As filed with the Securities and Exchange Commission on July 17, 1998
File Nos. 2-34215 and 811-1911
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 67
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 47
SCHRODER CAPITAL FUNDS (DELAWARE)
(formerly Schroder Capital Funds, Inc.)
Two Portland Square
Portland, Maine 04101
207-879-1900
Cheryl O. Tumlin, Esq.
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
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:
[ ] 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)(1)
[ ] on ________ pursuant to Rule 485, paragraph (a)(1)
[X] 75 days after filing pursuant to Rule 485, paragraph (a)(2)
[ ] on ________ pursuant to Rule 485, paragraph (a)(2)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
This post-effective amendment relates only to the Schroder Greater China Fund, a
series of the Registrant. No information and no part of the Registration
Statement is deleted or superceded hereby.
<PAGE>
CROSS REFERENCE SHEET
PART A
(Prospectuses offering Investor Shares and Advisor Shares
of Schroder Greater China Fund)
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<S> <C> <C>
Form N-1A
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Item No. Location in Prospectus
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Item 1. Cover Page Cover Page
Item 2. Synopsis FUND STRUCTURE
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant INVESTMENT OBJECTIVE AND POLICIES; MANAGEMENT OF
THE TRUST
Item 5. Management of the Fund MANAGEMENT OF THE TRUST
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities MANAGEMENT OF THE TRUST
Item 7. Purchase of Securities Being Offered HOW TO BUY SHARES
Item 8. Redemption or Repurchase HOW TO SELL SHARES
Item 9. Pending Legal Proceedings None
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
PART B
(SAIs for Investor Shares and Advisor Shares
of Schroder Greater China Fund)
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<S> <C> <C>
Form N-1A
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Item No. Location in SAI
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Item 10. Cover Page Cover Page
Item 11. Table of Contents TABLE OF CONTENTS
Item 12. General Information and History OTHER INFORMATION
Item 13. Investment Objectives and Other Policies INVESTMENT OBJECTIVES AND POLICIES OF THE FUND
AND RISK CONSIDERATIONS; INVESTMENT RESTRICTIONS
Item 14. Management of the Fund MANAGEMENT
Item 15. Control Persons and Principal Holders of MANAGEMENT
Securities
Item 16. Investment Advisory and Other Services MANAGEMENT
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities OTHER INFORMATION
Item 19. Purchase, Redemption and Pricing of ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Securities Being Offered
Item 20. Tax Status TAXATION
Item 21. Underwriters MANAGEMENT
Item 22. Calculation of Performance Data OTHER INFORMATION
Item 23. Financial Statements Not Applicable
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<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
Schroder Greater China Fund
PROSPECTUS
Investor Shares
September --, 1998
Schroder Greater China Fund ( the "Fund") seeks growth of capital by investing
in securities of issuers domiciled or doing business in the People's Republic of
China, including Hong Kong, and Taiwan. The Fund is a diversified series of
shares of Schroder Capital Funds (Delaware). Schroder Capital Management
International Inc. serves as investment adviser to the Fund.
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
September --, 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>
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FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
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SCHRODER CAPITAL FUNDS (DELAWARE) 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
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<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 the
Fund expects to incur during its first full fiscal year. The Example shows the
cumulative expenses attributable to a hypothetical $1,000 investment in the Fund
over specified periods.
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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) .......................None
Redemption Charge (based on net asset value of shares redeemed) .......................None
</TABLE>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
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Management Fees (after expense limitation) (1)(2) .......................[0.81%]
12b-1 Fees .......................None
Other Expenses (after expense limitation) ........................[1.19%]
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Total Fund Operating Expenses (after expense limitation) (2) ........................[2.00%]
- ----------------------------
</TABLE>
(1) Management Fees reflect the fees paid by the Fund for investment
advisory and administrative services.
(2) Management Fees and Total Operating Expenses reflect expense
limitations currently in effect. See "Management of the Fund -- Expenses."
In the absence of the expense limitation, Management Fees, Other Expenses,
and Total Fund Operating Expenses would be[1.25% , 1.19%, and 2.44%],
respectively.
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period.
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1 YEAR 3 YEARS
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Assuming no redemption $ $
Assuming full redemption at end of period $20 $63
</TABLE>
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.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Schroder Greater China Fund's investment objective is to seek long-term growth
of capital. The Fund is designed for investors seeking growth of capital
primarily through a diversified portfolio of common stocks and other securities
of companies located in the People's Republic of China (including Hong Kong) and
Taiwan. Dividend and interest income is only an incidental consideration. The
Fund is not intended to be a complete investment program, and there is no
assurance it will achieve its objective.
The Fund will invest primarily in securities of companies located in the
People's Republic of China, including Hong Kong (referred to collectively in
this prospectus as "China"), and Taiwan. The Fund's investments will normally
include common stocks, preferred stocks, securities convertible into common
stocks or preferred stocks, and warrants to purchase common stocks or preferred
stocks. The Fund may also invest to a lesser extent in debt securities and other
types of investments if SCMI believes they would help achieve the Fund's
objective. The Fund may hold a portion of its assets in cash and money market
instruments.
It is anticipated that under normal market conditions the Fund will invest at
least 65% of its assets in securities of companies located in China and Taiwan.
The Fund will consider an issuer of securities to be located in China or Taiwan
if it is organized under the laws of China or Taiwan (or any political
subdivision thereof); its primary securities trading market is in China or
Taiwan; at least 50% of the issuer's revenues or profits are derived from goods
produced or sold, investments made, or services performed in China or Taiwan; or
at least 50% of its assets are situated in China or Taiwan. Because the Fund's
investments will be concentrated in securities of issuers located in China and
Taiwan, the Fund will be more susceptible to the risks of investing in those
countries than would a fund investing in a geographically more diversified
portfolio. See "Special Risks of investing in China and Taiwan," below.
The Fund will not limit its investments to any particular type of company. The
Fund may invest in companies, large or small, which SCMI believes offer the
potential for long-term growth of capital. These companies, many of which have
equity market capitalizations below $1 billion, may present greater
opportunities for growth of capital than other companies, but may also involve
greater risk. 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, and only in the over-the-counter
market or on a regional securities exchange. As a result, these securities may
fluctuate in value more than those of larger, more established companies.
Debt securities in which the Fund may invest will generally be rated at least
Baa or BBB by a nationally recognized rating agency, such as Standard & Poor's
("S&P") or Moody's Investors Service, Inc. ("Moody's"). Debt securities rated
Baa or BBB (and comparable unrated securities) have speculative characteristics
and may be more likely to exhibit a weakened capacity to pay interest and repay
principal under adverse economic conditions. To the extent a security is
assigned a different rating by one or more of the various rating agencies, SCMI
will use the highest rating assigned by any agency in determining compliance
with the foregoing investment limitations.
SPECIAL RISKS OF INVESTING IN CHINA AND TAIWAN. Investment in China and Taiwan
entails significant risks. China is a communist country, and there can be no
assurance that economic or market reforms which have occurred in recent years
will continue, or that they will not be scaled back. In particular, it is
possible that political instability, including changes of leadership at various
levels of government within China or a political reaction against capitalism,
will lead to economic uncertainty or to changes in economic or market conditions
which are adverse to investments in securities of companies organized or doing
business in China.
Relations between China and certain other Asian nations have historically been
unfriendly and at times hostile. Increased hostility between China and such
nations would likely have an adverse impact on the values of the Fund's
investments in China.
<PAGE>
The People's Republic of China gained control of Hong Kong in July 1997. Changes
to political, economic, or market conditions in Hong Kong as a result of China's
control could adversely affect the values of investments in companies organized
or doing business there.
China continues to claim sovereignty over Taiwan, and continuing hostility
between China and Taiwan may have an adverse effect on investments in either
country, or make investment in such countries impracticable or impossible.
Escalation of hostility between the two countries would likely have a
significant adverse impact on the values of the Fund's investments in both
countries.
Investments in China and Taiwan are also subject to the risks described below
under "Foreign securities."
Investment in China and Taiwan involves risks not present in most other mutual
funds. The Fund is suitable only for long-term investors who can bear the risks
of an investment in those countries. An investment in the Fund should make up
only one portion of an otherwise diversified portfolio of investments. The net
asset value of the Fund will likely fluctuate substantially.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Fund 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 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. 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.
In addition, there may be a possibility of nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability, and diplomatic developments that could
affect the value of the Fund's investments in certain foreign countries. 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. In the case of securities issued by a foreign
governmental entity, the issuer may in certain circumstances be 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. 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. 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.
A change in the value of foreign currencies 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
<PAGE>
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.
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.
China and Taiwan are "emerging markets" countries, and so subject to additional
risks. The prices of securities of issuers in emerging market countries 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.
Currently, only a limited market exists for currency exchange transactions
relating to Chinese and Taiwanese currencies. This may limit the Fund's ability
to hedge its investments in those markets or otherwise to engage in the foreign
currency exchange transactions described below.
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 ("anticipatory
hedging"); to "lock in" the U.S. dollar value of interest and dividends to be
paid in a foreign currency; or to hedge against the possibility that a foreign
currency in which portfolio securities are denominated or quoted may suffer a
decline against the U.S. dollar ("position hedging").
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.
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
<PAGE>
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. 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 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 is 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.
OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in a variety of
transactions involving the use of options and futures contracts. The Fund may
engage in such transactions for hedging purposes or, to the extent 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 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 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.
<PAGE>
The 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.
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
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, index, or currency, or in
the prices of the securities or currencies 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.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Fund may
lend portfolio securities to brokers, dealers, and financial institutions
meeting specified credit conditions, and may enter into repurchase agreements.
Such activities may create taxable income in excess of the cash they generate.
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
<PAGE>
may increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies or pooled vehicles, including closed-end funds, that are
advised by SCMI or its affiliates or by unaffiliated parties. 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 Investment Company Act of 1940 (the "1940 Act" or any orders,
rules or regulations thereunder. 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 conditions in the
securities markets 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 that are primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing these defensive
strategies, the Fund may invest without limit in securities of any kind traded
primarily in U.S. markets or in other markets outside China and Taiwan,
including in cash, money market instruments or any other securities SCMI
considers consistent with such defensive strategies. It is impossible to predict
when, or for how long, these alternative strategies would be used.
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. The Fund currently expects that its portfolio turnover rate for
its first full fiscal year will not exceed 100%.
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"). 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 may be made by mailing a check (in U.S.
dollars), payable to the Fund to:
Schroder Greater China Fund --Investor Shares
<PAGE>
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 Greater China
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 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 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.
The Fund may be used as an investment vehicle for an IRA including SEP-IRA. An
IRA naming BankBoston 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
<PAGE>
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 made 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. 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 New York Stock 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".
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
<PAGE>
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 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 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 New York Stock Exchange is restricted or that 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 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.
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.
<PAGE>
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 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 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 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 gain 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. 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.
<PAGE>
CERTAIN INFORMATION REGARDING FOREIGN TAXES. Foreign governments may impose
taxes on the Fund and its 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), 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.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. Information regarding the Trustees and
executive officers of the Trust 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 served as investment managers for approximately $__ billion as of June
30, 1998. 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 June 30, 1998, had under management assets of over $___ billion. Schroder
Fund Advisors Inc. ("Schroder Advisors") is a wholly owned subsidiary of SCMI.
For its investment advisory services, SCMI is entitled to a monthly fee 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 the
Fund. 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 .25% of the
Fund's average daily net assets. FAdS is entitled to compensation at the annual
rate of .10% of the Fund'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 1.60%.
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.
The current portfolio manager at SCMI with primary responsibility for managing
the Fund is Heather F. Crighton. Ms. Crighton, who has managed the Fund since
its inception, is a Vice President of SCMI and has been employed by SCMI in the
investment research and portfolio management areas since 1992.
<PAGE>
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.
YEAR 2000
The Fund receives services from its investment adviser, administrator,
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. SCMI is taking
steps that is 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 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 Funds from this problem.
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.
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 ten different series [note:
ten includes Japan Fund and Asia Fund]. 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
<PAGE>
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.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE
AND POLICIES.................................
HOW TO BUY SHARES..............................
HOW TO SELL SHARES.............................
OTHER INFORMATION..............................
MANAGEMENT OF THE TRUST........................
<PAGE>
[Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER GREATER CHINA FUND
Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826
INVESTOR SHARES
PROSPECTUS
September __, 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
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 GREATER CHINA FUND
PROSPECTUS
ADVISOR SHARES
SEPTEMBER --, 1998
SCHRODER GREATER CHINA FUND ( the "Fund") seeks long-term growth of capital by
investing in securities of issuers domiciled or doing business in the People's
Republic of China, including Hong Kong, and Taiwan. The Fund is a diversified
series of shares of Schroder Capital Funds (Delaware). Schroder Capital
Management International Inc. serves as investment adviser to the Fund.
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
SEPTEMBER --, 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>
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>
================================================================================
<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 the Fund expects to incur
during its first full fiscal year. 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) .......................None
Redemption Charge (based on net asset value of shares redeemed) .......................None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after expense limitation) (1)(2) .....................[6.91]%
12b-1 Fees .......................None
Other Expenses (after expense limitation) .....................[1.34]%
- ---------------------- -
Total Fund Operating Expenses (after expense limitation) (2) .....................[2.25%]%
- ----------------------------
</TABLE>
(1) Management Fees reflect the fees paid by the Fund for investment advisory
and administrative services.
(2) Management Fees and Total Operating Expenses reflect expense limitations
currently in effect. See "Management of the Fund--Expenses." In the absence
of the expense limitation, Management Fees, Other Expenses, and Total
Fund Operating Expenses would be [1.25% ,1.34%, and 2.59%], respectively.
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS
------ -------
Assuming no redemption $ $
Assuming full redemption at end of period $23 $70
</TABLE>
THE ANNUAL OPERATING EXPENSES 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.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Schroder Greater China Fund's investment objective is to seek long-term growth
of capital. The Fund is designed for investors seeking growth of capital
primarily through a diversified portfolio of common stocks and other securities
of companies located in the People's Republic of China (including Hong Kong) and
Taiwan. Dividend and interest income is only an incidental consideration. The
Fund is not intended to be a complete investment program, and there is no
assurance it will achieve its objective.
The Fund will invest primarily in securities of companies located in the
People's Republic of China, including Hong Kong (referred to collectively in
this prospectus as "China"), and Taiwan. The Fund's investments will normally
include common stocks, preferred stocks, securities convertible into common
stocks or preferred stocks, and warrants to purchase common stocks or preferred
stocks. The Fund may also invest to a lesser extent in debt securities and other
types of investments if SCMI believes they would help achieve the Fund's
objective. The Fund may hold a portion of its assets in cash and money market
instruments.
It is anticipated that under normal market conditions the Fund will invest at
least 65% of its assets in securities of companies located in China and Taiwan.
The Fund will consider an issuer of securities to be located in China or Taiwan
if it is organized under the laws of China or Taiwan (or any political
subdivision thereof); its primary securities trading market is in China or
Taiwan; at least 50% of the issuer's revenues or profits are derived from goods
produced or sold, investments made, or services performed in China or Taiwan; or
at least 50% of its assets are situated in China or Taiwan. Because the Fund's
investments will be concentrated in securities of issuers located in China and
Taiwan, the Fund will be more susceptible to the risks of investing in those
countries than would a fund investing in a geographically more diversified
portfolio. See "Special Risks of investing in China and Taiwan," below.
The Fund will not limit its investments to any particular type of company. The
Fund may invest in companies, large or small, which SCMI believes offer the
potential for long-term growth of capital. These companies, many of which have
equity market capitalizations below $1 billion, may present greater
opportunities for growth of capital than other companies, but may also involve
greater risk. 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, and only in the over-the-counter
market or on a regional securities exchange. As a result, these securities may
fluctuate in value more than those of larger, more established companies.
Debt securities in which the Fund may invest will generally be rated at least
Baa or BBB by a nationally recognized rating agency, such as Standard & Poor's
("S&P") or Moody's Investors Service, Inc. ("Moody's"). Debt securities rated
Baa or BBB (and comparable unrated securities) have speculative characteristics
and may be more likely to exhibit a weakened capacity to pay interest and repay
principal under adverse economic conditions. To the extent a security is
assigned a different rating by one or more of the various rating agencies, SCMI
will use the highest rating assigned by any agency in determining compliance
with the foregoing investment limitations.
SPECIAL RISKS OF INVESTING IN CHINA AND TAIWAN. Investment in China and Taiwan
entails significant risks. China is a communist country, and there can be no
assurance that economic or market reforms which have occurred in recent years
will continue, or that they will not be scaled back. In particular, it is
possible that political instability, including changes of leadership at various
levels of government within China or a political reaction against capitalism,
will lead to economic uncertainty or to changes in economic or market conditions
which are adverse to investments in securities of companies organized or doing
business in China.
Relations between China and certain other Asian nations have historically been
unfriendly and at times hostile. Increased hostility between China and such
nations would likely have an adverse impact on the values of the Fund's
investments in China.
<PAGE>
The People's Republic of China gained control of Hong Kong in July 1997. Changes
to political, economic, or market conditions in Hong Kong as a result of China's
control could adversely affect the values of investments in companies organized
or doing business there.
China continues to claim sovereignty over Taiwan, and continuing hostility
between China and Taiwan may have an adverse effect on investments in either
country, or make investment in such countries impracticable or impossible.
Escalation of hostility between the two countries would likely have a
significant adverse impact on the values of the Fund's investments in both
countries.
Investments in China and Taiwan are also subject
to the risks described below under "Foreign
securities."
Investment in China and Taiwan involves risks not present in most other mutual
funds. The Fund is suitable only for long-term investors who can bear the risks
of an investment in those countries. An investment in the Fund should make up
only one portion of an otherwise diversified portfolio of investments. The net
asset value of the Fund will likely fluctuate substantially.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Fund 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 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. 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.
In addition, there may be a possibility of nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability, and diplomatic developments that could
affect the value of the Fund's investments in certain foreign countries. 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. In the case of securities issued by a foreign
governmental entity, the issuer may in certain circumstances be 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. 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. 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.
A change in the value of foreign currencies 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
<PAGE>
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.
In determining whether to invest in debt securities of foreign issuers, Schroder
will consider the likely impact of foreign taxes on the net yield available to
the Fund and its shareholders. Income received by the Fund from sources within
foreign countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by the Fund will reduce its
net income available for distribution to shareholders.
China and Taiwan are "emerging markets" countries, and so subject to additional
risks. The prices of securities of issuers in emerging market countries 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.
Currently, only a limited market exists for currency exchange transactions
relating to Chinese and Taiwanese currencies. This may limit the Fund's ability
to hedge its investments in those markets or otherwise to engage in the foreign
currency exchange transactions described below.
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 ("anticipatory
hedging"); to "lock in" the U.S. dollar value of interest and dividends to be
paid in a foreign currency; or to hedge against the possibility that a foreign
currency in which portfolio securities are denominated or quoted may suffer a
decline against the U.S. dollar ("position hedging").
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.
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
<PAGE>
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. 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 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 is 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.
OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in a variety of
transactions involving the use of options and futures contracts. The Fund may
engage in such transactions for hedging purposes or, to the extent 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 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 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.
<PAGE>
The 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.
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
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, index, or currency, or in
the prices of the securities or currencies 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.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Fund may
lend portfolio securities to brokers, dealers, and financial institutions
meeting specified credit conditions, and may enter into repurchase agreements.
Such activities may create taxable income in excess of the cash they generate.
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
<PAGE>
may increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies or pooled vehicles, including closed-end funds, that are
advised by SCMI or its affiliates or by unaffiliated parties. 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 Investment Company Act of 1940 (the "1940 Act") or any
orders, rules or regulations thereunder. 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 conditions in the
securities markets 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 that are primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing these defensive
strategies, the Fund may invest without limit in securities of any kind traded
primarily in U.S. markets or in other markets outside China and Taiwan,
including in cash, money market instruments or any other securities SCMI
considers consistent with such defensive strategies. It is impossible to predict
when, or for how long, these alternative strategies would be used.
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. The Fund currently expects that its portfolio turnover rate for
its first full fiscal year will not exceed 100%.
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"). 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 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 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 may be made by mailing a check (in U.S.
dollars), payable to the Fund to:
Schroder Greater China Fund --Advisor Shares
<PAGE>
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 Greater China
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 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 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.
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 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 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 BankBoston 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 Advisor Shares 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 made 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
Advisor Shares through a Service Organization, the shareholder must
<PAGE>
make an exchange through the Service Organization. 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. 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
A shareholder can sell his or her Advisor Shares in the Fund to the Fund any day
the New York Stock 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.
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 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 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.
<PAGE>
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 New York Stock Exchange is restricted or that 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 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 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 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 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 Advisor
Shares of the Fund; (2) receive distributions from net investment income in cash
while reinvesting capital-gain distributions in additional Advisor
<PAGE>
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 gain 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. 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 the Fund and its 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), 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.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. Information regarding the Trustees and
executive officers of the Trust 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.,
served as investment managers for approximately $__ billion in the aggregate as
of June 30, 1998. 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
<PAGE>
Group") engage in international merchant banking and investment management
businesses, and as of June 30, 1998, had under management assets of over $___
billion. Schroder Fund Advisors Inc. ("Schroder Advisors") is a wholly owned
subsidiary of SCMI.
For its investment advisory services, SCMI is entitled to a monthly fee 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 the
Fund. 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 0.25% of the
Fund's average daily net assets. FAdS is entitled to compensation at the annual
rate of .10% of the Fund'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 1.85%.
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.
The current portfolio manager at SCMI with primary responsibility for managing
the Fund is Heather F. Crighton. Ms. Crighton, who has managed the Fund since
its inception, is a Vice President of SCMI and has been employed by SCMI in the
investment research and portfolio management areas since 1992.
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.
YEAR 2000
The Fund receives services from its 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 from the year 1900. SCMI is taking
steps that is 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 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 Funds from this problem.
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. 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 its
Advisor Shares.
<PAGE>
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 ten different series [note:
ten includes Japan Fund and Asia Fund]. The 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 Investor 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 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.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE
AND POLICIES.................................
HOW TO BUY SHARES..............................
HOW TO SELL SHARES.............................
OTHER INFORMATION..............................
MANAGEMENT OF THE TRUST........................
<PAGE>
[Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER GREATER CHINA FUND
Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826
ADVISOR SHARES
PROSPECTUS
September __, 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 Greater China Fund
Statement of Additional Information
September ___, 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 GREATER CHINA FUND (the "Fund") are offered for sale at net
asset value, with no sales charge, 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, 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 September ___, 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 FUND AND RISK CONSIDERATIONS.............3
Options...........................................3
Futures Contracts.................................5
Special Risks of Transactions in Futures
Contracts and Related Options...................7
Forward Commitments...............................8
Repurchase Agreements.............................9
When-Issued Securities............................9
Loans of Fund Securities..........................9
Foreign Securities...............................10
Foreign Currency Transactions....................10
Zero-Coupon Securities...........................12
Warrants and Stock Rights........................13
Convertible Securities...........................13
Indexed Securities...............................14
Investment in Other Investment Companies.........14
Rule 144A Securities.............................14
Loans of Fund Securities.........................14
INVESTMENT RESTRICTIONS..........................15
MANAGEMENT.......................................16
Officers and Trustees............................16
Investment Adviser...............................18
Administrative Services..........................19
Distribution of Fund Shares......................20
Shareholder Servicing and Processing Organizations21
Fund Accounting..................................21
PORTFOLIO TRANSACTIONS...........................22
Investment Decisions.............................22
Brokerage and Research Services..................22
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION......................24
Determination of Net Asset Value Per Share.......24
Redemptions In-Kind..............................24
TAXATION.........................................24
OTHER INFORMATION................................28
Fund Structure...................................28
Organization of the Trust........................30
Capitalization and Voting........................30
Performance Information..........................31
Custodian........................................32
Transfer Agent and Dividend Disbursing Agent.....32
Legal Counsel....................................32
Independent Accountant...........................32
Year 2000 Issues.................................32
Registration Statement...........................32
APPENDIX A - RATINGS OF CORPORATE
DEBT INSTRUMENTS...............................33
<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.
<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. Risks related to such options should generally
be similar to 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.
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.
<PAGE>
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
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 may
purchase and sell stock index futures to hedge against changes in stock 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.
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
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.
<PAGE>
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 buy or sell debt index
futures contracts and stock index futures contracts, and related options. A debt
index futures contract is a contract to buy or sell units of a specified debt
index at a specified future date at a price agreed upon when the contract is
made. A unit is the current value of the index. A stock index futures contract
is a contract to buy or sell units of a stock index at a specified future date
at a price agreed upon when the contract is made. A unit is 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.
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
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
Investments in foreign securities 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 the 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.
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.
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.
<PAGE>
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 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.
<PAGE>
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.
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.
<PAGE>
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
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.
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 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.
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.
<PAGE>
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.
INVESTMENT IN OTHER INVESTMENT COMPANIES.
The Fund may invest in the shares of other investment companies subject
to the limits permitted under the 1940 Act or any orders, rules or regulations
thereunder. 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.
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 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.
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
As fundamental investment restrictions, which may not be changed without
approval by the holders of a majority of the outstanding shares of the Fund, the
Fund may not:
1. Purchase any security (other than U.S. Government securities)
if as a result: (i) as to 75% of the Fund's total assets, more than 5%
of the Fund's total assets (taken at current value) would then be
invested in securities of a single issuer, or (ii) more than 25% of the
Fund's total assets would be invested in a single industry.
<PAGE>
2. Acquire more than 10% of the voting securities of any issuer.
3. Act as underwriter of securities of other issuers except to
the extent that, in connection with the disposition of portfolio
securities, it may be deemed to be an underwriter under certain federal
securities laws.
4. Issue any class of securities which is senior to the Fund's
shares of beneficial interest, except as contemplated by restriction 6
below.
5. Purchase or sell real estate or interests in real estate,
including real estate mortgage loans, although it may purchase and sell
securities which are secured by real estate and securities of companies
that invest or deal in real estate or real estate limited partnership
interests (for purposes of this restriction, investments by the Fund in
mortgage-backed securities and other securities representing interests
in mortgage pools shall not constitute the purchase or sale of real
estate or interests in real estate or real estate mortgage loans.)
6. Borrow more than 33 1/3% of the value of its total assets
less all liabilities and indebtedness (other than such borrowings).
7. Purchase and sell commodities or commodity contracts, except
that the Fund may purchase or sell financial futures contracts, options
on futures contracts, and futures contracts, forward contracts and
options with respect to foreign currencies, and may enter into swap
transactions.
8. Make loans, except by purchase of debt obligations in which
the Fund may invest consistent with its investment policies, by entering
into repurchase agreements, or by lending its portfolio securities.
In addition, it is contrary to the current policy of the Fund which
policy may be changed without shareholder approval, to invest in (i) securities
which at the time of such investment are not readily marketable; (ii) securities
restricted as to resale (excluding securities determined by Trustees of the
Trust [or the person designated by the Trustees to make such determinations] to
be readily marketable), and (iii) repurchase agreements maturing in more than
seven days, if, as a result, more than 15% of the Fund's net assets (taken at
current value) would then be invested in securities described in (i), (ii), and
(iii).
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as a fundamental or to the extent
designated as such in a Prospectus with respect to the Fund, the other
investment policies described in this Statement or in a Prospectus are not
fundamental and may be changed by approval of the Trustees.
The Investment Company Act of 1940, as amended (the "1940 Act"),
provides that a "vote of a majority of the outstanding voting securities" of the
Fund means the affirmative vote of the lesser of (i) more than 50% of the
outstanding shares of the Fund, and (ii) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
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.
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.
<PAGE>
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.
NICHOLAS ROSSI, 35, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust, Associate of SCMI since October 1997 and Assistant Vice President
Schroder Advisors since March 1998; prior thereto Mutual Fund Specialist,
Willkie Farr & Gallagher since May 1996; prior thereto, Fund Administrator with
Furman Selz LLC since 1992.
THOMAS G. SHEEHAN, 42, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Relationship Manager, Forum
Administrative Services, LLC 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.
CHERYL O. TUMLIN, 32, Two Portland Square, Portland, Maine - Assistant Treasurer
and Assistant Secretary of the Trust; Assistant Counsel, Forum Administrative
Services, LLC since July 1996, prior thereto, attorney with the U.S. Securities
and Exchange Commission, Division of Market Regulation since 1995; prior
thereto, attorney with Robinson Silverman Pearce Aronsohn & Berman since 1991.
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.
* 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 in the Schroder family of funds 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 Schroder family of funds has any bonus, profit
sharing, pension or retirement plans.
<PAGE>
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>
* 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 June 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 the Fund under an investment advisory agreement between
the Trust 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 $___ billion as of
June 30, 1997.
Under the advisory agreement, SCMI is responsible for managing the
investment program for the Fund. . In this regard, it is SCMI's responsibility
to make decisions relating to portfolio investments and to place purchase and
sale orders regarding such investments with brokers or dealers it selects. SCMI
also furnishes the Trust Board with periodic reports on the investment
performance of the Fund. Under the terms of the advisory agreement, SCMI is
required to manage the investment portfolio in accordance with applicable laws
and regulations.
The advisory agreement for the Fund continues in effect more than two
years following its effective date 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. The 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, as the case may be, and each terminates
automatically if assigned. The 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 performance of duties to the 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.
<PAGE>
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.
The fees paid by the Fund to SCMI and Schroder Advisors may equal up
the totals set forth in the Prospectus as to the 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.
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
<PAGE>
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.
SHAREHOLDER SERVICING PLAN AND SERVICE ORGANIZATIONS
Under the Shareholder Service Plan approved by the Trust for the Fund's
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 Fund's Advisor
Shares. The Fund 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 Fund's 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 Fund has no intention of 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 Fund or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts that might be paid to
the Service Organization by the Fund. Each Service Organization 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 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
<PAGE>
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. During any period in which Schroder Greater China Fund, 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 1940 Act, the fee
payable to Forum Accounting under the agreement is $12,000 annually for each
series so invested.
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 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. The Fund'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 advisory agreement authorizes and directs SCMI to place
orders for the purchase and sale of the Fund's investments with brokers or
dealers it selects and to seek "best execution" of such portfolio transactions.
SCMI places all such orders for the purchase and sale of portfolio securities
and buys and sells securities 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 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
<PAGE>
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 the Fund), although not all of these services are
necessarily useful and of value in managing the Fund. The investment advisory
fee paid by the Fund is not reduced because SCMI and its affiliates receive such
services.
As permitted by Section 28(e) of the 1934 Act, SCMI may cause the Fund
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 toward payment of Fund expenses,
such as custodian fees.
Subject to the general policies of the Fund 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 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, 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 satisfy the foregoing
standards. Such procedures are reviewed periodically by the Board, including a
majority of the non-interested Trustees. The Board also reviews all transactions
at least quarterly for compliance with such procedures.
It is further a policy of the Fund 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 to the brokers executing the transactions on the New York Stock
Exchange. In accordance with Rule 11a2-2(T), the Board has entered into an
agreement with Schroder Inc. permitting it to retain a portion of the brokerage
commissions paid to it by the Fund.
<PAGE>
The Fund does not have 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 may purchase securities of a broker or
dealer through which it regularly engages in securities transactions.
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.
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 Fund's'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.
<PAGE>
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. 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 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
<PAGE>
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 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,
<PAGE>
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
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.
<PAGE>
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.
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.
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.
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 eight 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).
<PAGE>
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.
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.
<PAGE>
CUSTODIAN
The Chase Manhattan Bank, through its Global Custody Division located
in London, England, acts as custodian of the Fund's assets but plays no role in
making decisions as to the purchase or sale of portfolio securities for the
Fund. Pursuant to rules adopted under the 1940 Act, the Fund 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 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 Fund; 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 Fund
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.
<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.
<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.
<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".
<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.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements
Prospectus: None.
Statement of Additional Information: None.
(b) Exhibits
(1) Form of Trust Instrument of Registrant Amended and
Restated as of March 13, 1998 (filed herewith).
(2) BYLAWS of Registrant dated September 8, 1995 (see
Note 3).
(3) Not applicable.
(4) See the following Articles and Sections in the Trust
Instrument filed as Exhibit (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.
(5) (a) Form of Investment Advisory Agreement
between the Trust and SCMI with respect to
Schroder Greater China Fund (filed herewith)
(b) Investment Advisory Agreement between the
Trust and SCMI dated as of January 9, 1996,
with respect to Schroder U.S. Equity Fund
(see Note 3).
(c) Investment Advisory Agreement between the
Trust and SCMI dated as of January 9, 1996,
with respect to Schroder U.S. Smaller
Companies Fund, Schroder Latin America Fund
and International Equity Fund (see Note 4).
(d) Investment Advisory Agreement between the
Trust and SCMI dated as of March 15, 1996,
with respect to Schroder International
Smaller Companies Fund and Schroder Global
Asset Allocation Fund (see Note 4).
(e) Investment Advisory Agreement between the
Trust and SCMI dated as of January 9, 1996,
with respect to Schroder Emerging Markets
Fund Institutional
Portfolio (see Note 2).
(f) Investment Advisory Agreement between the
Trust and SCMI dated as of March 5, 1997,
with respect to Schroder International Bond
Fund and Schroder Cash Reserves Fund (see
Note 2).
(g) Investment Advisory Agreement between the
Trust and SCMI dated as of March 5, 1997,
with respect to Schroder Micro Cap Fund (see
Note 2).
(h) Investment Advisory Agreement between the
Trust and SCMI dated as of November 26,
1996, with respect to Schroder Emerging
Markets Fund (see Note 2).
(6) (a) Form of Distribution Agreement between the Trust
and Schroder Advisors with respect to Schroder
Greater China Fund (filed herewith).
<PAGE>
(b) Distribution Agreement between the Trust and Schroder
Advisors dated as of January 9, 1996, with respect to
Schroder U.S. Equity Fund (see Note 3).
(c) Distribution Agreement between the Trust and Schroder
Advisors dated as of 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 (see Note 2).
(7) Not applicable.
(8) (a) Form of Global Custody Agreement Between the Trust
and The Chase Manhattan Bank, N.A. with respect to Schroder
Greater China Fund (filed herewith).
(b) Global Custody Agreement between the Trust and The Chase
Manhattan Bank, N.A. dated as of January 9, 1996, as amended
May 3, 1996, 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 (see Note 2).
(9) (a) Form of Administration Agreement between the Trust
and Schroder Advisors with respect to Schroder Greater China
Fund (filed herewith).
(b) Administration Agreement between the Trust and Schroder
Advisors dated as of 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 and Schroder International Bond Fund
(see Note 2).
(c) Form of Subadministration Agreement between the Trust
and Forum Administrative Services, LLC with respect to
Schroder Greater China Fund (filed herewith).
(d) Subadministration Agreement between the Trust and Forum
Administrative Services, LLC dated as of 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 (see Note
2).
<PAGE>
(e) Form of Transfer Agency and Service Agreement between
the Trust and Forum Shareholder Services, LLC with respect
to Schroder Greater China Fund (filed herewith).
(f) Transfer Agency and Service Agreement between the Trust
and Forum Accounting Services, LLC dated as of 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 (see Note 2).
(g) Form of Fund Accounting Agreement between the Trust and
Forum Accounting Services, LLC with respect to Schroder
Greater China Fund (filed herewith).
(h) Fund Accounting Agreement between the Trust and Forum
Accounting Services, LLC dated as of March 5, 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 Global Asset Allocation Fund, Schroder European
Growth Fund, Schroder Asia Fund, Schroder Japan Fund,
Schroder United Kingdom Fund, Schroder Cash Reserve Fund,
Schroder Micro Cap Fund and Schroder Emerging Markets Fund
(see Note 2).
(i) Form of Shareholder Service Plan adopted by the Trust
with respect to Schroder Greater China Fund (filed
herewith).
(10) Opinion and consent of Smith Katzenstein Furlow LLP as
to the legality of the securities being registered (see Note
2).
(11) Not applicable.
(12) No financial statements were omitted from Item 23.
(13) Not applicable.
(14) Not applicable.
(15) (a) Form of Distribution Plan adopted by Registrant
with respect to Schroder Greater China Fund (filed
herewith).
(b) Distribution Plan adopted by Registrant dated as of
January 9, 1996 with respect to Adviser Shares of 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 (see Note 2).
<PAGE>
(16) (a) Schedule of Sample Performance Calculations --
Schroder U.S. Equity Fund (see Note 3).
(b) Schedule of Sample Performance Calculations -- Schroder
U.S. Smaller Companies Fund (see Note 5).
(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 (see note 2).
(17) Not Applicable
(18) (a) Form of Multiclass (Rule 18f-3) Plan adopted by
Trust with respect to Schroder Greater China Fund (filed
herewith).
(b) Multiclass (Rule 18f-3) Plan adopted by Trust (see Note
6).
Other Exhibits:
Power of Attorney forms pursuant to which the
Trustees and President have signed this
Post-Effective Amendment (see Note 7).
Power of Attorney from Fergal Cassidy (see Note 2).
Power of Attorney from Sharon L. Haugh (see Note 2).
Power of Attorney from David N. Dinkins (filed
herewith).
Power of Attorney from Peter S. Knight (filed
herewith).
----------
Notes:
1 Exhibit incorporated by reference as filed on PEA No. 46 via EDGAR on
January 10, 1996, accession number 0000912057-96-000285.
2 Exhibit incorporated by reference as filed on PEA No. 66 via EDGAR on
February 27, 1998,
accession number 0001004402-98-000149.
3 Exhibit incorporated by reference as filed on PEA No. 61 via EDGAR on
April 18, 1997, accession
number 0000912057-97-013527.
4 Exhibit incorporated by reference as filed on PEA No. 63 via EDGAR on
July 18, 1997, accession
number 0001004402-97-000035.
5 Exhibit incorporated by reference as filed on PEA No. 64 via EDGAR on
September 30, 1997, accession number 0001004402-97-000103.
<PAGE>
6 Exhibit incorporated by reference as filed on PEA No. 65 via EDGAR on
June 30, 1997, accession number 0001004402-97-000053
7 Exhibit incorporated herein by reference as filed on PEA No. 62 via EDGAR
on June 30, 1997, accession number 0001004402-97-000030.
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 6/30/98
-------------------------------------------------------------------------- -------------------------------
-------------------------------------------------------------------------- --------------- ---------------
Advisor Investor
----------------------------------------------------------------------------------------------------------
Schroder U.S. Equity Fund 0 567
-------------------------------------------------------------------------- --------------- ---------------
Schroder International Fund 1 474
-------------------------------------------------------------------------- --------------- ---------------
Schroder U.S. Smaller Companies Fund 4 611
-------------------------------------------------------------------------- --------------- ---------------
Schroder Emerging Markets Fund Institutional Portfolio 4 23
-------------------------------------------------------------------------- --------------- ---------------
Schroder International Smaller Companies Fund 0 4
-------------------------------------------------------------------------- --------------- ---------------
Schroder Emerging Markets Fund 0 4
-------------------------------------------------------------------------- --------------- ---------------
Schroder Micro Cap Fund N/A 28
-------------------------------------------------------------------------- --------------- ---------------
</TABLE>
ITEM 27. INDEMNIFICATION
Section 3803 of the Delaware Business Trust Act, Section 10.02 of the
Registrant's Trust Instrument reads as follows:
"(a) Subject to the exceptions and limitations contained in subsection
10.02(b):
"(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;
"(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
<PAGE>
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
Following is a description of any business, profession, vocation or
employment of a substantial nature in which each investment adviser of
the Registrant, and each trustee or officer of any such investment
adviser, is or has been, at any time during the past two years, engaged
for his or her own account or in the capacity of trustee, officer or
employee. 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 Kingdom.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connections
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David M. Salisbury Chief Executive Officer, Director, SCMI
Chairman
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.
------------------------------------ ----------------------------------
Director Schroders plc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman/Executive Vice SCMI
President
------------------------------------ ----------------------------------
Director Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Open end management investment
companies for which SCMI and/or
its affiliates provide
investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Director Schroder Ltd.
------------------------------------ ----------------------------------
----------------------------------
Officer Open end management investment
companies for which SCMI and/or
its affiliates provide
investment services
---------------------------------- ------------------------------------ ----------------------------------
<PAGE>
---------------------------------- ------------------------------------ ----------------------------------
David Gibson Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John S. Ager Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Advisers
------------------------------------ ----------------------------------
Director Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Open end management investment
companies for which SCMI and/or
its affiliates provide
investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Open end management investment
companies for which SCMI and/or
its affiliates provide
investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Officer Open end management investment
companies for which SCMI and/or
its affiliates provide
investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Advisers
------------------------------------ ----------------------------------
Director Schroder Capital Management
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Open end management investment
companies for which SCMI and/or
its affiliates provide
investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
C. John Govett Director SCMI
------------------------------------ ----------------------------------
Group Managing Director Schroder Ltd.
----------------------------------
------------------------------------
Director Schroders plc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Phillipa J. Gould Senior Vice President, Director SCMI
---------------------------------- ------------------------------------ ----------------------------------
<PAGE>
---------------------------------- ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Abdallah Nauphal Group Vice President, Director SCMI
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
*Schroder Capital Management Inc. is located at 787 Seventh Avenue, 34th Floor,
New York, NY 10019.
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.
* 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
Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of SCMI. (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 Shareholder Services, LLC., Two Portland Square, Portland,
Maine 04101 (shareholder records).
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
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, as amended, the Registrant has duly caused this amendment
to its Registration Statement to be signed on its behalf by the undersigned,
duly authorized, in the City of New York, and State of New York on the 17th day
of July, 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 17th
day of July, 1998.
Signatures Title
- ---------- -----
(a) Principle Executive Officer
Mark J. Smith* President
*By: /s/ Thomas G. Sheehan
Thomas G. Sheehan, Attorney-in-Fact
(b) Principle Financial and Accounting Officer
Fergal Cassidy* Treasurer
*By: /s/ Thomas G. Sheehan
Thomas G. Sheehan, Attorney-in-Fact
(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
Exhibit
(1) Form of Amended and Restated Trust Instrument of Registrant.
(5)(a) Form of Investment Advisory Agreement between the Trust and SCMI
with respect to Schroder Greater China Fund
(6)(a) Form of Distribution Agreement between the Trust and Schroder
Advisors with respect to Schroder Greater China Fund
(8)(a) Form of Global Custody Agreement Between the Trust and The Chase
Manhattan Bank, N.A. with respect to Schroder Greater China Fund
(9)(a) Form of Administration Agreement between the Trust and Schroder
Advisors with respect to Schroder Greater China Fund
(9)(c) Form of Subadministration Agreement between the Trust and Forum
Administrative Services, LLC with respect to Schroder Greater China Fund
(9)(e) Form of Transfer Agency and Service Agreement between the Trust and
Forum Shareholder Services, LLC with respect to Schroder Greater China Fund
(9)(g) Form of Fund Accounting Agreement between the Trust and Forum
Accounting Services, LLC with respect to Schroder Greater China Fund
(9)(i) Form of Shareholder Service Plan adopted by the Trust with respect
to Schroder Greater China Fund
(15)(a) Form of Distribution Plan adopted by Registrant with respect to
Schroder Greater China Fund
(17) Financial Data Schedules
(18)(a) Form of Multiclass (Rule 18f-3) Plan adopted by Trust with respect
to Schroder Greater China Fund
Other Exhibits:
Power of Attorney From David N. Dinkins
Power of Attorney from Peter S. Knight.
Exhibit (1)
SCHRODER CAPITAL FUNDS (DELAWARE)
TRUST INSTRUMENT
DATED SEPTEMBER 6, 1995
AS AMENDED SEPTEMBER 17, 1996
AND RESTATED AS OF MARCH 13, 1998
<PAGE>
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
Page
ARTICLE I NAME AND DEFINITIONS
Section 1.01 Name........................................................................1
Section 1.02 Definitions.................................................................1
ARTICLE II BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest...............................................2
Section 2.02 Issuance of Shares..........................................................2
Section 2.03 Register of Shares and Share Certificates...................................2
Section 2.04 Transfer of Shares..........................................................3
Section 2.05 Treasury Shares.............................................................3
Section 2.06 Establishment of Series.....................................................3
Section 2.07 Investment in the Trust.....................................................4
Section 2.08 Assets and Liabilities of Series............................................4
Section 2.09 No Preemptive Rights........................................................5
Section 2.10 No Personal Liability of Shareholders.......................................5
Section 2.11 Assent to Trust Instrument..................................................5
ARTICLE III THE TRUSTEES
Section 3.01 Management of the Trust.....................................................5
Section 3.02 Initial Trustees............................................................6
Section 3.03 Term of Office..............................................................6
Section 3.04 Vacancies and Appointments..................................................6
Section 3.05 Temporary Absence...........................................................6
Section 3.06 Number of Trustees..........................................................6
Section 3.07 Effect of Ending of a Trustee's Service.....................................6
Section 3.08 Ownership of Assets of the Trust............................................7
ARTICLE IV POWERS OF THE TRUSTEES
Section 4.01 Powers......................................................................7
Section 4.02 Issuance and Repurchase of Shares...........................................9
Section 4.03 Trustees and Officers as Shareholders.......................................9
Section 4.04 Action by the Trustees.....................................................10
Section 4.05 Chairman of the Trustees...................................................10
Section 4.06 Principal Transactions.....................................................10
ARTICLE V EXPENSES OF THE TRUST ...............................................................................10
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VI INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser.........................................................11
Section 6.02 Principal Underwriter......................................................11
Section 6.03 Administrator..............................................................12
Section 6.04 Transfer Agent.............................................................12
Section 6.05 Parties to Contract........................................................12
Section 6.06 Provisions and Amendments..................................................12
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers..............................................................12
Section 7.02 Meetings...................................................................13
Section 7.03 Quorum and Required Vote...................................................13
ARTICLE VIII CUSTODIAN
Section 8.01 Appointment and Duties.....................................................14
Section 8.02 Central Certificate System.................................................14
ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions..............................................................14
Section 9.02 Redemptions................................................................15
Section 9.03 Determination of Net Asset Value
and Valuation of Portfolio Assets..........................................15
Section 9.04 Suspension of the Right of Redemption......................................16
Section 9.05 Redemption of Shares in Order to
......................................Qualify as Regulated Investment Company
16
ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability....................................................16
Section 10.02 Indemnification............................................................16
Section 10.03 Shareholders...............................................................17
ARTICLE XI MISCELLANEOUS
Section 11.01 Trust Not a Partnership....................................................18
Section 11.02...Trustee's Good Faith Action, Expert Advice, No Bond or Surety
18
Section 11.03...................................Establishment of Record Dates
18
Section 11.04............................................Termination of Trust
19
Section 11.05..................................................Reorganization
19
Section 11.06..........................Filing of Copies, References, Headings
20
Section 11.07 Applicable Law.............................................................20
Section 11.08 Amendments.................................................................20
Section 11.09 Fiscal Year................................................................21
Section 11.10 Provisions in Conflict With Law............................................21
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
APPENDIX A Established Series........................................................A-1
</TABLE>
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
This TRUST INSTRUMENT of SCHRODER CAPITAL FUNDS (DELAWARE) is restated
and executed as of the 13th day of March 1998 by the parties signatory hereto,
as Trustees.
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
Section 1.01 Name. The name of the trust created hereby is "Schroder
Capital Funds (Delaware)."
Section 1.02 Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(b) "Bylaws" means the Bylaws of the trust as adopted by the Trustees,
as amended from time to time;
(c) "Commission" has the meaning given it in the 1940 Act. "Affiliated
Person", "Assignment," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any rules or
regulations adopted by or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.
(d) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from time to
time.
(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(f) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof.
<PAGE>
(h) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(j) The "Trust" means Learning AssetsTM and reference to the Trust,
when applicable to one or more Series of the Trust, shall refer to any such
Series;
(k) The "Trustees" means the person or persons who has or have signed
this Trust Instrument, so long as he or they shall continue in office in
accordance with the terms hereof, and all other persons who may from time to
time be duly qualified and serving as Trustees in accordance with the provisions
of Article III hereof and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their capacity as Trustees hereunder;
(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
ARTICLE II
BENEFICIAL INTEREST
Section 2.01 Shares Of Beneficial Interest. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and class
thereof, authorized hereunder is unlimited. Each Share shall have no par value.
All Shares issued hereunder, including without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.
Section 2.02 Issuance of Shares. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
Section 2.03 Register of Shares and Share Certificates. A register
shall be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. As to
Shares for which no certificate has been issued, such register shall be entitled
to receive dividends or other distributions
<PAGE>
or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder
shall be entitled to receive payment of any dividend or other distribution, nor
to have notice given to him as herein or in the Bylaws provided, until he has
given his address to the transfer agent or such officer or other agent of the
Trustees as shall keep the said register for entry thereon. No share
certificates shall be issued by the Trust except to the extent authorized by the
Board of Trustees.
Section 2.04 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
Section 2.05 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.06 Establishment of Series. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Series. A Series may issue any number of Shares and need not
issue shares. At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by a majority
vote abolish that Series and the establishment and designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of all distributions made with
respect to such Series. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series of the Trust.
<PAGE>
Section 2.07 Investment in the Trust. The Trustees shall accept
investments in any Series of the Trust from such persons and on such terms as
they may from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or securities
in which the affected Series is authorized to invest, valued as provided in
Article IX, Section 9.03 hereof. Investments in a Series shall be credited to
each Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received or accepted as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in such
manner and at such time determined by the Trustees or (c) issue fractional
Shares.
Section 2.08 Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, subject only to
the rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.08, but subject to the right of the Trustees in their discretion
to allocate general liabilities, expenses, costs, changes or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally. Notice of this contractual limitation on inter-Series
liabilities may, in the Trustee's sole discretion, be set forth in the
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on inter-Series liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series may
look only to the assets of that Series to satisfy or enforce any debt, with
respect to that Series. No Shareholder or former Shareholder of any Series shall
have a claim on or any right to any assets allocated or belonging to any other
Series.
<PAGE>
Section 2.09 No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees, whether of the same or other
Series.
Section 2.10 No Personal Liability of Shareholders. Each Shareholder of
the Trust and of each Series shall not be personally liable for the debts,
liabilities, obligation and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue
of having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
ARTICLE III
THE TRUSTEES
Section 3.01 Management of the Trust. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.
<PAGE>
Section 3.02 Initial Trustees. The initial Trustees shall be the
persons named herein. On a date fixed by the Trustees, the Shareholders shall
elect at least three (3) but not more than twelve (12) Trustees, as specified by
the Trustees pursuant to Section 3.06 of this Article III.
Section 3.03 Term of Office. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of disease or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least
two-thirds of the Outstanding Shares.
Section 3.04 Vacancies and Appointments. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the limitations
under the 1940 Act. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the Trustees,
duly adopted, which shall be recorded in the minutes of a meeting of the
Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.
Section 3.05 Temporary Absence. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
Section 3.06 Number of Trustees. The number of Trustees shall be at
least three (3), and thereafter shall be such number as shall be fixed from time
to time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than twelve (12).
Section 3.07 Effect of Ending of a Trustee's Service. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
<PAGE>
Section 3.08 Ownership of Assets of the Trust. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of the Trust, or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series. The Shares shall be personal property giving only the
rights specifically set forth in this Trust Instrument.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.01 Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust:
(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other Person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders; such
Bylaws shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
<PAGE>
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager, custodian,
underwriter or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form; or
either in the name of the Trust or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner provided herein;
<PAGE>
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers
of the Trustees to said committees and to adopt a committee charter providing
for such responsibilities, membership (including Trustees, officers or other
agents of the Trust therein) and any other characteristics of said committees as
the Trustees may deem proper. Notwithstanding the provisions of this Article IV,
and in addition to such provisions or any other provision of this Trust
Instrument or of the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body;
(v) To interpret the investment policies, practices or limitations of any
Series;
(w) To establish a registered office and have a registered agent in the
state of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.02 Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
Section 4.03 Trustees and Officers as Shareholders. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such
<PAGE>
Shares from any such person or any firm or company in which he is interested,
subject only to the general limitations herein contained as to the sale and
purchase of such Shares; and all subject to any restrictions which may be
contained in the Bylaws.
Section 4.04 Action by the Trustees. The Trustees shall act by majority
vote at a meeting duly called or by unanimous written consent without a meeting
or by telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the party calling the
meeting to each Trustee by telephone, facsimile or other electronic mechanism
sent to his home or business address at least twenty-four hours in advance of
the meeting or by written notice mailed to his home or business address at least
seventy-two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Any meeting
conducted by telephone shall be deemed to take place at the principal office of
the Trust, as determined by the Bylaws or by the Trustees. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to any
one or more of their number their authority to approve particular matters or
take particular actions on behalf of the Trust. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Execution of a written
consent or waiver and delivery thereof to the Trust may be accomplished by
facsimile or other similar electronic mechanism.
Section 4.05 Chairman of the Trustees. The Trustees shall appoint one
of their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
Section 4.06 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.08 hereof, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodian,
transfer agent and fund accountant; fees of pricing, interest, dividend, credit
and other reporting services; costs of membership in trade associations;
telecommunications expenses; funds
<PAGE>
transmission expenses; auditing, legal and compliance expenses; costs of forming
the Trust and maintaining corporate existence; costs of preparing and printing
the Trust's prospectuses, statements of additional information and shareholder
reports and delivering them to existing shareholders; expenses of meetings of
shareholders and proxy solicitations therefore; costs of maintaining books and
accounts; costs of reproduction, stationery and supplies; fees and expenses of
the Trust's trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust; costs of Trustee
meetings; Securities and Exchange Commission registration fees and related
expenses; state or foreign securities laws registration fees and related
expenses and for such non-recurring items as may arise, including litigation to
which the Trust (or a Trustee acting as such) is a party, and for all losses and
liabilities by them incurred in administering the Trust, and for the payment of
such expenses, disbursements, losses and liabilities the Trustees shall have a
lien on the assets belonging to the appropriate Series, or in the case of an
expense allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto. This section shall
not preclude the Trust from directly paying any of the aforementioned fees and
expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser. The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory, statistical and research facilities and services and such
other facilities and services, if any, all upon such terms and conditions as may
be prescribed in the Bylaws or as the Trustees may in their discretion determine
(such terms and conditions not to be inconsistent with the provisions of this
Trust Instrument or of the Bylaws). Notwithstanding any other provision of this
Trust Instrument, the Trustees may authorize any investment adviser (subject to
such general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser (and all without further action by the Trustees). Any such purchases,
sales and exchanges shall be deemed to have been authorized by all of the
Trustees.
The Trustees may authorize the investment adviser to employ, from time
to time, one or more sub-advisers to perform such of the acts and services of
the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and sub-adviser (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires.
Section 6.02 Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares, whereby the
Trust may either agree to sell Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws); and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
<PAGE>
Section 6.03 Administrator. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Section 6.04 Transfer Agent. The Trustees may in their discretion from
time to time enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and Shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).
Section 6.05 Parties to Contract. Any contract of the character
described in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any
contract of the character described in Article VIII hereof may be entered into
with any corporation, firm, partnership, trust or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered void or voidable by reason of the
existence of any relationship, nor shall any person holding such relationship be
disqualified from voting on or executing the same in his capacity as Shareholder
and/or Trustee, nor shall any person holding such relationship be liable merely
by reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a firm, corporation, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.
Section 6.06 Provisions and Amendments. Any contract entered into
pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act, if applicable, or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner consistent with the requirements of said Section
15, as modified by any applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Article III, Sections 3.01
and 3.02 hereof, (b) for the removal of Trustees as provided in Article III,
Section 3.03(d) hereof, (c) with respect to any investment advisory contract as
provided in Article VI, Sections 6.01 and 6.06 hereof, and (d) with respect to
such additional matters relating to the Trust as may be required by law, by this
Trust Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.
<PAGE>
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted separately by individual Series, except (i) when required by the 1940
Act, Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects the interests of
more than one Series, then the Shareholders of all such Series shall be entitled
to vote thereon. The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such matter
shall be voted on by such class or classes. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders of one or more Series or of the Trust, or in the
event of any proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the Trust, Shares may be voted only
in person or by written proxy. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required or
permitted by law, this Trust Instrument or any of the Bylaws of the Trust to be
taken by Shareholders.
Section 7.02 Meetings. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02 of Article III hereof at
the principal office of the Trust or such other place as the Trustees may
designate. Meetings may be held within or without the State of Delaware. Special
meetings of the Shareholders of any Series may be called by the Trustees and
shall be called by the Trustees upon the written request of Shareholders owning
at least one-tenth of the Outstanding Shares entitled to vote. Whenever ten or
more Shareholders meeting the qualifications set forth in Section 16(c) of the
1940 Act, as the same may be amended from time to time, seek the opportunity of
furnishing materials to the other Shareholders with a view to obtaining
signatures on such a request for a meeting, the Trustees shall comply with the
provisions of said Section 16(c) with respect to providing such Shareholders
access to the list of the Shareholders of record of the Trust or the mailing of
such materials to such Shareholders of record, subject to any rights provided to
the Trust or any Trustees provided by said Section 16(c). Notice shall be sent,
by First Class Mail or such other means determined by the Trustees, at least 15
days prior to any such meeting.
Section 7.03 Quorum and Required Vote. One-third of Shares entitled to
vote in person or by proxy shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series (or class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or class) is concerned.
Shareholders may act by unanimous written consent. Actions taken by Series (or
class) may be consented to unanimously in writing by Shareholders of that Series
(or class).
<PAGE>
ARTICLE VIII
CUSTODIAN
Section 8.01 Appointment and Duties. The Trustees shall at all times
employ a bank, a company that is a member of a national securities exchange, or
a trust company, each having capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and is a member of the Depository Trust
Company as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Bylaws of the Trust: (a) to hold the securities owned by the Trust and
deliver the same upon written order or oral order confirmed in writing; (b) to
receive and receipt for any moneys due to the Trust and deposit the same in its
own banking department or elsewhere as the Trustees may direct; and (c) to
disburse such funds upon orders or vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and is a
member of the Depository Trust Company or such other person as may be permitted
by the Commission or otherwise in accordance with the 1940 Act.
Section 8.02 Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions.
(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series. The amount of such dividends or
distributions and the payment of them and whether they are in cash or any other
Trust Property shall be wholly in the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to
<PAGE>
Shareholders such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a stock dividend pro rata
among the Shareholders of a particular Series, or class thereof, as of the
record date of that Series fixed as provided in Subsection 9.01(b) hereof.
Section 9.02 Redemptions. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the principal
underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.03 of this Article IX). The
Series shall make payment for any such Shares to be redeemed, as aforesaid, in
cash or property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective. Upon redemption, shares shall become Treasury shares and
may be re-issued from time to time.
Section 9.03 Determination of Net Asset Value and Valuation of
Portfolio Assets. The term "Net Asset Value" of any Series shall mean that
amount by which the assets of that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Such value shall be
determined separately for each Series and shall be determined on such days and
at such times as the Trustees may determine. Such determination shall be made
with respect to securities for which market quotations are readily available, at
the market value of such securities; and with respect to other securities and
assets, at the fair value as determined in good faith by the Trustees; provided,
however, that the Trustees, without Shareholder approval, may alter the method
of valuing portfolio securities insofar as permitted under the 1940 Act and the
rules, regulations and interpretations thereof promulgated or issued by the
Commission or insofar as permitted by any Order of the Commission applicable to
the Series. The Trustees may delegate any of their powers and duties under this
Section 9.03 with respect to valuation of assets and liabilities. The resulting
amount, which shall represent the total Net Asset Value of the particular
Series, shall be divided by the total number of shares of that Series
outstanding at the time and the quotient so obtained shall be the Net Asset
Value per Share of that Series. At any time the Trustees may cause the Net Asset
Value per Share last determined to be determined again in similar manner and may
fix the time when such redetermined value shall become effective. If, for any
reason, the net income of any Series, determined at any time, is a negative
amount, the Trustees shall have the power with respect to that Series (a) to
offset each Shareholder's pro rata share of such negative amount from the
accrued dividend account of such Shareholder, (b) to reduce the number of
Outstanding Shares of such Series by reducing the number of Shares in the
account of each Shareholder by a pro rata portion of that number of full and
fractional Shares which represents the amount of such excess negative net
income, (c) to cause to be recorded on the books of such Series an asset account
in the amount of such negative net income (provided that the same shall
thereupon become the property of such Series with respect to such Series and
shall not be paid to any Shareholder), which account may be reduced by the
amount, of dividends declared thereafter upon the Outstanding Shares of such
Series on the day such negative net income is experienced, until such asset
account is reduced to zero; (d) to combine the methods described in clauses (a)
and (b) and (c) of this sentence; or (e) to take any other action they deem
appropriate, in order to cause (or in order to assist in causing) the Net Asset
Value per Share of such Series to remain at a constant amount per Outstanding
Share immediately after each such determination and declaration. The
<PAGE>
Trustees shall also have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per Share to be increased. The
Trustees shall not be required to adopt, but may at any time adopt, discontinue
or amend the practice of maintaining the Net Asset Value per Share of the Series
at a constant Amount.
Section 9.04 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.
Section 9.05 Redemption of Shares in Order to Qualify as Regulated
Investment Company. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has or may
become concentrated in any Person to an extent which would disqualify any Series
as a regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (a) to call for redemption by any such person of a
number, or principal amount, of Shares sufficient to maintain or bring the
direct or indirect ownership of Shares into conformity with the requirements for
such qualification and (b) to refuse to transfer or issue Shares to any person
whose acquisition of Shares in question would result in such disqualification.
The redemption shall be effected at the redemption price and in the manner
provided in this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the requirements of any taxing
authority.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
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
<PAGE>
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;
(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
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office or (B)
not to have acted in good faith in the reasonable belief that his 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 his 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 Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 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 Section 10.02.
Section 10.03 Shareholders. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not
because of his acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by the Shareholder, assume the defense of any claim
made against the Shareholder for any act or obligation of the Series and satisfy
any judgment thereon from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Not A Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder shall
have any power to bind personally either the Trust officers or any Shareholder.
All persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the appropriate
Series or (if the Trustees shall have yet to have established Series) of the
Trust for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Trust Instrument
shall protect a Trustee against any liability to which the Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 11.02 Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof and to Section 11.01 of this Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Trust Instrument, and subject to the provisions of Article X hereof and
Section 11.01 of this Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
Section 11.03 Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
<PAGE>
Section 11.04 Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).
(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees,
(i) sell and convey all or substantially all of the assets of
the Trust or any affected Series to another trust, partnership, association or
corporation, or to a separate series of shares thereof, organized under the laws
of any state which trust, partnership, association or corporation is an open-end
management investment company as defined in the 1940 Act, or is a series
thereof, for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of beneficial
interest, stock or other ownership interests of such trust, partnership,
association or corporation or of a series thereof; or
(ii) at any time sell and convert into money all of the assets of the Trust
or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for the
payment of all such liabilities in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each Series (or class) ratably among the holders of Shares
of that Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in Subsection 11.05(b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or Series
shall be canceled and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
Section 11.05 Reorganization. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an open-end management investment company
under the 1940 Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and which is formed, organized or existing
under the laws of a state, commonwealth, possession or colony of the United
States or (b) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment
<PAGE>
to the Trust Instrument or effect the adoption of a new trust instrument of the
Trust if it is the surviving or resulting trust in the merger or consolidation.
Section 11.06 Filing of Copies, References, Headings. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been make and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his", "he" and "him", shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 11.07 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 11.08 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment which would affect their right to vote granted in Section
7.01 of Article VII hereof, (b) on any amendment to this Section 11.08, (c) on
any amendment as may be required by law or by the Trust's registration statement
filed with the Commission and (d) on any amendment submitted to them by the
Trustees. Any amendment required or permitted to be submitted to Shareholders
<PAGE>
which, as the Trustees determine, shall affect the Shareholders of one or more
Series shall be authorized by vote of the Shareholders of each Series affected
and no vote of shareholders of a Series not affected shall be required.
Notwithstanding anything else herein, any amendment to Article X hereof shall
not limit the rights to indemnification or insurance provided therein with
respect to action or omission of Covered Persons prior to such amendment.
Section 11.09 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the Trust.
Section 11.10 Provisions in Conflict With Law. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have caused this amended and
restated Trust Instrument to be executed as of the day and year first written
above.
<TABLE>
<S> <C>
- ------------------------------------
Herman C. Schwabb Peter S. Knight
as Trustee and not individually as Trustee and not individually
- ------------------------------------
Peter E. Guernsey Sharon L. Haugh
as Trustee and not individually as Trustee and not individually
- ------------------------------------
John I. Howell Mark J. Smith
as Trustee and not individually as Trustee and not individually
- ------------------------------------ --------------------------------------
Clarence F. Michalis Hon. David I. Dinkins
as Trustee and not individually as Trustee and not individually
</TABLE>
<PAGE>
APPENDIX A
Established Series
The following Series have been created by the Trustees in accordance
with section 2.06 of the Trust Instrument:
<TABLE>
<S> <C>
Series Date Established
1. Schroder International Fund 9/6/95
2. Schroder Emerging Markets Fund Institutional Portfolio 9/6/95
3. Schroder U.S. Equity Fund 9/6/95
4. Schroder U.S. Smaller Companies Fund 9/6/95
5. Schroder Latin American Fund 9/6/95
6. Schroder International Smaller Companies Fund 3/15/96
7. Schroder Global Asset Allocation Fund 3/15/96
8. Schroder Emerging Markets Fund 11/26/96
9. Schroder European Growth Fund 11/26/96
10. Schroder Japan Fund 11/26/96
11. Schroder Asia Fund 11/26/96
12. Schroder United Kingdom Fund 11/26/96
13. Schroder International Bond Fund 3/5/97
14. Schroder Cash Reserves Fund 3/5/97
15. Schroder Micro Cap Fund 9/18/97
</TABLE>
Exhibit (5)(a)
SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated as of this [ ] day of September 1998, 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 787 Seventh
Avenue, 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.
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, 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).
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 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, 34th 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.
(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)
--------------------------
By: Catherine A. Mazza
Vice President
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.
------------------------
By: David Gibson
Director
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%
Schroder Greater China Fund 1.00%
Exhibit (6)(a)
SCHRODER CAPITAL FUNDS (DELAWARE)
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 9th day of January, 1996, by and between
Schroder Capital Funds (Delaware), a Delaware business trust, with respect to
its series called ["Schroder Greater China Fund"] (the "Fund") and Schroder Fund
Advisors Inc. (the "Distributor").
1. The Fund hereby appoints the Distributor its agent to sell and
arrange for the sale of shares of the Fund in jurisdictions wherein shares of
the Fund may legally be offered for sale. The Distributor shall discharge its
responsibilities in compliance with the objectives, policies and limitations set
forth in the Fund's current prospectus and applicable laws and regulations. The
Distributor accepts such appointment and agrees to use its "best efforts" to
secure purchases of shares of the Fund.
2. The Distributor will, upon receipt of unconditional orders (and not
before), transmit such orders to the Fund (or its authorized agent) for
acceptance and confirmation. The price at which shares are offered shall be the
net asset value per share as determined in accordance with the Fund's charter
and by-laws, subject to the provisions of the Investment Company Act of 1940
(the "1940 Act") and any regulations of the Securities and Exchange Commission,
as described in the then current prospectus (which for the purposes hereof is
deemed to include the Fund's current statement of additional information) of the
Fund.
3. Upon receipt of such orders from the Distributor, the Fund or its
agent shall open a new account in such names as shall be specified by the
Distributor, provided, however, that no shares shall be registered on the Fund's
books until (i) receipt by the Fund's Transfer Agent of the Distributor's
written request therefor; and (ii) receipt of payment of that amount by the
Fund, its Transfer Agent or its Custodian.
4. The Fund reserves the right to reject any order for the purchase of
shares, provided, however, that the Fund agrees that it will not arbitrarily or
without reasonable cause refuse acceptance or confirmation of such orders.
5. The Fund covenants and agrees that it will, at its own expense:
(a) use its best efforts to keep authorized, but unissued, sufficient shares to
meet the reasonable requirements of the Distributor;
(b) supply the Distributor with the net asset value per shares computed
as at the times prescribed by and in compliance with all pertinent
requirements of the charter of the Fund and the Securities and Exchange
Commission;
(c) prepare, file and keep effective registration statements,
prospectuses and licenses covering as many shares as may be necessary
for distribution and sale of shares in such jurisdictions where shares
may lawfully be sold and as reasonably requested by the Distributor;
(d) maintain qualified personnel and adequate facilities for the
acceptance and confirmation of orders for the sale of Shares.
6. The Distributor will pay all expenses incident to the sale and
distribution of the shares issued or sold hereunder, including (i) expenses of
printing and distributing or disseminating any sales literature (including
prospectuses and annual reports), advertising and selling aids in connection
with such offering of the shares for sale (except that such expenses shall not
include expenses incurred by the Fund in connection with the preparation,
printing and distribution of any report or other communication to holders of
shares in their capacity as such) and (ii) expenses of advertising in connection
with such offering. The Fund authorizes the Distributor in connection with the
sale or arranging for the sale of shares to give only such information and to
make only such statements or representations as are contained in the prospectus
or in sales literature or advertisements approved by the Fund.
7. The Distributor covenants and agrees that it will comply, at its own
expense, with the applicable Federal and state laws and regulations regulating
the affairs of broker-dealers, and will conduct its affairs with the Fund and
with dealers, brokers and investors in accordance with the Rules of Fair
Practice of The National Association of Securities Dealers. The Distributor
agrees that all sales literature and advertisements used by the Distributor
shall be subject to the approval of the Fund.
8. In the absence of (i) any breach of its obligations under this
Agreement (ii) willful misfeasance, bad faith or gross negligence on the part of
the Distributor, or (iii) reckless disregard by the Distributor of its
obligations and duties hereunder, the Distributor shall not be subject to any
liability whatsoever to the Fund, or to any shareholder of the Fund, for any
error of judgment, mistake of law or any other act or omission in the course of,
or connected with, rendering services hereunder. The Fund agrees to indemnify
and hold harmless the Distributor and each person who controls the Distributor
within the meaning of the Securities Act of 1933 (the "1933 Act") against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the 1933 and 1940 Acts, the Securities
Exchange Act of 1934 or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Fund's
registration statement for the registration of the Shares as originally filed or
in any amendment thereof, or in the Fund's current prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party for any legal loss, claim,
damage, liability or action; provided, however, that the Fund will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Fund by or on behalf of the
Distributor specifically for use in connection with the preparation thereof.
9. This Agreement shall terminate automatically in the event of its
assignment. This Agreement may be terminated at any time, (i) by the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Fund by thirty days' written notice addressed to the
Distributor at its principal place of business; and (ii) by the Distributor by
thirty days' written notice addressed to the Fund at its principal place of
business.
10. This Agreement shall continue in effect for one year, and
thereafter only so long as its continuance is specifically approved at least
annually by a majority of the Board of Trustees of the Fund who are not parties
to the Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval, or by vote of a
majority of the outstanding voting securities of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 9th day of January, 1996.
SCHRODER CAPITAL FUNDS (DELAWARE)
By:
Title:
SCHRODER FUND ADVISORS INC.
By:
Title:
Exhibit (8)(a)
SCHRODER CAPITAL FUNDS (DELAWARE)
Global Custody Agreement
AGREEMENT, dated as of January 9, 1996, as amended May 3, 1996, between
The Chase Manhattan Bank (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 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 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.
(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
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.
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;
(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;
(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.
(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;
(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.
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.
(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");
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
MUTUAL FUND
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:
Bank: The Chase Manhattan Bank
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.
SCHRODER CAPITAL FUNDS
(DELAWARE) On behalf of
each fund listed in
Schedule A.
By:
Name:
Title: President
THE CHASE MANHATTAN BANK
By:
Name:
Title:
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
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
As of September [ ], 1998
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Schroder Greater China Fund
- ----------------------------------------------------------------------
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
Global Custody Agreement
SCHEDULE B
(List of authorized Subcustodians)
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 dated as of this [ ]th day of September, 1998, 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 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;
(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.
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, 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
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 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 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.
(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)
Catherine A. Mazza
Vice President
SCHRODER FUND ADVISORS INC.
------------------------
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
Schroder Greater China Fund
SCHRODER CAPITAL FUNDS (DELAWARE)
ADMINISTRATION AGREEMENT
APPENDIX B
ADMINISTRATION FEES
Series of the Trust Fee As % Of The Average Annual 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%
Schroder Greater China 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)(c)
SCHRODER CAPITAL FUNDS (DELAWARE)
SUBADMINISTRATION AGREEMENT
AGREEMENT made this 1st day of February, 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 Forum Administrative Services, LLC
("Subadministrator"), a limited liability company organized under the laws of
the State of Delaware.
WHEREAS, the Trust 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 Trust 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 Trust.
WHEREAS, the Trust desires that the Subadministrator perform certain
administrative services for each of the series of the Trust 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 Trust and the Subadministrator agree as
follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints the Subadministrator
as subadministrator of the Trust 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 Trust 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 Trust'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 Trust 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 Trust authorizes the
Subadministrator to rely on such 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 Trust 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 Trust'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 Trust, each Series and each Class thereof, as
applicable, the Subadministrator shall:
(i) oversee (A) the preparation and maintenance by the
Adviser and the Trust'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 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
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;
(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 Fund;
(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) prepare, file and maintain the Trust's governing documents,
including the Trust Instrument and minutes of meetings of
Trustees and shareholders;
(viii) with the cooperation of the Trust'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 Trust and its Board on matters concerning the Trust
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 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 the Subadministrator 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 the Subadministrator's normal
business hours. Upon the reasonable request of the Trust, copies of any such
accounts and records shall be provided promptly by the Subadministrator to the
Trust or the Trust's authorized representatives. In the event the Trust
designates a successor to any of the Subadministrator's obligations under this
agreement, the Subadministrator shall, at the expense and direction of the
Trust, transfer to 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 Trust 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 Trust
notice and reasonable opportunity to defend against any such loss, claim,
damage, liability or expense in the name of the Trust or the Subadministrator,
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 the Subadministrator, 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 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
Trust does not elect to assume the defense of any such suit, or in case the
Subadministrator does not approve of counsel chosen by the Trust 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 Trust, the Trust
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 Trust or of
counsel, who may be counsel for the Trust 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 Trust 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.
(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 Trust, 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, Trust 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 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 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 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 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 Trust's Trustees; (t) compensation of the Trust'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 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 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 Trust 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 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 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
Trust 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 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 date on which the Trust'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 Trust. Upon receiving notice of termination by the
Subadministrator, the Trust shall use its best efforts to obtain a successor
subadministrator. Upon receipt of written notice from the Trust 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 Trust and the Subadministrator, the provisions of
Sections 4 and 6 hereof shall continue in full force and effect.
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 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, fund, firm,
individual or association.
SECTION 9. COOPERATION WITH INDEPENDENT ACCOUNTANTS. The
Subadministrator shall cooperate 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 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
Trust 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 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 the Subadministrator 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 the Subadminstrator's rights or claims relate
in settlement of such rights or claims, and not to the Trustees of the Trust 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 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)
--------------------------------
FORUM ADMINISTRATIVE SERVICES, LIMITED LIABILITY COMPANY
--------------------------------
<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
Schroder Greater China Fund
SCHRODER CAPITAL FUNDS (DELAWARE)
SUBADMINISTRATION AGREEMENT
APPENDIX B
SUBADMINISTRATION FEES
Fee As % of the Average Annual
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 Greater China Fund [0.10%]
Schroder International Smaller Companies Fund,
Schroder International Bond Fund, and
Schroder Emerging Markets Fund 0.075%
(a) The minimum subadministration 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)(e)
SCHRODER CAPITAL FUNDS (DELAWARE)
Transfer Agency and Services Agreement
This Transfer Agency and Services Agreement (the "Agreement") dated as
of the 9th day of December, 1997, by and between Schroder Capital Funds
(Delaware), a business trust organized under the laws of the State of Delaware,
with its principal office and place of business at Two Portland Square,
Portland, Maine 04101 (the "Trust"), and Forum [Shareholder Services, LLC], a
Delaware corporation with its principal office and place of business at Two
Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets, and is authorized to divide those series into
separate 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 13, 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"); and
WHEREAS, the Trust on behalf of the Funds desires to appoint Forum as
its transfer agent and dividend disbursing agent and Forum desires to accept
such appointment;
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) Appointment. The Trust, on behalf of the Funds, hereby appoints
Forum to act as, and Forum agrees to act as: (i) transfer agent for the
authorized and issued shares of beneficial interest of the Trust representing
interests in each of the respective Funds and Classes thereof ("Shares"); (ii)
dividend disbursing agent; and (iii) agent in connection with any accumulation,
open-account or similar plans provided to the registered owners of Shares of any
of the Funds ("Shareholders") and set out in the currently effective
prospectuses and statements of additional information of the applicable Fund,
including, without limitation, any periodic investment plan or periodic
withdrawal program.
(b) Document Delivery. 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 (the "Registration Statement") filed with the U.S. Securities
and Exchange Commission ("SEC") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Investment Company Act of 1940, as
amended (the "1940 Act"); (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"); (iv) each current plan of
distribution or similar document adopted by the Trust under Rule 12b-1 under the
1940 Act ("Plan") and each current shareholder service plan or similar document
adopted by the Trust ("Service Plan"); and (v) all procedures adopted by the
Trust with respect to the Funds (i.e., repurchase agreement procedures), and the
Trust shall promptly furnish Forum with all amendments of or supplements to the
foregoing. The Trust 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) Services. Forum agrees that in accordance with procedures
established from time to time by agreement between the Trust on behalf of each
of the Funds, as applicable, and Forum, Forum will perform the following
services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account
or similar plans (including without limitation any periodic investment
plan or periodic withdrawal program) that are customary for open-end
management investment companies including: (A) maintaining all
Shareholder accounts; (B) preparing Shareholder meeting lists; (C)
mailing proxies to Shareholders; (D) mailing Shareholder reports and
prospectuses to current Shareholders; (E) withholding taxes on U.S.
resident and non-resident alien accounts; (F) preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required by
federal authorities with respect to distributions for Shareholders; (G)
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts; (H) preparing and
mailing activity statements for Shareholders; and (I) providing
Shareholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian") or, in the case of a
Fund operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of
a Fund operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests; (v) as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay the redemption
proceeds as required by the prospectus pursuant to which the redeemed
Shares were offered and as instructed by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the
Trust with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or
destroyed upon receipt by Forum of indemnification satisfactory to
Forum and protecting Forum and the Trust and, at the option of Forum,
issue replacement certificates in place of mutilated share certificates
upon presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Trust and provide periodic reporting to
the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and
statements to the Trust and Shareholders as to the
foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as
amended (the "1934 Act") a record of the total number of Shares of the
Trust, each Fund and each Class thereof, that are authorized, based
upon data provided to it by the Trust, and are issued and outstanding
and provide the Trust on a regular basis a report of the total number
of Shares that are authorized and the total number of Shares that are
issued and outstanding; and
(xiii) provide a system which will enable the Trust to calculate the
total number of Shares of each Fund and Class thereof sold in each
State.
(b) Other Services. Forum shall provide the following additional
services on behalf of the Trust and such other services agreed to in writing by
the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States; and
(ii) oversee the activities of proxy solicitation firms and coordinate
the tabulation of proxy and shareholder meeting votes.
(c) Blue Sky Matters. The Trust or its administrator or other agent (i)
shall identify to Forum in writing those transactions and assets to be treated
as exempt from reporting for each state and territory of the United States and
for each foreign jurisdiction (collectively "States"); and (ii) shall monitor
the sales activity with respect to Shareholders domiciled or resident in each
State. The responsibility of Forum for the Trust's State registration status is
solely limited to the reporting of transactions to the Trust, and Forum shall
have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which functions shall be the sole responsibility of the
Trust or its administrator or other agent.
(d) Safekeeping. Forum shall establish and maintain facilities and
procedures reasonably acceptable to the Trust for the safekeeping, control,
preparation and use of share certificates, check forms, and facsimile signature
imprinting devices. Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of all records maintained by
Forum pursuant to this Agreement.
(e) Cooperation With Accountants. Forum shall cooperate 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.
(f) Responsibility for Compliance With Law. Except with respect to
Forum's duties as set forth in this Section 2 and 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 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 3. RECORDKEEPING
(a) Predecessor Records. Prior to the commencement of Forum's
responsibilities under this Agreement, if applicable, the Trust shall deliver or
cause to be delivered over to Forum: (i) an accurate list of Shareholders of the
Trust, showing each Shareholder's address of record, number of Shares owned and
whether such Shares are represented by outstanding share certificates; and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by Forum under this Agreement
(collectively referred to as the "Materials"). The Trust shall on behalf of each
applicable Fund or Class indemnify and hold Forum harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any error, omission, inaccuracy or
other deficiency of the Materials, or out of the failure of the Trust to provide
any portion of the Materials or to provide any information in the Trust's
possession or control reasonably needed by Forum to perform the services
described in this Agreement.
(b) Recordkeeping. Forum shall keep records relating to the services to
be performed under this Agreement, in the form and manner as it may deem
advisable and as required by applicable law. To the extent required by Section
31 of the 1940 Act, and the rules thereunder, Forum agrees that all such records
prepared or maintained by Forum relating to the services to be performed by
Forum under this Agreement are the property of the Trust and will be preserved,
maintained and made available in accordance with Section 31 of the 1940 Act and
the rules thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Trust's request. The Trust and the Trust's authorized
representatives shall have access to Forum's records relating to the services to
be performed under this Agreement at all times during Forum's normal business
hours. Upon the reasonable request of the Trust, copies of any such records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives.
(c) Confidentiality of Records. Forum and the Trust (the "disclosing
party") agree that all books, records, information, and data pertaining to the
business of the other party (the "other party") that are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as: (i) may be required by law; or (ii) as the other party may agree in writing
in advance of disclosure by the disclosing party.
(d) Inspection of Records by Others. In case of any requests or demands
for the inspection of the Shareholder records of the Trust, 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 4. ISSUANCE AND TRANSFER OF SHARES
(a) Issuance of Shares. Forum shall make original issues of Shares of
each Fund and Class thereof in accordance with the Trust's then current
prospectus only upon receipt of: (i) 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 Trust's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Trust of an appropriate notice with the SEC, as required by
Section 24 of the 1940 Act or the rules thereunder. If the opinion described in
(iv) above is contingent upon a filing under Section 24 of the 1940 Act, the
Trust shall indemnify Forum for any liability arising from the failure of the
Trust to comply with that section or the rules thereunder.
(b) Transfer of Shares. Transfers of Shares of each Fund and Class
thereof shall be registered on the Shareholder records maintained by Forum. In
registering transfers of Shares, Forum may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of Forum's counsel, protect Forum and the Trust 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, Forum will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) Certificates. The Trust shall furnish to Forum a supply of blank
share certificates of each Fund and Class thereof and, from time to time, will
renew such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
by the Organic Documents of the Trust and, if required by the Organic Documents,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) Endorsement; Transportation. New Share certificates shall be issued
by Forum upon surrender of outstanding Share certificates in the form deemed by
Forum to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. Forum shall forward Share certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means Forum deems equally
reliable and expeditious. Forum shall not mail Share certificates in
"negotiable" form unless requested in writing by the Trust and fully indemnified
by the Trust to Forum's satisfaction.
(c) Non-Issuance of Certificates. In the event that the Trust informs
Forum that any Fund or Class thereof does not issue share certificates, Forum
shall not issue any such share certificates and the provisions of this Agreement
relating to share certificates shall not be applicable with respect to those
Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) Purchase Orders. Shares shall be issued in accordance with the
terms of a Fund's or Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic
payment in the amount designated in the instruction and (C), in the
case of an initial purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar
contract with a financial intermediary.
(b) Distribution Eligibility. Shares issued in a Fund after receipt of
a completed purchase order shall be eligible to receive distributions of the
Fund at the time specified in the prospectus pursuant to which the Shares are
offered.
(c) Determination of Federal Funds. Shareholder payments shall be
considered Federal Funds no later than on the day indicated below unless other
times are noted in the prospectus of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System,
on the second Fund Business Day following receipt of the check; and
(iii) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as Forum is credited with Federal
Funds with respect to that check.
SECTION 7. FEES AND EXPENSES
(a) Fees. For the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to pay Forum the fees set
forth in Clauses (i) and (ii) of Appendix B hereto. Fees will begin to accrue
for each Fund on the latter of the date of this Agreement or the date of
commencement of operations of the Fund. If fees 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) Expenses. 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 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.
(c) Payment. All fees and reimbursements are payable in arrears on a
monthly basis and the Trust, on behalf of the applicable Fund, agrees to pay all
fees and reimbursable expenses within five (5) business days following receipt
of the respective billing notice.
SECTION 8. REPRESENTATIONS AND WARRANTIES
(a) Representations and Warranties of Forum. Forum represents and
warrants to the Trust that: (i) It is a corporation duly organized and
existing and in good standing under the laws of the State of Delaware.
(ii) It is duly qualified to carry on its business in the
State of Maine.
(iii) It is empowered under applicable laws and by its Article of
Incorporation and Bylaws to enter into this Agreement and perform its
duties under this Agreement.
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(v) It has access to the necessary facilities, equipment, and personnel
to perform its duties and obligations under this Agreement.
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
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.
(vii) It is registered as a transfer agent under Section 17A of the
1934 Act.
(b) Representations and Warranties of the Trust. The Trust represents
and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into this Agreement and perform its duties under this
Agreement.
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(iv) It is an open-end management investment company registered under
the 1940 Act.
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust 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.
(vi) A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate State securities
law filings have been made and will continue to be made, with respect
to all Shares of the Funds and Classes of the Trust being offered for
sale.
SECTION 9. PROPRIETARY INFORMATION
(a) Proprietary Information of Forum. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust agrees
to treat all Proprietary Information as proprietary to Forum and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(b) Proprietary Information of the Trust. Forum acknowledges that the
Shareholder list and all information related to Shareholders furnished to Forum
by the Trust or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Trust. In no event shall Proprietary Information be
deemed Customer Data. Forum agrees to treat all Customer Data as proprietary to
the Trust and further agrees that it shall not divulge any Customer Data to any
person or organization except as may be provided under this Agreement, or as may
be required under applicable law, or as may be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) Indemnification of Forum. Forum shall not be responsible for, and
the Trust shall on behalf of each applicable Fund or Class thereof indemnify and
hold Forum harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without gross negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's gross
negligence or willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors
of information, records, documents or services which have been
prepared, maintained or performed by the Trust or any other person or
firm on behalf of the Trust, including but not limited to any previous
transfer agent or registrar;
(iv) the reasonable reliance on, or the carrying out by Forum or its
agents or subcontractors of, any instructions or requests of the Trust
on behalf of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or
regulations of any State that such Shares be registered in such State
or in violation of any stop order or other determination or ruling by
any federal agency or any State with respect to the offer or sale of
such Shares in such State.
(b) Indemnification of Trust. Forum shall indemnify and hold the Trust
and each Fund or Class thereof harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by Forum as a result of Forum's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(c) Reliance. At any time Forum may apply to any officer of the Trust
for instructions, and may consult with legal counsel to the Trust or to Forum
with respect to any matter arising in connection with the services to be
performed by Forum under this Agreement, and Forum and its agents or
subcontractors shall not be liable and shall be indemnified by the Trust on
behalf of the applicable Fund for any action taken or omitted by it in
reasonable reliance upon such instructions or upon the advice of such counsel.
Forum, its agents and subcontractors shall be protected and indemnified in
acting upon: (i) any paper or document furnished by or on behalf of the Trust,
reasonably believed by Forum to be genuine and to have been signed by the proper
person or persons, (ii) any instruction, information, data, records or documents
provided to Forum or its agents or subcontractors by machine readable input,
telex, CRT data entry or other similar means authorized by the Trust, and (iii)
any authorization, instruction, approval, item or set of data, or information of
any kind transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing Share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) Reliance on Electronic Instructions. If the Trust has the ability
to originate electronic instructions to Forum in order to: (i) effect the
transfer or movement of cash or Shares; or (ii) transmit Shareholder information
or other information, then in such event Forum shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by Forum from time to time.
(e) Use of Fund/SERV and Networking. The Trust has authorized, or in
the future may authorize, Forum to act as a "Mutual Fund Services Member" for
the Trust or various Funds. Fund/SERV and Networking are services sponsored by
the National Securities Clearing Corporation ("NSCC") and as used herein have
the meanings as set forth in the then current edition of NSCC Rules and
Procedures published by NSCC or such other similar publication as may exist from
time to time. The Trust shall indemnify and hold Forum harmless from and against
any and all losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liability arising directly or indirectly out of or attributed to
any action or failure or omission to act by NSCC.
(f) Notification of Claims. In order that the indemnification
provisions contained in this Section shall apply, upon the assertion of a claim
for which either party may be required to indemnify the other, the party seeking
indemnification (the "Indemnitee") shall promptly notify in writing the other
party (the "Indemnitor") of such assertion, and shall keep the other party
advised with respect to all developments concerning such claim. The Indemnitor
may assume the defense of any suit brought to enforce any claim brought against
the Indemnitee and may retain counsel of good standing chosen by the Indemnitor
and approved by the Indemnitee, which approval shall not be withheld
unreasonably. The Indemnitor shall advise the Indemnitee in writing that it will
assume the defense of the suit and retain counsel within ten (10) days of
receipt of the notice of the claim. If the Indemnitor assumes the defense of any
such suit and retains counsel, the defendants shall bear the fees and expenses
of any additional counsel that they retain. If the Indemnitor does not assume
the defense of any such suit, or if the Indemnitee does not approve of counsel
chosen by the Indemnitor or has been advised that it may have available defenses
or claims that are not available to or conflict with those available to the
Indemnitor, the Indemnitor will reimburse any Indemnitee named as defendant in
such suit for the reasonable fees and expenses of any counsel that person
retains. The Indemnitee shall in no case confess any claim or make any
compromise in any case in which the Indemnitor may be required to indemnify it
except with the Indemnitor's prior written consent, which consent shall not be
unreasonably withheld.
SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION
(a) Effectiveness. This Agreement shall become effective with respect
to each Fund or Class on December 9, 1997. 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 any of the Funds.
(b) Duration. 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) Termination. 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. Any termination shall be effective as of the date specified in the
notice. Upon notice of termination of this Agreement by either party, Forum
shall promptly transfer to the successor transfer agent the original or copies
of all books and records maintained by Forum 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 transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
(d) Survival. The obligations of Sections 7, 9 and 10 shall
survive any termination of this -------- Agreement.
SECTION 12. 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 and such series or classes subject to this
Agreement.
SECTION 13. ASSIGNMENT. Except as otherwise provided in this Agreement,
neither this Agreement nor any rights or obligations under this Agreement may be
assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns. Forum may, without further
consent on the part of the Trust, subcontract for the performance hereof with
any entity, including affiliated persons of Forum; provided however, that Forum
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as Forum is for its own acts and omissions.
SECTION 14. 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 or any transportation medium, communication system or power
supply.
SECTION 15. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS. 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 16. TAXES. Forum 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 Trust or any Shareholder or any purchase of Shares,
excluding taxes assessed against Forum for compensation received by it under
this Agreement.
SECTION 17. MISCELLANEOUS
(a) No Consequential Damages. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement.
(b) 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.
(c) Choice of Law. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Delaware.
(d) Entire Agreement. 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) Counterparts. 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) Severability. 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) 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.
(h) 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.
(i) Business Days. Nothing contained in this Agreement is intended to
or shall require Forum, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day (as defined in the Prospectus).
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.
(j) Distinction of Funds. 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.
(k) Nonliability of Affiliates. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
(l) Representation of Signatories. Each of the undersigned expressly
warrants and represents that he or she has full power and authority to sign this
Agreement on behalf of the party indicated and that his or her signature will
bind the party indicated to the terms hereof.
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
persons, as of the day and year first above written.
Schroder Capital Funds (Delaware)
By:
Catherine A. Mazza
Vice President
Forum Shareholder Services, LLC
By:
SCHRODER CAPITAL FUNDS (DELAWARE)
Transfer Agency and Services Agreement
Appendix A
Funds and Classes
as of December 9, 1997
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------- --------------------------------
Funds Classes
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
As of January 9, 1996
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Emerging Markets Fund Institutional Portfolio Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder International Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Latin American Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Global Asset Allocation Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder U.S. Smaller Companies Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder International Smaller Companies Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
As of November 26, 1996
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder U.S. Equity Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Emerging Markets Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder European Growth Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Asia Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Japan Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder United Kingdom Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
As of March 5, 1997
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Cash Reserves Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder International Bond Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
As of June 4, 1997
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Micro Cap Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
As of September [ ], 1998
- --------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------- --------------------------------
Schroder Greater China Fund Investor and Advisor
- --------------------------------------------------------------- --------------------------------
</TABLE>
SCHRODER CAPITAL FUNDS (DELAWARE)
Transfer Agency and Services Agreement
Appendix B
Fees and Expenses
(i) Base Fee:
$12,000 per year per Fund, plus, $12,000 per year for each additional
Class above one.
(ii) Shareholder Account Fees:
$25 per Shareholder account per year.
Shareholder account fees are based upon the number of Shareholder
accounts as of the last Fund Business Day of the prior month.
(iii) Indexing
The rates in clauses (i) and (ii) shall remain fixed through December
31, 1997. On January 1, 1998, 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.
(iv) The Trust, on behalf of the applicable Fund, shall
reimburse Forum for all out-of-pocket and ancillary expenses
in providing the services described in this Agreement,
including but not limited to the cost of (or appropriate
share of the cost of): (i) statement, confirmation, envelope
and stationary stock; (ii) share certificates; (iii)
printing of checks and drafts; (iv) postage; (v)
telecommunications; (vi) banking services (DDA account, wire
and ACH, check and draft clearing and lock box fees and
charges); (vii) NSCC Mutual Fund Service Member fees and
expenses; (viii) outside proxy solicitors and tabulators;
(ix) proxy solicitation fees; and (ix) microfilm and
microfiche. In addition, any other expenses incurred by
Forum at the request or with the consent of the Trust, will
be reimbursed by the Trust on behalf of the applicable Fund.
Exhibit (9)(g)
SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
AGREEMENT dated as of the 5th day of March, 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 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;
(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
(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.
(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
(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 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.
(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;
(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.
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.
(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:
FORUM ACCOUNTING SERVICES, LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By:
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 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
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
As of September [ ], 1998
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Schroder Greater China Fund
- ----------------------------------------------------------------------
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, Forum 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.
- 2 -
Exhibit (9)(i)
SCHRODER CAPITAL FUNDS (DELAWARE)
SHAREHOLDER SERVICE PLAN
March 15, 1996
As Amended September 17, 1996
This Shareholder Service Plan (the "Plan") is adopted by Schroder
Capital Funds (Delaware) (the "Trust") with respect to the classes of beneficial
interests of each of the Funds identified in Appendix A (individually a "Fund"
and collectively the "Funds").
SECTION 1. ADMINISTRATOR
The Trust has entered into an Administration Agreement with Schroder
Advisors Inc. ("Schroder Advisors") whereby Schroder Advisors provides certain
administrative services for the Trust and for each Fund.
SECTION 2. SERVICE AGREEMENTS; PAYMENTS
(a) Schroder Advisors is authorized to enter into Shareholder Service
Agreements (the "Agreements") with financial institutions and other persons who
provide services for and maintain shareholder accounts ("Service Providers") as
set forth in this Plan.
(b) Pursuant to the Agreements, as compensation for the services
described in Section 4 below, Schroder Advisors may pay each Service Provider,
on behalf of the Trust, a fee at an annual rate of up to 0.25% of the average
daily net assets of each Fund represented by the shareholder accounts for which
the Service Provider maintains a service relationship (the "Payments");
provided, however, that no Fund shall directly or indirectly pay any amounts,
whether Payments or otherwise, that exceed any applicable limits imposed by law
or the National Association of Securities Dealers, Inc.
(c) To the extent practicable, each Agreement shall contain a
representation by the Service Provider that any compensation payable to the
Service Provider in connection with an investment in any Fund of the assets of
its customers will (i) be disclosed by the Service Provider to its customers,
(ii) be authorized by its customers, and (iii) not result in an excessive fee to
the Service Provider.
SECTION 3. SHAREHOLDER SERVICE FEE.
Pursuant to this Plan, the Trust shall daily accrue and monthly pay
Schroder Advisors a Shareholder Service Fee for each Fund equal to the combined
Payments made by Schroder Advisors with respect to the Fund for the month.
SECTION 4. SERVICE ACTIVITIES
Service activities include (a) establishing and maintaining accounts
and records relating to clients of Service Provider; (b) answering shareholder
inquiries regarding the manner in which purchases, exchanges and redemptions of
shares of the Trust may be effected and other matters pertaining to the Trust's
services; (c) providing necessary personnel and facilities to establish and
maintain shareholder accounts and records; (d) assisting shareholders in
arranging for processing purchase, exchange and redemption transactions; (e)
arranging for the wiring of funds; (f) guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; (g) integrating periodic statements with other
shareholder transactions; and (h) providing such other related services as the
shareholder may request.
SECTION 5. AMENDMENT AND TERMINATION
(a) Any material amendment to the Plan shall be effective only upon
approval of the Board of Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined in the
Investment Company Act of 1940 (the "Disinterested Trustees"), pursuant to a
vote cast in person at a meeting called for the purpose of voting on the
amendment to the Plan.
(b) The Plan may be terminated without penalty at any time by a vote of
a majority of the Disinterested Trustees.
SCHRODER CAPITAL FUNDS (DELAWARE)
SHAREHOLDER SERVICE PLAN
Appendix A
Funds and Classes to which Shareholder Service Plan Applies
<TABLE>
<S> <C> <C>
Fund Class Date Subject to Plan
International Equity Fund Advisor Shares March 15, 1996
Schroder Emerging Markets Fund
Institutional Portfolio Advisor Shares March 15, 1996
Schroder U.S. Smaller
Companies Fund Advisor Shares March 15, 1996
Schroder Latin American Fund Advisor Shares March 15, 1996
Global Asset Allocation Fund Advisor Shares March 15, 1996
Schroder International Smaller
Companies Fund Advisor Shares March 15, 1996
Schroder U.S. Equity Fund Advisor Shares November 26, 1996
[Schroder Greater China Fund Advisor Shares Spetember [ ], 1998]
</TABLE>
Exhibit (15)(a)
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 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.
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
<TABLE>
<S> <C>
Fee as a % of each Fund's
Average Daily Net Assets
Fund Name* Attributable to Advisor Shares
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%
[Schroder Greater China Fund 0.50%]
</TABLE>
* The Plan has been approved by the Trust with respect to the Advisor Share
class of each Fund.
Exhibit 18(a)
SCHRODER CAPITAL FUNDS (DELAWARE)
Multiclass (Rule 18f-3) Plan
March 15, 1996, as revised November 26, 1996,
March 5, 1997 and June 4, 1997
This Plan is adopted by Schroder Capital Funds (Delaware) (the "Trust")
pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the "Act") in
order to document the separate arrangements and expense allocations of each
class (each, a "Class") of shares of beneficial interest ("Shares") of the
series of the Trust specified on Schedule A attached hereto (each, a "Multiclass
Fund").
Section 1. Class Designations
For each Multiclass Fund, the types of Classes are "Investor Shares"
and "Advisor Shares." Each Class has a different arrangement for shareholder
services or distribution or both, as follows:
(a) Investor Shares. Are offered by the related Multiclass Fund with no
sales charges or distribution expenses, provided that Investor Shares of
Schroder Emerging Markets Fund Institutional Portfolio are offered subject to a
purchase charge of 0.50% and a redemption charge of 0.50%. The investment
minimum for Investor Shares of each Multiclass Fund generally is higher than
that for Advisor Shares for the Multiclass Fund, subject to reduction by
Schroder Fund Advisors Inc. ("Schroder Advisors"), the Trust's administrator, or
Forum Administrative Services, Limited Liability Company ("Forum"), the Trust's
sub-administrator.
(b) Advisor Shares. Are offered by the related Multiclass Fund with no
sales charges, provided that Advisor Shares of Schroder Emerging Markets Fund
Institutional Portfolio are offered subject to a purchase charge of 0.50% and a
redemption charge of 0.50%; and further provided that Advisor Shares of each
Multiclass Funs are sold subject to an asset-based sales charge under a
distribution plan adopted in accordance with Rule 12b-1 under the Act and,
further, Advisor Shares of each Multiclass Fund are sold subject to a servicing
fee under a Shareholder Service Plan, each as described in the applicable
prospectus. The investment minimum for Advisor Shares of each Multiclass Fund is
generally lower than that for Investor Shares for the Multiclass Fund.
Section 2. Voting
Each Class shall have exclusive voting rights on any matter submitted
to a shareholder vote that relates solely to the Class' arrangement for
shareholder service or distribution, and each Class shall have separate voting
rights with respect to any matter submitted to a shareholder vote in which the
interests of one Class differ from the interests of another Class.
Section 3. Expenses
(a) Distribution Expenses. All expenses incurred under a Class's
distribution plan adopted in accordance with Rule 12b-1 under the Act, if any,
shall be allocated to that Class.
(b) Shareholder Service Expenses. All expenses incurred under a Class's
shareholder service plan, if any, shall be allocated to that Class.
(c) Other Class Expenses. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with expenses under
Sections 3(a) and 3(b), "Class Expenses"), shall be allocated to the Class that
incurred the expenses to the extent practicable:
(i) Administration and transfer agent fees and expenses; (ii)
Litigation, legal and audit fees; (iii) State and foreign securities
registration fees; (iv) Shareholder report expenses; (v) Trustee fees
and expenses; (vi) Preparation, printing and related fees and expenses
for proxy statements and, with respect to
current shareholders, prospectuses and statements of
additional information; (vii) Expenses incurred in connection with
shareholder meetings; and (viii) Subject to approval by the Trustees,
such other fees and expenses as Schroder Advisors or
Forum, pursuant to Rule 18f-3, deems to be allocable to
specified Classes.
(d) Class Expense Allocations. Class Expenses are to be borne solely by
the Class to which they relate. Item (i) of Section 3(c) in its entirety is
incurred by each Multiclass Fund on a Class-by-Class basis and, accordingly, is
wholly allocated to the specific Class to which it relates. All fees of a
Multiclass Fund's investment adviser and custodian and administrator and all
portfolio based fees of a Multiclass Fund's fund accountant are incurred by a
Multiclass Fund and not by an individual Class of the Fund. All other items in
Section 3(c) are allocated to a specific Class to the extent they are
attributable to each Class in different amounts.
Section 4. Other Allocations and Waivers/Reimbursements
(a) Expenses Applicable to More than One Fund. Expenses (other than
Class Expenses) incurred by the Trust on behalf of one series of the Trust,
including the Multiclass Funds (each, a "Fund"), shall be allocated to that
Fund, and expenses (other than Class Expenses) incurred by the Trust on behalf
of more than one Fund shall be allocated among the Funds that incurred the
expenses based on the net asset values of the Funds in relation to the net asset
value of all Funds to which the expense relates.
(b) Other Allocations. Income, realized and unrealized capital gain and
loss, and other expenses (excluding Class Expenses related to a Multiclass Fund)
shall be allocated to each Class on the basis of the net asset value of that
Class in relation to the net asset value of the Multiclass Fund.
(c) Waivers and Reimbursements. Nothing in this Plan shall be construed
as limiting the ability of any person to waive any fee paid by a Fund or Class
to that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a de facto modification of the fees provided for in
the Fund's various service agreements.
Section 5. Exchanges
Shareholders of a Class may exchange their Shares for Shares of the
same Class of any other Fund in accordance with Section 11(a) of the Act, the
rules thereunder and, if permitted by each Multiclass Fund pursuant to its
then-current prospectus, the requirements of such prospectus.
Section 6. Amendments and Board Review
(a) Non-Material Amendments. Non-material amendments to this
Plan may be made at any time by Schroder Advisors.
(b) Material Amendments. Material amendments to this Plan may only be
made by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined by the Act, upon
a finding that the amendment is in the best interests of the Classes and/or Fund
affected by the amendment and of the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.
(c) Board Review. The Board, including a majority of those Trustees who
are not interested persons of the Trust as defined in the Act, shall review
periodically review: (i) this Plan for its continuing appropriateness; and (ii)
any fee waivers and expense reimbursements to determine that the Multiclass
Funds are in compliance with Section 4(c) of the Plan.
<PAGE>
Schedule A
Schroder Capital Funds (Delaware) Funds
to which the Multiclass Plan Applies
<TABLE>
<S> <C>
Fund Date Subject to Plan
Schroder International Fund March 15, 1996
Schroder Emerging Markets Fund
Institutional Portfolio March 15, 1996
Schroder U.S. Smaller Companies Fund March 15, 1996
Schroder Latin American Fund March 15, 1996
Schroder Global Asset Allocation Fund March 15, 1996
Schroder International Smaller
Companies Fund March 15, 1996
Schroder U.S. Equity Fund November 26, 1996
Schroder Emerging Markets Fund November 26, 1996
Schroder European Growth Fund November 26, 1996
Schroder Japan Fund November 26, 1996
Schroder Asia Fund November 26, 1996
Schroder United Kingdom Fund November 26, 1996
Schroder International Bond Fund March 5, 1997
Schroder Cash Reserves Fund March 5, 1997
Schroder Micro Cap Fund June 4, 1997
</TABLE>
Other Exhibits
SCHRODER CAPITAL FUNDS (DELAWARE)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the Hon. David N. Dinkins
constitutes and appoints Thomas G. Sheehan, Cheryl O. Tumlin, 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.
Hon. David N. Dinkins
Dated: June ___, 1998
SCHRODER CAPITAL FUNDS (DELAWARE)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Peter S. Knight constitutes and
appoints Thomas G. Sheehan, Cheryl O. Tumlin, 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.
Peter S. Knight
Dated: June ___, 1998
