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liquidated, each class of shares would receive the net assets of the Fund
attributable to that class. The Trust may suspend the sale of a Fund's shares at
any time and may refuse any order to purchase shares. Although the Trust is not
required to hold annual meetings of its shareholders, shareholders have the
right to call a meeting to elect or remove Trustees, or to take other actions as
provided in the Declaration of Trust.
INFORMATION ABOUT THE PORTFOLIOS
Each of the Funds (other than the U.S. Equity Fund and the Micro Cap Fund) seeks
to achieve its investment objective, by investing all of its investable assets
in a Portfolio of Schroder Capital Funds or Schroder Capital Funds II, that has
the same investment objective and similar policies. In that way, a Portfolio
acquires investment securities directly, and a Fund acquires an indirect
interest in those securities. Schroder Capital Funds is a business trust
organized under the laws of the state of Delaware in September 1995. Schroder
Capital Funds II is a business trust organized under the laws of the State of
Delaware in December 1996. Each of Schroder Capital Funds and Schroder Capital
Funds II is registered under the 1940 Act as an open-end management investment
company. The assets of a Portfolio belong only to, and the liabilities of a
Portfolio are borne solely by, that Portfolio and no other Portfolio of Schroder
Capital Funds or Schroder Capital Funds II.
A Fund's investment in a Portfolio is in the form of a non-transferable
beneficial interest. All other investors in a Portfolio invest on the same terms
and conditions as the Fund and pay a proportionate share of the Portfolio's
expenses.
The Portfolios normally will not hold meetings of investors except as required
by the 1940 Act. Each investor in a 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, in accordance with applicable law the Board of
Trustees will either: (1) solicit voting instructions from Fund shareholders
with regard to the voting of all proxies with respect to a Fund's shares and
vote such proxies in accordance with such instructions, or (2) vote the
interests held by a Fund in the same proportion as the vote of all other holders
of the Portfolio's interests. 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 Portfolios do not sell their shares directly to members of the general
public. Another investor in a 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 investing in that
Portfolio and could have different fees and expenses than the Fund. Therefore,
Fund shareholders may have different returns than shareholders in another
investment company that invests exclusively in the same Portfolio. Information
regarding any such funds in the future will be available by calling
1-800-730-2932.
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement of a material fact in, or omission of
a material fact from, the registration statement. Each of Schroder Capital Funds
and Schroder Capital Funds II, their Trustees, and certain of their officers are
required to sign the registration statement of the Trust and may be required to
sign the registration statements of certain other investors in the Portfolio. In
addition, Schroder Capital Funds or Schroder Capital Funds II may be liable for
misstatements or omissions of a material fact in any proxy soliciting material
of an investor in a Portfolio, including a Fund. Each investor in a Portfolio,
including the Trust, is required to indemnify Schroder Capital Funds or Schroder
Capital Funds II, as the case may be, and their Trustees and officers ("SCF
Indemnitees") against certain claims.
Indemnified claims are those brought against SCF Indemnitees based on a
misstatement of a material fact in, or omission of a material fact from, a
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Capital
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Funds or Schroder Capital Funds II, as the case may be, and was supplied to the
investor by Schroder Capital Funds or Schroder Capital Funds II, as the case may
be. Similarly, Schroder Capital Funds or Schroder Capital Funds II, as the case
may be, is required to indemnify each investor in a Portfolio, including a Fund,
for any claims brought against the investor with respect to the investor's
registration statement or proxy materials, to the extent the claim is based on a
misstatement or omission of a material fact relating to information about
Schroder Capital Funds or Schroder Capital Funds II, as the case may be, that is
supplied to the investor by Schroder Capital Funds or Schroder Capital Funds II,
as the case may be.
A Fund's investment in a Portfolio may be affected by the actions of other large
investors in the Portfolio; 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.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Trust Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were other
investors in the Portfolio who, by a vote of the shareholders of all investors
(including the Fund), changed 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 a Fund should withdraw its investment from a Portfolio, the Trust
Board would consider appropriate alternatives, including the management of the
Fund's assets in accordance with its investment objective and policies by SCMI,
or the investment of all of the Fund's investable assets in another pooled
investment entity having substantially the same investment objective as the
Fund. The inability of a Fund to find a suitable replacement investment, if the
Board decided not to permit SCMI to manage the Fund's assets, could have a
significant adverse impact on shareholders of the Fund.
Each investor in a Portfolio, including a Fund, may be liable for all
obligations of the Portfolio. The risk to an investor in a Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be remote. Upon liquidation of a
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
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APPENDIX A
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
FIXED-INCOME SECURITY RATINGS
<TABLE>
<S> <C>
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group they comprise what are generally
known as high grade fixed-income securities. They are rated lower than the best
fixed-income securities because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
"A" Fixed-income securities which are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
"Baa" Fixed-income securities which are rated "Baa" are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
</TABLE>
Rating Refinements: Moody's may apply numerical modifiers, "1", "2", and "3" in
each generic rating classification from "Aa" through "B" in its municipal
fixed-income security rating system. The modifier "1" indicates that the
security ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and a modifier "3" indicates that the issue
ranks in the lower end of its generic rating category.
A-1
<PAGE>
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay punctually
promissory obligations not having an original maturity in excess of nine months.
The ratings apply to Municipal Commercial Paper as well as taxable Commercial
Paper. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:
"Prime-1", "Prime-2", "Prime-3".
Issuers rated "Prime-1" have a superior capacity for repayment of short-term
promissory obligations. Issuers rated "Prime-2" have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated "Prime-3" have
an acceptable capacity for repayment of short-term promissory obligations.
Issuers rated "Not Prime" do not fall within any of the Prime rating categories.
STANDARD & POOR'S RATING GROUP ("STANDARD & POOR'S")
FIXED-INCOME SECURITY RATINGS
A Standard & Poor's fixed-income security rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers, or
lessees.
The ratings are based on current information furnished by the issuer or obtained
by Standard & Poor's from other sources it considers reliable. The ratings are
based, in varying degrees, on the following considerations: (1) likelihood of
default-capacity and willingness of the obligor as to the timely payment of
interest and repayment of principal in accordance with the terms of the
obligation; (2) nature of and provisions of the obligation; and (3) protection
afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information, or for other reasons.
<TABLE>
<S> <C>
"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay interest
and repay principal and differs from the highest-rated issues only in small
degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.
"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for fixed-income securities in this category than for fixed-income securities in
higher-rated categories.
Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.
"BB" Fixed-income securities rated "BB" have less near-term vulnerability to default
than other speculative grade fixed-income securities. However, it faces major
ongoing uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity or willingness to pay
interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to default but
presently have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair capacity
or willingness to pay interest and repay principal.
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
"CCC" Fixed-income securities rated "CCC" have a current identifiable vulnerability to
default, and the obligor is dependent upon favorable business, financial and
economic conditions to meet timely payments of interest and repayments of
principal. In the event of adverse business, financial or economic conditions,
it is not likely to have the capacity to pay interest and repay principal.
"CC" The rating "CC" is typically applied to fixed-income securities subordinated to
senior debt which is assigned an actual or implied "CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities subordinated to
senior debt which is assigned an actual or implied "CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which no interest is
being paid.
"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
</TABLE>
Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are regarded as
having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation and
"C" the highest degree of speculation. While such fixed-income securities will
likely have some quality and protective characteristics, these are out-weighed
by large uncertainties or major risk exposures to adverse conditions.
Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by the
addition of a plus or minus sign to show relative standing with the major
ratings categories.
COMMERCIAL PAPER RATINGS
Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. The commercial paper rating is not a recommendation to purchase or
sell a security. The ratings are based upon current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
Issues assigned "A" ratings are regarded as having the greatest capacity for
timely payment. Issues in this category are further refined with the designation
"1", "2", and "3" to indicate the relative degree of safety.
<TABLE>
<S> <C>
"A-1" Indicates that the degree of safety regarding timely payment is very strong.
"A-2" Indicates capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated "A-1".
"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying this
designation are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
</TABLE>
A-3
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, New York 11245
and
Global Custody Division
125 London Wall
London EC2Y 5AJ United Kingdom
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
[LOGO]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER INTERNATIONAL FUND
SCHRODER EMERGING
MARKETS FUND
SCHRODER INTERNATIONAL
SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL
BOND FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S.
SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
Schroder Capital Funds (Delaware)
P.O. Box 446
<PAGE>
Portland, Maine 04112
1-800-290-9826
INVESTOR SHARES
PROSPECTUS
MARCH 1, 1998
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
PROSPECTUS
MARCH 1, 1998
SCHRODER CAPITAL FUNDS (DELAWARE)
ADVISOR SHARES
SCHRODER INTERNATIONAL FUND
SCHRODER EMERGING MARKETS FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL BOND FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND
The Schroder Capital Funds are mutual funds offering a wide range of investment
objectives: SCHRODER INTERNATIONAL FUND, SCHRODER EMERGING MARKETS FUND,
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND, SCHRODER INTERNATIONAL BOND FUND,
SCHRODER U.S. EQUITY FUND, and SCHRODER U.S. SMALLER COMPANIES FUND. Each of the
Funds is a series of shares of Schroder Capital Funds (Delaware), and each Fund
(other than the U.S. Equity Fund) invests substantially all of its assets in a
separately managed portfolio of Schroder Capital Funds or Schroder Capital Funds
II, each of which is a registered, open-end management investment company.
Schroder Capital Management International Inc. serves as investment adviser to
each of the Funds and to each portfolio. Each of the Funds, except Emerging
Markets Fund and International Bond Fund, is a diversified mutual fund.
This Prospectus explains concisely the information that a prospective investor
should know before investing in Advisor Shares of the Funds. Please read it
carefully and keep it for future reference. INVESTORS CAN FIND MORE DETAILED
INFORMATION ABOUT SCHRODER CAPITAL FUNDS (DELAWARE) IN THE MARCH 1, 1998
STATEMENT OF ADDITIONAL INFORMATION, AS AMENDED FROM TIME TO TIME. FOR A FREE
COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, PLEASE CALL 1-800-290-9826. The
Statement of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference. The
Securities and Exchange Commission maintains an Internet World Wide Web site (at
http://www.sec.gov) that contains the Statement of Additional Information,
materials that are incorporated by reference into this Prospectus and the
Statement of Additional Information, and other information about the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FUND STRUCTURE.............................................................. 3
FINANCIAL HIGHLIGHTS........................................................ 5
INVESTMENT OBJECTIVES AND POLICIES.......................................... 6
HOW TO BUY SHARES........................................................... 16
HOW TO SELL SHARES.......................................................... 18
OTHER INFORMATION........................................................... 21
MANAGEMENT OF THE TRUST..................................................... 21
APPENDIX A.................................................................. A-1
Description of Securities Ratings
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
<S> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. EQUITY FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
</TABLE>
FUND STRUCTURE
Each of SCHRODER INTERNATIONAL FUND, SCHRODER EMERGING MARKETS FUND, SCHRODER
INTERNATIONAL SMALLER COMPANIES FUND, SCHRODER INTERNATIONAL BOND FUND, and
SCHRODER U.S. SMALLER COMPANIES FUND seeks to achieve its investment objective
by investing all of its investable assets in a separate portfolio ( a
"Portfolio") of either Schroder Capital Funds or Schroder Capital Funds II that
has the same investment objective as, and investment policies that are
substantially similar to those of, that Fund. Accordingly, the investment
experience of each Fund will correspond directly with the investment experience
of its corresponding Portfolio. See "Other Information - Information about the
Portfolios." The Funds and the Portfolios in which they invest are:
<TABLE>
<CAPTION>
FUNDS PORTFOLIOS
- ----------------------------------------------------- ---------------------------------------------------------
<S> <C>
SCHRODER INTERNATIONAL FUND INTERNATIONAL EQUITY FUND
(Schroder Capital Funds)
SCHRODER EMERGING MARKETS FUND SCHRODER EM CORE PORTFOLIO*
(Schroder Capital Funds)
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER INTERNATIONAL SMALLER COMPANIES PORTFOLIO
(Schroder Capital Funds)
SCHRODER INTERNATIONAL BOND FUND SCHRODER INTERNATIONAL BOND PORTFOLIO*
(Schroder Capital Funds II)
SCHRODER U.S. SMALLER COMPANIES FUND SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
(Schroder Capital Funds)
</TABLE>
SCHRODER U.S. EQUITY FUND seeks to achieve its investment objective by investing
directly in securities.
* Each of SCHRODER EM CORE PORTFOLIO and SCHRODER INTERNATIONAL BOND PORTFOLIO
is a non-diversified series of an open-end management investment company. Each
of the other Portfolios is a diversified series of an open-end management
investment company. See "Other Investment Practices and Risk Considerations -
Non-Diversification and Geographic Concentration."
3
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in Advisor Shares
of the Funds. There are no "Shareholder Transaction Expenses" associated with a
purchase or redemption of Advisor Shares of the Funds. "Annual Operating
Expenses" for each Fund other than Schroder U.S. Smaller Companies Fund show the
estimated expenses of the Fund with respect to its Advisor Shares for the Fund's
expenses in the current fiscal year (except in the case of Schroder U.S. Smaller
Companies Fund, where Annual Operating Expenses are shown with respect to its
Advisor Shares based on the Fund's expenses for its most recent fiscal year).
Annual Operating Expenses of each Fund (other than U.S. Equity Fund) include the
Fund's pro rata portion of all operating expenses of the Portfolio of Schroder
Capital Funds or Schroder Capital Funds II in which the Fund invests. The
Example shows the cumulative expenses attributable to a hypothetical $1,000
investment in the Funds over specified periods.
SHAREHOLDER TRANSACTION EXPENSES NONE
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL EMERGING SMALLER INTERNATIONAL U.S. EQUITY
FUND MARKETS FUND COMPANIES FUND BOND FUND FUND
--------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Management Fees(1)
(after expense limitation)(2) 0.61% 0.81% 0.00% 0.19% 0.57%
12b-1 Fees(3) None None None None None
Other Expenses
(after expense limitation)(2) 0.63 % 1.14 % 1.75 % 1.01 % 1.18 %
--- --- --- --- ---
Total Fund Operating Expenses
(after expense limitation)(2) 1.24 % 1.95 % 1.75 % 1.20 % 1.75 %
<CAPTION>
U.S. SMALLER
COMPANIES FUND
---------------
<S> <C>
Management Fees(1)
(after expense limitation)(2) 0.50%
12b-1 Fees(3) None
Other Expenses
(after expense limitation)(2) 1.24 %
---
Total Fund Operating Expenses
(after expense limitation)(2) 1.74 %
</TABLE>
(1) Management Fees reflect the fees paid by the Portfolio and the Fund for
investment advisory and administrative services.
(2) The Management Fees and Total Fund Operating Expenses for each of the Funds
reflect expenses limitations currently in effect. See "Management of the
Trust." Without the limitations, Management Fees, Other Expenses, and Total
Fund Operating Expenses for Advisor Shares would be 0.675%, 0.63%, and
1.305%, respectively, in the case of International Fund; 1.25%, 1.16%, and
2.41%, respectively, in the case of Emerging Markets Fund; 1.10%, 3.08%, and
4.18%, respectively, in the case of International Smaller Companies Fund;
0.70%, 2.43%, and 3.13%, respectively, in the case of International Bond
Fund; 0.75%, 1.18%, and 1.93%, respectively, in the case of U.S. Equity
Fund; and 0.85%, 56.17%, and 57.02%, respectively, in the case of U.S.
Smaller Companies Fund.
(3) Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, with respect to its Advisor
Shares. The Funds presently make no payments under the Distribution Plan,
although payments by a Fund under the Shareholder Service Plan will be
deemed to have been made pursuant to the Distribution Plan to the extent
such payments may be considered to be primarily intended to result in the
sale of the Fund's Advisor Shares. See "How to Buy Shares -- Distributor and
Distribution Plan."
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Schroder International Fund $ 13 $ 39 $ 68 $ 150
Schroder Emerging Markets Fund $ 20 $ 61 N/A N/A
Schroder International Smaller Companies Fund $ 18 $ 55 $ 95 $ 207
Schroder International Bond Fund $ 12 $ 38 N/A N/A
Schroder U.S. Equity Fund $ 18 $ 55 $ 95 $ 206
Schroder U.S. Smaller Companies Fund $ 18 $ 55 $ 94 $ 205
</TABLE>
The Annual Operating Expenses table and Example are provided to help you
understand your share of the operating expenses of the Funds attributable to
Advisor Shares. THE TABLE AND EXAMPLE DO NOT REPRESENT PAST OR FUTURE EXPENSE
LEVELS. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL ANNUAL
RETURNS WILL VARY.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights of Schroder U.S. Smaller Companies Fund presented below
for the period ended May 31, 1997, have been audited by Coopers & Lybrand
L.L.P., independent accountants to the Funds. The financial highlights for the
Fund for the period ended November 30, 1997 are unaudited. The financial
statements for Schroder U.S. Smaller Companies Fund and the related independent
accountants' report are contained in the Fund's Annual Report to Shareholders
and are incorporated by reference into the Statement of Additional Information
(the "SAI"). The unaudited financial statements of Schroder U.S. Smaller
Companies Fund for the period through November 30, 1997 similarly are
incorporated by reference into the SAI. None of the other Funds had any Advisor
Shares outstanding during those periods. Copies of the Funds' Annual and
Semi-Annual Reports may be obtained without charge by writing the Funds at Two
Portland Square, Portland, Maine 04101 or by calling 1-800-290-9826.
SCHRODER U.S. SMALLER COMPANIES FUND
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED PERIOD ENDED
NOVEMBER 30, MAY 31,
1997 1997(A)
------------- ------------
<S> <C> <C>
(UNAUDITED)
Net Asset Value, Beginning of Period $13.24 $11.89
------------- ------------
Investment Operations:
Net Investment Income (Loss)(b) (0.04 ) (0.03 )
Net Realized and Unrealized Gain (Loss) on Investments 1.94 1.38
------------- ------------
Total from Investment Operations 1.90 1.35
------------- ------------
Net Asset Value, End of Period $15.14 $13.24
------------- ------------
------------- ------------
Total Return(c) 14.35 % 11.35 %
Ratios/Supplementary Data
Net Assets, End of Period (in thousands) $1,053 $81
Ratios to Average Net Assets:
Expenses After Expense Limitation(b)(d) 1.68 % 1.74 %
Expenses Before Expense Limitation(b)(d) 5.41 % 57.02 %
Net Investment Income (Loss) After Expense Limitation(b)(d) (0.82 %) (0.67 %)
Average Commission Rate Per Share(e) $0.0588 $0.0584
Portfolio Turnover Rate 28.71 % 34.45 %
</TABLE>
(a) Advisor Class shares were first issued on December 23, 1996.
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(c) Total returns would have been lower had certain expenses not been reduced
during the period shown.
(d) Annualized.
(e) The rate represents the average commission per share paid by the Portfolio
to brokers on the purchase and sale of equity securities on which
commissions were charged.
5
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective that it pursues through the
investment policies described below.
Because of the differences in objectives and policies among the Funds, the Funds
will achieve different investment returns and will be subject to varying degrees
of market and financial risk. There is no assurance that any Fund will achieve
its objective. None of the Funds is intended to be a complete investment
program.
EACH FUND (OTHER THAN U.S. EQUITY FUND) CURRENTLY INVESTS SUBSTANTIALLY ALL OF
ITS ASSETS IN A MANAGED PORTFOLIO OF SCHRODER CAPITAL FUNDS OR SCHRODER CAPITAL
FUNDS II. EACH SUCH PORTFOLIO IS REFERRED TO IN THIS PROSPECTUS AS A
"PORTFOLIO." IN REVIEWING THE DESCRIPTION OF A FUND'S INVESTMENT OBJECTIVE AND
POLICIES BELOW, INVESTORS SHOULD ASSUME THAT THE INVESTMENT OBJECTIVE AND
POLICIES OF THE CORRESPONDING PORTFOLIO ARE THE SAME IN ALL MATERIAL RESPECTS AS
THOSE OF THE FUND. SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. ("SCMI") IS
THE INVESTMENT ADVISER TO EACH FUND AND TO EACH PORTFOLIO.
A Fund's investment objective may not be changed without shareholder approval.
The investment policies of each Fund may, unless otherwise specifically stated,
be changed by the Trustees of Schroder Capital Funds (Delaware) (the "Trust")
without a vote of the shareholders. All percentage limitations on investments
will apply at the time of investment and will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
the investment.
SCHRODER INTERNATIONAL FUND
SCHRODER INTERNATIONAL FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL
APPRECIATION THROUGH INVESTMENT IN SECURITIES MARKETS OUTSIDE THE UNITED STATES.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, securities convertible into common or preferred stocks, and rights or
warrants to purchase any of the foregoing. They may also include American
Depositary Receipts, European Depositary Receipts, and other similar instruments
providing for indirect investment in securities of foreign issuers. The Fund may
also invest in securities of closed-end investment companies that invest in turn
primarily in foreign securities.
The Fund normally invests at least 65% of its assets in equity securities of
companies domiciled outside the United States and will invest in securities of
issuers domiciled in at least three countries other than the United States.
There is no limit on the amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. When the Fund has invested a
substantial portion of its assets in the securities of companies domiciled in a
single country, it will be more susceptible to the risks of investing in that
country than would a fund investing in a geographically more diversified
portfolio. The Fund normally invests a substantial portion of its assets in
countries included in the Morgan Stanley Capital International EAFE Index, which
is a market capitalization-weighted index of companies in developed market
countries in Europe, Australia and the Far East. Other countries in which the
Fund may invest may be considered "emerging markets" and involve special risks.
See "Other Investment Practices and Risk Considerations - Foreign Securities."
The Fund may invest in debt securities, including, for example, securities of
foreign governments (including provinces and municipalities) or their agencies
or instrumentalities, securities issued or guaranteed by international
organizations designated or supported by multiple foreign governmental entities
to promote economic reconstruction or development, and debt securities of
foreign corporations or financial institutions. The Fund may invest up to 5% of
its net assets in lower-quality, high yielding debt securities, which entail
certain risks. See "Other Investment Practices and Risk Considerations - Debt
Securities."
6
<PAGE>
SCHRODER EMERGING MARKETS FUND
SCHRODER EMERGING MARKETS FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL
APPRECIATION. The Fund invests primarily in equity securities of issuers
domiciled or doing business in emerging market countries in regions such as
Southeast Asia, Latin America, and Eastern and Southern Europe. The Fund will
normally invest in at least three countries other than the United States.
An "emerging market" country is any country not included at the time of
investment in the Morgan Stanley Capital International World Index of major
world economies. Those economies currently include: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States of America. SCMI may at
times determine based on its own analysis that an economy included in the Index
should nonetheless be considered an emerging market country; any such country
would then constitute an emerging market country for purposes of investment by
the Fund.
The Fund normally invests at least 65% of its assets in equity securities of
issuers determined by SCMI to be emerging market issuers. Equity securities
include common stocks, preferred stocks, securities convertible into common or
preferred stocks, and rights or warrants to purchase any of the foregoing
(although such rights and warrants will not be taken into account in determing
compliance with the 65% requirement described in the preceding sentence). They
may also include American Depositary Receipts, European Depositary Receipts, and
other similar instruments providing for indirect investment in securities of
foreign issuers. The Fund may also invest in securities of closed-end investment
companies that invest in turn primarily in foreign securities. The Fund is a
non-diversified mutual fund. See "Non-Diversification and Geographic
Concentration."
The remainder of the Fund's assets may be invested in securities of issuers
located anywhere in the world. The Fund may invest up to 35% of its assets in
debt securities, including lower-quality, high yielding debt securities, which
entail certain risks. The Fund would invest in debt securities principally in an
effort to realize capital appreciation due, for example, to a favorable change
in currency exchange or control rates, or in the creditworthiness of their
issuers. The Fund may invest up to 5% of its assets in sovereign debt securities
that are in default. See "Other Investment Practices and Risk Considerations -
Debt Securities."
An issuer of a security will be considered to be an emerging market issuer if
SCMI determines that: (1) it is organized under the laws of an emerging market
country; (2) its primary securities trading market is in an emerging market
country; (3) at least 50% of the issuer's revenues or profits are derived from
goods produced or sold, investments made, or services performed in emerging
market countries; or (4) at least 50% of its assets are situated in emerging
market countries. The Fund may consider investment companies to be located in
the country or countries in which SCMI determines they focus their investments.
There is no limit on the amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. When the Fund has invested a
substantial portion of its assets in the securities of companies domiciled in a
single country, it will be more susceptible to the risks of investing in that
country than would a fund investing in a geographically more diversified
portfolio. The Fund will normally invest in issuers domiciled in at least three
different emerging market countries.
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND'S INVESTMENT OBJECTIVE IS
LONG-TERM CAPITAL APPRECIATION THROUGH INVESTMENT IN SECURITIES MARKETS OUTSIDE
THE UNITED STATES. The Fund normally invests at least 65% of its assets in
equity securities of companies domiciled outside the United States that have
market capitalizations of $1.5 billion or less at the time of investment. In
selecting investments for the Fund, SCMI considers a number of factors,
including, for example, the company's potential for long-term growth, the
company's financial condition, its sensitivity to cyclical factors, the relative
value of the company's securities (to those of other companies and to the market
as a whole), and the extent to which the company's management owns equity in the
company.
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Equity securities in which the Fund may invest include common stocks, preferred
stocks, securities convertible into common or preferred stocks, and rights or
warrants to purchase any of the foregoing. They may also include American
Depositary Receipts, European Depositary Receipts, and other similar instruments
providing for indirect investment in securities of foreign issuers. The Fund may
also invest in securities of closed-end investment companies that invest in turn
primarily in foreign securities.
The Fund will invest in securities of issuers domiciled in at least three
countries other than the United States, although there is no limit on the amount
of the Fund's assets that may be invested in securities of issuers domiciled in
any one country. When the Fund has invested a substantial portion of its assets
in the securities of companies domiciled in a single country, it will be more
susceptible to the risks of investing in that country than would a Fund
investing in a geographically more diversified portfolio. Other countries in
which the Fund may invest may be considered "emerging markets" and involve
special risks. See "Other Investment Practices and Risk Considerations - Foreign
Securities."
Smaller companies may present greater opportunities for investment return than
do larger companies, but also involve greater risks. Smaller companies may have
limited product lines, markets, or financial resources, or may depend on a
limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
than prices of securities of larger, more widely traded companies. See "Other
Investment Practices and Risk Considerations - Investments in Smaller
Companies."
The Fund may invest in debt securities, including, for example, securities of
foreign governments, international organizations, and foreign corporations and
U.S. government securities. The Fund may invest up to 5% of its total assets in
lower-quality, high yielding debt securities, which entail certain risks. See
"Other Investment Practices and Risk Considerations - Debt Securities."
SCHRODER INTERNATIONAL BOND FUND
SCHRODER INTERNATIONAL BOND FUND'S INVESTMENT OBJECTIVE IS TO SEEK A HIGH RATE
OF TOTAL RETURN. The Fund normally invests substantially all of its assets in
debt securities and debt-related investments of issuers domiciled outside the
United States.
"Total return" consists of current income, including interest payments and
discount accruals, plus any increases in the values of the Fund's investments
(less any decreases in the values of any of its investments and amortizations of
premiums). SCMI considers expected changes in foreign currency exchange rates in
determining the anticipated returns on securities denominated in foreign
currencies.
The Fund may invest in debt securities of foreign governments (including
provinces and municipalities) and their agencies and instrumentalities, debt
securities of supranational organizations, and debt securities of private
issuers. These bonds may pay interest at fixed, variable, or floating rates.
Certain securities in which the Fund invests may be convertible into common or
preferred stock, or they may be traded together with warrants for the purchase
of common stock. The rate of return on some debt obligations may be linked to
indices or stock prices or indexed to the level of exchange rates between the
U.S. dollar and a foreign currency or currencies. The Fund may invest up to 10%
of its net assets in lower-quality, high-yielding debt securities. See "Other
Investment Practices and Risk Considerations - Debt Securities." The Fund is a
non-diversified mutual fund. See "Non-Diversification and Geographic
Concentration."
The Fund normally invests in securities of issuers in at least five countries
other than the United States, although there is no limit on the amount of the
Fund's assets that may be invested in securities of issuers domiciled in any one
country. When the Fund has invested a substantial portion of its assets in the
securities of companies domiciled in a single country, it will be more
susceptible to the risks of investing in that country than would a fund
investing in a geographically more diversified portfolio. At times, the Fund may
invest a substantial portion of its assets in securities of issuers in emerging
market countries, which involves special risks. See "Other Investment Practices
and Risk Considerations - Foreign Securities."
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Generally, the Fund's average maturity will be shorter when SCMI expects
interest rates in markets where the Fund has invested to rise, and longer when
SCMI expects interest rates in those markets to fall. SCMI may use various
techniques to increase the interest-rate sensitivity of the Fund's portfolio,
including transactions in futures and options on futures, interest-rate swaps,
caps, floors, and short sales of securities.
SCMI believes that active currency management, through the use of any of the
foreign currency exchange transactions described below, can enhance portfolio
returns through opportunities arising from interest-rate differentials between
securities denominated in different currencies or changes in value between
currencies. SCMI also believes that active currency management can be employed
as an overall portfolio risk management tool. Foreign currency management can
also provide increased overall portfolio risk diversification. See "Other
Investment Practices and Risk Considerations - Foreign Currency Exchange
Transactions." The Fund may also borrow money to invest in additional
securities. Use of leverage involves special risks. See "Other Investment
Practices and Risk Considerations - Leverage."
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. EQUITY FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL. The Fund
normally invests substantially all of its assets in equity securities of
companies in the United States. Equity securities in which the Fund may invest
include common stocks, preferred stocks, securities convertible into common or
preferred stocks, and rights or warrants to purchase any of the foregoing.
The Fund does not limit its investments to any particular type of company
although the Fund will not normally invest in securities of small capitalization
companies (companies with market capitalizations of $1.5 billion or less). The
Fund may invest in companies, large or small, that SCMI believes offer the
potential for capital growth. They may, for example, include companies whose
earnings are believed to be in a relatively strong growth trend, companies with
a proprietary advantage, or companies that are in industry segments that are
experiencing rapid growth; the Fund may also invest in companies in which
significant further growth is not anticipated but whose market value per share
is thought to be undervalued. The Fund may invest in relatively less well-known
companies that meet any of these characteristics or other characteristics
identified by SCMI.
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER U.S. SMALLER COMPANIES FUND'S INVESTMENT OBJECTIVE IS CAPITAL
APPRECIATION. The Fund invests at least 65% of its assets in equity securities
of U.S.-domiciled companies that have at the time of purchase market
capitalizations of $1.5 billion or less. In selecting investments for the Fund,
SCMI seeks to identify securities of companies with strong management that it
believes can generate above average earnings growth, and are selling at
favorable prices in relation to book values and earnings. Equity securities in
which the Fund may invest include common stocks, preferred stocks, securities
convertible into common or preferred stocks, and rights or warrants to purchase
any of the foregoing.
The Fund may also invest in equity securities of larger companies and in debt
securities, if SCMI believes such investments are consistent with the Fund's
investment objective. In addition, the Fund may invest up to 5% of its assets in
lower-quality, high yielding debt securities, which entail certain risks. See
"Other Investment Practices and Risk Considerations - Debt Securities."
Smaller companies may present greater opportunities for investment return than
do larger companies, but also involve greater risks. They may have limited
product lines, markets, or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and in limited
volume. As a result, the prices of these securities may fluctuate more than
prices of securities of larger, widely traded companies. See "Other Investment
Practices and Risk Considerations - Investments in Smaller Companies." The Fund
intends to invest no more than 25% of its total assets in securities of small
companies that, together with their predecessors, have been in operation for
less than three years.
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OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Funds may engage in the following investment practices, each of which
involves certain special risks. The SAI contains more detailed information about
these practices (some of which may be considered "derivative" investments).
FOREIGN SECURITIES. Investments in foreign securities entail certain risks.
There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and diplomatic
developments that could affect the value of a Fund's investments in certain
foreign countries. Since foreign securities are normally denominated and traded
in foreign currencies, the values of the Fund's assets may be affected favorably
or unfavorably by currency exchange rates, currency exchange control
regulations, foreign withholding taxes and restrictions or prohibitions on the
repatriation of foreign currencies. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign issuers
are not generally subject to accounting, auditing, and financial reporting
standards and practices comparable to those in the United States. The securities
of some foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage commissions and other
fees are also generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of a Fund's assets held
abroad) and expenses not present in the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign countries
may be more limited than those available with respect to investments in the
United States or in other foreign countries. The willingness and ability of
sovereign issuers to pay principal and interest on government securities depends
on various economic factors, including, without limitation, the issuer's balance
of payments, overall debt level, and cash-flow considerations related to the
availability of tax or other revenues to satisfy the issuer's obligations. If a
foreign governmental entity is unable or unwilling to meet its obligations on
the securities in accordance with their terms, a Fund may have limited recourse
available to it in the event of default. The laws of some foreign countries may
limit a Fund's ability to invest in securities of certain issuers located in
those foreign countries. Special tax considerations apply to foreign securities.
Except as otherwise provided in this Prospectus, there is no limit on the amount
of a Fund's assets that may be invested in foreign securities.
If a Fund purchases securities denominated in foreign currencies, a change in
the value of any such currency against the U.S. dollar will result in a change
in the U.S. dollar value of the Fund's assets and the Fund's income available
for distribution. In addition, although at times most of a Fund's income may be
received or realized in these currencies, the Fund will be required to compute
and distribute its income in U.S. dollars. Therefore, if the exchange rate for
any such currency declines after the Fund's income has been earned and
translated into U.S. dollars but before payment, the Fund could be required to
liquidate portfolio securities to make such distributions. Similarly, if an
exchange rate declines between the time the Fund incurs expenses in U.S. dollars
and the time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount in any such currency of such expenses at
the time they were incurred. A Fund may buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments.
In determining whether to invest in debt securities of foreign issuers, SCMI
considers the likely impact of foreign taxes on the net yield available to the
Fund and its shareholders. Income received by a Fund from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by a Fund will reduce its
net income available for distribution to shareholders. In certain circumstances,
a Fund may be able to pass through to shareholders credits for foreign taxes
paid. See "How to Sell Shares - Dividends, Distributions and Taxes."
Certain Funds may invest in securities of issuers in emerging market countries
with respect to some or all of their assets. The securities' prices and relative
currency values of emerging market investments are subject to
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greater volatility than those of issuers in many more developed countries.
Investments in emerging market countries are subject to the same risks
applicable to foreign investments generally, although those risks may be
increased due to conditions in such countries. For example, the securities
markets and legal systems in emerging market countries may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Funds may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Funds may also invest a substantial
portion of their assets in securities traded in the over-the-counter markets in
such countries and not on any exchange, which may affect the liquidity of the
investment and expose the Funds to the credit risk of their counterparties in
trading those investments. Emerging market countries may experience extremely
high rates of inflation, which may adversely affect these countries' economies
and securities markets.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates will
affect the U.S. dollar values of securities denominated in foreign currencies.
Exchange rates between the U.S. dollar and other currencies fluctuate in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation, and other
factors, many of which may be difficult (if not impossible) to predict. A Fund
may engage in foreign currency exchanges transactions to protect against
uncertainty in the level of future exchange rates. Although the strategy of
engaging in foreign currency exchange transactions could reduce the risk of loss
due to a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.
In particular, a Fund may enter into foreign currency exchange transactions to
protect against a change in exchange ratios that may occur between the date on
which the Fund contracts to trade a security and the settlement date
("transaction hedging") or in anticipation of placing a trade ("anticipation
hedging"); to "lock in" the U.S. dollar value of interest and dividends to be
paid in a foreign currency; or to hedge against the possibility that a foreign
currency in which portfolio securities are denominated or quoted may suffer a
decline against the U.S. dollar ("position hedging"). International Bond Fund
may also enter into forward contracts to adjust the Fund's exposure to various
foreign currencies, either pending anticipated investments in securities
denominated in those currencies or as a hedge against anticipated market
changes.
SCMI may seek to enhance a Fund's investment return through active currency
management. SCMI may buy or sell foreign currencies for a Fund, on a spot or
forward basis, in an attempt to profit from inefficiencies in the pricing of
various currencies or of debt securities denominated in those currencies.
When investing in foreign securities, a Fund usually effects currency exchange
transactions on a "spot" (I.E., cash) basis at the spot rate prevailing in the
foreign exchange market. A Fund incurs foreign exchange expenses in converting
assets from one currency to another. In addition, the International Bond Fund
may, to a limited extent, purchase forward contracts to increase exposure in
foreign currencies that are expected to appreciate and thereby increase total
return.
A forward currency contract is an obligation to purchase or sell a specific
currency at a future date (which may be any fixed number of days from the date
of the contract agreed upon by the parties) at a price set at the time of the
contract. Forward contracts do not eliminate fluctuations in the underlying
prices of securities and expose the Fund to the risk that the counterparty is
unable to perform.
Forward contracts are not exchange traded, and there can be no assurance that a
liquid market will exist at a time when a Fund seeks to close out a forward
contract. Currently, only a limited market, if any, exists for exchange
transactions relating to currencies in certain emerging markets or to securities
of issuers domiciled or principally engaged in business in certain emerging
markets. This may limit a Fund's ability to hedge its investments in those
markets. These contracts involve a risk of loss if SCMI fails to predict
accurately changes in relative currency values, the direction of stock prices or
interest rates and other economic factors.
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From time to time, a Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign currency and
may at times involve currencies in which its portfolio securities are not then
denominated ("cross hedging"). From time to time, a Fund may also engage in
"proxy" hedging, whereby the Fund would seek to hedge the value of portfolio
holdings denominated in one currency by entering into an exchange contract on a
second currency, the valuation of which SCMI believes correlates to the value of
the first currency. Cross hedging and proxy hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions relate and changes in the value of the currency or other
asset or liability that is the subject of the hedge.
INVESTMENTS IN SMALLER COMPANIES. Certain Funds may invest all or a substantial
portion of their assets in securities issued by small companies. Such companies
may offer greater opportunities for capital appreciation than larger companies,
but investments in such companies may involve certain special risks. Such
companies may have limited product lines, markets, or financial resources and
may be dependent on a limited management group. While the markets in securities
of such companies have grown rapidly in recent years, such securities may trade
less frequently and in smaller volume than more widely held securities. The
values of these securities may fluctuate more sharply than those of other
securities, and a Fund may experience some difficulty in establishing or closing
out positions in these securities at prevailing market prices. There may be less
publicly available information about the issuers of these securities or less
market interest in such securities than in the case of larger companies, and it
may take a longer period of time for the prices of such securities to reflect
the full value of their issuers' underlying earnings potential or assets.
Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of a Fund to dispose of such
securities may be greatly limited, and a Fund may have to continue to hold such
securities during periods when SCMI would otherwise have sold the securities. It
is possible that SCMI or its affiliates or clients may hold securities issued by
the same issuers, and may in some cases have acquired the securities at
different times, on more favorable terms, or at more favorable prices, than a
Fund.
LEVERAGE. International Bond Fund may borrow money by engaging in reverse
repurchase agreements to invest in additional securities. "Reverse" repurchase
agreements generally involve the sale by the Fund of securities held by it and
an agreement to repurchase the securities at an agreed-upon price, date, and
interest payment. Certain other Funds may engage in forward commitments,
described below and in the SAI, which may have the same economic effect as if
the Funds had borrowed money.
The use of borrowed money, known as "leverage," increases the International Bond
Fund's market exposure and risk and may result in losses. When the Fund has
borrowed money for leverage and its investments increase or decrease in value,
its net asset value will normally increase or decrease more than if it had not
borrowed money for this purpose. The interest that the Fund must pay on borrowed
money will reduce its net investment income, and may also either offset any
potential capital gains or increase any losses. The Fund will not always borrow
money for investments, and the extent to which the Fund will borrow money and
the amount it may borrow, depends on market conditions and interest rates.
Successful use of leverage depends on SCMI's ability to predict market movements
correctly. The amount of leverage that can exist at any one time will not exceed
one-third of the value of the Fund's total assets (including the amount
borrowed). A Fund may be required to segregate certain assets against its
obligations under reverse repurchase agreements entered into by it.
DEBT SECURITIES. Each Fund may invest in debt securities. A Fund may invest in
debt securities either to earn investment income or to benefit from changes in
the market values of such securities. Debt securities are subject to market risk
(the fluctuation of market value in response to changes in interest rates) and
to credit risk (the risk that the issuer may become unable or unwilling to make
timely payments of principal and interest).
Each Fund also may invest in lower-quality, high-yielding debt securities rated
below investment grade and in unrated debt securities determined by SCMI to be
of comparable quality. Lower-rated debt securities (commonly called "junk
bonds") are considered to be of poor standing and predominantly speculative.
Securities in the lowest rating categories may have extremely poor prospects of
attaining any real investment
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standing, and some of those securities in which a Fund may invest may be in
default. The rating services' descriptions of securities in the lower rating
categories, including their speculative characteristics, are set forth in
Appendix A to this Prospectus.
In addition, lower-rated securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the perceived ability of an issuer to make payments of interest and principal
may also affect the value of these investments. The inability (or perceived
inability) of issuers to make timely payments of interest and principal would
likely make the values of securities held by the Fund more volatile and could
limit the Fund's ability to sell its securities at prices approximating the
values the Fund had placed on such securities. In the absence of a liquid
trading market for securities held by it, the Fund may be unable at times to
establish the fair value of such securities. The rating assigned to a security
by a rating agency does not reflect an assessment of the volatility of the
security's market value or of the liquidity of an investment in the security.
Each Fund may at times invest in so-called "zero coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity, rather than at intervals
during the life of the security. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. The values of zero-coupon bonds and payment-in-kind bonds are
subject to greater fluctuation in response to changes in market interest rates
than bonds which pay interest currently, and may involve greater credit risk
than such bonds. From time to time, a Fund may invest a portion of its assets in
Brady Bonds, which are securities created through the exchange of existing
commercial bank loans to sovereign entities for new obligations in connection
with debt restructuring. Brady Bonds have been issued only recently and,
therefore, do not have a long payment history.
A Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although SCMI will monitor the
investment to determine whether continues investment in the security will assist
in meeting the Fund's investment objective.
OPTIONS AND FUTURES TRANSACTIONS. Each Fund may engage in a variety of
transactions involving the use of options and futures contracts. A Fund may
engage in such transactions for hedging purposes or, to the extent permitted by
applicable law, to increase its current return.
A Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. A Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. A Fund may also buy and sell put and call options on such
securities for hedging purposes. When a Fund writes a call option on a portfolio
security, it gives up the opportunity to profit from any increase in the price
of the security above the exercise price of the option; when it writes a put
option, a Fund takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price of the
security. A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. A Fund may also from time
to time buy and sell combinations of put and call options on the same underlying
security to earn additional income.
A Fund may buy and sell index futures contracts. An "index future" is a contract
to buy or sell units of a particular index at an agreed price on a specified
future date. Depending on the change in value of the index between the time when
a Fund enters into and terminates an index future transaction, the Fund may
realize a gain or loss. A Fund may also purchase warrants, issued by banks or
other financial institutions, whose values are based on the values from time to
time of one or more securities indices.
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A Fund may buy and sell futures contracts on U.S. Government securities or other
debt securities. A futures contract on a debt security is a contract to buy or
sell a certain amount of the debt security at an agreed price on a specified
future date. Depending on the change in the value of the security when the Fund
enters into and terminates a futures contract, the Fund realizes a gain or loss.
A Fund may purchase and sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.
A Fund may also purchase and sell put and call options on foreign currencies,
futures contracts on foreign currencies, and options on foreign currency futures
contracts as an alternative, or in addition to, the foreign currency exchange
transactions described above. Such transactions are similar to options and
futures contracts on securities, except that they typically contemplate that one
party to a transaction will deliver one foreign currency to the other in return
for another currency (which may or may not be the U.S. dollar).
RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that a Fund may be
unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that
Schroder may not forecast market movements correctly.
The effective use of options and futures strategies is dependent on, among other
things, a Fund's ability to terminate options and futures positions at times
when SCMI deems it desirable to do so. Although a Fund will enter into an option
or futures contract position only if SCMI believes that a liquid secondary
market exists for that option or futures contract, there is no assurance that a
Fund will be able to effect closing transactions at any particular time or at an
acceptable price.
Each Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter markets. A Fund's ability
to terminate options in the over-the-counter markets may be more limited than
for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to a Fund. A Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of SCMI, the pricing mechanism and liquidity of the
over-the-counter markets are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. A Fund will treat over-
the-counter options (and, in the case of options sold by the Fund, the
underlying securities held by the Fund) as illiquid investments as required by
applicable law.
The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities, index, or currency, or in
the prices of the securities or currency that are the subject of a hedge. The
successful use of these strategies further depends on the ability of SCMI to
forecast market movements correctly.
Because the markets for certain options and futures contracts in which a Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, a Fund's
ability to engage in transactions using such investments may be limited. A
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. A Fund's hedging transactions may affect the
character or amount of its distributions. The tax consequences of certain
hedging transactions have been modified by the Taxpayer Relief Act of 1997.
For more information about any of the options or futures portfolio transactions
described above, see the SAI.
SWAP AGREEMENTS. The International Bond Fund may enter into interest-rate,
index, and currency-exchange rate swap agreements for purposes of attempting to
obtain a particular desired return at a lower cost to the Fund than if the Fund
had invested directly in an instrument that yielded that desired return. Swap
agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
typical "swap" transaction, two parties agree to exchange the
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<PAGE>
returns (or differentials in rates of return) earned or realized on particular
predetermined investments or instruments. The gross returns to be exchanged or
"swapped" between the parties are calculated with respect to a "notional amount"
(I.E., the dollar amount invested at a particular interest rate, in a particular
foreign currency, or in a "basket" of securities representing a particular
index). Commonly used swap agreements include interest-rate caps, under which,
in return for a premium, one party agrees to make payments to the other to the
extent that interest rates exceed a specified rate, or "cap"; interest-rate
floors, under which, in return for a premium, one party agrees to make payments
to the other to the extent that interest rates fall below a specified level, or
"floor"; and interest-ratecollars, under which a party sells a cap and purchases
a floor or vice versa in an attempt to protect itself against interest rate
movements exceeding given minimum or maximum. The use of swap agreements is a
highly specialized activity that involves investment techniques and risks
different from those associated with ordinary portfolio securities transactions.
If SCMI is incorrect in its forecast of market values, interest rates, exchange
rates or other factors, the Fund's investment performance would be less
favorable than if the Fund had not used such agreements.
SHORT SALES. A Fund may engage in "short sales", which are transactions in which
the Fund sells a security that it does not own in anticipation of a decline in
the market value of that security. To complete the transaction, the Fund must
borrow the security to make delivery to the purchaser. The Fund is then
obligated to replace the borrowed security through a purchase of it at the
market price at the time of replacement. The price at that time may be more or
less than the price at which the security was sold by the Fund. The Fund incurs
a loss as a result of the short sale if the price of the security increases
between the date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund realizes a gain if the security declines in price
between those dates. The result is the opposite of what one would expect from a
cash purchase of a long position in a security.
SHORT SALES AGAINST-THE-BOX. The Fund may make short sales "against-the-box",
which are transactions in which the Fund sells a security that it owns in
anticipation of a decline in the market value of that security. The proceeds of
the short sale are held by a broker until the settlement date, at which time the
Fund delivers the security to close the short position. The Fund receives the
net proceeds from the short sale. It is anticipated that the Fund will make
short sales against-the-box to protect the value of its net assets.
NON-DIVERSIFICATION AND GEOGRAPHIC CONCENTRATION. Emerging Markets Fund and
International Bond Fund are "non-diversified" mutual fund, and each Fund may
invest its assets in a more limited number of issuers than may other investment
companies. Under the Internal Revenue Code, an investment company, including a
non-diversified investment company, generally may not invest more than 25% of
its total assets in obligations of any one issuer other than U.S. Government
obligations and, with respect to 50% of its total assets, a fund may not invest
more than 5% of its total assets in the securities of any one issuer (except
U.S. Government obligations). Thus, each Fund may invest up to 25% of its total
assets in the securities of each of any two issuers. This practice involves an
increased risk of loss to a Fund if the market value of a security should
decline or its issuer were otherwise not to meet its obligations.
Any of the Funds may invest more than 25% of its total assets in issuers located
in any one country. To the extent that it does so, a Fund is susceptible to a
range of factors that could adversely affect that country, including political
and economic developments and foreign exchange rate fluctuations as discussed
above. As a result of investing substantially in one country, the value of a
Fund's assets may fluctuate more widely than the value of shares of a comparable
fund with a lesser degree of geographic concentration.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS. Each Fund may
lend portfolio securities to brokers, dealers and financial institutions meeting
specified credit conditions, and may enter into repurchase agreements without
limit. Such activities may create taxable income in excess of the cash they
generate. The percentage limitation on the amount of a Fund's total assets that
may be loaned in accordance with the approved procedures is as follows: SCHRODER
INTERNATIONAL FUND - 10%; SCHRODER INTERNATIONAL SMALLER COMPANIES FUND,
SCHRODER INTERNATIONAL BOND FUND, SCHRODER U.S. EQUITY FUND and SCHRODER U.S.
SMALLER COMPANIES FUND - 25%; and SCHRODER EMERGING MARKETS FUND - 33 1/3%.
These transactions must be fully collateralized at all times but involve some
risk to a Fund if the other party should
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<PAGE>
default on its obligation and the Fund is delayed or prevented from recovering
its assets or realizing on the collateral. Each Fund may also purchase
securities for future delivery, which may increase its overall investment
exposure and involves a risk of loss if the value of the securities declines
prior to the settlement date.
INVESTMENT IN OTHER INVESTMENT COMPANIES. Each Fund is permitted to invest in
other investment companies or pooled vehicles, including closed-end funds, that
are advised by SCMI or its affiliates or by unaffiliated parties. A Fund may
invest in the shares of other investment companies that invest in securities in
which the Fund is permitted to invest, subject to the limits and conditions
required under the Investment Company Act of 1940, as amended, (the "1940 Act")
or any orders, rules or regulations thereunder. When investing through
investment companies, a Fund may pay a premium above such investment companies'
net asset value per share. As a shareholder in an investment company, a Fund
would bear its ratable share of the investment company's expenses, including its
advisory and administrative fees. At the same time, the Fund would continue to
pay its own fees and expenses.
LIQUIDITY. A Fund will not invest more than 15% (10%, in the case of
International Fund and U.S. Equity Fund) of its net assets in securities
determined by SCMI to be illiquid. Certain securities that are restricted as to
resale may nonetheless be resold by a Fund in accordance with Rule 144A under
the Securities Act of 1933, as amended. Such securities may be determined by
SCMI to be liquid for purposes of compliance with the limitation on a Fund's
investment in illiquid securities. There can, however, be no assurance that a
Fund will be able to sell such securities at any time when SCMI deems it
advisable to do so or at prices prevailing for comparable securities that are
more widely held.
ALTERNATIVE INVESTMENTS. At times, SCMI may judge that market conditions make
pursuing a Fund's basic investment strategy inconsistent with the best interests
of its shareholders. At such times, SCMI may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the values of the
Fund's assets. In implementing these "defensive" strategies, a Fund may invest
without limit in U.S. government obligations and other high-quality debt
instruments and any other investment SCMI considers to be consistent with such
defensive strategies, and may hold any portion of its assets in cash.
PORTFOLIO TURNOVER
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. The investment policies of a Fund may
lead to frequent changes in the Fund's investments, particularly in periods of
volatile market movements. A change in the securities held by a Fund is known as
"portfolio turnover." Portfolio turnover generally involves some expense to a
Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. Such
securities sales may result in realization of taxable capital gain.
HOW TO BUY SHARES
Investors may purchase Advisor Shares of each Fund directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Shareholder Services, LLC, the Trust's transfer agent
(the "Transfer Agent"). Investments also may be made through broker-dealers and
other financial institutions ("Service Organizations"). Service Organizations
may charge their customers a service fee for processing orders to purchase or
sell shares. Investors wishing to purchase Shares through their accounts at a
Service Organization should contact that organization directly for appropriate
instructions. A Service Organization is responsible for forwarding all necessary
documentation to the Trust, and may charge for its services.
Each Fund's Advisor Shares are offered at the net asset value next-determined
after receipt of your completed account application (at the address set forth
below) and your purchase request in good order. The
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<PAGE>
minimum initial investment and the minimum subsequent investment for each Fund
is set forth in the table below. A Service Organization may impose higher
minimums on your initial or subsequent investment. The Trust is authorized to
reject any purchase order.
<TABLE>
<CAPTION>
INITIAL SUBSEQUENT
FUND INVESTMENT INVESTMENT
- --------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Schroder International Fund $ 2,500 $ 250
Schroder Emerging Markets Fund $ 2,500 $ 250
Schroder International Smaller Companies Fund $ 2,000 $ 250
Schroder International Bond Fund $ 2,500 $ 250
Schroder U.S. Equity Fund $ 2,500 $ 250
Schroder U.S. Smaller Companies Fund $ 2,500 $ 250
</TABLE>
Purchases may be made by mailing your check (in U.S. dollars), payable to the
Fund to:
[Name of Fund] - Advisor Shares
P.O. Box 446
Portland, Maine 04112
For initial purchases, your 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 purchase request.
You may make subsequent purchases by mailing a check, by sending a bank wire, or
through your Service Organization, as indicated. All payments should clearly
indicate the shareholder's name and account number.
Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
Ref.: [Name of Fund] - Advisor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class (I.E.,
Advisor Shares), the account name and number, address, confirmation number,
amount to be wired, name of the wiring bank, and name and telephone number of
the person to be contacted in connection with the order. If the initial
investment is by wire, an account number will be assigned, and a completed
account application must be mailed to the Fund before any transaction will be
effected. Wire orders received prior to the close of the New York Stock Exchange
on a day when the New York Stock Exchange is open for trading are processed at
the net asset value next determined as of that day. Wire orders received after
the close of the New York Stock Exchange are processed at the net asset value
next determined.
The Fund's Transfer Agent establishes for each shareholder of record an open
account to which all shares purchased and all reinvested dividends and other
distributions are credited. Although most shareholders elect not to receive
share certificates, certificates for full shares can be obtained by written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new
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<PAGE>
address. When an account is deemed lost, dividends and other distributions are
automatically reinvested. In addition, the amount of any outstanding checks for
dividends and other distributions that have been returned to the Transfer Agent
are reinvested, and the checks are canceled.
DISTRIBUTOR AND DISTRIBUTION PLAN
Schroder Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York,
New York 10019, serves as Distributor of the Funds' shares. Schroder Advisors
was organized in 1989 as a registered broker-dealer to serve as an administrator
and distributor of each Fund and other mutual funds.
Each Fund has adopted a Distribution Plan pursuant to which the Fund may pay
Schroder Advisors or others compensation in an amount limited in any fiscal year
to the annual rate of 0.50% of the Fund's average daily net assets attributable
to its Advisor Shares. The Funds presently make no payments under the
Distribution Plans, although the Trustees may at any time authorize payments at
any annual rate of up to 0.50% of a Fund's average daily net assets attributable
to its Advisor Shares.
Payment under a Fund's Shareholder Servicing Plan for Advisor Shares will be
considered to have been made pursuant to the Fund's Distribution Plan, to the
extent such payments may be deemed to be primarily intended to result in the
sale of the Fund's Advisor Shares.
SHAREHOLDER SERVICE PLAN
The Trust has adopted a shareholder service plan (the "Service Plan") for the
Advisor Shares of each Fund. Under the Service Plan, each Fund pays fees to
Schroder Advisors or others at an annual rate of up to 0.25% of the average
daily net assets of the Fund represented by Advisor Shares. Schroder Advisors
may enter into shareholder service agreements with Service Organizations
pursuant to which the Service Organizations provide administrative support
services to their customers who are Fund shareholders. In return for providing
these support services, a Service Organization may receive payments from
Schroder Advisors at a rate not exceeding 0.25% of the average daily net assets
of the Advisor Shares of each Fund for which the Service Organization is the
Service Organization of record. These administrative services may include, but
are not limited to, the following functions: establishing and maintaining
accounts and records relating to clients of the Service Organization; answering
shareholder inquiries regarding the manner in which purchases, exchanges, and
redemptions of Advisor Shares of the Trust may be effected and other matters
pertaining to the Trust's services; providing necessary personnel and facilities
to establish and maintain shareholder accounts and records; assisting
shareholders in arranging for processing purchase, exchange, and redemption
transactions; arranging for the wiring of funds; guaranteeing shareholder
signatures in connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request. Payments to a particular Service Organization under the
Service Plan are calculated by reference to the average daily net assets of
Advisor Shares owned beneficially by investors who have a service relationship
with the Service Organization. Some Service Organizations may impose additional
conditions or fees, such as requiring clients to invest more than the minimum
amounts required by the Trust for initial or subsequent investments or charging
a direct fee for services. Such fees would be in addition to any amounts which
might be paid to the Service Organization by Schroder Advisors. Please contact
your Service Organization for details.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Advisor Shares are offered in connection with tax-deferred retirement plans,
including traditional and Roth IRAs. Application forms and further information
about these plans, including applicable fees, are available upon request. Before
investing in a Fund through one of these plans, investors should consult their
tax advisors.
The Funds may be used as an investment vehicle for an IRA including a SEP-IRA.
An IRA naming Bank-Boston as custodian is available from the Trust or the
Transfer Agent. The minimum initial investment for an IRA and the minimum
subsequent investment for each Fund is set forth in the table below. Generally,
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<PAGE>
contributions and investment earnings in a traditional IRA grow tax-deferred
until withdrawn. In contrast, contributions to a Roth IRA are not
tax-deductible, but investment earnings generally grow tax-free. IRAs are
available to individuals (and their spouses) who receive compensation or earned
income whether or not they are active participants in a tax-qualified or
government-approved retirement plan. An IRA contribution by an individual or
spouse who participates in a tax-qualified or government-approved retirement
plan may not be deductible, depending upon the individual's income. Individuals
also may establish an IRA to receive a "rollover" contribution of distributions
from another IRA or qualified plan. Consult your tax advisor.
<TABLE>
<CAPTION>
INITIAL SUBSEQUENT
FUND INVESTMENT INVESTMENT
- --------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Schroder International Fund $ 250 $ 250
Schroder Emerging Markets Fund $ 250 $ 250
Schroder International Smaller Companies Fund $ 250 $ 250
Schroder International Bond Fund $ 250 $ 250
Schroder U.S. Equity Fund $ 250 $ 250
Schroder U.S. Smaller Companies Fund $ 250 $ 250
</TABLE>
EXCHANGES
You may exchange a Fund's Advisor Shares for Advisor Shares of any fund offered
by the Schroder family of funds so long as your investment meets the initial
investment minimum of the fund being purchased, and you maintain the respective
minimum account balance in each fund in which you own shares. Exchanges between
Funds are made at net asset value.
For federal income tax purposes, an exchange is considered to be a sale of
shares on which you may realize a capital gain or loss. If you hold Advisor
Shares directly, you may make an exchange by calling the Transfer Agent at
1-800-344-8332 (see "How to Sell Shares - By Telephone") or by mailing written
instructions to Schroder Capital Funds (Delaware), P.O. Box 446, Portland, Maine
04112. If you hold Advisor Shares through a Service Organization, you must make
an exchange through the Service Organization. Exchange privileges may be
exercised only in those states where shares of the other funds of the Schroder
family of funds may legally be sold. Exchange privileges may be amended or
terminated at any time upon sixty (60) days' notice.
HOW TO SELL SHARES
You can sell your Advisor Shares in a Fund to that Fund any day the New York
Stock Exchange is open, either through your Service Organization or directly to
the Fund. If your shares are held in the name of a Service Organization, you may
only sell shares through that Service Organization. The Trust will only redeem
shares for which it has received payment.
Advisor Shares are redeemed at their net asset value next determined after
receipt by the Fund (see the address set forth under "How to Buy Shares") of a
redemption request in proper form. Redemption requests that are received in good
order prior to the close of the Exchange on a day on which the Exchange is open
are processed at the net asset value determined as of that day. Redemption
requests that are received after the close of the Exchange are processed at the
net asset value next determined.
TELEPHONE REQUESTS
Redemption requests may be made by a shareholder of record 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
19
<PAGE>
procedures will be followed by the Transfer Agent to confirm that telephone
instructions are genuine. The Transfer Agent and the Trust generally will not be
liable for any losses due to unauthorized or fraudulent redemption requests, but
either or both may be liable if they do not follow these procedures. Shares for
which certificates have been issued may not be redeemed by telephone. In times
of drastic economic or market change, it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.
WRITTEN REQUESTS
Redemptions may be made by a shareholder of record by letter to a 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 1-800-290-9826.
If Advisor Shares to be redeemed are held in certificate form, the certificates
must be enclosed with the redemption request, and the assignment form on the
back of the certificates (or an assignment separate from the certificates but
accompanied by the certificates) must be signed by all owners in exactly the
same way the owners' names are written on the face of the certificates.
Requirements for signature guarantees and/or documentation of authority as
described above could also apply. For your protection, the Trust suggests that
certificates be sent by registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally are
mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of the Advisor 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
is sent to the shareholder's address of record.
A Fund may suspend the right of redemption during any period when: (1) trading
on the New York Stock Exchange is restricted or the New York Stock Exchange is
closed; (2) the SEC has by order permitted such suspension; or (3) an emergency
(as defined by rules of the SEC) exists making disposal of portfolio investments
or determination of the Fund's net asset value not reasonably practicable.
If the Board of Trustees determines that it would be detrimental to the best
interest of the remaining shareholders of a Fund to make payment wholly or
partly in cash, the Fund may redeem Advisor Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Advisor 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 Advisor Shares is made wholly or partly in portfolio
securities, the shareholder may be subject to additional risks and costs in
converting the securities to cash. See "Additional Purchase and Redemption
Information" in the SAI.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for federal income tax
purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account (other than an IRA) if at any
time the account does not have a value of at least $2,000, unless the value of
the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and will be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.
The Trust may also redeem shares if you own shares of any Fund above a maximum
amount set by the Trustees. There is currently no maximum, but the Trustees may
establish one at any time, which could apply to both present and future
shareholders.
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<PAGE>
OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
EACH FUND CALCULATES THE NET ASSET VALUE OF ITS ADVISOR SHARES BY DIVIDING THE
TOTAL VALUE OF ITS ASSETS ATTRIBUTABLE TO ITS ADVISOR SHARES, LESS ITS
LIABILITIES ATTRIBUTABLE TO THOSE SHARES, BY THE NUMBER OF ITS ADVISOR SHARES
OUTSTANDING. Shares are valued as of the close of the New York Stock Exchange
(normally, 4:00 p.m. Eastern time) each day the New York Stock Exchange is open.
Portfolio securities for which market quotations are readily available are
stated at market value. Short-term investments that will mature in 60 days or
less are stated at amortized cost, which approximates market value. All other
securities and assets are valued at their fair values determined by in
accordance with procedures approved by the Board of Trustees. The net asset
value of a Fund's Advisor Shares will generally differ from that of its other
class of shares due to the variance in daily net income realized by and
dividends paid on each class of shares, and differences in the expenses of the
different classes. All assets and liabilities of a Fund denominated in foreign
currencies are valued in U.S. dollars based on the exchange rate last quoted by
a major bank prior to the time when the net asset value of the Fund is
calculated.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund distributes any net investment income and any net realized capital
gain at least annually. Distributions from net capital gain are made after
applying any available capital loss carryovers.
YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS: (1) reinvest all distributions in
additional Advisor Shares of your Fund; (2) receive distributions from net
investment income in cash while reinvesting capital-gain distributions in
additional Advisor Shares of your Fund; (3) receive distributions from net
investment income in additional Advisor Shares of your Fund while receiving
capital-gain distributions in cash; or (4) receive all distributions in cash.
You can change your distribution option by notifying the Transfer Agent in
writing. If you do not select an option when you open your account, all
distributions by a Fund will be reinvested in Advisor Shares of that Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.
TAXES
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gain it distributes to
shareholders. A Fund will distribute substantially all of its net investment
income and net capital-gain income on a current basis.
All Fund distributions will be taxable to you as ordinary income, except that
any distributions of net long-term capital gain will be taxed as such,
regardless of how long you have held the shares. Long-term capital gain will be
subject to a maximum rate of 28% or 20% depending upon the holding period of the
portfolio investment generating the gain. Distributions will be taxable as
described above whether received in cash or in shares through the reinvestment
of distributions.
Early in each year the Trust will notify you of the amount and tax status of
distributions paid to you by each Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax advisor to determine the
precise effect of an investment in a Fund on your particular tax situation.
CERTAIN INFORMATION REGARDING FOREIGN TAXES. Foreign governments may impose
taxes on the Funds and the Portfolios and their investments, which generally
would reduce the income of the Fund or Portfolio. However, an offsetting tax
credit or deduction may be available to you.
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<PAGE>
Each Fund that is eligible to do so intends to elect to permit its shareholders
to take a credit (or a deduction) for the Fund's share of qualified foreign
income taxes paid by the Portfolio in which that Fund invests its assets. If the
Fund does make such an election, its shareholders would include as gross income
in their federal income tax returns both: (1) distributions received from the
Fund and (2) the amount that the Fund advises is their pro rata portion of
foreign income taxes paid with respect to or withheld from dividends and
interest paid to the Fund from its foreign investments. Shareholders then would
be entitled, subject to certain limitations (including, with respect to a
foreign tax credit, a holding period requirement), to take a foreign tax credit
against their federal income tax liability for the amount of such foreign taxes
or else to deduct such foreign taxes as an itemized deduction from gross income.
THE PORTFOLIOS
The Portfolios are not required to pay federal income tax because they are
classified as partnerships for federal income tax purposes. All interest,
dividends, gain and losses of the Portfolios will be deemed to have been "passed
through" to the Funds in proportion to the Funds' holdings in the Portfolios
regardless of whether such interest, dividends or gain have been distributed by
the Portfolios.
Each Portfolio intends to conduct its operations so as to enable each fund, if
each invests all of its assets in a Portfolio, to qualify as a regulated
investment company.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. The business and affairs of each Portfolio are
managed under the direction of the Board of Trustees of Schroder Capital Funds
or of Schroder Capital Funds II. Information regarding the Trustees and
executive officers of the Trust, as well as the Trustees and executive officers
of Schroder Capital Funds and Schroder Capital Funds II, may be found in the
SAI.
Schroder Capital Management International Inc. ("SCMI") is the investment
adviser to each of the Funds. SCMI is a wholly owned U.S. subsidiary of
Schroders U.S. Holdings Inc., which engages through its subsidiary firms in the
investment banking, asset management and securities businesses. Affiliates of
Schroders U.S. Holdings Inc. (or their predecessors) have been investment
managers since 1927. SCMI and its United Kingdom affiliate, Schroder Capital
Management International, Ltd., have served as investment managers for
approximately $28 billion in the aggregate as of September 30, 1997. Schroders
U.S. Holdings Inc. is an indirect, wholly owned U.S. subsidiary of Schroders
plc, a publicly owned holding company organized under the laws of England.
Schroders plc and its affiliates engage in international merchant banking and
investment management businesses, and as of September 30, 1997, had under
management assets of over $175 billion. Schroder Fund Advisors Inc. ("Schroder
Advisors") is a wholly owned subsidiary of SCMI.
SCMI also serves as investment adviser to each of the Portfolios of Schroder
Capital Funds and Schroder Capital Funds II. Each of those Portfolios pays
advisory fees to SCMI monthly at the following annual rates (based on the assets
of each Portfolio taken separately): INTERNATIONAL EQUITY FUND - 0.45% of the
Portfolio's average daily net assets; SCHRODER INTERNATIONAL BOND PORTFOLIO -
0.50% of the Portfolio's average daily net assets; SCHRODER INTERNATIONAL
SMALLER COMPANIES PORTFOLIO - 0.85% of the Portfolio's average daily net assets;
SCHRODER EM CORE PORTFOLIO - 1.00% of the Portfolio's average daily net assets;
and SCHRODER U.S. SMALLER COMPANIES PORTFOLIO - 0.60% of the Portfolio's average
daily net assets. Each Fund, due to its investment in a Portfolio, bears a
proportionate part of the management fees paid by the Portfolio (based on the
percentage of the Portfolio's assets attributable to the Fund).
Each Fund (except Schroder U.S. Equity Fund) has entered into an investment
advisory agreement with SCMI pursuant to which SCMI would manage the Fund's
assets directly in the event that the Fund were to cease investing substantially
all of its assets in a Portfolio. SCMI will not receive any fees under that
22
<PAGE>
agreement so long as a Fund continues to invest substantially all of its assets
in a Portfolio (or another investment company). For further information on these
dormant investment advisory agreements, see the SAI.
SCHRODER U.S. EQUITY FUND pays advisory fees to SCMI monthly at the annual rates
of 0.75% of the first $100 million of the Fund's average daily net assets and
0.50% of the Fund's average daily net assets in excess of $100 million.
ADMINISTRATIVE SERVICES. The Trust, on behalf of each Fund (other than U.S.
Equity Fund), has entered into an administration agreement with Schroder
Advisors pursuant to which Schroder Advisors provides certain management and
administrative services to these Funds. The Trust, on behalf of each Fund has
entered into subadministration agreements with Forum Administrative Services,
LLC, Two Portland Square, Portland, Maine 04101 ("FAdS"), pursuant to which FAdS
provides certain management and administrative services necessary for the Funds'
operations. The Trust pays fees to Schroder Advisors and to FAdS monthly at the
following annual rates: SCHRODER INTERNATIONAL FUND - 0.15% and 0.05%,
respectively, of the Fund's average daily net assets; SCHRODER EMERGING MARKETS
FUND - 0.15% and 0.075%, respectively, of the Fund's average daily net assets;
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND - 0.10% and 0.075%, respectively,
of the Fund's average daily net assets; SCHRODER INTERNATIONAL BOND FUND - 0.10%
and 0.075%, respectively, of the Fund's average daily net assets; and SCHRODER
U.S. SMALLER COMPANIES FUND - 0.25% and 0.075%, respectively, of the Fund's
average daily net assets. Each of Emerging Markets Fund and International
Smaller Companies Fund also is subject to a $25,000 minimum annual fee plus a
$12,000 charge per class under the subadministration agreement.
Schroder Advisors and FAdS also serve as administrator and subadministrator,
respectively, to each of the Portfolios of Schroder Capital Funds and Schroder
Capital Funds II. Each of those Portfolios pays administration fees to Schroder
Advisors and subadministration fees to FAdS monthly at the following annual
rates (based on the assets of each Portfolio taken separately): INTERNATIONAL
EQUITY FUND - % and %, respectively, of the Portfolio's average daily net
assets; SCHRODER INTERNATIONAL BOND PORTFOLIO - % and %, respectively, of
the Portfolio's average daily net assets; SCHRODER INTERNATIONAL SMALLER
COMPANIES PORTFOLIO - % and %, respectively, of the Portfolio's average
daily net assets; SCHRODER EM CORE PORTFOLIO - % and %, respectively, of
the Portfolio's daily net assets; and SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
- - % and %, respectively, of the Portfolio's average daily net assets. Each
Fund, due to its investment in a Portfolio, bears a proportionate part of the
administration and subadministration fees paid by the Portfolio (based on the
percentage of the Portfolio's assets attributable to the Fund).
In order to limit the Funds' expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of each of the Funds) with respect to each of the Funds to the
extent that a Fund's expenses chargeable to Advisor Shares exceed the following
annual rates: SCHRODER INTERNATIONAL FUND - 1.24% of the Fund's average daily
net assets attributable to Advisor Shares; SCHRODER EMERGING MARKETS FUND -
1.95% of the Fund's average daily net assets attributable to Advisor Shares;
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND - 1.75% of the Fund's average
daily net assets attributable to Advisor Shares; SCHRODER INTERNATIONAL BOND
FUND - 1.20% of the Fund's average daily net assets attributable to Advisor
Shares; SCHRODER U.S. EQUITY FUND - 1.75% of the Fund's average daily net assets
attributable to Advisor Shares; and SCHRODER U.S. SMALLER COMPANIES FUND - 1.74%
of the Fund's average daily net assets attributable to Advisor Shares. In
addition, SCMI has agreed to limit the advisory fees paid by U.S. EQUITY FUND to
0.65% of the Fund's average daily net assets. FAdS may waive voluntarily all or
a portion of its subadvisory fees, from time to time. The Trust pays all
expenses not assumed by SCMI and Schroder Advisors, including Trustees' fees,
auditing, legal, custodial, and investor servicing, and shareholder reporting
expenses.
SCMI's investment decisions for each Portfolio in which a Fund invests (or, for
the U.S. Equity Fund, for the Fund) are made by an investment manager or an
investment team, with the assistance of an investment committee at SCMI. The
Portfolio Managers for each Fund are as follows:
23
<PAGE>
MICHAEL PERELSTEIN --Portfolio Manager since January 1997 of Schroder
International Equity Portfolio, in which Schroder International Fund invests,
and Portfolio Manager since inception of Schroder International Bond Portfolio,
in which Schroder International Bond Fund invests. Mr. Perelstein is a Vice
President of the Trust and of Schroder Capital Funds and is a Director and
Senior Vice President of SCMI. He was previously a Managing Director,
MacKay-Shields Financial Corp.
MARK BRIDGEMAN --Portfolio Manager since inception of Schroder EM Core
Portfolio, in which Schroder Emerging Markets Fund invests. Mr. Bridgeman is a
Vice President of SCMI.
HEATHER CRIGHTON --Portfolio Manager since inception of Schroder EM Core
Portfolio, in which Schroder Emerging Markets Fund invests. Ms. Crighton is a
First Vice President of SCMI.
JOHN A. TROIANO --Portfolio Manager since inception of Schroder EM Core
Portfolio, in which Schroder Emerging Markets Fund invests. Mr. Troiano is a
Vice President of the Trust and of Schroder Capital Funds. He is also the Chief
Executive of SCMI.
RICHARD R. FOULKES --Portfolio Manager since January 1997 of Schroder
International Smaller Companies Portfolio, in which Schroder International
Smaller Companies Fund invests. Mr. Foulkes is a Vice President of the Trust and
of Schroder Capital Funds. He is also Deputy Chairman of SCMI.
MARK ASTLEY --Portfolio Manager since inception of Schroder International Bond
Portfolio, in which Schroder International Bond Fund invests. Mr. Astley is a
Vice President of the Trust and of Schroder Capital Funds II. He is also a First
Vice President of SCMI.
JANE P. LUCAS --Portfolio Manager since November 1995 of Schroder U.S. Equity
Fund. Ms. Lucas is a Vice President of the Trust and Senior Vice President of
SCMI.
PAUL MORRIS --Portfolio Manager since January 1997 of Schroder U.S. Equity Fund.
Mr. Morris is Senior Vice President of SCMI. He was previously Principal and
Senior Portfolio Manager, Weiss Peck & Greer, L.L.C., and Managing Director,
Equity Division, UBS Asset Management.
FARIBA TALEBI --Portfolio Manager since inception of Schroder U.S. Smaller
Companies Portfolio, in which Schroder U.S. Smaller Companies Fund invests. Ms.
Talebi is a Vice President of the Trust and Group Vice President of SCMI.
SCMI places all orders for purchases and sales of the Funds' securities. In
selecting broker-dealers, SCMI may consider research and brokerage services
furnished to it and its affiliates. Schroder & Co. Inc. and Schroder Securities
Limited, affiliates of SCMI, may receive brokerage commissions from the Funds in
accordance with procedures adopted by the Trustees under the 1940 Act which
require periodic review of these transactions. Subject to seeking the most
favorable price and execution available, SCMI may consider sales of shares of
the Funds as a factor in the selection of broker-dealers.
YEAR 2000
The Funds receive services from the investment adviser, administrators,
distributor, transfer agent and custodian, which rely on the smooth functioning
of their respective systems and the systems of others to perform these services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. SCMI is taking
steps that it believes are reasonably designed to address this potential year
2000 problem and to obtain satisfactory assurances that comparable steps are
being taken by each of the Funds' other major service providers. There can be no
assurance, however, that these steps will be sufficient to avoid any adverse
impact on the Funds from this problem.
PERFORMANCE INFORMATION
Yield (for Advisor Shares of International Bond Fund) and total return data
relating to Advisor Shares of the Funds may from time to time be included in
advertisements about the Funds. The "yield" of a Fund's Advisor Shares is
calculated by dividing the Fund's annualized net investment income per Advisor
Shares
24
<PAGE>
during a recent 30-day period by the net asset value per Advisor Shares on the
last day of that period. When a Fund's "total return" is advertised with respect
to Advisor Shares, it will be calculated for the past year, the past five years,
and the past ten years (or if a Fund's Advisor Shares have been offered for a
period shorter than one, five, or ten years, that period will be substituted)
through the most recent calendar quarter, as more fully described in the SAI.
Advertisements about a Fund may include total return information for the Fund's
Investor Shares for periods prior to the initial offering date of the Fund's
Advisor Shares; that information may be applicable to the Fund's Advisor Shares
during the periods presented. Total return for any period of one year or less
represents the actual rate of return on such an investment earned during the
period, although annualized figures may also be shown in advertisements. Total
return quotations assume that all dividends and distributions are reinvested
when paid.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE
PERFORMANCE. Investment performance of a Fund's Advisor Shares, which will vary,
is based on many factors, including market conditions, the composition of the
Fund's portfolio, and the Fund's operating expenses attributable to its Advisor
Shares. Investment performance also often reflects the risks associated with a
Fund's investment objectives and policies. Quotations of yield or total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect. These factors should be considered when
comparing the investment results of a Fund's Advisor Shares to those of various
classes of other mutual funds and other investment vehicles. Performance for
each Fund's Advisor Shares may be compared to various indices. See the SAI for
more information.
ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust was organized as a Maryland corporation on July 30, 1969, reorganized
on February 29, 1988 as Schroder Capital Funds, Inc. and reorganized as a
Delaware business trust on January 9, 1996. The Trust has an unlimited number of
shares of beneficial interest that may, without shareholder approval, be divided
into an unlimited number of series of such shares, which, in turn, may be
divided into an unlimited number of classes of such shares. The Trust's shares
of beneficial interest are presently divided into nine different series. Each
Fund's shares are presently divided into two classes, Advisor Shares, which are
offered through this Prospectus, and Investor Shares, which are offered through
a separate prospectus. Unlike Advisor Shares, Investor Shares are not subject to
shareholder service and distribution fees, which will affect their performance
relative to Advisor Shares. To obtain more information about Investor Shares,
contact Schroder Capital Funds (Delaware) at 1-800-290-9826. The Trust's
principal office is located at Two Portland Square, Portland, Maine 04101, and
its telephone number is 1-207-879-8903.
Each share has one vote, with fractional shares voting proportionally.
Shareholders of a class of shares or series generally have separate voting
rights with respect to matters that affect only that class or series. See
"Organization and Capitalization" in the SAI. Shares are freely transferable and
are entitled to dividends and other distributions as declared by the Trustees.
Dividends paid by the Funds on their two classes of shares will normally differ
in amount due to the differing expenses borne by the two classes. If a Fund were
liquidated, each class of shares would receive the net assets of the Fund
attributable to that class. The Trust may suspend the sale of a Fund's shares at
any time and may refuse any order to purchase shares. Although the Trust is not
required to hold annual meetings of its shareholders, shareholders have the
right to call a meeting to elect or remove Trustees, or to take other actions as
provided in the Declaration of Trust.
INFORMATION ABOUT THE PORTFOLIOS
Each of the Funds (other than U.S. Equity Fund) seeks to achieve its investment
objective by investing all of its investable assets in a Portfolio of Schroder
Capital Funds or Schroder Capital Funds II, that has the same investment
objective and similar policies. In that way, a Portfolio acquires investment
securities directly, and a Fund acquires an indirect interest in those
securities. Schroder Capital Funds is a business trust organized under the laws
of the State of Delaware in September 1995. Schroder Capital Funds II is a
business trust organized under the laws of the State of Delaware in December
1996. Each of Schroder Capital Funds and
25
<PAGE>
Schroder Capital Funds II is registered under the 1940 Act as an open-end
management investment company. The assets of a Portfolio belong only to, and the
liabilities of a Portfolio are borne solely by, that Portfolio and no other
Portfolio of Schroder Capital Funds or Schroder Capital Funds II.
A Fund's investment in a Portfolio is in the form of a non-transferable
beneficial interest. All other investors in a Portfolio invest on the same terms
and conditions as the Fund and pay a proportionate share of the Portfolio's
expenses.
The Portfolios normally will not hold meetings of investors except as required
by the 1940 Act. Each investor in a 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, in accordance with applicable law the Board of
Trustees will either: (1) solicit voting instructions from Fund shareholders
with regard to the voting of all proxies with respect to a Fund's shares and
vote such proxies in accordance with such instructions, or (2) vote the
interests held by a Fund in the same proportion as the vote of all other holders
of the Portfolio's interests. 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 Portfolios do not sell their shares directly to members of the general
public. Another investor in a 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 investing in that
Portfolio and could have different fees and expenses than the Fund. Therefore,
Fund shareholders may have different returns than shareholders in another
investment company that invests exclusively in the same Portfolio. Information
regarding any such funds in the future will be available by calling
1-800-730-2932.
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement of a material fact in, or omission of
a material fact from, the registration statement. Each of Schroder Capital Funds
and Schroder Capital Funds II, their Trustees, and certain of their officers are
required to sign the registration statement of the Trust and may be required to
sign the registration statements of certain other investors in the Portfolio. In
addition, Schroder Capital Funds or Schroder Capital Funds II may be liable for
misstatements or omissions of a material fact in any proxy soliciting material
of an investor in a Portfolio, including a Fund. Each investor in a Portfolio,
including the Trust, is required to indemnify Schroder Capital Funds or Schroder
Capital Funds II, as the case may be, and their Trustees and officers ("SCF
Indemnitees") against certain claims.
Indemnified claims are those brought against SCF Indemnitees based on a
misstatement of a material fact in, or omission of a material fact from, a
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Capital Funds or Schroder Capital Funds II, as the case may be, and was
supplied to the investor by Schroder Capital Funds or Schroder Capital Funds II,
as the case may be. Similarly, Schroder Capital Funds or Schroder Capital Funds
II, as the case may be, is required to indemnify each investor in a Portfolio,
including a Fund, for any claims brought against the investor with respect to
the investor's registration statement or proxy materials, to the extent the
claim is based on a misstatement or omission of a material fact relating to
information about Schroder Capital Funds or Schroder Capital Funds II, as the
case may be, that is supplied to the investor by Schroder Capital Funds or
Schroder Capital Funds II, as the case may be.
A Fund's investment in a Portfolio may be affected by the actions of other large
investors in the Portfolio; 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.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Trust Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were other
investors in the Portfolio who, by a vote of the shareholders of all investors
(including the
26
<PAGE>
Fund), changed 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 a Fund should
withdraw its investment from a Portfolio, the Trust Board would consider
appropriate alternatives, including the management of the Fund's assets in
accordance with its investment objective and policies by SCMI, or the investment
of all of the Fund's investable assets in another pooled investment entity
having substantially the same investment objective as the Fund. The inability of
a Fund to find a suitable replacement investment, if the Board decided not to
permit SCMI to manage the Fund's assets, could have a significant adverse impact
on shareholders of the Fund.
Each investor in a Portfolio, including a Fund, may be liable for all
obligations of the Portfolio. The risk to an investor in a Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be remote. Upon liquidation of a
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
27
<PAGE>
APPENDIX A
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
FIXED-INCOME SECURITY RATINGS
<TABLE>
<S> <C>
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group they comprise what are generally
known as high grade fixed-income securities. They are rated lower than the best
fixed-income securities because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
"A" Fixed-income securities which are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
"Baa" Fixed-income securities which are rated "Baa" are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
</TABLE>
Rating Refinements: Moody's may apply numerical modifiers, "1", "2", and "3" in
each generic rating classification from "Aa" through "B" in its municipal
fixed-income security rating system. The modifier "1" indicates that the
security ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and a modifier "3" indicates that the issue
ranks in the lower end of its generic rating category.
A-1
<PAGE>
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay punctually
promissory obligations not having an original maturity in excess of nine months.
The ratings apply to Municipal Commercial Paper as well as taxable Commercial
Paper. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:
"Prime-1", "Prime-2", "Prime-3".
Issuers rated "Prime-1" have a superior capacity for repayment of short-term
promissory obligations. Issuers rated "Prime-2" have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated "Prime-3" have
an acceptable capacity for repayment of short-term promissory obligations.
Issuers rated "Not Prime" do not fall within any of the Prime rating categories.
STANDARD & POOR'S RATING GROUP ("STANDARD & POOR'S")
FIXED-INCOME SECURITY RATINGS
A Standard & Poor's fixed-income security rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers, or
lessees.
The ratings are based on current information furnished by the issuer or obtained
by Standard & Poor's from other sources it considers reliable. The ratings are
based, in varying degrees, on the following considerations: (1) likelihood of
default-capacity and willingness of the obligor as to the timely payment of
interest and repayment of principal in accordance with the terms of the
obligation; (2) nature of and provisions of the obligation; and (3) protection
afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information, or for other reasons.
<TABLE>
<S> <C>
"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay interest
and repay principal and differs from the highest-rated issues only in small
degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.
"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for fixed-income securities in this category than for fixed-income securities in
higher-rated categories.
Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.
"BB" Fixed-income securities rated "BB" have less near-term vulnerability to default
than other speculative grade fixed-income securities. However, it faces major
ongoing uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity or willingness to pay
interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to default but
presently have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair capacity
or willingness to pay interest and repay principal.
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
"CCC" Fixed-income securities rated "CCC" have a current identifiable vulnerability to
default, and the obligor is dependent upon favorable business, financial and
economic conditions to meet timely payments of interest and repayments of
principal. In the event of adverse business, financial or economic conditions,
it is not likely to have the capacity to pay interest and repay principal.
"CC" The rating "CC" is typically applied to fixed-income securities subordinated to
senior debt which is assigned an actual or implied "CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities subordinated to
senior debt which is assigned an actual or implied "CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which no interest is
being paid.
"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
</TABLE>
Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are regarded as
having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation and
"C" the highest degree of speculation. While such fixed-income securities will
likely have some quality and protective characteristics, these are out-weighed
by large uncertainties or major risk exposures to adverse conditions.
Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by the
addition of a plus or minus sign to show relative standing with the major
ratings categories.
COMMERCIAL PAPER RATINGS
Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. The commercial paper rating is not a recommendation to purchase or
sell a security. The ratings are based upon current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
Issues assigned "A" ratings are regarded as having the greatest capacity for
timely payment. Issues in this category are further refined with the designation
"1", "2", and "3" to indicate the relative degree of safety.
<TABLE>
<S> <C>
"A-1" Indicates that the degree of safety regarding timely payment is very strong.
"A-2" Indicates capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated "A-1".
"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying this
designation are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
</TABLE>
A-3
<PAGE>
[LOGO]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER INTERNATIONAL FUND
SCHRODER EMERGING
MARKETS FUND
SCHRODER INTERNATIONAL
SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL
BOND FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S.
SMALLER COMPANIES FUND
Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826
<PAGE>
ADVISOR SHARES
PROSPECTUS
MARCH 1, 1998
<PAGE>
INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, New York 11245
and
Global Custody Division
125 London Wall
London EC2Y 5AJ, United Kingdom
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
PROSPECTUS
INVESTOR SHARES
MARCH 1, 1998
The Schroder Capital Funds are mutual funds offering a wide range of investment
objectives. SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO ( the "Fund")
is a non-diversified series of shares of Schroder Capital Funds (Delaware). The
Fund invests substantially all of its assets in Schroder Emerging Markets Fund
Institutional Portfolio (the "Portfolio"). The Portfolio is a separately
managed, non-diversified portfolio of Schroder Capital Funds, which, like
Schroder Capital Funds ( Delaware), is an open-end management investment
company. Schroder Capital Management International Inc. serves as investment
adviser to the Fund and to the Portfolio.
This Prospectus explains concisely the information that a prospective investor
should know before investing in Investor Shares of the Fund. Please read it
carefully and keep it for future reference. Investors can find more detailed
information about Schroder Capital Funds (Delaware) (the "Trust") in the March
1, 1998 Statement of Additional Information, as amended from time to time. For a
free copy of the Statement of Additional Information, please call
1-800-290-9826. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference. The Prospectus and the Statement of Additional Information are
available along with other related materials for reference on the SEC's Internet
Web Site (http://www.sec.gov).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
================================================================================
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
<TABLE>
<S> <C> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. EQUITY FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
</TABLE>
================================================================================
FUND STRUCTURE
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO seeks to achieve its
investment objective by investing all of its investable assets in a separate
portfolio ( a "Portfolio") of Schroder Capital Funds that has the same
investment objective as, and investment policies that are substantially similar
to those of, the Fund. Accordingly, the investment experience of the Fund will
correspond directly with the investment experience of the Portfolio. See "Other
Information -- Information about the Portfolio."
2
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in Investor
Shares of the Fund. The "Shareholder Transaction Expenses" table below
summarizes the maximum transaction costs you would incur by investing in
Investor Shares of the Fund. "Annual Operating Expenses" show the expenses
incurred by the Fund for the most recent fiscal year. Annual Operating Expenses
of the Fund include the Fund's pro rata portion of all operating expenses of the
Portfolio. The Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in the Fund over specified periods.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases .......................None
Maximum Sales Load Imposed on Reinvested Dividends .......................None
Deferred Sales Load .......................None
Purchase Charge (based on amount invested((1) ..................... 0.50%
Redemption Charge (based on net asset value of shares redeemed)(1) ......................0.50%
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (after waivers) (2)(3) ......................0.89%
12b-1 Fees .......................None
Other Expenses (after waivers and reimbursements) ......................0.52%
- ------------------------------------------------- -----
Total Fund Operating Expenses (after waivers and reimbursements) (3) ......................1.41%
</TABLE>
- ----------------------------
(1) The Purchase and Redemption Charges are collected by the Fund and paid to
the Portfolio to compensate the other investors in the Portfolio for
expenses incurred in connection with purchases and sales of portfolio
securities. See "Investment in the Fund -- Purchase of Shares" and "--
Redemption of Shares."
(2) Management Fees reflect the fees paid by the Portfolio and the Fund for
investment advisory and administrative services.
(3) Management Fees and Total Operating Expenses reflect expense limitations
currently in effect. See "Management of the Fund -- Expenses." In the
absence of the expense limitations, Management Fees, Other Expenses, and
Total Fund Operating Expenses would be 1.10% , .52%, and 1.62%,
respectively.
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period.
The tables and Example are provided to help you understand your share of the
operating expenses of the Fund attributable to Investor Shares. THE TABLE AND
EXAMPLE DO NOT REPRESENT PAST OR FUTURE EXPENSE LEVELS. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO
ASSUME A 5% ANNUAL RETURN, BUT ACTUAL ANNUAL RETURN WILL VARY.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Assuming no redemption $19 $50 $82 $174
Assuming full redemption at end of period $24 $55 $87 $179
</TABLE>
3
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights of the Fund presented below have been audited by
Coopers & Lybrand L.L.P., independent accountants to the Fund. The financial
statements for the period ended October 31, 1997 for the Fund and the related
independent accountants' report are incorporated by reference into the Statement
of Additional Information (the "SAI"). Further information about the performance
of the Fund is also contained in its Annual Report, which may be obtained
without charge by writing the Fund at Two Portland Square, Portland, Maine 04101
or by calling 1-800-290-9826.
<TABLE>
<S> <C> <C> <C>
Period Ended
October 31,
-------------------------------------------------------------
1997 1996(A) 1995(B)
---- ------- -------
Net Asset Value, Beginning of Period $11.06 $10.63 $10.00
------ ------ ------
Investment Operations:
Net Investment Income (Loss)(c) 0.06 0.02 0.02
Net Realized and Unrealized Gain (Loss) on Investments(d) (0.03) 0.43 0.61
------ ---- ----
Total from Investment Operations 0.03 0.45 0.63
---- ---- ----
Distributions from Net Investment Income (0.01) (0.02) --
------ ------ --
Total Distributions (0.01) (0.02) --
------ ------ --
Net Asset Value, End of period $11.08 $11.06 $10.63
====== ====== ======
Total Return (e)(f) 0.27% 4.22% 6.30%
Ratios/Supplementary Data:
Net Assets at End of period (000s omitted) $179,436 $167,570 $18,423
Ratios to Average Net Assets:
Expenses including reimbursement/waiver(c) 1.41% 1.60% 1.58%(g)
Expenses excluding reimbursement/waiver(c) 1.62% 1.71% 2.45%(g)
Net investment income (loss) including
waiver(c) 0.51% 0.36% 0.46%(g)
Average Commission Rate Per Share(h) $0.0020 $0.0008 N/A
Portfolio Turnover Rate(i) 43.13% 102.70% 44.10%
- ---------------------------------
</TABLE>
(a) On May 17, 1996, the Fund began offering two classes of shares, Investor
Shares and Advisor Shares, and all then outstanding shares of the Fund were
designated as Investor Shares.
(b) The Fund commenced operations on March 31, 1995 and converted to Core and
Gateway(R) on November 1, 1995.
(c) For the periods ending after October 31, 1995, includes the Fund's
proportionate share of income and expenses of the Portfolio.
(d) For the period ended October 31, 1996, the amount shown for a share
outstanding does not correspond with the aggregate net gain (loss) on
investments for the period ended due to the timing of sales and repurchases
of the Fund shares in relation to fluctuating market values of the
investments of the Fund.
(e) Total return calculation does not include the purchase or redemption fee of
0.50%, respectively.
(f) Total return would have been lower had certain expenses not been reduced
during the periods shown.
(g) Annualized.
(h) For the fiscal periods beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid by the Portfolio to
brokers on the purchase and sale of equity securities on which commissions
are charged.
(i) Portfolio turnover represents the rate of portfolio activity. The rate
after October 31, 1995 represents the portfolio turnover rate of the
Portfolio.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO'S INVESTMENT OBJECTIVE IS
TO SEEK LONG-TERM CAPITAL APPRECIATION THROUGH DIRECT OR INDIRECT INVESTMENT IN
EQUITY AND DEBT SECURITIES OF ISSUERS DOMICILED OR DOING BUSINESS IN EMERGING
MARKET COUNTRIES IN REGIONS SUCH AS SOUTHEAST ASIA, LATIN AMERICA, AND EASTERN
AND SOUTHERN EUROPE. The Fund is not intended to be a complete investment
program. There can be no assurance that the Fund will achieve its investment
objective.
THE FUND CURRENTLY SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING
SUBSTANTIALLY ALL OF ITS ASSETS IN A MANAGED PORTFOLIO OF SCHRODER CAPITAL
FUNDS. THAT PORTFOLIO IS REFERRED TO IN THIS PROSPECTUS AS A "PORTFOLIO." IN
REVIEWING THE DESCRIPTION OF THE FUND'S INVESTMENT OBJECTIVES AND POLICIES
BELOW, INVESTORS SHOULD ASSUME THAT THE INVESTMENT OBJECTIVE AND POLICIES OF THE
PORTFOLIO ARE THE SAME IN ALL MATERIAL RESPECTS AS THOSE OF THE FUND. SCHRODER
CAPITAL MANAGEMENT INTERNATIONAL INC. ("SCMI") IS THE INVESTMENT ADVISER TO THE
FUND AND PORTFOLIO.
An "emerging market" country is any country not included at the time of
investment in the Morgan Stanley Capital International World Index of major
world economies. Those economies currently include: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States of America. SCMI may at
times determine based on its own analysis that an economy included in the Index
should nonetheless be considered an emerging market country; any such country
would then constitute an emerging market country for purposes of investment by
the Fund.
The Fund normally invests at least 65% of its assets in securities of issuers
determined by SCMI to be emerging market issuers. The Fund may invest the
remainder of its assets of issuers located anywhere in the world. The Fund may
invest in equity or debt securities of any kind. Equity securities may include,
for example, common stocks, preferred stocks, securities convertible into common
or preferred stocks, and rights and warrants, and non-convertible debt
securities. They may also include American Depositary Receipts, European
Depositary Receipts, and other similar instruments providing for indirect
investment in securities of foreign issuers. The Fund may also invest in
securities of closed-end investment companies that invest in turn primarily in
foreign securities, including emerging market issuers. The Fund is a
non-diversified mutual fund. See "Non-Diversification and Geographic
Concentration."
The Fund may invest up to 35% of its assets in debt securities, including
lower-quality, high-yielding debt securities, which entail certain risks. See
"Other Investment Practices and Risk Considerations -- Debt securities."
An issuer of a security will be considered to be an emerging market issuer if
SCMI determines that: (1) it is organized under the laws of an emerging market
country; (2) its primary securities trading market is in an emerging market
country; (3) at least 50% of the issuer's revenues or profits are derived from
goods produced or sold, investments made, or services performed in emerging
market countries; or (4) at least 50% of its assets are situated in emerging
market countries. The Fund may consider investment companies to be located in
the country or countries in which SCMI determines they focus their investments.
There is no limit on the amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. When the Fund has invested a
substantial portion of its assets in the securities of a single country, it will
be more susceptible to the risks of investing in that country than would a fund
investing in a geographically more diversified portfolio.
The Fund's investment objective may not be changed without shareholder approval.
The investment policies of the Fund may, unless otherwise specifically stated,
be changed by the Trust's Board of Trustees without a vote of the shareholders.
All percentage limitations on investments will apply at the time of investment
and will not be
5
<PAGE>
considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of the investment, except that the policies stated with
regard to borrowing and liquidity will be observed at all times.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Fund also may engage in the following investment practices, each of which
involves certain special risks. The SAI contains more detailed information about
these practices (some of which may be considered "derivative" investments),
including limitations designed to reduce these risks.
FOREIGN SECURITIES. Investments in foreign securities entail certain risks.
There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and diplomatic
developments that could affect the value of the Fund's investments in certain
foreign countries. Since foreign securities are normally denominated and traded
in foreign currencies, the values of the Fund's assets may be affected favorably
or unfavorably by currency exchange rates, currency exchange control
regulations, foreign withholding taxes and restrictions or prohibitions on the
repatriation of foreign currencies. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign issuers
are not generally subject to accounting, auditing, and financial reporting
standards and practices comparable to those in the United States. The securities
of some foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage commissions and other
fees are also generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign countries
may be more limited than those available with respect to investments in the
United States or in other foreign countries. The willingness and ability of
sovereign issuers to pay principal and interest on government securities depends
on various economic factors, including without limitation the issuer's balance
of payments, overall debt level, and cash-flow considerations related to the
availability of tax or other revenues to satisfy the issuer's obligations. If a
foreign governmental entity is unable or unwilling to meet its obligations on
the securities in accordance with their terms, and the Fund may have limited
recourse available to it in the event of default. The laws of some foreign
countries may limit the Fund's ability to invest in securities of certain
issuers located in those foreign countries. Special tax considerations apply to
foreign securities. Except as otherwise provided in this Prospectus, there is no
limit on the amount of the Fund's assets that may be invested in foreign
securities.
If the Fund purchases securities denominated in foreign currencies, a change in
the value of any such currency against the U.S. dollar will result in a change
in the U.S. dollar value of the Fund's assets and the Fund's income available
for distribution. In addition, although at times most of the Fund's income may
be received or realized in these currencies, the Fund will be required to
compute and distribute its income in U.S. dollars. Therefore, if the exchange
rate for any such currency declines after the Fund's income has been earned and
translated into U.S. dollars but before payment, the Fund could be required to
liquidate portfolio securities to make such distributions. Similarly, if an
exchange rate declines between the time the Fund incurs expenses in U.S. dollars
and the time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount in any such currency of such expenses at
the time they were incurred. The Fund may buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments.
In determining whether to invest in debt securities of foreign issuers, SCMI
considers the likely impact of foreign taxes on the net yield available to the
Fund and its shareholders. Income received by the Fund from sources within
foreign countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by the Fund will reduce its
net income available for distribution to shareholders. In certain circumstances,
the Fund may be able to pass through to shareholders credits for foreign taxes
paid. See "How to Sell Shares -- Dividends, Distributions and Taxes."
6
<PAGE>
The Fund may invest in securities of issuers in emerging market countries with
respect to some or all of its assets. The securities' prices and relative
currency values of emerging market investments are subject to greater volatility
than those of issuers in many more developed countries. Investments in emerging
market countries are subject to the same risks applicable to foreign investments
generally, although those risks may be increased due to conditions in such
countries. For example, the securities markets and legal systems in emerging
market countries may only be in a developmental stage and may provide few, or
none, of the advantages or protections of markets or legal systems available in
more developed countries. Although many of the securities in which the Fund may
invest are traded on securities exchanges, they may trade in limited volume, and
the exchanges may not provide all of the conveniences or protections provided by
securities exchanges in more developed markets. The Fund may also invest a
substantial portion of its assets in securities traded in the over-the-counter
markets in such countries and not on any exchange, which may affect the
liquidity of the investment and expose the Fund to the credit risk of its
counterparties in trading those investments. Emerging market countries may
experience extremely high rates of inflation, which may adversely affect these
countries' economies and securities markets.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates will
affect the U.S. dollar values of securities denominated in foreign currencies.
Exchange rates between the U.S. dollar and other currencies fluctuate in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation, and other
factors, many of which may be difficult (if not impossible) to predict. The Fund
may engage in foreign currency exchanges transactions to protect against
uncertainty in the level of future exchange rates. Although the strategy of
engaging in foreign currency exchange transactions could reduce the risk of loss
due to a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.
In particular, the Fund may enter into foreign currency exchange transactions to
protect against a change in exchange ratios that may occur between the date on
which the Fund contracts to trade a security and the settlement date
("transaction hedging") or in anticipation of placing a trade ("anticipation
hedging"); to "lock in" the U.S. dollar value of interest and dividends to be
paid in a foreign currency; or to hedge against the possibility that a foreign
currency in which portfolio securities are denominated or quoted may suffer a
decline against the U.S. dollar ("position hedging"). INSERT TIM'S SENTENCE
HERE?] To a limited extent, the Fund may purchase forward International
contracts to increase exposure in foreign currencies that are expected to
appreciate and thereby increase total return.
SCMI may seek to enhance the Fund's investment return through active currency
management. SCMI may buy or sell currencies of the Fund, on a spot or forward
basis, in an attempt to profit from inefficiencies in the pricing of various
currencies or of debt securities denominated in those currencies. When investing
in foreign securities, the Fund usually effects currency exchange transactions
on a spot (I.E., cash) basis at the spot rate prevailing in the foreign exchange
market. The Fund incurs foreign exchange expenses in converting assets from one
currency to another.
The Fund may also enter into forward currency contracts. A forward currency
contract is an obligation to purchase or sell a specific currency at a future
date (which may be any fixed number of days from the date of the contract agreed
upon by the parties) at a price set at the time of the contract. Forward
contracts do not eliminate fluctuations in the underlying prices of securities
and expose the Fund to the risk that the counterparty is unable to perform.
Forward contracts are not exchange traded, and there can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a forward
contract. Currently, only a limited market, if any, exists for exchange
transactions relating to currencies in certain emerging markets or to securities
of issuers domiciled or principally engaged in business in certain emerging
markets. This may limit the Fund's ability to hedge its investments in those
markets. These contracts involve a risk of loss if SCMI fails to predict
accurately changes in relative currency values, the direction of stock prices or
interest rates, and other economic factors.
7
<PAGE>
From time to time, the Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign currency and
may at times involve currencies in which its portfolio securities are not then
denominated ("cross hedging"). From time to time, the Fund may also engage in
"proxy" hedging; whereby the Fund \would seek to hedge the value of portfolio
holdings denominated in one currency by entering into an exchange contract on a
second currency, the valuation of which SCMI believes correlates to the value of
the first currency. Cross hedging and proxy hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions relate and changes in the value of the currency or other
asset or liability that are the subject of the hedge.
INVESTMENTS IN SMALLER COMPANIES. The Fund may invest all or a substantial
portion of its assets in securities issued by small companies. Such companies
may offer greater opportunities for capital appreciation than larger companies,
but investments in such companies may involve certain special risks. Such
companies may have limited product lines, markets, or financial resources and
may be dependent on a limited management group. While the markets in securities
of such companies have grown rapidly in recent years, such securities may trade
less frequently and in smaller volume than more widely held securities. The
values of these securities may fluctuate more sharply than those of other
securities, and the Fund may experience some difficulty in establishing or
closing out positions in these securities at prevailing market prices. There may
be less publicly available information about the issuers of these securities or
less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets. See "Additional Information Regarding Investments -- Micro and Small Cap
Companies -- Unseasoned Issuers" in the SAI.
Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of the Fund to dispose of such
securities may be greatly limited, and the Fund may have to continue to hold
such securities during periods when SCMI would otherwise have sold the
securities. It is possible that SCMI or its affiliates or clients may hold
securities issued by the same issuers, and may in some cases have acquired the
securities at different times, on more favorable terms, or at more favorable
prices, than the Fund. See "Additional Information Regarding Investments --
Micro and Small Cap Companies, and -- Unseasoned Issuers" in the SAI.
LEVERAGE. The Fund may engage in forward commitments, described below and in the
SAI, which may have the same economic effect as if the Fund had borrowed money.
Leverage increases the Fund's market exposure and risk and may result in losses.
When the Fund is using leverage and its investments increase or decrease in
value, its net asset value normally increases or decreases more than if it were
not leveraged. Successful use of leverage depends on SCMI's ability to predict
market movements correctly. The amount of leverage that can exist at any one
time will not exceed one-third of the value of the Fund's total assets.
DEBT SECURITIES; ZERO COUPON AND PAYMENT-IN-KIND BONDS. The Fund may invest in
debt securities. The Fund may invest in debt securities either to earn
investment income or to benefit from changes in the market values of such
securities. Debt securities are subject to market risk; that is, the fluctuation
of market value in response to changes in interest rates; and to credit risk;
that is, the risk that the issuer may become unable or unwilling to make timely
payments of principal and interest.
The Fund also may invest in lower-quality, high-yielding debt securities rated
below investment grade. Lower-rated debt securities (commonly called "junk
bonds") are considered to be of poor standing and predominantly speculative.
Securities in the lowest rating categories may have extremely poor prospects of
attaining any real investment standing, and some of those securities in which
the Fund may invest may be in default. The rating services' descriptions of
securities in the lower rating categories, including their speculative
characteristics, are set forth in Appendix A to this Prospectus.
In addition, lower-rated securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the ability or perceived ability of an issuer to make payments of interest and
principal may also affect the value of these investments.
8
<PAGE>
The Fund may at times invest in so-called "zero coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity, rather than at intervals
during the life of the security. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. The values of zero-coupon bonds and payment-in-kind bonds are
subject to greater fluctuation in response to changes in market interest rates
than bonds which pay interest currently, and may involve greater credit risk
than such bonds. From time to time, the Fund may invest a portion of its assets
in Brady Bonds, which are securities created through the exchange of existing
commercial bank loans to sovereign entities for new obligations in connection
with debt restructuring. Brady Bonds have been issued only recently and,
therefore, do not have a long payment history.
The Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although SCMI will monitor the
investment to determine whether continues investment in the security will assist
in meeting the Fund's investment objective.
OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in a variety of
transactions involving the use of options and futures contracts for purposes of
increasing its investment return or hedging against market changes. The Fund may
engage in such transactions for hedging purposes or, to the text permitted by
applicable law, to increase its current return.
The Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. The Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. The Fund may also buy and sell put and call options on such
securities for hedging purposes. When the Fund writes a call option on a
portfolio security, it gives up the opportunity to profit from any increase in
the price of the security above the exercise price of the option; when it writes
a put option, the Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current market price of the
security. The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. The Fund may also from
time to time buy and sell combinations of put and call options on the same
underlying security to earn additional income.
The Fund may buy and sell futures contracts. An "index future" is a contract to
buy or sell units of a particular index at an agreed price on a specified future
date. Depending on the change in value of the index between the time when the
Fund enters into and terminates an index future transaction, the Fund may
realize a gain or loss. The Fund may also purchase warrants, issued by banks or
other financial institutions, whose values are based on the values from time to
time of one or more securities indices.
The Fund may buy and sell futures contracts on U.S. government obligations or
other debt securities. A futures contract on a debt security is a contract to by
and sell a certain amount of the debt security at an agreed price on a specified
future date. Depending on the change in the value of the security when the Fund
enters into and terminates a futures contract, the Fund realizes a gain or loss.
The Fund may purchase or sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.
The Fund may purchase and sell futures contracts, options on futures contracts,
and options on securities indices for hedging purposes or, to the extent
permitted by applicable law, to increase its current return.
The Fund may also purchase and sell put and call options on foreign currencies,
futures contracts on foreign currencies, and options on foreign currency futures
contracts as an alternative, or in addition to, the foreign currency exchange
transactions described above. Such transactions are similar to options and
futures contracts on securities, except that they typically contemplate that one
party to a transaction will deliver one foreign currency to the other in return
for another currency (which may or may not be the U.S. dollar).
9
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RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that the Fund may be
unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that SCMI
may not forecast market movements correctly.
The effective use of options and futures strategies is dependent on, among other
things, the Fund's ability to terminate options and futures positions at times
when SCMI deems it desirable to do so. Although the Fund will enter into an
option or futures contract position only if SCMI believes that a liquid
secondary market exists for that option or futures contract, there is no
assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
The Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, the
Fund may purchase and sell options in the over-the-counter markets. The Fund's
ability to terminate options in the over-the-counter markets may be more limited
than for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to the Fund. The Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of SCMI, the pricing mechanism and liquidity of the
over-the-counter markets are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. The Fund will treat
over-the-counter options (and, in the case of options sold by the Fund, the
underlying securities held by the Fund) as illiquid investments as required by
applicable law.
The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities or index, or in the prices
of the securities that are the subject of a hedge. The successful use of these
strategies further depends on the ability of SCMI to forecast market movements
correctly.
Because the markets for certain options and futures contracts in which the Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, the Fund's
ability to engage in transactions using such investments may be limited. The
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. The Fund's hedging transactions may affect
the character or amount of its distributions. The tax consequences of certain
hedging transactions have been modified by the Taxpayer Relief Act of 1997.
For more information about any of the options or futures portfolio transactions
described above, see the SAI.
NON-DIVERSIFICATION AND GEOGRAPHIC CONCENTRATION. The Fund is a
"non-diversified" series of an investment company, and it may invest in a more
limited number of issuers than may other investment companies. Under the
Internal Revenue Code, however, an investment company, including a
non-diversified investment company, generally may not invest more than 25% of
its total assets in obligations of any one issuer other than U.S. government
obligations and, with respect to 50% of its total assets, the Fund may not
invest more than 5% of its total assets in the securities of any one issuer
(except U.S. government obligations). Thus, the Fund may invest up to 25% of its
total assets in the securities of each of any two issuers. This practice
involves an increased risk of loss to the Fund if the market value of a security
should decline or its issuer were otherwise not to meet its obligations.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Fund may
lend portfolio securities amounting to not more than 25% of its assets to
brokers, dealers and financial institutions meeting specified credit conditions,
and may enter into repurchase agreements without limit. These transactions must
be fully collateralized at all times but involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering its assets or realizing on the collateral. The Fund
may also purchase securities for future delivery, which may increase its overall
investment exposure and involve a risk of loss if the value of the securities
declines prior to the settlement date.
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INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund is permitted to invest in
other investment companies or pooled vehicles, including closed-end funds, that
are advised by SCMI or its affiliates or by unaffiliated parties. Pursuant to
the 1940 Act, the Fund may invest in the shares of other investment companies
that invest in securities in which the Fund is permitted to invest, subject to
the limits and conditions required under the 1940 Act or any orders, rules or
regulations thereunder. When investing through investment companies, the Fund
may pay a premium above such investment companies' net asset value per share. As
a shareholder in an investment company, the Fund would bear its ratable share of
the investment company's expenses, including its advisory and administrative
fees. At the same time, the Fund would continue to pay its own fees and
expenses.
LIQUIDITY. The Fund will not invest more than 15% of its net assets in
securities determined by SCMI to be illiquid. Certain securities that are
restricted as to resale may nonetheless be resold by the Fund in accordance with
Rule 144A under the Securities Act of 1933, as amended. Such securities may be
determined by SCMI to be liquid for purposes of compliance with the limitation
on the Fund's investment in illiquid securities. There can, however, be no
assurance that the Fund will be able to sell such securities at any time when
SCMI deems it advisable to do so or at prices prevailing for comparable
securities that are more widely held.
ALTERNATIVE INVESTMENTS. At times, SCMI may judge that market conditions make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, SCMI may temporarily use
alternative strategies, primarily designed to reduce fluctuations in the values
of the Fund's assets. In implementing these "defensive" strategies, the Fund may
invest without limit in U.S. government obligations and other high-quality debt
instruments and any other investment SCMI considers to be consistent with such
defensive strategies, and may hold any portion of its assets in cash.
PORTFOLIO TURNOVER. The length of time the Fund has held a particular security
is not generally a consideration in investment decisions. The investment
policies of the Fund may lead to frequent changes in the Fund's investments,
particularly in periods of volatile market movements. A change in the securities
held by the Fund is known as "portfolio turnover." Portfolio turnover generally
involves some expense to the Fund, including brokerage commissions or dealer
mark-ups and other transaction costs on the sale of securities and reinvestment
in other securities. Such securities sales may result in realization of taxable
capital gain.
HOW TO BUY SHARES
Investors may purchase Investor Shares of the Fund directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Shareholder Services, LLC, the Fund's transfer agent (the
"Transfer Agent"). See "Other Information -- Shareholder Inquiries". Investments
also may be made through broker-dealers and other financial institutions
("Service Organizations"). Service Organizations may charge their customers a
service fee for processing orders to purchase or sell shares. Investors wishing
to purchase Shares through their accounts at a Service Organization should
contact that organization directly for appropriate instructions. A Service
Organization is responsible for forwarding all necessary documentation to the
Trust, and may charge for its services.
The Fund's Investor Shares are offered at the net asset value next-determined
after receipt of a completed account application (at the address set forth
below)and your purchase request in good order. The minimum initial investment is
$250,000. There is no minimum subsequent investment. A Service Organization may
impose higher minimums on an initial and subsequent investment. All purchase
payments are invested in full and fractional shares. The Fund is authorized to
reject any purchase order.
Purchases of Fund shares are subject to a purchase charge of 0.50% of the amount
invested. This charge is paid to the Portfolio and is designed to compensate
shareholders for the transaction costs incurred in purchasing securities because
of an investment in the Fund, including brokerage commissions in acquiring
portfolio securities; currency transaction costs and transfer agent costs; and
to protect the interests of shareholders. This charge, which is not a sales
charge, is assessed by the Fund and paid to the Portfolio, not to Schroder
Advisors or any other entity. The
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purchase charge is not assessed on the reinvestment of dividends or
distributions or shares purchased through a subscription in kind.
Purchases may be made by mailing a check (in U.S. dollars), payable to the Fund
to:
Schroder Emerging Markets Fund Institutional Portfolio -- Investor Shares
P.O. Box 446
Portland, Maine 04112
For initial purchases, the check must be accompanied by a completed account
application in proper form. Further documentation, 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.
You may make subsequent purchases by mailing a check, by sending a bank wire, or
through your Service Organization, as indicated. All payments should clearly
indicate the shareholder's name and account number.
Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
Ref.: Schroder Emerging Markets Fund Institutional Portfolio--
Investor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class (I.E.,
Investor Shares), the account name and number, address, confirmation number,
amount to be wired, name of the wiring bank, and name and telephone number of
the person to be contacted in connection with the order. If the initial
investment is by wire, an account number will be assigned, and a completed
account application must be mailed to the Fund before any transaction will be
effected. Wire orders received prior to the close of the New York Stock Exchange
(the "Exchange") on a day when the Exchange is open for trading are processed at
the net asset value next determined as of that day. Wire orders received after
the close of the Exchange are processed at the net asset value next determined.
The Fund's Transfer Agent establishes for each shareholder of record an open
account to which all shares purchased and all reinvested dividends and other
distributions are credited. Although most shareholders elect not to receive
share certificates, certificates for full shares can be obtained by written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions are automatically reinvested. In
addition, the amount of any outstanding checks for dividends and other
distributions that have been returned to the Transfer Agent are reinvested, and
the checks are canceled.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Investor Shares are offered in connection with tax-deferred retirement plans,
including traditional and Roth IRAs. 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.
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The Fund may be used as an investment vehicle for an IRA including SEP-IRA. An
IRA naming Bank 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. Generally, contributions and investment earnings
in a traditional IRA grow tax-deferred until withdrawn. In contrast,
contributions to a Roth IRA are not tax-deductible, but investment earnings
generally grow tax-free. IRAs are available to individuals (and their spouses)
who receive compensation or earned income whether or not they are active
participants in a tax-qualified or government-approved retirement plan. An IRA
contribution by an individual or spouse who participates in a tax-qualified or
government-approved retirement plan may not be deductible, depending upon the
individual's income. Individuals also may establish an IRA to receive a
"rollover" contribution of distributions from another IRA or qualified plan.
Consult your tax advisor.
EXCHANGES
You may exchange the Fund's Investor Shares for Investor Shares of any fund
offered by the Schroder family of funds so long as the investment meets the
initial investment minimum of the fund being purchased, and the shareholder
maintains the applicable minimum account balance in the fund in which the Shares
are held. Exchanges between funds are at net asset value.
For federal income tax purposes an exchange is considered to be a sale of shares
on which a shareholder may realize a capital gain or loss. If a shareholder owns
Investor Shares through a Service Organization, the shareholder must make an
exchange through the Service Organization. If a shareholder owns Investor Shares
directly, the shareholder may make an exchange by calling the Transfer Agent at
1-800-344-8332 (see "How to Sell Shares -- By Telephone") or by mailing written
instructions to Schroder Capital Funds (Delaware), P.O. Box 446, Portland, Maine
04112. Exchange privileges may be exercised only in those states where shares of
the other funds of the Schroder family of funds may legally be sold. Exchange
privileges may be amended or terminated at any time upon sixty (60) days'
notice.
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 $250,000 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. [THIS SENTENCE DOES NOT SEEN NECESSARY
AS THERE IS NO SUBSEQUENT INVESTMENT MINIMUM -- DELETE?]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.
HOW TO SELL SHARES
A shareholder can sell his or her Investor Shares in the Fund to the Fund any
day the Exchange is open, either through the Service Organization or directly to
the Fund. If Shares are held in the name of a Service Organization, a
shareholder may only sell the shares through that Service Organization. The
Trust will only redeem shares for which it has received payment.
Investor Shares are redeemed at their next determined net asset value after
receipt by the Fund (see the address set forth under "How to Buy Shares") of a
redemption request in proper form. Redemption requests that are received prior
to the close of the Exchange on a day on which the Exchange is open are
processed at the net asset value determined as of that day. Redemption requests
that are received after the close of the Exchange are processed at the net asset
value next determined. See "Net Asset Value".
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TELEPHONE REQUESTS
Redemption requests may be made by a shareholder of record by telephoning the
Transfer Agent at the telephone number on the cover page of this Prospectus. A
shareholder must provide the Transfer Agent with the class of shares, the dollar
amount or number of shares to be redeemed, shareholder account number, and some
additional form of identification such as a password. A redemption by telephone
may be made only if the telephone redemption privilege option has been elected
on the account application or otherwise in writing. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, reasonable
procedures will be followed by the Transfer Agent to confirm that telephone
instructions are genuine. The Transfer Agent and the Trust generally will not be
liable for any losses due to unauthorized or fraudulent redemption requests, but
either or both may be liable if they do not follow these procedures. Shares for
which certificates have been issued may not be redeemed by telephone. In times
of drastic economic or market change it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.
WRITTEN REQUESTS
Redemptions may be made by a shareholder of record 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 Investor Shares to be redeemed are held in certificate form, the certificates
must be enclosed with the redemption request, and the assignment form on the
back of the certificates (or an assignment separate from the certificates but
accompanied by the certificates) must be signed by all owners in exactly the
same way the owners' names are written on the face of the certificates.
Requirements for signature guarantees and/or documentation of authority as
described above could also apply. For your protection, the Trust suggests that
certificates be sent by registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally are
mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of the Investor 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 is sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when: (1) trading
on the Exchange is restricted or that exchange is closed; (2) the SEC has by
order permitted such suspension; or (3) an emergency (as defined by rules of the
SEC) exists making disposal of portfolio investments or determination of the
Fund's net asset value not reasonably practicable.
If the Trust's 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 Investor Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Investor 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 Investor Shares is made wholly or partly
in portfolio securities, the shareholder may be subject to additional risks and
costs in converting the securities to cash. See "Additional Purchase and
Redemption Information" in the SAI.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for federal income tax
purposes.
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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 $100,000, unless the value of
the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and will be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.
The Trust may also redeem shares if a shareholder owns shares of any Fund above
a maximum amount set by the Trustees. There is currently no maximum, but the
Trustees may establish one at any time, which could apply to both present and
future shareholders.
OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
The Fund calculates the net asset value of its Investor Shares by dividing the
total value of its assets attributable to its Investor Shares, less its
liabilities attributable to those shares, by the number of its Investor Shares
outstanding. Shares are valued as of the close of the Exchange ( normally 4:00
p.m. Eastern time) each day the Exchange is open. Portfolio securities for which
market quotations are readily available are stated at market value. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. All other securities and assets are valued at
their fair values determined by SCMI. The net asset value of the Fund's Investor
Shares will generally differ from that of its other classes of shares due to the
variance in daily net income realized by and dividends paid on each class of
shares, and any differences in the expenses of the different classes. All assets
and liabilities of the Fund denominated in foreign currencies are valued in U.S.
dollars based on the exchange rate last quoted by a major bank prior to the time
when the net asset value of the Fund is calculated.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund distributes any net investment income and any net realized capital gain
at least annually. Distributions from net capital gain are made after applying
any available capital loss carryovers.
DISTRIBUTION OPTIONS: (1) reinvest all distributions in additional Investor
Shares of the Fund; (2) receive distributions from net investment income in cash
while reinvesting capital-gain distributions in additional Investor Shares; (3)
receive distributions from net investment income in Additional Investor Shares
while receiving capital-gain distributions in cash; or (4) receive all
distributions in cash. An investor can change the distribution option by
notifying the Transfer Agent in writing. If the investor does not select an
option when the account is opened, all distributions by the Fund will be
reinvested in Investor Shares of the Fund. Investors will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the period in which the reinvestment occurs.
TAXES
The Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. The Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.
All Fund distributions will be taxable to a shareholder as ordinary income,
except that any distributions of net long-term capital gain will be taxed as
such, regardless of how long the shareholder has held the shares. Pursuant to
the Taxpayer Relief Act of 1997 ( the "1997 Act "), long-term capital gain will
be subject to a maximum rate of 28% or 20%, depending upon the holding period of
the portfolio investment generating the gain. Distributions will be taxable as
described above whether received in cash or in shares through the reinvestment
of distributions.
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Early in each year the Trust will notify each shareholder of the amount and tax
status of distributions paid to the shareholder by the Fund for the preceding
year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. Investors should consult their tax advisors to determine
the precise effect of an investment in the Fund on their particular tax
situation.
CERTAIN INFORMATION REGARDING FOREIGN TAXES. Foreign governments may impose
taxes on certain of the Fund's investments, which generally would reduce the
income of the Fund. However, an offsetting tax credit or deduction may be
available to investors.
The Fund, provided that it is eligible to do so, intends to elect to permit its
shareholders to take a credit (or a deduction) for the Fund's share of foreign
income taxes paid by the Fund. If the Fund does make such an election, its
shareholders would include as gross income in their federal income tax returns
both: (1) distributions received from the Fund and (2) the amount that the Fund
advises is their pro rata portion of foreign income taxes paid with respect to
or withheld from dividends and interest paid to the Fund from its foreign
investments. Shareholders then would be entitled, subject to certain limitations
( including, with respect to a foreign tax credit, a holding period requirement
imposed pursuant to the 1997 Act), to take a foreign tax credit against their
federal income tax liability for the amount of such foreign taxes or else to
deduct such foreign taxes as an itemized deduction from gross income.
THE PORTFOLIO
The Portfolio is not required to pay federal income tax because it is classified
as a partnership for federal income tax purposes. All interest, dividends, gain
and losses of the Portfolio will be deemed to have been "passed through" to the
Fund in proportion to the Fund's holdings in the Portfolio regardless of whether
such interest, dividends or gain have been distributed by the Portfolio.
The Portfolio intends to conduct its operations so as to enable the Fund, if it
invests all of its assets in the Portfolio, to qualify as a regulated investment
company.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. The business and affairs of the Portfolio are
managed under the direction of the Board of Trustees of Schroder Capital Funds
(the "Core"). Information regarding the Trustees and executive officers of the
Trust, as well as the trustees and executive officers of the Core, may be found
in the SAI under "Management --Trustees and Officers".
Schroder Capital Management International Inc. is the investment adviser to the
Fund. SCMI is a wholly owned U.S. subsidiary of Schroders U.S. Holdings Inc.,
which engages through its subsidiary firms in the investment banking, asset
management and securities businesses. Affiliates of Schroders U.S. Holdings Inc.
(or their predecessors) have been investment managers since 1927. SCMI and its
United Kingdom affiliate, Schroder Capital Management International, Ltd.,
together have served as investment managers for approximately $28 billion as of
September 30, 1997. Schroders U.S. Holdings Inc. is an indirect, wholly owned
U.S. subsidiary of Schroders plc, a publicly owned holding company organized
under the laws of England. Schroders plc and its affiliates ("Schroder Group")
engage in international merchant banking and investment management businesses,
and as of September 30, 1997, had under management assets of over $175 billion.
Schroder Fund Advisors Inc. ("Schroder Advisors") is a wholly owned subsidiary
of SCMI.
SCMI also serves as investment adviser to the Portfolio. SCMI is entitled to a
monthly fee at the annual rate of 1.00% of the Fund's average daily net assets.
The Fund, due to its investment in the Portfolio, bears a proportionate part of
the management fees paid by the Portfolio (based on the percentage of the
Portfolio's assets attributable to the Fund).
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The Fund has entered into an investment advisory agreement with SCMI pursuant to
which SCMI would manage the Fund's assets directly in the event that the Fund
were to cease investing substantially all of its assets in the Portfolio (or
another investment company). SCMI is not entitled to receive any fees under that
agreement so long as the Fund continues to invest substantially all of its
assets in the Portfolio (or another investment company). If SCMI were to manage
the Fund's assets directly under the investment advisory agreement, the Fund
would pay fees to SCMI monthly at the annual rate of 1.00% of the Fund's average
daily net assets.
ADMINISTRATIVE SERVICES. The Trust, on behalf of the Fund, has entered into an
administration agreement with Schroder Advisors pursuant to which Schroder
Advisors provides certain management and administrative services necessary for
the Fund's operations. The Trust, on behalf of the Fund, has entered into a
subadministration agreement with Forum Administrative Services, LLC, Two
Portland Square, Portland, Maine 04101 ("FAdS"), pursuant to which FAdS provides
certain management and administrative services necessary for the Fund's
operations. Schroder Advisors is entitled to compensation at an annual rate of
0.05% of the Fund's average daily net assets. FAdS is entitled to compensation
at the annual rate of 0.05% of the Fund's average daily net assets.
Schroder Advisors and FAdS also serve as administrator and subadministrator,
respectively, to the Portfolio. The Trust, on behalf of the Portfolio, pays
administration fees to Schroder Advisors and subadministration fees to FAdS
monthly at the annual rates of 0.05% and 0.10%, respectively, of the Portfolio's
average daily net assets;
In order to limit the Fund's expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) with respect to the Fund to the extent that the
Fund's expenses chargeable to Investor Shares exceed the annual rate of 1.70%.
FAdS may waive voluntarily all or a portion of its subadvisory fees, from time
to time. The Trust pays all expenses not assumed by SCMI and Schroder Advisors,
including Trustees' fees, auditing, legal, custodial, and investor servicing,
and shareholder reporting expenses.
SCMI's investment decisions for the Portfolio are made by an investment manager
or an investment team, with the assistance of an investment committee at SCMI.
Mr. John A. Troiano, a Vice President of the Trust and of Schroder Capital
Funds, and Chief Executive of SCMI, Ms. Heather Crighton, a First Vice President
of SCMI, and Mr. Mark Bridgeman, a Vice President of SCMI, are primarily
responsible for managing Schroder Emerging Markets Fund Institutional Portfolio,
in which the Fund invests. Mr. Troiano managed the Fund's investment portfolio
from its inception until it invested its assets in the Portfolio and has managed
the Portfolio's assets since its inception.
SCMI places all orders for purchases and sales of the Fund' securities. In
selecting broker-dealers, SCMI may consider research and brokerage services
furnished to it and its affiliates. Schroder & Co. Inc. and Schroder Securities
Limited, affiliates of SCMI, may receive brokerage commissions from the Fund in
accordance with procedures adopted by the Trustees under the 1940 Act which
require periodic review of these transactions. Subject to seeking the most
favorable price and execution available, SCMI may consider sales of shares of
the Fund as a factor in the selection of broker-dealers.
PERFORMANCE INFORMATION
Total return data relating to Investor Shares of the Fund may from time to time
be included in advertisements about the Fund. The Fund's total return with
respect to Investor Shares is calculated for the past year, the past five years,
and the past ten years (or if the Fund's Investor Shares have been offered for a
period shorter than five or ten years, that period will be substituted) since
the establishment of the Fund, as more fully described in the SAI. Total return
quotations assume that all dividends and distributions are reinvested when paid.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE
PERFORMANCE. Investment performance of the Fund's Investor Shares, which will
vary, is based on many factors, including market conditions, the composition of
the Fund's portfolio, and the Fund's operating expenses attributable to its
Investor Shares. Investment performance also often reflects the risks associated
with the Fund's investment objectives and policies. Quotations of total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect. These factors should be considered when
comparing the investment results of the Fund's Investor Shares to those of
various classes of other mutual Funds and other investment vehicles. Performance
for the Fund's Investor Shares may be compared to various indices. See the SAI
for a fuller discussion of performance information.
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ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust was organized as a Maryland corporation on July 30, 1969, reorganized
on February 29, 1988 as Schroder Capital Funds, Inc. and reorganized as a
Delaware business trust on January 9, 1996. The Trust has an unlimited number of
shares of beneficial interest that may, without shareholder approval, be divided
into an unlimited number of series of such shares, which, in turn, may be
divided into an unlimited number of classes of such shares. The Trust's shares
of beneficial interest are presently divided into nine different series. The
Fund's shares are presently divided into two classes, Investor Shares, which are
offered through this Prospectus, and Advisor Shares, which are offered through a
separate prospectus. Unlike Investor Shares, Advisor Shares are subject to
shareholder service and distribution fees, which will affect their performance
relative to Investor Shares. To obtain more information about Advisor Shares,
contact Schroder Capital Funds (Delaware) at 1-800 290-9826. The Trust's
principal office is located at Two Portland Square, Portland, Maine 04101, and
its telephone number is 1-207-879-8903.
Each share has one vote, with fractional shares voting proportionally.
Shareholders of a class of shares or series generally have separate voting
rights with respect to matters that affect only that class or series. See
"Organization and Capitalization" in the SAI. Shares are freely transferable and
are entitled to dividends and other distributions as declared by the Trustees.
Dividends paid by the Fund on its two classes of shares will normally differ in
amount due to the differing expenses borne by the two classes. If the Fund were
liquidated, each class of shares would receive the net assets of the Fund
attributable to that class. The Trust may suspend the sale of the Fund's shares
at any time and may refuse any order to purchase shares. Although the Trust is
not required to hold annual meetings of its shareholders, shareholders have the
right to call a meeting to elect or remove Trustees, or to take other actions as
provided in the Declaration of Trust.
INFORMATION ABOUT THE PORTFOLIO
The Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which has the same investment objective and
similar policies. In that way, the Portfolio acquires investment securities
directly, and the Fund acquires an indirect interest in those securities.
Schroder Capital Funds is a business trust organized under the laws of the state
of Delaware in September 1995. Schroder Capital Funds is registered under the
1940 Act as an open-end management investment company. The assets of the
Portfolio belong only to, and the liabilities of the Portfolio are borne solely
by, that Portfolio and no other portfolio of Schroder Capital Funds.
The Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. All other investors in the Portfolio invest on the same
terms and conditions as the Fund and pay a proportionate share of the
Portfolio's expenses.
The Portfolio normally will not hold meetings of investors except as required by
the 1940 Act. Each investor in the Portfolio is entitled to vote in proportion
to its relative beneficial interest in the Portfolio. On most issues subject to
a vote of investors, in accordance with applicable law the Board of Trustees
will either: (1) solicit voting instructions from Fund shareholders with regard
to the voting of all proxies with respect to a Fund's shares and vote such
proxies in accordance with such instructions, or (2) vote the interests held by
a Fund in the same proportion as the vote of all other holders of the
Portfolio's interests.. 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 does not sell its shares directly to members of the general
public. Another investor in the Portfolio, such as an investment company, that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund and could have
different 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. Information regarding any such fund in the future
will be available by calling 1-800-730-2932.
18
<PAGE>
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement of a material fact in, or omission of
a material fact from, the registration statement. Schroder Capital Funds, its
Trustees, and certain of its officers are required to sign the registration
statement of the Trust and may be required to sign the registration statements
of certain other investors in the Portfolio. In addition, Schroder Capital Funds
may be liable for misstatements or omissions of a material fact in any proxy
soliciting material of an investor in the Portfolio, including the Fund. Each
investor in the Portfolio, including the Trust, is required to indemnify
Schroder Capital Funds and its Trustees and officers ("SCF Indemnitees") against
certain claims.
Indemnified claims are those brought against SCF Indemnitees based on a
misstatement of a material fact in, or omission of a material fact from, a
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Capital Funds and was supplied to the investor by Schroder Capital
Funds. Similarly, Schroder Capital Funds is required to indemnify each investor
in the Portfolio, including the Fund, for any claims brought against the
investor with respect to the investor's registration statement or proxy
materials, to the extent the claim is based on a misstatement or omission of a
material fact relating to information about Schroder Capital Funds that is
supplied to the investor by Schroder Capital Funds.
The Fund's investment in the Portfolio may be affected by the actions of other
large investors in the Portfolio; 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 who, by a vote of the shareholders of all investors
(including the Fund), changed 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 should withdraw its investment from the Portfolio, the Trust
Board would consider appropriate alternatives, including the management of the
Fund's assets in accordance with its investment objective and policies by SCMI,
or the investment of all of the Fund's investable assets in another pooled
investment entity having substantially the same investment objective as the
Fund. The inability of the Fund to find a suitable replacement investment, if
the Board decided not to permit SCMI to manage the Fund's assets, could have a
significant adverse impact on shareholders of the Fund.
Each investor in the Portfolio, including the Fund, may be liable for all
obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be 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.
As of February 1, 1998, the Robert Wood Johnson Foundation held in excess of 25%
of the shares of the Fund and, accordingly, may be deemed to control the Fund
for purposes of the 1940 Act.
19
<PAGE>
APPENDIX A
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
FIXED-INCOME SECURITY RATINGS
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group they comprise what are
generally known as high grade fixed-income securities. They are rated lower than
the best fixed-income securities because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
"A" Fixed-income securities which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.
"Baa" Fixed-income securities which are rated "Baa" are considered as medium
grade obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack characteristics
of the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
A-1
<PAGE>
Rating Refinements: Moody's may apply numerical modifiers, "1", "2",
and "3" in each generic rating classification from "Aa" through "B" in its
municipal fixed-income security rating system. The modifier "1" indicates that
the security ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and a modifier "3" indicates that
the issue ranks in the lower end of its generic rating category.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. The ratings apply to Municipal Commercial Paper as well as taxable
Commercial Paper. Moody's employs the following three designations, all judged
to be investment grade, to indicate the relative repayment capacity of rated
issuers: "Prime-1", "Prime-2", "Prime-3".
Issuers rated "Prime-1" have a superior capacity for repayment of
short-term promissory obligations. Issuers rated "Prime-2" have a strong
capacity for repayment of short-term promissory obligations; and Issuers rated
"Prime-3" have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.
STANDARD & POOR'S RATING GROUP("STANDARD & POOR'S")
FIXED-INCOME SECURITY RATINGS
A Standard & Poor's fixed-income security rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.
"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the highest-rated issues only in
small degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.
"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for fixed-income securities in this category than for
fixed-income securities in higher-rated categories.
A-2
<PAGE>
Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.
"BB" Fixed-income securities rated "BB" have less near-term vulnerability to
default than other speculative grade fixed-income securities. However, it faces
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity or willingness to
pay interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to default
but presently have the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions would likely
impair capacity or willingness to pay interest and repay principal.
"CCC" Fixed-income securities rated "CCC" have a current identifiable
vulnerability to default, and the obligor is dependent upon favorable business,
financial and economic conditions to meet timely payments of interest and
repayments of principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and repay
principal.
"CC" The rating "CC" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied "CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities subordinated
to senior debt which is assigned an actual or implied "CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which no
interest is being paid.
"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are
regarded as having predominantly speculative characteristics with respect to
capacity to pay interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such fixed-income
securities will likely have some quality and protective characteristics, these
are out-weighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by
the addition of a plus or minus sign to show relative standing with the major
ratings categories.
COMMERCIAL PAPER RATINGS
Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
Issues assigned "A" ratings are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation "1", "2", and "3" to indicate the relative degree of safety.
"A-1" Indicates that the degree of safety regarding timely payment is very
strong.
"A-2" Indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3
<PAGE>
"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
A-4
<PAGE>
TABLE OF CONTENTS
FUND STRUCTURE.................................
FINANCIAL HIGHLIGHTS...........................
INVESTMENT OBJECTIVE
AND POLICIES.................................
HOW TO BUY SHARES..............................
HOW TO SELL SHARES.............................
OTHER INFORMATION..............................
MANAGEMENT OF THE TRUST........................
APPEND IX A - Description of Securities
Ratings Appendix..........................A-1
<PAGE>
[Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO
Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826
INVESTOR SHARES
PROSPECTUS
MARCH 1, 1998
<PAGE>
INVESTMENT ADVISOR
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, New York 11245
and
Global Custody Division
125 London Wall
London EC2Y 5AJ, United Kingdom
TRANSFER & DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
PO Box 446
Portland, Maine 04112
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
PROSPECTUS
ADVISOR SHARES
MARCH 1, 1998
The Schroder Capital Funds are mutual funds offering a wide range of investment
objectives. SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO ( the "Fund")
is a non-diversified series of shares of Schroder Capital Funds (Delaware). The
Fund invests substantially all of its assets in Schroder Emerging Markets Fund
Institutional Portfolio (the "Portfolio"). The Portfolio is a separately
managed, non-diversified portfolio of Schroder Capital Funds, which, like
Schroder Capital Funds ( Delaware), is an open-end management investment
company. Schroder Capital Management International Inc. serves as investment
adviser to the Fund and to the Portfolio.
This Prospectus explains concisely the information that a prospective investor
should know before investing in Advisor Shares of the Fund. Please read it
carefully and keep it for future reference. Investors can find more detailed
information about Schroder Capital Funds (Delaware) (the "Trust") in the March
1, 1998 Statement of Additional Information, as amended from time to time. For a
free copy of the Statement of Additional Information, please call
1-800-290-9826. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference. The Prospectus and the Statement of Additional Information are
available along with other related materials for reference on the SEC's Internet
Web Site (http://www.sec.gov).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
================================================================================
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
<TABLE>
<S> <C> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. EQUITY FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
</TABLE>
================================================================================
FUND STRUCTURE
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO seeks to achieve its
investment objective by investing all of its investable assets in a separate
portfolio ( a "Portfolio") of Schroder Capital Funds that has the same
investment objective as, and investment policies that are substantially similar
to those of, the Fund. Accordingly, the investment experience of the Fund will
correspond directly with the investment experience of the Portfolio. See "Other
Information -- Information about the Portfolio."
2
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in Advisor Shares
of the Fund. The "Shareholder Transaction Expenses" table below summarizes the
maximum transaction costs you would incur by investing in Advisor Shares of the
Fund. "Annual Operating Expenses" show the expenses incurred by the Fund in the
current fiscal year. Annual Operating Expenses of the Fund include the Fund's
pro rata portion of all operating expenses of the Portfolio. The Example shows
the cumulative expenses attributable to a hypothetical $1,000 investment in the
Fund over specified periods.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases .......................None
Maximum Sales Load Imposed on Reinvested Dividends .......................None
Deferred Sales Load .......................None
Purchase Charge (based on amount invested((1) ..................... 0.50%
Redemption Charge (based on net asset value of shares redeemed)(1) ......................0.50%
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (after waivers) (2)(3) ......................0.89%
12b-1 Fees .......................None
Other Expenses (after waivers and reimbursements) ......................0.77%
- ------------------------------------------------- -----
Total Fund Operating Expenses (after waivers and reimbursements) (3) ......................1.66%
</TABLE>
- ----------------------------
(1) The Purchase and Redemption Charges are collected by the Fund and paid to
the Portfolio to compensate the other investors in the Portfolio for
expenses incurred in connection with purchases and sales of portfolio
securities. See "Investment in the Fund -- Purchase of Shares" and "--
Redemption of Shares."
(2) Management Fees reflect the fees paid by the Portfolio and the Fund for
investment advisory and administrative services.
(3) Management Fees and Total Operating Expenses reflect expense limitations
currently in effect. See "Management of the Fund -- Expenses." In the
absence of the expense limitations, Management Fees, Other Expenses, and
Total Fund Operating Expenses would be 1.10% , .93%, and 2.03%,
respectively.
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period.
The tables and Example are provided to help you understand your share of the
operating expenses of the Fund attributable to Advisor Shares. THE TABLE AND
EXAMPLE DO NOT REPRESENT PAST OR FUTURE EXPENSE LEVELS. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO
ASSUME A 5% ANNUAL RETURN, BUT ACTUAL ANNUAL RETURN WILL VARY.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Assuming no redemption $22 $57 $95 $202
Assuming full redemption at end of period $27 $62 $100 $207
</TABLE>
3
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights of the Fund presented below have been audited by
Coopers & Lybrand L.L.P., independent accountants to the Fund. The financial
statements for the period ended October 31, 1997 for the Fund and the related
independent accountants' report are incorporated by reference into the Statement
of Additional Information (the "SAI"). Further information about the performance
of the Fund is also contained in its Annual and Semi-Annual Reports, which may
be obtained without charge by writing the Fund at Two Portland Square, Portland,
Maine 04101 or by calling 1-800-290-9826.
<TABLE>
<S> <C>
Period Ended
October 31,
1997(a)
-------
Net Asset Value, Beginning of Period $11.28
Investment Operations:
Net Investment Income (Loss) 0.03
Net Realized and Unrealized Gain (Loss) on Investments(b) (0.19)
Total from Investment Operations (0.16)
Distributions from Net Investment Income (0.01)
Total Distributions (0.01)
Net Asset Value, End of period $11.11
Total Return (c)(d) (1.42)%
Ratios/Supplementary Data:
Net Assets at End of period (000s omitted) $25,280
Ratios to Average Net Assets:
Expenses including reimbursement/waiver(b)(e) 1.66%
Expenses excluding reimbursement/waiver(b)(e) 2.03%
Net investment income (loss) including
waiver(b)(e) 0.27%
Average Commission Rate Per Share(f) $0.0020
Portfolio Turnover Rate(g) 43.13%
</TABLE>
- ---------------------------------
(a) Advisor Shares were first issued on November 21, 1996.
(b) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(c) Total return calculation does not include the purchase or redemption fee of
0.50%, respectively.
(d) Total return would have been lower had certain expenses not been reduced
during the period shown.
(e) Annualized.
(f) Amount represents the average commission per share paid by the Portfolio to
brokers on the purchase and sale of equity securities on which commissions
are charged.
(g) Portfolio turnover represents the rate of portfolio activity of the
Portfolio.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO'S INVESTMENT OBJECTIVE IS
TO SEEK LONG-TERM CAPITAL APPRECIATION THROUGH DIRECT OR INDIRECT INVESTMENT IN
EQUITY AND DEBT SECURITIES OF ISSUERS DOMICILED OR DOING BUSINESS IN EMERGING
MARKET COUNTRIES IN REGIONS SUCH AS SOUTHEAST ASIA, LATIN AMERICA, AND EASTERN
AND SOUTHERN EUROPE. The Fund is not intended to be a complete investment
program. There can be no assurance that the Fund will achieve its investment
objective.
THE FUND CURRENTLY SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING
SUBSTANTIALLY ALL OF ITS ASSETS IN A MANAGED PORTFOLIO OF SCHRODER CAPITAL
FUNDS. THAT PORTFOLIO IS REFERRED TO IN THIS PROSPECTUS AS A "PORTFOLIO." IN
REVIEWING THE DESCRIPTION OF THE FUND'S INVESTMENT OBJECTIVE AND POLICIES BELOW,
INVESTORS SHOULD ASSUME THAT THE INVESTMENT OBJECTIVE AND POLICIES OF THE
PORTFOLIO ARE THE SAME IN ALL MATERIAL RESPECTS AS THOSE OF THE FUND. SCHRODER
CAPITAL MANAGEMENT INTERNATIONAL INC. ("SCMI") IS THE INVESTMENT ADVISER TO THE
FUND AND PORTFOLIO.
An "emerging market" country is any country not included at the time of
investment in the Morgan Stanley Capital International World Index of major
world economies. Those economies currently include: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States of America. SCMI may at
times determine based on its own analysis that an economy included in the Index
should nonetheless be considered an emerging market country; any such country
would then constitute an emerging market country for purposes of investment by
the Fund.
The Fund normally invests at least 65% of its assets in securities of issuers
determined by SCMI to be emerging market issuers. The Fund may invest the
remainder of its assets of issuers located anywhere in the world. The Fund may
invest in equity or debt securities of any kind. Equity securities may include,
for example, common stocks, preferred stocks, securities convertible into common
or preferred stocks, and rights and warrants, and non-convertible debt
securities. They may also include American Depositary Receipts, European
Depositary Receipts, and other similar instruments providing for indirect
investment in securities of foreign issuers. The Fund may also invest in
securities of closed-end investment companies that invest in turn primarily in
foreign securities, including emerging market issuers. The Fund is a
non-diversified mutual fund. See "Non-Diversification and Geographic
Concentration."
The Fund may invest up to 35% of its assets in debt securities, including
lower-quality, high-yielding debt securities, which entail certain risks. See
"Other Investment Practices and Risk Considerations --Debt securities."
An issuer of a security will be considered to be an emerging market issuer if
SCMI determines that: (1) it is organized under the laws of an emerging market
country; (2) its primary securities trading market is in an emerging market
country; (3) at least 50% of the issuer's revenues or profits are derived from
goods produced or sold, investments made, or services performed in emerging
market countries; or (4) at least 50% of its assets are situated in emerging
market countries. The Fund may consider investment companies to be located in
the country or countries in which SCMI determines they focus their investments.
There is no limit on the amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. When the Fund has invested a
substantial portion of its assets in the securities of a single country, it will
be more susceptible to the risks of investing in that country than would a fund
investing in a geographically more diversified portfolio.
The Fund's investment objective may not be changed without shareholder approval.
The investment policies of the Fund may, unless otherwise specifically stated,
be changed by the Trust's Board of Trustees without a vote of the shareholders.
All percentage limitations on investments will apply at the time of investment
and will not be
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considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of the investment, except that the policies stated with
regard to borrowing and liquidity will be observed at all times.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Fund also may engage in the following investment practices, each of which
involves certain special risks. The SAI contains more detailed information about
these practices (some of which may be considered "derivative" investments),
including limitations designed to reduce these risks.
FOREIGN SECURITIES. Investments in foreign securities entail certain risks.
There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability and diplomatic
developments that could affect the value of the Fund's investments in certain
foreign countries. Since foreign securities are normally denominated and traded
in foreign currencies, the values of the Fund's assets may be affected favorably
or unfavorably by currency exchange rates, currency exchange control
regulations, foreign withholding taxes and restrictions or prohibitions on the
repatriation of foreign currencies. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign issuers
are not generally subject to accounting, auditing, and financial reporting
standards and practices comparable to those in the United States. The securities
of some foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage commissions and other
fees are also generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign countries
may be more limited than those available with respect to investments in the
United States or in other foreign countries. The willingness and ability of
sovereign issuers to pay principal and interest on government securities depends
on various economic factors, including without limitation the issuer's balance
of payments, overall debt level, and cash-flow considerations related to the
availability of tax or other revenues to satisfy the issuer's obligations. If a
foreign governmental entity is unable or unwilling to meet its obligations on
the securities in accordance with their terms, the Fund may have limited
recourse available to it in the event of default. The laws of some foreign
countries may limit the Fund's ability to invest in securities of certain
issuers located in those foreign countries. Special tax considerations apply to
foreign securities. Except as otherwise provided in this Prospectus, there is no
limit on the amount of the Fund's assets that may be invested in foreign
securities.
If the Fund purchases securities denominated in foreign currencies, a change in
the value of any such currency against the U.S. dollar will result in a change
in the U.S. dollar value of the Fund's assets and the Fund's income available
for distribution. In addition, although at times most of the Fund's income may
be received or realized in these currencies, the Fund will be required to
compute and distribute its income in U.S. dollars. Therefore, if the exchange
rate for any such currency declines after the Fund's income has been earned and
translated into U.S. dollars but before payment, the Fund could be required to
liquidate portfolio securities to make such distributions. Similarly, if an
exchange rate declines between the time the Fund incurs expenses in U.S. dollars
and the time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount in any such currency of such expenses at
the time they were incurred. The Fund may buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments.
In determining whether to invest in debt securities of foreign issuers, SCMI
considers the likely impact of foreign taxes on the net yield available to the
Fund and its shareholders. Income received by the Fund from sources within
foreign countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by the Fund will reduce its
net income available for distribution to shareholders. In certain circumstances,
the Fund may be able to pass through to shareholders credits for foreign taxes
paid. See "How to Sell Shares -- Dividends, Distributions and Taxes."
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The Fund may invest in securities of issuers in emerging market countries with
respect to some or all of its assets. The securities' prices and relative
currency values of emerging market investments are subject to greater volatility
than those of issuers in many more developed countries. Investments in emerging
market countries are subject to the same risks applicable to foreign investments
generally, although those risks may be increased due to conditions in such
countries. For example, the securities markets and legal systems in emerging
market countries may only be in a developmental stage and may provide few, or
none, of the advantages or protections of markets or legal systems available in
more developed countries. Although many of the securities in which the Fund may
invest are traded on securities exchanges, they may trade in limited volume, and
the exchanges may not provide all of the conveniences or protections provided by
securities exchanges in more developed markets. The Fund may also invest a
substantial portion of its assets in securities traded in the over-the-counter
markets in such countries and not on any exchange, which may affect the
liquidity of the investment and expose the Fund to the credit risk of its
counterparties in trading those investments. Emerging market countries may
experience extremely high rates of inflation, which may adversely affect these
countries' economies and securities markets.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates will
affect the U.S. dollar values of securities denominated in foreign currencies.
Exchange rates between the U.S. dollar and other currencies fluctuate in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation, and other
factors, many of which may be difficult (if not impossible) to predict. The Fund
may engage in foreign currency exchanges transactions to protect against
uncertainty in the level of future exchange rates. Although the strategy of
engaging in foreign currency exchange transactions could reduce the risk of loss
due to a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.
In particular, the Fund may enter into foreign currency exchange transactions to
protect against a change in exchange ratios that may occur between the date on
which the Fund contracts to trade a security and the settlement date
("transaction hedging") or in anticipation of placing a trade ("anticipation
hedging"); to "lock in" the U.S. dollar value of interest and dividends to be
paid in a foreign currency; or to hedge against the possibility that a foreign
currency in which portfolio securities are denominated or quoted may suffer a
decline against the U.S. dollar ("position hedging"). INSERT TIM'S SENTENCE
HERE?] To a limited extent, the Fund may purchase forward International
contracts to increase exposure in foreign currencies that are expected to
appreciate and thereby increase total return.
SCMI may seek to enhance the Fund's investment return through active currency
management. SCMI may buy or sell foreign currencies for the Fund, on a spot or
forward basis, in an attempt to profit from inefficiencies in the pricing of
various currencies or of debt securities denominated in those currencies. When
investing in foreign securities, the Fund usually effects currency exchange
transactions on a spot (I.E., cash) basis at the spot rate prevailing in the
foreign exchange market. The Fund incurs foreign exchange expenses in converting
assets from one currency to another.
The Fund may also enter into forward currency contracts. A forward currency
contract is an obligation to purchase or sell a specific currency at a future
date (which may be any fixed number of days from the date of the contract agreed
upon by the parties) at a price set at the time of the contract. Forward
contracts do not eliminate fluctuations in the underlying prices of securities
and expose the Fund to the risk that the counterparty is unable to perform.
Forward contracts are not exchange traded, and there can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a forward
contract. Currently, only a limited market, if any, exists for exchange
transactions relating to currencies in certain emerging markets or to securities
of issuers domiciled or principally engaged in business in certain emerging
markets. This may limit the Fund's ability to hedge its investments in those
markets. These contracts involve a risk of loss if SCMI fails to predict
accurately changes in relative currency values, the direction of stock prices or
interest rates and other economic factors.
From time to time, the Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign currency and
may at times involve currencies in which its portfolio securities are not
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then denominated ("cross hedging"). From time to time, the Fund may also engage
in "proxy" hedging; whereby the Fund \would seek to hedge the value of portfolio
holdings denominated in one currency by entering into an exchange contract on a
second currency, the valuation of which SCMI believes correlates to the value of
the first currency. Cross hedging and proxy hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions relate and changes in the value of the currency or other
asset or liability that are the subject of the hedge.
INVESTMENTS IN SMALLER COMPANIES. The Fund may invest all or a substantial
portion of its assets in securities issued by small companies. Such companies
may offer greater opportunities for capital appreciation than larger companies,
but investments in such companies may involve certain special risks. Such
companies may have limited product lines, markets, or financial resources and
may be dependent on a limited management group. While the markets in securities
of such companies have grown rapidly in recent years, such securities may trade
less frequently and in smaller volume than more widely held securities. The
values of these securities may fluctuate more sharply than those of other
securities, and the Fund may experience some difficulty in establishing or
closing out positions in these securities at prevailing market prices. There may
be less publicly available information about the issuers of these securities or
less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.
Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of the Fund to dispose of such
securities may be greatly limited, and the Fund may have to continue to hold
such securities during periods when SCMI would otherwise have sold the
securities. It is possible that SCMI or its affiliates or clients may hold
securities issued by the same issuers, and may in some cases have acquired the
securities at different times, on more favorable terms, or at more favorable
prices, than the Fund. See "Additional Information Regarding Investments --
Micro and Small Cap Companies", and -- "Unseasoned Issuers" in the SAI.
LEVERAGE. The Fund may engage in forward commitments, described below and in the
SAI, which may have the same economic effect as if the Fund had borrowed money.
Leverage increases the Fund's market exposure and risk and may result in losses.
When the Fund is using leverage and its investments increase or decrease in
value, its net asset value normally increases or decreases more than if it were
not leveraged. Successful use of leverage depends on SCMI's ability to predict
market movements correctly. The amount of leverage that can exist at any one
time will not exceed one-third of the value of the Fund's total assets.
DEBT SECURITIES; ZERO COUPON AND PAYMENT-IN-KIND BONDS. The Fund may invest in
debt securities. The Fund may invest in debt securities either to earn
investment income or to benefit from changes in the market values of such
securities. Debt securities are subject to market risk; that is, the fluctuation
of market value in response to changes in interest rates; and to credit risk;
that is, the risk that the issuer may become unable or unwilling to make timely
payments of principal and interest.
The Fund also may invest in lower-quality, high-yielding debt securities rated
below investment grade. Lower-rated debt securities (commonly called "junk
bonds") are considered to be of poor standing and predominantly speculative.
Securities in the lowest rating categories may have extremely poor prospects of
attaining any real investment standing, and some of those securities in which
the Fund may invest may be in default. The rating services' descriptions of
securities in the lower rating categories, including their speculative
characteristics, are set forth in Appendix A to this Prospectus.
In addition, lower-rated securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the ability or perceived ability of an issuer to make payments of interest and
principal may also affect the value of these investments.
The Fund may at times invest in so-called "zero coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity, rather than at intervals
during
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the life of the security. Payment-in-kind bonds allow the issuer, at its option,
to make current interest payments on the bonds either in cash or in additional
bonds. The values of zero-coupon bonds and payment-in-kind bonds are subject to
greater fluctuation in response to changes in market interest rates than bonds
which pay interest currently, and may involve greater credit risk than such
bonds. From time to time, the Fund may invest a portion of its assets in Brady
Bonds, which are securities created through the exchange of existing commercial
bank loans to sovereign entities for new obligations in connection with debt
restructuring. Brady Bonds have been issued only recently and, therefore, do not
have a long payment history.
The Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although SCMI will monitor the
investment to determine whether continues investment in the security will assist
in meeting the Fund's investment objective.
OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in a variety of
transactions involving the use of options and futures contracts for purposes of
increasing its investment return or hedging against market changes. The Fund may
engage in such transactions for hedging purposes or, to the text permitted by
applicable law, to increase its current return.
The Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. The Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. The Fund may also buy and sell put and call options on such
securities for hedging purposes. When the Fund writes a call option on a
portfolio security, it gives up the opportunity to profit from any increase in
the price of the security above the exercise price of the option; when it writes
a put option, the Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current market price of the
security. The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. The Fund may also from
time to time buy and sell combinations of put and call options on the same
underlying security to earn additional income.
The Fund may buy and sell futures contracts. An "index future" is a contract to
buy or sell units of a particular index at an agreed price on a specified future
date. Depending on the change in value of the index between the time when the
Fund enters into and terminates an index future transaction, the Fund may
realize a gain or loss. The Fund may also purchase warrants, issued by banks or
other financial institutions, whose values are based on the values from time to
time of one or more securities indices.
The Fund may buy and sell futures contracts on U.S. government obligations or
other debt securities. A futures contract on a debt security is a contract to by
and sell a certain amount of the debt security at an agreed price on a specified
future date. Depending on the change in the value of the security when the Fund
enters into and terminates a futures contract, the Fund realizes a gain or loss.
The Fund may purchase or sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.
The Fund may purchase and sell futures contracts, options on futures contracts,
and options on securities indices for hedging purposes or, to the extent
permitted by applicable law, to increase its current return.
The Fund may also purchase and sell put and call options on foreign currencies,
futures contracts on foreign currencies, and options on foreign currency futures
contracts as an alternative, or in addition to, the foreign currency exchange
transactions described above. Such transactions are similar to options and
futures contracts on securities, except that they typically contemplate that one
party to a transaction will deliver one foreign currency to the other in return
for another currency (which may or may not be the U.S. dollar).
RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that the Fund may be
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unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that SCMI
may not forecast market movements correctly.
The effective use of options and futures strategies is dependent on, among other
things, the Fund's ability to terminate options and futures positions at times
when SCMI deems it desirable to do so. Although the Fund will enter into an
option or futures contract position only if SCMI believes that a liquid
secondary market exists for that option or futures contract, there is no
assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
The Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, the
Fund may purchase and sell options in the over-the-counter markets. The Fund's
ability to terminate options in the over-the-counter markets may be more limited
than for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to the Fund. The Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of SCMI, the pricing mechanism and liquidity of the
over-the-counter markets are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. The Fund will treat
over-the-counter options (and, in the case of options sold by the Fund, the
underlying securities held by the Fund) as illiquid investments as required by
applicable law.
The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities or index, or in the prices
of the securities that are the subject of a hedge. The successful use of these
strategies further depends on the ability of SCMI to forecast market movements
correctly.
Because the markets for certain options and futures contracts in which the Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, the Fund's
ability to engage in transactions using such investments may be limited. The
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. The Fund's hedging transactions may affect
the character or amount of its distributions. The tax consequences of certain
hedging transactions have been modified by the Taxpayer Relief Act of 1997.
For more information about any of the options or futures portfolio transactions
described above, see the SAI.
NON-DIVERSIFICATION AND GEOGRAPHIC CONCENTRATION. The Fund is a
"non-diversified" series of an investment company, and it may invest its assets
in a more limited number of issuers than may other investment companies. Under
the Internal Revenue Code, however, an investment company, including a
non-diversified investment company, generally may not invest more than 25% of
its total assets in obligations of any one issuer other than U.S. Government
obligations and, with respect to 50% of its total assets, the Fund may not
invest more than 5% of its total assets in the securities of any one issuer (
except U.S. Government obligations). Thus, the Fund may invest up to 25% of its
total assets in the securities of each of any two issuers. This practice
involves an increased risk of loss to the Fund if the market value of a security
should decline or its issuer were otherwise not to meet its obligations.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS. The Fund may
lend portfolio securities amounting to not more than 25% of its assets to
brokers, dealers and financial institutions meeting specified credit conditions,
and may enter into repurchase agreements without limit. These transactions must
be fully collateralized at all times but involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering its assets or realizing on the collateral. The Fund
may also purchase securities for future delivery, which may increase its overall
investment exposure and involve a risk of loss if the value of the securities
declines prior to the settlement date.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund is permitted to invest in
other investment companies or pooled vehicles, including closed-end funds, that
are advised by SCMI or its affiliates or by unaffiliated parties. Pursuant to
the 1940 Act, the Fund may invest in the shares of other investment companies
that invest in securities in which the Fund is permitted to invest, subject to
the limits and conditions required under the 1940 Act or any
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orders, rules or regulations thereunder. When investing through investment
companies, the Fund may pay a premium above such investment companies' net asset
value per share. As a shareholder in an investment company, the Fund would bear
its ratable share of the investment company's expenses, including its advisory
and administrative fees. At the same time, the Fund would continue to pay its
own fees and expenses.
LIQUIDITY. The Fund will not invest more than 15% of its net assets in
securities determined by SCMI to be illiquid. Certain securities that are
restricted as to resale may nonetheless be resold by the Fund in accordance with
Rule 144A under the Securities Act of 1933, as amended. Such securities may be
determined by SCMI to be liquid for purposes of compliance with the limitation
on the Fund's investment in illiquid securities. There can, however, be no
assurance that the Fund will be able to sell such securities at any time when
SCMI deems it advisable to do so or at prices prevailing for comparable
securities that are more widely held.
ALTERNATIVE INVESTMENTS. At times, SCMI may judge that market conditions make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, SCMI may temporarily use
alternative strategies, primarily designed to reduce fluctuations in the values
of the Fund's assets. In implementing these "defensive" strategies, the Fund may
invest without limit in U.S. government obligations and other high-quality debt
instruments and any other investment SCMI considers to be consistent with such
defensive strategies, and may hold any portion of its assets in cash.
PORTFOLIO TURNOVER. The length of time the Fund has held a particular security
is not generally a consideration in investment decisions. The investment
policies of the Fund may lead to frequent changes in the Fund's investments,
particularly in periods of volatile market movements. A change in the securities
held by the Fund is known as "portfolio turnover." Portfolio turnover generally
involves some expense to the Fund, including brokerage commissions or dealer
mark-ups and other transaction costs on the sale of securities and reinvestment
in other securities. Such securities sales may result in realization of taxable
capital gain.
HOW TO BUY SHARES
Investors may purchase Advisor Shares of the Fund directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Shareholder Services, LLC, the Fund's transfer agent (the
"Transfer Agent"). See "Other Information -- Shareholder Inquiries". Investments
also may be made through broker-dealers and other financial institutions that
assist their customers in purchasing Fund Shares ("Service Organizations").
Service Organizations may charge their customers a service fee for processing
orders to purchase or sell shares. Investors wishing to purchase Shares through
their accounts at a Service Organization should contact that organization
directly for appropriate instructions. A Service Organization is responsible for
forwarding all necessary documentation to the Trust, and may charge for its
services.
The Fund's Advisor Shares are offered at the net asset value next-determined
after receipt of a completed account application (at the address set forth
below)and your purchase request in good order. The minimum initial investment is
$250,000. There is no minimum subsequent investment. A Service Organization may
impose higher minimums on your initial or subsequent investment. All purchase
payments are invested in full and fractional shares. The Fund is authorized to
reject any purchase order.
Purchases of Fund shares are subject to a purchase charge of 0.50% of the amount
invested. This charge is paid to the Portfolio and is designed to compensate
shareholders for the transaction costs incurred in purchasing securities because
of an investment in the Fund, including brokerage commissions in acquiring
portfolio securities; currency transaction costs and transfer agent costs; and
to protect the interests of shareholders. This charge, which is not a sales
charge, is assessed by the Fund and paid to the Portfolio, not to Schroder
Advisors or any other entity. The purchase charge is not assessed on the
reinvestment of dividends or distributions or shares purchased through a
subscription in kind.
Purchases may be made by mailing a check (in U.S. dollars), payable to the Fund
to:
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Schroder Emerging Markets Fund Institutional Portfolio -- 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.
Subsequent purchases may be made by mailing a check, by sending a bank wire, or
through a shareholder's Service Organization, as indicated. All payments should
clearly indicate the shareholder's name and account number.
Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
Ref.: Schroder Emerging Markets Fund Institutional Portfolio--
Advisor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class (I.E.,
Advisor Shares), the account name and number, address, confirmation number,
amount to be wired, name of the wiring bank, and name and telephone number of
the person to be contacted in connection with the order. If the initial
investment is by wire, an account number will be assigned, and a completed
account application must be mailed to the Fund before any transaction will be
effected. Wire orders received prior to the close of the New York Stock Exchange
(the "Exchange") on a day when the Exchange is open for trading are processed at
the net asset value next determined as of that day. Wire orders received after
the close of the Exchange are processed at the net asset value next determined.
The Fund's Transfer Agent establishes for each shareholder of record an open
account to which all shares purchased and all reinvested dividends and other
distributions are credited. Although most shareholders elect not to receive
share certificates, certificates for full shares can be obtained by written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.
The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions are automatically reinvested. In
addition, the amount of any outstanding checks for dividends and other
distributions that have been returned to the Transfer Agent are reinvested, and
the checks are canceled.
DISTRIBUTOR; DISTRIBUTION PLAN
Schroder Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York,
New York 10019, serves as Distributor of the Fund's shares. Schroder Advisors
was organized in 1989 as a registered broker-dealer to serve as an administrator
and distributor of the Fund and other mutual funds.
The Fund has adopted a Distribution Plan pursuant to which the Fund may pay
Schroder Advisors or others compensation in an amount limited in any fiscal year
to the annual rate of 0.50% of the Fund's average daily net assets attributable
to its Advisor Shares. The Fund presently make no payments under the
Distribution Plans, although the Trustees may at any time authorize payments at
any annual rate of up to 0.50% of a Fund's average daily net assets attributable
to its Advisor Shares.
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Payment under a Fund's Shareholder Servicing Plan for Advisor Shares will be
considered to have been made pursuant to the Fund's Distribution Plan, to the
extent such payments may be deemed to be primarily intended to result in the
sale of the Fund's Advisor Shares.
SHAREHOLDER SERVICE PLAN
The Trust has adopted a shareholder service plan (the "Service Plan") for the
Advisor Shares of the Fund. Under the Service Plan, the Fund pays fees to
Schroder Advisors or others at an annual rate of up to 0.25% of the average
daily net assets of the Fund represented by Advisor Shares. Schroder Advisors
may enter into shareholder service agreements with Service Organizations
pursuant to which the Service Organizations provide administrative support
services to their customers who are Fund shareholders. In return for providing
these support services, a Service Organization may receive payments from
Schroder Advisors at a rate not exceeding 0.25% of the average daily net assets
of the Fund's Advisor Shares for which the Service Organization is the Service
Organization of record. These administrative services may include, but are not
limited to, the following functions: establishing and maintaining accounts and
records relating to clients of the Service Organization; answering shareholder
inquiries regarding the manner in which purchases, exchanges, and redemptions of
Advisor Shares of the Trust may be effected and other matters pertaining to the
Trust's services; providing necessary personnel and facilities to establish and
maintain shareholder accounts and records; assisting shareholders in arranging
for processing purchase, exchange, and redemption transactions; arranging for
the wiring of funds; guaranteeing shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
integrating periodic statements with other customer transactions; and providing
such other related services as the shareholder may request. Payments to a
particular Service Organization under the Service Plan are calculated by
reference to the average daily net assets of Advisor Shares owned beneficially
by investors who have a service relationship with the Service Organization. Some
Service Organizations may impose additional conditions or fees, such as
requiring clients to invest more than the minimum amounts required by the Trust
for initial or subsequent investments or charging a direct fee for services.
Such fees would be in addition to any amounts that might be paid to the Service
Organization by Schroder Advisors. Please contact your Service Organization for
details.
RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
Advisor Shares are offered in connection with tax-deferred retirement plans,
including traditional and Roth IRAs. 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 Bank 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. Generally, contributions and investment earnings
in a traditional IRA grow tax-deferred until withdrawn. In contrast,
contributions to a Roth IRA are not tax-deductible, but investment earnings
generally grow tax-free. IRAs are available to individuals (and their spouses)
who receive compensation or earned income whether or not they are active
participants in a tax-qualified or government-approved retirement plan. An IRA
contribution by an individual or spouse who participates in a tax-qualified or
government-approved retirement plan may not be deductible, depending upon the
individual's income. Individuals also may establish an IRA to receive a
"rollover" contribution of distributions from another IRA or qualified plan.
Consult your tax advisor.
EXCHANGES
The Fund's Advisor Shares may be exchanged for Advisor Shares of any fund
offered by the Schroder family of funds so long as the investment meets the
initial investment minimum of the fund being purchased, and the shareholder
maintains the applicable minimum account balance in the fund in which the Shares
are held. Exchanges between funds are at net asset value.
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For federal income tax purposes an exchange is considered to be a sale of shares
on which a shareholder may realize a capital gain or loss. If a shareholder owns
Advisor Shares directly, the shareholder may make an exchange by calling the
Transfer Agent at 1-800-344-8332 (see "How to Sell Shares -- By Telephone") or
by mailing written instructions to Schroder Capital Funds (Delaware), P.O. Box
446, Portland, Maine 04112. If a shareholder owns Advisor Shares through a
Service Organization, the shareholder must make an exchange through the Service
Organization. Exchange privileges may be exercised only in those states where
shares of the other funds of the Schroder family of funds may legally be sold.
Exchange privileges may be amended or terminated at any time upon sixty (60)
days' notice.
HOW TO SELL SHARES
You can sell your Advisor Shares in the Fund to the Fund any day the Exchange is
open, either through the Service Organization or directly to the Fund. If your
shares are held in the name of a Service Organization, you may only sell the
Shares through that Service Organization. The Trust will only redeem Shares for
which it has received payment.
Advisor Shares are redeemed at their next determined net asset value after
receipt by the Fund (see the address set forth under "How to Buy Shares") of a
redemption request in proper form. Redemption requests that are received in good
order prior to the close of the Exchange on a day on which the Exchange is open
are processed at the net asset value determined as of that day. Redemption
requests that are received after the close of the Exchange are processed at the
net asset value next determined. See "Net Asset Value".
TELEPHONE REQUESTS
Redemption requests may be made by a shareholder of record by telephoning the
Transfer Agent at the telephone number on the cover page of this Prospectus. A
shareholder must provide the Transfer Agent with the class of shares, the dollar
amount or number of shares to be redeemed, shareholder account number, and some
additional form of identification such as a password. A redemption by telephone
may be made only if the telephone redemption privilege option has been elected
on the account application or otherwise in writing. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, reasonable
procedures will be followed by the Transfer Agent to confirm that telephone
instructions are genuine. The Transfer Agent and the Trust generally will not be
liable for any losses due to unauthorized or fraudulent redemption requests, but
either or both may be liable if they do not follow these procedures. Shares for
which certificates have been issued may not be redeemed by telephone. In times
of drastic economic or market change it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.
WRITTEN REQUESTS
Redemptions may be made by a shareholder of record 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 Advisor 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
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written on the face of the certificates. Requirements for signature guarantees
and/or documentation of authority as described above could also apply. For your
protection, the Trust suggests that certificates be sent by registered mail.
ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally are
mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of the Advisor 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
is sent to the shareholder's address of record.
The Fund may suspend the right of redemption during any period when: (1) trading
on the Exchange is restricted or that exchange is closed; (2) the SEC has by
order permitted such suspension; or (3) an emergency (as defined by rules of the
SEC) exists making disposal of portfolio investments or determination of the
Fund's net asset value not reasonably practicable.
If the Trust's 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 Advisor Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Advisor 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 Advisor Shares is made wholly or partly
in portfolio securities, the shareholder may be subject to additional risks and
costs in converting the securities to cash. See "Additional Purchase and
Redemption Information" in the SAI.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for federal income tax
purposes.
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 $100,000, unless the value of
the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and will be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.
The Trust may also redeem shares if a shareholder owns shares of any Fund above
a maximum amount set by the Trustees. There is currently no maximum, but the
Trustees may establish one at any time, which could apply to both present and
future shareholders.
OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
THE FUND CALCULATES THE NET ASSET VALUE OF ITS ADVISOR SHARES BY DIVIDING THE
TOTAL VALUE OF ITS ASSETS ATTRIBUTABLE TO ITS ADVISOR SHARES, LESS ITS
LIABILITIES ATTRIBUTABLE TO THOSE SHARES, BY THE NUMBER OF ITS ADVISOR SHARES
OUTSTANDING. Shares are valued as of the close of the Exchange ( normally 4:00
p.m. Eastern time) each day the Exchange is open. Portfolio securities for which
market quotations are readily available are stated at market value. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. All other securities and assets are valued at
their fair values determined by SCMI. The net asset value of the Fund's Advisor
Shares will generally differ from that of its other classes of shares due to the
variance in daily net income realized by and dividends paid on each class of
shares, and any differences in the expenses of the different classes. All assets
and liabilities of the Fund denominated in foreign currencies are valued in U.S.
dollars based on the exchange rate last quoted by a major bank prior to the time
when the net asset value of the Fund is calculated.
DIVIDENDS, DISTRIBUTIONS AND TAXES
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The Fund distributes any net investment income and any net realized capital
gains at least annually. Distributions from net capital gains are made after
applying any available capital loss carryovers.
YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS: (1) reinvest all distributions in
additional Advisor Shares of the Fund; (2) receive distributions from net
investment income in cash while reinvesting capital-gain distributions in
additional Advisor Shares; (3) receive distributions from net investment income
in additional Advisor Shares while receiving capital-gain distributions in cash;
or (4) receive all distributions in cash. An investor can change the
distribution option by notifying the Transfer Agent in writing. If the investor
does not select an option when the account is opened, all distributions by the
Fund will be reinvested in Advisor Shares of the Fund. Investors will receive a
statement confirming reinvestment of distributions in additional Fund shares
promptly following the period in which the reinvestment occurs.
TAXES
The Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. The Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.
All Fund distributions will be taxable to a shareholder as ordinary income,
except that any distributions of net long-term capital gain will be taxed as
such, regardless of how long the shareholder has held the shares. Pursuant to
the Taxpayer Relief Act of 1997 ( the "1997 Act"), long-term capital gain will
be subject to a maximum rate of 28% or 20%, depending upon the holding period of
the portfolio investment generating the gain. Distributions will be taxable as
described above whether received in cash or in shares through the reinvestment
of distributions.
Early in each year the Trust will notify each shareholder of the amount and tax
status of distributions paid to the shareholder by the Fund for the preceding
year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. Investors should consult their tax advisors to determine
the precise effect of an investment in the Fund on their particular tax
situation.
CERTAIN INFORMATION REGARDING FOREIGN TAXES. Foreign governments may impose
taxes on certain of the Fund's investments, which generally would reduce the
income of the Fund. However, an offsetting tax credit or deduction may be
available to investors.
The Fund, provided that it is eligible to do so, intends to elect to permit its
shareholders to take a credit (or a deduction) for the Fund's share of foreign
income taxes paid by the Fund. If the Fund does make such an election, its
shareholders would include as gross income in their federal income tax returns
both: (1) distributions received from the Fund and (2) the amount that the Fund
advises is their pro rata portion of foreign income taxes paid with respect to
or withheld from dividends and interest paid to the Fund from its foreign
investments. Shareholders then would be entitled, subject to certain limitations
( including, with respect to a foreign tax credit, a holding period requirement
imposed pursuant to the 1997 Act), to take a foreign tax credit against their
federal income tax liability for the amount of such foreign taxes or else to
deduct such foreign taxes as an itemized deduction from gross income.
THE PORTFOLIO
The Portfolio is not required to pay federal income tax because it is classified
as a partnership for federal income tax purposes. All interest, dividends, gain
and losses of the Portfolio will be deemed to have been "passed through" to the
Fund in proportion to the Fund's holdings in the Portfolio regardless of whether
such interest, dividends or gains have been distributed by the Portfolio.
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The Portfolio intends to conduct its operations so as to enable the Fund, if it
invests all of its assets in the Portfolio, to qualify as a regulated investment
company.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. The business and affairs of the Portfolio are
managed under the direction of the Board of Trustees of Schroder Capital Funds
(the "Core"). Information regarding the Trustees and executive officers of the
Trust, as well as the trustees and executive officers of the Core, may be found
in the SAI under "Management --Trustees and Officers".
Schroder Capital Management International Inc. ("SCMI") is the investment
adviser to the Fund. SCMI is a wholly owned U.S. subsidiary of Schroders U.S.
Holdings Inc., which engages through its subsidiary firms in the investment
banking, asset management and securities businesses. Affiliates of Schroders
U.S. Holdings Inc. (or their predecessors) have been investment managers since
1927. SCMI and its United Kingdom affiliate, Schroder Capital Management
International, Ltd., together served as investment managers for approximately
$28 billion as of September 30, 1997. Schroders U.S. Holdings Inc. is an
indirect, wholly owned U.S. subsidiary of Schroders plc, a publicly owned
holding company organized under the laws of England. Schroders plc and its
affiliates ("Schroder Group") engage in international merchant banking and
investment management businesses, and as of September 30, 1997, had under
management assets of over $175 billion. Schroder Advisors Inc. ("Schroder
Advisors") is a wholly owned subsidiary of SCMI.
SCMI also serves as investment adviser to the Portfolio. SCMI is entitled to a
monthly fee at the annual rate of 1.00% of the Fund's average daily net assets.
The Fund, due to its investment in the Portfolio, bears a proportionate part of
the management fees paid by the Portfolio (based on the percentage of the
Portfolio's assets attributable to the Fund).
The Fund has entered into an investment advisory agreement with SCMI pursuant to
which SCMI would manage the Fund's assets directly in the event that the Fund
were to cease investing substantially all of its assets in the Portfolio (or
another investment company). SCMI is not entitled to receive any fees under that
agreement so long as the Fund continues to invest substantially all of its
assets in the Portfolio (or another investment company). If SCMI were to manage
the Fund's assets directly under the investment advisory agreement, the Fund
would pay fees to SCMI monthly at the annual rate of 1.00% of the Fund's average
daily net assets.
ADMINISTRATIVE SERVICES. The Trust, on behalf of the Fund, has entered into an
administration agreement with Schroder Advisors pursuant to which Schroder
Advisors provides certain management and administrative services necessary for
the Fund's operations. The Trust, on behalf of the Fund, has entered into a
subadministration agreement with Forum Administrative Services, LLC, Two
Portland Square, Portland, Maine 04101 ("FAdS"), pursuant to which FAdS provides
certain management and administrative services necessary for the Fund's
operations. Schroder Advisors is entitled to compensation at an annual rate of
0.05% of the Fund's average daily net assets. FAdS is entitled to compensation
at the annual rate of 0.05% of the Fund's average daily net assets.
Schroder Advisors and FAdS also serve as administrator and subadministrator,
respectively, to the Portfolio. The Trust, on behalf of the Portfolio, pays
administration fees to Schroder Advisors and subadministration fees to FAdS
monthly at the annual rates of 0.05% and 0.10%, respectively, of the Portfolio's
average daily net assets;
In order to limit the Fund's expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) with respect to the Fund to the extent that the
Fund's expenses chargeable to Advisor Shares exceed the annual rate of 1.95%.
FAdS may waive voluntarily all or a portion of its subadvisory fees, from time
to time. The Trust pays all expenses not assumed by SCMI and Schroder Advisors,
including Trustees' fees, auditing, legal, custodial, and investor servicing,
and shareholder reporting expenses.
SCMI's investment decisions for the Portfolio are made by an investment manager
or an investment team, with the assistance of an investment committee at SCMI.
Mr. John A. Troiano, a Vice President of the Trust and of Schroder Capital
Funds, and Chief Executive of SCMI, Ms. Heather Crighton, a First Vice President
of SCMI, and Mr. Mark Bridgeman, a Vice President of SCMI, are primarily
responsible for managing Schroder Emerging Markets Fund
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Institutional Portfolio, in which the Fund invests. Mr. Troiano managed the
Fund's investment portfolio from its inception until it invested its assets in
the Portfolio and has managed the Portfolio's assets since its inception.
SCMI places all orders for purchases and sales of the Fund' securities. In
selecting broker-dealers, SCMI may consider research and brokerage services
furnished to it and its affiliates. Schroder & Co. Inc. and Schroder Securities
Limited, affiliates of SCMI, may receive brokerage commissions from the Fund in
accordance with procedures adopted by the Trustees under the 1940 Act which
require periodic review of these transactions. Subject to seeking the most
favorable price and execution available, SCMI may consider sales of shares of
the Fund as a factor in the selection of broker-dealers.
PERFORMANCE INFORMATION
Total return data relating to Advisor Shares of the Fund may from time to time
be included in advertisements about the Fund. The Fund's total return with
respect to Advisor Shares is calculated for the past year, the past five years,
and the past ten years (or if the Fund's Advisor Shares have been offered for a
period shorter than five or ten years, that period will be substituted) since
the establishment of the Fund, as more fully described in the SAI.
Advertisements about the Fund may include total return information for the
Fund's Investor Shares for periods prior to the initial offering date of the
Fund's Advisor Shares; that information may be applicable to the Fund's Advisor
Shares during the periods presented. Total return for any period of one year or
less represents the actual rate of return on such an investment earned during
the period, although annualized figures may also be shown in advertisements.
Total return quotations assume that all dividends and distributions are
reinvested when paid.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE
PERFORMANCE. Investment performance of the Fund's Advisor Shares, which will
vary, is based on many factors, including market conditions, the composition of
the Fund's portfolio, and the Fund's operating expenses attributable to Advisor
Shares. Investment performance also often reflects the risks associated with the
Fund's investment objectives and policies. Quotations of total return for any
period when an expense limitation is in effect will be greater than if the
limitation had not been in effect. These factors should be considered when
comparing the investment results of the Fund's Advisor Shares to those of
various classes of other mutual Funds and other investment vehicles. Performance
for the Fund's Advisor Shares may be compared to various indices. See the SAI
for a fuller discussion of performance information.
ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust was organized as a Maryland corporation on July 30, 1969, reorganized
on February 29, 1988 as Schroder Capital Funds, Inc. and reorganized as a
Delaware business trust on January 9, 1996. The Trust has an unlimited number of
shares of beneficial interest that may, without shareholder approval, be divided
into an unlimited number of series of such shares, which, in turn, may be
divided into an unlimited number of classes of such shares. The Trust's shares
of beneficial interest are presently divided into nine different series. The
Fund's shares are presently divided into two classes, Advisor Shares, which are
offered through this Prospectus, and Advisor Shares, which are offered through a
separate prospectus. Unlike Advisor Shares, Investor Shares are not subject to
shareholder service and distribution fees, which will affect their performance
relative to Advisor Shares. To obtain more information about Advisor Shares,
contact Schroder Capital Funds (Delaware) at 1-800 290-9826. The Trust's
principal office is located at Two Portland Square, Portland, Maine 04101, and
its telephone number is 1-207-879-8903.
Each share has one vote, with fractional shares voting proportionally.
Shareholders of a class of shares or series generally have separate voting
rights with respect to matters that affect only that class or series. See
"Organization and Capitalization" in the SAI. Shares are freely transferable and
are entitled to dividends and other distributions as declared by the Trustees.
Dividends paid by the Fund on its two classes of shares will normally differ in
amount due to the differing expenses borne by the two classes. If the Fund were
liquidated, each class of shares would receive the net assets of the Fund
attributable to that class. The Trust may suspend the sale of the Fund's shares
at any time and may refuse any order to purchase shares. Although the Trust is
not required to hold annual meetings
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of its shareholders, shareholders have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the Declaration of
Trust.
INFORMATION ABOUT THE PORTFOLIO
The Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which has the same investment objective and
similar policies. In that way, the Portfolio acquires investment securities
directly, and the Fund acquires an indirect interest in those securities.
Schroder Capital Funds is a business trust organized under the laws of the state
of Delaware in September 1995. Schroder Capital Funds is registered under the
1940 Act as an open-end management investment company. The assets of the
Portfolio belong only to, and the liabilities of the Portfolio are borne solely
by, that Portfolio and no other Portfolio of Schroder Capital Funds.
The Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. All other investors in the Portfolio invest on the same
terms and conditions as the Fund and pay a proportionate share of the
Portfolio's expenses.
The Portfolio normally will not hold meetings of investors except as required by
the 1940 Act. Each investor in the Portfolio is entitled to vote in proportion
to its relative beneficial interest in the Portfolio. On most issues subject to
a vote of investors, in accordance with applicable law the Board of Trustees
will either (1) solicit voting instructions from Fund shareholders with regard
to the voting of all proxies with respect to a Fund's shares and vote such
proxies in accordance with such instructions, or (2) vote the interests held by
a Fund in the same proportion as the vote of all other holders of the
Portfolio's interests. 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 does not sell its shares directly to members of the general
public. Another investor in the Portfolio, such as an investment company, that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund and could have
different 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. Information regarding any such fund in the future
will be available by calling 1-800-730-2932.
Under federal securities law, any person or entity that signs a registration
statement may be liable for a misstatement of a material fact in, or omission of
a material fact from, the registration statement. Schroder Capital Funds, its
Trustees, and certain of its officers are required to sign the registration
statement of the Trust and may be required to sign the registration statements
of certain other investors in the Portfolio. In addition, Schroder Capital Funds
may be liable for misstatements or omissions of a material fact in any proxy
soliciting material of an investor in the Portfolio, including the Fund. Each
investor in the Portfolio, including the Trust, is required to indemnify
Schroder Capital Funds and its Trustees and officers ("SCF Indemnitees") against
certain claims.
Indemnified claims are those brought against SCF Indemnitees based on a
misstatement of a material fact in, or omission of a material fact from, a
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Capital Funds and was supplied to the investor by Schroder Capital
Funds. Similarly, Schroder Capital Funds is required to indemnify each investor
in the Portfolio, including the Fund, for any claims brought against the
investor with respect to the investor's registration statement or proxy
materials, to the extent the claim is based on a misstatement or omission of a
material fact relating to information about Schroder Capital Funds that is
supplied to the investor by Schroder Capital Funds.
The Fund's investment in the Portfolio may be affected by the actions of other
large investors in the Portfolio; 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.
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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 who, by a vote of the shareholders of all investors
(including the Fund), changed 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 should withdraw its investment from the Portfolio, the Trust
Board would consider appropriate alternatives, including the management of the
Fund's assets in accordance with its investment objective and policies by SCMI,
or the investment of all of the Fund's investable assets in another pooled
investment entity having substantially the same investment objective as the
Fund. The inability of the Fund to find a suitable replacement investment, if
the Board decided not to permit SCMI to manage the Fund's assets, could have a
significant adverse impact on shareholders of the Fund.
Each investor in the Portfolio, including the Fund, may be liable for all
obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be 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.
As of February 1, 1998, the Robert Wood Johnson Foundation held in excess of 25%
of the shares of the Fund and, accordingly, may be deemed to control the Fund
for purposes of the 1940 Act.
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APPENDIX A
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
FIXED-INCOME SECURITY RATINGS
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group they comprise what are
generally known as high grade fixed-income securities. They are rated lower than
the best fixed-income securities because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
"A" Fixed-income securities which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.
"Baa" Fixed-income securities which are rated "Baa" are considered as medium
grade obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack characteristics
of the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
A-1
<PAGE>
Rating Refinements: Moody's may apply numerical modifiers, "1", "2",
and "3" in each generic rating classification from "Aa" through "B" in its
municipal fixed-income security rating system. The modifier "1" indicates that
the security ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and a modifier "3" indicates that
the issue ranks in the lower end of its generic rating category.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. The ratings apply to Municipal Commercial Paper as well as taxable
Commercial Paper. Moody's employs the following three designations, all judged
to be investment grade, to indicate the relative repayment capacity of rated
issuers: "Prime-1", "Prime-2", "Prime-3".
Issuers rated "Prime-1" have a superior capacity for repayment of
short-term promissory obligations. Issuers rated "Prime-2" have a strong
capacity for repayment of short-term promissory obligations; and Issuers rated
"Prime-3" have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.
STANDARD & POOR'S RATING GROUP("STANDARD & POOR'S")
FIXED-INCOME SECURITY RATINGS
A Standard & Poor's fixed-income security rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.
"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the highest-rated issues only in
small degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.
"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for fixed-income securities in this category than for
fixed-income securities in higher-rated categories.
A-2
<PAGE>
Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.
"BB" Fixed-income securities rated "BB" have less near-term vulnerability to
default than other speculative grade fixed-income securities. However, it faces
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity or willingness to
pay interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to default
but presently have the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions would likely
impair capacity or willingness to pay interest and repay principal.
"CCC" Fixed-income securities rated "CCC" have a current identifiable
vulnerability to default, and the obligor is dependent upon favorable business,
financial and economic conditions to meet timely payments of interest and
repayments of principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and repay
principal.
"CC" The rating "CC" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied "CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities subordinated
to senior debt which is assigned an actual or implied "CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which no
interest is being paid.
"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are
regarded as having predominantly speculative characteristics with respect to
capacity to pay interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such fixed-income
securities will likely have some quality and protective characteristics, these
are out-weighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by
the addition of a plus or minus sign to show relative standing with the major
ratings categories.
COMMERCIAL PAPER RATINGS
Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
Issues assigned "A" ratings are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation "1", "2", and "3" to indicate the relative degree of safety.
"A-1" Indicates that the degree of safety regarding timely payment is very
strong.
"A-2" Indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3
<PAGE>
"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
A-4
<PAGE>
TABLE OF CONTENTS
FUND STRUCTURE.................................
FINANCIAL HIGHLIGHTS...........................
INVESTMENT OBJECTIVE
AND POLICIES.................................
HOW TO BUY SHARES..............................
HOW TO SELL SHARES.............................
OTHER INFORMATION..............................
MANAGEMENT OF THE TRUST........................
APPEND IX A - Description of Securities
Ratings Appendix A-1
<PAGE>
[Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO
Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826
ADVISOR SHARES
PROSPECTUS
MARCH 1, 1998
<PAGE>
INVESTMENT ADVISOR
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, New York 11245
and
Global Custody Division
125 London Wall
London EC2Y 5AJ, United Kingdom
TRANSFER & DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
PO Box 446
Portland, Maine 04112
COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER INTERNATIONAL FUND
SCHRODER EMERGING MARKETS FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL BOND FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
COMBINED STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1998
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- ------------------
Schroder Capital Management International Inc. ("SCMI")
ADMINISTRATOR AND DISTRIBUTOR
- -----------------------------
Schroder Fund Advisors Inc. ("Schroder Advisors")
SUBADMINISTRATOR
- ----------------
Forum Administrative Services, LLC ("FAdS")
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------
Forum Shareholder Services, LLC ("Forum")
GENERAL INFORMATION: 1-207-879-8903
ACCOUNT INFORMATION: 1-800-344-8332
FAX: 1-207-879-6206
Investor Shares of SCHRODER INTERNATIONAL FUND, SCHRODER EMERGING MARKETS FUND,
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND, SCHRODER INTERNATIONAL BOND FUND,
SCHRODER U.S. EQUITY FUND, SCHRODER U.S. SMALLER COMPANIES FUND, and SCHRODER
MICRO CAP FUND (each, a "Fund" and collectively, the "Funds") are offered for
sale at net asset value with no sales charge as an investment vehicle for
individuals, institutions, corporations and fiduciaries. The Funds' Advisor
Shares also are offered for sale at net asset value to individual investors, in
most cases through Service Organizations (as defined in the prospectuses) at
lower investment minimums but higher expenses than Investor Shares.
This Combined Statement of Additional Information ("SAI") is not a prospectus
and is authorized for distribution only when preceded or accompanied by the
Funds' current combined prospectus dated March 1, 1998, as may be amended from
time to time for each of the Investor Shares and the Advisor Shares (each, a
"Prospectus" and, together, the "Prospectuses"). This SAI contains additional
and more detailed information than that set forth in each Prospectus and should
be read in conjunction with the applicable Prospectus and retained for future
reference. The Prospectuses and this SAI are available along with other related
materials for reference on the SEC's Internet Web Site (http://www.sec.gov). All
terms used in this SAI that are defined in the Prospectuses have the meaning
assigned in the Prospectuses. You may obtain an additional copy of the
applicable Prospectus(es) without charge by writing to the Trust at Two Portland
Square, Portland, Maine 04101 or calling the numbers listed above.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVES AND POLICIES
OF THE TRUST AND RISK
CONSIDERATIONS....................................3
Options.............................................3
Futures Contracts...................................5
Special Risks of Transactions in Futures
Contracts and Related Options.....................8
Forward Commitments.................................9
Repurchase Agreements...............................9
When-Issued Securities..............................9
Loans of Fund Securities...........................10
Foreign Securities.................................10
Foreign Currency Transactions......................11
Zero-Coupon Securities.............................13
Short Sales........................................14
INVESTMENT RESTRICTIONS............................15
MANAGEMENT.........................................23
Officers and Trustees..............................23
Control Persons and Principal Holders
of Securities....................................26
Administrative Services............................27
Distribution of Fund Shares........................27
Shareholder Service Plan and
Service Organization.............................28
Fund Accounting....................................29
PORTFOLIO TRANSACTIONS.............................30
Investment Decisions...............................30
Brokerage and Research Services....................30
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION...........................32
Determination of Net Asset Value Per Share.........32
Redemption In-Kind.................................32
TAXATION...........................................32
OTHER INFORMATION..................................35
Fund Structure.....................................35
Organization of the Trust..........................37
Capitalization and Voting..........................38
Performance Information............................38
Principal Shareholders.............................39
Custodian..........................................39
Transfer Agent and Dividend
Disbursing Agent.................................39
Legal Counsel......................................39
Independent Accountant.............................39
Year 2000 Disclosure...............................40
Registration Statement.............................40
Financial Statements...............................40
APPENDIX A - PERFORMANCE INFORMATION .............A-1
APPENDIX B - MISCELLANEOUS TABLES.................B-1
2
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST
AND RISK CONSIDERATIONS
The Trust offers shares of beneficial interest of seven series (the
"Funds") with separate investment objectives and policies. The investment
objectives and policies of the Funds are described in the Prospectuses. This
Statement contains additional information concerning certain investment
practices and investment restrictions of the Trust and the Funds.
Except as described below under "Investment Restrictions", the
investment objectives and policies described in the Prospectus and in this
Statement are not fundamental, and the Board of Trustees may change the
non-fundamental policies of a Fund without an affirmative vote of shareholders
of a Fund.
Except as otherwise noted below, the following descriptions of certain
investment policies and techniques are applicable to all of the Funds.
OPTIONS
Each Fund may purchase and sell covered put and call options on its
portfolio securities to enhance investment performance and to protect against
changes in market prices.
COVERED CALL OPTIONS. A Fund may write covered call options on its
securities to realize a greater current return through the receipt of premiums
than it would realize on its securities alone. Such option transactions may also
be used as a limited form of hedging against a decline in the price of
securities owned by the Fund.
A call option gives the holder the right to purchase, and obligates the
writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times while
obligated as a writer, either owns the underlying securities (or comparable
securities satisfying the cover requirements of the securities exchanges), or
has the right to acquire such securities through immediate conversion of
securities.
In return for the premium received when it writes a covered call
option, the Fund gives up some or all of the opportunity to profit from an
increase in the market price of the securities covering the call option during
the life of the option. The Fund retains the risk of loss should the price of
such securities decline. If the option expires unexercised, the Fund realizes a
gain equal to the premium, which may be offset by a decline in price of the
underlying security. If the option is exercised, the Fund realizes a gain or
loss equal to the difference between the Fund's cost for the underlying security
and the proceeds of sale (exercise price minus commissions) plus the amount of
the premium.
A Fund may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. A Fund may enter into
closing purchase transactions in order to free itself to sell the underlying
security or to write another call on the security, realize a profit on a
previously written call option, or protect a security from being called in an
unexpected market rise. Any profits from a closing purchase transaction may be
offset by a decline in the value of the underlying security. Conversely, because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from a
closing purchase transaction is likely to be offset in whole or in part by
unrealized appreciation of the underlying security owned by the Fund.
COVERED PUT OPTIONS. A Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash
3
<PAGE>
and high-grade short-term debt obligations or other permissible collateral equal
to the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, the Fund also
receives interest on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put option, the Fund assumes the risk
that it may be required to purchase the underlying security for an exercise
price higher than its then current market value, resulting in a potential
capital loss unless the security later appreciates in value.
A Fund may terminate a put option that it has written before it expires
by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. A Fund may also purchase put options
to protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it sold
the underlying security instead of buying the put option.
A Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security.
A Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
A Fund may also purchase put and call options to enhance its current
return.
OPTIONS ON FOREIGN SECURITIES. A Fund may purchase and sell options on
foreign securities if in SCMI's opinion the investment characteristics of such
options, including the risks of investing in such options, are consistent with
the Fund's investment objectives. It is expected that risks related to such
options will not differ materially from risks related to options on U.S.
securities. However, position limits and other rules of foreign exchanges may
differ from those in the U.S. In addition, options markets in some countries,
many of which are relatively new, may be less liquid than comparable markets in
the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that SCMI will not forecast interest rate or
market movements correctly, that a Fund may be unable at times to close out such
positions, or that hedging transactions may not accomplish their purpose because
of imperfect market correlations. The successful use of these strategies depends
on the ability of SCMI to forecast market and interest rate movements correctly.
4
<PAGE>
An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close out
an option position. As a result, a Fund may be forced to continue to hold, or to
purchase at a fixed price, a security on which it has sold an option at a time
when SCMI believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other
unforeseen events might cause The Options Clearing Corporation or an exchange to
institute special trading procedures or restrictions that might restrict the
Fund's use of options. The exchanges have established limitations on the maximum
number of calls and puts of each class that may be held or written by an
investor or group of investors acting in concert. It is possible that the Fund
and other clients of SCMI may be considered such a group. These position limits
may restrict the Fund's ability to purchase or sell options on particular
securities.
Options that are not traded on national securities exchanges may be
closed out only with the other party to the option transaction. For that reason,
it may be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.
Government regulations, particularly the requirements for qualification
as a "regulated investment company" under the Internal Revenue Code, may also
restrict the Trust's use of options.
FUTURES CONTRACTS
In order to hedge against the effects of adverse market changes, each
Fund that may invest in debt securities may buy and sell futures contracts on
debt securities of the type in which the Fund may invest and on indexes of debt
securities. In addition, each Fund that may invest in equity securities may
purchase and sell stock index futures to hedge against changes in stock market
prices. Each Fund may also, to the extent permitted by applicable law, buy and
sell futures contracts and options on futures contracts to increase the Fund's
current return. All such futures and related options will, as may be required by
applicable law, be traded on exchanges that are licensed and regulated by the
Commodity Futures Trading Commission (the "CFTC").
FUTURES ON DEBT SECURITIES AND RELATED OPTIONS. A futures contract on a
debt security is a binding contractual commitment which, if held to maturity,
will result in an obligation to make or accept delivery, during a particular
month, of securities having a standardized face value and rate of return. By
purchasing futures on debt securities -- assuming a "long" position -- a Fund
will legally obligate itself to accept the future delivery of the underlying
security and pay the agreed price. By selling futures on debt securities
- --assuming a "short" position -- it will legally obligate itself to make the
future delivery of the security against payment of the agreed price. Open
futures positions on debt securities will be valued at the most recent
settlement price, unless that price does not, in the judgment of persons acting
at the direction of the Trustees as to the valuation of the Fund's assets,
reflect the fair value of the contract, in which case the positions will be
valued by the Trustees or such persons.
Positions taken in the futures markets are not normally held to
maturity, but are instead liquidated through offsetting transactions that may
result in a profit or a loss. While futures positions taken by a Fund will
usually be liquidated in this manner, a Fund may instead make or take delivery
of the underlying securities whenever it appears economically advantageous to
the Fund to do so. A clearing corporation associated with the exchange on which
futures are traded assumes responsibility for such closing transactions and
guarantees that a Fund's sale and purchase obligations under closed-out
positions will be performed at the termination of the contract.
5
<PAGE>
Hedging by use of futures on debt securities seeks to establish more
certainly than would otherwise be possible the effective rate of return on
portfolio securities. A Fund may, for example, take a "short" position in the
futures market by selling contracts for the future delivery of debt securities
held by the Fund (or securities having characteristics similar to those held by
the Fund) in order to hedge against an anticipated rise in interest rates that
would adversely affect the value of the Fund's portfolio securities. When
hedging of this character is successful, any depreciation in the value of
portfolio securities may substantially be offset by appreciation in the value of
the futures position.
On other occasions, a Fund may take a "long" position by purchasing
futures on debt securities. This would be done, for example, when the Fund
expects to purchase particular securities when it has the necessary cash, but
expects the rate of return available in the securities markets at that time to
be less favorable than rates currently available in the futures markets. If the
anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Fund of purchasing
the securities may be offset, at least to some extent, by the rise in the value
of the futures position taken in anticipation of the subsequent securities
purchase.
Successful use by a Fund of futures contracts on debt securities is
subject to SCMI's ability to predict correctly movements in the direction of
interest rates and other factors affecting markets for debt securities. For
example, if a Fund has hedged against the possibility of an increase in interest
rates which would adversely affect the market prices of debt securities held by
it and the prices of such securities increase instead, the Fund will lose part
or all of the benefit of the increased value of its securities which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily maintenance margin requirements. The Fund may have
to sell securities at a time when it may be disadvantageous to do so.
A Fund may purchase and write put and call options on certain debt
futures contracts, as they become available. Such options are similar to options
on securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an option of the same series.
There is no guarantee that such closing transactions can be effected. A Fund
will be required to deposit initial margin and maintenance margin with respect
to put and call options on futures contracts written by it pursuant to brokers'
requirements, and, in addition, net option premiums received will be included as
initial margin deposits. See "Margin Payments" below. Compared to the purchase
or sale of futures contracts, the purchase of call or put options on futures
contracts involves less potential risk to a Fund because the maximum amount at
risk is the premium paid for the options plus transactions costs. However, there
may be circumstances when the purchase of call or put options on a futures
contract would result in a loss to a Fund when the purchase or sale of the
futures contracts would not, such as when there is no movement in the prices of
debt securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
INDEX FUTURES CONTRACTS AND OPTIONS. Certain Funds may invest in debt
index futures contracts and stock index futures contracts, and in related
options. A debt index futures contract is a contract to buy or sell units of a
specified debt index at a specified future date at a price agreed upon when the
contract is made. A unit is the current value of the index. Debt index futures
in which the Funds are presently expected to invest are not now available,
although such futures contracts are expected to become available in the future.
A stock index futures contract is a contract to buy or sell units of a stock
index at a specified future date at a price agreed upon when the contract is
made. A unit is the current value of the stock index.
The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index is composed of
100 selected common stocks, most of which are listed on the New York Stock
Exchange. The S&P 100 Index assigns relative weightings to the common stocks
included in the Index, and the Index fluctuates with changes in the market
values of those common stocks. In the case of the S&P 100 Index, contracts are
to buy or sell 100 units. Thus, if the value of the S&P 100 Index were $180, one
contract
6
<PAGE>
would be worth $18,000 (100 units x $180). The stock index futures contract
specifies that no delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the contract price
and the actual level of the stock index at the expiration of the contract. For
example, if a Fund enters into a futures contract to buy 100 units of the S&P
100 Index at a specified future date at a contract price of $180 and the S&P 100
Index is at $184 on that future date, the Fund will gain $400 (100 units x gain
of $4). If the Fund enters into a futures contract to sell 100 units of the
stock index at a specified future date at a contract price of $180 and the S&P
100 Index is at $182 on that future date, the Fund will lose $200 (100 units x
loss of $2).
A Fund may purchase or sell futures contracts with respect to any
securities indexes. Positions in index futures may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
In order to hedge a Fund's investments successfully using futures
contracts and related options, a Fund must invest in futures contracts with
respect to indexes or sub-indexes the movements of which will, in its judgment,
have a significant correlation with movements in the prices of the Fund's
securities.
Options on index futures contracts are similar to options on securities
except that options on index futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the holder would assume the underlying futures
position and would receive a variation margin payment of cash or securities
approximating the increase in the value of the holder's option position. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the difference
between the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
As an alternative to purchasing and selling call and put options on
index futures contracts, each of the Funds that may purchase and sell index
futures contracts may purchase and sell call and put options on the underlying
indexes themselves to the extent that such options are traded on national
securities exchanges. Index options are similar to options on individual
securities in that the purchaser of an index option acquires the right to buy
(in the case of a call) or sell (in the case of a put), and the writer
undertakes the obligation to sell or buy (as the case may be), units of an index
at a stated exercise price during the term of the option. Instead of giving the
right to take or make actual delivery of securities, the holder of an index
option has the right to receive a cash "exercise settlement amount". This amount
is equal to the amount by which the fixed exercise price of the option exceeds
(in the case of a put) or is less than (in the case of a call) the closing value
of the underlying index on the date of the exercise, multiplied by a fixed
"index multiplier".
A Fund may purchase or sell options on stock indices in order to close
out its outstanding positions in options on stock indices which it has
purchased. A Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of
call or put options on an index involves less potential risk to a Fund because
the maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar to
those risks relating to the purchase or sale of index futures contracts.
MARGIN PAYMENTS. When a Fund purchases or sells a futures contract, it
is required to deposit with its custodian an amount of cash, U.S. Treasury
bills, or other permissible collateral equal to a small percentage of the amount
of the futures contract. This amount is known as "initial margin". The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to a Fund upon termination of the contract, assuming a Fund satisfies its
contractual obligations.
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Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market". These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying debt security rises above the delivery price, the Fund's position
declines in value. The Fund then pays the broker a variation margin payment
equal to the difference between the delivery price of the futures contract and
the market price of the securities underlying the futures contract. Conversely,
if the price of the underlying security falls below the delivery price of the
contract, the Fund's futures position increases in value. The broker then must
make a variation margin payment equal to the difference between the delivery
price of the futures contract and the market price of the securities underlying
the futures contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market for such
futures. Although each Fund intends to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange or
board of trade will exist for any particular contract or at any particular time.
If there is not a liquid secondary market at a particular time, it may not be
possible to close a futures position at such time and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event financial futures are used
to hedge portfolio securities, such securities will not generally be sold until
the financial futures can be terminated. In such circumstances, an increase in
the price of the portfolio securities, if any, may partially or completely
offset losses on the financial futures.
In addition to the risks that apply to all options transactions, there
are several special risks relating to options on futures contracts. The ability
to establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
such a market will develop. Although a Fund generally will purchase only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options with the result that a Fund would have to exercise the options
in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by a
Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or movements in the prices of a Fund's securities which are the subject of
a hedge. SCMI will, however, attempt to reduce this risk by purchasing and
selling, to the extent possible, futures contracts and related options on
securities and indexes the movements of which will, in its judgment, correlate
closely with movements in the prices of the underlying securities or index and a
Fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by a Fund for hedging
purposes is also subject to SCMI's ability to predict correctly movements in the
direction of the market. It is possible that, where a Fund has purchased puts on
futures contracts to hedge its portfolio against a decline in the market, the
securities or index on which the puts are purchased may increase in value and
the value of securities held in the portfolio may decline. If this occurred, the
Fund would lose money on the puts and also experience a decline in value in its
portfolio securities. In addition, the prices of futures, for a number of
reasons, may not correlate perfectly with movements in the underlying securities
or index due to certain market distortions. First, all participants in the
futures market are subject to margin deposit requirements. Such requirements may
cause investors to close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying security or index
and futures markets. Second, the margin requirements in the futures markets are
less onerous than margin requirements in the securities markets in general, and
as a result the futures markets may attract more speculators than the
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securities markets do. Increased participation by speculators in the futures
markets may also cause temporary price distortions. Due to the possibility of
price distortion, even a correct forecast of general market trends by SCMI may
still not result in a successful hedging transaction over a very short time
period.
OTHER RISKS. The Funds will incur brokerage fees in connection with
their futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while a Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss.
FORWARD COMMITMENTS
Each Fund may enter into contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward commitments")
if the Fund holds, and maintains until the settlement date in a segregated
account, cash or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the Fund enters into offsetting contracts for the forward
sale of other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the Fund's other assets. Where
such purchases are made through dealers, a Fund relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to the
Fund of an advantageous yield or price.
Although a Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, a Fund may dispose of a commitment prior
to settlement if SCMI deems it appropriate to do so. A Fund may realize
short-term profits or losses upon the sale of forward commitments.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. A repurchase agreement
is a contract under which the Fund acquires a security for a relatively short
period (usually not more than 7 days) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. government or its
agencies or instrumentalities or other high quality short term debt obligations.
Repurchase agreements may also be viewed as loans made by a Fund which are
collateralized by the securities subject to repurchase. SCMI will monitor such
transactions to ensure that the value of the underlying securities will be at
least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, a Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if a Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.
WHEN-ISSUED SECURITIES
Each Fund may from time to time purchase securities on a "when-issued"
basis. Debt securities are often issued on this basis. The price of such
securities, which may be expressed in yield terms, is fixed at the time a
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between purchase and
settlement, no payment is made by a Fund and no interest accrues to the Fund. To
the extent that assets of a Fund are held in cash pending the settlement of a
purchase of securities, that Fund would earn no income. While a Fund
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may sell its right to acquire when-issued securities prior to the settlement
date, a Fund intends actually to acquire such securities unless a sale prior to
settlement appears desirable for investment reasons. At the time a Fund makes
the commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the amount due and the value of the security in
determining the Fund's net asset value. The market value of the when-issued
securities may be more or less than the purchase price payable at the settlement
date. Each Fund will establish a segregated account in which it will maintain
cash and U.S. Government Securities or other high-grade debt obligations at
least equal in value to commitments for when-issued securities. Such segregated
securities either will mature or, if necessary, be sold on or before the
settlement date.
LOANS OF FUND SECURITIES
A Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) a Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund loaned will not at any time exceed
one-third of the total assets of the Fund. In addition, it is anticipated that
the Fund may share with the borrower some of the income received on the
collateral for the loan or that it will be paid a premium for the loan. Before a
Fund enters into a loan, SCMI considers all relevant facts and circumstances
including the creditworthiness of the borrower. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Although voting rights or rights to consent with
respect to the loaned securities pass to the borrower, a Fund retains the right
to call the loans at any time on reasonable notice, and it will do so in order
that the securities may be voted by a Fund if the holders of such securities are
asked to vote upon or consent to matters materially affecting the investment. A
Fund will not lend portfolio securities to borrowers affiliated with a Fund.
FOREIGN SECURITIES
Each Fund may invest in foreign securities and in certificates of
deposit issued by United States branches of foreign banks and foreign branches
of United States banks.
Investments in foreign securities may involve considerations different
from investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment against
a foreign issuer.
In addition, to the extent that any Fund's foreign investments are not
United States dollar-denominated, the Fund may be affected favorably or
unfavorably by changes in currency exchange rates or exchange control
regulations and may incur costs in connection with conversion between
currencies.
In determining whether to invest in securities of foreign issuers, the
investment adviser of a Fund seeking current income will consider the likely
impact of foreign taxes on the net yield available to the Fund and its
shareholders. Income received by a Fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of a Fund's assets to be invested in
various countries is not known, and tax laws and their interpretations may
change from time to time and may change without advance notice. Any such taxes
paid by a Fund will reduce its net income available for distribution to
shareholders.
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FOREIGN CURRENCY TRANSACTIONS
Each Fund may engage in currency exchange transactions to protect
against uncertainty in the level of future foreign currency exchange rates and
to increase current return. A Fund may engage in both "transaction hedging" and
"position hedging."
When it engages in transaction hedging, a Fund enters into foreign
currency transactions with respect to specific receivables or payables of a Fund
generally arising in connection with the purchase or sale of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging a Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
A Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging. A Fund
may also enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes a Fund may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives a Fund the right to assume a short position in the futures contract until
expiration of the option. A put option on currency gives a Fund the right to
sell a currency at an exercise price until the expiration of the option. A call
option on a futures contract gives a Fund the right to assume a long position in
the futures contract until the expiration of the option. A call option on
currency gives a Fund the right to purchase a currency at the exercise price
until the expiration of the option. A Fund will engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in SCMI's opinion, the pricing mechanism and liquidity are
satisfactory and the participants are responsible parties likely to meet their
contractual obligations.
When it engages in position hedging, a Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which securities held by a Fund are denominated or are
quoted in their principal trading markets or an increase in the value of
currency for securities which a Fund expects to purchase. In connection with
position hedging, a Fund may purchase put or call options on foreign currency
and foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. A Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of a
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency a Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities exceeds
the amount of foreign currency a Fund is obligated to deliver.
To offset some of the costs to a Fund of hedging against fluctuations
in currency exchange rates, a Fund may write covered call options on those
currencies.
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Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.
A Fund may also seek to increase its current return by engaging in foreign
currency exchange transactions.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized contract
for the future delivery of a specified amount of a foreign currency at a future
date at a price set at the time of the contract. Foreign currency futures
contracts traded in the United States are designed by and traded on exchanges
regulated by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity date
of a forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a given
month. Forward contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in foreign currency futures contracts and related options may
be closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although a Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate
similarly to options on securities, and are traded primarily in the
over-the-counter market, although options on foreign currencies have recently
been listed on several exchanges. Such options will be purchased or written only
when SCMI believes that a liquid secondary market exists for such options. There
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time. Options on foreign currencies are affected by all
of those factors which influence exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market
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(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the U.S. options
markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should a Fund desire to resell
that currency to the dealer.
ZERO-COUPON SECURITIES
Zero-coupon securities in which a Fund may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity.
Zero-coupon securities usually trade at a deep discount from their face or par
value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest. As a result, the net asset value of shares of a Fund
investing in zero-coupon securities may fluctuate over a greater range than
shares of other Funds of the Trust and other mutual funds investing in
securities making current distributions of interest and having similar
maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-term bonds
or notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on
Treasuries ("CATS"). CATS and TIGRS are not considered U.S. Government
Securities. The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(I.E., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.
In addition, the Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, a Fund will be able to have its beneficial ownership of U.S.
Treasury zero-coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
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SHORT SALES
In a short sale, a Fund sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. A Fund also may
engage in short sales if, at the time of the short sale, it owns or has the
right to obtain, at no additional cost, an equal amount of the security being
sold short. This investment technique is known as a short sale
"against-the-box." In such a short sale, a seller does not immediately deliver
the securities sold and is said to have a short position in those securities
until delivery occurs. If a Fund engages in a short sale, the collateral for the
short position is maintained by the Fund's custodian or a qualified
sub-custodian. While the short sale is open, the Fund maintains in a segregated
account an amount of securities equal in kind and amount to the securities sold
short or securities convertible into or exchangeable for such equivalent
securities. These securities constitute the Fund's long position. The Fund does
not engage in short sales against-the-box for speculative purposes but may,
however, make a short sale as a hedge, when SCMI believes that the price of a
security may decline, causing a decline in the value of a security owned by the
Fund (or a security convertible or exchangeable for such security). There are
certain additional transaction costs associated with short sales
against-the-box, but SCMI endeavors to offset these costs with the income from
the investment of the cash proceeds of short sales. Under the Taxpayer Relief
Act of 1997, activities by the Fund which lock-in gain on an appreciated
financial instrument generally will be treated as a "constructive sale" of such
instrument which will trigger gain (but not loss) for federal income tax
purposes. Such activities may create taxable income in excess of the cash they
generate. For more information regarding the taxation of such activities, see
"Taxation."
ARBITRAGE. International Bond Fund may sell a security in one market
and simultaneously purchase the same security in another market in order to take
advantage of differences in the price of the security in the different markets.
The Fund does not actively engage in arbitrage. Such transactions may be entered
into only with respect to debt securities and will occur only in a dealer's
market where the buying and selling dealers involved confirm their prices to the
Fund at the time of the transaction, thus eliminating any risk to the assets of
the Fund.
SWAP AGREEMENTS. International Bond Fund may enter into interest-rate,
index and currency-exchange rate swap agreements for purposes of attempting to
obtain a particular desired return at a lower cost to the Fund than if the Fund
had invested directly in an instrument that yielded that desired return. Swap
agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments. The gross returns to be exchanged or "swapped"
between the parties are calculated with respect to a "notional amount" (I.E.,
the return on or increase in value of a particular dollar amount invested at a
particular interest rate, in a particular foreign currency or in a "basket" of
securities representing a particular index). Commonly used swap agreements
include interest-rate caps, under which, in return for a premium, one party
agrees to make payments to the other to the extent that interest rates exceed a
specified rate, or "cap"; interest-rate floors, under which, in return for a
premium, one party agrees to make payments to the other to the extent that
interest rates fall below a specified level, or "floor"; and interest-rate
collars, under which a party sells a cap and purchases a floor or vice versa in
an attempt to protect itself against interest rate movements exceeding given
minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictive basis on
which to calculate the obligations that the parties to a swap agreement have
agreed to exchange. Most swap agreements entered into by the Fund would
calculate the obligations of the parties to the agreement on a "net" basis.
Consequently, the Fund's obligations (or rights) under a swap agreement are
generally equal only to the net amount to be paid or received under the
agreement based on the relative values of the positions held by each party to
the agreement (the "net amount"). The Fund's obligations under a swap agreement
will be accrued daily (offset against any amounts owing to the Fund) and any
accrued but unpaid net amounts owed to a swap counterparty will be covered by
maintaining a segregated account comprised of Segregable Assets to avoid any
potential leveraging of the Fund's investment portfolio. The Fund will not enter
into a swap agreement with any single party if the net amount owed or to be
received under existing contracts with that party would exceed 5% of the Fund's
assets.
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Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA. To qualify for this exemption, a swap
agreement must be entered into by "eligible participants," which includes the
following, provided the participants' total assets exceed established levels: a
bank or trust company, savings association or credit union, insurance company,
investment company subject to regulation under the 1940 Act, commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employee benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through a
multilateral transaction execution facility.
This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy
Statement applies to swap transactions settled in cash that: (1) have
individually tailored terms; (2) lack exchange style offset and the use of a
clearing organization or margin system; (3) are undertaken in conjunction with a
line of business; and (4) are not marketed to the public.
DEPOSITARY RECEIPTS. A Fund may invest in American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs"), and other similar instruments providing
for indirect investment in securities of foreign issuers. Due to the absence of
established securities markets in certain foreign countries and restrictions in
certain countries on direct investment by foreign entities, a Fund may invest in
certain issuers through the purchase of sponsored and unsponsored ADRs or other
similar securities, such as American Depositary Shares, Global Depositary Shares
of International Depositary Receipts. ADRs are receipts typically issued by U.S.
banks evidencing ownership of the underlying securities into which they are
convertible. These securities may or may not be denominated in the same currency
as the underlying securities. Unsponsored ADRs may be created without the
participation of the foreign issuer. Holders of unsponsored ADRs generally bear
all the costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights.
INVESTMENT RESTRICTIONS
These restrictions, unless otherwise indicated, are all fundamental
policies of each Fund and cannot be changed without the affirmative vote of a
majority of the outstanding shares of each Fund, which is defined in the 1940
Act as the affirmative vote of the holders of the lesser of: (1) 67% or more of
the shares present at a meeting of shareholders, if the holders of more than 50%
of the outstanding shares are represented at the meeting in person or by proxy;
or (2) more than 50% of the outstanding shares. The fundamental restrictions are
set forth below for each of the Funds.
SCHRODER INTERNATIONAL FUND
Under the additional restrictions set forth below, Schroder
International Fund will not:
FUNDAMENTAL POLICIES:
1. Invest more than 5% of its assets in the securities of any single
issuer. This restriction does not apply to securities issued by the
U.S. Government, its agencies or instrumentalities;
2. Purchase more than 10% of the voting securities of any one issuer;
3. Invest more than 10% of its assets in "illiquid securities"
(Securities that cannot be disposed of within seven days at their then
current value). For purposes of this limitation, "illiquid securities"
includes, except in those circumstances described below: (1)
"restricted securities", which are securities that cannot be resold to
the public without registration under federal securities law; and (2)
securities of issuers (together with all predecessors) having a record
of less than three years of continuous operation;
4. Invest 25% or more of the value of its total assets in any one
industry;
5. Borrow money, except from banks for temporary emergency purposes, and
then only in an amount not exceeding 5% of the value of the total
assets of the Portfolio;
6. Pledge, mortgage or hypothecate its assets to an extent greater than
10% of the value of its total assets;
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7. Purchase securities on margin or sell short;
8. Make investments for the purpose of exercising control or management;
9. Purchase or sell real estate (provided that the Portfolio may invest
in securities issued by companies that invest in real estate or
interests therein);
10. Make loans to other persons (provided that for purposes of this
restriction, entering into repurchase agreements, acquiring corporate
debt securities and investing in U.S. Government obligations,
short-term commercial paper, certificates of deposit and bankers'
acceptances shall not be deemed to be the making of a loan);
11. Invest in commodities; commodity contracts other than foreign currency
forward contracts; or oil, gas and other mineral resource, lease, or
arbitrage transactions.
12. Write, purchase or sell options, puts, calls, straddles, spreads, or
combinations thereof.
13. Underwrite securities issued by other persons (except to the extent
that, in connection with the disposition of its portfolio investments,
it may be deemed to be an underwriter under U.S. securities laws);
14. Invest in warrants, valued at the lower of cost or market, to more
than 5% of the value of the Portfolio's net assets. Included within
that amount, but not to exceed 2% of the value of the Portfolio's net
assets, may be warrants that are not listed on the New York or
American Stock Exchange. Warrants acquired by the Portfolio in units
or attached to securities may be deemed to be without value;
15. Purchase more than 3% of the outstanding securities of any closed-end
investment company. Any such purchase of securities issued by a
closed-end investment company will otherwise be made in full
compliance with Sections 12(d)(1)(a)(i), (ii) and (iii) of the
Investment Company Act of 1940 (the "1940 Act").
NON-FUNDAMENTAL POLICY:
Schroder International Fund will not invest in restricted securities. This
policy does not include restricted securities eligible for resale to qualified
institutional purchasers pursuant to Rule 144A under the Securities Act of 1933
that are determined to be liquid by SCMI pursuant to guidelines adopted by the
Board of Trustees of Schroder Capital Funds. Such guidelines take into account
trading activity for such securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in
particular Rule 144A securities, these securities may be illiquid.
SCHRODER EMERGING MARKETS FUND
Under the additional restrictions set forth below, Schroder Emerging
Markets Fund will not:
FUNDAMENTAL POLICIES:
1. INDUSTRY CONCENTRATION
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. For purposes of this limitation, there is no limit
on: (1) investments in U.S. government securities, in
repurchase agreements covering U.S. government securities, in
securities issued by the states, territories or possessions of
the United States ("municipal securities") or in foreign
government securities; or (2) investment in issuers domiciled
in a single jurisdiction. Notwithstanding anything to the
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contrary, to the extent permitted by the 1940 Act, the Fund
may invest in one or more investment companies; provided that,
except to the extent the it invests in other investment
companies pursuant to Section 12(d)(1)(A) of the 1940 Act, the
Fund treats the assets of the investment companies in which it
invests as its own for purposes of this policy.
2. BORROWING
borrow money if, as a result, outstanding borrowings would
exceed an amount equal to one third of the Fund's total
assets.
3. REAL ESTATE
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).
4. LENDING
make loans to other parties. For purposes of this limitation,
entering into repurchase agreements, lending securities and
acquiring any debt security are not deemed to be the making of
loans.
5. COMMODITIES
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).
6. UNDERWRITING
underwrite (as that term is defined in the Securities Act of
1933, as amended) securities issued by other persons except,
to the extent that in connection with the disposition of its
assets, the Fund may be deemed to be an underwriter.
7. SENIOR SECURITIES
issue any class of senior securities except to the extent
consistent with the 1940 Act.
NONFUNDAMENTAL POLICIES
Schroder Emerging Markets Fund has adopted the following nonfundamental
investment limitations. A nonfundamental policy does not override a fundamental
limitation. The policies of the Portfolio may be changed by the Board of
Trustees of Schroder Capital Funds without approval of its interestholders or
Fund shareholders.
1. DIVERSIFICATION
The Fund is "non-diversified" as that term is defined in the
1940 Act. To the extent required to qualify as a regulated
investment company under the Code, the Fund may not purchase a
security (other than a U.S. government security or a security
of an investment company) if, as a result: (1) with respect to
50% of its assets, more than 5% of the Fund's total assets
would be invested in the securities of any single issuer; (2)
with respect to 50% of its assets, the Fund would own more
than 10% of the outstanding securities of any single issuer;
or (3) more than 25% of the Fund's total assets would be
invested in the securities of any single issuer.
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2. BORROWING
for purposes of the limitation on borrowing, the following
are not treated as borrowings to the extent they are fully
collateralized: (1) the delayed delivery of purchased
securities (such as the purchase of when-issued securities);
(2) reverse repurchase agreements; (3) dollar-roll
transactions; and (5) the lending of securities ("leverage
transactions"). (See Fundamental Limitation No. 2
"Borrowing.")
3. LIQUIDITY
invest more than 15% of its net assets in: (1) securities that
cannot be disposed of within seven days at their then-current
value; (2) repurchase agreements not entitling the holder to
payment of principal within seven days; and (3) securities
subject to restrictions on the sale of the securities to the
public without registration under the 1933 Act ("restricted
securities") that are not readily marketable. The Fund may
treat certain restricted securities as liquid pursuant to
guidelines adopted by the Board of Trustees of the Trust or
the Board of Schroder Capital Funds, as the case may be.
4. EXERCISING CONTROL OF ISSUERS
make investments for the purpose of exercising control of an
issuer. Investments by the Fund in entities created under the
laws of foreign countries solely to facilitate investment in
securities in that country will not be deemed the making of
investments for the purpose of exercising control.
5. OTHER INVESTMENT COMPANIES
invest in securities of another investment company, except to
the extent permitted by the 1940 Act.
6. SHORT SALES AND PURCHASING ON MARGIN
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.
purchase securities on margin, except that the Fund may use
short-term credit for the clearance of its portfolio's
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.
7. LENDING
lend a security if, as a result, the amount of loaned
securities would exceed an amount equal to one third of the
Fund's total assets.
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
Under the additional restrictions set forth below, Schroder
International Smaller Companies Fund will not:
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FUNDAMENTAL POLICIES:
1. The Fund may not, with respect to 75% of its assets, purchase a
security other than a security issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or a security of an
investment company if, as a result, more than 5% of the Fund's
total assets would be invested in the securities of a single
issuer or the Fund would own more than 10% of the outstanding
voting securities of any single issuer.
2. The Fund may not concentrate investments in any particular
industry; therefore, the Fund will not purchase the securities of
companies in any one industry if, thereafter, 25% or more of the
Fund's total assets would consist of securities of companies in
that industry. This restriction does not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. An investment of more than 25% of the Fund's
assets in the securities of issuers located in one country does
not contravene this policy.
3. The Fund may not borrow money in excess of 331/3% of its total
assets taken at market value (including the amount borrowed) and
then only from a bank as a temporary measure for extraordinary or
emergency purposes, including to meet redemptions or to settle
securities transactions that may otherwise require untimely
dispositions of portfolio securities.
4. The Fund may not purchase or sell real estate, provided that the
Fund may invest in securities issued by companies which invest in
real estate or interests therein.
5. The Fund may not make loans to other persons, provided that for
purposes of this restriction, entering into repurchase agreements
or acquiring any otherwise permissible debt securities or engaging
in securities loans shall not be deemed to be the making of a
loan.
6. The Fund may not invest in commodities or commodity contracts
other than forward foreign currency exchange contracts.
7. The Fund may not underwrite securities issued by other persons
except to the extent that, in connection with the disposition of
its portfolio investments, it may be deemed to be an underwriter
under U.S. securities laws.
8. The Fund may not issue senior securities except to the extent
permitted by the 1940 Act.
Except for the policies on borrowing and illiquid securities, the percentage
restrictions described above apply only at the time of investment and require no
action by the Fund as a result of subsequent changes in value of the investments
or the size of the Fund.
SCHRODER INTERNATIONAL BOND FUND
Under the additional restrictions set forth below, Schroder
International Bond Fund will not:
FUNDAMENTAL POLICIES:
1. The Fund may not concentrate investments in any particular
industry; therefore, the Fund will not purchase the securities of
companies in any one industry if, thereafter, 25% or more of the
Fund's total assets would consist of securities of companies in
that industry. This restriction does not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (or repurchase agreements with respect thereto).
An investment of more than 25% of the Fund's assets in the
securities of issuers located in one country does not contravene
this policy.
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2. The Fund may not borrow money in excess of 33-1/3% of its total
assets taken at market value (including the amount borrowed) and
then only from a bank as a temporary measure for extraordinary or
emergency purposes, including to meet redemptions or to settle
securities transactions that may otherwise require untimely
dispositions of portfolio securities.
3. The Fund may not purchase or sell real estate, provided that the
Fund may invest in securities issued by companies that invest in
real estate or interests therein.
4. The Fund may not make loans to other persons, provided that for
purposes of this restriction, entering into repurchase agreements
or acquiring any otherwise permissible debt securities including
engaging in securities lending shall not be deemed to be the
making of a loan.
5. The Fund may not invest in commodities or commodity contracts,
except that, subject to the restrictions described in the
Prospectus and elsewhere in this SAI, the Fund may: (1) enter into
futures contracts and options on futures contracts; (2) enter into
foreign forward currency exchange contracts and foreign currency
options; (3) purchase or sell currencies on a spot or forward
basis; and (4) may enter into futures contracts on securities,
currencies or on indices of such securities or currencies, or any
other financial instruments, and may purchase and sell options on
such futures contracts.
6. The Fund may not underwrite securities issued by other persons
except to the extent that, in connection with the disposition of
its portfolio investments, it may be deemed to be an underwriter
under U.S. securities laws.
7. The Fund may not issue senior securities except to the extent
permitted by the 1940 Act.
NON-FUNDAMENTAL POLICIES:
1. The Fund may not acquire securities or invest in repurchase
agreements with respect to any securities if, as a result, more
than 15% of its net assets (taken at current value) would be
invested in illiquid securities (securities that cannot be
disposed of within seven days at their then-current value),
including repurchase agreements not entitling the holder to
payment of principal within seven days and securities that are
not readily marketable by virtue of restrictions on the sale of
such securities to the public without registration under the
Securities Act of 1933, as amended ("Restricted Securities").
Illiquid securities do not include securities that can be sold to
the public in foreign markets or that may be eligible for resale
to qualified institutional purchasers pursuant to Rule 144A under
the Securities Act of 1933 that are determined to be liquid by
the investment adviser pursuant to guidelines adopted by the
Trust's Board of Trustees.
2. The Fund may not make investments for the purpose of exercising
control or management, except in connection with a merger,
consolidation, acquisition, or reorganization with another
investment company or series thereof. (Investments by the Fund in
wholly owned investment entities created under the laws of certain
foreign countries will not be deemed the making of investments for
the purpose of exercising control or management.)
3. The Fund may not invest in interests in oil, gas or other mineral
exploration, resource, or lease transactions or development
programs but may purchase readily marketable securities of
companies that operate, invest in, or sponsor such programs.
4. The Fund may acquire or retain the securities of any other
investment company to the extent permitted by the 1940 Act,
including in connection with a merger, consolidation, acquisition,
or reorganization.
Except for the policies on borrowing and illiquid securities, the percentage
restrictions described above apply only at the time of investment and require no
action by the Fund as a result of subsequent changes in value of the investments
or the size of the Fund.
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SCHRODER U.S. EQUITY FUND
Under the additional restrictions set forth below, Schroder U.S. Equity
Fund will not:
FUNDAMENTAL POLICIES:
1. Will not issue senior securities except that: (1) it may borrow
money from a bank on its promissory Fund's total assets after the
borrowing; (2) if at any time it exceeded such one-third
limitation, the Fund would within three days thereafter (not
including Sundays or holidays) or such longer period as the
Securities and Exchange Commission may prescribe by rules and
regulations, reduce its borrowings to the limitation; and (3)
might or might not be secured and, if secured, all or any part of
the Fund's assets could be pledged. To comply with such
limitations, the Fund might be required to dispose of certain
assets when it might be disadvantageous to do so. Any such
borrowings would be subject to Federal Reserve Board regulations.
(As a non-fundamental policy, the Fund does not borrow for
investment purposes.)
2. Will not effect short sales, purchase any security on margin or
write or purchase put and call options.
3. Will not acquire more than 10% of the voting securities of any
one issuer.
4. Will not invest 25% or more of the value of its total assets in
any one industry.
5. Will not engage in the purchase and sale of illiquid interests in
real estate, including illiquid interests in real estate
investment trusts.
6. Will not engage in the purchase and sale of commodities or
commodity contracts.
7. Will not invest in companies for the purpose of exercising
control or management.
8. Will not underwrite securities of other issuers, except that the
Fund may acquire portfolio securities, not in excess of 10% of
the value of its total assets, under circumstances where if sold
it might be deemed to be an underwriter for the purposes of the
Securities Act of 1933.
9. Will not make loans to other persons except that it may purchase
evidences of indebtedness of a type distributed privately to
financial institutions but not in excess of 10% of the value of
its total assets.
10. Will not acquire securities described in 8 and 9 above which in
the aggregate exceed 10% of the value of the Fund's total assets.
11. Will not invest in other investment companies.
NON-FUNDAMENTAL POLICIES:
Schroder U.S. Equity Fund: (1) will not invest more than 10% of its
total assets in illiquid securities, including securities described in items 8
and 9 above and repurchase agreements maturing more than seven days; and (2)
will not engage in writing, buying or selling of stock index futures, options on
stock index futures, financial futures contracts or options thereon.
SCHRODER U.S. SMALLER COMPANIES FUND
Under the additional restrictions set forth below, Schroder U.S. Smaller
Companies Fund will not:
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FUNDAMENTAL POLICIES:
1. Underwrite securities of other companies (except insofar as the Fund
might be deemed to be an underwriter in the resale of any securities
held in its portfolio);
2. Invest in commodities or commodity contracts (other than Hedging
Instruments, which it may use as permitted by any of its other
fundamental policies, whether or not any such Hedging Instrument is
considered to be a commodity or a commodity contract);
3. Purchase securities on margin; however, the Fund may make margin
deposits in connection with any Hedging Instruments, which it may use
as permitted by any of its other fundamental policies;
4. Purchase or write puts or calls except as permitted by any of its other
fundamental policies;
5. Lend money except in connection with the acquisition of that portion of
publicly-distributed debt securities which the Fund's investment
policies and restrictions permit it to purchase (see "Investment
Objective" and "Investment Policies" in the Prospectus); the Fund may
also make loans of portfolio securities (see "Loans of Portfolio
Securities") and enter into repurchase agreements (see "Repurchase
Agreements");
6. Pledge, mortgage or hypothecate its assets to an extent greater than
10% of the value of the total assets of the Fund; however, this does
not prohibit the escrow arrangements contemplated by the put and call
activities of the Fund or other collateral or margin arrangements in
connection with any of the Hedging Instruments, which it may use as
permitted by any of its other fundamental policies;
7. Invest in companies for the purpose of acquiring control or management
thereof;
8. Invest in interests in oil, gas or other mineral exploration or
development programs (but may purchase readily marketable securities of
companies which operate, invest in, or sponsor such programs); or
9. Invest in real estate or in interests in real estate, but may purchase
readily marketable securities of companies holding real estate or
interests therein.
SCHRODER MICRO CAP FUND
FUNDAMENTAL POLICIES:
Under the additional restrictions set forth below, Schroder Micro Cap
Fund will not:
1. Underwrite securities of other companies (except insofar as the Fund
might be deemed to be an underwriter in the resale of any securities
held in its portfolio);
2. Invest in commodities or commodity contracts (other than Hedging
Instruments, which it may use as permitted by any of its other
fundamental policies, whether or not any such Hedging Instrument is
considered to be a commodity or a commodity contract);
3. Purchase securities on margin; however, the Fund may make margin
deposits in connection with any Hedging Instruments, which it may use
as permitted by any of its other fundamental policies;
4. Purchase or write puts or calls except as permitted by any of its other
fundamental policies;
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5. Lend money except in connection with the acquisition of that portion of
publicly-distributed debt securities that the Fund's investment
policies and restrictions permit it to purchase (see "Investment
Objective" and "Investment Policies" in the Prospectus); the Fund may
also make loans of portfolio securities (see "Loans of Portfolio
Securities") and enter into repurchase agreements (see "Repurchase
Agreements");
6. Pledge, mortgage or hypothecate its assets to an extent greater than
10% of the value of the total assets of the Fund; however, this does
not prohibit the escrow arrangements contemplated by the put and call
activities of the Fund or other collateral or margin arrangements in
connection with any of the Hedging Instruments, which it may use as
permitted by any of its other fundamental policies;
7. Invest in companies for the purpose of acquiring control or management
thereof, except that the Fund may invest in other investment companies
to the extent permitted under the 1940 Act or by rule or exemption
thereunder.
8. Invest in interests in oil, gas or other mineral exploration or
development programs (but may purchase readily marketable securities of
companies which operate, invest in, or sponsor such programs); or
9. Invest in real estate or in interests in real estate, but may purchase
readily marketable securities of companies holding real estate or
interests therein.
MANAGEMENT
OFFICERS AND TRUSTEES. The following information relates to the
principal occupations during the past five years of each Trustee and executive
officer of the Trust and shows the nature of any affiliation with SCMI. Except
as noted, each of these individuals currently serves in the same capacity for
Schroder Capital Funds, Schroder Capital Funds II and Schroder Series Trust,
other registered investment companies in the Schroder family of funds.
PETER E. GUERNSEY, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Insurance Consultant since August 1986; prior thereto
Senior Vice President, Marsh & McLennan, Inc., insurance brokers.
JOHN I. HOWELL, 80, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Private Consultant since February 1987; Honorary Director,
American International Group, Inc.; Director, American International Life
Assurance Company of New York.
CLARENCE F. MICHALIS, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Chairman of the Board of Directors, Josiah Macy, Jr.
Foundation (charitable foundation).
HERMANN C. SCHWAB, 77, c/o the Trust, Two Portland Square, Portland, Maine -
Chairman and Trustee of the Trust; retired since March, 1988; prior thereto,
consultant to SCMI since February 1, 1984.
HON. DAVID N. DINKINS, 69, c/o the Trust, Two Portland Square, Portland, Maine,
Trustee of the Trust; Professor, Columbia University School of International and
Public Affairs; Director, American Stock Exchange, Carver Federal Savings Bank,
Transderm Laboratory Corporation, and The Cosmetic Center, Inc.; formerly,
Mayor, The City of New York.
PETER S. KNIGHT, 46, c/o the Trust, Two Portland Square, Portland, Maine,
Trustee of the Trust; Partner, Wunder, Knight, Levine, Thelen & Forcey;
Director, Comsat Corp., Medicis Pharmaceutical Corp., and Whitman Education
Group Inc., Formerly, Campaign Manager, Clinton/Gore `96.
SHARON L. HAUGH*, 51, 787 Seventh Avenue, New York, New York, Trustee of the
Trust; Chairman, Schroder Capital Management Inc. ("SCM"), Executive Vice
President and Director, SCMI; Chairman and Director, Schroder Advisors.
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MARK J. SMITH*, 35, 33 Gutter Lane, London, England - President and Trustee of
the Trust; Senior Vice President and Director of SCMI since April 1990; Director
and Senior Vice President, Schroder Advisors.
MARK ASTLEY, 33, 787 Seventh Avenue, New York, New York - Vice President of the
Trust; First Vice President of SCMI, prior thereto, employed by various
affiliates of SCMI in various positions in the investment research and portfolio
management areas since 1987.
ROBERT G. DAVY, 36, 787 Seventh Avenue, New York, New York - 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 SCMI in various positions in the investment
research and portfolio management areas since 1986.
MARGARET H. DOUGLAS-HAMILTON, 55, 787 Seventh Avenue, New York, New York - Vice
President of the Trust; Secretary of SCM since July 1995; Senior Vice President
(since April 1997) and General Counsel of Schroders U.S. Holdings Inc. since May
1987; prior thereto, partner of Sullivan & Worcester, a law firm.
RICHARD R. FOULKES, 51, 787 Seventh Avenue, New York, New York - 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.
FERGAL CASSIDY, 28, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust.
JOHN Y. KEFFER, 54, Two Portland Square, Portland, Maine - Vice President of the
Trust; President of FFC, the Fund's transfer and dividend disbursing agent and
other affiliated entities including Forum Financial Services, Inc., Forum
Administrative Services, LLC, and Forum Advisors, Inc.
JANE P. LUCAS, 35, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director and Senior Vice President SCMI; Director of SCM since
September 1995; Director of Schroder Advisors since September 1996; Assistant
Director Schroder Investment Management Ltd. since June 1991.
CATHERINE A. MAZZA, 37, 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.
MICHAEL PERELSTEIN, 41, 787 Seventh Avenue, New York, New York - Vice President
of the Trust; Director since May 1997 and Senior Vice President of SCMI since
January 1997; prior thereto, Managing Director of MacKay - Shields Financial
Corp.
ALEXANDRA POE, 37, 787 Seventh Avenue, New York, New York - Secretary and Vice
President of the Trust; Vice President of SCMI since August 1996; Fund Counsel
and Senior Vice President of Schroder Advisors since August 1996; Secretary of
Schroder Advisors; prior thereto, an investment management attorney with Gordon
Altman Butowsky Weitzen Shalov & Wein since July 1994; prior thereto counsel and
Vice President of Citibank, N.A. since 1989.
THOMAS G. SHEEHAN, 42, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Relationship Manager and
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, 36, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Group Vice President of SCMI since April 1993, employed in various
positions in the investment research and portfolio management areas since 1987;
Director of SCM since April 1997.
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JOHN A. TROIANO, 38, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director of SCM since April 1997; Chief Executive Officer, since July
1, 1997, of SCMI and Managing Director and Senior Vice President of SCMI since
October 1995; prior thereto, employed by various affiliates of SCMI in various
positions in the investment research and portfolio management areas since 1981.
IRA L. UNSCHULD, 31, 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.
CATHERINE S. WOOLEDGE, 55, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Counsel, Forum Financial
Services, Inc. since November 1996. Prior thereto, associate at Morrison &
Foerster, Washington, D.C. from October 1994 to November 1996, associate
corporate counsel at Franklin Resources, Inc. from September 1993 to September
1994, and prior thereto associate at Drinker Biddle & Reath, Philadelphia, PA.
* Interested Trustee of the Trust within the meaning of the 1940 Act.
Schroder Advisors is a wholly owned subsidiary of SCMI, which is a wholly
owned subsidiary of Schroders U.S. Holdings Inc., which in turn is an indirect,
wholly owned U.S. subsidiary of Schroders plc. SCM is also a wholly owned
subsidiary of Schroders U.S. Holdings Inc..
Officers and Trustees who are interested persons of the Trust receive
no salary, fees or compensation from the Fund. Independent Trustees of the Trust
receive an annual retainer of $11,000 and additional fees of $1,250 per meeting
attended in person or $500 per meeting attended by telephone. Members of an
Audit Committee for one or more of the investment companies receive an
additional $1,000 per year. Payment of the annual retainer is allocated among
the various investment companies based on their relative net assets. Payment of
meeting fees is allocated only among those investment companies to which the
meeting relates. None of the registered investment companies in the Fund Complex
has any bonus, profit sharing, pension or retirement plans.
The following table provides the fees paid to each independent Trustee
of the Trust for certain funds' fiscal year ended December 31, 1997.
<TABLE>
<S> <C> <C> <C> <C>
Pension or Total
Retirement Compensation From
Aggregate Benefits Accrued Estimated Annual Trust And Fund
Compensation From As Part of Trust Benefits Upon Complex Paid To
Name of Trustee Trust Expenses Retirement Trustees
- -------------------------------- -------------------- -------------------- --------------------- -------------------
Mr. Guernsey $1,365.30 $0 $0 $ 3,983.42
Mr. Howell $1,365.30 $0 $0 $14,983.42
Mr. Michalis $ 865.30 $0 $0 $ 2,483.42
Mr. Schwab $2,365.30 $0 $0 $ 7,983.42
Mr. Dinkins $ 0.00 $0 $0 $11,000.00
Mr. Knight $ 365.30 $0 $0 $11,983.42
</TABLE>
* In addition to the Trust, the "Fund Complex" includes three other registered
investment companies (Schroder Capital Funds II, an open-end company; Schroder
Capital Funds, an open-end company; and Schroder Series Trust, an open-end
company) for which SCMI serves as investment adviser for each series.
As of January 30, 1998, the officers and Trustees of the Trust owned,
in the aggregate, less than 1% of the Trust's outstanding shares. Mr. Ira
Unschuld, principal advisor with regard to Micro Cap Fund, held 8.63% of the
Investor Shares of that Fund, as set forth in Table 4 of APPENDIX B.
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<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Table 5 in APPENDIX B to this SAI sets forth certain information with
regard to the holders of more than 5% of the beneficial interests in each Fund,
together with information regarding the holders of more than 25% of the
beneficial interests in each Fund.
INVESTMENT ADVISER
SCMI, 787 Seventh Avenue, New York, New York 10019, serves as
investment adviser to each Portfolio under an investment advisory agreement
between Schroder Core and SCMI (the "Core Advisory Agreement"). SCMI is a wholly
owned U.S. subsidiary of Schroders U.S. Holdings Inc., the wholly owned U.S.
holding company subsidiary of Schroders plc. Schroders plc is the holding
company parent of a large worldwide group of banks and financial service
companies (referred to as the "Schroder Group"), with associated companies and
branch and representative offices in eighteen countries. The Schroder Group
specializes in providing investment management services, with funds under
management currently in excess of $175 billion as of September 30, 1997.
Under the Advisory Agreements, SCMI is responsible for managing the
investment program for each Fund or Portfolio. In this regard, it is SCMI's
responsibility to make decisions relating to the portfolio investments and to
place purchase and sale orders regarding such investments with brokers or
dealers it selects. SCMI also furnishes Schroder Core Board and the Trust Board
with periodic reports on the investment performance of the Portfolios and the
Funds.
Under the terms of the Advisory Agreements, SCMI is required to manage
the investment portfolios in accordance with applicable laws and regulations. In
making its investment decisions, SCMI does not use material inside information
that may be in its possession or in the possession of its affiliates.
Each Fund (other than U.S. Equity Fund and Micro Cap Fund) currently
invests all of its assets in a Portfolio. As long as a Fund remains completely
invested in a Portfolio (or any other investment company), SCMI is not entitled
to receive an investment advisory fee with respect to the Fund. A Fund may
withdraw its investment from a Portfolio at any time if the Trust Board
determines that it is in the best interests of the Fund and its shareholders to
do so. Accordingly, the Trust retains SCMI as investment adviser to manage a
Fund's assets in the event a Fund so withdraws its investment. The investment
advisory agreement between the Trust and SCMI with respect to the Funds is the
same in all material respects as the Investment Advisory Agreement with respect
to the Portfolios (except as to the parties, the fees and the circumstances
under which fees will be paid, and the jurisdiction whose laws govern the
agreement). During a time that a Fund did not have substantially all of its
assets invested in a Portfolio or another investment company, for providing
investment advisory services under the investment advisory agreement for the
Fund, SCMI would be entitled to receive advisory fees monthly at the following
annual rates (based on the assets of each Fund taken separately): SCHRODER
INTERNATIONAL FUND -- 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; SCHRODER EMERGING
MARKETS FUND -- 1.00% of the Fund's average daily net assets; SCHRODER
INTERNATIONAL SMALLER COMPANIES FUND -- 0.75% of the Fund's average daily net
assets; SCHRODER INTERNATIONAL BOND PORTFOLIO -- 0.50% of the Fund's average
daily net assets; and SCHRODER U.S. SMALLER COMPANIES FUND -- 0.50% of the first
$100 million of the Fund's average daily net assets, 0.40% of the next $150
million of average net assets and 0.35% of average daily net assets in excess of
$250 million.
Table 1 in APPENDIX B shows the dollar amount of the advisory fees
payable had certain waivers not been in place, together with the dollar amount
of investment advisory fees waived, and the dollar amount of net fees paid. The
percentage amounts of the advisory fees are set forth in the Prospectus. This
information is provided for the past three years (or such shorter terms as a
Fund has been operational).
Each Fund Advisory Agreement continues in effect provided such
continuance is approved annually: (1) by the holders of a majority of the
outstanding voting securities of the Funds or by the Board; and, in either case,
(2) by a majority of the Trustees who are not parties to the Agreement or
"interested persons" (as defined in the 1940 Act) of any such party. Each Fund
Advisory Agreement may be terminated without penalty by vote of the Trustees or
the Fund's shareholders on 60 days' written notice to the investment adviser, or
by the investment adviser on 60 days' written notice to the Trust, and it
terminates automatically if assigned. Each Fund's Advisory Agreement also
provides that, with respect to the Funds, neither SCMI nor its personnel shall
be liable for any error of judgment or mistake of law or for any act or omission
in the performance of duties to either Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of any obligations and duties under the Agreement.
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<PAGE>
ADMINISTRATIVE SERVICES
On behalf of each Fund, the Trust has entered into an Administration
Agreement with Schroder Advisors, under which Schroder Advisors provides
management and administrative services necessary for the operation of each Fund,
including: (1) preparation of shareholder reports and communications; (2)
regulatory compliance, such as reports to and filings with the SEC and state
securities commissions; and (3) general supervision of the operation of each
Fund, including coordination of the services performed by each Fund's investment
adviser, transfer agent, custodian, independent accountants, legal counsel and
others. Schroder Advisors is a wholly owned subsidiary of SCMI and is a
registered broker-dealer organized to act as administrator and distributor of
mutual funds.
For providing administrative services Schroder Advisors is entitled to
receive from the Funds a fee, payable monthly, at the annual rate set out in the
Prospectus as to each Fund's average daily net assets. The Administration
Agreement is terminable with respect to each Fund without penalty, at any time,
by the Trust Board, upon 60 days' written notice to Schroder Advisors or by
Schroder Advisors upon 60 days' written notice to the Trust.
The Trust has entered into a Subadministration Agreement with FAdS.
Under its Agreement, FAdS assists Schroder Advisors with certain of its
responsibilities under the Administration Agreement, including shareholder
reporting and regulatory compliance. For providing its services, FAdS is
entitled to receive a monthly fee from each Fund at the annual rate set out in
the Prospectus as to the Fund's average daily net assets. The Subadministration
Agreement is terminable with respect to each Fund without penalty, at any time,
by the Trust Board, upon 60 days' written notice to FAdS or by FAdS upon 60
days' written notice to the Fund.
Schroder Advisors and FAdS provide similar services to the Portfolios
pursuant to administration and subadministration agreements between Schroder
Core and each of these entities, for which Schroder Advisors and FAdS are each
compensated at the annual rate set out in the Prospectus as to each Portfolio's
average daily net assets. The administration and subadministration agreements
with regard to the Portfolios are the same in all material respects as the
Funds' respective agreements (except as to the parties, the circumstances under
which the fees will be paid, and the fees payable thereunder).
The fees paid by the Funds and Portfolios to SCMI and Schroder Advisors
may equal up the totals set forth in the Prospectus as to each 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 Funds.
Table 2 in APPENDIX B shows the Administration Fees and
Subadministration Fees payable by each Fund had certain waivers not been in
place, together with the dollar amount of such fees waived and the dollar amount
of net fees paid by each Fund. This information is provided for the past three
years (or such shorter time as a Fund has been operational).
DISTRIBUTION OF FUND SHARES
Schroder Advisors, 787 Seventh Avenue, New York, New York 10019, serves
as Distributor of Fund shares under a Distribution Agreement. Schroder Advisors
is a wholly owned subsidiary of Schroders U.S. Holdings Inc., the parent company
of SCMI, and is a registered broker-dealer organized to act as administrator
and/or distributor of mutual funds.
Under the Distribution Agreement, Schroder Advisors has agreed to use
its best efforts to secure purchases of Fund shares in jurisdictions in which
such shares may be legally offered for sale. Schroder Advisors is not obligated
to sell any specific amount of Fund shares. Further, Schroder Advisors has
agreed in the Distribution Agreement to serve without compensation and to pay
from its own resources all costs and expenses incident to the sale and
distribution of Fund shares including expenses for printing and distributing
prospectuses and other sales
27
<PAGE>
materials to prospective investors, advertising expenses, and the salaries and
expenses of its employees or agents in connection with the distribution of Fund
shares.
Under a Distribution Plan (the "Plan") adopted by the Trust with
respect to Advisor 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 "1934 Act") (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 that Fund's average daily net
assets) for: (1) advertising expenses including advertising by radio,
television, newspapers, magazines, brochures, sales literature or direct mail;
(2) costs of printing prospectuses and other materials to be given or sent to
prospective investors; (3) 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 (4) payments to
broker-dealers (other than the Distributor) or other organizations 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. The
maximum annual amount currently payable under the Plan is 0.25%, but no payments
may be made under the Plan until the Trust Board so authorizes. Any payment made
pursuant to the Plan is contingent upon the Trust Board's approval. The Fund is
not liable for distribution expenditures of the Distributor in any given year in
excess of the maximum amount (0.50% per annum of the 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
series 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 series of
the Trust. The Trust Board has concluded that there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders.
Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act. Without shareholder approval, the Plan may not be amended to increase
materially the costs that any Fund may bear. Other material amendments to the
Plan must be approved by the Trust , 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 (the "disinterested Trustees"), 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 disinterested Trustees. The Plan has been approved, and is subject to annual
approval, by the Trust Board and by the disinterested Trustees, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The Plan is
terminable with respect to a Fund at any time by a vote of a majority of the
disinterested Trustees or by vote of the holders of a majority of the shares of
the Fund. During the periods ended October 31, 1997, neither Fund had any shares
outstanding and, therefore, neither accrued nor paid any dollars under the Plan.
SHAREHOLDER SERVICE PLAN AND SERVICE ORGANIZATIONS
Under the Shareholder Service Plan approved by the Trust for the Funds'
Advisor Shares, the Trust may also contract with banks, trust companies,
broker-dealers or other financial organizations ("Service Organizations") to
provide certain administrative services for shareholders of the Funds' Advisor
Shares. The Funds may pay fees (which may 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 Funds' Advisor Shares owned by shareholders
with whom the Service Organization has a servicing relationship. Services
provided by Service Organizations may include: (1) providing personnel and
facilities necessary to establish and maintain certain shareholder accounts and
records; (2) assisting in processing purchase, exchange and redemption
transactions; (3) arranging for the wiring of funds or transmitting and
receiving funds in connection with client orders to purchase or redeem shares;
(4) verifying and guaranteeing client signatures in connection with redemption
orders, transfers among, and changes in client-designated accounts; (5)
providing periodic statements of a client's account balances and, to the extent
practicable, integrating such information with other client transactions; (6)
furnishing periodic and annual statements and confirmations of all purchases and
redemptions of shares in a client's account; (7) transmitting proxy statements,
annual reports, and updating prospectuses and other communications from the Fund
to clients; and (8) 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 Funds have no intention o
28
<PAGE>
making any such payments to Service Organizations with respect to accounts of
institutional investors and, in any event, would make no such payments until the
Trust Board specifically so authorizes.
Some Service Organizations may impose additional or different conditions
on their clients, such as requiring them to invest more than the minimum
investments specified by the Funds 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 Funds. Each Service Organization agrees 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.
FUND ACCOUNTING
Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of
Forum, performs fund accounting services for each Fund pursuant to an agreement
with the Trust. The Accounting Agreement is terminable with respect to each Fund
without penalty, at any time, by the Trust Board upon 60 days' written notice to
Forum Accounting or by Forum Accounting upon 60 days' written notice to the
Trust.
Under its agreement, Forum Accounting prepares and maintains the books
and records of each Fund that are required to be maintained under the 1940 Act,
calculates the net asset value per share of each Fund, calculates dividends and
capital-gain distributions, and prepares periodic reports to shareholders and
the SEC. For its services to each Fund, Forum Accounting is entitled to receive
from the Trust a fee of $36,000 per year plus $12,000 per year for each class of
each Fund above one. Forum Accounting is entitled to an additional $24,000 per
year with respect to global and international funds. In addition, Forum
Accounting also is entitled to an additional $12,000 per year with respect to
tax-free money market funds, funds with more than 25% of their total assets
invested in asset-backed securities, funds that have more than 100 security
positions, or funds that have a monthly portfolio turnover rate of 10% or
greater.
Forum Accounting is required to use its best judgment and efforts in
rendering fund accounting services and is not liable to the Trust for any action
or inaction in the absence of bad faith, willful misconduct or gross negligence.
Forum Accounting is not responsible or liable for any failure or delay in
performance of its fund accounting obligations arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control. The
Trust has agreed to indemnify and hold harmless Forum Accounting and its
employees, agents, officers and directors against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, counsel fees and all other expenses arising out of or in any way
related to Forum Accounting's actions taken or failures to act with respect to a
Fund or based, if applicable, upon information, instructions or requests with
respect to a Fund given or made to Forum Accounting by an officer of the Trust
duly authorized. This indemnification does not apply to Forum Accounting's
actions taken or failures to act in cases of Forum Accounting's own bad faith,
willful misconduct or gross negligence.
Table 3 in APPENDIX B shows the dollar amount of fees paid for
accounting services by the Funds and the Portfolios. This information is
provided for the past three years (or such shorter time a Fund has been
operational).
29
<PAGE>
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Investment decisions for the Funds or the Portfolios and for SCMI's
other investment advisory clients are made with a view to achieving their
respective investment objectives. Investment decisions are the product of many
factors in addition to basic suitability for the particular client involved, and
a particular security may be bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In some instances, one client
may sell a particular security to another client. It also sometimes happens that
two or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as is possible,
averaged as to price and allocated between such clients in a manner that, in
SCMI's opinion, is equitable to each and in accordance with the amount being
purchased or sold by each. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse effect on
other clients. Each Portfolio's portfolio transaction costs are borne pro rata
by its investors, including the Fund that invests in it.
BROKERAGE AND RESEARCH SERVICES
Transactions on U.S. stock exchanges and other agency transactions
involve the payment of negotiated brokerage commissions. Such commissions vary
among brokers. Also, a particular broker may charge different commissions
according to the difficulty and size of the transaction; for example,
transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the U.S. Since
most brokerage transactions for a Fund are placed with foreign broker-dealers,
certain portfolio transaction costs for a Fund may be higher than fees for
similar transactions executed on U.S. securities exchanges. However, SCMI seeks
to achieve the best net results in effecting its portfolio transactions. There
is generally less governmental supervision and regulation of foreign stock
exchanges and brokers than in the U.S. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid includes a disclosed, fixed commission or
discount retained by the underwriter or dealer.
Each Fund's Advisory Agreement and the Core Advisory Agreements
authorize and direct SCMI to place orders for the purchase and sale of a Fund's
or a Portfolio's investments with brokers or dealers it selects and to seek
"best execution" of such portfolio transactions. SCMI places all such orders for
the purchase and sale of portfolio securities and buys and sells securities
through a substantial number of brokers and dealers. In so doing, SCMI uses its
best efforts to obtain the most favorable price and execution available. A Fund
or a Portfolio may, however, pay higher than the lowest available commission
rates when SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
transaction. In seeking the most favorable price and execution, SCMI considers
all factors it deems relevant (including price, transaction size, the nature of
the market for the security, the commission amount, the timing of the
transaction (taking into account market prices and trends), the reputation,
experience and financial stability of the broker-dealers involved, and the
quality of service rendered by the broker-dealers in other transactions).
Historically, investment advisers, including advisers of investment
companies and other institutional investors, have received research services
from broker-dealers that execute portfolio transactions for the advisers'
clients. Consistent with this practice, SCMI may receive research services from
broker-dealers with which it places portfolio transactions. These services,
which in some cases may also be purchased for cash, include such items as
general economic and security market reviews, industry and company reviews,
evaluations of securities and recommendations as to the purchase and sale of
securities. Some of these services are of value to SCMI in advising various of
its clients (including a Fund or a Portfolio), although not all of these
services are necessarily useful and of value in managing a Fund or a Portfolio.
The investment advisory fee paid by a Fund or a Portfolio is not reduced because
SCMI and its affiliates receive such services.
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<PAGE>
As permitted by Section 28(e) of the 1934 Act, SCMI may cause a Fund or
a Portfolio to pay a broker-dealer that provides SCMI with "brokerage and
research services" (as defined in the 1934 Act) an amount of disclosed
commission for effecting a securities transaction in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
In addition, although it does not do so currently SCMI may allocate brokerage
transactions to broker-dealers who have entered into arrangements under which
the broker-dealer allocates a portion of the commissions paid by a Fund or a
Portfolio toward payment of Fund or Portfolio expenses, such as custodian fees.
Subject to the general policies of a Fund or a Portfolio regarding
allocation of portfolio brokerage as set forth above, the Core Board has
authorized SCMI to employ: (1) Schroder & Co. Inc., an affiliate of SCMI, to
effect securities transactions of a Fund or a Portfolio on the New York Stock
Exchange only; and (2) Schroder Securities Limited and its affiliates
(collectively, "Schroder Securities"), affiliates of SCMI, to effect securities
transactions of a Fund or a Portfolio on various foreign securities exchanges on
which Schroder Securities has trading privileges, provided certain other
conditions are satisfied as described below.
Payment of brokerage commissions to Schroder & Co. Inc. or Schroder
Securities for effecting such transactions is subject to Section 17(e) of the
1940 Act, which requires, among other things, that commissions for transactions
on a securities exchange paid by a registered investment company to a broker
that is an affiliated person of such investment company (or an affiliated person
of another person so affiliated) not exceed the usual and customary broker's
commissions for such transactions. It is the policy of each Fund and of each
Portfolio that commissions paid to Schroder & Co. Inc. or Schroder Securities
will, in SCMI's opinion, be: (1) at least as favorable as commissions
contemporaneously charged by Schroder & Co. Inc. or Schroder Securities, as the
case may be, on comparable transactions for their most favored unaffiliated
customers; and (2) at least as favorable as those which would be charged on
comparable transactions by other qualified brokers having comparable execution
capability. The Trust Board and Core Board, including a majority of the
respective non-interested Trustees, have each adopted procedures pursuant to
Rule 17e-1 under the 1940 Act to ensure that commissions paid to Schroder & Co.
Inc. or Schroder Securities by a Fund or a Portfolio satisfy the foregoing
standards. Such procedures are reviewed periodically by the applicable Board,
including a majority of the non-interested Trustees. Each Board also reviews all
transactions at least quarterly for compliance with such procedures.
It is further a policy of the Funds and the Portfolios that all such
transactions effected by Schroder & Co. Inc. on the New York Stock Exchange be
in accordance with Rule 11a2-2(T) promulgated under the 1934 Act, which requires
in substance that a member of such exchange not associated with Schroder & Co.
Inc. actually execute the transaction on the exchange floor or through the
exchange facilities. Thus, while Schroder & Co. Inc. will bear responsibility
for determining important elements of execution such as timing and order size,
another firm will actually execute the transaction.
Schroder & Co. Inc. pays a portion of the brokerage commissions it receives
from a Fund or a Portfolio to the brokers executing the transactions on the New
York Stock Exchange. In accordance with Rule 11a2-2(T), Schroder Core has
entered into an agreement with Schroder & Co. Inc. permitting it to retain a
portion of the brokerage commissions paid to it by a Fund or a Portfolio. Each
Board, including a majority of the non-interested Trustees, has approved this
agreement.
None of the Funds or the Portfolios has any understanding or arrangement to
direct any specific portion of its brokerage to Schroder & Co. Inc. or Schroder
Securities, and none will direct brokerage to Schroder & Co. Inc. or Schroder
Securities in recognition of research services.
From time to time, a Fund or a Portfolio may purchase securities of a
broker or dealer through which it regularly engages in securities transactions.
See Table 5 in APPENDIX B to this SAI for information regarding the
payment of brokerage commissions.
31
<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DETERMINATION OF NET ASSET VALUE PER SHARE
The net asset value per share of each class of a Fund is determined as
of the close of trading on the New York Stock Exchange each day that the
Exchange is open. Any assets or liabilities initially expressed in terms of
non-U.S. dollar currencies are translated into U.S. dollars at the prevailing
market rates as quoted by one or more banks or dealers on the afternoon of
valuation. The Exchange's most recent holiday schedule (which is subject to
change) states that it will close on New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Board has established procedures for the valuation of a Fund's
securities: (1) equity securities listed or traded on the New York or American
Stock Exchange or other domestic or foreign stock exchange are valued at their
latest sale prices on such exchange that day prior to the time when assets are
valued; in the absence of sales that day, such securities are valued at the
mid-market prices (in cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by the Portfolio's investment adviser); (2) unlisted equity securities
for which over-the-counter market quotations are readily available are valued at
the latest available mid-market prices prior to the time of valuation; (3)
securities (including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures; (4) debt
securities having a maturity in excess of 60 days are valued at the mid-market
prices determined by a portfolio pricing service or obtained from active market
makers on the basis of reasonable inquiry; and (5) short-term debt securities
(having a remaining maturity of 60 days or less) are valued at cost, adjusted
for amortization of premiums and accretion of discount.
When an option is written, an amount equal to the premium received is
recorded in the books as an asset, and an equivalent deferred credit is recorded
as a liability. The deferred credit is adjusted ("marked-to-market") to reflect
the current market value of the option. Options are valued at their mid-market
prices in the case of exchange-traded options or, in the case of options traded
in the over-the-counter market, the average of the last bid price as obtained
from two or more dealers unless there is only one dealer, in which case that
dealer's price is used. Futures contracts and related options are stated at
market value.
REDEMPTIONS IN-KIND
In the event that payment for redeemed shares is made wholly or partly
in portfolio securities, shareholders may incur brokerage costs in converting
the securities to cash. An in-kind distribution of portfolio securities is
generally less liquid than cash. The shareholder may have difficulty finding a
buyer for portfolio securities received in payment for redeemed shares.
Portfolio securities may decline in value between the time of receipt by the
shareholder and conversion to cash. A redemption in-kind of portfolio securities
could result in a less diversified portfolio of investments for a Fund and could
affect adversely the liquidity of its investment portfolio.
TAXATION
Under the Internal Revenue Code of 1986, as amended (the "Code"), each
Fund and each other series established from time to time by the Trust Board is
treated as a separate taxpayer for federal income tax purposes with the result
that: (1) each such series must meet separately the income and distribution
requirements for qualification as a regulated investment company; and (2) the
amounts of investment income and capital gain earned are determined on a
series-by-series (rather than on a Trust-wide) basis.
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code each year so long as such qualification is in the best
interests of its shareholders. To do so, each Fund intends to distribute to
shareholders at least 90% of its "investment company taxable income" as defined
in the Code (which includes, among other items, dividends, interest and the
excess of any net short-term capital gain over net long-term capital loss), and
to meet certain diversification of assets, source of income, and other
requirements of the Code. By so doing, each Fund will not be subject to federal
income tax on its investment company taxable income and "net
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capital gain" (the excess of net long-term capital gain over net short-term
capital loss) distributed to shareholders. If a 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, each Fund must distribute for each calendar year an amount
equal to the sum of: (1) at least 98% of its ordinary income (excluding any
capital gain or loss) for the calendar year; (2) at least 98% of the excess of
its capital gain over capital loss realized during the one-year period ending
October 31 of such year; and (3) all such ordinary income and capital gain for
previous years that were not distributed during such years. A distribution will
be treated as paid during the calendar year if it is declared by a Fund in
October, November or December of the year with a record date in such month and
paid by the Fund during January of the following year. Such distributions will
be taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Distributions of investment company taxable income (including net
realized short-term capital gain) are taxable to shareholders as ordinary
income. Generally, it is not expected that such distributions will be eligible
for the dividends received deduction available to corporations.
Distributions of net long-term capital gain are taxable to shareholders
as long-term capital gain, regardless of the length of time Fund shares have
been held by a shareholder and are not eligible for the dividends received
deduction. Such distributions will qualify for the new reduced rates for capital
gains on assets held for more than 18 months to the extent they represent gains
on the sale of such assets. A loss realized by a shareholder on the sale of Fund
shares held for six months or less with respect to which capital-gain
distributions have been paid will, to the extent of such capital-gain
distributions, be treated as long-term capital loss. Further, a loss realized on
a disposition will be disallowed to the extent the shares disposed of are
replaced (whether by reinvestment or distribution or otherwise) within a period
of 61 days beginning 30 days before and ending 30 days after the shares are
disposed of. In such a case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss.
All distributions to shareholders are taxable whether reinvested in
additional shares or received in cash. Shareholders that reinvest distributions
will have for federal income tax purposes a cost basis in each share received
equal to the net asset value of a share of 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 that Fund's
shares. If a distribution reduces the net asset value below a shareholder's cost
basis, such distribution nevertheless would be taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution, which will be returned to the investor
in the form of a taxable distribution.
Upon redemption or sale of shares, a shareholder will realize a taxable
gain or loss, which will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands. Such gain or loss generally will be
long-term or short-term depending upon the shareholder's holding period for the
shares, and generally will qualify for the new reduced rates for capital gains
if the shares have been held for more than 18 months.
Ordinary income dividends paid to Fund shareholders who are nonresident
aliens are subject to a 30% U.S. withholding tax under existing provisions of
the Code applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
Nonresident shareholders are urged to consult their own tax advisors concerning
the applicability of the U.S. withholding tax.
Dividends and interest received (and, in certain circumstances,
realized capital gain) by a 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 a Fund's
total assets at the close of its taxable year consists of stock or securities of
foreign corporations, that Fund will be eligible, and ordinarily expects,
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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. Each Fund will report annually to
its shareholders the amount per share of such withholding taxes.
Due to investment laws in certain emerging market countries, it is
anticipated that a Fund's investments in equity securities in such countries
will consist primarily of shares of investment companies (or similar investment
entities) organized under foreign law or of ownership interests in special
accounts, trusts or partnerships. If a Fund purchases shares of an investment
company (or similar investment entity) organized under foreign law, that Fund
will be treated as owning shares in a passive foreign investment company
("PFIC") for U.S. federal income tax purposes. A Fund may be subject to U.S.
federal income tax, and an additional tax in the nature of interest, on a
portion of distributions from such company and on gain from the disposition of
such shares (collectively referred to as "excess distributions"), even if such
excess distributions are paid by that Fund as a dividend to its shareholders.
Each Fund may make an election with respect to a PFIC in which it owns
shares to mark such shares to the market annually or to treat the PFIC as a
"qualified electing fund" that will allow it to avoid the taxes on excess
distributions. However, such election may cause a Fund to recognize income in a
particular year in excess of the distributions received from such PFICs.
If a Fund engages in hedging transactions, including hedging
transactions in options, futures contracts, and straddles, or other similar
transactions, it will be subject to special tax rules (including constructive
sale, mark-to-market, straddle, wash sale, and short sale rules), the effect of
which may be to accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These rules could
therefore affect the amount, timing and character of distributions to
shareholders. Each Fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best interests of the
Fund.
Certain of a Fund's hedging activities (including its transactions, if
any, in foreign currencies or foreign currency-denominated instruments) are
likely to produce a difference between its book income and its taxable income.
If a Fund's book income exceeds its taxable income, the distribution (if any) of
such excess will be treated as: (1) a dividend to the extent of the Fund's
remaining earnings and profits (including earnings and profits arising from
tax-exempt income); (2) thereafter as a return of capital to the extent of the
recipient's basis in the shares; and (3) thereafter as gain from the sale or
exchange of a capital asset. If a Fund's book income is less than its taxable
income, the Fund could be required to make distributions exceeding book income
to qualify as a regulated investment company that is accorded special tax
treatment.
In general, gain from "foreign currencies" and from foreign currency
options, foreign currency futures contracts and forward foreign exchange
contracts relating to investments in stock, securities or foreign currencies
will be qualifying income for purposes of determining whether a Fund qualifies
as a regulated investment company. It is currently unclear, however, who will be
treated as the issuer of a foreign currency instrument or how foreign currency
options, futures contracts or forward foreign currency contracts will be valued
for purposes of the regulated investment company diversification requirements
applicable to each Fund.
A Fund's transactions in foreign currencies, foreign
currency-denominated debt securities and certain foreign currency options,
futures contracts and forward contracts (and similar instruments) may give rise
to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned.
Certain a Fund's investments, including assets "marked to the market"
for federal income tax purposes and debt obligations issued or purchased at a
discount, will create taxable income in excess of the cash they generate. In
such cases, a Fund may be required to sell assets (including when it is not
advantageous to do so) to generate the
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cash necessary to distribute as dividends to its shareholders all of its income
and gains and therefore to eliminate any tax liability at the Fund level.
Pursuant to the 1997 Act, new "constructive sale" provisions apply to
activities by a Fund which lock-in gain on an "appreciated financial position."
Generally, a "position" is defined to include stock, a debt instrument, or
partnership interest, or an interest in any of the foregoing, including through
a short sale, a swap contract, or a future or forward contract. Under the 1997
Act, the entry into a short sale, a swap contract or a future or forward
contract relating to an appreciated direct position in any stock or debt
instrument, or the acquisition of stock or debt instrument at a time when a Fund
occupies an offsetting (short) appreciated position in the stock or debt
instrument, is treated as a "constructive sale" that gives rise to the immediate
recognition of gain (but not loss). The application of these new provisions may
cause a Fund to recognize taxable income from these offsetting transactions in
excess of the cash generated by such activities.
The Trust is 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 it 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 IRS recently revised its regulations affecting the application to
foreign investors of the "back-up withholding" and withholding tax rules
described above. The new regulations will generally be effective for payments
made on or after January 1, 1999 (although transition rules will apply). In some
circumstances, the new rules will increase the certification and filing
requirements imposed on foreign investors in order to qualify for exemption from
the 31% back-up withholding tax and for reduced withholding tax rates under
income tax treaties. Foreign investors in each Fund should consult their tax
advisors with respect to the potential application of these new regulations.
The income tax and estate tax consequences to a non-U.S. shareholder
entitled to claim the benefits of an applicable tax treaty may be different from
those described herein. Non-U.S. shareholders may be required to provide
appropriate documentation to establish their entitlement to the benefits of such
a treaty.
Non-U.S. shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in shares of
a Fund.
The foregoing discussion relates only to federal income tax law as
applicable to U.S. persons (I.E., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). Distributions by a Fund also
may be subject to foreign, state and local taxes, and their treatment under
foreign, state and local income tax laws may differ from the federal income tax
treatment. Shareholders should consult their tax advisors with respect to
particular questions of federal, foreign, state and local taxation.
OTHER INFORMATION
FUND STRUCTURE
CLASSES OF SHARES. Each Fund except Micro Cap Fund has two classes of
shares, Investor Shares and Advisor Shares. Advisor Shares are offered by a
separate prospectus to individual investors, in most cases through service
organizations. Advisor Shares incur more expenses but have lower investment
minimums than Investor Shares. Except for certain class differences, each share
of each class represents an undivided, proportionate interest
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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 differs between the classes.
Information about the other class of shares is available from the Trust by
calling Schroder Advisors at 1-800-730-2932.
THE PORTFOLIOS. Each of the Funds (except U.S. Equity Fund and Micro
Cap Fund) seeks to achieve its investment objective by investing all of its
investable assets in a Portfolio that has the same investment objective and
substantially similar policies as those of the Fund. Accordingly, the Portfolio
directly acquires its own securities, and the Fund acquires an indirect interest
in those securities. Schroder International Bond Portfolio is a separate series
of Schroder Capital Funds II, a business trust organized under the laws of the
state of Delaware in December, 1996 ("Schroder Core II"). Each other Portfolio
in which a Fund invests is a separate series of Schroder Core, a business trust
organized under the laws of the State of Delaware in September 1995. Schroder
Core is registered under the 1940 Act as an open-end, management investment
company and currently has eleven separate series. Schroder Core II is similarly
registered and currently has one series. The assets of each Portfolio belong
only to, and the liabilities of each Portfolio are borne solely by, that
Portfolio and no other portfolio of Schroder Core or Schroder Core II.
Each Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. The Portfolio may permit other investment
companies or other qualified investors to invest in it. All other investors in
the Portfolio will invest on the same terms and conditions as the Fund and will
pay a proportionate share of the Portfolio's expenses.
A Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in a Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On most issues
subject to a vote of investors, as permitted under the 1940 Act and other
applicable law, the Board may solicit proxies from the Fund's shareholders and
vote the Fund's interest in a Portfolio based upon the vote of its shareholders
or the Board may determine to vote the Fund's interests in a Portfolio in the
same proportion as the vote of all other interestholders in the Portfolio. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders would
receive a majority of votes cast by all investors in the Portfolio; indeed, if
other investors hold a majority interest in the Portfolio, they could have
voting control of the Portfolio.
The Portfolios do not sell their shares directly to members of the
general public. Another investor in a 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 offering price as a Fund and could have
different fees and expenses than the Fund. Therefore, Fund shareholders may have
different returns than shareholders in another investment company that invests
exclusively in a Portfolio. There is currently no such other investment company
that offers its shares to members of the general public. Information regarding
any such funds in the future is available from Schroder Capital Funds (the
"Core") or Schroder Core II by calling Forum Shareholder Services, LLC at
1-800-730-2932.
Under federal securities law, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. Schroder Core, Schroder Core II,
their trustees and certain of their officers are required to sign the
registration statement and amendments thereto of the Trust and may be required
to sign the registration statements of certain other investors in a Portfolio.
In addition, under federal securities law, Schroder Core or Schroder Core II may
be liable for misstatements or omissions of a material fact in any proxy
soliciting material of a publicly offered investor in Schroder Core or Schroder
Core II, including a Fund. Each investor in a Portfolio, including the Trust,
has agreed to indemnify Schroder Core or Schroder Core II and its Trustees and
officers ("Schroder Core Indemnitees") against certain claims.
Indemnified claims are those brought against Schroder Core Indemnitees
based on a misstatement or omission of a material fact in the investor's
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Core and was supplied to the investor by Schroder Core or Schroder Core
II. Similarly, Schroder Core or Schroder Core II will indemnify each investor in
a Portfolio, including the Fund, for any claims brought against the investor
with respect
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to the investor's registration statement or proxy materials, to the extent the
claim is based on a misstatement or omission of a material fact relating to
information about Schroder Core or Schroder Core II that is supplied to the
investor by Schroder Core or Schroder Core II. In addition, each registered
investment company investor in the Portfolio will indemnify each Schroder Core
Indemnitee against any claim based on a misstatement or omission of a material
fact relating to information about a series of the registered investment company
that did not invest in the Schroder Core or Schroder Core II. The purpose of
these cross-indemnity provisions is principally to limit the liability of
Schroder Core or Schroder Core II to information that it knows or should know
and can control. With respect to other prospectuses and other offering documents
and proxy materials of investors in Schroder Core or Schroder Core II, its
liability is similarly limited to information about and supplied by it.
CERTAIN RISKS OF INVESTING IN THE PORTFOLIOS. A Fund's investment in a
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if a Portfolio had a large investor other than
the Fund that redeemed its interest in the Portfolio, the Portfolio's remaining
investors (including the Fund) might, as a result, experience higher pro rata
operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from a Portfolio at any time,
if the Trust Board determines that it is in the best interests of the Fund and
its shareholders to do so. A Fund might withdraw, for example, if there were
other investors in the Portfolio with power to, and who did by a vote of the
shareholders of all investors (including the Fund), change the investment
objective or policies of the Portfolio in a manner not acceptable to the Trust
Board. A withdrawal could result in a distribution in kind of portfolio
securities (as opposed to a cash distribution) by the Portfolio. That
distribution could result in a less diversified portfolio of investments for the
Fund and could affect adversely the liquidity of the Fund's portfolio. If the
Fund decided to convert those securities to cash, it would likely incur
brokerage fees or other transaction costs. If the Fund withdrew its investment
from the Portfolio, the Trust Board would consider appropriate alternatives,
including the management of the Fund's assets in accordance with its investment
objective and policies by SCMI or the investment of all of the Fund's investable
assets in another pooled investment entity having substantially the same
investment objective as the Fund. The inability of the Fund to find a suitable
replacement investment, if the Board decided not to permit SCMI to manage the
Fund's assets, could have a significant impact on shareholders of the Fund.
Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
ORGANIZATION OF THE TRUST
The Trust was organized as a Maryland corporation on July 30, 1969;
reorganized on February 29, 1988 as Schroder Capital Funds, Inc.; and
reorganized on January 9, 1996, as a Delaware business trust. The Trust is
registered as an open-end management investment company under the 1940 Act.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. Securities regulators of some states, however, have
indicated that they and the courts in their state may decline to apply Delaware
law on this point. To guard against this risk, the Trust Instrument contains an
express disclaimer of shareholder liability for the debts, liabilities,
obligations, and expenses of the Trust. The Trust Instrument provides for
indemnification out of each series' property of any shareholder or former
shareholder held personally liable for the obligations of the series. The Trust
Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply (or no contractual limitation
of liability was in effect) and the series is unable to meet its obligations.
Schroder believes that, in view of the above, there is no risk of personal
liability to shareholders.
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CAPITALIZATION AND VOTING
The Trust has authorized an unlimited number of shares of beneficial
interest. The Trust Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate series (such as the
Funds) and may divide series into classes of shares, and the costs of doing so
may be borne by a series or a class or the Trust in accordance with the Trust
Instrument. The Trust currently consists of nine series. Each series offers two
classes of shares, Investor Shares and Advisor Shares except for Schroder Micro
Cap Fund, which has authorized only Investor Shares..
When issued for the consideration described in the relevant Prospectus
or under the dividend reinvestment plan, shares are fully paid, nonassessable,
and have no preferences as to conversion, exchange, dividends, retirement or
other features. Shares have no preemptive rights and have non-cumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so.
Each shareholder of record is entitled to one vote for each full share held (and
a fractional vote for each fractional share held).
The Trust does not hold annual meetings of shareholders. The matters
considered at an annual meeting typically include the reelection of Trustees,
approval of an investment advisory agreement, and the ratification of the
selection of independent accountants. These matters are not submitted to
shareholders unless a meeting of shareholders is held for some other reason,
such as those indicated below. Each Trustee serves until death, resignation or
removal. Vacancies are filled by the remaining Trustees, subject to the
provisions of the 1940 Act requiring a meeting of shareholders for election of
Trustees to fill vacancies. Similarly, the selection of independent accountants
and renewal of investment advisory agreements for future years is performed
annually by the Trust Board. Future shareholder meetings will be held to elect
Trustees if required by the 1940 Act, to obtain shareholder approval of changes
in fundamental investment policies, to obtain shareholder approval of material
changes in investment advisory agreements, to select new independent accountants
if the employment of the Trust's independent accountants has been terminated,
and to seek any other shareholder approval required under the 1940 Act. The
Trust Board has the power to call a meeting of shareholders at any time when it
believes it is necessary or appropriate.
In addition to the foregoing rights, the Trust Instrument provides that
holders of at least two-thirds of the outstanding shares of the Trust may remove
any person serving as a Trustee at any meeting of the shareholders.
PERFORMANCE INFORMATION
Performance quotations of the average annual total return and
cumulative total return of a Fund is provided in advertisements or reports to
shareholders or prospective investors.
Quotations of average annual total return are expressed in terms of the
average annual compounded rate of return of a hypothetical investment in a fund
or class over periods of 1, 5 and 10 years (or since commencement of operations
if any of these periods are not available), calculated pursuant to the following
formula:
P (1+T)n = 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 reflect the deduction of fund and any class expenses (net
of any reimbursed expenses) on an annual basis and generally assume that all
dividends and distributions, when paid, are reinvested in shares of the same
class.
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Quotations of cumulative total return reflect only the performance of a
hypothetical investment in a fund or a class during the particular time period
shown. Cumulative total returns vary based on changes in market conditions and
the level of a fund's and any applicable class's expenses, and no reported
performance figure should be considered an indication of performance which may
be expected in the future.
In communications to current or prospective shareholders, performance
figures such as cumulative total return, also may be compared with the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indexes that may assume reinvestment of dividends but generally do not
reflect deductions for administrative and management costs.
Investors who purchase and redeem shares through a customer account
maintained at a financial institution or a Service Organization may be charged
one or more of the following types of fees as agreed upon by the financial
institution or Service Organization and the investor, with respect to the
customer services provided: (1) account fees (a fixed amount per month or per
year); (2) transaction fees (a fixed amount per transaction processed); (3)
compensating balance requirements (a minimum dollar amount a customer must
maintain in order to obtain the services offered); or (4) 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 have the effect of reducing
the average annual or cumulative total returns for those investors.
For information regarding performance data as for the relevant period
for each of the Funds, see APPENDIX A.
PRINCIPAL SHAREHOLDERS
For information regarding Principal Shareholders of each Fund, see
Table 4 in APPENDIX B.
CUSTODIAN
The Chase Manhattan Bank, through its Global Custody Division located
in London, England, acts as custodian of the Funds' and the Portfolios' assets
but plays no role in making decisions as to the purchase or sale of portfolio
securities for the Funds or the Portfolios. Pursuant to rules adopted under the
1940 Act, a Portfolio may maintain its foreign securities and cash in the
custody of certain eligible foreign banks and securities depositories. Selection
of these foreign custodial institutions is made currently by the Core Trust
Board following a consideration of a number of factors, including (but not
limited to) the reliability and financial stability of the institution; the
ability of the institution to perform capably custodial services for the
Portfolio; the reputation of the institution in its national market; the
political and economic stability of the country in which the institution is
located; and further risks of potential nationalization or expropriation of
Portfolio assets.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC, Two Portland Square, Portland, Maine
04101, acts as the Funds' transfer agent and dividend disbursing agent.
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
serves as counsel to the Trust.
INDEPENDENT ACCOUNTANT
Coopers & Lybrand L.L.P. serves as independent accountants for the Trust.
Coopers & Lybrand L.L.P. provides audit services and consultation in connection
with review of U.S. SEC filings. Their address is One Post Office Square,
Boston, Massachusetts 02109.
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YEAR 2000 DISCLOSURE
The Funds receive services from the investment advisor, administrators,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the Year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. Schroder
Advisors is taking steps that it believes are reasonably designed to address
this potential "Year 2000" problem and to obtain satisfactory assurances that
comparable steps are being taken by each of the Funds' other major service
providers. There can be no assurance, however, that these steps will be
sufficient to avoid any adverse impact on the Funds from this problem.
REGISTRATION STATEMENT
This SAI and each Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC under the
Securities Act of 1933 with respect to the securities offered hereby, certain
portions of which have been omitted pursuant to the rules and regulations of the
SEC. The registration statement, including the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C.
Statements contained herein and in each 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.
FINANCIAL STATEMENTS
The fiscal year end of Schroder International Fund, Schroder International
Smaller Companies Fund, and Schroder U.S. Equity Fund is October 31. The fiscal
year end of Schroder International Bond Fund is December 31. The fiscal year end
of Schroder Emerging Markets Fund, Schroder U.S. Smaller Companies Fund, and
Schroder Micro Cap Fund is May 31.
Financial statements for each Fund's semi-annual period and fiscal year
will be distributed to shareholders of record. The Board in the future may
change the fiscal year end of a Fund.
The following financial statements are incoporated by reference into this
SAI:
Audited financial statements for the fiscal year ended October 31, 1997
including Schedule of Investments, Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, Financial
Highlights, Notes to Financial Statements and Report of Independent
Accountants for Schroder International Fund, Schroder International
Smaller Companies Fund, Schroder U.S. Equity Fund and Schroder Emerging
Markets Fund Institutional Portfolio (Annual Reports filed via EDGAR on
January 6, 1998 and January 9, 1998, accession numbers
0000889812-98-000006, 000889812-98-000005, 000889812-98-000004 and
0001004402-98-000018, respectively).
Unaudited financial statements for the period ended November 30, 1997
including Schedule of Investments (Schroder Micro Cap Fund only),
Statement of Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets, Financial Highlights, Notes to Financial
Statements (unaudited) and Supplemental Information (unaudited) for
Schroder U.S. Smaller Companies Fund and Schroder Micro Cap Fund
(Semi-Annual Reports filed via EDGAR on January 29, 1998 and February
5, 1998, accession numbers 0001004402-98-000066 and
0000889812-98-000163 respectively).
40
<PAGE>
APPENDIX A
PERFORMANCE INFORMATION
The average annual return of each of International Fund, International
Smaller Companies Fund, and U.S. Equity Fund for the period ended October 31,
1997 is shown below. The average annual return for International bond Fund,
based on the performance of International Bond Portfolio, for the period ended
December 31, 1997, is shown below. The average annual return for U.S. Smaller
Companies Fund for the period ended May 31, 1997 is shown below. The average
return for Micro Cap Fund for the period ended November 30, 1997 is shown below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR SINCE
ONE THREE YEAR ONE THREE FIVE TEN INCEPTION
MONTHS MONTHS TO DATE YEAR YEARS YEARS YEARS ANNUALIZED
------ ------ ------- ---- ----- ----- ----- ----------
SCHRODER INTERNATIONAL
FUND
Investor Shares (6.80%) (10.43%) 4.55% 8.33% 6.58% 13.36% 9.83% 11.89%
SCHRODER EMERGING MARKETS
FUND
Investor Shares N/A N/A N/A N/A N/A N/A N/A N/A
SCHRODER INTERNATIONAL
SMALLER COMPANIES FUND
Investor Shares (3.56)% (7.24%) (7.73%) 0.00% 0.00% 0.00% 0.00%
SCHRODER INTERNATIONAL
BOND FUND
Investor Shares N/A N/A N/A N/A N/A N/A N/A N/A
SCHRODER U.S. EQUITY FUND
Investor Shares (2.49%) (4.29%) 17.34% 26.49% 21.14% 15.79% 14.95% 11.28%
SCHRODER U.S. SMALLER
COMPANIES FUND
Investor Shares 11.71% 8.09% 10.04% 21.39% 27.40% 0.00% 0.00% 24.91%
Advisor Shares 11.73% 7.99% 36.38% 0.00% 0.00% 0.00% 0.00% 27.23%
SCHRODER MICRO CAP FUND
Investor Shares 1.07% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
- -------------------------------------------
As of February 1, 1998, there were no outstanding Advisor Shares of any Fund
other than U.S. Smaller Companies Fund.
A-1
<PAGE>
APPENDIX B
MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES
Fees are paid at the Portfolio level where the Fund invests in a Portfolio. If
the Fund invests in other than in a Portfolio, the expense is paid by the Fund.
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
--------- ---------- ------------
SCHRODER INTERNATIONAL FUND
Year Ended October 31, 1997 $891,659 $47,444 $844,215
Year Ended October 31, 1996 $978,697 $51,971 $926,726
Year Ended October 31, 1995 $893,082 $ 0 $893,082
SCHRODER INTERNATIONAL SMALLER
COMPANIES FUND
Year Ended October 31, 1997 $60,033 $60,033 $ 0
SCHRODER U.S. EQUITY FUND
Year Ended October 31, 1997 $118,887 $28,422 $ 90,465
Year Ended October 31, 1996 $139,483 $ 4,355 $135,128
Year Ended October 31, 1995 $140,988 $ 0 $140,988
SCHRODER INTERNATIONAL BOND FUND(1)
Period Ended December 31, 1997 $53,529 $53,529 $ 0
SCHRODER EMERGING MARKETS FUND(2) $ 0 $ 0 $ 0
SCHRODER U.S. SMALLER COMPANIES FUND
Period Ended May 31, 1997 $59,916 $10,038 $49,878
Year Ended October 31, 1996 $76,373 $16,090 $60,283
Year Ended October 31, 1995 $71,188 $ 0 $71,188
SCHRODER MICRO CAP FUND
Period Ended November 30, 1997 $3,733 $3,733 $ 0
</TABLE>
- -----------------------------------------------------------------
(1) For the first full year International Bond Portfolio has been in operation.
(2) Not yet in operation.
B-1
<PAGE>
TABLE 2 - ADMINISTRATION FEES
(Includes the Fund's Proportion of the Portfolio's Expenses where Applicable)
A. ADMINISTRATION FEES PAID TO SCHRODER FUND ADVISORS, INC.
<TABLE>
<S> <C> <C> <C>
NET FEE
GROSS FEE FEE WAIVED PAID
--------- ---------- ----
SCHRODER INTERNATIONAL FUND
Year Ended October 31, 1997 $463,353 $ 97,253 $366,100
Year Ended October 31, 1996 $761,036 $61,259 $699,777
Year Ended October 31, 1995 $446,541 $ $446,541
0
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
Year Ended October 31, 1997 $ 18,234 $ 17,657 $ 577
SCHRODER U.S. EQUITY FUND
Year Ended October 31, 1997 $ 0 $ $
Year Ended October 31, 1996 $ 0 0
Year Ended October 31, 1995 0 $ $
$ 0 0
0 $ $
0 0
SCHRODER INTERNATIONAL BOND FUND
Period Ended December 31, 1997 $ 10,706 $10,706 $ 0
SCHRODER EMERGING MARKETS FUND(1) $ $ $ 0
0 0
SCHRODER U.S. SMALLER COMPANIES FUND
Period Ended May 31, 1997 $ 25,060 $ 25,060 $ 0
Year Ended October 31, 1996 $ 41,063 $ 26,850 $ 14,213
Year Ended October 31, 1995 $ 35,594 $ $ 35,594
0
SCHRODER MICRO CAP FUND
Period Ended November 30, 1997 $ 747 $ 747 $
0
</TABLE>
B. SUBADMINSTRATION FEES PAID TO FORUM ADMINISTRATIVE SERVICES, LLC
<TABLE>
<S> <C> <C> <C>
NET FEE
GROSS FEE FEE WAIVED PAID
--------- ---------- ----
SCHRODER INTERNATIONAL FUND
Year Ended October 31, 1997 $229,792 $ 0 $229,792
Year Ended October 31, 1996
Year Ended October 31, 1995
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
Year Ended October 31, 1997 $ 10,018 $ 0 $ 10,018
SCHRODER U.S. EQUITY FUND
Year Ended October 31, 1997 $ 15,853 $ 0 $ 15,853
Year Ended October 31, 1996
Year Ended October 31, 1995
SCHRODER INTERNATIONAL BOND FUND
Period Ended December 31, 1997 $ 25,000 $ 25,000 $ 0
</TABLE>
B-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
NET FEE
GROSS FEE FEE WAIVED PAID
--------- ---------- ----
SCHRODER EMERGING MARKETS FUND(1) N/A N/A N/A
SCHRODER U.S. SMALLER COMPANIES FUND
Period Ended May 31, 1997 $ 15,007 $ 0 $ 15,007
Year Ended October 31, 1996
Year Ended October 31, 1995
SCHRODER MICRO CAP FUND
Period Ended November 30, 1997 $ 299 $ 0 $ 299
</TABLE>
- -----------------------------------------------------
(1) Not yet in operation.
B-3
<PAGE>
TABLE 3 - FUND ACCOUNTING FEES
(Includes the Fund's Share of the Portfolio's Expense, were applicable)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
--------- ---------- ------------
SCHRODER INTERNATIONAL FUND
Year Ended October 31, 1997 $83,959 $ 0 $83,959
Year Ended October 31, 1996 $86,000 $ 0 $86,000
Year Ended October 31, 1995 $72,000 $ 0 $72,000
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
Year Ended October 31, 1997 $71,200 $ 0 $71,200
SCHRODER U.S. EQUITY FUND
Year Ended October 31, 1997 $36,000 $ 0 $36,000
Year Ended October 31, 1996 $36,000 $ 0 $36,000
Year Ended October 31, 1995 $38,000 $ 0 $38,000
SCHRODER INTERNATIONAL BOND FUND(1)
Period Ended December 31, 1997 $62,000 $24,000 $38,000
SCHRODER EMERGING MARKETS FUND(2) $ 0 $ 0 $ 0
SCHRODER U.S. SMALLER COMPANIES FUND
Period Ended May 31, 1997 $12,955 $ 0 $12,955
Year Ended October 31, 1996 $37,972 $ 0 $37,972
Year Ended October 31, 1995 $36,000 $ 0 $36,000
SCHRODER MICRO CAP FUND
Period Ended November 30, 1997 $ 4,645 $ 0 $ 4,645
</TABLE>
- -----------------------------------------------------
(1) For the first full year International Bond Portfolio has been in operation.
(2) Not yet in operation.
B-4
<PAGE>
TABLE 4 - HOLDERS OF 5% OR MORE OF OUTSTANDING SHARES
As of February 1, 1998, the shareholders listed below owned more than 5% of a
Fund as noted. Shareholders owning 25% or more of the shares of a Fund or of the
Trust as a whole may be deemed to be controlling persons. By reason of their
substantial holdings of shares, these persons may be able to require the Trust
to hold a shareholder meeting to vote on certain issues and may be able to
determine the outcome of any shareholder vote. As noted, certain of these
shareholders are known to the Trust to hold their shares of record only and have
no beneficial interest, including the right to vote, in the shares.
<TABLE>
<S> <C> <C> <C>
NUMBER OF NUMBER OF % OF SHARES
INVESTOR ADVISOR OF FUND
SHARES SHARES CLASS OWNED
------ ------ -----------
SCHRODER INTERNATIONAL FUND
Mac & Co.
Mellon Bank NA
PO Box 3198
Pittsburgh PA 15230-3198 1,528,397.118 15.16
Mac & Co.
Mellon Bank NA
PO Box 3198
Pittsburgh PA 15230-3198 969,017.668 9.61
Cal Farley's Boys Ranch Foundation
600 W 11th Street
Amarillo TX 79101 928,314.855 9.21
Union College Pooled Endowment Funds
PO Box 3199 Church Street Station
New York NY 10008 828,387.036 8.22
Norwest Bank Minnesota NA, Trustee
PO Box 1450 NW 8477
Minneapolis MN 55480-8477 548,281.576 5.44
Lutheran Church
Missouri Synod Foundation
1333 5 Kirkwood Road
St. Louis MO 63122 544,127.021 5.40
Miter & Co
c/o Marshall & Ilsley Trust Company
PO Box 2977
Milwaukee WI 53202-2977 523,228.836 5.19
Donaldson Lufkin & Jenrette
Securities Corporation
PO Box 2052
Mutual Funds Dept./5th Floor
Jersey City NJ 07303 152.905 100.00
</TABLE>
B-5
<PAGE>
<TABLE>
<S> <C> <C> <C>
NUMBER OF NUMBER OF % OF SHARES
INVESTOR ADVISOR OF FUND
SHARES SHARES CLASS OWNED
------ ------ -----------
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
N/A N/A N/A
SCHRODER U.S. EQUITY FUND
Wendel & Co.
c/o The Bank of New York
PO Box 1066
Wall Street Station
New York NY 10268 152,163.424 8.53
Schroder Nominee Limited
120 Cheapside
London EC2V 6DS England, United Kingdom 131,062.172 7.35
Security Nominees Incorporated
1 State Street
New York NY 10017 113,383.988 6.36
Citibank F.S.B. as Trustee
for Natwest Crawley
1410 N. Westshore Blvd.
Tampa FL 33607 106,505.585 5.97
Fox & Co.
PO Box 976
New York NY 10268 99,971.674 5.60
SCHRODER INTERNATIONAL BOND FUND
Charles Schwab & Co. Inc.
101 Montgomery Street
San Francisco CA 94104 5,739.347 100.00
SCHRODER EMERGING MARKETS FUND
N/A N/A N/A
SCHRODER U.S. SMALLER COMPANIES FUND
Gooss & Co.
c/o Chase Manhattan Bank
1211-6th Avenue 35th Floor
New York NY 10036 641,387.856 19.14
Schroder Nominees Limited
120 Cheapside
London EC2V 6DS England, United Kingdom 522,518.912 15.59
</TABLE>
B-7
<PAGE>
<TABLE>
<S> <C> <C> <C>
NUMBER OF NUMBER OF % OF SHARES
INVESTOR ADVISOR OF FUND
SHARES SHARES CLASS OWNED
------ ------ -----------
SCHRODER U.S. SMALLER COMPANIES FUND (CONT.)
FTC & Co.
PO Box 173736
Denver CO 80217-3736 408,154.845 12.18
Donaldson Lufkin & Jenrette
Securities Corporation
PO Box 2052
Jersey City NJ 07303 193,080.089 5.76
Charles Schwab & Co Inc.
101 Montgomery Street
San Francisco CA 94104 180,870.816 5.40
Donaldson Lufkin & Jenrette
Securities Corporation
Jersey City NJ 07303 52,111.264 17.97
National Investor Services Corp.
55 Water Street
New York NY 10041 18,797.430 6.48
SCHRODER MICRO CAP FUND
Schroders Incorporated
787 Seventh Avenue
New York NY 10019 203,942.455 86.32
IRA Unschuld
150 East 56th Street
New York NY 10022 20,394.245 8.63
</TABLE>
B-8
<PAGE>
TABLE 5- BROKERAGE COMMISSIONS
The following table shows the aggregate brokerage commissions with respect to
each Fund that incurred brokerage costs. The data is for the past three fiscal
years or shorter period if the Fund has been in operation for a shorter period.
<TABLE>
<S> <C> <C> <C> <C>
PERCENTAGE
OF COMMISSION
PERCENTAGE OF TRANSACTIONS
COMMISSIONS COMMISSIONS EXECUTED
AGGREGATE PAID TO PAID TO THROUGH
COMMISSIONS SCHRODER & SCHRODER & SCHRODER &
PAID CO. INC. CO. INC. CO. INC.
---- -------- -------- --------
SCHRODER INTERNATIONAL FUND
Year Ended October 31, 1997 $421,129 $4,716 0.99% 1.11%
Year Ended October 31, 1996 $756,181
Year Ended October 31, 1995 $584,429
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
Year Ended October 31, 1997 $ 37,223
SCHRODER U.S. EQUITY FUND
Year Ended October 31, 1997 $ 20,510
Year Ended October 31, 1996
Year Ended October 31, 1995
SCHRODER INTERNATIONAL BOND FUND(1)
Period Ended December 31, 1997 $ 297
SCHRODER EMERGING MARKETS FUND(2) $ 0
SCHRODER U.S. SMALLER COMPANIES FUND
Period Ended May 31, 1997 $167,043
Year Ended October 31, 1996 $ 37,589
Year Ended October 31, 1995 $ 34,391
SCHRODER MICRO CAP FUND
Period Ended November 30, 1997 $ 2,966
</TABLE>
During the last three fiscal years certain Funds paid brokerage commissions to
Schroder & Co. Inc., an affiliate of SCMI. The tables above indicate the Funds
that paid commissions to Schroder & Co. Inc., the aggregate amounts of
commissions paid, the percentage of aggregate brokerage commissions paid to
Schroder & Co. Inc. and the percentage of the aggregate dollar amount of
transactions involving payment of commissions that were effected through
Schroder & Co. Inc. ----------------------------------------------------
(1) Based solely on the first full year of the Portfolio.
(2) Not yet in operation.
B-9
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1998
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- ------------------
Schroder Capital Management International Inc. ("SCMI")
ADMINISTRATOR AND DISTRIBUTOR
- -----------------------------
Schroder Fund Advisors Inc. ("Schroder Advisors")
SUBADMINISTRATOR
- ----------------
Forum Administrative Services, LLC ("FAdS")
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------
Forum Shareholder Services, LLC ("Forum")
GENERAL INFORMATION: (207) 879-8903
ACCOUNT INFORMATION: (800) 344-8332
FAX: (207) 879-6206
Investor Shares of SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO (the
"Fund") are offered for sale at net asset value, with no sales charge but a
transaction charge of 0.50% on purchases and redemptions, as an investment
vehicle for individuals, institutions, corporations and fiduciaries. The Fund's
Advisor Shares also are offered for sale at net asset value, with no sales
charge but a transaction charge of 0.50% on purchases and redemptions, to
individual investors, in most cases through Service Organizations (as defined in
the prospectuses) at lower investment minimums but higher expenses than Investor
Shares.
This Statement of Additional Information ("SAI") is not a prospectus and is
authorized for distribution only when preceded or accompanied by the Fund's
current prospectus dated March 1, 1998, as may be amended from time to time for
each of the Investor Shares and the Advisor Shares ( each, a "Prospectus" and,
collectively, the "Prospectuses"). This SAI contains additional and more
detailed information than that set forth in each Prospectus and should be read
in conjunction with the applicable Prospectus and retained for future reference.
The Prospectuses and this SAI are available along with other related materials
for reference on the SEC's Internet Web Site (http://www.sec.gov). All terms
used in this SAI that are defined in the Prospectuses have the meaning assigned
in the Prospectuses. You may obtain an additional copy of the applicable
Prospectus(es) without charge by writing to the Trust at Two Portland Square,
Portland, Maine 04101 or calling the numbers listed above.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVES AND POLICIES
OF THE TRUST AND RISK
CONSIDERATIONS....................................3
Options.............................................3
Futures Contracts...................................5
Special Risks of Transactions in Futures
Contracts and Related Options.....................8
Forward Commitments.................................9
Repurchase Agreements...............................9
When-Issued Securities..............................9
Loans of Fund Securities...........................10
Foreign Securities.................................10
Foreign Currency Transactions......................11
Zero-Coupon Securities.............................13
Warrants and Stock Rights..........................16
Convertible Securities.............................16
Debt-to-Equity Conversions.........................16
Brady Bonds........................................17
Indexed Securities.................................17
Investment in Other Investment
Companies........................................17
Temporary Investments..............................18
Short-Term Debt Securities.........................18
Restricted Securities..............................19
Rule 144A Securities...............................20
U.S. Government Securities.........................20
Bank Obligations...................................20
INVESTMENT RESTRICTIONS............................21
MANAGEMENT.........................................22
Officers and Trustees..............................18
Investment Adviser.................................25
Administrative Services............................26
Distribution of Fund Shares........................28
Glass-Steagall Act.................................29
Fund Accounting....................................29
PORTFOLIO TRANSACTIONS.............................30
Investment Decisions...............................30
Brokerage and Research Services....................30
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION........................32
Determination of Net Asset Value Per Share.........32
Redemptions In-Kind................................33
TAXATION...........................................33
OTHER INFORMATION..................................38
Fund Structure.....................................38
Classes of Shares..................................38
The Portfolio......................................38
Certain Risks of Investing in the Portfolio........39
Organization of the Trust..........................40
Capitalization and Voting..........................40
Performance Information............................42
Principal Shareholders.............................42
Custodian..........................................42
Transfer Agent and Dividend Disbursing Agent.......42
Legal Counsel......................................42
Independent Accountant.............................42
Year 2000 Issues...................................42
Registration Statement.............................42
Financial Statements...............................42
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND AND RISK CONSIDERATIONS
This Statement of Additional Information contains additional information
concerning certain investment practices and investment restrictions of the Trust
and the Fund.
Except as described below under "Investment Restrictions", the
investment policies described in the Prospectuses and in this SAI are not
fundamental, and the Trustees may change the non-fundamental policies of the
Fund without an affirmative vote of shareholders of the Fund.
OPTIONS
The Fund may purchase and sell covered put and call options on its
portfolio securities to enhance investment performance and to protect against
changes in market prices.
COVERED CALL OPTIONS. The Fund may write covered call options on its
securities to realize a greater current return through the receipt of premiums
than it would realize on its securities alone. Such option transactions may also
be used as a limited form of hedging against a decline in the price of
securities owned by the Fund.
A call option gives the holder the right to purchase, and obligates the
writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times while
obligated as a writer, either owns the underlying securities (or comparable
securities satisfying the cover requirements of the securities exchanges), or
has the right to acquire such securities through immediate conversion of
securities.
In return for the premium received when it writes a covered call
option, the Fund gives up some or all of the opportunity to profit from an
increase in the market price of the securities covering the call option during
the life of the option. The Fund retains the risk of loss should the price of
such securities decline. If the option expires unexercised, the Fund realizes a
gain equal to the premium, which may be offset by a decline in price of the
underlying security. If the option is exercised, the Fund realizes a gain or
loss equal to the difference between the Fund's cost for the underlying security
and the proceeds of sale (exercise price minus commissions) plus the amount of
the premium.
The Fund may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. The Fund may enter into
closing purchase transactions in order to free itself to sell the underlying
security or to write another call on the security, realize a profit on a
previously written call option, or protect a security from being called in an
unexpected market rise. Any profits from a closing purchase transaction may be
offset by a decline in the value of the underlying security. Conversely, because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from a
closing purchase transaction is likely to be offset in whole or in part by
unrealized appreciation of the underlying security owned by the Fund.
COVERED PUT OPTIONS. The Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash and
high-grade short-term debt obligations or other permissible collateral equal to
the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, the Fund also
receives interest on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put option, the Fund assumes the risk
that it may be required to purchase the underlying security for an exercise
price higher than its then current market value, resulting in a potential
capital loss unless the security later appreciates in value.
3
<PAGE>
The Fund may terminate a put option that it has written before it
expires by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. The Fund may also purchase put options
to protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it sold
the underlying security instead of buying the put option.
The Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security.
The Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
The Fund may also purchase put and call options to enhance its current
return.
OPTIONS ON FOREIGN SECURITIES. The Fund may purchase and sell options
on foreign securities if in SCMI's opinion the investment characteristics of
such options, including the risks of investing in such options, are consistent
with the Fund's investment objectives. It is expected that risks related to such
options will not differ materially from risks related to options on U.S.
securities. However, position limits and other rules of foreign exchanges may
differ from those in the U.S. In addition, options markets in some countries,
many of which are relatively new, may be less liquid than comparable markets in
the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that SCMI will not forecast interest rate or
market movements correctly, that The Fund may be unable at times to close out
such positions, or that hedging transactions may not accomplish their purpose
because of imperfect market correlations. The successful use of these strategies
depends on the ability of SCMI to forecast market and interest rate movements
correctly.
An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close out
an option position. As a result, The Fund may be forced to continue to hold, or
to purchase at a fixed price, a security on which it has sold an option at a
time when SCMI believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other
unforeseen events might cause The Options Clearing Corporation or an exchange to
institute special trading procedures or restrictions that might restrict the
Fund's use of options. The exchanges have established limitations on the maximum
number of calls and puts of each class that may be held or written by an
investor or group of investors acting in concert. It is possible that the Fund
and other clients of SCMI may be considered such a group. These position limits
may restrict the Fund's ability to purchase or sell options on particular
securities.
4
<PAGE>
Options that are not traded on national securities exchanges may be
closed out only with the other party to the option transaction. For that reason,
it may be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.
Government regulations, particularly the requirements for qualification
as a "regulated investment company" under the Internal Revenue Code, may also
restrict the Trust's use of options.
FUTURES CONTRACTS
In order to hedge against the effects of adverse market changes, the
Fund that may invest in debt securities may buy and sell futures contracts on
debt securities of the type in which the Fund may invest and on indexes of debt
securities. In addition, the Fund that may invest in equity securities may
purchase and sell stock index futures to hedge against changes in stock market
prices. The Fund may also, to the extent permitted by applicable law, buy and
sell futures contracts and options on futures contracts to increase the Fund's
current return. All such futures and related options will, as may be required by
applicable law, be traded on exchanges that are licensed and regulated by the
Commodity Futures Trading Commission (the "CFTC").
FUTURES ON DEBT SECURITIES AND RELATED OPTIONS. A futures contract on a
debt security is a binding contractual commitment which, if held to maturity,
will result in an obligation to make or accept delivery, during a particular
month, of securities having a standardized face value and rate of return. By
purchasing futures on debt securities -- assuming a "long" position -- The Fund
will legally obligate itself to accept the future delivery of the underlying
security and pay the agreed price. By selling futures on debt securities
- --assuming a "short" position -- it will legally obligate itself to make the
future delivery of the security against payment of the agreed price. Open
futures positions on debt securities will be valued at the most recent
settlement price, unless that price does not, in the judgment of persons acting
at the direction of the Trustees as to the valuation of the Fund's assets,
reflect the fair value of the contract, in which case the positions will be
valued by the Trustees or such persons.
Positions taken in the futures markets are not normally held to
maturity, but are instead liquidated through offsetting transactions that may
result in a profit or a loss. While futures positions taken by The Fund will
usually be liquidated in this manner, The Fund may instead make or take delivery
of the underlying securities whenever it appears economically advantageous to
the Fund to do so. A clearing corporation associated with the exchange on which
futures are traded assumes responsibility for such closing transactions and
guarantees that the Fund's sale and purchase obligations under closed-out
positions will be performed at the termination of the contract.
Hedging by use of futures on debt securities seeks to establish more
certainly than would otherwise be possible the effective rate of return on
portfolio securities. The Fund may, for example, take a "short" position in the
futures market by selling contracts for the future delivery of debt securities
held by the Fund (or securities having characteristics similar to those held by
the Fund) in order to hedge against an anticipated rise in interest rates that
would adversely affect the value of the Fund's portfolio securities. When
hedging of this character is successful, any depreciation in the value of
portfolio securities may substantially be offset by appreciation in the value of
the futures position.
On other occasions, the Fund may take a "long" position by purchasing
futures on debt securities. This would be done, for example, when the Fund
expects to purchase particular securities when it has the necessary cash, but
expects the rate of return available in the securities markets at that time to
be less favorable than rates currently available in the futures markets. If the
anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Fund of purchasing
the securities may be offset, at least to some extent, by the rise in the value
of the futures position taken in anticipation of the subsequent securities
purchase.
Successful use by the Fund of futures contracts on debt securities is
subject to SCMI's ability to predict correctly movements in the direction of
interest rates and other factors affecting markets for debt securities. For
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example, if the Fund has hedged against the possibility of an increase in
interest rates which would adversely affect the market prices of debt securities
held by it and the prices of such securities increase instead, the Fund will
lose part or all of the benefit of the increased value of its securities which
it has hedged because it will have offsetting losses in its futures positions.
In addition, in such situations, if the Fund has insufficient cash, it may have
to sell securities to meet daily maintenance margin requirements. The Fund may
have to sell securities at a time when it may be disadvantageous to do so.
The Fund may purchase and write put and call options on certain debt
futures contracts, as they become available. Such options are similar to options
on securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an option of the same series.
There is no guarantee that such closing transactions can be effected. The Fund
will be required to deposit initial margin and maintenance margin with respect
to put and call options on futures contracts written by it pursuant to brokers'
requirements, and, in addition, net option premiums received will be included as
initial margin deposits. See "Margin Payments" below. Compared to the purchase
or sale of futures contracts, the purchase of call or put options on futures
contracts involves less potential risk to the Fund because the maximum amount at
risk is the premium paid for the options plus transactions costs. However, there
may be circumstances when the purchase of call or put options on a futures
contract would result in a loss to the Fund when the purchase or sale of the
futures contracts would not, such as when there is no movement in the prices of
debt securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
INDEX FUTURES CONTRACTS AND OPTIONS. The Fund may invest in debt index
futures contracts and stock index futures contracts, and in related options. A
debt index futures contract is a contract to buy or sell units of a specified
debt index at a specified future date at a price agreed upon when the contract
is made. A unit is the current value of the index. Debt index futures in which
the Fund is presently expected to invest are not now available, although such
futures contracts are expected to become available in the future. A stock index
futures contract is a contract to buy or sell units of a stock index at a
specified future date at a price agreed upon when the contract is made. A unit
is the current value of the stock index.
The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index is composed of
100 selected common stocks, most of which are listed on the New York Stock
Exchange. The S&P 100 Index assigns relative weightings to the common stocks
included in the Index, and the Index fluctuates with changes in the market
values of those common stocks. In the case of the S&P 100 Index, contracts are
to buy or sell 100 units. Thus, if the value of the S&P 100 Index were $180, one
contract would be worth $18,000 (100 units x $180). The stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the contract.
For example, if the Fund enters into a futures contract to buy 100 units of the
S&P 100 Index at a specified future date at a contract price of $180 and the S&P
100 Index is at $184 on that future date, the Fund will gain $400 (100 units x
gain of $4). If the Fund enters into a futures contract to sell 100 units of the
stock index at a specified future date at a contract price of $180 and the S&P
100 Index is at $182 on that future date, the Fund will lose $200 (100 units x
loss of $2).
The Fund may purchase or sell futures contracts with respect to any
securities indexes. Positions in index futures may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
In order to hedge the Fund's investments successfully using futures
contracts and related options, the Fund must invest in futures contracts with
respect to indexes or sub-indexes the movements of which will, in its judgment,
have a significant correlation with movements in the prices of the Fund's
securities.
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Options on index futures contracts are similar to options on securities
except that options on index futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the holder would assume the underlying futures
position and would receive a variation margin payment of cash or securities
approximating the increase in the value of the holder's option position. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the difference
between the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
As an alternative to purchasing and selling call and put options on
index futures contracts, the Fund may purchase and sell index futures contracts
may purchase and sell call and put options on the underlying indexes themselves
to the extent that such options are traded on national securities exchanges.
Index options are similar to options on individual securities in that the
purchaser of an index option acquires the right to buy (in the case of a call)
or sell (in the case of a put), and the writer undertakes the obligation to sell
or buy (as the case may be), units of an index at a stated exercise price during
the term of the option. Instead of giving the right to take or make actual
delivery of securities, the holder of an index option has the right to receive a
cash "exercise settlement amount". This amount is equal to the amount by which
the fixed exercise price of the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index on the
date of the exercise, multiplied by a fixed "index multiplier".
The Fund may purchase or sell options on stock indices in order to
close out its outstanding positions in options on stock indices which it has
purchased. The Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of
call or put options on an index involves less potential risk to the Fund because
the maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar to
those risks relating to the purchase or sale of index futures contracts.
MARGIN PAYMENTS. When the Fund purchases or sells a futures contract,
it is required to deposit with its custodian an amount of cash, U.S. Treasury
bills, or other permissible collateral equal to a small percentage of the amount
of the futures contract. This amount is known as "initial margin". The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to the Fund upon termination of the contract, assuming the Fund satisfies its
contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market". These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when the Fund sells a futures contract and the price of the
underlying debt security rises above the delivery price, the Fund's position
declines in value. The Fund then pays the broker a variation margin payment
equal to the difference between the delivery price of the futures contract and
the market price of the securities underlying the futures contract. Conversely,
if the price of the underlying security falls below the delivery price of the
contract, the Fund's futures position increases in value. The broker then must
make a variation margin payment equal to the difference between the delivery
price of the futures contract and the market price of the securities underlying
the futures contract.
When the Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market for such
futures. Although the Fund intends to purchase or sell futures only on
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exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange or
board of trade will exist for any particular contract or at any particular time.
If there is not a liquid secondary market at a particular time, it may not be
possible to close a futures position at such time and, in the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event financial futures are used
to hedge portfolio securities, such securities will not generally be sold until
the financial futures can be terminated. In such circumstances, an increase in
the price of the portfolio securities, if any, may partially or completely
offset losses on the financial futures.
In addition to the risks that apply to all options transactions, there
are several special risks relating to options on futures contracts. The ability
to establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
such a market will develop. Although the Fund generally will purchase only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options with the result that the Fund would have to exercise the options
in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by
the Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or movements in the prices of the Fund's securities which are the subject
of a hedge. SCMI will, however, attempt to reduce this risk by purchasing and
selling, to the extent possible, futures contracts and related options on
securities and indexes the movements of which will, in its judgment, correlate
closely with movements in the prices of the underlying securities or index and
the Fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by the Fund for hedging
purposes is also subject to SCMI's ability to predict correctly movements in the
direction of the market. It is possible that, where the Fund has purchased puts
on futures contracts to hedge its portfolio against a decline in the market, the
securities or index on which the puts are purchased may increase in value and
the value of securities held in the portfolio may decline. If this occurred, the
Fund would lose money on the puts and also experience a decline in value in its
portfolio securities. In addition, the prices of futures, for a number of
reasons, may not correlate perfectly with movements in the underlying securities
or index due to certain market distortions. First, all participants in the
futures market are subject to margin deposit requirements. Such requirements may
cause investors to close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying security or index
and futures markets. Second, the margin requirements in the futures markets are
less onerous than margin requirements in the securities markets in general, and
as a result the futures markets may attract more speculators than the securities
markets do. Increased participation by speculators in the futures markets may
also cause temporary price distortions. Due to the possibility of price
distortion, even a correct forecast of general market trends by SCMI may still
not result in a successful hedging transaction over a very short time period.
OTHER RISKS. The Fund will incur brokerage fees in connection with
their futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while the Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss.
FORWARD COMMITMENTS
The Fund may enter into contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward commitments")
if the Fund holds, and maintains until the settlement date in a segregated
account, cash or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the
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Fund enters into offsetting contracts for the forward sale of other securities
it owns. Forward commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in the value of the Fund's other assets. Where such purchases are made through
dealers, the Fund relies on the dealer to consummate the sale. The dealer's
failure to do so may result in the loss to the Fund of an advantageous yield or
price.
Although the Fund will generally enter into forward commitments with
the intention of acquiring securities for its portfolio or for delivery pursuant
to options contracts it has entered into, the Fund may dispose of a commitment
prior to settlement if SCMI deems it appropriate to do so. The Fund may realize
short-term profits or losses upon the sale of forward commitments.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. A repurchase agreement
is a contract under which the Fund acquires a security for a relatively short
period (usually not more than 7 days) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. government or its
agencies or instrumentalities or other high quality short term debt obligations.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. SCMI will monitor such
transactions to ensure that the value of the underlying securities will be at
least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.
WHEN-ISSUED SECURITIES
The Fund may from time to time purchase securities on a "when-issued"
basis. Debt securities are often issued on this basis. The price of such
securities, which may be expressed in yield terms, is fixed at the time a
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between purchase and
settlement, no payment is made by the Fund and no interest accrues to the Fund.
To the extent that assets of the Fund are held in cash pending the settlement of
a purchase of securities, that Fund would earn no income. While the Fund may
sell its right to acquire when-issued securities prior to the settlement date,
the Fund intends actually to acquire such securities unless a sale prior to
settlement appears desirable for investment reasons. At the time the Fund makes
the commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the amount due and the value of the security in
determining the Fund's net asset value. The market value of the when-issued
securities may be more or less than the purchase price payable at the settlement
date. The Fund will establish a segregated account in which it will maintain
cash and U.S. Government Securities or other high-grade debt obligations at
least equal in value to commitments for when-issued securities. Such segregated
securities either will mature or, if necessary, be sold on or before the
settlement date.
LOANS OF FUND SECURITIES
The Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) the Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund loaned will not at any time exceed
one-third of the total assets of the Fund. In addition, it is anticipated that
the Fund may share with the borrower some of the income received on the
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collateral for the loan or that it will be paid a premium for the loan. Before
the Fund enters into a loan, SCMI considers all relevant facts and circumstances
including the creditworthiness of the borrower. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Although voting rights or rights to consent with
respect to the loaned securities pass to the borrower, the Fund retains the
right to call the loans at any time on reasonable notice, and it will do so in
order that the securities may be voted by the Fund if the holders of such
securities are asked to vote upon or consent to matters materially affecting the
investment. The Fund will not lend portfolio securities to borrowers affiliated
with the Fund.
FOREIGN SECURITIES
The Fund may invest in foreign securities and in certificates of
deposit issued by United States branches of foreign banks and foreign branches
of United States banks.
Investments in foreign securities may involve considerations different
from investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment against
a foreign issuer.
In addition, to the extent that any Fund's foreign investments are not
United States dollar-denominated, the Fund may be affected favorably or
unfavorably by changes in currency exchange rates or exchange control
regulations and may incur costs in connection with conversion between
currencies.
In determining whether to invest in securities of foreign issuers, the
investment adviser of the Fund seeking current income will consider the likely
impact of foreign taxes on the net yield available to the Fund and its
shareholders. Income received by the Fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested in
various countries is not known, and tax laws and their interpretations may
change from time to time and may change without advance notice. Any such taxes
paid by the Fund will reduce its net income available for distribution to
shareholders.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS
The Fund may engage in currency exchange transactions to protect
against uncertainty in the level of future foreign currency exchange rates and
to increase current return. The Fund may engage in both "transaction hedging"
and "position hedging."
When it engages in transaction hedging, the Fund enters into foreign
currency transactions with respect to specific receivables or payables of the
Fund generally arising in connection with the purchase or sale of its portfolio
securities. The Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging the Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
The Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging. The
Fund may also enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts") and purchase and sell foreign currency futures
contracts.
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For transaction hedging purposes the Fund may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Fund the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Fund the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Fund the right to assume a
long position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option. The Fund will engage in
over-the-counter transactions only when appropriate exchange-traded transactions
are unavailable and when, in SCMI's opinion, the pricing mechanism and liquidity
are satisfactory and the participants are responsible parties likely to meet
their contractual obligations.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which securities held by the Fund are denominated or are
quoted in their principal trading markets or an increase in the value of
currency for securities which the Fund expects to purchase. In connection with
position hedging, the Fund may purchase put or call options on foreign currency
and foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. The Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of the
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of the Fund if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to deliver.
To offset some of the costs to the Fund of hedging against fluctuations
in currency exchange rates, the Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.
The Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, and by purchasing and selling options
on foreign currencies and on foreign currency futures contracts, and by
purchasing and selling foreign currency forward contracts.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized contract
for the future delivery of a specified amount of a foreign currency at a future
date at a price set at the time of the contract. Foreign
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currency futures contracts traded in the United States are designed by and
traded on exchanges regulated by the CFTC, such as the New York Mercantile
Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity date
of a forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a given
month. Forward contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in foreign currency futures contracts and related options may
be closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although the Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, the Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate
similarly to options on securities, and are traded primarily in the
over-the-counter market, although options on foreign currencies have recently
been listed on several exchanges. Such options will be purchased or written only
when SCMI believes that a liquid secondary market exists for such options. There
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time. Options on foreign currencies are affected by all
of those factors which influence exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the U.S. options
markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.
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ZERO-COUPON SECURITIES
Zero-coupon securities in which the Fund may invest are debt
obligations which are generally issued at a discount and payable in full at
maturity, and which do not provide for current payments of interest prior to
maturity. Zero-coupon securities usually trade at a deep discount from their
face or par value and are subject to greater market value fluctuations from
changing interest rates than debt obligations of comparable maturities which
make current distributions of interest. As a result, the net asset value of
shares of the Fund investing in zero-coupon securities may fluctuate over a
greater range than shares of other Funds of the Trust and other mutual funds
investing in securities making current distributions of interest and having
similar maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-term bonds
or notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on
Treasuries ("CATS"). CATS and TIGRS are not considered U.S. Government
Securities. The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(I.E., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.
In addition, the Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities". Under the
STRIPS program, the Fund will be able to have its beneficial ownership of U.S.
Treasury zero-coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
WARRANTS AND STOCK RIGHTS. The Fund may invest in warrants, which are
options to purchase an equity security at a specified price (usually
representing a premium over the applicable market value of the underlying equity
security at the time of the warrant's issuance). Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of the Fund's entire
investment therein). The prices of warrants do not necessarily move parallel to
the prices of the underlying securities. Warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the issuer.
In addition, the Fund may invest to a limited degree in stock rights. A
stock right is an option given to a shareholder to buy additional shares at a
predetermined price during a specified time period. Currently, the Fund does not
intend to invest more than 5% of its total net assets (at the time of
investment) in stock rights.
DEPOSITARY RECEIPTS. As described in the Prospectus, the Fund may
invest in American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), and other similar instruments providing for indirect investment in
securities of foreign issuers. Due to the absence of established securities
markets in certain foreign
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countries and restrictions in certain countries on direct investment by foreign
entities, the Fund may invest in certain issuers through the purchase of
sponsored and unsponsored ADRs or other similar securities, such as American
Depositary Shares, Global Depositary Shares or International Depositary
Receipts. ADRs are receipts typically issued by U.S. banks evidencing ownership
of the underlying securities into which they are convertible. These securities
may or may not be denominated in the same currency as the underlying securities.
Unsponsored ADRs may be created without the participation of the foreign issuer.
Holders of unsponsored ADRs generally bear all the costs of the ADR facility,
whereas foreign issuers typically bear certain costs in a sponsored ADR. The
bank or trust company depository of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights.
CONVERTIBLE SECURITIES. The Fund may invest in convertible preferred
stocks and convertible debt securities ("convertible securities"). A convertible
security is a bond, debenture, note, preferred stock or other security that may
be converted into or exchanged for a prescribed amount of common stock of the
same or a different issuer within a particular period of time at a specified
price or formula. Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, carry less risk than the
corporation's common stock. The value of a convertible security is a function of
its "investment value" (its value as if it did not have a conversion privilege),
and its "conversion value" (the security's worth if it were to be exchanged for
the underlying security, at market value, pursuant to its conversion privilege).
Because convertible debt is convertible into stock under specified conditions,
the value of convertible debt also is affected normally by changes in the value
of the issuer's equity securities.
DEBT-TO-EQUITY CONVERSIONS. The Fund may invest up to 5% of its net
assets in debt-to-equity conversions. Debt-to-equity conversion programs are
sponsored in varying degrees by certain foreign countries and permit investors
to use external debt of a country to make equity investments in local companies.
Many conversion programs relate primarily to investments in transportation,
communication, utilities and similar infrastructure-related areas. The terms of
the programs vary from country to country but include significant restrictions
on the application of proceeds received in the conversion and on the
repatriation of investment profits and capital. When inviting conversion
applications by holders of eligible debt, a government usually specifies the
minimum discount from par value that it will accept for conversion. SCMI
believes that debt-to-equity conversion programs may offer opportunities to
invest in otherwise restricted equity securities that have a potential for
significant capital appreciation. SCMI, therefore, may invest the Fund's assets
to a limited extent in such programs under appropriate circumstances. There can
be no assurance that debt-to-equity conversion programs will continue to be
successful or that the Fund will be able to convert all or any of its emerging
market debt portfolio into equity investments.
BRADY BONDS. The Fund may invest a portion of its assets in Brady
Bonds, which are securities created through the exchange of existing commercial
bank loans to sovereign entities for new obligations in connection with debt
restructurings. Brady Bonds have been issued only recently and, therefore, do
not have a long payment history. Brady Bonds may have collateralized and
uncollateralized components, are issued in various currencies, and are actively
traded in the over-the-counter secondary market. Brady Bonds are not considered
U.S. government securities. In light of the residual risk associated with the
uncollateralized portions of Brady Bonds and, among other factors, the history
of defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds, investments in Brady Bonds are considered
speculative. Brady Bonds acquired by the Fund could be subject to restructuring
arrangements or to requests for new credit, which could cause the Fund to suffer
a loss of interest or principal on its holdings.
INDEXED SECURITIES. The Fund may invest in indexed securities, the
values of which are linked to currencies, interest rates, commodities, indices,
or other financial indicators. Investment in indexed securities involves certain
risks. In addition to the credit risk of the securities issuer and normal risks
of price changes in response to changes in interest rates, the principal amount
of indexed securities may decrease as a result of changes in the value of the
reference instruments. Also, in the case of certain indexed securities where the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Further, indexed securities may
be more volatile than the reference instruments underlying indexed securities.
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FOREIGN EXCHANGE CONTRACTS. Changes in currency exchange rates will
affect the U.S. dollar values of securities denominated in foreign currencies.
Exchange rates between the U.S. dollar and other currencies fluctuate in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation, and other
factors, many of which may be difficult (if not impossible) to predict. When
investing in foreign securities, the Fund usually effects currency exchange
transactions on a spot (I.E., cash) basis at the spot rate prevailing in the
foreign exchange market. The Fund incurs foreign exchange expenses in converting
assets from one currency to another.
The Fund may enter into forward contracts for the purchase or sale of
foreign currency: (1) to "lock in" the U.S. dollar price of the securities
denominated in a foreign currency or the U.S. dollar value of interest and
dividends to be paid on such securities; or (2) to hedge against the possibility
that a foreign currency may suffer a decline against the U.S. dollar. A forward
currency contract is an obligation to purchase or sell a specific currency at a
future date (which may be any fixed number of days from the date of the contract
agreed upon by the parties) at a price set at the time of the contract. This
method of attempting to hedge against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of securities and exposes
the Fund to the risk that the counterparty is unable to perform. Although the
strategy of engaging in foreign currency transactions could reduce the risk of
loss due to a decline in the value of the hedged currency, it could also limit
the potential gain from an increase in the value of the currency.
The Fund does not intend to maintain a net exposure to such contracts
if the fulfillment of obligations under such contracts would obligate it to
deliver an amount of foreign currency in excess of the value of its portfolio
securities or other assets denominated in the currency. The Fund will not enter
into these contracts for speculative purposes and will not enter into
non-hedging currency contracts. The Fund will generally not enter into a forward
contract with a term of greater than one year. Forward contracts are not
exchange traded, and there can be no assurance that a liquid market will exist
at a time when the Fund seeks to close out a forward contract. Currently, only a
limited market, if any, exists for hedging transactions relating to currencies
in certain emerging markets or to securities of issuers domiciled or principally
engaged in business in certain emerging markets. This may limit the Fund's
ability to hedge its investments in those markets. These contracts involve a
risk of loss if SCMI fails to predict accurately changes in relative currency
values. See "Risk Considerations -- Currency Fluctuations and Devaluations"
INVESTMENT IN OTHER INVESTMENT COMPANIES. Pursuant to the 1940 Act, the
Fund may invest in the shares of other investment companies that invest in
securities that the Fund is permitted to purchase subject to the limits
permitted under the 1940 Act or any orders, rules or regulations thereunder.
From time to time, such investment funds may be the sole means by which the Fund
may invest in equity securities of certain emerging markets companies. When
investing through investment companies, the Fund may pay substantial premiums
above such investment companies' net asset value per share. As a shareholder in
an investment company, the Fund would bear its ratable share of the investment
company's expenses, including its advisory and administrative fees. At the same
time, the Fund would continue to pay its own fees and expenses.
TEMPORARY INVESTMENTS. As described in the applicable Prospectus, the
Fund may hold and/or invest its assets without limitation in cash and/or
Temporary Investments (as defined below) for cash management purposes, pending
initial investment in accordance with the Fund's investment objective and
policies. In addition, the Fund may hold these investments for temporary
defensive purposes. The Fund may assume a temporary defensive posture when,
owing to political, market or other factors broadly affecting markets in one or
more emerging markets countries, SCMI determines either that opportunities for
capital appreciation in those markets may be significantly limited or that
significant diminution in value of the securities traded in those markets may
occur. The Fund may invest without limitation in (or enter into repurchase
agreements maturing in seven days or less with banks and broker-dealers with
respect to) short-term debt securities, including commercial paper, U.S.
Treasury bills, other short-term U.S. government securities, certificates of
deposit, and bankers' acceptances of U.S. or foreign banks. The Fund also may
hold cash and time deposits denominated in any major foreign currency in foreign
banks. To the extent that the Fund invests in Temporary Investments, it may not
achieve its investment objective.
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Temporary Investments are high quality debt securities (rated "AA" or
above by Standard & Poor's Corporation ("S&P") or "Aa" or above by Moody's
Investors Services, Inc. ("Moody's") or with an equivalent rating by other
nationally recognized securities rating organizations) denominated in U.S.
dollars or in another freely convertible currency including: (1) short-term
(less than 12 months to maturity) and medium-term (not more than five years to
maturity) obligations issued or guaranteed by: (a) the U.S. Government, its
agencies instrumentalities, or government-sponsored enterprises; or (b)
international organizations designated or supported by multiple foreign
governmental entities to promote economic reconstruction or development
("supranational entities"); (2) U.S. finance company obligations, corporate
commercial paper and other short-term commercial obligations; (3) obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks; and (4) repurchase agreements with respect to securities
in which the Fund may invest. The banks whose obligations may be purchased by
the Fund and the banks and broker-dealers with which the Fund may enter into
repurchase agreements include any member bank of the Federal Reserve System and
any U.S. broker-dealer or any foreign bank that has been determined by the
investment adviser to be creditworthy.
SHORT-TERM DEBT SECURITIES. For cash management, pending investment or
other temporary purposes, the Fund may invest in commercial paper -- short-term
unsecured promissory notes issued in bearer form by bank holding companies,
corporations and finance companies. The commercial paper purchased by the Fund
for temporary defensive purposes consists of direct obligations of domestic
issuers that at the time of investment are rated "P-1" by Moody's Investors
Service ("Moody's") or "A-1" by Standard & Poor's ("S&P"), or securities that,
if not rated, are issued by companies having an outstanding debt issue currently
rated "Aaa" or "Aa" by Moody's or "AAA" or "AA" by S&P. The rating "P-1" is the
highest commercial paper rating assigned by Moody's, and the rating "A-1" is the
highest commercial paper rating assigned by S&P. The Fund also may invest in
variable rate master demand notes, which are obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a commercial bank acting as agent for the
payer of such notes. Generally both parties have the right to vary the amount of
the outstanding indebtedness on the notes.
RESTRICTED SECURITIES. "Liquidity" under "Investment Policies" in each
Prospectus sets forth the circumstances in which the Fund may invest in
"restricted securities". In connection with the Fund's original purchase of
restricted securities, SCMI may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the registration
expenses of illiquid restricted securities may also be negotiated by the Fund
with the issuer at the time such securities are purchased by that Fund. When
registration is required, however, a considerable period may elapse between the
decision to sell the securities and the time the Fund would be permitted to sell
such securities. A similar delay might be experienced in attempting to sell such
securities pursuant to an exemption from registration. Thus, the Fund may not be
able to obtain as favorable a price as that prevailing at the time of the
decision to sell.
If SCMI determines that a "restricted security" is liquid pursuant to
guidelines adopted by the Board of Trustees of Schroder Capital Funds ( the
"Schroder Core", and the "Schroder Core Board"), the security is not deemed
illiquid. These guidelines take into account trading activity for the securities
and the availability of reliable pricing information, among other factors. If
there is a lack of trading interest in a particular restricted security, that
security may become illiquid, which could affect the Fund's liquidity.
RULE 144A SECURITIES. The Fund may purchase certain restricted
securities ("Rule 144A securities") for which there is a secondary market of
qualified institutional buyers, as contemplated by rule 144A under the
Securities Act of 1933 (the "Securities Act"). Rule 144A provides an exemption
from the registration requirements of the Securities Act for resale of certain
restricted securities to qualified institutional buyers. One effect of Rule 144A
is that certain restricted securities may now be deemed to be liquid, though
there is no assurance that a liquid market for any particular Rule 144A security
will develop or be maintained. SCMI will make liquidity determinations subject
to guidelines approved by the Schroder Core Board. If any Rule 144A security
previously determined to be liquid is later determined to be illiquid, such
security will be subject to the Fund's 15% limitation on illiquid securities.
U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in obligations issued
or guaranteed by the U.S. Government (or its agencies, instrumentalities or
government-sponsored enterprises). Agencies, instrumentalities
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and government-sponsored enterprises that have been established or sponsored by
the U.S. Government and issue or guarantee debt securities include the Bank for
Cooperatives, the Export-Import Bank, the Federal Farm Credit System, the
Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks, the Federal Land Banks, the Federal National Mortgage
Association, the Government National Mortgage Association and the Student Loan
Marketing Association. Except for obligations issued by the U.S. Treasury and
the Government National Mortgage Association, none of the obligations of the
other agencies, instrumentalities or government-sponsored enterprises referred
to above are backed by the full faith and credit of the U.S. Government. There
can be no assurance that the U.S. Government will provide financial support to
these obligations where it is not obligated to do so.
BANK OBLIGATIONS. The Fund may invest in obligations of U.S. and
foreign banks (including certificates of deposit and bankers' acceptances) whose
total assets at the time of purchase exceed $1 billion. The Fund also may hold
cash and time deposits denominated in any major currency in foreign banks. A
certificate of deposit is an interest-bearing negotiable certificate issued by a
bank against funds deposited in the bank. A bankers' acceptance is a short-term
draft drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction. Although the borrower is liable for
payment of the draft, the bank unconditionally guarantees to pay the draft at
its face value on the maturity date. A time deposit is a non-negotiable receipt
issued by a bank in exchange for the deposit of funds. Similar to a certificate
of deposit, a time deposit earns a specified rate of interest over a definite
time period; however, it cannot be traded in the secondary markets.
LOANS OF FUND SECURITIES. The Fund may lend its portfolio securities
subject to the restrictions stated in its Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan collateral must:
(1) on each business day, at least equal the market value of the loaned
securities; and (2) consist of cash, bank letters of credit, U.S. government
securities, other cash equivalents or liquid securities in which the Fund is
permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to
SCMI. When lending portfolio securities, the Fund receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan plus the interest on the collateral
securities (less any finders' or administrative fees the Fund pays in arranging
the loan). The Fund may share the interest it receives on the collateral
securities with the borrower if it realizes at least a minimum amount of
interest required by the lending guidelines established by the Board. The Fund
will not lend its portfolio securities to any officer, trustee, employee or
affiliate of the Fund or SCMI. The terms of any Fund's loans must meet certain
tests under the Internal Revenue Code and permit the Fund to reacquire loaned
securities on five business days' notice or in time to vote on any important
matter.
The market value of portfolio securities purchased with cash collateral
may decline. Loans of securities by the Fund are subject to termination at the
Fund's or the borrower's option. The Fund may pay reasonable negotiated fees in
connection with loaned securities, so long as such fees are set forth in a
written contract and approved by the Board.
INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions are described in the Prospectus.
The following investment restrictions, except where stated to be non-fundamental
policies, are also fundamental policies of the Fund and, together with the
fundamental policies and investment objective described in the Prospectus,
cannot be changed without the vote of a "majority" of the Fund's outstanding
shares. Under the Investment Company Act of 1940, such a "majority" vote is
defined as the vote of the holders of the lesser of: (1) 67% of more of the
shares present or represented by proxy at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares are present; or (2) more than
50% of the outstanding shares. Under these additional restrictions, the Fund
cannot:
(a) Underwrite securities of other companies (except insofar as the Fund
might be deemed to be an underwriter in the resale of any securities held in its
portfolio);
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(b) Invest in commodities or commodity contracts (other than Hedging
Instruments, which it may use as permitted by any of its other fundamental
policies, whether or not any such Hedging Instrument is considered to be a
commodity or a commodity contract);
(c) Purchase securities on margin; however, the Fund may make margin
deposits in connection with any Hedging Instruments which it may use as
permitted by any of its other fundamental policies;
(d) Purchase or write puts or calls except as permitted by any of its
other fundamental policies;
(e) Lend money except in connection with the acquisition of debt
securities that the Fund's investment policies and restrictions permit it to
purchase (see "Investment Objective" and "Investment Policies" in the
Prospectus). The Fund may make loans of portfolio securities (see "Loans of
Portfolio Securities") and enter into repurchase agreements (see "Repurchase
Agreements");
(f) As a non-fundamental policy, invest in or hold securities of any
issuer if officers or Trustees of the Trust or SCMI individually owning more
than 0.5% of the securities of such issuer together own more than 5% of the
securities of such issuer;
(g) As a non-fundamental policy, invest more than 5% of the value of its
total assets in securities of issuers having a record, together with
predecessors, of less than three years of continuous operation;
(h) Make short sales of securities;
(i) Invest in interests in oil, gas or other mineral exploration or
development programs (but may purchase readily marketable securities of
companies which operate, invest in, or sponsor such programs);
(j) Invest in real estate or in interests in real estate (but may
purchase readily marketable securities of companies holding real estate or
interests therein).
MANAGEMENT
OFFICERS AND TRUSTEES. The following information relates to the
principal occupations during the past five years of each Trustee and executive
officer of the Trust and shows the nature of any affiliation with SCMI. Except
as noted, each of these individuals currently serves in the same capacity for
Schroder Capital Funds, Schroder Capital Funds II and Schroder Series Trust,
other registered investment companies in the Schroder family of funds.
PETER E. GUERNSEY, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Insurance Consultant since August 1986; prior thereto
Senior Vice President, Marsh & McLennan, Inc., insurance brokers.
JOHN I. HOWELL, 80, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Private Consultant since February 1987; Honorary Director,
American International Group, Inc.; Director, American International Life
Assurance Company of New York.
CLARENCE F. MICHALIS, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Chairman of the Board of Directors, Josiah Macy, Jr.
Foundation (charitable foundation).
HERMANN C. SCHWAB, 77, c/o the Trust, Two Portland Square, Portland, Maine -
Chairman and Trustee of the Trust; retired since March, 1988; prior thereto,
consultant to SCMI since February 1, 1984.
HON. DAVID N. DINKINS, 69, c/o the Trust, Two Portland Square, Portland, Maine,
Trustee of the Trust; Professor, Columbia University School of International and
Public Affairs; Director, American Stock Exchange, Carver Federal Savings Bank,
Transderm Laboratory Corporation, and The Cosmetic Center, Inc.; formerly,
Mayor, The City of New York.
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PETER S. KNIGHT, 46, c/o the Trust, Two Portland Square, Portland, Maine,
Trustee of the Trust; Partner, Wunder, Knight, Levine, Thelen & Forcey;
Director, Comsat Corp., Medicis Pharmaceutical Corp., and Whitman Education
Group Inc., Formerly, Campaign Manager, Clinton/Gore `96.
SHARON L. HAUGH*, 51, 787 Seventh Avenue, New York, New York, Trustee of the
Trust; Chairman, Schroder Capital Management Inc. ("SCM"), Executive Vice
President and Director, SCMI; Chairman and Director, Schroder Advisors.
MARK J. SMITH*, 35, 33 Gutter Lane, London, England - President and Trustee of
the Trust; Senior Vice President and Director of SCMI since April 1990; Director
and Senior Vice President, Schroder Advisors.
MARK ASTLEY, 33, 787 Seventh Avenue, New York, New York - Vice President of the
Trust; First Vice President of SCMI, prior thereto, employed by various
affiliates of SCMI in various positions in the investment research and portfolio
management areas since 1987.
ROBERT G. DAVY, 36, 787 Seventh Avenue, New York, New York - 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 SCMI in various positions in the investment
research and portfolio management areas since 1986.
MARGARET H. DOUGLAS-HAMILTON, 55, 787 Seventh Avenue, New York, New York - Vice
President of the Trust; Secretary of SCM since July 1995; Senior Vice President
(since April 1997) and General Counsel of Schroders U.S. Holdings Inc. since May
1987; prior thereto, partner of Sullivan & Worcester, a law firm.
RICHARD R. FOULKES, 51, 787 Seventh Avenue, New York, New York - 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.
FERGAL CASSIDY, 28, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust.
JOHN Y. KEFFER, 54, Two Portland Square, Portland, Maine - Vice President of the
Trust; President of FFC, the Fund's transfer and dividend disbursing agent and
other affiliated entities including Forum Financial Services, Inc., Forum
Administrative Services, LLC, and Forum Advisors, Inc.
JANE P. LUCAS, 35, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director and Senior Vice President SCMI; Director of SCM since
September 1995; Director of Schroder Advisors since September 1996; Assistant
Director Schroder Investment Management Ltd. since June 1991.
CATHERINE A. MAZZA, 37, 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.
MICHAEL PERELSTEIN, 41, 787 Seventh Avenue, New York, New York - Vice President
of the Trust; Director since May 1997 and Senior Vice President of SCMI since
January 1997; prior thereto, Managing Director of MacKay - Shields Financial
Corp.
ALEXANDRA POE, 37, 787 Seventh Avenue, New York, New York - Secretary and Vice
President of the Trust; Vice President of SCMI since August 1996; Fund Counsel
and Senior Vice President of Schroder Advisors since August 1996; Secretary of
Schroder Advisors; prior thereto, an investment management attorney with Gordon
Altman Butowsky Weitzen Shalov & Wein since July 1994; prior thereto counsel and
Vice President of Citibank, N.A. since 1989.
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THOMAS G. SHEEHAN, 42, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Relationship Manager and
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, 36, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Group Vice President of SCMI since April 1993, employed in various
positions in the investment research and portfolio management areas since 1987;
Director of SCM since April 1997.
JOHN A. TROIANO, 38, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director of SCM since April 1997; Chief Executive Officer, since July
1, 1997, of SCMI and Managing Director and Senior Vice President of SCMI since
October 1995; prior thereto, employed by various affiliates of SCMI in various
positions in the investment research and portfolio management areas since 1981.
IRA L. UNSCHULD, 31, 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.
CATHERINE S. WOOLEDGE, 55, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Counsel, Forum Financial
Services, Inc. since November 1996. Prior thereto, associate at Morrison &
Foerster, Washington, D.C. from October 1994 to November 1996, associate
corporate counsel at Franklin Resources, Inc. from September 1993 to September
1994, and prior thereto associate at Drinker Biddle & Reath, Philadelphia, PA.
* Interested Trustee of the Trust within the meaning of the 1940 Act.
Schroder Advisors is a wholly owned subsidiary of SCMI, which is a wholly
owned subsidiary of Schroders U.S. Holdings Inc., which in turn is an indirect,
wholly owned U.S. subsidiary of Schroders plc. SCM is also a wholly owned
subsidiary of Schroders U.S. Holdings Inc..
Officers and Trustees who are interested persons of the Trust receive
no salary, fees or compensation from the Fund. Independent Trustees of the Trust
receive an annual retainer of $11,000 and additional fees of $1,250 per meeting
attended in person or $500 per meeting attended by telephone. Members of an
Audit Committee for one or more of the investment companies receive an
additional $1,000 per year. Payment of the annual retainer is allocated among
the various investment companies based on their relative net assets. Payment of
meeting fees is allocated only among those investment companies to which the
meeting relates. None of the registered investment companies in the Fund Complex
has any bonus, profit sharing, pension or retirement plans.
The following table provides the fees paid to each independent Trustee
of the Trust for the year ended December 31, 1997.
<TABLE>
<S> <C> <C> <C> <C>
PENSION OR TOTAL COMPENSATION
RETIREMENT FROM TRUST AND
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL FUND COMPLEX PAID
COMPENSATION FROM AS PART OF TRUST BENEFITS UPON TO TRUSTEES
NAME OF TRUSTEE TRUST EXPENSES RETIREMENT
- -------------------------------- -------------------- -------------------- -------------------- --------------------
Mr. Guernsey $1,365.30 $0 $0 $ 3,983.42
Mr. Howell $1,365.30 $0 $0 $14,983.42
Mr. Michalis $ 865.30 $0 $0 $ 2,483.42
Mr. Schwab $2,365.30 $0 $0 $ 7,983.42
Mr. Dinkins $ 0.00 $0 $0 $11,000.00
Mr. Knight $ 365.30 $0 $0 $11,983.42
</TABLE>
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<PAGE>
* In addition to the Trust, the "Fund Complex" includes three other registered
investment companies (Schroder Capital Funds II, an open-end company; Schroder
Capital Funds, an open-end company; and Schroder Series Trust, an open--end
company) for which SCMI or its affiliate Schroder Capital Management, Inc.,
serves as investment adviser for each series.
As of January 30, 1998, the officers and Trustees of the Trust owned, in
the aggregate, less than 1% of the Trust's outstanding shares.
INVESTMENT ADVISER
SCMI, 787 Seventh Avenue, New York, New York 10019, serves as
investment adviser to each Portfolio under an investment advisory agreement
between Schroder Core and SCMI. SCMI is a wholly owned U.S. subsidiary of
Schroders U.S. Holdings Inc., the wholly owned U.S. holding company subsidiary
of Schroders plc. Schroders plc is the holding company parent of a large
worldwide group of banks and financial service companies (referred to as the
"Schroder Group"), with associated companies and branch and representative
offices in eighteen countries. The Schroder Group specializes in providing
investment management services, with funds under management currently in excess
of $175 billion as of September 30, 1997.
For the period commencement of operations through October 31, 1995 SCMI
received in vestment advisory fees of $19,326 for advisory services provided to
the Fund. For the fiscal years ended October 31, 1996 and 1997, SCMI received
investment advisory fees of $1.115.324 and $1,755,044, respectively, for
services provided to the Portfolio after the Fund converted to a master/feeder
structure. The Fund, due to its investment in the Portfolio, bears a
proportionate part of the management fees paid by the Portfolio (based on the
percentage of the Portfolio's assets attributable to the Fund).
Under the advisory agreement, SCMI is responsible for managing the
investment program for the Fund or Portfolio. In this regard, it is SCMI's
responsibility to make decisions relating to the portfolio investments and to
place purchase and sale orders regarding such investments with brokers or
dealers it selects. SCMI also furnishes Schroder Core Board and the Trust Board
with periodic reports on the investment performance of the Portfolio and the
Fund. Under the terms of the advisory agreement, SCMI is required to manage the
investment portfolio in accordance with applicable laws and regulations. In
making its investment decisions, SCMI does not use material inside information
that may be in its possession or in the possession of its affiliates.
The Fund currently invests all of its assets in the Portfolio. As long
as the Fund remains completely invested in the Portfolio (or any other
investment company), SCMI is not entitled to receive an investment advisory fee
with respect to the Fund. The Fund may withdraw its investment from the
Portfolio at any time if the Trust Board determines that it is in the best
interests of the Fund and its shareholders to do so. Accordingly, the Trust has
retained SCMI as investment adviser to manage the Fund's assets in the event the
Fund's assets are so withdrawn. The investment advisory agreement between the
Trust and SCMI with respect to the Fund is the same in all material respects as
the Investment Advisory Agreement with respect to the Portfolio (except as to
the parties, the circumstances under which fees will be paid, and the
jurisdiction whose laws govern the agreement). During a time that the Fund did
not have substantially all of its assets invested in the Portfolio or another
investment company, for providing investment advisory services under the
investment advisory agreement for the Fund, SCMI would be entitled to receive
advisory fees monthly at the annual rate of 1.00% of the of the Fund's average
daily net assets.
The advisory agreements for the Fund and Portfolio continue in effect
provided such continuance is approved annually: (1) by the holders of a majority
of the outstanding voting securities of the Fund or by the Board; and, in either
case, (2) by a majority of the Trustees who are not parties to the agreement or
"interested persons" (as defined in the 1940 Act) of any such party. Each
advisory agreement may be terminated without penalty by vote of the Trustees or
the Fund's shareholders or Portfolio's interestholders on 60 days' written
notice to the investment adviser, or by the investment adviser on 60 days'
written notice to the Trust or Core Trust, as the case may be, and each
terminates automatically if assigned. Each advisory agreement also provides that
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
21
<PAGE>
performance of duties to the Fund or Portfolio, except for willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of any obligations and duties under the agreement.
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Advisors, under which Schroder Advisors provides
management and administrative services necessary for the operation of the Fund,
including: (1) preparation of shareholder reports and communications; (2)
regulatory compliance, such as reports to and filings with the SEC and state
securities commissions; and (3) general supervision of the operation of the
Fund, including coordination of the services performed by its investment
adviser, transfer agent, custodian, independent accountants, legal counsel and
others. Schroder Advisors is a wholly owned subsidiary of SCMI and is a
registered broker-dealer organized to act as administrator and distributor of
mutual funds.
For providing administrative services Schroder Advisors is entitled to
receive a monthly fee at the annual rate set out in the Prospectus as to the
Fund's average daily net assets. The administration agreement is terminable with
respect to the Fund without penalty, at any time, by the Trust Board, upon 60
days' written notice to Schroder Advisors or by Schroder Advisors upon 60 days'
written notice to the Trust.
The Trust has entered into a subadministration agreement with FAdS.
Under its agreement, FAdS assists Schroder Advisors with certain of its
responsibilities under the administration agreement, including shareholder
reporting and regulatory compliance. For providing its services, FAdS is
entitled to receive a monthly fee from the Fund at the annual rate set out in
the Prospectus as to the Fund's average daily net assets. The subadministration
agreement is terminable with respect to the Fund without penalty, at any time,
by the Trust, upon 60 days' written notice to FAdS or by FAdS upon 60 days'
written notice to the Trust.
Schroder Advisors and FAdS provide similar services to the Portfolio
pursuant to administration and subadministration agreements between Schroder
Core and each of these entities, for which Schroder Advisors and FAdS are each
compensated at the annual rate set out in the Prospectus as to the Portfolio's
average daily net assets. The administration and subadministration agreements
with regard to the Portfolio are the same in all material respects as the Fund's
respective agreements (except as to the parties, the circumstances under which
the fees will be paid, and the fees payable thereunder).
The fees paid by the Fund and Portfolio to SCMI and Schroder Advisors
may equal up the totals set forth in the Prospectus as to each Fund's average
daily net assets. Such fees as a whole are higher than advisory and management
fees charged to mutual funds that invest primarily in U.S. securities but not
necessarily higher than those charged to funds with investment objectives
similar to that of the Fund.
From commencement of operations through October 31, 1995, Schroder
Advisors received an administrative fee of $19,591. For the fiscal year ended
October 31, 1996 Schroder Advisors received administrative fees of $ 291,903, of
which $175,124 was paid to FAdS. For the fiscal year ended October 31, 1997,
Schroder Advisors received administration fees of $122,999, and FAdS received
subadministration fees of $214,672. These figures include the Fund's pro rata
portion of these operating expenses of the Portfolio.
Schroder Advisors has voluntarily waived a portion of its advisory fee
and has assumed certain expenses of the Fund so that the Fund's total expenses,
including indirect expenses borne by the Fund as a result of investing in the
Portfolio, would not exceed 1.45% (of the respective share's average daily net
assets) on Investor Shares and 1.70% (of the respective share's average daily
net assets) on Advisor Shares. The expense limitations 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 Act ) of the Trust.
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.
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<PAGE>
For the year ended October 31, 1997, Schroder Advisors waived fees and
reimbursed expenses of $19,679 and $8,705, respectively. For the year ended
October 31, 1996, Schroder Advisors waived fees of $53,602.
DISTRIBUTION OF FUND SHARES
Schroder Advisors, 787 Seventh Avenue, New York, New York 10019, serves
as Distributor of Fund shares under a Distribution Agreement. Schroder Advisors
is a wholly owned subsidiary of Schroders U.S. Holdings Inc., the parent company
of SCMI, and is a registered broker-dealer organized to act as administrator
and/or distributor of mutual funds.
Under the Distribution Agreement, Schroder Advisors has agreed to use
its best efforts to secure purchases of Fund shares in jurisdictions in which
such shares may be legally offered for sale. Schroder Advisors is not obligated
to sell any specific amount of Fund shares. Further, Schroder Advisors has
agreed in the Distribution Agreement to serve without compensation and to pay
from its own resources all costs and expenses incident to the sale and
distribution of Fund shares including expenses for printing and distributing
prospectuses and other sales materials to prospective investors, advertising
expenses, and the salaries and expenses of its employees or agents in connection
with the distribution of Fund shares.
Under a Distribution Plan (the "Plan") adopted by the Trust with
respect to Advisor 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 "1934 Act") (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 that Fund's average daily net
assets) for: (1) advertising expenses including advertising by radio,
television, newspapers, magazines, brochures, sales literature or direct mail;
(2) costs of printing prospectuses and other materials to be given or sent to
prospective investors; (3) 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 (4) payments to
broker-dealers (other than the Distributor) or other organizations 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. The
maximum annual amount currently payable under the Plan is 0.25%, but no payments
may be made under the Plan until the Trust Board so authorizes. Any payment made
pursuant to the Plan is contingent upon the Trust Board's approval. The Fund is
not liable for distribution expenditures of the Distributor in any given year in
excess of the maximum amount (0.50% per annum of the 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
series 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 series of
the Trust. The Trust 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 Trust , 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 (the "disinterested Trustees"), 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 disinterested Trustees. The Plan has been approved, and is subject to annual
approval, by the Trust Board and by the disinterested Trustees, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The Plan is
terminable with respect to the Fund at any time by a vote of a majority of the
disinterested Trustees or by vote of the holders of a majority of the shares of
the Fund. During the period ended October 31, 1997, there were no expenses
incurred dollars under the Plan.
GLASS-STEAGALL ACT
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
23
<PAGE>
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 Fund shareholders, and alternative means for
continuing the 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.
FUND ACCOUNTING
Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of
Forum, performs fund accounting services for the Fund under an agreement with
the Trust. The Accounting Agreement is terminable with respect to the Fund
without penalty, at any time, by the Trust upon 60 days' written notice to Forum
Accounting or by Forum Accounting upon 60 days' written notice to the Trust.
Under its agreement, Forum Accounting prepares and maintains the books
and records of the Fund that are required to be maintained under the 1940 Act,
calculates the net asset value per share of the Fund, calculates dividends and
capital-gain distributions, and prepares periodic reports to shareholders and
the SEC. For its services to the Fund, Forum Accounting is entitled to receive
from the Trust a fee of $36,000 per year plus $12,000 per year for each class of
the Fund above one. Forum Accounting is entitled to an additional $24,000 per
year with respect to global and international funds. In addition, Forum
Accounting also is entitled to an additional $12,000 per year with respect to
tax-free money market funds, funds with more than 25% of their total assets
invested in asset-backed securities, funds that have more than 100 security
positions, or funds that have a monthly portfolio turnover rate of 10% or
greater.
For the fiscal period ending October 31, 1995 and the fiscal years
ended October 31, 1996 and 1997, the Fund paid fund accounting fees of $35,667,
$73,000 and $ 75,571, respectively. For fiscal years 1996 and 1997, these
figures include the Fund's pro rata portion of these operating expenses of the
Portfolio.
Forum Accounting is required to use its best judgment and efforts in
rendering fund accounting services and is not liable to the Trust for any action
or inaction in the absence of bad faith, willful misconduct or gross negligence.
Forum Accounting is not responsible or liable for any failure or delay in
performance of its fund accounting obligations arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control. The
Trust has agreed to indemnify and hold harmless Forum Accounting and its
employees, agents, officers and directors against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, counsel fees and all other expenses arising out of or in any way
related to Forum Accounting's actions taken or failures to act with respect to
the Fund or based, if applicable, upon information, instructions or requests
with respect to the Fund given or made to Forum Accounting by an officer of the
Trust duly authorized. This indemnification does not apply to Forum Accounting's
actions taken or failures to act in cases of Forum Accounting's own bad faith,
willful misconduct or gross negligence.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Investment decisions for the Fund or the Portfolio and for SCMI's other
investment advisory clients are made with a view to achieving their respective
investment objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved, and a
particular security may be bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In some instances, one client
may sell a particular security to another client. It also sometimes happens that
two or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as is possible,
averaged as to price and allocated between such clients in a manner that, in
SCMI's opinion, is equitable to each and in accordance with the
24
<PAGE>
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients. Each Portfolio's portfolio transaction costs
are borne pro rata by its investors, including the Fund that invests in it.
BROKERAGE AND RESEARCH SERVICES
Transactions on U.S. stock exchanges and other agency transactions
involve the payment of negotiated brokerage commissions. Such commissions vary
among brokers. Also, a particular broker may charge different commissions
according to the difficulty and size of the transaction; for example,
transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the U.S. Since
most brokerage transactions for the Fund are placed with foreign broker-dealers,
certain portfolio transaction costs for the Fund may be higher than fees for
similar transactions executed on U.S. securities exchanges. However, SCMI seeks
to achieve the best net results in effecting its portfolio transactions. There
is generally less governmental supervision and regulation of foreign stock
exchanges and brokers than in the U.S. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid includes a disclosed, fixed commission or
discount retained by the underwriter or dealer.
The Fund's and Portfolio's advisory agreements authorize and direct
SCMI to place orders for the purchase and sale of the Fund's or Portfolio's
investments with brokers or dealers it selects and to seek "best execution" of
such portfolio transactions. SCMI places all such orders for the purchase and
sale of portfolio securities and buys and sells securities through a substantial
number of brokers and dealers. In so doing, SCMI uses its best efforts to obtain
the most favorable price and execution available. The Fund or the Portfolio may,
however, pay higher than the lowest available commission rates when SCMI
believes it is reasonable to do so in light of the value of the brokerage and
research services provided by the broker effecting the transaction. In seeking
the most favorable price and execution, SCMI considers all factors it deems
relevant (including price, transaction size, the nature of the market for the
security, the commission amount, the timing of the transaction (taking into
account market prices and trends), the reputation, experience and financial
stability of the broker-dealers involved, and the quality of service rendered by
the broker-dealers in other transactions).
For the period from commencement of operations through October 31,
1996, the Fund paid a total of $101,087 in commissions. For the fiscal year
ended October 31, 1997, the Portfolio paid a total of $1,413,998 in commissions.
Historically, investment advisers, including advisers of investment
companies and other institutional investors, have received research services
from broker-dealers that execute portfolio transactions for the advisers'
clients. Consistent with this practice, SCMI may receive research services from
broker-dealers with which it places portfolio transactions. These services,
which in some cases may also be purchased for cash, include such items as
general economic and security market reviews, industry and company reviews,
evaluations of securities and recommendations as to the purchase and sale of
securities. Some of these services are of value to SCMI in advising various of
its clients (including the Fund or the Portfolio), although not all of these
services are necessarily useful and of value in managing the Fund or the
Portfolio. The investment advisory fee paid by the Fund or the Portfolio is not
reduced because SCMI and its affiliates receive such services.
As permitted by Section 28(e) of the 1934 Act, SCMI may cause the Fund
or the Portfolio to pay a broker-dealer that provides SCMI with "brokerage and
research services" (as defined in the 1934 Act) an amount of disclosed
commission for effecting a securities transaction in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
In addition, although it does not do so currently SCMI may allocate brokerage
transactions to broker-dealers who have entered into arrangements under which
the broker-dealer allocates a portion of the commissions paid by the Fund or the
Portfolio toward payment of Fund or Portfolio expenses, such as custodian fees.
Subject to the general policies of the Fund or the Portfolio regarding
allocation of portfolio brokerage as set forth above, each Board of Trustees has
authorized SCMI to employ: (1) Schroder & Co. Inc. ("Schroder Inc.") an
25
<PAGE>
affiliate of SCMI, to effect securities transactions on the New York Stock
Exchange only; and (2) Schroder Securities Limited and its affiliates
(collectively, "Schroder Securities"), affiliates of SCMI, to effect securities
transactions on various foreign securities exchanges on which Schroder
Securities has trading privileges, provided certain other conditions are
satisfied as described below.
Payment of brokerage commissions to Schroder Inc. or Schroder
Securities for effecting such transactions is subject to Section 17(e) of the
1940 Act, which requires, among other things, that commissions for transactions
on a securities exchange paid by a registered investment company to a broker
that is an affiliated person of such investment company (or an affiliated person
of another person so affiliated) not exceed the usual and customary broker's
commissions for such transactions. It is the policy of the Trust that
commissions paid to Schroder Inc. or Schroder Securities must be, in SCMI's
opinion: (1) at least as favorable as commissions contemporaneously charged by
Schroder Inc. or Schroder Securities, as the case may be, on comparable
transactions for their most favored unaffiliated customers; and (2) at least as
favorable as those which would be charged on comparable transactions by other
qualified brokers having comparable execution capability. The Board and Core
Board, including a majority of the respective non-interested Trustees, have each
adopted procedures pursuant to Rule 17e-1 under the 1940 Act to ensure that
commissions paid to Schroder Inc. or Schroder Securities by the Fund or the
Portfolio satisfy the foregoing standards. Such procedures are reviewed
periodically by the applicable Board, including a majority of the non-interested
Trustees. Each Board also reviews all transactions at least quarterly for
compliance with such procedures.
It is further a policy of the Fund and the Portfolio that all such
transactions effected by Schroder Inc. on the New York Stock Exchange be in
accordance with Rule 11a2-2(T) promulgated under the 1934 Act, which requires in
substance that a member of such exchange not associated with Schroder Inc.
actually execute the transaction on the exchange floor or through the exchange
facilities. Thus, while Schroder Inc. will bear responsibility for determining
important elements of execution such as timing and order size, another firm will
actually execute the transaction.
Schroder Inc. pays a portion of the brokerage commissions it receives
from the Fund or the Portfolio to the brokers executing the transactions on the
New York Stock Exchange. In accordance with Rule 11a2-2(T), the Schroder Core
has entered into an agreement with Schroder Inc. permitting it to retain a
portion of the brokerage commissions paid to it by the Fund or the Portfolio.
Each Board, including a majority of the non-interested Trustees, have approved
this agreement.
Neither the Fund nor the Portfolio has any understanding or arrangement
to direct any specific portion of its brokerage to Schroder Inc. or Schroder
Securities, and neither will direct brokerage to Schroder Inc. or Schroder
Securities in recognition of research services.
From time to time, the Fund or the Portfolio may purchase securities of
a broker or dealer through which it regularly engages in securities
transactions. During the fiscal year ended October 31, 1996, the Fund purchased
securities of Global Securities, one of its regular broker-dealers. Such
securities had a value of $110,979 as of the end of the Fund's fiscal year.
There were no reportable purchases for the fiscal year ended October 31, 1997.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DETERMINATION OF NET ASSET VALUE PER SHARE
The net asset value per share of each class of the Fund is determined
as of the close of trading on the New York Stock Exchange each day that the
Exchange is open. Any assets or liabilities initially expressed in terms of
non-U.S. dollar currencies are translated into U.S. dollars at the prevailing
market rates as quoted by one or more banks or dealers on the afternoon of
valuation. The Exchange's most recent holiday schedule (which is subject to
change) states that it will close on New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
26
<PAGE>
The Board has established procedures for the valuation of the Fund's
securities: (1) equity securities listed or traded on the New York or American
Stock Exchange or other domestic or foreign stock exchange are valued at their
latest sale prices on such exchange that day prior to the time when assets are
valued; in the absence of sales that day, such securities are valued at the
mid-market prices (in cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by the Portfolio's investment adviser); (2) unlisted equity securities
for which over-the-counter market quotations are readily available are valued at
the latest available mid-market prices prior to the time of valuation; (3)
securities (including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures; (4) debt
securities having a maturity in excess of 60 days are valued at the mid-market
prices determined by a portfolio pricing service or obtained from active market
makers on the basis of reasonable inquiry; and (5) short-term debt securities
(having a remaining maturity of 60 days or less) are valued at cost, adjusted
for amortization of premiums and accretion of discount.
When an option is written, an amount equal to the premium received is
recorded in the books as an asset, and an equivalent deferred credit is recorded
as a liability. The deferred credit is adjusted ("marked-to-market") to reflect
the current market value of the option. Options are valued at their mid-market
prices in the case of exchange-traded options or, in the case of options traded
in the over-the-counter market, the average of the last bid price as obtained
from two or more dealers unless there is only one dealer, in which case that
dealer's price is used. Futures contracts and related options are stated at
market value.
REDEMPTIONS IN-KIND
In the event that payment for redeemed shares is made wholly or partly
in portfolio securities, shareholders may incur brokerage costs in converting
the securities to cash. An in-kind distribution of portfolio securities is
generally less liquid than cash. The shareholder may have difficulty finding a
buyer for portfolio securities received in payment for redeemed shares.
Portfolio securities may decline in value between the time of receipt by the
shareholder and conversion to cash. A redemption in-kind of portfolio securities
could result in a less diversified portfolio of investments for the Fund and
could affect adversely the liquidity of its investment portfolio.
TAXATION
Under the Internal Revenue Code of 1986, as amended (the "Code"), the
Fund and each other series established from time to time by the Trust Board is
treated as a separate taxpayer for federal income tax purposes with the result
that: (1) each such series must meet separately the income and distribution
requirements for qualification as a regulated investment company; and (2) the
amounts of investment income and capital gain earned are determined on a
series-by-series (rather than on a Trust-wide) basis.
The Fund qualified last year as a regulated investment company under
Subchapter M of the Code and intends to so qualify each year so long as such
qualification is in the best interests of its shareholders. To do so, the Fund
must distribute to shareholders at least 90% of its "investment company taxable
income" as defined in the Code (which includes, among other items, dividends,
interest and the excess of any net short-term capital gain over net long-term
capital loss), and to meet certain diversification of assets, source of income,
and other requirements of the Code. By so doing, the Fund will not be subject to
federal income tax on its investment company taxable income and "net capital
gain" (the excess of net long-term capital gain over net short-term capital
loss) distributed to shareholders. If the Fund does not meet all of these Code
requirements, it will be taxed as an ordinary corporation, and its distributions
will be taxable to shareholders as ordinary income.
Amounts not distributed on a timely basis (in accordance with a
calendar year distribution requirement) are subject to a 4% nondeductible excise
tax. To prevent this, the Fund must distribute for each calendar year an amount
equal to the sum of: (1) at least 98% of its ordinary income (excluding any
capital gain or loss) for the calendar year; (2) at least 98% of the excess of
its capital gain over capital loss realized during the one-year period ending
October 31 of such year; and (3) all such ordinary income and capital gain for
previous years that were not distributed during such years. A distribution will
be treated as paid during the calendar year if it is declared by the Fund in
October, November or December of the year with a record date in such month and
paid by the Fund during
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<PAGE>
January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.
Distributions of investment company taxable income (including net
realized short-term capital gain) are taxable to shareholders as ordinary
income. Generally, it is not expected that such distributions will be eligible
for the dividends received deduction available to corporations. However, if the
Fund acquires at least 10% of the stock of a foreign corporation that has U.S.
source income, a portion of that 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 Fund shares have
been held by a shareholder and are not eligible for the dividends received
deduction. Such distributions will qualify for the new reduced rates for capital
gains on assets held for more than 18 months to the extent they represent gains
on the sale of such assets. A loss realized by a shareholder on the sale of Fund
shares with respect to which capital-gain distributions have been paid will, to
the extent of such capital-gain distributions, be treated as long-term capital
loss (even though such shares may have been held by the shareholder for one year
or less). Further, a loss realized on a disposition will be disallowed to the
extent the shares disposed of are replaced (whether by reinvestment or
distribution or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss.
All distributions to shareholders are taxable whether reinvested in
additional shares or received in cash. Shareholders that reinvest distributions
will have for federal income tax purposes a cost basis in each share received
equal to the net asset value of a share of the Fund on the reinvestment date.
Shareholders will be notified annually as to the federal tax status of
distributions.
Distributions by the Fund reduce the net asset value of that Fund's
shares. If a distribution reduces the net asset value below a shareholder's cost
basis, such distribution nevertheless would be taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution, which will be returned to the investor
in the form of a taxable distribution.
Upon redemption or sale of shares, a shareholder will realize a taxable
gain or loss, which will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands. Such gain or loss generally will be
long-term or short-term depending upon the shareholder's holding period for the
shares, and generally will qualify for the new reduced rates for capital gains
if the shares have been held for more than 18 months.
Ordinary income dividends paid to Fund shareholders who are nonresident
aliens are subject to a 30% U.S. withholding tax under existing provisions of
the Code applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
Nonresident shareholders are urged to consult their own tax advisors concerning
the applicability of the U.S. withholding tax.
Dividends and interest received (and, in certain circumstances,
realized capital gain) by the Fund may give rise to withholding and other taxes
imposed by foreign countries. Tax conventions between certain countries and the
U.S. may reduce or eliminate such taxes. If more than 50% in value of the Fund's
total assets at the close of its taxable year consists of securities of foreign
corporations, that Fund will be eligible, and ordinarily expects, to file an
election with the Internal Revenue Service ("IRS") pursuant to which
shareholders of the Fund will be required to include their proportionate share
of such withholding taxes in their U.S. income tax returns as gross income;
treat such proportionate share as taxes paid by them; and, subject to certain
limitations, deduct such proportionate share in computing their taxable incomes
or, alternatively, use them as foreign tax credits against their U.S. income
taxes. No deductions for foreign taxes, however, may be claimed by noncorporate
shareholders who do not itemize deductions. A shareholder that is a nonresident
alien individual or a foreign corporation may be subject to U.S. withholding tax
on the income resulting from the Fund's election described in this paragraph but
may not be able to
28
<PAGE>
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.
Due to investment laws in certain emerging market countries, it is
anticipated that the Fund's investments in equity securities in such countries
will consist primarily of shares of investment companies (or similar investment
entities) organized under foreign law or of ownership interests in special
accounts, trusts or partnerships. If the Fund purchases shares of an investment
company (or similar investment entity) organized under foreign law, that Fund
will be treated as owning shares in a passive foreign investment company
("PFIC") for U.S. federal income tax purposes. The Fund may be subject to U.S.
federal income tax, and an additional tax in the nature of interest, on a
portion of distributions from such company and on gain from the disposition of
such shares (collectively referred to as "excess distributions"), even if such
excess distributions are paid by that Fund as a dividend to its shareholders.
The Fund may make an election with respect to PFICs in which it owns
shares that will allow it to avoid the taxes on excess distributions. However,
such election may cause the Fund to recognize income in a particular year in
excess of the distributions received from such PFICs.
The Fund may write, purchase or sell options or futures contracts.
Unless the Fund is eligible to, and does, make a special election, such options
and futures contracts that are "Section 1256 contracts" will be "marked to
market" for federal income tax purposes at the end of each taxable year (I.E.,
each option or futures contract will be treated as sold for its fair market
value on the last day of the taxable year). In general, unless such special
election is made, gain or loss from transactions in options and futures
contracts will be 60% long-term and 40% short-term capital gain or loss.
Code Section 1092, which applies to certain "straddles," may affect the
taxation of the Fund's transactions in options and futures contracts. Under
Section 1092, the Fund may be required to postpone recognition for tax purposes
of losses incurred in certain closing transactions in options and futures.
In general, gain from "foreign currencies" and from foreign currency
options, foreign currency futures contracts and forward foreign exchange
contracts relating to investments in stock, securities or foreign currencies
will be qualifying income for purposes of determining whether the Fund qualifies
as a regulated investment company. It is currently unclear, however, who will be
treated as the issuer of a foreign currency instrument or how foreign currency
options, futures contracts or forward foreign currency contracts will be valued
for purposes of the regulated investment company diversification requirements
applicable to the Fund.
Under Code Section 988, special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional currency
(I.E., unless certain special rules apply, currencies other than the U.S.
dollar). In general, foreign currency gain or loss from certain forward
contracts not traded in the interbank market, from futures contracts that are
not "regulated futures contracts," and from unlisted options will be treated as
ordinary income or loss under Code Section 988. In certain circumstances, the
Fund may elect capital gain or loss treatment for such transactions. In general,
however, Code Section 988 gain or loss will increase or decrease the amount of
the Fund's investment company taxable income available to be distributed to
shareholders as ordinary income. Additionally, if the Code Section 988 loss
exceeds other investment company taxable income during a taxable year, the Fund
would not be able to make any ordinary dividend distributions, and any
distributions made before the loss was realized but in the same taxable year
would be recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's basis in his or her Fund shares.
The Trust is required to report to the Internal Revenue Service ("IRS")
all distributions and gross proceeds from the redemption of Fund shares (except
in the case of certain exempt shareholders). All such distributions and proceeds
generally will be subject to the withholding of federal income tax at a rate of
31% ("backup withholding") in the case of non-exempt shareholders if: (1) the
shareholder fails to furnish the Trust with and to certify the shareholder's
correct taxpayer identification number or social security number; (2) the IRS
notifies the Trust that the shareholder has failed to report properly certain
interest and dividend income to the IRS and to respond to notices to that
effect; or (3) when required to do so, the shareholder fails to certify that it
is not subject to backup withholding. If the withholding provisions are
applicable, any such distributions or proceeds, whether reinvested in additional
29
<PAGE>
shares or taken in cash, will be reduced by the amount required to be withheld.
Any amounts withheld may be credited against the shareholder's federal income
tax liability. Investors may wish to consult their tax advisors about the
applicability of the backup withholding provisions.
U.S. federal income taxation of a shareholder who, under the Code, is a
non-resident alien individual, a foreign trust or estate, foreign corporation or
foreign partnership ("non-U.S. shareholder") depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder. Ordinarily, income from the Fund will not be treated as so
"effectively connected."
If the income from the Fund is not treated as "effectively connected"
with a U.S. trade or business carried on by the non-U.S. shareholder dividends
of net investment income (which includes short-term capital gains), whether
received in cash or reinvested in shares, will be subject to a U.S. federal
income tax of 30% (or lower treaty rate), which tax is generally withheld from
such dividends. Furthermore, such non-U.S. shareholders may be subject to U.S.
federal income tax at the rate of 30% (or lower treaty rate) on their income
resulting from the Fund's election (described above) to "pass through" the
amount of non-U.S. taxes paid by the Fund, but may not be able to claim a credit
or deduction with respect to the non-U.S. income taxes treated as having been
paid by them.
A non-U.S. shareholder whose income is not treated as "effectively
connected" with a U.S. trade or business generally will not be subject to U.S.
federal income taxation on distributions of net long-term capital gains and any
gain realized upon the sale of Fund shares. If the non-U.S. shareholder is
treated as a non-resident alien individual but is physically present in the
United States for more than 182 days during the taxable year, then in certain
circumstances such distributions of net long-term capital gains amounts retained
by Fund which are designated as undistributed capital gains and gain from the
sale of Fund shares will be subject to a U.S. federal income tax of 30% (or
lower treaty rate). In the case of a non-U.S. shareholder who is a non-resident
alien individual, the Fund may be required to withhold U.S. federal income tax
at a rate of 31% of distributions (including distributions of net long-term
capital gains) unless IRS Form W-8 is provided.
If the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by a non-U.S. shareholder, then distributions of net
investment income (which includes short-term capital gains) whether received in
cash or reinvested in shares net long-term capital gains and amounts otherwise
includable in income, such as amounts retained by the Fund which are designated
as undistributed capital gains and any gains realized upon the sale of shares of
the Fund will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. taxpayers. Non-U.S. shareholders that are corporations may
also be subject to the branch profits tax.
Transfers of shares of the Fund by gift by a non-U.S. shareholder will
generally not be subject to U.S. federal gift tax, but the value of shares of
the Fund held by such a shareholder at death will be includable in the
shareholder's gross estate for U.S. federal income tax purposes.
The income tax and estate tax consequences to a non-U.S. shareholder
entitled to claim the benefits of an applicable tax treaty may be different from
those described herein. Non-U.S. shareholders may be required to provide
appropriate documentation to establish their entitlement to the benefits of such
a treaty.
Non-U.S. shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in shares of
the Fund.
The foregoing discussion relates only to federal income tax law as
applicable to U.S. persons (I.E., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). Distributions by the Fund also
may be subject to state and local taxes, and their treatment under state and
local income tax laws may differ from the federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of federal, foreign, state and local taxation.
30
<PAGE>
OTHER INFORMATION
FUND STRUCTURE
CLASSES OF SHARES. The Fund has two classes of shares, Investor Shares
and Advisor Shares. Advisor Shares are offered by a separate prospectus to
individual investors, in most cases through Service Organizations. Advisor
Shares incur more expenses but have lower investment minimums than Investor
Shares. Except for certain class differences, each share of each class
represents an undivided, proportionate interest in the Fund. Each share of the
Fund is entitled to participate equally in dividends and other distributions and
the proceeds of any liquidation of the Fund except that, due to the differing
expenses borne by the two classes, the amount of dividends and other
distributions differs between the classes. Information about the other class of
shares is available from the Trust by calling Schroder Advisors at
1-800-730-2932.
THE PORTFOLIO. The Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, which has the same
investment objective and substantially similar policies as those of the Fund.
Accordingly, the Portfolio directly acquires its own securities, and the Fund
acquires an indirect interest in those securities. The Portfolio is a separate
series of Schroder Core, a business trust organized under the laws of the State
of Delaware on September 7, 1995. Schroder Core is registered under the 1940 Act
as an open-end, management investment company and currently has eleven separate
series. The assets of the Portfolio belong only to, and the liabilities of the
Portfolio are borne solely by, that Portfolio and no other portfolio of Schroder
Core.
The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. Other investment companies or other
qualified investors may be permitted to invest in the Portfolio. 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 does not hold meetings of investors except as
required by the 1940 Act. Each investor in the Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On most issues
subject to a vote of investors, as permitted under the 1940 Act and other
applicable law, the Fund's Board may solicit instructions from the Fund's
shareholders and vote the Fund's interest in the Portfolio based upon the
instructions or the Board may determine to vote the Fund's interests in the
Portfolio in the same proportion as the vote of all other interestholders in the
Portfolio. If there are other investors in the Portfolio, there can be no
assurance that any issue that receives a majority of the votes cast by Fund
shareholders would receive a majority of votes cast by all investors in the
Portfolio; indeed, if other investors hold a majority interest in the Portfolio,
they could have voting control of the Portfolio.
The Portfolio's interests are not sold 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 offering price as the Fund and could
have different fees and expenses than the Fund. Therefore, Fund shareholders may
have different returns than shareholders in another investment company that
invests exclusively in the Portfolio. There is currently no such other
investment company that offers its shares to members of the general public.
Information regarding any such funds in the future is available from Schroder
Core by calling Forum Shareholder Services, LLC at 1-800-730-2932.
Under federal securities law, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. Schroder Core, its trustees and
certain of its officers are required to sign the registration statement and
amendments thereto of the Trust and may be required to sign the registration
statements of certain other investors in the Portfolio. In addition, under
federal securities law, Schroder Core may be liable for misstatements or
omissions of a material fact in any proxy soliciting material of a publicly
offered investor in Schroder Core, including the Fund. Each investor in the
Portfolio, including the Trust, has agreed to indemnify Schroder Core and its
Trustees and officers ("Schroder Core Indemnitees") against certain claims.
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<PAGE>
Indemnified claims are those brought against Schroder Core Indemnitees
based on a misstatement or omission of a material fact in the investor's
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Core and was supplied to the investor by Schroder Core. Similarly,
Schroder Core will indemnify each investor in the Portfolio, including the Fund,
for any claims brought against the investor with respect to the investor's
registration statement or proxy materials, to the extent the claim is based on a
misstatement or omission of a material fact relating to information about
Schroder Core that is supplied to the investor by Schroder Core. In addition,
each registered investment company investor in the Portfolio will indemnify each
Schroder Core Indemnitee against any claim based on a misstatement or omission
of a material fact relating to information about a series of the registered
investment company that did not invest in the Schroder Core. The purpose of
these cross-indemnity provisions is principally to limit the liability of
Schroder Core to information that it knows or should know and can control. With
respect to other prospectuses and other offering documents and proxy materials
of investors in Schroder Core, its liability is similarly limited to information
about and supplied by it.
CERTAIN RISKS OF INVESTING IN THE PORTFOLIO. The Fund's investment in
the Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if the Portfolio had a large investor other than
the Fund that redeemed its interest in the Portfolio, the Portfolio's remaining
investors (including the Fund) might, as a result, experience higher pro rata
operating expenses, thereby producing lower returns.
The Fund's entire investment may be withdrawn 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's assets might be withdrawn, for
example, if there were other investors in the Portfolio with power to, and who
did by a vote of the shareholders of all investors (including the Fund), change
the investment objective or policies of the Portfolio in a manner not acceptable
to the Trust Board. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. That
distribution could result in a less diversified portfolio of investments for the
Fund and could affect adversely the liquidity of the Fund's portfolio. If the
Fund decided to convert those securities to cash, it would likely incur
brokerage fees or other transaction costs. If the Fund withdrew its investment
from the Portfolio, the Trust Board would consider appropriate alternatives,
including the management of the Fund's assets in accordance with its investment
objective and policies by SCMI or the investment of all of the Fund's investable
assets in another pooled investment entity having substantially the same
investment objective as the Fund. The inability of the Fund to find a suitable
replacement investment, if the Board decided not to permit SCMI to manage the
Fund's assets, could have a significant impact on shareholders of the Fund.
Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
ORGANIZATION OF THE TRUST
The Trust was organized as a Maryland corporation on July 30, 1969;
reorganized on February 29, 1988 as Schroder Capital Funds, Inc.; and
reorganized on January 9, 1996, as a Delaware business trust. The Trust is
registered as an open-end management investment company under the 1940 Act.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. Securities regulators of some states, however, have
indicated that they and the courts in their state may decline to apply Delaware
law on this point. To guard against this risk, the Trust Instrument contains an
express disclaimer of shareholder liability for the debts, liabilities,
obligations, and expenses of the Trust. The Trust Instrument provides for
indemnification out of each series' property of any shareholder or former
shareholder held personally liable for the obligations of the series. The Trust
Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
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<PAGE>
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply (or no contractual limitation
of liability was in effect) and the series is unable to meet its obligations.
Schroder believes that, in view of the above, there is no risk of personal
liability to shareholders.
CAPITALIZATION AND VOTING
The Trust has authorized an unlimited number of shares of beneficial
interest. The Trust Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate series (such as the Fund)
and may divide series into classes of shares, and the costs of doing so may be
borne by a series or a class or the Trust in accordance with the Trust
Instrument. The Trust currently consists of nine series. Each series offers two
classes of shares, Investor Shares and Advisor Shares.
When issued for the consideration described in the relevant Prospectus
or under the dividend reinvestment plan, shares are fully paid, nonassessable,
and have no preferences as to conversion, exchange, dividends, retirement or
other features. Shares have no preemptive rights and have non-cumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so.
Each shareholder of record is entitled to one vote for each full share held (and
a fractional vote for each fractional share held).
The Trust does not hold annual meetings of shareholders. The matters
considered at an annual meeting typically include the reelection of Trustees,
approval of an investment advisory agreement, and the ratification of the
selection of independent accountants. These matters are not submitted to
shareholders unless a meeting of shareholders is held for some other reason,
such as those indicated below. Each Trustee serves until death, resignation or
removal. Vacancies are filled by the remaining Trustees, subject to the
provisions of the 1940 Act requiring a meeting of shareholders for election of
Trustees to fill vacancies. Similarly, the selection of independent accountants
and renewal of investment advisory agreements for future years is performed
annually by the Trust Board. Future shareholder meetings will be held to elect
Trustees if required by the 1940 Act, to obtain shareholder approval of changes
in fundamental investment policies, to obtain shareholder approval of material
changes in investment advisory agreements, to select new independent accountants
if the employment of the Trust's independent accountants has been terminated,
and to seek any other shareholder approval required under the 1940 Act. The
Trust Board has the power to call a meeting of shareholders at any time when it
believes it is necessary or appropriate.
In addition to the foregoing rights, the Trust Instrument provides that
holders of at least two-thirds of the outstanding shares of the Trust may remove
any person serving as a Trustee at any meeting of the shareholders.
PERFORMANCE INFORMATION
Performance quotations of the average annual total return and
cumulative total return of the Fund is provided in advertisements or reports to
shareholders or prospective investors.
Quotations of average annual total return are expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund or class over periods of 1, 5 and 10 years (or since commencement of
operations if any of these periods are not available), calculated pursuant to
the following formula:
P (1+T)n = 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 reflect the deduction of fund and any class expenses (net
of any reimbursed expenses) on an annual basis and generally assume that all
dividends and distributions, when paid, are reinvested in shares of the same
class.
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<PAGE>
For the one year ended October 31, 1997, the average annual return of
the Fund is set forth in the following table:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR SINCE
ONE THREE YEAR ONE THREE FIVE TEN INCEPTION
MONTHS MONTHS TO DATE YEAR YEARS YEARS YEARS ANNUALIZED
------- ------ ------- ---- ----- ----- ----- -----------
INVESTOR SHARES -16.63% -22.84% -4.84% -0.27% 0.00% 0.00% 0.00% 4.14
ADVISOR SHARES -16.59% -22.9% -4.39% 0.00% 0.00% 0.00% 0.00% -1.50%
</TABLE>
Quotations of cumulative total return reflect only the performance of a
hypothetical investment in a fund or a class during the particular time period
shown. Cumulative total returns vary based on changes in market conditions and
the level of a fund's and any applicable class's expenses, and no reported
performance figure should be considered an indication of performance which may
be expected in the future.
In communications to current or prospective shareholders, performance
figures such as cumulative total return, also may be compared with the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indexes that may assume reinvestment of dividends but generally do not
reflect deductions for administrative and management costs.
Investors who purchase and redeem shares through a customer account
maintained at a financial institution or a Service Organization may be charged
one or more of the following types of fees as agreed upon by the financial
institution or Service Organization and the investor, with respect to the
customer services provided: (1) account fees (a fixed amount per month or per
year); (2) transaction fees (a fixed amount per transaction processed); (3)
compensating balance requirements (a minimum dollar amount a customer must
maintain in order to obtain the services offered); or (4) 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 have the effect of reducing
the average annual or cumulative total returns for those investors.
PRINCIPAL SHAREHOLDERS
As of February 27, 1998, the following persons owned of record or beneficially
5% or more of the Fund's shares:
<TABLE>
<S> <C> <C>
SHAREHOLDER SHARE BALANCE PERCENT OF FUND
- ----------- ------------- ---------------
The Robert Wood Johnson Foundation 4,917,050.504 27.35%
P.O. Box 2316
College Road at Route One
Princeton, NJ 08543
University of Chicago 3,845,643.143 21.39%
450 North Cityfront Plaza Drive
Chicago, IL 60611
Baptist Foundation of Texas 1,668,533.558 9.28%
1601 Elm Street, Suite 1700
Dallas, Texas 75201-7241
Montgomery Securities 2,197,129.755 13.16%
600 Montgomery St., 4th Floor
San Francisco, CA 94111
</TABLE>
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<PAGE>
CUSTODIAN
The Chase Manhattan Bank, through its Global Custody Division located
in London, England, acts as custodian of the Portfolio's assets but plays no
role in making decisions as to the purchase or sale of portfolio securities for
the Portfolio. Pursuant to rules adopted under the 1940 Act, the Portfolio may
maintain its foreign securities and cash in the custody of certain eligible
foreign banks and securities depositories. Selection of these foreign custodial
institutions is made currently by the Schroder Core Trust Board following a
consideration of a number of factors, including (but not limited to) the
reliability and financial stability of the institution; the ability of the
institution to perform capably custodial services for the Portfolio; the
reputation of the institution in its national market; the political and economic
stability of the country in which the institution is located; and further risks
of potential nationalization or expropriation of Portfolio assets.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC, Two Portland Square, Portland, Maine
04101, acts as the Fund's transfer agent and dividend disbursing agent.
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
counsel to the Trust, passes upon certain legal matters in connection with the
shares offered by the Fund.
INDEPENDENT ACCOUNTANT
Coopers & Lybrand L.L.P. serves as independent accountants for the Trust.
Coopers & Lybrand L.L.P. provides audit services and consultation in connection
with review of U.S. SEC filings. Their address is One Post Office Square,
Boston, Massachusetts 02109.
YEAR 2000 DISCLOSURE
The Fund receives services from the investment advisor, administrators,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the Year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. Schroder
Advisors is taking steps that it believes are reasonably designed to address
this potential "Year 2000" problem and to obtain satisfactory assurances that
comparable steps are being taken by the Fund's other major service providers.
There can be no assurance, however, that these steps will be sufficient to avoid
any adverse impact on the Fund from this problem.
REGISTRATION STATEMENT
This SAI and the Prospectuses do not contain all the information
included in the Trust's registration statement filed with the SEC under the
Securities Act of 1933 with respect to the securities offered hereby, certain
portions of which have been omitted pursuant to the rules and regulations of the
SEC. The registration statement, including the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C.
Statements contained herein and in the Prospectuses 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.
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<PAGE>
FINANCIAL STATEMENTS
The fiscal year end of the Fund is October 31. Financial statements for
the Fund's semi-annual period and fiscal year will be distributed to
shareholders of record. The Board in the future may change the fiscal year end
of the Fund.
36
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) INCLUDED IN THE PROSPECTUS:
Financial Highlights.
INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION AND INCORPORATED
HEREIN BY REFERENCE:
Audited financial statements for the fiscal year ended October 31, 1997
including Schedule of Investments, Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, Financial
Highlights, Notes to Financial Statements and Report of Independent
Accountants for Schroder International Fund, Schroder International
Smaller Companies Fund, Schroder U.S. Equity Fund and Schroder Emerging
Markets Fund Institutional Portfolio (Annual Reports filed via EDGAR on
January 6, 1998 and January 9, 1998, accession numbers
0000889812-98-000006, 000889812-98-000005, 000889812-98-000004 and
0001004402-98-000018, respectively).
Unaudited financial statements for the period ended November 30, 1997
including Schedule of Investments (Schroder Micro Cap Fund only),
Statement of Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets, Financial Highlights, Notes to Financial
Statements (unaudited) and Supplemental Information (unaudited) for
Schroder U.S. Smaller Companies Fund and Schroder Micro Cap Fund
(Semi-Annual Reports filed via EDGAR on January 29, 1998 and February
5, 1998, accession numbers 0001004402-98-000066 and
0000889812-98-000163 respectively).
(B) EXHIBITS:
NOTES: (1) * INDICATES THAT THE EXHIBIT IS INCORPORATED HEREIN BY
REFERENCE. ALL REFERENCES ARE TO A POST-EFFECTIVE AMENDMENT
("PEA") TO REGISTRANT'S REGISTRATION STATEMENT ON FORM N-1A,
FILE NO. 2-34215.
EXHIBIT
(1) (a)* Trust Instrument of Registrant (filed as
Exhibit (1) to PEA No. 46 via EDGAR on
January 10, 1996, accession number
0000912057-96-000285).
(b) Secretary's Certificate with respect to
amendment to Trust Instrument (filed
herewith).
(2)* BYLAWS dated September 8, 1995 (filed as Exhibit (2) to
Registrant's PEA No. 61 via EDGAR on April 18, 1997, accession
number 0000912057-97-013527).
(3) Not applicable.
(4)* See the following Articles and Sections in the Trust
Instrument filed as Exhibit 24(b)(1)(a): Article II, Sections
2.03, 2.04, 2.06, 2.08, 2.09, 2.10, 2.11; Article III,
Section 3.08; Article VII; Article IX; and Article X, Section
10.03.
<PAGE>
(5) (a)* Investment Advisory Agreement between the Trust and
SCMI dated January 9, 1996, with respect to Schroder
U.S. Equity Fund (filed as Exhibit (5) to Registrant's
PEA No. 61 via EDGAR on April 18, 1997, accession
number 0000912057-97-013527).
(b)* Investment Advisory Agreement between the Trust and
SCMI dated January 9, 1996, with respect to Schroder
U.S. Smaller Companies Fund, Schroder Latin America
Fund and International Equity Fund (filed as Exhibit
5(c) to Registrant's PEA No. 63 via EDGAR on July 18,
1997, accession number 0001004402-97-000035).
(c)* Investment Advisory Agreement between the Trust and
SCMI dated March 15, 1996, with respect to Schroder
International Smaller Companies Fund and Schroder
Global Asset Allocation Fund (filed as Exhibit 5(d) to
Registrant's PEA No. 63 via EDGAR on July 18, 1997,
accession number 0001004402-97-000035).
(d) Investment Advisory Agreement between the Trust and
SCMI dated January 9, 1996, with respect to Schroder
Emerging Markets Fund Institutional Portfolio (filed
herewith).
(e) Investment Advisory Agreement between the Trust and
SCMI dated March 5, 1997, with respect to Schroder
International Bond Fund and Schroder Cash Reserves Fund
(filed herewith).
(f) Investment Advisory Agreement between the Trust and
SCMI dated March 5, 1997, with respect to Schroder
Micro Cap Fund (filed herewith).
(g) Investment Advisory Agreement between the Trust and
SCMI dated November 26, 1996, with respect to Schroder
Emerging Markets Fund (filed herewith).
(6) (a)* Distribution Agreement between the Trust and Schroder
Advisors dated January 9, 1996, with respect to
Schroder U.S. Equity Fund (filed as Exhibit (6) to
Registrant's PEA No. 61 via EDGAR on April 18, 1997,
accession number 0000912057-97-013527).
(b) Distribution Agreement between the Trust and Schroder
Advisors dated January 9, 1996, as amended, with
respect to Schroder Emerging Markets Fund Institutional
Portfolio, Schroder International Fund, Schroder Latin
American Fund, Schroder Global Asset Allocation Fund,
Schroder U.S. Smaller Companies Fund, Schroder
International Smaller Companies Fund, Schroder Emerging
Markets Fund, Schroder European Growth Fund, Schroder
Asia Fund, Schroder Japan Fund, Schroder United Kingdom
Fund, Schroder Cash Reserves Fund, Schroder
International Bond Fund and Schroder Micro Cap Fund
(filed herewith).
(7) Not applicable.
(8) Global Custody Agreement between the Trust and The Chase
Manhattan Bank, N.A. dated January 9, 1996, as amended, with
respect to Schroder Emerging Markets Fund Institutional
Portfolio, Schroder International Fund, Schroder Latin
American Fund, Schroder Global Asset Allocation Fund, Schroder
U.S. Smaller Companies Fund, Schroder International Smaller
Companies Fund, Schroder U.S. Equity Fund, Schroder Emerging
Markets Fund, Schroder European Growth Fund, Schroder Asia
Fund, Schroder Japan Fund, Schroder United Kingdom Fund,
Schroder Cash Reserves Fund, Schroder International Bond Fund
and Schroder Micro Cap Fund (filed herewith).
(9) (a) Administration Agreement between the Trust and Schroder
Advisors dated November 26, 1996, with respect to
Schroder International Fund, Schroder U.S. Smaller
<PAGE>
Companies Fund, Schroder Latin American Fund, Schroder
Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder Micro
Cap Fund, Schroder Emerging Markets Fund, Schroder
International Bond Fund and Schroder U.S. Equity Fund
(filed herewith).
(b) Subadministration Agreement between the Trust and Forum
Administrative Services, LLC dated February 1, 1997,
with respect to Schroder International Fund, Schroder
U.S. Equity Fund, Schroder U.S. Smaller Companies Fund,
Schroder Latin American Fund, Schroder Emerging Markets
Fund Institutional Portfolio, Schroder International
Smaller Companies Fund, Schroder Micro Cap Fund,
Schroder Emerging Markets Fund and Schroder
International Bond Fund (filed herewith).
(c) Transfer Agency Agreement between the Trust and Forum
Financial Corp. dated January 9, 1996, as amended, with
respect to Schroder Emerging Markets Fund Institutional
Portfolio, Schroder International Fund, Schroder Latin
American Fund, Schroder Global Asset Allocation Fund,
Schroder U.S. Smaller Companies Fund, Schroder
International Smaller Companies Fund, Schroder U.S.
Equity Fund, Schroder Emerging Markets Fund, Schroder
European Growth Fund, Schroder Asia Fund, Schroder
Japan Fund, Schroder United Kingdom Fund, Schroder Cash
Reserves Fund, Schroder International Bond Fund and
Schroder Micro Cap Fund (filed herewith).
(d) Fund Accounting Agreement between the Trust and Forum
Financial Corp. dated March 5, 1997, as amended, with
respect to Schroder Emerging Markets Fund Institutional
Portfolio, Schroder International Fund, Schroder Latin
American Fund, Schroder Global Asset Allocation Fund,
Schroder U.S. Smaller Companies Fund, Schroder
International Smaller Companies Fund, Schroder U.S.
Equity Fund, Schroder Emerging Markets Fund, Schroder
European Growth Fund, Schroder Asia Fund, Schroder
Japan Fund, Schroder United Kingdom Fund, Schroder Cash
Reserves Fund, Schroder International Bond Fund and
Schroder Micro Cap Fund (filed herewith).
(10) (a)* Opinion and consent of Jacobs Persinger & Parker with
respect to Schroder International Fund, Schroder U.S.
Equity Fund and Schroder U.S. Smaller Companies Fund
(filed as an Exhibit to Registrant's PEA No. 54 via
EDGAR on October 24, 1996, accession number 0000912057-
96-023645).
(b) Opinion and consent of Smith Katzenstein Furlow LLP
with respect to Schroder Emerging Markets Fund
Institutional Portfolio, Schroder International Smaller
Companies Fund, Schroder Emerging Markets Fund,
Schroder International Bond Fund and Schroder Micro Cap
Fund (filed herewith).
(11) Consent of Coopers & Lybrand L.L.P. with respect to Schroder
Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder International
Fund, Schroder U.S. Equity Fund and Schroder U.S. Smaller
Companies Fund (filed herewith).
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan adopted by Registrant with respect to
Schroder U.S. Smaller Companies Fund, Schroder Latin American
Fund, Schroder International Fund, Schroder Emerging Markets
Fund Institutional Portfolio, Schroder International Smaller
Companies Fund, Schroder Micro Cap Fund, Schroder Emerging
Markets Fund, Schroder International Bond Fund and Schroder
U.S. Equity Fund (filed herewith).
(16) (a)* Schedule of Sample Performance Calculations -- Schroder
U.S. Equity Fund (filed as Exhibit 16 to Registrant's
PEA No. 61 via EDGAR on April 18, 1997, accession
number 0000912057-97-013527).
(b)* Schedule of Sample Performance Calculations -- Schroder
U.S. Smaller Companies Fund (filed as Exhibit 16(b) to
Registrant's PEA No. 64 via EDGAR on September 30,
1997, accession number 0001004402-97-000103).
<PAGE>
(c) Schedule of Sample Performance Calculations -- Schroder
International Fund, Schroder International Smaller
Companies Fund, Schroder Emerging Markets Fund
and Schroder Micro Cap Fund (filed herewith).
(17) Financial Data Schedules (filed herewith).
(18) Multiclass (Rule 18f-3) Plan adopted by Trust (filed as
Exhibit 18 to Registrant's PEA No. 65 via EDGAR on January 27,
1998, accession number 0001004402-98-000053).
Other Exhibits:
* Power of Attorney forms pursuant to which the Trustees and
President have signed this Post-Effective Amendment (filed as
an Other Exhibit to PEA No. 62 via EDGAR on June 30, 1997,
accession number 0001004402-97-000030).
Power of Attorney from Fergal Cassidy (filed herewith).
Power of Attorney from Sharon L. Haugh (filed herewith).
Power of Attorney from Peter S. Knight (filed herewith).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------- --- -------------------------------------
NUMBER OF RECORDHOLDERS
TITLE OF CLASS (FUND) AS OF 1/31/98
- ---------------------------------------------------------------------- ---------------- -- -----------------
ADVISOR INVESTOR
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder U.S. Equity Fund 0 580
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder International Fund 1 569
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder U.S. Smaller Companies Fund 3 542
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder Emerging Markets Fund Institutional Portfolio 4 22
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder International Smaller Companies Fund 0 4
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder Emerging Markets Fund 0 2
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder Micro Cap Fund N/A 8
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder International Bond Fund 0 1
- ---------------------------------------------------------------------- ---------------- -----------------
</TABLE>
ITEM 27. INDEMNIFICATION.
In accordance with Section 3803 of the Delaware Business Trust Act, Section
10.02 of the Registrant's Trust Instrument provides as follows:
"Section 10.02 Indemnification.
"(a) Subject to the exceptions and limitations contained in subsection 10.02(b):
"(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 his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
<PAGE>
"(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. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
"(d) Expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Subsection 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) 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 10.02."
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The following are the directors and principal officers of Schroder Capital
Management International Inc. ("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."), a United Kingdom affiliate
of SCMI, provides investment management services to international clients
located principally in the United States.
David M. Salisbury. Chief Executive Officer, Director and Chairman of
SCMI; Chief Executive and Director of Schroder Ltd.; and Director of
Schroders plc.
Richard R. Foulkes. Deputy Chairman/Executive Vice President of SCMI;
and Director of Schroder Ltd.
John A. Troiano. Chief Executive and Director of SCMI; and Director of
Schroder Ltd.
<PAGE>
David Gibson. Senior Vice President and Director of SCMI; Director of
Schroder Capital Management; and Senior Vice President of Schroder
Ltd.
John S. Ager. Senior Vice President and Director of SCMI; and Director
of Schroder Ltd.
Sharon L. Haugh. Executive Vice President and Director of SCMI;
Director and Chairman of Schroder Advisors; and Director of Schroder
Ltd.
Gavin D.L. Ralston. Senior Vice President and Managing Director of
SCMI; and Director of Schroder Ltd.
Mark J. Smith. Senior Vice President and Director of SCMI; and
Director of Schroder Ltd.
Robert G. Davy. Senior Vice President and Director of SCMI; 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 SCMI; Director of
Schroder Advisors; and Director of Schroder Capital Management.
C. John Govett. Director of SCMI; Group Managing Director of Schroder
Ltd.; and Director of Schroders plc.
Phillipa J. Gould. Senior Vice President and Director of SCMI.
Louise Croset. First Vice President and Director of SCMI; and First
Vice President of Schroder Ltd.
Abdallah Nauphal. Group Vice President and Director of SCMI.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Schroder Advisors, the Registrant's principal underwriter, also serves as
principal underwriter for Schroder Series Trust.
(b) Following is information with respect to each officer and director of
Schroder Advisors, the Distributor of the shares of Schroder Emerging Markets
Fund Institutional Portfolio, Schroder International Fund, Schroder Latin
American Fund, Schroder Global Asset Allocation Fund, Schroder U.S. Smaller
Companies Fund, Schroder International Smaller Companies Fund, Schroder U.S.
Equity Fund, Schroder Emerging Markets Fund, Schroder European Growth Fund,
Schroder Asia Fund, Schroder Japan Fund, Schroder United Kingdom Fund, Schroder
Cash Reserves Fund, Schroder International Bond Fund and Schroder Micro Cap Fund
(each, a series of the Registrant):
Catherine A. Mazza. President.
Mark J. Smith. Director and Senior Vice President.
Sharon L. Haugh. Chairman and Director.
Fergal Cassidy. Treasurer and CFO.
Alexandra Poe. Secretary and Senior Vice President.
Jane E. Lucas. Director.
<PAGE>
* Address for each is 787 Seventh Avenue, New York, New York 10019 except for
Mark J. Smith, whose address is 33 Gutter Lane, London, England, EC2V 8AS.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by Registrant
with respect to Registrant's series pursuant to Section 31(a) of the Investment
Company Act of 1940 and the Rules thereunder are maintained at the offices of
Schroder Capital Management International Inc. (investment management records)
and Schroder Advisors (administrator and distributor records), 787 Seventh
Avenue, New York, New York 10019, except that certain items are maintained at
the following locations:
(a) Forum Accounting Services, LLC, Two Portland Square, Portland, Maine 04101
(fund accounting records).
(b) Forum Administrative Services, LLC, Two Portland Square, Portland, Maine
04101 (corporate minutes and all other records required under the
Subadministration Agreement).
(c) Forum Financial Corp., Two Portland Square, Portland, Maine 04101
(shareholder records).
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(a) Registrant undertakes to file a post-effective amendment(s), using
financial statements that need not be certified, within four to six months
from the latter of the effective date of Registrant's post-effective
amendment to its Securities Act of 1933 Registration Statement relating to
the prospectuses offering Advisor Shares and Investor Shares of Schroder
Asia Fund and/or Schroder Japan Fund or the commencement of operation of
each of the respective Funds; and
(b) Registrant undertakes to furnish to each person to whom a prospectus is
delivered 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 with respect to Rule 485(b) under the Securities Act of
1933, 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, and State of New York on the 23rd day of
February, 1998.
SCHRODER CAPITAL FUNDS (DELAWARE)
By:/s/ Catherine A. Mazza
--------------------------------
Catherine A. Mazza
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the 23rd
day of February, 1998.
SIGNATURES TITLE
(a) Principal Executive Officer
Mark J. Smith President
By: /s/ Thomas G. Sheehan
----------------------------
Thomas G. Sheehan, Attorney-in-Fact
(b) Principal Financial and
Accounting Officer
/s/ Fergal Cassidy
-------------------------------
Fergal Cassidy Treasurer
(c) The Trustees
Peter E. Guernsey* Trustee
John I. Howell* Trustee
Hermann C. Schwab* Trustee
Clarence F. Michalis* Trustee
Mark J. Smith* Trustee
Hon. David N. Dinkins Trustee
Peter S. Knight* Trustee
Sharon L. Haugh* Trustee
*By: /s/ Thomas G. Sheehan
--------------------------
Thomas G. Sheehan, Attorney-in-Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this amendment to its Registration Statement for
Schroder Capital Funds (Delaware) to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
the 23rd day of February, 1998.
SCHRODER CAPITAL FUNDS
By: /s/ Catherine A. Mazza
----------------------------
Catherine A. Mazza
Vice President
Pursuant to the requirements of the Investment Act of 1940, this Registration
Statement amendment of Schroder Capital Funds (Delaware) has been signed below
by the following persons on the 23rd day of February, 1998.
SIGNATURES TITLE
(a) Principal Executive Officer
Mark J. Smith President
By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan, Attorney-in-Fact
(b) Principal Financial and
Accounting Officer
/s/ Fergal Cassidy
---------------------------------
Fergal Cassidy Treasurer
(c) The Trustees
Peter E. Guernsey* Trustee
John I. Howell* Trustee
Hermann C. Schwab* Trustee
Clarence F. Michalis* Trustee
Mark J. Smith* Trustee
Hon. David N. Dinkins Trustee
Peter S. Knight Trustee
Sharon L. Haugh Trustee
*By: /s/ Thomas G. Sheehan
-----------------------------
Thomas G. Sheehan, Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS FOR PEA 66 TO REGISTRATION STATEMENT FOR SCHRODER CAPITAL
FUNDS (DELAWARE)
EXHIBIT
(5) (d) Investment Advisory Agreement between the Trust and SCMI dated January
9, 1996, with respect to Schroder Emerging Markets Fund Institutional
Portfolio.
(5) (e) Investment Advisory Agreement between the Trust and SCMI dated March
5, 1997, with respect to Schroder International Bond Fund and Schroder
Cash Reserves Fund.
(5) (f) Investment Advisory Agreement between the Trust and SCMI dated March
5, 1997, with respect to Schroder Micro Cap Fund.
(5) (g) Investment Advisory Agreement between the Trust and SCMI dated
November 26, 1996, with respect to Schroder Emerging Markets Fund.
(6) (b) Distribution Agreement between the Trust and Schroder Fund Advisors
Inc. dated January 9, 1996, as amended, with respect to Schroder
Emerging Markets Fund Institutional Portfolio, Schroder International
Fund, Schroder Latin American Fund, Schroder Global Asset Allocation
Fund, Schroder U.S. Smaller Companies Fund, Schroder International
Smaller Companies Fund, Schroder Emerging Markets Fund, Schroder
European Growth Fund, Schroder Asia Fund, Schroder Japan Fund,
Schroder United Kingdom Fund, Schroder Cash Reserves Fund, Schroder
International Bond Fund and Schroder Micro Cap Fund.
(8) Global Custody Agreement between the Trust and The Chase Manhattan
Bank, N.A. dated January 9, 1996, as amended, with respect to Schroder
Emerging Markets Fund Institutional Portfolio, Schroder International
Fund, Schroder Latin American Fund, Schroder Global Asset Allocation
Fund, Schroder U.S. Smaller Companies Fund, Schroder International
Smaller Companies Fund, Schroder U.S. Equity Fund, Schroder Emerging
Markets Fund, Schroder European Growth Fund, Schroder Asia Fund,
Schroder Japan Fund, Schroder United Kingdom Fund, Schroder Cash
Reserves Fund, Schroder International Bond Fund and Schroder Micro Cap
Fund.
(9) (a) Administration Agreement between the Trust and Schroder Fund Advisors
Inc. dated November 26, 1996, with respect to Schroder International
Fund, Schroder U.S. Smaller Companies Fund, Schroder Latin American
Fund, Schroder Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder Micro Cap Fund,
Schroder Emerging Markets Fund, Schroder International Bond Fund and
Schroder U.S. Equity Fund.
(b) Subadministration Agreement between the Trust and Forum Administrative
Services, LLC dated February 1, 1997, with respect to Schroder
International Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller
Companies Fund, Schroder Latin American Fund, Schroder Emerging Markets
Fund Institutional Portfolio, Schroder International Smaller Companies
Fund, Schroder Micro Cap Fund, Schroder Emerging Markets Fund and
Schroder International Bond Fund.
(c) Transfer Agency Agreement between the Trust and Forum Financial Corp.
dated January 9, 1996, as amended, with respect to Schroder Emerging
Markets Fund Institutional Portfolio, Schroder International Fund,
Schroder Latin American Fund, Schroder Global Asset Allocation Fund,
Schroder U.S. Smaller Companies Fund, Schroder International Smaller
Companies Fund, Schroder U.S. Equity Fund, Schroder Emerging Markets
Fund, Schroder European Growth Fund, Schroder Asia Fund, Schroder Japan
Fund, Schroder United Kingdom Fund, Schroder Cash Reserves Fund,
Schroder International Bond Fund and Schroder Micro Cap Fund.
(d) Fund Accounting Agreement between the Trust and Forum Financial Corp.
dated March 5, 1997, as amended, with respect to Schroder
International Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller
Companies Fund, Schroder Latin American Fund, Schroder Emerging
Markets Fund Institutional Portfolio, Schroder International Smaller
Companies Fund, Schroder Global Asset Allocation Fund and Schroder
Emerging Markets Fund.
(10)(b) Opinion and consent of Smith Katzenstein Furlow LLP with respect to
Schroder Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder Emerging Markets Fund,
Schroder International Bond Fund and Schroder Micro Cap Fund.
(11) Consent of Coopers & Lybrand L.L.P.
(15) Distribution Plan adopted by Registrant with respect to Schroder U.S.
Smaller Companies Fund, Schroder Latin American Fund, Schroder
International Fund, Schroder Emerging Markets Fund Institutional
Portfolio, Schroder International Smaller Companies Fund, Schroder
Micro Cap Fund, Schroder Emerging Markets Fund, Schroder International
Bond Fund and Schroder U.S. Equity Fund.
(16)(c) Schedule of Sample Performance Calculations -- Schroder International
Fund, Schroder International Smaller Companies Fund, Schroder Emerging
Markets Fund, Schroder International Bond Fund, Schroder Micro Cap
Fund and Schroder Emerging Markets Fund Institutional Portfolio.
(17) Financial Data Schedules.
OTHER EXHIBITS:
Power of Attorney from Fergal Cassidy.
Power of Attorney from Sharon L. Haugh.
Power of Attorney from Peter S. Knight.
EXHIBIT (5)(D)
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated and effective as of January 9, 1996, between Schroder
Capital Funds (Delaware), a Delaware business trust (herein referred to as the
"Trust") and Schroder Capital Management International Inc., a New York
corporation (herein referred to as the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act")
which currently has five separate investment portfolios, one of which is subject
to this agreement: Schroder Emerging Markets Fund Institutional Portfolio (the
"Fund");
WHEREAS, the Investment Adviser provides investment advice and is
registered with the Securities and Exchange Commission (the "SEC") as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") and is registered with the United Kingdom Investment Management
Regulatory Organization ("IMRO");
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory services to or on behalf of the Fund in the manner and on
the terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to render such investment
advisory services to the Fund;
NOW, THEREFORE, in consideration of the promises and covenants
hereinafter contained, the Trust and the Investment Adviser hereby agree as
follows:
1. ENGAGEMENT OF THE INVESTMENT ADVISER. The Trust hereby employs the
Investment Adviser to act as the investment adviser to the Fund and to provide
the investment advisory services described below, subject to the supervision of
the Board of Trustees of the Trust, for the period and on the terms and
conditions set forth in this Agreement. The Investment Adviser hereby accepts
such employment and agrees during such period to render such services and to
assume the obligations herein set forth for the compensation provided for
herein. The Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority hereunder to act for or represent the Fund in any
way or otherwise be deemed an agent of the Fund.
<PAGE>
2. INVESTMENT ADVISORY SERVICES.
Subject always to the Trust's Trust Instrument and its registration
statement filed on Form N-2 with the SEC, the Investment Adviser shall:
(a) Furnish the Trust with advice and recommendations
consistent with the investment objective, policies, and restrictions of the
Fund, with respect to the purchase, holding and disposition of portfolio assets,
including advice on the allocation of investments among the countries in which
the Fund may invest and among equity and debt securities;
(b) Furnish the Trust with advice and recommendations with
respect to foreign currency matters, having regard to foreign exchange controls,
if any, and forward foreign exchange contracts;
(c) Advise the Trust in connection with policy decisions to be
made by its Board of Trustees or any committee thereof with respect to its
investments and, as requested, furnish the Fund with research, economic and
statistical data in connection with its investments and investment policies;
(d) Submit such reports relating to the valuation of the
Fund's securities as the Trust's Board of Trustees or the Trust's administrator
may reasonably request;
(e) Place orders for the purchase, sale or exchange of
portfolio assets for the Fund's accounts with brokers or dealers selected by the
Investment Adviser; provided, however, that in connection with the placing of
such orders and the selection of such brokers or dealers the Investment Adviser
shall seek to obtain execution and pricing within the policy guidelines
established by the Trust's Board of Trustees;
(f) Provide information in the possession of the Investment
Adviser to the Trust's administrator as the Trust's administrator may request to
maintain and preserve the records required by the Investment Company Act;
(g) Obtain and evaluate such information relating to
economics, industries, businesses, securities markets and securities as the
Investment Adviser may deem necessary or useful in the discharge of its duties
hereunder; and
(h) From time to time, or at any time requested by the Trust's
Board of Trustees, make reports to the Trust concerning its performance of the
foregoing services and furnish advice and recommendations with respect to other
aspects of the business and affairs of the Fund.
3. ALLOCATION OF CHARGES AND EXPENSES.
(a) The Investment Adviser shall pay for maintaining its staff
and personnel necessary to perform its obligations under this Agreement and
shall, at its own expense, maintain
<PAGE>
the office space, facilities, equipment and personnel that are reasonably
necessary to carry out its obligations hereunder. In addition, the Investment
Adviser shall pay the reasonable salaries, fees and expenses of such of the
Trust's officers and employees (including the Trust's share of payroll taxes)
and any fees and expenses of such of the Trust's trustees as are trustees,
officers or employees of the Investment Adviser, provided, however, that the
Trust, and not the Investment Adviser, shall bear OUT-OF-POCKET travel expenses
of trustee and officers of the Trust who are trustees, officers or employees of
the Investment Adviser to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust or any committees thereof.
(b) The Fund assumes and shall pay or cause to be paid fees to
the Investment Adviser and the Trust's administrator and all other expenses of
the Fund including, without limitation: (i) charges and expenses of any
custodian, subcustodian or depository appointed by the Trust for the safekeeping
of its cash, securities or property and fees and expenses of any transfer agent,
dividend paying agent and registrar for the Trust; (ii) charges and expenses of
accounting and auditing; (iii) expenses and fees associated with registering and
qualifying securities issued by the Fund for sale with the SEC and in various
states and foreign jurisdictions and expenses of preparing share certificates
and other expenses in connection with the issuance, offering or underwriting of
securities issued by the Fund, including stock exchange listing fees and freight
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; (iv) expenses of stationary, preparing, printing and
distributing reports, notices and dividends and other documents to the Fund's
shareholders, including, without limitation, expenses of tender offers for and
repurchases of securities issued by the Fund, to the extent not borne by the
Trust's administrator; (v) interest on any indebtedness of the Fund; (vi)
governmental fees and taxes of the Fund, including any stock transfer tax
payable on a portfolio security of the Fund; (vii) brokerage commissions and
other expenses incurred in acquiring or disposing of the Fund's portfolio
securities; (viii) costs of trustees' and officers' insurance and fidelity
bonds; (ix) compensation and expenses of the trustees who are not interested
persons of the Investment Adviser, including out-of-pocket travel expenses; (x)
costs and expenses incidental to holding meetings of the Board of Trustees, or
any committees thereof, including out-of-pocket travel expenses of trustees and
officers of the Trust who are trustees, officers or employees of the Investment
Adviser to the extent that such expenses relate to attendance at such meetings
of the Board of Trustees, or any committee thereof; (xi) fees for legal,
auditing and consulting services and litigation expenses, including settlement
or arbitration costs; (xii) dues and expenses incurred in connection with
membership in investment company organizations and expenses relating to investor
and public relations; and (xiii) costs, expenses and fees incurred in connection
with obtaining, maintaining, refinancing or repaying indebtedness. It is
understood that the organizational, offering and marketing expenses, including
accounting, legal and printing expenses and registration fees incurred by the
Investment Adviser on behalf of the Fund in connection with the initial public
offering of the Fund's securities will be reimbursed to the Investment Adviser
by the Fund within the limitations set forth in the Prospectus.
4. COMPENSATION OF THE INVESTMENT ADVISER.
(a) For the services rendered, the equipment and facilities
furnished and expenses assumed by the Investment Adviser, the Fund shall pay in
arrears to the Investment
<PAGE>
Adviser at the end of each calendar month a fee calculated by applying the
annual percentage rate of 1.00% to the Fund's month-end average of net assets
("net assets" being the value of the total assets of the Fund, minus the sum of
liabilities of the Fund), determined at the end of each month by dividing the
sum of the average net assets of the Fund at the end of each week during the
month by the number of weeks ended during the calendar month. The assets for
each weekly period are determined by averaging the net assets of the Fund at the
close of each business day for each business day in the week that this Agreement
is in effect. If this Agreement becomes effective subsequent to the first day of
a month or shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be subject to a pro rata
adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month. During any period when the
determination of net asset value is suspended by the Board of Trustees of the
Trust, the average net asset value of a share for the last week prior to such
suspension shall for this purpose be deemed to be the average net asset value at
the close of each succeeding week until it is again determined. No fee shall be
payable hereunder with respect to a Fund during any period in which the Fund
invests all (or substantially all) of its investment assets in a registered,
open-end management investment company, or separate series thereof, in
accordance with Section 12(d)(1)(E) under the Investment Company Act of 1940.
(b) EXPENSE LIMITATIONS. In the event the operating expenses
of the Fund, including amounts payable to the Investment Adviser pursuant to
subsection (a) hereof, for any fiscal year ending on a date on which this
Agreement is in effect, exceed the expense limitations applicable to the Fund
imposed by applicable state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Investment Adviser
shall reduce its management fee by the extent of such excess and, if required
pursuant to any such laws or regulations, will reimburse the Fund in the amount
of such excess; provided, however, to the extent permitted by law, there shall
be excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs, including settlement or arbitration
costs, and any indemnification related thereto) paid or payable by the Fund.
Whenever the expenses of the Fund exceed a pro rata portion of the applicable
annual expense limitations, the estimated amount of reimbursement under such
limitations shall be applicable as an offset against the monthly payment of the
management fee due to the Investment Adviser. Should two or more such expense
limitations be applicable as at the end of the last business day of the month,
that expense limitation which results in the largest reduction in the Investment
Adviser's fee shall be applicable.
5. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER.
(a) The Investment Adviser shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in the execution and management of the Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard or its obligations and duties
hereunder. As used in this Article 5, the term "Investment Adviser" shall
include any
<PAGE>
affiliates of the Investment Adviser performing services for the Fund
contemplated hereby and trustees, officers and employees of the Investment
Adviser as well as that corporation itself.
(b) The Investment Adviser shall not be liable for any losses
caused by disturbances of its operations by virtue of force majeure, riot, or
damage caused by nature or due to other events for which it is not responsible
(E.G., strike, lock-out or losses caused by the imposition of foreign exchange
controls, expropriation of assets or other acts of domestic or foreign
authorities).
(c) The presence of exculpatory language in this Agreement
shall not be deemed by the Trust, the Investment Adviser or any other party
appointed pursuant to this Agreement, including without limitation any
custodian, as in any way limiting causes of action and remedies which may,
notwithstanding such language, be available to the Trust either under common law
or statutory law principles applicable to fiduciary relationships or under the
federal securities laws.
6. OTHER ACTIVITIES OF THE INVESTMENT ADVISER AND ITS AFFILIATES.
(a) Nothing herein contained shall prevent the Investment
Adviser or any of its affiliates from engaging in any other business or from
acting as investment adviser or investment manager for any other person or
entity, whether or not having investment policies or portfolios similar to that
of the Fund; and it is specifically understood that officers, trustees and
employees of the Investment Adviser and its affiliates may continue to engage in
providing portfolio management services and advice to other investment
companies, whether or not registered, and to other investment advisory clients.
When other clients of the Investment Adviser desire to purchase or sell a
security at the same time such security is purchased or sold for the Fund, such
purchases and sales will, to the extent feasible, be allocated among the Fund
and such clients in a manner believed by the Investment Adviser to be equitable
to the Fund and such clients.
(b) The Investment Adviser reserves the right to grant the use
of the name "SCHRODER", or any derivative thereof, to any other investment
company or business enterprise. The Investment Adviser reserves the right to
withdraw from the Fund the use of the name "SCHRODER", the Investment Adviser
agrees that the question of continuing this Agreement may be submitted to a vote
of the Fund's shareholders. In the event of such withdrawal or the termination
of this Agreement, for any reason, the Trust will, on the written request of the
Investment Adviser, take such action as may be necessary to change its name and
eliminate all reference to the words "SCHRODER" in any form, and will no longer
use such registered service mark.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until the second anniversary of the effective date of this
Agreement first set forth above and from year to year thereafter, but only so
long as such continuance is approved at least annually by (a) the vote of a
majority of the trustees of the Trust who are not parties to the Agreement or
interested persons of the Investment Adviser or interested persons of any such
party (other than
<PAGE>
as trustees of the Trust), cast in person at a meeting called for the purpose of
voting on such approval, and (b) the vote of either (i) the Board of Trustees of
the Trust or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time, without payment of any penalty, by
the Trust either by the vote of Board of Trustees of the Trust or by the vote of
a majority of the outstanding voting securities of the Fund on sixty (60) days'
written notice to the Investment Adviser, and by the Investment Adviser on sixty
(60) days' written notice to the Trust. This Agreement shall automatically
terminate (i) in the event of its assignment by either party, or (ii) upon
termination of the Investment Advisory Agreement. In interpreting the provisions
of this Section 7, the definitions contained in Section 2(e) of the Investment
Company Act (particularly the definitions of "assignment," "interested person"
and "voting security") shall be applied.
8. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment, sale
hypothecation or pledge of this Agreement shall be effective until approved by
the vote of: (a) the Board of Trustees, including a majority of the trustees who
are not parties to the Agreement or interested persons of the Investment Adviser
or interested persons of any such party (other than as trustees of the Trust),
cast in person at a meeting called for the purpose of voting on such approval
and (b) a majority of the outstanding voting securities of the Fund.
9. NOTICE. Any notice or other communication required to be given
pursuant to this Agreement shall be in writing or by telex and shall be
effective upon receipt. Notices and communications shall be given: (a) to the
Trust at Schroder Capital Funds (Delaware), Two Portland Square, Portland, Maine
04101 and (b) to the Investment Adviser at 787 Seventh Avenue, 29th Floor, New
York, New York 10019, Attention: Mark J. Smith.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the
Investment Company Act. To the extent the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable provisions
of the Investment Company Act, the latter shall control.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The Investment Adviser confirms that the Trust is a "business customer"
as defined by IMRO.
The Trust confirms that it has been provided with independent legal
advice on this Agreement.
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be
executed as of the day and year first above written.
SCHRODER CAPITAL FUNDS, (DELAWARE)
By: /S/ LAURA E. LUCKYN-MALONE
------------------------------
Name: Laura E. Luckyn-Malone
Title
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
By: /S/ JANE P. LUCAS
-----------------------------
Name: Jane P. Lucas
Title
EXHIBIT (5)(E)
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 5th day of March, 1997, between Schroder Capital
Funds (Delaware) (the "Trust"), a business trust organized under the laws of the
State of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Schroder Capital Management International Inc. (the
"Adviser"), a corporation organized under the laws of the State of New York with
its principal place of business at One State Street, New York, New York.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series;
WHEREAS, the Adviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
is registered with the United Kingdom Investment Management Regulatory
Organization ("IMRO");
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for Schroder International Bond Fund and Schroder Cash Reserves Fund
(each a "Fund," and collectively the "Funds"), and the Adviser is willing to
provide those services on the terms and conditions set forth in this Agreement;
and
WHEREAS, the Adviser is willing to render such investment advisory
services to the Portfolios;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue seven series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs Adviser, subject to the direction and control
of the Board, to manage the investment and reinvestment of the assets in each
Fund and, without limiting the generality of the foregoing, to provide other
services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Funds. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in the Funds since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in a
Fund's holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Fund maintains
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request. In making
purchases and sales of securities for a Fund, the Adviser will bear in mind the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument and Registration Statement under the Act, the
limitations in the Act and in the Internal Revenue Code of 1986, as amended, in
respect of regulated investment companies and the investment objectives,
policies and restrictions of the Funds.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser shall maintain records for each Fund relating to
portfolio transactions and the placing and allocation of brokerage orders as are
required to be maintained by the Trust under the Act. The Adviser shall prepare
and maintain, or cause to be prepared and maintained, in such form, for such
periods and in such locations as may be required by applicable law, all
documents and records relating to the services provided by the Adviser pursuant
to this Agreement required to be prepared and maintained by the Trust pursuant
to the rules and regulations of any national, state, or local government entity
with jurisdiction over the Trust,
<PAGE>
including the Commission and the Internal Revenue Service. The books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during the Adviser's
normal business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided promptly by the Adviser to the Trust or
the Trust's authorized representatives.
SECTION 4. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and costs
of other personnel performing services for the Trust who are not officers of the
Adviser or of Forum Financial Services, Inc. or affiliated persons of either;
costs of Trust meetings; registration fees and related expenses for registration
with the Commission and the securities regulatory authorities of other countries
in which the Trust's interests are sold; state securities law registration fees
and related expenses; and fees and out-of-pocket expenses payable to Forum
Financial Services, Inc. under any placement agent, management or similar
agreement.
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust, and as an inducement to the Adviser's undertaking
these services the Adviser shall not be liable hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect, the
Adviser against any liability to the Trust or to the Trust's interestholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties
hereunder, or by reason of the Adviser's reckless disregard of its obligations
and duties hereunder. As used in this Section 5, the term "Adviser" shall
include any affiliates of the Adviser performing services for the Funds
contemplated hereby and directors, officers and employees of the Adviser as well
as the Adviser itself.
(b) The Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot, or damage
caused by nature or due to other events for which the Adviser is not responsible
(e.g., strike, lock-out or losses caused by the imposition of foreign exchange
controls, expropriation of assets or other acts of domestic or foreign
authorities) except under the circumstances provided for in Section 5(a).
<PAGE>
The presence of exculpatory language in this Agreement shall not in any
way limit or be deemed by anyone to limit the Trust, the Trustees of the Trust,
the Funds, the Adviser, or any other party appointed pursuant to this Agreement,
including without limitation any custodian, as in any way limiting causes of
action and remedies which may, notwithstanding such language, be available to
the Trust, the Trustees of the Trust, Funds or any other party appointed
pursuant to this Agreement, either under common law or statutory law principles
applicable to fiduciary relationships or under the Federal securities laws.
SECTION 6. COMPENSATION
In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Funds, a fee at an annual rate as listed in Appendix
A hereto. Such fees shall be accrued by the Trust based on average daily net
assets and shall be payable monthly in arrears on the first day of each calendar
month for services performed hereunder during the prior calendar month. No fee
shall be payable hereunder with respect to a Fund during any period in which the
Fund invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Investment Company Act of 1940.
SECTION 7. EFFECTIVENESS, DURATION, AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting interests of
that Fund.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this Agreement
or interested persons of any such party (other than as trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
that Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting interests of a Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This agreement shall terminate upon assignment.
SECTION 8. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers,
<PAGE>
directors or employees who may also be a trustee, officer or employee of the
Trust, or persons otherwise affiliated persons of the Trust to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, trust, firm, individual or
association. It is specifically understood that officers, directors and
employees of the Adviser and its affiliates may continue to engage in providing
portfolio management services and advice to other investment companies, whether
or not registered, and to other investment advisory clients. When other clients
of the Adviser desire to purchase or sell a security at the same time such
security is purchased or sold for the Funds, such purchases and sales will, to
the extent feasible, be allocated among the Funds and such clients in a manner
believed by the Adviser to be equitable to the Funds and such clients.
SECTION 9. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of the Funds shall
not be liable for any obligations of the Trust or of the Funds under this
Agreement, and the Adviser agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Funds to which the Adviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders of
the Funds.
SECTION 10. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Schroder Capital Funds (Delaware)
Two Portland Square
Portland, Maine 04101
Attention: Thomas G. Sheehan
and if to the Adviser, at:
Schroder Capital Management International Inc.
787 Seventh Avenue, 29th Floor
New York, New York 10019
Attention: Catherine A. Mazza
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Funds
<PAGE>
thereby affected. No amendment to this Agreement or the termination of this
Agreement with respect to a Fund shall effect this Agreement as it pertains to
any other Fund.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The Adviser confirms that each Fund is a "Non-private Customer" as
defined in the rules of IMRO.
(g) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER CAPITAL FUNDS (DELAWARE)
/S/ CATHERINE MAZZA
--------------------
Catherine Mazza
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
/S/ SHARON HAUGH
--------------------
Sharon Haugh
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
Appendix A
Annual Fee as a % of
the Average Daily
FUNDS OF THE TRUST NET ASSETS OF THE FUND
Schroder International Bond Fund 0.50%
Schroder Cash Reserves Fund 0.20% of the first $300 million of
assets; 0.16% for next $400 million,
and 0.12% of remaining net assets
EXHIBIT (5)(F)
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 5th day of March, 1997, between Schroder Capital
Funds (Delaware) (the "Trust"), a business trust organized under the laws of the
State of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Schroder Capital Management International Inc. (the
"Adviser"), a corporation organized under the laws of the State of New York with
its principal place of business at One State Street, New York, New York.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series;
WHEREAS, the Adviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
is registered with the United Kingdom Investment Management Regulatory
Organization ("IMRO");
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for Schroder Micro Cap Fund (each a "Fund," and collectively the
"Funds"), and the Adviser is willing to provide those services on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Adviser is willing to render such investment advisory
services to the Portfolios;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue seven series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish Adviser with any
amendments thereof.
<PAGE>
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs Adviser, subject to the direction and control
of the Board, to manage the investment and reinvestment of the assets in each
Fund and, without limiting the generality of the foregoing, to provide other
services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Funds. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in the Funds since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in a
Fund's holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Fund maintains
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request. In making
purchases and sales of securities for a Fund, the Adviser will bear in mind the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument and Registration Statement under the Act, the
limitations in the Act and in the Internal Revenue Code of 1986, as amended, in
respect of regulated investment companies and the investment objectives,
policies and restrictions of the Funds.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser shall maintain records for each Fund relating to
portfolio transactions and the placing and allocation of brokerage orders as are
required to be maintained by the Trust under the Act. The Adviser shall prepare
and maintain, or cause to be prepared and maintained, in such form, for such
periods and in such locations as may be required by applicable law, all
documents and records relating to the services provided by the Adviser pursuant
to this Agreement required to be prepared and maintained by the Trust pursuant
to the rules and regulations of any national, state, or local government entity
with jurisdiction over the Trust,
<PAGE>
including the Commission and the Internal Revenue Service. The books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during the Adviser's
normal business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided promptly by the Adviser to the Trust or
the Trust's authorized representatives.
SECTION 4. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and costs
of other personnel performing services for the Trust who are not officers of the
Adviser or of Forum Financial Services, Inc. or affiliated persons of either;
costs of Trust meetings; registration fees and related expenses for registration
with the Commission and the securities regulatory authorities of other countries
in which the Trust's interests are sold; state securities law registration fees
and related expenses; and fees and out-of-pocket expenses payable to Forum
Financial Services, Inc. under any placement agent, management or similar
agreement.
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust, and as an inducement to the Adviser's undertaking
these services the Adviser shall not be liable hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect, the
Adviser against any liability to the Trust or to the Trust's interestholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties
hereunder, or by reason of the Adviser's reckless disregard of its obligations
and duties hereunder. As used in this Section 5, the term "Adviser" shall
include any affiliates of the Adviser performing services for the Funds
contemplated hereby and directors, officers and employees of the Adviser as well
as the Adviser itself.
(b) The Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot, or damage
caused by nature or due to other events for which the Adviser is not responsible
(e.g., strike, lock-out or losses caused by the imposition of foreign exchange
controls, expropriation of assets or other acts of domestic or foreign
authorities) except under the circumstances provided for in Section 5(a).
<PAGE>
The presence of exculpatory language in this Agreement shall not in any
way limit or be deemed by anyone to limit the Trust, the Trustees of the Trust,
the Funds, the Adviser, or any other party appointed pursuant to this Agreement,
including without limitation any custodian, as in any way limiting causes of
action and remedies which may, notwithstanding such language, be available to
the Trust, the Trustees of the Trust, Funds or any other party appointed
pursuant to this Agreement, either under common law or statutory law principles
applicable to fiduciary relationships or under the Federal securities laws.
SECTION 6. COMPENSATION
In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Funds, a fee at an annual rate as listed in Appendix
A hereto. Such fees shall be accrued by the Trust based on average daily net
assets and shall be payable monthly in arrears on the first day of each calendar
month for services performed hereunder during the prior calendar month. No fee
shall be payable hereunder with respect to a Fund during any period in which the
Fund invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Investment Company Act of 1940.
SECTION 7. EFFECTIVENESS, DURATION, AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting interests of
that Fund.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this Agreement
or interested persons of any such party (other than as trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
that Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting interests of a Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This agreement shall terminate upon assignment.
SECTION 8. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers,
<PAGE>
directors or employees who may also be a trustee, officer or employee of the
Trust, or persons otherwise affiliated persons of the Trust to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, trust, firm, individual or
association. It is specifically understood that officers, directors and
employees of the Adviser and its affiliates may continue to engage in providing
portfolio management services and advice to other investment companies, whether
or not registered, and to other investment advisory clients. When other clients
of the Adviser desire to purchase or sell a security at the same time such
security is purchased or sold for the Funds, such purchases and sales will, to
the extent feasible, be allocated among the Funds and such clients in a manner
believed by the Adviser to be equitable to the Funds and such clients.
SECTION 9. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of the Funds shall
not be liable for any obligations of the Trust or of the Funds under this
Agreement, and the Adviser agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Funds to which the Adviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders of
the Funds.
SECTION 10. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Schroder Capital Funds (Delaware)
Two Portland Square
Portland, Maine 04101
Attention: Thomas G. Sheehan
and if to the Adviser, at:
Schroder Capital Management International Inc.
787 Seventh Avenue, 29th Floor
New York, New York 10019
Attention: Catherine A. Mazza
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Funds
<PAGE>
thereby affected. No amendment to this Agreement or the termination of this
Agreement with respect to a Fund shall effect this Agreement as it pertains to
any other Fund.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The Adviser confirms that each Fund is a "Non-private Customer" as
defined in the rules of IMRO.
(g) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER CAPITAL FUNDS (DELAWARE)
/S/ CATHERINE MAZZA
-------------------
Catherine Mazza
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
/S/ SHARON HAUGH
------------------
Sharon Haugh
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
Appendix A
Annual Fee as a % of
the Average Daily
FUNDS OF THE TRUST NET ASSETS OF THE FUND
Schroder Micro Cap Fund 1.25%
EXHIBIT (5)(G)
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of November 26, 1996, between Schroder Capital Funds
(Delaware) (the "Trust"), a business trust organized under the laws of the State
of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Schroder Capital Management International Inc. (the
"Adviser"), a corporation organized under the laws of the State of New York with
its principal place of business at One State Street, New York, New York.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series;
WHEREAS, the Adviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
is registered with the United Kingdom Investment Management Regulatory
Organization ("IMRO");
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series listed in Appendix A (each a "Fund," and collectively
the "Funds"), and the Adviser is willing to provide those services on the terms
and conditions set forth in this Agreement; and
WHEREAS, the Adviser is willing to render such investment advisory
services to the Portfolios;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue seven series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish Adviser with any
amendments thereof.
<PAGE>
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs Adviser, subject to the direction and control
of the Board, to manage the investment and reinvestment of the assets in each
Fund and, without limiting the generality of the foregoing, to provide other
services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Funds. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in the Funds since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in a
Fund's holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Fund maintains
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request. In making
purchases and sales of securities for a Fund, the Adviser will bear in mind the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument and Registration Statement under the Act, the
limitations in the Act and in the Internal Revenue Code of 1986, as amended, in
respect of regulated investment companies and the investment objectives,
policies and restrictions of the Funds.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser shall maintain records for each Fund relating to
portfolio transactions and the placing and allocation of brokerage orders as are
required to be maintained by the Trust under the Act. The Adviser shall prepare
and maintain, or cause to be prepared and maintained, in such form, for such
periods and in such locations as may be required by applicable law, all
documents and records relating to the services provided by the Adviser pursuant
to this Agreement required to be prepared and maintained by the Trust pursuant
to the rules and regulations of any national, state, or local government entity
with jurisdiction over the Trust,
<PAGE>
including the Commission and the Internal Revenue Service. The books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during the Adviser's
normal business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided promptly by the Adviser to the Trust or
the Trust's authorized representatives.
SECTION 4. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and costs
of other personnel performing services for the Trust who are not officers of the
Adviser or of Forum Financial Services, Inc. or affiliated persons of either;
costs of Trust meetings; registration fees and related expenses for registration
with the Commission and the securities regulatory authorities of other countries
in which the Trust's interests are sold; state securities law registration fees
and related expenses; and fees and out-of-pocket expenses payable to Forum
Financial Services, Inc. under any placement agent, management or similar
agreement.
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust, and as an inducement to the Adviser's undertaking
these services the Adviser shall not be liable hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect, the
Adviser against any liability to the Trust or to the Trust's interestholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties
hereunder, or by reason of the Adviser's reckless disregard of its obligations
and duties hereunder. As used in this Section 5, the term "Adviser" shall
include any affiliates of the Adviser performing services for the Funds
contemplated hereby and directors, officers and employees of the Adviser as well
as the Adviser itself.
(b) The Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot, or damage
caused by nature or due to other events for which the Adviser is not responsible
(e.g., strike, lock-out or losses caused by the imposition of foreign exchange
controls, expropriation of assets or other acts of domestic or foreign
authorities) except under the circumstances provided for in Section 5(a).
<PAGE>
The presence of exculpatory language in this Agreement shall not in any
way limit or be deemed by anyone to limit the Trust, the Trustees of the Trust,
the Funds, the Adviser, or any other party appointed pursuant to this Agreement,
including without limitation any custodian, as in any way limiting causes of
action and remedies which may, notwithstanding such language, be available to
the Trust, the Trustees of the Trust, Funds or any other party appointed
pursuant to this Agreement, either under common law or statutory law principles
applicable to fiduciary relationships or under the Federal securities laws.
SECTION 6. COMPENSATION
In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Funds, a fee at an annual rate as listed in Appendix
A hereto. Such fees shall be accrued by the Trust based on average daily net
assets and shall be payable monthly in arrears on the first day of each calendar
month for services performed hereunder during the prior calendar month. No fee
shall be payable hereunder with respect to a Fund during any period in which the
Fund invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Investment Company Act of 1940.
SECTION 7. EFFECTIVENESS, DURATION, AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting interests of
that Fund.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this Agreement
or interested persons of any such party (other than as trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
that Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting interests of a Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This agreement shall terminate upon assignment.
SECTION 8. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be a
trustee, officer or employee of the Trust, or persons
<PAGE>
otherwise affiliated persons of the Trust to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, trust, firm, individual or association. It is
specifically understood that officers, directors and employees of the Adviser
and its affiliates may continue to engage in providing portfolio management
services and advice to other investment companies, whether or not registered,
and to other investment advisory clients. When other clients of the Adviser
desire to purchase or sell a security at the same time such security is
purchased or sold for the Funds, such purchases and sales will, to the extent
feasible, be allocated among the Funds and such clients in a manner believed by
the Adviser to be equitable to the Funds and such clients.
SECTION 9. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of the Funds shall
not be liable for any obligations of the Trust or of the Funds under this
Agreement, and the Adviser agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Funds to which the Adviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders of
the Funds.
SECTION 10. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Schroder Capital Funds (Delaware)
Two Portland Square
Portland, Maine 04101
Attention: Thomas G. Sheehan
and if to the Adviser, at:
Schroder Capital Management International Inc.
787 Seventh Avenue, 29th Floor
New York, New York 10019
Attention: Catherine A. Mazza
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Funds thereby affected. No amendment to this
Agreement or the termination of this Agreement with respect to a Fund shall
effect this Agreement as it pertains to any other Fund.
<PAGE>
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The Adviser confirms that each Fund is a "Non-private Customer" as
defined in the rules of IMRO.
(g) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER CAPITAL FUNDS (DELAWARE)
/S/ CATHERINE A. MAZZA
------------------------
By: Catherine A. Mazza
Vice President
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
/S/ DAVID GIBSON
---------------------
By: David Gibson
Director
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
Appendix A
Annual Fee as a % of
the Average Daily
FUNDS OF THE TRUST NET ASSETS OF THE FUND
Schroder Emerging Markets Fund 1.00%
EXHIBIT (6)(b)
SCHRODER CAPITAL FUNDS (DELAWARE)
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the 9th day of January, 1996, between Schroder
Capital Funds (Delaware) (the "Company") and Schroder Fund Advisors Inc. (the
"Distributor") as follows:
1. The Trust is an open-end investment company organized as a Delaware
business trust, and consists of one or more separate investment portfolios as
may be established and designated by the Board of Trustees of the Trust from
time to time (the "Funds"). This Agreement shall pertain to such Funds as shall
be designated in Appendix A to this Agreement, as further agreed between the
Trust and the Distributor. A separate class of shares of Common Stock of the
Trust is offered to investors with respect to each Fund. The Trust engages in
the business of investing and reinvesting the assets of the Funds in the manner
and in accordance with the investment objectives and restrictions specified in
the currently effective prospectus or prospectuses and statement of additional
information (collectively, the "Prospectus") relating to the Trust and the Funds
included in the Trust's Registration Statement, as amended from time to time
(the "Registration Statement"), filed by the Trust under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933 (the "1933 Act").
Copies of the documents referred to in the preceding sentence have been
furnished to the Distributor. Any amendment to those documents shall be
furnished to the Distributor promptly. The Trust has entered into an investment
advisory agreement or agreements (the "Advisory Agreement") with respect to the
Funds with such advisers as are designated therein (each such adviser is
hereinafter referred to as an "Adviser") and an Administrative Services
Agreement (the "Administrative Services Agreement") with the Distributor with
respect to certain of the Funds. The Trust has also adopted a Distribution Plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to certain
of the Funds.
2. As the Trust's agent, the Distributor shall be the exclusive
distributor (except as provided in paragraph 5) for the unsold portion of shares
of classes pertaining to the designated Funds (the "Shares") which may from time
to time be registered under the 1933 Act.
3. The Trust shall sell though the Distributor, as the Trust's agent,
shares to the eligible investors as described in the Prospectus. All orders
through the Distributor shall be subject to acceptance and confirmation by the
Trust. The Trust shall have the right, at its election, to deliver either shares
issued upon original issue or treasury shares.
4. As the Trust's agent, the Distributor may sell and distribute shares
in such manner not inconsistent with the provisions hereof and the Trust's
Prospectus as the Distributor may determine from time to time. In this
connection, the Distributor shall comply with all laws, rules and regulations
applicable to it, including, without limiting the generality of the foregoing,
all
<PAGE>
applicable rules or regulations under the 1940 Act of 1934 (the "1940 Act")
in which it is a member.
5. The Trust reserves the right to sell shares to purchasers to the
extent that it or the transfer agent for its shares receives purchase requests
therefor.
6. All shares offered for sale and sold by the Distributor shall be
offered for sale and sold by the Distributor to designated investors at the
price per share (the "offering price") specified and determined as provided in
the Prospectus. The Trust shall determine and promptly furnish to the
Distributor a statement of the offering price at least once on each day on which
the New York Stock Exchange is open for trading and on each additional day on
which each Fund's net asset value might be materially affected by changes in the
value of its portfolio securities. Each offering price shall become effective at
the time and shall remain in effect during the period specified in the
statement. Each such statement shall show the basis of its computation.
7. The Trust shall furnish the Distributor from time to time, for use
in connection with the sale of shares, such written information with respect to
the Trust as the Distributor may reasonably request. In each case such written
information shall be signed by an authorized officer of the Trust. The Trust
represents and warrants that such information, when signed by one of its
officers, shall be true and correct. The Trust also shall furnish to the
Distributor copies of its reports to its shareholders and such additional
information regarding the Trust's financial condition as the Distributor may
reasonably request from time to time.
8. The Registration Statement and the Prospectus have been or will be,
as the case may be, prepared in conformity with the 1933 Act, the 1940 Act and
the rules and regulations of the Securities and Exchange Commission (the "SEC").
The Trust represents and warrants to the Distributor that the Registration
Statement and the Prospectus contain or will contain all statements required to
be stated therein in accordance with the 1933 Act, the 1940 Act and the rules
and regulations thereunder, that all statements of fact contained or to be
contained therein are or will be true and correct at the time indicated or the
effective date, as the case may be, and that neither the Registrations Statement
nor the Prospectus, when it shall become effective under the 1933 Act or be
authorized for use, shall include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of shares. The Trust shall from
time to time file such amendment or amendments to the Registration Statement and
the Prospectus as, in the light of future developments, shall, in the opinion of
the Trust's counsel, be necessary in order to have the Registration Statement
and the Prospectus at all times contain all material facts required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of shares. If the Trust shall not file such an amendment or amendments
within 15 days after receipt by the Trust of a written request from the
Distributor to do so, the Distributor may, at its option, terminate this
Agreement immediately. The Trust shall not file any amendment to the
Registration Statement or the Prospectus without giving the Distributor
reasonable notice thereof in advance, provided that nothing in this Agreement
shall in any way limit the Trust's right to file at any time such amendments to
the Registration Statement or the Prospectus as the Trust may deem advisable.
The Trust represents and warrants to the Distributor that any amendment to the
<PAGE>
Registration Statement or the Prospectus filed hereafter by the Trust will, when
it becomes effective under the 1933 Act, contain all statements required to be
stated therein in accordance with the 1933 Act, the 1940 Act and the rules and
regulations thereunder, that all statements of fact contained therein will, when
the same shall become effective, be true and correct, and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of shares.
9. The Trust shall prepare and furnish to the Distributor from time to
time such number of copies of the most recent form of the Prospectus filed with
the SEC as the Distributor may reasonably request. The Trust authorizes the
Distributor to use the Prospectus, in the form furnished to the Distributor from
time to time, in connection with the sale of shares. The Trust shall indemnify,
defend and hold harmless the Distributor, its officers and trustees and any
person who controls the Distributor within the meaning of the 1933 Act, from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Distributor, its
officers and trustees or any such controlling person may incur under the 1933
Act, the 1940 Act, common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus or arising out of or based upon any alleged omission
to state a material fact required to be stated in either or necessary to make
the statements in either not misleading. This contract shall not be construed to
protect the Distributor against any liability to the Trust or its shareholders
to which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement and shall not be construed to provide indemnification to the extent
that indemnification under the circumstances would be prohibited by the 1933 Act
or the 1940 Act. This indemnity agreement is expressly conditioned upon the
Trust being notified of any action brought against the Distributor, its officers
or Trustees or any such controlling person, which notification shall be given by
letter, telex or facsimile addressed to the Trust at its principal office in
Portland, Maine, and sent to the Trust by the person against whom such actions
is brought within 10 days after the summons or other first legal process shall
have been served. The failure to notify the Trust of any such action shall not
relieve the Trust from any liability which it may have to the person against
whom such action is brought by reason of any such alleged untrue statement or
omission otherwise than on account of the indemnity agreement contained in this
paragraph 9. The Trust shall be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, the
defense shall be conducted by counsel chosen by the Trust and approved by the
Distributor. If the Trust elects to assume the defense of any such suit and
retain counsel approved by the Distributor, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them, but in case the Trust does not elect to assume the defense of any such
suit, or in case the Distributor does not approve of counsel chosen by the
Trust, the Trust will reimburse the Distributor, its officers and trustees or
the controlling person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by the Distributor or them. In
addition, the Distributor shall have the right to employ counsel to represent
it, its officers and trustees and any such controlling person who may be subject
to liability arising out
<PAGE>
of any claim in respect of which indemnity may be sought by the Distributor
against the Trust hereunder if is the reasonable judgment of the Distributor it
is advisable for the Distributor, its officers and trustees or such controlling
person to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the Trust. This indemnity
agreement and the Trust's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Distributor, its officers and trustees or any such
controlling person. This indemnity agreement shall inure exclusively to the
benefit of the Distributor and its successors, the Distributor's officers and
trustees and their respective estates and any such controlling persons and their
successors and estates. The Trust shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any shares.
10. The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers and trustees and any person who controls the Trust within
the meaning of the 1033 Act, from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which the Trust, its officers or trustees or any such controlling
person, may incur under the 1933 Act, the 1940 Act, common law or otherwise, but
only to the extent that such liability or expense incurred by the Trust, its
officers or trustees or such controlling person resulting from such claims or
demands shall arise out of or be based upon (a) any alleged untrue statement of
a material fact contained in information furnished in writing by the Distributor
to the Trust specifically for use in the Registration Statement or the
Prospectus or shall arise out of or be based upon any alleged omission to state
a material fact in connection with such information required to be stated in the
Registration Statement or the Prospectus or necessary to make such information
not misleading and (b) any alleged act or omission on the Distributor's part as
the Trust's agent that has not been expressly authorized by the Trust in
writing. This indemnity agreement is expressly conditioned upon the Distributor
being notified of any action brought against the Trust, its officers or trustees
or any such controlling person, which notification shall be given by letter,
telex or facsimile, addressed to the Distributor at its principal office in New
York, New York, and sent to the Distributor by the person against whom such
action is brought, within 10 days after the summons or other first legal process
shall have been served. The failure to notify the Distributor of any such action
shall not relieve the distributor from any liability which it may have to the
Trust, its officers or trustees or such controlling person by reason of any such
alleged misstatement or omission on the Distributor's part otherwise than on
account of the indemnity agreement contained in this paragraph 10. The
Distributor shall have a right to control the defense of such action with
counsel of its own choosing and approved by the Trust if such action is based
solely upon such alleged misstatement or omission on the Distributor's part, and
in any other event the Trust, its officers and trustees or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action at their own expense.
11. No shares shall be sold through the Distributor or by the Trust
under this Agreement and no orders for the purchase of shares shall be confirmed
or accepted by the Trust if and so long as the effectiveness of the Registration
Statement shall be suspended under any of the provisions of the 1933 Act.
Nothing contained in this paragraph 11 shall in any way restrict,
<PAGE>
limit or have any application to or bearing upon the Trust's obligation to
redeem shares from any shareholder in accordance with the provisions of its
Trust Instrument and the 1940 Act. The Trust will use its best efforts at all
times to have shares effectively registered under the 1933 Act.
12. The Trust agrees to advise the Distributor immediately:
(a) of any request by the SEC for amendments to the
Registration Statement or the Prospectus or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
Prospectus under the 1933 Act or the initiation of any proceedings for
that purpose;
(c) of the happening of any material event which makes untrue
any statement made in the Registration Statement or the Prospectus or
which requires the making of a change in either thereof in order to
make the statements therein not misleading; and
(d) of all action of the SEC with respect to any amendments to
the Registration Statement or the Prospectus which may from time to
time be filed with the SEC under the 1933 Act or the 1940 Act.
13. Insofar as they concern the Trust, the Trust shall comply with all
applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules or regulations made or adopted pursuant
to the 1933 Act, the 1940 Act or by any securities association registered under
the 1934 Act applicable to it.
14. The Distributor may, if it desires and at its own cost and expense,
appoint or employ agents to assist it in carrying out its obligations under this
Agreement, but no such appointment or employment shall relieve the Distributor
of any of its responsibilities or obligations to the Trust under this Agreement.
15. (a) The Distributor shall from time to time employ or associate
with it such persons as it believes necessary to assist it in carrying
out its obligations under this Agreement. The compensation of such
persons shall be paid by the Distributor.
(b) The Distributor shall pay all expenses incurred in
connection with its qualification as a dealer or broker under Federal
or state law.
(c) The Trust shall pay all expenses incurred in connection
with (i) the preparation, printing and distribution to shareholders of
the Prospectus and reports and other communications to shareholder,
(ii) future registrations of shares under the 1933 Act and the 1940
Act, (iii) amendments of the Registration Statement subsequent to the
initial public offering of shares, (iv) qualification of shares for
sale in jurisdictions designated by the Distributor, (v) qualification
of the Trust as a dealer or broker under the laws of jurisdictions
designated by Distributor, (vi) qualification of the Trust as a foreign
<PAGE>
corporation authorized to do business in any jurisdiction if the
Distributor determines that such qualification is necessary or
desirable for the purpose of facilitating sales of shares, (vii)
maintaining facilities for the issue and transfer of shares, and (viii)
supplying information, prices and other data to be furnished by the
Trust under this Agreement.
(d) The Trust shall pay any original issue taxes or transfer
taxes applicable to the sale or delivery of shares or certificates
therefor.
(e) The Trust shall execute all documents and furnish any
information which may be reasonably necessary in connection with the
qualification of shares of the Trust for sale in jurisdictions
designated by the Distributor.
16. Except to the extent set forth in paragraph 15, the Distributor
will render all service hereunder without compensation or reimbursement,
provided, however, that notwithstanding anything set forth in paragraphs 14 and
15 and this paragraph 16 to the contrary, the Distributor shall be entitled to
seek reimbursement from designated Funds for any costs or expenses incurred by
it in connection with its services rendered in distributing and marketing shares
of designated Funds to the extent provided for in the Plan, subject in all cases
to the limitations on payments and reimbursements pertaining to each designated
Fund set forth therein.
17. This Agreement shall become effective with respect to the Trust and
each Fund on January 9, 1996, and shall continue in effect until such time as
there shall remain no unsold balance of shares registered under the 1933 Act,
PROVIDED that this Agreement shall continue in effect for a period of more than
one year only so long as such continuance is specifically approved at least
annually by (a) the Trust's Board of Trustees or by the vote of a majority of
such Fund's outstanding voting securities (as defined in the 1940 Act), and (b)
by the vote, cast in person at a meeting called for the purpose, of a majority
of the Trust's Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the 1940
Act). This Agreement may, in any event, be terminated at any time, without the
payment of any penalty, by the Trust upon 60 days' written notice to the
Distributor and by the Distributor upon 60 days' written notice to the Trust.
18. Except to the extent necessary to perform the Distributor's
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the right of the Distributor, or any affiliate of the Distributor, or
any employee of the Distributor to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.
<PAGE>
19. This Agreement shall be construed and its provisions interpreted,
in accordance with the laws of the state of New York.
If the foregoing correctly sets forth the agreement between the Trust
and the Distributor, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
SCHRODER CAPITAL FUNDS (DELAWARE)
By /S/ LAURA E. LUCKYN-MALONE
--------------------------
Title:
SCHRODER FUND ADVISORS INC.
By /S/ CATHERINE MAZZA
- ------------------------
Title:
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
----------------------------------------------------------------------
FUND
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF MARCH 15, 1996
----------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
Schroder International Fund
Schroder Latin American Fund
Schroder Global Asset Allocation Fund
Schroder U.S. Smaller Companies Fund
Schroder International Smaller Companies Fund
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF NOVEMBER 26, 1996
----------------------------------------------------------------------
Schroder Emerging Markets Fund
Schroder European Growth Fund
Schroder Asia Fund
Schroder Japan Fund
Schroder United Kingdom Fund
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF MARCH 5, 1997
----------------------------------------------------------------------
Schroder Cash Reserves Fund
Schroder International Bond Fund
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF JUNE 4, 1997
----------------------------------------------------------------------
Schroder Micro Cap Fund
----------------------------------------------------------------------
EXHIBIT (8)
SCHRODER CAPITAL FUNDS (DELAWARE)
GLOBAL CUSTODY AGREEMENT
AGREEMENT, dated as of January 9, 1996, as amended May 3, 1996, between
The Chase Manhattan Bank, N.A. (the "Bank") and Schroder Capital Funds
(Delaware). (the "Customer") on behalf of each series of the Customer listed in
Schedule A hereto (each series, a "Fund").
SECTION 1. CUSTOMER ACCOUNTS
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody
Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of
money, bullion, coin and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any
other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by
the Bank or its Subcustodian (as defined in Section 3) for the
account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit
Account") for any and all cash in any currency received by the
Bank or its Subcustodian for the account of the Customer,
which cash shall not be subject to withdrawal by draft or
check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the same
class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
SECTION 2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction
in which the principal trading market for such Securities is
located, where such Securities are to be presented for payment
or where such Securities are acquired; and
<PAGE>
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is
the legal currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
SECTION 3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES
The Bank may act under this Agreement through the Subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank to
hold Assets in the Accounts in accounts which the Bank has established with one
or more of its branches or Subcustodians. The Bank and Subcustodians are
authorized to hold any of the Securities in their account with any securities
depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of any
amendment to Schedule B. Upon request by the Customer, the Bank will identify
the name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Act;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a
country other than the United States that is regulated as such by
that country's government or an agency thereof and that has
shareholders' equity in excess of $200 million in U.S. currency
(or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws
of a country other than the United States and that has
shareholders' equity in excess of $100 million in U.S. currency
(or a foreign
<PAGE>
currency equivalent thereof) (iii) a banking
institution or trust company incorporated or organized under the
laws of a country other than the United States or a majority
owned direct or indirect subsidiary of a qualified U.S. bank or
bank holding company that is incorporated or organized under the
laws of a country other than the United States which has such
other qualifications as shall be specified in Instructions and
approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate
action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under
the laws of a country other than the United States, which
operates (i) the central system for handling securities or
equivalent book-entries in that country, or (ii) a transnational
system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Trustees has approved each of
the Subcustodians listed in Schedule B to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through ___ of Schedule B, and further represents that its Board
has determined that the use of each Subcustodian and the terms of each
subcustody agreement are consistent with the best interests of the Fund(s) and
its (their) shareholders. The Bank will supply the Customer with any amendment
to Schedule B for approval. The Customer has supplied or will supply the Bank
with certified copies of its Board of Trustees resolutions(s) with respect to
the foregoing prior to placing Assets with any Subcustodian so approved.
SECTION 4. USE OF SUBCUSTODIAN
(a) The Bank will identify such Assets on its books as belonging
to the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts
identified on such Subcustodian's books as special custody
accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be
subject only to the instructions of the Bank or its agent. Any
Securities held in a securities depository for the account of
a Subcustodian will be subject only to the instructions of
such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for
holding its customer's assets shall provide that such assets
will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of such Subcustodian except
for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without
the payment of money or value other than for safe custody or
administration. The foregoing shall not apply to the
<PAGE>
extent of any special agreement or arrangement made by the
Customer with any particular Subcustodian.
SECTION 5. DEPOSIT ACCOUNT TRANSACTIONS
(a) The Bank or its Subcustodians will make payments from a Deposit
Account upon receipt of Instructions which include all
information required by the Bank. Instructions bust be received
from one or more Authorized Person(s) and countersigned or
confirmed in writing by one or more Authorized Person(s) who are
different than the Authorized Person(s) that originated or
drafted the Instructions.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in a Deposit Account, the Bank, in
its discretion, may advance the Customer such excess amount which
shall be deemed a loan payable on demand, bearing interest at the
rate customarily charged by the Bank on similar loans.
(c) If the Bank credits a Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to that
Deposit Account, with interest, dividends, redemptions or any
other amount due, the Customer will promptly return any such
amount upon oral or written notification: (i) that such amount
has not been received in the ordinary course of business or (ii)
that such amount was incorrectly credited. If the Customer does
not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the
Customer, to reverse such credit by debiting the Deposit Account
for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such
amount, but may act for the Customer upon Instructions after
consultation with the Customer.
SECTION 6. CUSTODY ACCOUNT TRANSACTIONS
(a) Securities will be transferred, exchanged or delivered by the
Bank or its Subcustodian upon receipt by the Bank of Instructions
which include all information required by the Bank. Settlement
and payment for Securities received for, and delivery of
Securities out of, a Custody Account may be made in accordance
with the customary or established securities trading or
securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery.
Delivery of Securities out of a Custody Account may also be made
in any manner specifically required by Instructions acceptable to
the Bank.
<PAGE>
(b) The Bank, in its discretion, may credit or debit an Account on a
contractual settlement date with cash or Securities with respect
to any sale, exchange or purchase of Securities. Otherwise, such
transactions will be credited or debited to the Account on the
date cash or Securities are actually received by the Bank and
reconciled to the Account.
(i) The Bank may reverse credits or debits made to an
Account in its discretion if the related transaction
fails to settle within a reasonable period,
determined by the Bank in its discretion, after the
contractual settlement date for the related
transaction.
(ii) If any Securities delivered pursuant to this Section
6 are returned by the recipient thereof, the Bank may
reverse the credits and debits of the particular
transaction at any time.
SECTION 7. ACTIONS OF THE BANK
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other
income items which call for payment upon presentation, to the
extent that the Bank or Subcustodian is actually aware of such
opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of
Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank
or any Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer sends the Bank a written exception or objection to
any Bank statement within sixty (60) days of receipt, the Customer shall be
deemed to have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
<PAGE>
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
SECTION 8. CORPORATE ACTIONS; PROXIES
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person as defined in Section
10, but if Instructions are not received in time for the Bank to take timely
actions, or actual notice of such Corporate Action was received too late to seek
Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the Deposit Account with the proceeds or take
any other action it deems, in good faith, to be appropriate in which case it
shall be held harmless for any such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
SECTION 9. NOMINEES
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities depository,
as the case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising from their status as a mere record
holder of Securities in the Custody Account.
<PAGE>
SECTION 10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.
SECTION 11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices
as confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
<PAGE>
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts
borrowed;
(h) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall
reflect any restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of,
the Bank, its Subcustodian or the Customer's transfer agent, such
shares to be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's
transfer agent of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be
released only upon payment to the Bank of monies for the premium
due and a receipt for the Securities which are to be held in
escrow. Upon exercise of the option, or at expiration, the Bank
will receive from brokers the Securities previously deposited.
The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not
returned promptly when due other than to make proper request for
such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
<PAGE>
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a
statement of the purpose for which the delivery or payment is to
be made, the amount of the payment or specific Securities to be
delivered, the name of the person or persons to whom delivery or
payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
SECTION 12. STANDARD OF CARE; LIABILITIES
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained
in Instructions which are consistent with the provisions of this
Agreement as follows:
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
Assets. The Bank shall be liable to the Customer for any
loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the
safekeeping of such Assets to the same extent that the Bank
would be liable to the Customer if the Bank were holding
such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its
Subcustodian to utilize reasonable care, the Bank shall be
liable to the customer only to the extent of the Customer's
direct damages, to be determined based on the market value
of the property which is the subject of the loss at the date
of discovery of such loss and without reference to any
special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent which it
or a Subcustodian appoints unless such appointment was made
negligently or in bad faith.
(iii)The Bank shall be indemnified by, and without liability to
the Customer for any actions taken or omitted by the Bank
whether pursuant to Instructions or otherwise within the
scope of this Agreement if such act or omission was in good
faith, without negligence. In performing its obligations
under this Agreement, the Bank may rely on the genuineness
of any document which it believes in good faith to have been
validly executed.
<PAGE>
(iv) The Customer agrees to pay for and hold the Bank harmless
from any liability or loss resulting from the imposition or
assessment of any taxes or other governmental charges, and
any related expenses with respect to income from or Assets
in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the
advice of counsel (who may be counsel for the Customer) on
all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of
the Customer.
(vii)Without limiting the foregoing, the Bank shall not be
liable for any loss which results from: 1) the general risk
of investing, or 2) investing or holding Assets in a
particular country including, but not limited to, losses
resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the
orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss
due to forces beyond their control including, but not
limited to strikes or work stoppages, acts of war or
terrorism, revolution, nuclear fusion, fission or radiation,
or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall
have no duty or responsibility to:
(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such
Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii)advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any
security other than as provided in Section 5(c) of this
Agreement;
<PAGE>
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or
other party (except for brokers, agents other than
subcustodians or depositories or other parties selected by
the Bank, except in markets where there is only one
registered or otherwise qualified broker, agent or other
party) to which Securities are delivered or payments are
made pursuant to this Agreement; or
(v) review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined
in Section 10) issuing Instructions shall bear any
responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or
circumstances are such that the Bank may have a potential
conflict of duty or interest including the fact that the Bank or
any of its affiliates may provide brokerage services to other
customers, act as financial advisor to the issuer of Securities,
act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material
interest in the issue of Securities, or earn profits from any of
the activities listed herein.
(d) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by
each of its branches, each branch of a qualified U.S. bank, each
eligible foreign custodian and each eligible foreign securities
depository holding the Customer's Securities pursuant to this
Agreement afford protection for such Securities at least equal to
that afforded by the Bank's established procedures with respect
to similar securities held by the Bank and its securities
depositories in New York.
SECTION 13. FEES AND EXPENSES
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement, so long as such lien does not contravene the provisions of
S.E.C. Release #40-12053, as amended from time to time. No fee shall be payable
hereunder with respect to any Fund during any period in which such Fund invests
all (or substantially all) of its investment assets in a registered, open-end
management investment company, or separate series thereof, in accordance with
section 12(d)(1)(E) under the Investment Company Act of 1940.
<PAGE>
SECTION 14. MISCELLANEOUS
(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration of the
Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the
Customer or an Authorized Person for the Customer and may also provide
foreign exchange through its subsidiaries, affiliates or
Subcustodians. Instructions, including standing instructions, may be
issued with respect to such contracts, but the Bank may establish
rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates
or Subcustodians enter into a foreign exchange contract related to an
Account, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and,
to the extent not inconsistent, this Agreement shall apply to such
transaction.
(b) CERTIFICATION OF RESIDENCY, ETC. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any
changes in residency. The Bank may rely upon this certification or the
certification of such other facts as may be required to administer the
Bank's obligations under this Agreement. The Customer will indemnify
the Bank against all losses, liability, claims or demands arising
directly or indirectly from any such certifications.
(c) ACCESS TO RECORDS. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their
examination of books and records pertaining to the customer's affairs.
Subject to restrictions under applicable law, the Bank shall also
obtain an undertaking to permit the Customer's independent public
accountants reasonable access to the records of any Subcustodian which
has physical possession of any Assets as may be required in connection
with the examination of the Customer's books and records. Upon
reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under
this Agreement. The Bank shall endeavor to obtain and furnish the
Customer with such similar reports as it may reasonably request with
respect to each Subcustodian and securities depository holding the
Customer's assets.
(d) GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of New York and shall not be
assignable by either party, but shall bind the successors in interest
of the Customer and the Bank.
<PAGE>
(e) ENTIRE AGREEMENT; APPLICABLE RIDERS. Customer represents that
the Assets deposited in the Accounts are (Check one):
[ ] Employee Benefit Plan or other assets subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA");
[X ] Mutual Fund assets subject to certain Securities and
Exchange Commission ("SEC")rules and regulations;
[ ] Neither of the above.
This Agreement consists exclusively of this document together with Schedule A,
Schedule B, Exhibits I-___ and the following Rider(s) [Check applicable
rider(s)]:
[ ] ERISA
[X ] MUTUAL FUND
[x ] SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) SEVERABILITY. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any
respect on the basis of any particular circumstances or in any
jurisdiction, the validity, legality and enforceability of
such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions will not
in any way be affected or impaired.
(g) WAIVER. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any
power or right under this Agreement operates as a waiver, nor
does any single or partial exercise of any power or right
preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party or any provision of
this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against
whom the waiver is to be enforced.
(h) NOTICES. All notices under this Agreement shall be effective
when actually received. Any notices or other communications
which may be required under this Agreement are to be sent to
the parties at the following addresses or such other addresses
as may subsequently be given to the other party in writing:
<PAGE>
Bank: The Chase Manhattan Bank, N.A.
Attention: Global Custody Division
Woolgate House, Coleman Street
London, EC2P 2HD, United Kingdom
or telex:
Customer: Schroder Capital Funds (Delaware)
c/o Forum Financial Services, Inc., Legal Dept.
Two Portland Square
Portland, Maine 04101
or telex: (207) 879-6050
(i) TERMINATION. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) ------------ days written notice to
the other, provided that such notice to the Bank shall specify
the names of the persons to whom the Bank shall deliver the
assets in the Accounts. If notice of termination is given by the
Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions
specifying the names of the persons to whom the Bank shall
deliver the Assets. In either case, the Bank will deliver the
Assets to the persons so specified, after deducting any amounts
which the Bank determines in good faith to be owed to it under
Section 13. If within sixty (60) days following receipt of a
notice of termination by the Bank, the Bank does not receive
Instructions from the Customer specifying the names of the
persons to whom the Bank shall deliver the Assets, the Bank, at
its election, may deliver the Assets to a bank or trust company
doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized
Persons, or may continue to hold the Assets until Instructions
are provided to the Bank.
(j) A copy of the Trust Instrument of the Schroder Capital Funds
(Delaware) is on file with the Secretary of the State of Delaware
and notice is hereby given that the Agreement is not binding upon
any of the trustees, officers, or shareholders of the Customer
individually, but are binding only upon the assets and property
of the applicable Fund. The Bank agrees that no shareholder,
trustee, or officer of the Customer or any Fund may be held
personally liable or responsible for any obligations of any fund
arising out of the Agreement. With respect to the obligations of
a Fund arising out of the Agreement, the Bank shall look for
payment or satisfaction of any claim solely to the assets and
property of that Fund, and not to the assets of any other series
of the Trust.
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
On behalf of each fund listed in Schedule A.
By: /S/ LAURA E. LUCKYN-MALONE
--------------------------------------
Name:Laura E. Luckyn-Malone
Title: President
THE CHASE MANHATTAN BANK, N.A.
By:/S/ CAROLINE WILLSON
----------------------------------
Name: Caroline Willson
Title: Director
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
GLOBAL CUSTODY AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
----------------------------------------------------------------------
FUND
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF MARCH 15, 1996
----------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
Schroder International Fund
Schroder Latin American Fund
Schroder Global Asset Allocation Fund
Schroder U.S. Smaller Companies Fund
Schroder International Smaller Companies Fund
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF NOVEMBER 26, 1996
----------------------------------------------------------------------
Schroder U.S. Equity Fund
Schroder Emerging Markets Fund
Schroder European Growth Fund
Schroder Asia Fund
Schroder Japan Fund
Schroder United Kingdom Fund
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF MARCH 5, 1997
----------------------------------------------------------------------
Schroder Cash Reserves Fund
Schroder International Bond Fund
----------------------------------------------------------------------
----------------------------------------------------------------------
AS OF JUNE 4, 1997
----------------------------------------------------------------------
Schroder Micro Cap Fund
----------------------------------------------------------------------
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
GLOBAL CUSTODY AGREEMENT
SCHEDULE B
(List of authorized Subcustodians)
<PAGE>
SPECIAL TERMS AND CONDITIONS
These Special Terms and Conditions supplement the Agreement by and
between The Chase Manhattan Bank, N.A. (the "Bank") and Schroder
Capital Funds (Delaware) (the "Customer") effective January 9, 1996. To
the extent that any term or provision of the Agreement is inconsistent
with these Special Terms and Conditions, the Special Terms and
Conditions shall control.
In order to properly allocate the responsibilities of the parties, the
term "Customer" shall have the meanings designated below.
a) In the following sections of the Agreement, the term "Customer"
shall mean "each Fund":
-- Section 1(a) & (b)
-- Section 2
-- Section 4
-- Section 13, and
-- Section 14(c)
b) In the following sections of the Agreement the term "Customer"
shall refer to the Customer on behalf of a Fund.
-- Section 1; the last paragraphs
-- Section 3
-- Section 4
-- Section 5(c)
-- Section 7(b) & (e)
-- Section 7; the last paragraph
-- Section 8
-- Section 10
-- Section 11, and
-- Section 14(a) & (i)
c) In sections 9 and 12 of the Agreement, the term "Customer"
shall mean the Customer or the Fund.
EXHIBIT (9)(a)
SCHRODER CAPITAL FUNDS (DELAWARE)
ADMINISTRATION AGREEMENT
AGREEMENT made this 26th day of November, 1996, between Schroder
Capital Funds (Delaware) (the "Trust"), a business trust organized under the
laws of the State of Delaware with its principal place of business at Two
Portland Square, Portland, Maine 04101, and Schroder Fund Advisors Inc.
("Schroder"), a corporation organized under the laws of the State of Maryland.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end management investment company
and is authorized to issue shares of beneficial interest in separate series and
classes;
WHEREAS, the Trust has entered into various Investment Advisory
Agreements with Schroder Capital Management International Inc. (the "Adviser"),
pursuant to which the Adviser provides investment advisory services for the
Trust;
WHEREAS, the Trust desires that Schroder perform certain administrative
services for each series of the Trust as listed in Appendix A hereto (each a
"Series") and each class of shares of each Series (each a "Class") and Schroder
is willing to provide those services on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Schroder agree as follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints Schroder as
administrator of the Trust and of each Series and any class of Shares thereof
and Schroder hereby accepts such appointment, all in accordance with the terms
and conditions of this Agreement. In connection therewith, the Trust has
delivered to Schroder copies of its Trust Instrument and Bylaws, the Trust's
Registration Statement and all amendments thereto filed pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the 1940 Act (the
"Registration Statement"), and the current prospectus and statement of
additional information of each Class of each Series (collectively, as currently
in effect and as amended or supplemented, the "Prospectus"), all in such manner
and to such extent as may from time to time be authorized by the Trust's Board
of Trustees (the "Board"), and shall promptly furnish Schroder with all
amendments of or supplements to the foregoing.
SECTION 2. FURNISHING OF EXISTING ACCOUNTS AND RECORDS. The Trust shall
promptly turn over to Schroder such of the accounts and records previously
maintained by or for it as are necessary for Schroder to perform its functions
under this Agreement. The Trust authorizes Schroder to rely on such accounts and
records turned over to it and hereby indemnifies and will hold Schroder, its
successors and assigns, harmless of and from any and all expenses, damages,
claims, suits, liabilities, actions, demands and losses whatsoever
<PAGE>
arising out of or in connection with any error, omission, inaccuracy or other
deficiency of such accounts and records or in the failure of the Trust to
provide any portion of such or to provide any information needed by Schroder to
knowledgeably perform its functions.
SECTION 3. ADMINISTRATIVE DUTIES
(a) Subject to the direction and control of the Board and in
cooperation with the Adviser, Schroder shall provide, or oversee, as applicable,
administrative services necessary for the Trust's operations with respect to
each Series except those services that are the responsibility of the Adviser or
the Series' custodian or transfer agent, all in such manner and to such extent
as may be authorized by the Board.
(b) With respect to the Trust, each Series and each Class thereof, as
applicable, Schroder shall:
(i) oversee (A) the preparation and maintenance by the Adviser
and the Trust's sub-administrator, custodian, transfer
agent, dividend disbursing agent and fund accountant in such
form, for such periods and in such locations as may be
required by applicable law, of all documents and records
relating to the operation of the Trust required to be
prepared or maintained by the Trust or its agents pursuant
to applicable law; (B) the reconciliation of account
information and balances among the Adviser and the Trust's
custodian, transfer agent, dividend disbursing agent and
fund accountant; (C) the transmission of purchase and
redemption orders for Shares; (D) the notification to the
Adviser of available funds for investment; and (E) the
performance of fund accounting, including the calculation of
the net asset value of the Shares;
(ii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its
sub-administrator, custodian, transfer agent and dividend
disbursing agent as well as legal, auditing and shareholder
servicing and other services performed for each Series or
class thereof;
(iii)oversee the preparation and the printing of the periodic
updating of the Registration Statement and Prospectus, tax
returns, and reports to shareholders, the Securities and
Exchange Commission and state securities commissions;
(iv) oversee the preparation of proxy and information statements
and any other communications to shareholders;
(v) at the request of the Board, provide the Trust with adequate
general office space and facilities and provide persons
suitable to the Board to serve as officers of the Trust;
<PAGE>
(vi) provide the Trust, at the Trust's request, with the services
of persons who are competent to perform such supervisory or
administrative functions as are necessary for effective
operation of the Trust; (vii) oversee the preparation,
filing and maintenance of the Trust's governing documents,
including the Trust Instrument and minutes of meetings of
Trustees and shareholders;
(viii) oversee with the cooperation of the Trust's counsel, the
Adviser, and other relevant parties, preparation and
dissemination of materials for meetings of the Board;
(ix) monitor sales of Shares and ensure that such Shares are
properly and duly registered with the Securities and
Exchange Commission and applicable state securities
commissions;
(x) oversee the calculation of performance data for
dissemination to information services covering the
investment company industry, for sales literature of the
Trust and other appropriate purposes;
(xi) oversee the determination of the amount of, and supervise
the declaration of, dividends and other distributions to
shareholders as necessary to, among other things, maintain
the qualification of each Series as a regulated investment
company under the Internal Revenue Code of 1986, as amended,
and prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other
distributions to shareholders; and
(xii)advise the Trust and its Board on matters concerning the
Trust and its affairs.
(c) Schroder shall oversee the preparation and maintenance, or cause to
be prepared and maintained, records in such form for such periods and in such
locations as may be required by applicable regulations, all documents and
records relating to the services provided to the Trust pursuant to this
Agreement required to be maintained pursuant to the 1940 Act, rules and
regulations of the Securities and Exchange Commission, the Internal Revenue
Service and any other national, state or local government entity with
jurisdiction over the Trust. The accounts and records pertaining to the Trust
which are in possession of Schroder, or an entity subcontracted by Schroder,
shall be the property of the Trust. The Trust, or the Trust's authorized
representatives, shall have access to such accounts and records at all times
during Schroder's, or its subcontractor's, normal business hours. Upon the
reasonable request of the Trust, copies of any such accounts and records shall
be provided promptly by Schroder to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor to any of
Schroder's obligations under this agreement, Schroder shall, at the expense and
direction of the Trust, transfer to such successor all relevant books, records
and other data established or maintained by Schroder, or its subcontractor,
under this Agreement.
<PAGE>
SECTION 4. STANDARD OF CARE
(a) Schroder, in performing under the terms and conditions of this
Agreement, shall use its best judgment and efforts in rendering the services
described herein, and shall incur no liability for its status under this
agreement or for any reasonable actions taken or omitted in good faith. As an
inducement to Schroder's undertaking to render these services, the Trust hereby
agrees to indemnify and hold harmless Schroder, its employees, agents, officers
and directors, from any and all loss, liability and expense, including any legal
expenses, arising out of Schroder's performance under this Agreement, or status,
or any act or omission of Schroder, its employees, agents, officers and
directors; provided that this indemnification shall not apply to Schroder's
actions taken or failures to act in cases of Schroder's own bad faith, willful
misconduct or gross negligence in the performance of its duties under this
Agreement; and further provided, that Schroder shall give the Trust notice and
reasonable opportunity to defend against any such loss, claim, damage, liability
or expense in the name of the Trust or Schroder, or both. The Trust will be
entitled to assume the defense of any suit brought to enforce any such claim or
demand, and to retain counsel of good standing chosen by the Trust and approved
by Schroder, which approval shall not be withheld unreasonably. In the event the
Trust does elect to assume the defense of any such suit and retain counsel of
good standing approved by Schroder, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any of
them; but in case the Trust does not elect to assume the defense of any such
suit, or in case Schroder does not approve of counsel chosen by the Trust or
Schroder has been advised that it may have available defenses or claims which
are not available or conflict with those available to the Trust, the Trust will
reimburse Schroder, its employees, agents, officers and directors for the fees
and expenses of any one law firm retained as counsel by Schroder or them.
Schroder may, at any time, waive its right to indemnification under this
agreement and assume its own defense. The provisions of paragraphs (b) through
(d) of this Section 4 should not in any way limit the foregoing:
(a) Schroder may rely upon the advice of the Trust or of counsel, who
may be counsel for the Trust or counsel for Schroder, and upon statements of
accountants, brokers and other persons believed by it in good faith to be expert
in the matters upon which they are consulted, and Schroder shall not be liable
to anyone for any actions taken in good faith upon such statements.
(b) Schroder may act upon any oral instruction which it receives and
which it believes in good faith was transmitted by the person or persons
authorized by the Board of the Trust to give such oral instruction. Schroder
shall have no duty or obligation to make any inquiry or effort of certification
of such oral instruction.
(c) Schroder shall not be liable for any action taken in good faith
reliance upon any written instruction or certified copy of any resolution of the
Board of the Trust, and Schroder may rely upon the genuineness of any such
document or copy thereof reasonably believed in good faith by Schroder to have
been validly executed.
(d) Schroder may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice,
<PAGE>
consent, order, or other paper document believed by it to be genuine and to have
been signed or presented by the purchaser, Trust or other proper party or
parties.
SECTION 5. EXPENSES
(a) Subject to any agreement by Schroder or other person to reimburse
any expenses of the Trust that relate to any Series, the Trust shall be
responsible for and assume the obligation for payment of all of its expenses,
including: (a) the fee payable under Section 6 hereof; (b) any fees payable to
the Adviser; (c) any fees payable to Schroder; (d) expenses of issue, repurchase
and redemption of Shares; (e) interest charges, taxes and brokerage fees and
commissions; (f) premiums of insurance for the Trust, its Trustees and officers
and fidelity bond premiums; (g) fees, interest charges and expenses of third
parties, including the Trust's custodian, transfer agent, dividend disbursing
agent and fund accountant; (h) fees of pricing, interest, dividend, credit and
other reporting services; (i) costs of membership in trade associations; (j)
telecommunications expenses; (l) funds transmission expenses; (m) auditing,
legal and compliance expenses; (n) costs of forming the Trust and maintaining
its existence; (o) to the extent permitted by the 1940 Act, costs of preparing
and printing the Series' Prospectuses, subscription application forms and
shareholder reports and delivering them to existing shareholders; (p) expenses
of meetings of shareholders and proxy solicitations therefore; (q) costs of
maintaining books of original entry for portfolio and fund accounting and other
required books and accounts, of calculating the net asset value of shares of the
Trust and of preparing tax returns; (r) costs of reproduction, stationery and
supplies; (s) fees and expenses of the Trust's Trustees; (t) compensation of the
Trust's officers and employees who are not employees of the Adviser or Schroder
or their respective affiliated persons and costs of other personnel (who may be
employees of the Adviser, Schroder or their respective affiliated persons)
performing services for the Trust; (u) costs of Trustee meetings; (v) Securities
and Exchange Commission registration fees and related expenses; (w) state or
foreign securities laws registration fees and related expenses; and (x) all fees
and expenses paid by the Trust in accordance with any distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act or under any shareholder service plan
or agreement.
(b) If the aggregate expenses of every character incurred by, or
allocated to, a Series in any fiscal year, other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, other expenditures which
are capitalized in accordance with generally accepted accounting principles and
any extraordinary expense (including, without limitation, litigation and
indemnification expense), but including the fees provided for in Section 6 and
under an Advisory Agreement with respect to a Series ("includable expenses"),
shall exceed the expense limitations applicable to that Series imposed by state
securities law or regulations thereunder, as these limitations may be raised or
lowered from time to time, Schroder shall pay that Series an amount equal to a
percentage of that excess ("Schroder's reimbursement"), such Schroder's
reimbursement to be in an amount set forth with respect to the Series in
Appendix A to this Agreement. With respect to portions of a fiscal year in which
this Agreement shall be in effect, the foregoing limitations shall be prorated
according to the proportion which that portion of the fiscal year bear to the
full fiscal year. At the end of each month of the Trust's fiscal year, Schroder
will review the includable expenses accrued during that fiscal year to the end
<PAGE>
of the period and shall estimate the contemplated includable expenses for the
balance of that fiscal year. If, as a result of that review and estimation, it
appears likely that the includable expenses will exceed the limitations referred
to in this Section 5(b) for a fiscal year, the monthly fees payable to Schroder
under this contract for such month shall be reduced, subject to a later
reimbursement to reflect actual expenses, by an amount equal to a percentage
(which shall be equal to Schroder's reimbursement) of a pro rata portion
(prorated on the basis of the remaining months of the fiscal year, including the
month just ended) of the amount by which the includable expenses for the fiscal
year (less an amount equal to the aggregate of actual reductions made pursuant
to this provision with respect to prior months of the fiscal year) are expected
to exceed the limitations provided in this Section 5(b). For purposes of the
foregoing, the value of the net assets of each Series shall be computed in the
manner specified in Section 6, and any payments required to be made by Schroder
shall be made once a year promptly after the end of the Trust's fiscal year.
SECTION 6. COMPENSATION
(a) In consideration of the services performed by Schroder under this
Agreement, the Trust will pay Schroder, with respect to each Series, a fee at
the annual rate, as listed in Appendix B hereto. Such fee shall be accrued by
the Trust daily and shall be payable monthly in arrears on the first day of each
calendar month for services performed under this agreement during the prior
calendar month. If the fees payable pursuant to this provision begin to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fees for the period from that date to the end of that month or
from the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. Upon the termination of
this Agreement, the Trust shall pay to Schroder such compensation as shall be
payable prior to the effective date of such termination.
(b) In the event that this agreement is terminated, Schroder shall be
reimbursed for reasonable charges and disbursements associated with promptly
transferring to its successor as designated by the Trust the original or copies
of all accounts and records maintained by Schroder under this agreement, and
cooperating with, and providing reasonable assistance to its successor in the
establishment of the accounts and records necessary to carry out the successor's
or other person's responsibilities.
(c) Notwithstanding anything in this Agreement to the contrary,
Schroder and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of services on behalf of the
Series in accordance with any distribution plan adopted by the Trust pursuant to
Rule 12b-1 under the 1940 Act or (ii) the provision of shareholder support or
other services, including fund accounting services.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date first above
written with respect to each Series of the Trust then existing and shall relate
to every other Series as of the later of the
<PAGE>
date on which the Trust's Registration Statement relating to the shares of such
Series becomes effective or the Series commences operations.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be automatically renewed each year for an additional term of
one year.
(c) This Agreement may be terminated with respect to a Series at any
time, without the payment of any penalty, (i) by the Board on 60 days' written
notice to Schroder or (ii) by Schroder on 60 days' written notice to the Trust.
Upon receiving notice of termination by Schroder, the Trust shall use its best
efforts to obtain a successor administrator. Upon receipt of written notice from
the Trust of the appointment of a successor, and upon payment to Schroder of all
fees owed through the effective termination date, and reimbursement for
reasonable charges and disbursements, Schroder shall promptly transfer to the
successor administrator the original or copies of all accounts and records
maintained by Schroder under this agreement including, in the case of records
maintained on computer systems, copies of such records in machine-readable form,
and shall cooperate with, and provide reasonable assistance to, the successor
administrator in the establishment of the accounts and records necessary to
carry out the successor administrator's responsibilities. For so long as
Schroder continues to perform any of the services contemplated by this Agreement
after termination of this Agreement as agreed to by the Trust and Schroder, the
provisions of Sections 4 and 6 hereof shall continue in full force and effect.
SECTION 8. ACTIVITIES OF SCHRODER
(a) Except to the extent necessary to perform Schroder's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of Schroder, or any affiliate of Schroder, or any employee of the
Schroder, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
(b) Schroder may subcontract any or all of its functions or
responsibilities pursuant to this Agreement to one or more corporations, trusts,
firms, individuals or associations, which may be affiliates of Schroder, who
agree to comply with the terms of this Agreement. Schroder may pay those persons
for their services, but no such payment will increase Schroder's compensation
from the Trust.
SECTION 9. COOPERATION WITH INDEPENDENT ACCOUNTANTS.
Schroder shall cooperate, if applicable, with the Trust's independent public
accountants and shall take reasonable action to make all necessary information
available to such accountants for the performance of their duties.
SECTION 10. SERVICE DAYS. Nothing contained in this Agreement is
intended to or shall require Schroder, in any capacity under this agreement, to
perform any functions or duties on any day other than a business day of the
Trust or of a Series. Functions or duties
<PAGE>
normally scheduled to be performed on any day which is not a business day of the
Trust or of a Series shall be performed on, and as of, the next business day,
unless otherwise required by law.
SECTION 11. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to the
Trust shall be given as follows or at such other address as the Trust may
designate in writing:
Schroder Capital Funds (Delaware)
787 Seventh Avenue
New York, New York 10019
Notice to Schroder shall be given as follows or at such other address
as Schroder may designate in writing:
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
Notices and other communications received by the parties at the
addresses listed above shall be deemed to have been properly given.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Series shall not
be liable for any obligations of the Trust or of the Series under this
Agreement, and Schroder agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Series to which Schroder's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Series.
SECTION 13. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) This Agreement may be executed in two or more counterparts, each of
which, when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
<PAGE>
(d) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the written
consent of Schroder, or by Schroder, without the written consent of the Trust
authorized or approved by a resolution of the Board.
(f) This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER CAPITAL FUNDS (DELAWARE)
/S/ CATHERINE A. MAZZA
-----------------------
CATHERINE A. MAZZA
President
SCHRODER FUND ADVISORS INC.
/S/ JANE P. LUCAS
----------------------
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
Schroder International Fund
Schroder U.S. Smaller Companies Fund
Schroder Latin American Fund
Schroder Emerging Markets Fund Institutional Portfolio
Schroder International Smaller Companies Fund
Schroder Micro Cap Fund
Schroder Emerging Markets Fund
Schroder International Bond Fund
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
ADMINISTRATION AGREEMENT
APPENDIX B
ADMINISTRATION FEES
Fee As % Of The Average Annual
SERIES OF THE TRUST DAILY NET ASSETS OF THE SERIES
------------------- ------------------------------
Schroder International Fund 0.20% for the first $100 million;
0.15% of the next $150 million;
and 0.125% of assets in excess of
$250 million
Schroder U.S. Smaller Companies Fund,
Schroder Latin American Fund,
Schroder Emerging Markets Fund
Institutional Portfolio,
Schroder Emerging Markets Fund 0.15%
Schroder International Smaller
Companies Fund,
Schroder International Bond Fund 0.10%
Schroder Global Asset Allocation Fund 0.125%
Schroder Micro Cap Fund 0.25%
During any period in which Schroder International Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) of the Investment Company Act of 1940, the Trust shall pay Schroder
a monthly fee on the first business day of each month based upon the average
daily value of the net assets of the Fund during the preceding month at an
annual rate of 0.15% of the average daily value of net assets of the Fund.
During any period in which Schroder Emerging Markets Fund Institutional
Portfolio invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) of the Investment Company Act of 1940,
the Trust shall pay Schroder a monthly fee on the first business day of each
month based upon the average daily value of the net assets of the Fund during
the preceding month at an annual rate of 0.05% of the average daily value of net
assets of the Fund.
During any period in which Schroder U.S. Smaller Companies Fund invests all
(or substantially all) of its investment assets in a registered, open-end
management investment company, or separate series thereof, in accordance with
Section 12(d)(1)(E) of the Investment Company Act of 1940, the Trust shall pay
Schroder a monthly fee on the first business day of each month based upon the
average daily value of the net assets of the Fund during the preceding month at
an annual rate of 0.25% of the average daily value of net assets of the Fund.
EXHIBIT (9)(b)
SCHRODER CAPITAL FUNDS (DELAWARE)
SUBADMINISTRATION AGREEMENT
AGREEMENT made this 1st day of February, 1997, between Schroder Capital
Funds (Delaware) ("Fund"), a business trust organized under the laws of the
State of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Forum Administrative Services, Limited Liability
Company ("Subadministrator"), a limited liability company organized under the
laws of the State of Delaware.
WHEREAS, the Fund is registered under the Investment Company Act of
1940 as amended ("1940 Act") as an open-end management investment company and is
authorized to issue shares of beneficial interest ("Shares") in separate series
and classes;
WHEREAS, the Fund has entered into various Investment Advisory
Agreements with Schroder Capital Management International Inc. (the "Adviser")
and Administrative Services Agreement with Schroder Fund Advisers Inc. (the
"Administrator"), pursuant to which the Adviser and Administrator provide
certain management and administrative services for the Fund.
WHEREAS, the Fund desires that the Subadministrator perform certain
administrative services for each of the series of the Fund as listed in Appendix
A hereto (each a "Series") and each class of shares of each Series (each a
"Class") other than any administrative services required to be performed by the
Adviser or the Administrator, and the Subadministrator is willing to provide
those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and the Subadministrator agree as follows:
SECTION 1. APPOINTMENT. The Fund hereby appoints the Subadministrator
as subadministrator of the Fund and of each Series and any class of Shares
thereof and the Subadministrator hereby accepts such appointment, all in
accordance with the terms and conditions of this Agreement. In connection
therewith, the Fund has delivered to the Subadministrator copies of its Trust
Instrument and Bylaws, the Fund's Registration Statement and all amendments
thereto filed pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act (the "Registration Statement"), and the
current prospectus and statement of additional information of each Class of each
Series (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), all in such manner and to such extent as may from time to time be
authorized by the Fund's Board of Trustees (the "Board"), and shall promptly
furnish the Subadministrator with all amendments of or supplements to the
foregoing.
SECTION 2. FURNISHING OF EXISTING ACCOUNTS AND RECORDS. The Fund shall
promptly turn over to the Subadministrator such of the accounts and records
previously maintained by or for it as are necessary for the Subadministrator to
perform its functions under this Agreement. The Fund authorizes the
Subadministrator to rely on such
<PAGE>
accounts and records turned over to it and hereby indemnifies and will hold the
Subadministrator, its successors and assigns, harmless of and from any and all
expenses, damages, claims, suits, liabilities, actions, demands and losses
whatsoever arising out of or in connection with any error, omission, inaccuracy
or other deficiency of such accounts and records or in the failure of the Fund
to provide any portion of such or to provide any information needed by the
Subadministrator to knowledgeably perform its functions.
SECTION 3. ADMINISTRATIVE DUTIES
(a) Subject to the direction and control of the Board and in
cooperation with the Adviser and the Administrator, the Subadministrator shall
provide administrative services necessary for the Fund's operations with respect
to each Series except those services that are the responsibility of the Adviser,
the Administrator or the Series' custodian or transfer agent, all in such manner
and to such extent as may be authorized by the Board and requested by the
Administrator.
(b) With respect to the Fund, each Series and each Class thereof, as
applicable, the Subadministrator shall:
(i) oversee (A) the preparation and maintenance by the Adviser
and the Fund's custodian, transfer agent, dividend
disbursing agent and fund accountant (or if appropriate,
prepare and maintain) in such form, for such periods and in
such locations as may be required by applicable law, of all
documents and records relating to the operation of the Fund
required to be prepared or maintained by the Fund or its
agents pursuant to applicable law; (B) the reconciliation of
account information and balances among the Adviser and the
Fund's custodian, transfer agent, dividend disbursing agent
and fund accountant; (C) the transmission of purchase and
redemption orders for Shares; (D) the notification to the
Adviser of available funds for investment; and (E) the
performance of fund accounting, including the calculation of
the net asset value of the Shares;
(ii) oversee the performance of administrative and professional
services rendered to the Fund by others, including its
custodian, transfer agent and dividend disbursing agent as
well as legal, auditing and shareholder servicing and other
services performed for each Series or class thereof;
(iii)be responsible for the preparation and the printing of the
periodic updating of the Registration Statement and
Prospectus, tax returns, and reports to shareholders, the
Securities and Exchange Commission and state securities
commissions;
(iv) be responsible for the preparation of proxy and information
statements and any other communications to shareholders;
<PAGE>
(v) at the request of the Board, provide the Fund with adequate
general office space and facilities and provide persons
suitable to the Board to serve as officers of the Fund;
(vi) provide the Fund, at the Fund's request, with the services
of persons who are competent to perform such supervisory or
administrative functions as are necessary for effective
operation of the Fund;
(vii)prepare, file and maintain the Fund's governing documents,
including the Trust Instrument and minutes of meetings of
Trustees and shareholders;
(viii) with the cooperation of the Fund's counsel, the
Administrator, the Adviser, and other relevant parties,
prepare and disseminate materials for meetings of the Board;
(ix) monitor sales of Shares and ensure that such Shares are
properly and duly registered with the Securities and
Exchange Commission and applicable state securities
commissions;
(x) oversee the calculation of performance data for
dissemination to information services covering the
investment company industry, for sales literature of the
Fund and other appropriate purposes;
(xi) oversee the determination of the amount of, and supervise
the declaration of, dividends and other distributions to
shareholders as necessary to, among other things, maintain
the qualification of each Series as a regulated investment
company under the Internal Revenue Code of 1986, as amended,
and prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other
distributions to shareholders; and
(xii)advise the Fund and its Board on matters concerning
the Fund and its affairs.
(c) The Subadministrator shall prepare and maintain or cause to be
prepared and maintained records in such form for such periods and in such
locations as may be required by applicable regulations, all documents and
records relating to the services provided to the Fund pursuant to this Agreement
required to be maintained pursuant to the 1940 Act, rules and regulations of the
Securities and Exchange Commission, the Internal Revenue Service and any other
national, state or local government entity with jurisdiction over the Fund. The
accounts and records pertaining to the Fund which are in possession of the
Subadministrator shall be the property of the Fund. The Fund, or the Fund's
authorized representatives, shall have access to such accounts and records at
all times during the Subadministrator's normal business hours. Upon the
reasonable request of the Fund, copies of any such accounts and records shall be
provided promptly by the Subadministrator to the Fund or the Fund's authorized
representatives. In the event the Fund designates a successor to any of the
Subadministrator's obligations under this agreement, the Subadministrator shall,
at the expense and direction of the Fund, transfer to
<PAGE>
such successor all relevant books, records and other data established or
maintained by the Subadministrator under this Agreement.
SECTION 4. STANDARD OF CARE.
(a) The Subadministrator, in performing under the terms and conditions
of this Agreement, shall use its best judgment and efforts in rendering the
services described herein, and shall incur no liability for its status under
this agreement or for any reasonable actions taken or omitted in good faith. As
an inducement to the Subadministrator's undertaking to render these services,
the Fund hereby agrees to indemnify and hold harmless the Subadministrator, its
employees, agents, officers and directors, from any and all loss, liability and
expense, including any legal expenses, arising out of the Subadministrator's
performance under this Agreement, or status, or any act or omission of the
Subadministrator, its employees, agents, officers and directors; provided that
this indemnification shall not apply to the Subadministrator's actions taken or
failures to act in cases of the Subadministrator's own bad faith, willful
misconduct or gross negligence in the performance of its duties under this
Agreement; and further provided, that the Subadministrator shall give the Fund
notice and reasonable opportunity to defend against any such loss, claim,
damage, liability or expense in the name of the Fund or the Subadministrator, or
both. The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim or demand, and to retain counsel of good standing chosen
by the Fund and approved by the Subadministrator, which approval shall not be
withheld unreasonably. In the event the Fund does elect to assume the defense of
any such suit and retain counsel of good standing approved by the
Subadministrator, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them; but in case the
Fund does not elect to assume the defense of any such suit, or in case the
Subadministrator does not approve of counsel chosen by the Fund or the
Subadministrator has been advised that it may have available defenses or claims
which are not available or conflict with those available to the Fund, the Fund
will reimburse the Subadministrator, its employees, agents, officers and
directors for the fees and expenses of any one law firm retained as counsel by
the Subadministrator or them. The Subadministrator may, at any time, waive its
right to indemnification under this agreement and assume its own defense. The
provisions of paragraphs (b) through (d) of this Section 4 should not in any way
limit the foregoing:
(a) The Subadministrator may rely upon the advice of the Fund or of
counsel, who may be counsel for the Fund or counsel for the Subadministrator,
and upon statements of accountants, brokers and other persons believed by it in
good faith to be expert in the matters upon which they are consulted, and the
Subadministrator shall not be liable to anyone for any actions taken in good
faith upon such statements.
(b) The Subadministrator may act upon any oral instruction which it
receives and which it believes in good faith was transmitted by the person or
persons authorized by the Board of the Fund to give such oral instruction. The
Subadministrator shall have no duty or obligation to make any inquiry or effort
of certification of such oral instruction.
<PAGE>
(c) The Subadministrator shall not be liable for any action taken in
good faith reliance upon any written instruction or certified copy of any
resolution of the Board of the Fund, and the Subadministrator may rely upon the
genuineness of any such document or copy thereof reasonably believed in good
faith by the Subadministrator to have been validly executed.
(d) The Subadministrator may rely and shall be protected in acting upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper document believed by it to be genuine and to have been signed or presented
by the purchaser, Fund or other proper party or parties.
SECTION 5. EXPENSES. Subject to any agreement by the Subadministrator
or other person to reimburse any expenses of the Fund that relate to any Series,
the Fund shall be responsible for and assume the obligation for payment of all
of its expenses, including: (a) the fee payable under Section 6 hereof; (b) any
fees payable to the Adviser; (c) any fees payable to the Administrator; (d)
expenses of issue, repurchase and redemption of Shares; (e) interest charges,
taxes and brokerage fees and commissions; (f) premiums of insurance for the
Fund, its Trustees and officers and fidelity bond premiums; (g) fees, interest
charges and expenses of third parties, including the Fund's custodian, transfer
agent, dividend disbursing agent and fund accountant; (h) fees of pricing,
interest, dividend, credit and other reporting services; (i) costs of membership
in trade associations; (j) telecommunications expenses; (l) funds transmission
expenses; (m) auditing, legal and compliance expenses; (n) costs of forming the
Fund and maintaining its existence; (o) to the extent permitted by the 1940 Act,
costs of preparing and printing the Series' Prospectuses, subscription
application forms and shareholder reports and delivering them to existing
shareholders; (p) expenses of meetings of shareholders and proxy solicitations
therefore; (q) costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts, of calculating the net
asset value of shares of the Fund and of preparing tax returns; (r) costs of
reproduction, stationery and supplies; (s) fees and expenses of the Fund's
Trustees; (t) compensation of the Fund's officers and employees who are not
employees of the Adviser or Subadministrator or their respective affiliated
persons and costs of other personnel (who may be employees of the Adviser, the
Administrator, the Subadministrator or their respective affiliated persons)
performing services for the Fund; (u) costs of Trustee meetings; (v) Securities
and Exchange Commission registration fees and related expenses; (w) state or
foreign securities laws registration fees and related expenses; and (x) all fees
and expenses paid by the Fund in accordance with any distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act or under any shareholder service plan
or agreement.
SECTION 6. COMPENSATION.
(a) In consideration of the services performed by the Subadministrator
under this Agreement, the Fund will pay the Subadministrator, with respect to
each Fund, a fee at the annual rate, as listed in Appendix B hereto. Such fee
shall be accrued by the Fund daily and shall be payable monthly in arrears on
the first day of each calendar month for services performed under this agreement
during the prior calendar month. If the fees payable pursuant to this provision
begin to accrue before the end of any month or if this Agreement terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the
<PAGE>
beginning of that month to the date of termination, as the case may be, shall be
prorated according to the proportion that the period bears to the full month in
which the effectiveness or termination occurs. Upon the termination of this
Agreement, the Fund shall pay to the Subadministrator such compensation as shall
be payable prior to the effective date of such termination.
(b) In the event that this agreement is terminated, the
Subadministrator shall be reimbursed for reasonable charges and disbursements
associated with promptly transferring to its successor as designated by the Fund
or the Administrator the original or copies of all accounts and records
maintained by the Subadministrator under this agreement, and cooperating with,
and providing reasonable assistance to its successor in the establishment of the
accounts and records necessary to carry out the successor's or other person's
responsibilities.
(c) Notwithstanding anything in this Agreement to the contrary, the
Subadministrator and its affiliated persons may receive compensation or
reimbursement from the Fund with respect to (i) the provision of services on
behalf of the Series in accordance with any distribution plan adopted by the
Fund pursuant to Rule 12b-1 under the 1940 Act or (ii) the provision of
shareholder support or other services, including fund accounting services.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date first above
written with respect to each Series of the Fund then existing and shall relate
to every other Series as of the later of the date on which the Fund's
Registration Statement relating to the shares of such Series becomes effective
and the Series commences operations.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be automatically renewed each year for an additional term of
one year.
(c) This Agreement may be terminated with respect to a Series at any
time, without the payment of any penalty, (i) by the Board on 60 days' written
notice to the Subadministrator or (ii) by the Subadministrator on 60 days'
written notice to the Fund. Upon receiving notice of termination by the
Subadministrator, the Fund shall use its best efforts to obtain a successor
subadministrator. Upon receipt of written notice from the Fund of the
appointment of a successor, and upon payment to the Subadministrator of all fees
owed through the effective termination date, and reimbursement for reasonable
charges and disbursements, the Subadministrator shall promptly transfer to the
successor subadministrator the original or copies of all accounts and records
maintained by the Subadministrator under this agreement including, in the case
of records maintained on computer systems, copies of such records in
machine-readable form, and shall cooperate with, and provide reasonable
assistance to, the successor sub-administrator in the establishment of the
accounts and records necessary to carry out the successor sub-administrator's
responsibilities. For so long as the Subadministrator continues to perform any
of the services contemplated by this Agreement after termination of this
Agreement as agreed to by the Fund and the Subadministrator, the provisions of
Sections 4 and 6 hereof shall continue in full force and effect.
<PAGE>
SECTION 8. ACTIVITIES OF SUB-ADMINISTRATOR. Except to the extent
necessary to perform its obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the Subadministrator's right, or the right of any
of its officers, directors or employees (whether or not they are a Trustee,
officer, employee or other affiliated person of the Fund) to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, trust, fund, firm, individual or
association.
SECTION 9. COOPERATION WITH INDEPENDENT ACCOUNTANTS. The
Subadministrator shall cooperate with the Fund's independent public accountants
and shall take reasonable action to make all necessary information available to
such accountants for the performance of their duties.
SECTION 10. SERVICE DAYS. Nothing contained in this Agreement is
intended to or shall require the Subadministrator, in any capacity under this
agreement, to perform any functions or duties on any day other than a business
day of the Fund or of a Series. Functions or duties normally scheduled to be
performed on any day which is not a business day of the Fund or of a Series
shall be performed on, and as of, the next business day, unless otherwise
required by law.
SECTION 11. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to the
Fund shall be given as follows or at such other address as a party may have
designated in writing, shall be deemed to have been properly given:
Schroder Capital Funds (Delaware)
787 Seventh Avenue
New York, New York 10019
Notice to the Subadministrator shall be given as follows or at such
other address as a party may have designated in writing, shall be deemed to have
been properly given:
Forum Administrative Services, Limited Liability Company
Two Portland Square
Portland, Maine 04101
Notices and other communications received by the parties at the
addresses listed above.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY.
The Trustees of the Fund and the shareholders of each Series shall not
be liable for any obligations of the Fund or of the Series under this Agreement,
and the Subadministrator agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Fund or the
Series to which the Subadminstrator's rights or claims relate in
<PAGE>
settlement of such rights or claims, and not to the Trustees of the Fund or the
shareholder of the Series.
SECTION 13. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) This Agreement may be executed in two or more counterparts, each of
which, when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(d) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the fund without the written
consent of the Subadministrator, or by the Subadministrator, without the written
consent of the Fund authorized or approved by a resolution of the Board.
(f) This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SCHRODER CAPITAL FUNDS (DELAWARE)
By: /S/ ALEXANDRA POE
-----------------------
Secretary and Vice President
FORUM ADMINISTRATIVE SERVICES,
LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc. as Manager
By: /S/ JOHN Y. KEFFER
------------------------
President
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SUBADMINISTRATION AGREEMENT
APPENDIX A
SERIES OF THE FUND
Schroder International Fund
Schroder U.S. Equity Fund
Schroder U.S. Smaller Companies Fund
Schroder Latin American Fund
Schroder Emerging Markets Fund Institutional Portfolio
Schroder International Smaller Companies Fund
Schroder Micro Cap Fund
Schroder Emerging Markets Fund
Schroder International Bond Fund
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SUBADMINISTRATION AGREEMENT
APPENDIX B
SUBADMINISTRATION FEES
Fee As % of the Average Annual
SERIES OF THE FUND DAILY NET ASSETS OF THE SERIES
Schroder International Fund 0.05%
Schroder U.S. Equity Fund,
Schroder U.S. Smaller Companies Fund,
Schroder Latin American Fund,
Schroder Emerging Markets Fund
Institutional Portfolio and
Schroder Micro Cap Fund 0.10%
Schroder International Smaller Companies Fund,
Schroder International Bond Fund, and
Schroder Emerging Markets Fund 0.075%
(a) The minimum administration fee per Series, except Schroder
International Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies
Fund, Schroder Latin American Fund and Schroder Emerging Markets Fund
Institutional Portfolio, is $25,000 plus $12,000 per Class for each Class of the
Series above one.
(b) During any period in which Schroder Emerging Markets Fund
Institutional Portfolio invests all (or substantially all) of its investable
assets in a registered, open-end management investment company, or separate
Series thereof ("Core Portfolio"), the above listed fee for this Series shall be
0.05%. The Subadministrator agrees to waive this fee only after the full waiver
of fees payable by the Series or the Core Portfolio to the Adviser and the
Administrator, and then only to the extent necessary to keep the total expense
ratio for this Series (including its pro rata share of the expenses of the Core
Portfolio) at or below 1.60% of average annual daily net assets in the Series.
(c) During any period in which Schroder U.S. Smaller Companies Fund
invests all (or substantially all) of its investable assets in a Core Portfolio,
the above listed fee for this Series shall be 0.075%.
EXHIBIT (9)(c)
SCHRODER CAPITAL FUNDS (DELAWARE)
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 9th day of January, 1996, between Schroder Capital
Funds (Delaware) (the "Fund"), and Forum Financial Corp. ("FFC"), both
corporations organized under the laws of the State of Delaware.
WHEREAS, the Fund is registered under the Investment Company Act of
1940 as an open-end management investment company and is authorized to issue
shares of common stock in separate series and classes;
WHEREAS, the Fund currently consists of each series listed in Appendix
A hereto;
WHEREAS, the Fund desires that FFC perform certain transfer agency and
related services for each series of the Fund, and class thereof, that currently
exists or in the future may be created, and FFC is willing to perform those
services on the terms and conditions set forth in this Agreement; and
WHEREAS, FFC has agreed to act as transfer agent for the purpose of
recording the transfer, issuance and redemption of Shares of the Fund,
transferring the Shares of the Fund, disbursing dividends and other
distributions to Shareholders, filing various tax forms, mailing shareholder
information and receiving and responding to various shareholder inquiries;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. APPOINTMENT. The Fund hereby appoints FFC as its Transfer
Agent and FFC agrees to act in such capacity upon the terms set forth in
this Agreement.
SECTION 2. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow:
a) ACT: The term Act shall mean the Investment Company Act
of 1940, as amended from time to time.
b) BOARD: The term Board shall mean the Board of Trustees
of the Fund.
c) CLASS: The term Class shall mean any future classes of
each Series listed in Appendix A or any class of any
Series that the Fund shall subsequently establish.
d) CUSTODIAN; CUSTODIAN AGREEMENT: The term Custodian
shall mean Chase Manhattan Bank, NA; or any successor
or other custodian acting as such for any current or
future Series of the Fund. The term Custodian Agreement
shall mean the agreement or agreements between the Fund
and the Custodian or Custodians providing for custodial
services to the Fund.
<PAGE>
e) FUND: The term Fund shall mean Schroder Capital Funds
(Delaware).
f) FUND ACCOUNTANT. The term Fund Accountant shall mean
FFC or any successor thereto that is responsible for
calculating the Fund's net asset value and maintaining
its accounting books and records.
g) FUND BUSINESS DAY: The term Fund Business Day shall
mean each day that the New York Stock Exchange is open
for trading (which excludes the following national
business holidays: New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day).
h) ORAL INSTRUCTION: The term Oral Instruction shall mean
an authorization, instruction, approval, item or set of
data, or information of any kind transmitted to FFC in
person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably
believed in good faith by FFC to be a person or persons
authorized by a resolution of the Board of Trustees of
the Fund to give Oral Instructions on behalf of the
Fund. Each Oral Instruction shall specify whether it is
applicable to all of the Fund or to a specific Series
or Class.
i) PROSPECTUS: The term Prospectus shall mean the then
current prospectus forming a part of an effective
Registration Statement of the Fund under the Securities
Act of 1933, as amended, and the Act covering the
Shares of a Series or Class as the case may be, as the
same may be amended or supplemented from time to time.
j) SERIES: The term Series shall mean each series listed
in Appendix A or any series that the Fund shall
subsequently establish.
k) SHARE CERTIFICATES: The term Share Certificates shall
mean the certificates evidencing ownership of Shares of
a series or class.
l) SHAREHOLDERS: The term Shareholders shall mean the
registered owners from time to time of the Shares, as
reflected on the share registry records of the Fund.
m) SHARES: The term Shares shall mean the issued and
outstanding shares of common stock of the Fund, or any
series or class of the Fund, including any fractions
thereof.
n) VALUATION TIME: The term Valuation Time shall mean,
with respect to each Series, the time at which the
Series' net asset value is calculated, as disclosed in
the Series' Prospectus.
o) WRITTEN INSTRUCTIONS: The term Written Instructions
shall mean an authorization, instruction, approval,
item or set of data, or information of any kind
transmitted to FFC in original writing containing
original signatures, or a copy of such document
transmitted by facsimile, including transmission of
such signature, or other mechanical or documentary
<PAGE>
means at the request of a person or persons reasonably
believed in good faith by FFC to be a person or persons
authorized by a resolution of the Board to give Written
Instructions on behalf of the Fund. Each Written
Instruction shall specify whether it is applicable to
all of the Fund or a specific Series or Class.
SECTION 3. SHARE CERTIFICATES. The Fund shall furnish to FFC a supply
of blank Share Certificates of each Class of each Series and, from time to time,
will renew such supply upon FFC's request. Blank Share Certificates shall be
signed manually or by facsimile signatures of officers of the Fund authorized to
sign by the by-laws of the Fund and, if required by FFC, shall bear the Fund's
seal or a facsimile thereof.
SECTION 4. ISSUANCE OF SHARES. FFC shall make original issues of Shares
of each Class of each Series in accordance with Section 11, and the Fund's then
current Prospectus, upon receipt of (i) Written Instructions requesting the
issuance, (ii) a certified copy of a resolution of the Board authorizing the
issuance, (iii) necessary funds for the payment of any original issue tax
applicable to such Shares, and (iv) an opinion of the Fund's counsel as to the
legality and validity of the issuance, which opinion may provide that it is
contingent upon the filing by the Fund of an appropriate notice with the
Securities and Exchange Commission, as required by Rule 24f-2 under the Act. If
the opinion described in (iv) above is contingent upon a filing under Rule
24f-2, the Fund shall fully indemnify FFC for any liability arising from the
failure of the Fund to comply with that rule.
SECTION 5. TRANSFER OF SHARES. Transfers of Shares of each Class of
each Series shall be registered on the Shareholder records maintained by FFC. In
registering transfers of Shares, FFC may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of FFC's counsel, protect FFC and the Fund from liability arising from (i) not
requiring complete documentation, (ii) registering a transfer without an adverse
claim inquiry, (iii) delaying registration for purposes of such inquiry or (iv)
refusing registration whenever an adverse claim requires such refusal. As
Transfer Agent, FFC will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.
SECTION 6. ISSUANCE AND TRANSFER OF SHARE CERTIFICATES. Subject to the
provisions of Section 8, new Share Certificates shall be issued by FFC upon
surrender of outstanding Share Certificates in the form deemed by FFC to be
properly endorsed for transfer and satisfactory evidence of compliance with all
applicable laws relating to the payment or collection of taxes. FFC shall
forward Share Certificates in "non-negotiable" form by first-class or registered
mail, or by whatever means FFC deems equally reliable and expeditious. While in
transit to the addressee, all deliveries of Share Certificates shall be insured
as FFC deems appropriate. FFC shall not mail Share Certificates in "negotiable"
form unless requested in writing by the Fund and fully indemnified by the Fund
to FFC's satisfaction. FFC may issue new Share Certificates in place of those
lost, destroyed or stolen, upon receiving indemnity satisfactory to FFC, and may
issue new Share Certificates in exchange for, and upon surrender of, mutilated
Share Certificates as FFC deems appropriate. Unless otherwise directed by the
Fund, FFC may issue or register Share Certificates reflecting the signature, or
facsimile thereof,
<PAGE>
of an officer who has died, resigned or been removed by the Fund. The Fund shall
file promptly with FFC approval, adoption or ratification of such action as may
be required by law or FFC. All share certificates submitted for transfer or
replacement shall be marked "cancelled" or destroyed by FFC following the
issuance in lieu of the Share Certificate of a new or replacement Share
Certificate or shares not evidenced by a Share Certificate.
SECTION 7. MAINTENANCE OF STOCK RECORDS. FFC shall maintain customary
stock registry records for each Class of each Series, noting the issuance,
transfer or redemption of Shares and the issuance and transfer of Share
Certificates. FFC will also maintain for each Class of each Series an account
entitled "Unissued Certificate Account" (or similar name) in which it will
record the Shares issued and outstanding from time to time for which issuance of
Share Certificates has not been requested. FFC is authorized to keep records for
each Class of each Series, containing the names and addresses of record of
Shareholders, and the number of Shares from time to time owned by them for which
no Share Certificates are outstanding. Each Shareholder account will be assigned
a single account number for each Class of each Series, even though Shares for
which Certificates have been issued will be accounted for separately.
SECTION 8. RECORDS REFLECTING ISSUANCES AND REDEMPTIONS. FFC shall
issue Share Certificates for Shares only upon receipt of a written request from
a Shareholder. If Shares are purchased without such request, FFC shall merely
note on its stock registry records the issuance of the Shares and credit the
Unissued Certificate Account and the respective Shareholders' accounts with the
Shares. Whenever Shares owned by Shareholders are surrendered for redemption,
FFC shall make appropriate entries in the stock transfer records and debit the
Unissued Certificate Account, if appropriate, and the record of issued Shares
outstanding; and shall cancel any Share Certificate surrendered for redemption.
SECTION 9. RELIANCE BY FFC. In performing its duties hereunder, FFC may
rely conclusively and act without further investigation upon any list,
instruction, certification, authorization, Share Certificate or other instrument
or paper reasonably believed by it in good faith to be genuine and unaltered,
and to have been signed, countersigned or executed or authorized by a
duly-authorized person or persons, or by the Fund, or upon the advice of counsel
for the Fund or for FFC. FFC may record any transfer of Share Certificates which
it reasonably believes in good faith to have been duly-authorized, or may refuse
to record any transfer of Share Certificates if, in good faith, it deems such
refusal necessary in order to avoid any liability on the part of either the Fund
or FFC. The Fund agrees to indemnify and hold harmless FFC from and against any
and all losses, claims, damages, liabilities or expenses that it may suffer or
incur by reason of such good faith reliance, action or failure to act.
SECTION 10. INSPECTION OF RECORDS. FFC shall notify the Fund of any
request or demand for the inspection of the Fund's share records. FFC shall
abide by the Fund's instructions for granting or denying the inspection;
provided, however, FFC may grant the inspection without such instructions if it
is advised by counsel to FFC that failure to do so will result in liability to
FFC.
<PAGE>
SECTION 11. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS.
(a) Shares shall be issued to investors at the net asset value next
determined after FFC receives a completed purchase order.
(b) A purchase order shall be complete when FFC receives:
(1) an instruction directing investment in a Series or Class of
a Series of the Fund;
(2) a check or wire in the amount designated in the instruction;
and,
(3) in the case of an initial purchase, a completed account
application; or,
(4) the information required for purchases pursuant to a
selected dealer agreement, processing organization
agreement, or a similar contract with a financial
intermediary.
(c) Shares issued after receipt of a completed purchase order shall be
eligible to receive dividend and capital gain distributions:
(1) in the case of Series that do not declare dividends daily,
on the next Fund Business Day after FFC receives the
completed purchase order;
(2) in the case of Series that are money market funds, on the
same Fund Business Day as FFC receives Federal Funds; and,
(3) in the case of Series, other than money market funds, that
declare dividends daily, on the next Fund Business Day after
FFC receives Federal Funds.
(d) Shareholder payments shall be considered Federal Funds no later
than on the day indicated below unless such other times shall be noted in a
Prospectus:
(1) for a wire received, at the time of the receipt of the wire;
(2) for a check drawn on a member bank of the Federal Reserve
System and received prior to 12:00 noon, Eastern time on a
Fund Business Day, on the Fund Business Day following
receipt;
(3) for a check drawn on a member bank of the Federal Reserve
System and received at or after 12:00 noon, Eastern time on
a Fund Business Day, on the second Fund Business Day
following receipt; and
<PAGE>
(4) for a check drawn on an institution that is not a member of
the Federal Reserve System, at such time as the Transfer
Agent actually receives Federal funds in respect of that
check.
SECTION 12. COMPUTATION OF NET ASSET VALUE; CONFIRMATIONS.
(a) On each Fund Business Day, as soon as possible after each Valuation
Time for a Series, FFC shall obtain from the Fund Accountant a quotation (on
which it may conclusively rely) of the net asset value for each Class of the
Series as of that Valuation Time. FFC shall use the net asset value determined
as of the Valuation Time to compute the number of Shares of each Class of a
Series to be purchased and the aggregate purchase proceeds to be deposited with
the Custodian based on the completed purchase orders received by FFC on that day
prior to the Valuation Time for the Series. FFC shall thereupon pay the
Custodian the aggregate net asset value of shares of each Class of the Series
purchased for which payment has been received by FFC.
(b) As necessary but no more frequently than once daily (unless a more
frequent basis is agreed to by FFC), FFC shall issue the proper number of Shares
to be purchased pursuant to subsection (a) above. Promptly thereafter FFC shall
send written confirmation of such purchase to the Custodian and the Fund or Fund
Accountant.
(c) FFC shall also credit each Shareholder's separate account with the
number of Shares purchased by such Shareholder. FFC shall promptly thereafter
mail written confirmation of the purchase to each Shareholder and to the Fund if
requested. Each confirmation shall indicate the prior Share balance, the new
Share balance, the amount invested and the price paid for the newly-purchased
Shares.
SECTION 13. SHARE REDEMPTIONS. Prior to each Valuation Time for a
Series on each Fund Business Day, as specified in accordance with Section 11,
FFC shall process all requests to redeem Shares of each Series or Class of the
Series in accordance with Section 8. Upon confirmation of the net asset value by
the Fund Accountant, FFC shall notify the Fund and the Custodian of the
redemption amount, apply the redemption proceeds in accordance with Section 13
and the Prospectus, record the redemption in the stock registry books, and debit
the redeemed Shares from the Unissued Certificates Account, if appropriate, and
the account of the Shareholder, and mark "cancelled" or destroy any Share
Certificates evidencing the redeemed shares.
In lieu of carrying out the redemption procedures described in the
preceding paragraph, FFC may, at the request of the Fund, sell Shares of each
class of each Series to the Fund as repurchases from Shareholders, provided that
the sale price is not less than the applicable redemption price. The redemption
procedures shall then be appropriately modified. The Fund may authorize FFC by
Written Instruction to effect any redemptions upon provision of an indemnity
satisfactory in form to FFC.
<PAGE>
SECTION 14. REDEMPTION PROCEEDS. The proceeds of redemption
shall be remitted by FFC in accordance with the Prospectus as follows:
(a) By check mailed to the Shareholder at the Shareholder's address of
record. The redemption request and Share Certificates, if any, for Shares being
redeemed must reflect a guarantee of the owner's signature as described in
Section 22; or
(b) By other procedures commonly followed by mutual funds, as set forth
in the Prospectus and in a Written Instruction from the Fund and mutually agreed
upon by the Fund and FFC. For purposes of redemption of shares of any Class of
any Series that have been purchased by check within fifteen (15) days prior to
receipt of the redemption request, the Fund shall provide FFC with Written
Instructions concerning the time within which such requests may be honored. The
authority of FFC to perform its responsibilities under Sections 12 and 13 shall
be suspended if FFC receives notice of the suspension of the determination of
the Fund's net asset value.
SECTION 15. DIVIDENDS. Upon the declaration with respect to a Series or
Class of a Series of each dividend and capital gain distribution by the Board,
the Fund shall notify FFC of the date of such declaration, the amount payable
per Share, the record date for determining the Shareholders entitled to payment,
and the payment and reinvestment date. On or before each payment date the Fund
will transfer, or cause the Custodian to transfer, to FFC the total amount of
the dividend or distribution currently payable. FFC will, as of the ex-dividend
date, reinvest all dividends and distributions in additional Shares of the same
Series or Class of a Series and promptly mail to each Shareholder at his address
of record, a statement showing the number of Shares (rounded to three decimal
places) of that Class then owned by the Shareholder and the net asset value of
such Shares, or transmit such information in accordance with any arrangement
between the Shareholder and FFC; provided, however, that if a Shareholder elects
to receive dividends and distributions in cash, FFC shall prepare a check in the
appropriate amount and mail it to the Shareholder at the Shareholder's address
of record within five (5) Fund Business Days after the designated payment date
or transmit the appropriate amount in Federal funds in accordance with any
arrangement between the Shareholder and FFC.
SECTION 16. BOOKS AND RECORDS.
(a) The Fund shall deliver or cause to be delivered over to FFC (i) an
accurate list of Shareholders of the Fund, showing each Shareholder's address of
record, number of Shares owned and whether such Shares are represented by
outstanding Share Certificates or by non-certificated Share accounts and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by FFC under this Agreement
(collectively referred to as the "Materials"). The Fund shall indemnify and hold
harmless FFC from and against any and all losses, claims, damages, liabilities
or expenses arising out of or in connection with any error, omission, inaccuracy
or other deficiency of the Materials, or out of the failure of the Fund to
provide any portion of the Materials or to provide any information in the Fund's
possession needed by FFC to knowledgeably perform its functions.
<PAGE>
(b) FFC shall prepare and maintain or cause to be prepared and
maintained records in such form for such periods and in such locations as may be
required by applicable regulations, all documents and records relating to the
services provided to the Fund pursuant to this Agreement required to be
maintained pursuant to the Act, rules and regulations of the Securities and
Exchange Commission, the Internal Revenue Service and any other national, state
or local government entity with jurisdiction over the Fund. The books and
records pertaining to the Fund which are in possession of FFC shall be the
property of the Fund. The Fund, or the Fund's authorized representatives, shall
have access to such books and records at all times during FFC's normal business
hours. Upon the reasonable request of the Fund, copies of any such books and
records shall be provided promptly to the Fund or the Fund's authorized
representatives. In the event the Fund designates a successor to any of FFC's
obligations hereunder, FFC shall, at the expense and direction of the Fund,
transfer to such successor all relevant books, records and other data
established or maintained by FFC under this Agreement.
SECTION 17. COOPERATION WITH INDEPENDENT ACCOUNTANTS. FFC shall
cooperate with the Fund's independent public accountants and shall take
reasonable action to make all necessary information available to such
accountants for the performance of their duties.
SECTION 18. OTHER SERVICES. In addition to the services described
above, FFC will perform other services for the Fund as mutually agreed upon in
writing from time to time, including but not limited to preparing and filing
federal tax forms with the Internal Revenue Service, mailing federal tax
information to Shareholders, mailing Shareholder reports, preparing the annual
list of Shareholders, mailing notices of Shareholders' meetings, proxies and
proxy statements and tabulating proxies. FFC shall answer certain Shareholder
inquiries related to their share accounts and other correspondence requiring an
answer from the Fund.
SECTION 19. SERVICE DAYS. Nothing contained in this Agreement is
intended to or shall require FFC, in any capacity hereunder, to perform any
functions or duties on any day other than a Fund Business Day. Functions or
duties normally scheduled to be performed on any day which is not a Fund
Business Day shall be performed on, and as of, the next Fund Business Day,
unless otherwise required by law.
SECTION 20. COMPENSATION. The Fund agrees to pay to FFC compensation
for its services as set forth in Appendix B attached hereto, or as shall be set
forth in written amendments to Appendix B approved by the Fund and FFC from time
to time. These fees shall be paid monthly in advance. Fees will begin to accrue
for each Series on the latter of the effective date of this Agreement or the
date of commencement of operations of such Series.
FFC shall be reimbursed for its out of pocket and ancillary costs
incurred in providing any transfer agency services hereunder, including the cost
of (or appropriate share of the cost of): (i) any and all forms and stationery
used or specially prepared for the purpose; (ii) postage; (iii) telephone
services; (iv) bank fees; (v) electronic or facsimile transmission; and (vi) any
items the Fund is responsible for as described in the Fund's agreements with
FFC, Forum Financial Services, Inc., Schroder Capital Management International
Inc., or Schroder Capital Distributors
<PAGE>
Inc. The Fund shall reimburse FFC for all expenses and employee time
attributable to any review of the Fund's accounts and records by the Fund's
independent public accountants or any regulatory body outside of routine and
normal periodic reviews. In the event that this agreement is terminated and a
successor transfer agent is appointed, FFC shall be reimbursed for reasonable
charges and disbursements associated with promptly transferring to the successor
transfer agent the original or copies of all books and records maintained by FFC
hereunder, and cooperating with, and providing reasonable assistance to, the
successor transfer agent in the establishment of the books and records necessary
to carry out the successor transfer agent's responsibilities.
Except as permitted by this Agreement with regard to indemnity, the
foregoing shall be full and complete compensation and reimbursement for all
FFC's expenses incurred in connection with the services contemplated by this
Agreement, and FFC shall be entitled to no additional expense reimbursement or
other payments of any nature.
SECTION 21. TAXES. FFC shall not be liable for any taxes, assessments
or governmental charges that may be levied or assessed on any basis whatsoever
in connection with the Fund or any Shareholder, excluding taxes assessed against
FFC for compensation received by it hereunder.
SECTION 22. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION.
FFC, in performing under the terms and conditions of this Agreement, shall use
its best judgment and efforts in rendering the services described herein, and
shall incur no liability for its status hereunder or for any reasonable actions
taken or omitted in good faith. As an inducement to FFC's undertaking to render
these services, the Fund hereby agrees to indemnify and hold harmless FFC, its
employees, agents, officers and trustees, from any and all loss, liability and
expense, including any legal expenses, arising out of FFC's performance under
this Agreement, or status, or any act or omission of FFC, its employees, agents,
officers and trustees; provided that this indemnification shall not apply to
FFC's actions taken or failures to act in cases of FFC's own bad faith, willful
misconduct or gross negligence in the performance of its duties under this
Agreement; and provided further that FFC shall give the Fund notice and
reasonable opportunity to defend against any such loss, claim, damage, liability
or expense in the name of the Fund or FFC, or both. The Fund will be entitled to
assume the defense of any suit brought to enforce any such claim or demand, and
to retain counsel of good standing chosen by the Fund and approved by FFC, which
approval shall not be withheld unreasonably. In the event the Fund does elect to
assume the defense of any such suit and retain counsel of good standing approved
by FFC, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the Fund
does not elect to assume the defense of any such suit, or in case FFC does not
approve of counsel chosen by the Fund or FFC has been advised that it may have
available defenses or claims which are not available or conflict with those
available to the Fund, the Fund will reimburse FFC, its officers or trustees or
the controlling person or persons named as defendant or defendants in such suit,
for the fees and expenses of any one law firm retained as counsel by FFC or
them. FFC may, at any time, waive its right to indemnification hereunder and
assume its own defense.
Without limitation of the foregoing:
<PAGE>
(a) FFC may rely upon the advice of the Fund or counsel to the
Fund or FFC, and upon statements of accountants, brokers and
other persons believed by FFC in good faith to be expert in
the matters upon which are consulted. FFC shall not be liable
for any action taken in good faith reliance upon such advice
or statements;
(b) FFC shall not be liable for any action reasonably taken in
good faith reliance upon any Written Instructions or certified
copy of any resolution of the Board; provided, however, that
upon receipt of a Written Instruction countermanding a prior
Instruction that has not been fully executed by FFC, FFC shall
verify the content of the second Instruction and honor it, to
the extent possible. FFC may rely upon the genuineness of any
such document, or copy thereof, reasonably believed by FFC in
good faith to have been validly executed;
(c) FFC may rely, and shall be protected by the Fund in
acting, upon any signature, instruction, request, letter of
transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, or other paper or
document reasonably believed by it in good faith to be genuine
and to have been signed or presented by the proper party or
parties; and
(d) FFC may, with the consent of the Fund, which consent shall
not be withheld unreasonably, subcontract the performance of
all, or any portion of, the services to be provided hereunder
with respect to any Shareholder or group of Shareholders to
any Processing Organization or agent of FFC and may reimburse
any such Processing Organization or agent for the services it
performs; provided that no such reimbursement will increase
the amount payable by the Fund pursuant to this Agreement.
SECTION 23. SIGNATURE GUARANTEES. Upon receipt of Written Instructions,
FFC is authorized to make payment upon redemption of Shares or otherwise effect
any transaction or class of transaction without a signature guarantee, and the
Fund hereby agrees to indemnify and hold FFC harmless from any and all expenses,
damages, claims, suits, liabilities, actions, demands or losses whatsoever
arising out of or in connection with such payment or transactions if made in
accordance with such Written Instructions. Signature guarantees may be provided
by any eligible institution, as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, that is authorized to guarantee signatures, and is
acceptable to FFC.
SECTION 24. ADOPTION OF PROCEDURES. The parties hereto may adopt
procedures as may be appropriate or practical under the circumstances, and FFC
may conclusively rely on the determination of the Fund that any procedure that
has been approved by the Fund does not conflict with or violate any requirement
of its Trust Instrument or Registration Statement, or any rule, regulation or
requirement of any regulatory body.
SECTION 25. BOARD RESOLUTIONS. The Fund shall file with FFC a certified
copy of the operative resolution of the Board authorizing the execution of
Written Instructions or the transmittal of Oral Instructions.
<PAGE>
SECTION 26. RETURNED CHECKS. In the event that any check or other order for
the payment of money is returned unpaid for any reason, FFC shall promptly
notify the Fund of the non-payment.
SECTION 27. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to the
Fund shall be given as follows until further notice:
Schroder Capital Funds (Delaware)
787 Seventh Avenue .
New York, New York 10019
Notice to FFC shall be given as follows until further notice:
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
SECTION 28. REPRESENTATIONS AND WARRANTIES. The Fund represents and
warrants to FFC that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly authorized by
resolution of the Board. FFC represents and warrants to the Fund that the
execution and delivery of this Agreement by the undersigned officer of FFC has
also been duly and validly authorized.
SECTION 29. EFFECTIVENESS, DURATION AND TERMINATION.
EFFECTIVENESS. This Agreement shall become effective as of the date first
above written with respect to existing series of the Fund, and shall relate
to every other Series as of the date on which the Fund's Registration
Statement relating to the shares of such Series becomes effective.
DURATION. This Agreement shall remain in effect indefinitely.
TERMINATION This Agreement may be terminated with respect to any Series,
or Class thereof, without the payment of any penalty, (i) by a vote of a
majority of the Fund's Board on 60 days' written notice to FFC or (ii) by
FFC on not less than 60 days' written notice to the Fund. Such termination
shall be effective as of the date specified in the notice. Upon receiving
notice of termination by FFC, the Fund shall use its best efforts to obtain
a successor transfer agent. Upon receipt of written notice from the Fund of
the appointment of the successor
<PAGE>
transfer agent and Oral or Written
Instructions, and upon payment to FFC of all fees owed through the
effective termination date, and reimbursement for reasonable charges and
disbursements (as described in Section 19), FFC shall promptly transfer to
the successor transfer agent the original or copies of all books and
records maintained by FFC hereunder including, in the case of records
maintained on computer systems, copies of such records in machine-readable
form, and shall cooperate with, and provide reasonable assistance to, the
successor transfer agent in the establishment of the books and records
necessary to carry out the successor transfer agent's responsibilities. For
so long as FFC continues to perform any of the services contemplated by
this Agreement after termination of this Agreement (as agreed to by the
Fund and FFC), the provisions of Sections 19 and 21 hereof shall continue
in full force and effect.
SECTION 30. MISCELLANEOUS.
a) MODIFICATIONS AND AMENDMENTS. No provisions of this
Agreement may be amended or modified in any manner except by
a written agreement properly authorized and executed by both
parties hereto.
b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which, when so executed shall be
deemed to be an original, but such counterparts shall
together constitute but one and the same instrument.
c) CONSTRUCTION IF PROVISION DEEMED ILLEGAL OR INVALID. If any
part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable
and not be affected, and the rights and obligations of the
parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held
to be illegal or invalid.
d) SECTION AND PARAGRAPH HEADINGS. Section and Paragraph
headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this
Agreement.
e) NOTICES. Notices, requests, instructions and communications
received by the parties at their respective principal
addresses, or at such other address as a party may have
designated in writing, shall be deemed to have been properly
given.
f) SUCCESSORS AND ASSIGNS. This Agreement shall extend to and
shall be binding upon the parties hereto and their
respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without
the written consent of FFC, or by FFC, without the written
consent of the Fund authorized or approved by a resolution
of the Board.
g) GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
/S/ LAURA E. LUCKYN-MALONE
------------------------
Laura E. Luckyn-Malone
FORUM FINANCIAL CORP.
/S/ JOHN Y. KEFFER
------------------------
John Y. Keffer, President
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
TRANSFER AGENCY AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
- ----------------------------------------------------------------------
FUND
- ----------------------------------------------------------------------
AS OF MARCH 15, 1996
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
Schroder International Fund
Schroder Latin American Fund
Schroder Global Asset Allocation Fund
Schroder U.S. Smaller Companies Fund
Schroder International Smaller Companies Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF NOVEMBER 26, 1996
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Schroder U.S. Equity Fund
Schroder Emerging Markets Fund
Schroder European Growth Fund
Schroder Asia Fund
Schroder Japan Fund
Schroder United Kingdom Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF MARCH 5, 1997
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Schroder Cash Reserves Fund
Schroder International Bond Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF JUNE 4, 1997
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Schroder Micro Cap Fund
- ----------------------------------------------------------------------
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
TRANSFER AGENCY AGREEMENT
APPENDIX B
For its services hereunder, FFC will receive fees calculated as
follows: (i) a fee of $12,000 per year with respect to each series, such amounts
to be computed and paid monthly in advance by the Fund; (ii) Annual Shareholder
Account Fees of $25.00 per shareholder account; such fees to be paid monthly and
computed as of the last business day of the prior month; (iii) for series with
multiple share classes, an additional fee of $12,000 per additional class per
year; and (iv) out-of-pocket expenses billed at cost.
The rates set forth above shall remain fixed through December 31, 1995.
On January 1, 1996, and on each successive January 1, the rates shall be
adjusted to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of Labor
Statistics.
EXHIBIT (9)(D)
SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of March 5, 1997, as amended as of June 4, 1997 and
as of December 1, 1997, by and between Schroder Capital Funds (Delaware), a
Delaware business trust organized under the laws of the State of Delaware with
its principal place of business at Two Portland Square, Portland, Maine 04101
(the "Trust"), and Forum Accounting Services, Limited Liability Company, a
Delaware limited liability company with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest (the "Shares"), in separate
series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and Bylaws (collectively, as amended from time
to time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus") and
(iv) all procedures adopted by the Trust with respect to the Funds (i.e.,
repurchase agreement procedures), and shall promptly furnish Forum with all
amendments of or supplements to the foregoing. The Trust
<PAGE>
shall deliver to Forum a certified copy of the resolution of the Board of
Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) Forum and the Trust's Fund's administrator, Schroder Fund Advisors
Inc., or sub-administrator, Forum Administrative Services, LLC (together, the
"Administrator") may from time to time adopt such procedures as they agree upon
to implement the terms of this Section. With respect to each Fund, Forum shall
perform the following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (unless otherwise specified in or
in accordance with this Agreement, based upon the use of outside
services normally used and contracted for this purpose by Forum in the
case of securities for which information and market price or yield
quotations are readily available and based upon evaluations conducted
in accordance with the Trust's instructions in the case of all other
assets) or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of those
assets by more than a specified percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
<PAGE>
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers,
as applicable;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that is required to update the Trust's registration
statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers, as
applicable, to the Trust and the Board and provide information to the
Administrator, investment advisers to the Trust and other appropriate
persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xix) periodically reconcile all appropriate data with each Fund's
custodian;
(xx) verify investment trade tickets when received from an investment
adviser, as applicable, and maintain individual ledgers and historical
tax lots for each security; and
<PAGE>
(xxi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. The books and records pertaining to the Trust
that are in possession of Forum shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during Forum's normal business hours. Upon the reasonable
request of the Trust or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations hereunder, Forum shall,
at the expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by Forum under
this Agreement.
<PAGE>
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(c)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
<PAGE>
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(d) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
(g) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Portfolio to act in contravention of a Portfolio's
Offering Document or any provision of the 1940 Act. Except as otherwise
specifically provided herein, the Trust assumes all responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act,
the 1940 Act and any laws, rules and regulations of governmental authorities
with jurisdiction over the Trust. All references
<PAGE>
to any law in this Agreement shall be deemed to include reference to the
applicable rules and regulations promulgated under authority of the law and all
official interpretations of such law or rules or regulations.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix B hereto. In addition, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all expenses and
employee time (at 150% of salary) attributable to any review of the Trust's
accounts and records by the Trust's independent accountants or any regulatory
body outside of routine and normal periodic reviews. Should the Trust exercise
its right to terminate this Agreement, the Trust, on behalf of the applicable
Fund, shall reimburse Forum for all out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
<PAGE>
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the Shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY. Forum agrees to treat all records and other
information related to the Trust as proprietary information of the Trust and, on
behalf of itself and its employees, to keep confidential all such information,
except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
<PAGE>
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
<PAGE>
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
<PAGE>
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
SCHRODER CAPITAL FUNDS (DELAWARE)
By: /s/ Catherine S. Mazza
-------------------------------
FORUM ACCOUNTING SERVICES,
LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/ John Y. Keffer
--------------------------------
John Y. Keffer
President
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
- ----------------------------------------------------------------------
FUND
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF MARCH 15, 1996
- ----------------------------------------------------------------------
Schroder Emerging Markets Fund Institutional Portfolio
- ----------------------------------------------------------------------
Schroder International Fund
- ----------------------------------------------------------------------
Schroder Latin American Fund
- ----------------------------------------------------------------------
Schroder Global Asset Allocation Fund
- ----------------------------------------------------------------------
Schroder U.S. Smaller Companies Fund
- ----------------------------------------------------------------------
Schroder International Smaller Companies Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF NOVEMBER 26, 1996
- ----------------------------------------------------------------------
Schroder Emerging Markets Fund
- ----------------------------------------------------------------------
Schroder European Growth Fund
- ----------------------------------------------------------------------
Schroder Asia Fund
- ----------------------------------------------------------------------
Schroder Japan Fund
- ----------------------------------------------------------------------
Schroder United Kingdom Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF MARCH 5, 1997
- ----------------------------------------------------------------------
Schroder Cash Reserves Fund
- ----------------------------------------------------------------------
Schroder International Bond Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
AS OF JUNE 4, 1997
- ----------------------------------------------------------------------
Schroder Micro Cap Fund
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
APPENDIX B
Standard Fee per Series with one Class $36,000/year
Fee for each additional Class $12,000/year
Plus additional surcharges for each of:
Global or International Funds $24,000/year
Tax Free Money Market Funds $12,000/year
Series with more than 25% of net assets
invested in asset backed securities $1000/month
Series with more than 50% of net assets
invested in asset backed securities $1000/month
Series with more than 100 security positions $1,000/month
Series with a monthly portfolio turnover
rate of 10% or greater $1,000/month
Monthly surcharges are determined based upon the total assets or
security positions as of the end of the prior month and on the portfolio
turnover rate for the prior month. Portfolio turnover rate shall have the
meaning ascribed thereto in Securities and Exchange Commission Form N-1A.
The rates set forth above shall remain fixed through December 31, 1995.
On January 1, 1996, and on each successive January 1, the rates shall be
adjusted to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of Labor
Statistics.
Notwithstanding the foregoing, FFC agrees, with respect to the Schroder
U.S. Smaller Companies Fund, to waive its surcharge for Series with more than
100 security positions for so long as the number of security positions remains
close to 100 security positions. If the number of security positions held by
Schroder U.S. Smaller Companies Fund materially exceeds 100 security positions
for any consecutive two month period, FFC shall have the right, following
notification to the Fund, to be paid the surcharge set forth above for Series
having more than 100 security positions.
During any period in which International Equity Fund or Schroder
Emerging Markets Fund Institutional Portfolio, or any other series of the Trust,
invests all (or substantially all) of its investment assets in a registered,
open-end management investment company, or separate series thereof, in
accordance with Section 12(d)(1)(E) under the Investment Company Act of 1940,
the fee payable hereunder shall be $12,000 annually for each series so invested.
EXHIBIT (10((B)
[Letterhead of Smith Katzenstein & Furlow]
The Corporate Plaza
800 Delaware Avenue
P.O.Box 410
Wilmington, Delaware 19899
Telephone:(302)652-8400
Telecopy:(302)652-8405
Smith
Katzenstein
Furlow LLP
Attorneys at Law
February 27, 1998
Schroder Capital Funds (Delaware)
Two Portland Square
Portland, Maine 04102
RE: ISSUANCE OF SHARES BY SCHRODER CAPITAL FUNDS
Ladies and Gentlemen:
"We are furnishing this opinion in connection with the issuance by Schroder
Capital Funds (Delaware), a Delaware business trust (the "Trust"), of an
indefinite number of beneficial shares of beneficial interest of each of the
following separate and distinct series of the Trust: Schroder International
Smaller Companies Fund, Schroder Emerging Markets Fund Institutional Portfolio,
Schroder Emerging Markets Fund, Schroder International Bond Fund, and Schroder
Micro Cap Fund (each a "Fund" and together, the "Funds"). The indefinite number
of shares of beneficial interest of each of the Funds are referred to
collectively as the "Shares". The Shares will be issued pursuant to the
provisions of Rule 24f-2 (the "Rule") under the Investment Company Act of 1940,
as amended."
In connection with this opinion, we have examined:
(a) A copy of the Trust Instrument of the Trust dated September 6,
1995 (the "Trust Instrument"), certified by the Assistant
Secretary of the Trust;
(b) Certificate of the Secretary of State of the State of
Delaware, dated February 27, 1998, certifying as to the due
formation, good standing and legal existence of the Trust
under the laws of the State of Delaware;
<PAGE>
(c) A copy of the By-Laws of the Trust (the "By-Laws") certified
by the Assistant Secretary of the Trust;
(d) A certificate of the Assistant Secretary of the Trust, dated
the date hereof, as to, among other things, certain actions of
the Trust; and
(e) Such other certificates, documents, and records as we have
deemed necessary for the purpose of giving this opinion.
We have also examined: (i) a copy of the Registration Statement N1-A (the
"Form") to be filed pursuant to the Rule by you with the Securities and Exchange
Commission relating to your registration of the Shares of beneficial interest of
the Funds pursuant to the Securities Act of 1933, as amended (the "1933 Act");
and (ii) a draft of the Prospectuses to be dated March 1, 1998 relating to the
offer and sale of Shares.
We have assumed that the statements and information set forth in the documents
which we reviewed are true, complete and accurate in all material respects. We
have made such examination of Delaware law as we have deemed relevant for
purposes of this opinion. We express no opinion as to the effect of laws, rules,
and regulations of any state or jurisdiction other than the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that: (i) the
Trust is a duly organized and validly formed Delaware business trust in good
standing under the laws of the State of Delaware; and (ii) the unlimited number
of unissued Shares which are currently being registered, may be validly issued
from time to time in accordance with the Trust Instrument and the By-Laws and
subject to compliance with applicable laws regulating the offer and sale of
securities, and receipt by the Trust of the full consideration for the Shares as
contemplated by the Prospectuses, when so issued the Shares will be validly
issued, fully paid and nonassessable by the Trust.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission (the "SEC") in connection with the Form to be filed with the SEC.
Very truly yours,
SMITH, KATZENSTEIN & FURLOW
By: /s/Craig B. Smith
--------------------------
Craig B. Smith
EXHIBIT (11)
[Coopers & Lybrand Logo]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Schroder Capital Funds (Delaware):
We hereby consent to the following with respect to Post-Effective Amendment No.
66 to the Registration Statement on Form N-1A (File No 2-34215) of Schroder
Capital Funds (Delaware) (consisting of Investor Shares of Schroder U.S. Equity
Fund, Schroder International Fund, Schroder International Smaller Companies
Fund, Schroder U.S. Smaller Companies Fund, and Schroder Emerging Markets Fund
Institutional Portfolio and Advisor Shares of Schroder U.S. Smaller Companies
Fund and Schroder Emerging Markets Fund Institutional Portfolio (collectively,
the "Funds")):
1. The reference to our firm under the heading "Financial Highlights"
in the Prospectus.
2. The incorporation by reference of our reports dated July 14, 1997
(Schroder U.S. Smaller Companies Fund) and December 19, 1997 on
our audits of the financial statements and financial highlights of
the Funds, which reports are included in the Funds' Annual Reports
for the years ended May 31, 1997 (Schroder U.S. Smaller Companies
Fund) and October 31, 1997, which are incorporated by reference in
the Statement of Additional Information.
3. The reference to our firm under the heading "Independent
Accountants" in the Prospectus and Statement of Additional
Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 27, 1998
EXHIBIT (15)
SCHRODER CAPITAL FUNDS (DELAWARE)
DISTRIBUTION PLAN
WHEREAS, Schroder Capital Funds (Delaware) (the "Trust") is registered
as an open-end management investment company under the Investment Company Act of
1940 (the "1940 Act") and is authorized to issue shares of common stock in
separate classes of shares with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust intends to engage investment advisers (the
"Advisers") to render investment management services with respect to separate
investment portfolios (the "Funds") as the Trust's Board of Trustees shall
establish and designate from time to time;
WHEREAS, the Trust intends itself, or through an Adviser or a
broker-dealer registered under the Securities Exchange Act of 1934 (such Adviser
or broker-dealer, if so designated, shall be hereinafter referred to as the
"Distributor"), to distribute shares of the Trust;
WHEREAS, the Board of Trustees of the Trust has determined to adopt
this Distribution Plan (the "Plan") in accordance with the requirements of the
1940 Act.
NOW THEREFORE, the Trust hereby adopts the Plan on the following terms
and conditions:
1. The Plan shall pertain to such Funds as shall be designated from
time to time by the Trustees of the Trust as listed in Appendix A.
2. The Trust will pay directly or will reimburse the Distributor for
costs and expenses incurred in connection with the distribution and marketing of
shares of the Funds listed in Appendix A. Such distribution costs and expenses
would include (i) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of advertising, (ii)
expenses of sales employees or agents of the Distributor, including salary,
commissions, travel and related expense for services in connection with the
distribution of shares, (iii) payments to broker-dealers and financial
institutions for services in connection with the distribution of shares,
including fees calculated with reference to the average daily net asset value of
shares held by shareholders who have a brokerage or other service relationship
with the broker-dealer of institution receiving such fees, (iv) costs of
printing prospectuses and other materials to be given or sent to prospective
investors and (v) such other similar services as the Trustees determine to be
reasonably calculated to result in the sale of Fund shares.
The Distributor will be reimbursed for such costs, expenses or payments
on a monthly basis, subject to annual limits based on each Fund's average daily
net assets as shall be set forth with respect to a Fund listed in Appendix A.
Payments made out of or charged against the assets of a Fund must be in payment
of, or reimbursement for, distribution services rendered for or on
<PAGE>
behalf of the Fund. The Distributor also may receive and retain brokerage
commissions with respect to portfolio transactions for a portfolio to the extent
not prohibited by the Prospectus or Statement of Additional Information for the
Fund.
3. The Funds shall pay all costs and expenses in connection with
preparation, printing and distribution of its prospectuses other than as
contemplated by paragraph 2 and the implementation and operation of the Plan.
4. The Plan shall not take effect with respect to a Fund until it has
been approved by a vote of at least a majority (as defined in the 1940 Act) of
the outstanding voting securities of that Fund. With respect to the submission
of the Plan for such a vote, it shall have been effectively approved with
respect to the Fund if a majority of the outstanding voting securities of the
Fund votes for approval of the Plan, notwithstanding that the matter has not
been approved by a majority of the outstanding voting securities of the Trust.
The Plan shall take effect with respect to any other Fund established in the
Trust provided the Plan is approved with respect to such Fund as set forth in
this paragraph and provided the Trustees have determined it to be listed in
Appendix A as set forth in paragraph 1.
5. The Plan shall not take effect with respect to a Fund until it has
been approved together with any related agreements, by votes of a majority of
both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Plan Trustees"), cast in person at a meeting
(or meetings) called for the purpose of voting on the Plan and such related
agreements.
6. The Plan shall continue in effect with respect to a Fund so long as
such continuance is specifically approved at least annually in the manner
provided for approval of the Plan in paragraph 5.
7. Any person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review at least quarterly,
a written report of the amounts so expended and the purposes for which such
expenditures were made.
8. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated with respect to a portfolio
at any time, without payment of any penalty, by vote of a majority of the
outstanding voting securities of the Fund, on not more than sixty days written
notice to any other party to the agreement; and (b) that such agreement shall
terminate automatically in the event of its assignment.
9. The Plan may be terminated at any time, without payment of any
penalty, with respect to a Fund by vote of a majority of the Plan Trustees, or
by vote of a majority of the outstanding voting securities of the Fund.
<PAGE>
10. The Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the costs which a
Fund may bear for distribution pursuant to the Plan shall be effective only upon
approval by a vote of the outstanding voting securities of the Fund, and (b) any
material amendments of the terms of the Plan shall become effective only upon
approval as provided in paragraph 5 hereof.
11. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust shall be committed to the discretion of the Trustees who are not
interested persons of the Trust.
12. The Trust shall preserve copies of the Plan and any related
agreements, and all reports made pursuant to paragraph 7 hereof, for a period of
not less than six years from the date of the Plan, the agreements or such
report, as the case may be, the first two years of which shall be in an easily
accessible place.
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
DISTIBUTION PLAN
APPENDIX A
Fee as a % of
the Annual Average Daily
FUND NAME NET ASSETS OF THE FUND
Schroder U.S. Smaller Companies Fund 0.50%
Schroder Latin American Fund 0.50%
Schroder International Fund 0.50%
Schroder Emerging Markets Fund Institutional Portfolio 0.50%
Schroder International Smaller Companies Fund 0.50%
Schroder Micro Cap Fund 0.50%
Schroder Emerging Markets Fund 0.50%
Schroder International Bond Fund 0.50%
Schroder U.S. Equity Fund 0.50%
EXHIBIT (16)(C)
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
SCHRODER INTERNATIONAL FUND - INVESTOR SHARES
Note: All performance is for the period ended: ________10/31/97__________
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 11.87
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1045.50 932.00 895.70 1018.30 1083.30 1211.00 1872.80 2556.20 3797.30
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 5.49 -57.54 -35.72 3.68 8.33 6.58 13.36 9.83 11.89
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 11.87
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1045.50 932.00 895.70 1018.30 1083.30 1211.00 1872.80 2556.20 3797.30
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 4.55 -6.80 -10.43 1.83 8.33 21.10 87.28 155.62 279.73
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
<PAGE>
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
SCHRODER EMERGING MARKETS FUND - INVESTOR SHARES
Note: All performance is for the period ended: 10/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 2.59
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 957.60 833.70 771.60 867.70 1002.70 1110.90
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) -5.07 -88.25 -64.26 -24.54 .27 4.14
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 2.59
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 957.60 833.70 771.60 867.70 1002.70 1110.90
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) -4.24 -16.63 -22.84 -13.23 .27 11.09
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period
(net of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
SCHRODER EMERGING MARKETS FUND - ADVISOR SHARES
Note: All performance is for the period ended: 10/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 .94
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 956.10 834.10 771.00 866.60 985.80
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) -5.25 -88.19 -64.36 -24.72 -1.50
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 .94
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 956.10 834.10 771.00 866.60 985.80
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) -4.39 -16.59 -22.90 -13.34 -1.42
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND - INVESTOR SHARES
Note: All performance is for the period ended: 10/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 .99
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 930.40 964.40 927.60 986.10 922.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) -8.30 -35.63 -26.04 -2.75 -7.79
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
- -<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 .99
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 930.40 964.40 927.60 986.10 922.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) -6.96 -3.56 -7.24 -1.39 -7.73
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
SCHRODER MICRO CAP FUND
Note: All performance is for the period ended: 11/30/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10 .13
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1010.70 1037.00
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 13.38 32.60
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10 .13
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1010.70 1037.00
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 1.07 3.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
OTHER EXHIBIT
SCHRODER CAPITAL FUNDS (DELAWARE)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Fergal Cassidy constitutes and appoints
Thomas G. Sheehan, Catherine S. Wooledge, Mark J. Smith, and Catherine A. Mazza
and each of them, as true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign the Registration Statement on Form N-1A
and any or all amendments thereto of Schroder Capital Funds (Delaware), and to
file the same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ FERGAL CASSIDY
------------------
Fergal Cassidy
Dated: February 17, 1998
OTHER EXHIBIT
SCHRODER CAPITAL FUNDS (DELAWARE)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Sharon L. Haugh constitutes and appoints
Thomas G. Sheehan, Catherine S. Wooledge, Mark J. Smith, and Catherine A. Mazza
and each of them, as true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for her and in her name, place and
stead, in any and all capacities to sign the Registration Statement on Form N-1A
and any or all amendments thereto of Schroder Capital Funds (Delaware), and to
file the same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ SHARON L. HAUGH
-------------------
Sharon L. Haugh
Dated: February 17, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SCHRODER
INTERNATIONAL SMALLER COMPANIES FUND ANNUAL REPORT DATED OCTOBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 7,778,786
<INVESTMENTS-AT-VALUE> 6,825,551
<RECEIVABLES> 34,442
<ASSETS-OTHER> 12,088
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,872,081
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,997
<TOTAL-LIABILITIES> 35,997
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,402,031
<SHARES-COMMON-STOCK> 741,676
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 9,567
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 377,721
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (953,235)
<NET-ASSETS> 6,836,084
<DIVIDEND-INCOME> 100,427
<INTEREST-INCOME> 20,623
<OTHER-INCOME> (84,784)
<EXPENSES-NET> 21,198
<NET-INVESTMENT-INCOME> 15,068
<REALIZED-GAINS-CURRENT> 377,647
<APPREC-INCREASE-CURRENT> (953,235)
<NET-CHANGE-FROM-OPS> (560,520)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,427
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,555,555
<NUMBER-OF-SHARES-REDEEMED> 153,524
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,836,084
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 86,161
<AVERAGE-NET-ASSETS> 7,141,662
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> (.79)
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.22
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SCHRODER
U.S. EQUITY FUND ANNUAL REPORT DATED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> SCHRODER U.S. EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 9,458,266
<INVESTMENTS-AT-VALUE> 13,613,774
<RECEIVABLES> 13,265
<ASSETS-OTHER> 293,115
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,920,154
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 59,004
<TOTAL-LIABILITIES> 59,004
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,839,530
<SHARES-COMMON-STOCK> 1,412,181
<SHARES-COMMON-PRIOR> 1,761,071
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,866,112
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,155,508
<NET-ASSETS> 13,861,150
<DIVIDEND-INCOME> 208,569
<INTEREST-INCOME> 14,098
<OTHER-INCOME> 0
<EXPENSES-NET> 237,584
<NET-INVESTMENT-INCOME> (14,917)
<REALIZED-GAINS-CURRENT> 3,881,030
<APPREC-INCREASE-CURRENT> 164,449
<NET-CHANGE-FROM-OPS> 4,030,562
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 41,186
<DISTRIBUTIONS-OF-GAINS> 3,648,561
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 187,894
<NUMBER-OF-SHARES-REDEEMED> 6,538,574
<SHARES-REINVESTED> 2,684,379
<NET-CHANGE-IN-ASSETS> (3,325,486)
<ACCUMULATED-NII-PRIOR> 41,186
<ACCUMULATED-GAINS-PRIOR> 3,648,560
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 118,887
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 266,006
<AVERAGE-NET-ASSETS> 15,851,647
<PER-SHARE-NAV-BEGIN> 9.76
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 2.20
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> 2.11
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.82
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SCHRODER U.S. SMALLER COMPANIES FUND DATED 11/30/97 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 030
<NAME> U.S. SMALLER COMPANIES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 40,419,336
<INVESTMENTS-AT-VALUE> 40,419,336
<RECEIVABLES> 51,875
<ASSETS-OTHER> 3,725
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,474,936
<PAYABLE-FOR-SECURITIES> 12,493
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,161
<TOTAL-LIABILITIES> 43,654
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,438,019
<SHARES-COMMON-STOCK> 2,594,747
<SHARES-COMMON-PRIOR> 1,969,016
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (93,719)
<ACCUMULATED-NET-GAINS> 3,365,100
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,721,882
<NET-ASSETS> 40,431,282
<DIVIDEND-INCOME> 92,474
<INTEREST-INCOME> 60,276
<OTHER-INCOME> (136,318)
<EXPENSES-NET> 111,038
<NET-INVESTMENT-INCOME> (94,606)
<REALIZED-GAINS-CURRENT> 1,856,877
<APPREC-INCREASE-CURRENT> 1,871,374
<NET-CHANGE-FROM-OPS> 3,633,645
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,188,432
<NUMBER-OF-SHARES-REDEEMED> 3,561,554
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,246,205
<ACCUMULATED-NII-PRIOR> 887
<ACCUMULATED-GAINS-PRIOR> 1,508,223
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 122,783
<AVERAGE-NET-ASSETS> 33,757,797
<PER-SHARE-NAV-BEGIN> 13.26
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 1.96
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.18
<EXPENSE-RATIO> 1.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SCHRODER U.S. SMALLER COMPANIES FUND DATED 11/30/97 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> U.S. SMALLER COMPANIES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 40,419,336
<INVESTMENTS-AT-VALUE> 40,419,336
<RECEIVABLES> 51,875
<ASSETS-OTHER> 3,725
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,474,936
<PAYABLE-FOR-SECURITIES> 12,493
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,161
<TOTAL-LIABILITIES> 43,654
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,438,019
<SHARES-COMMON-STOCK> 69,544
<SHARES-COMMON-PRIOR> 6,098
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (93,719)
<ACCUMULATED-NET-GAINS> 3,365,100
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,721,882
<NET-ASSETS> 40,431,282
<DIVIDEND-INCOME> 92,474
<INTEREST-INCOME> 60,276
<OTHER-INCOME> (136,318)
<EXPENSES-NET> 111,038
<NET-INVESTMENT-INCOME> (94,606)
<REALIZED-GAINS-CURRENT> 1,856,877
<APPREC-INCREASE-CURRENT> 1,871,374
<NET-CHANGE-FROM-OPS> 3,633,645
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,466,962
<NUMBER-OF-SHARES-REDEEMED> 461,280
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,246,205
<ACCUMULATED-NII-PRIOR> 887
<ACCUMULATED-GAINS-PRIOR> 1,508,223
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 122,783
<AVERAGE-NET-ASSETS> 623,591
<PER-SHARE-NAV-BEGIN> 13.24
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 1.94
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.14
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SCHRODER MICRO CAP FUND DATED 11/30/97 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 060
<NAME> SCHRODER MICRO CAP FUND
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 2,398,383
<INVESTMENTS-AT-VALUE> 2,432,333
<RECEIVABLES> 41,235
<ASSETS-OTHER> 6,557
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,480,125
<PAYABLE-FOR-SECURITIES> 63,333
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,007
<TOTAL-LIABILITIES> 76,340
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,320,020
<SHARES-COMMON-STOCK> 231,702
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,819
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47,996
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,950
<NET-ASSETS> 2,403,785
<DIVIDEND-INCOME> 911
<INTEREST-INCOME> 6,873
<OTHER-INCOME> 0
<EXPENSES-NET> 5,965
<NET-INVESTMENT-INCOME> 1,819
<REALIZED-GAINS-CURRENT> 47,996
<APPREC-INCREASE-CURRENT> 33,950
<NET-CHANGE-FROM-OPS> 83,765
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,320,020
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,403,785
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,733
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 34,114
<AVERAGE-NET-ASSETS> 2,319,319
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .36
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.37
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SCHRODER
EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO (FUND) ANNUAL REPORT DATED
OCTOBER 31, 1997.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> SCHRODER EMERGING MARKETS INSTITIUTIONAL PORTFOLIO (FUND)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 202,498,537
<INVESTMENTS-AT-VALUE> 204,415,739
<RECEIVABLES> 389,939
<ASSETS-OTHER> 14,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 204,820,211
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 104,449
<TOTAL-LIABILITIES> 104,449
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 213,131,683
<SHARES-COMMON-STOCK> 2,276,150
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 431,813
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,764,936)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,917,202
<NET-ASSETS> 204,715,762
<DIVIDEND-INCOME> 3,811,777
<INTEREST-INCOME> 447,639
<OTHER-INCOME> (2,756,426)
<EXPENSES-NET> 418,158
<NET-INVESTMENT-INCOME> 1,084,832
<REALIZED-GAINS-CURRENT> (4,692,069)
<APPREC-INCREASE-CURRENT> 242,848
<NET-CHANGE-FROM-OPS> (3,364,389)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10,884
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28,015,324
<NUMBER-OF-SHARES-REDEEMED> 103,102
<SHARES-REINVESTED> 10,884
<NET-CHANGE-IN-ASSETS> 37,145,712
<ACCUMULATED-NII-PRIOR> 152,823
<ACCUMULATED-GAINS-PRIOR> (6,701,953)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 446,542
<AVERAGE-NET-ASSETS> 18,471,642
<PER-SHARE-NAV-BEGIN> 11.28
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> (.19)
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.11
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SCHRODER
EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO (FUND) ANNUAL REPORT DATED
OCTOBER 31, 1997.
</LEGEND>
<SERIES>
<NUMBER> 040
<NAME> SCHRODER EMERGING MARKETS INSTITIUTIONAL PORTFOLIO (FUND)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 202,498,537
<INVESTMENTS-AT-VALUE> 204,415,739
<RECEIVABLES> 389,939
<ASSETS-OTHER> 14,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 204,820,211
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 104,449
<TOTAL-LIABILITIES> 104,449
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 213,131,683
<SHARES-COMMON-STOCK> 16,199,944
<SHARES-COMMON-PRIOR> 15,153,374
<ACCUMULATED-NII-CURRENT> 431,813
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,764,936)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,917,202
<NET-ASSETS> 204,715,762
<DIVIDEND-INCOME> 3,811,777
<INTEREST-INCOME> 447,639
<OTHER-INCOME> (2,756,426)
<EXPENSES-NET> 418,158
<NET-INVESTMENT-INCOME> 1,084,832
<REALIZED-GAINS-CURRENT> (4,692,069)
<APPREC-INCREASE-CURRENT> 242,848
<NET-CHANGE-FROM-OPS> (3,364,389)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 150,511
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,703,940
<NUMBER-OF-SHARES-REDEEMED> 26,043,240
<SHARES-REINVESTED> 87,690
<NET-CHANGE-IN-ASSETS> 37,145,712
<ACCUMULATED-NII-PRIOR> 152,823
<ACCUMULATED-GAINS-PRIOR> (6,701,953)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 446,542
<AVERAGE-NET-ASSETS> 205,143,313
<PER-SHARE-NAV-BEGIN> 11.06
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> (.03)
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.08
<EXPENSE-RATIO> 1.41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SCHRODER
INTERNATIONAL EQUITY FUND ANNUAL REPORT DATED OCTOBER 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> SCHRODER INTERNATIONAL EQUITY FUND -Investor
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 163,583,764
<INVESTMENTS-AT-VALUE> 190,992,943
<RECEIVABLES> 410,865
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 191,403,808
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 184,675
<TOTAL-LIABILITIES> 184,675
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,379,246
<SHARES-COMMON-STOCK> 10,410,792
<SHARES-COMMON-PRIOR> 10,134,012
<ACCUMULATED-NII-CURRENT> 2,915,645
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,515,063
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,409,179
<NET-ASSETS> 191,219,133
<DIVIDEND-INCOME> 2,858,125
<INTEREST-INCOME> 421,646
<OTHER-INCOME> (1,486,649)
<EXPENSES-NET> 474,991
<NET-INVESTMENT-INCOME> 1,318,131
<REALIZED-GAINS-CURRENT> 17,315,084
<APPREC-INCREASE-CURRENT> (3,581,079)
<NET-CHANGE-FROM-OPS> 15,052,136
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,570,768
<DISTRIBUTIONS-OF-GAINS> 26,130,027
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 67,836,994
<NUMBER-OF-SHARES-REDEEMED> 81,436,338
<SHARES-REINVESTED> 17,731,934
<NET-CHANGE-IN-ASSETS> (11,516,069)
<ACCUMULATED-NII-PRIOR> 4,398,568
<ACCUMULATED-GAINS-PRIOR> 26,102,194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 572,244
<AVERAGE-NET-ASSETS> 197,962,259
<PER-SHARE-NAV-BEGIN> 20.01
<PER-SHARE-NII> .14
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> .46
<PER-SHARE-DISTRIBUTIONS> 2.63
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.37
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
