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As filed with the Securities and Exchange Commission on May 7, 1999
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.73
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 54
SCHRODER CAPITAL FUNDS (DELAWARE)
(formerly Schroder Capital Funds, Inc.)
Two Portland Square
Portland, Maine 04101
207-879-1900
Dana A. Lukens, 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
Carin Muhlbaum, 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)
[X] 60 days after filing pursuant to Rule 485, paragraph (a)(1)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(1)
[ ] 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.
Title of Series Being Registered: Schroder Greater China Fund.
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
PROSPECTUS
SCHRODER GREATER CHINA FUND
INVESTOR SHARES
May 10, 1999
This prospectus describes Schroder Greater China Fund, a series of shares of
Schroder Capital Funds (Delaware). The Fund seeks long-term growth of capital.
The Fund invests primarily in common stocks and securities of issuers domiciled
or doing business in China, Hong Kong SAR, and Taiwan. The Trust offers Investor
Shares of the Fund in this prospectus.
Schroder Capital Management International Inc. ("Schroder") manages the Fund.
You can call (800) 290-9826 to find out more about the Fund and other funds in
the Schroder family.
The prospectus explains what you should know about the Fund before you invest.
Please read it carefully.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY INFORMATION.................................................3
FEES AND EXPENSES...................................................5
RISKS AND OTHER INVESTMENT STRATEGIES...............................6
MANAGEMENT OF THE FUND.............................................10
HOW THE FUND'S SHARES ARE PRICED...................................11
HOW TO BUY SHARES..................................................11
HOW TO SELL SHARES.................................................13
EXCHANGES..........................................................14
DIVIDENDS AND DISTRIBUTIONS........................................15
TAXES..............................................................15
YEAR 2000 DISCLOSURE...............................................16
2
<PAGE>
SUMMARY INFORMATION
This summary identifies the investment objective, principal investment
strategies, and principal risks of Schroder Greater China Fund. The Fund offers
Advisor Shares, which have lower investment minimums and higher fees and
expenses, in a separate prospectus. The Fund's investment objective may not be
changed without shareholder approval. The investment policies of the Fund may,
unless otherwise specifically stated, be changed by the Board of Trustees of
Schroder Capital Funds (Delaware) without a vote of the shareholders. It is
possible to lose money on investments in the Fund.
SCHRODER GREATER CHINA FUND
o INVESTMENT OBJECTIVE. To seek long-term growth of capital.
o PRINCIPAL INVESTMENTS. The Fund normally invests at least 65% of its
total assets in securities of companies located in China, Hong Kong SAR, and
Taiwan. Schroder will consider an issuer of securities to be located in China,
Hong Kong SAR, or Taiwan if it is organized under the laws of China, Hong Kong
SAR, or Taiwan (or any political subdivision thereof); its primary securities
trading market is in China Hong Kong SAR, 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, Hong Kong SAR, or Taiwan; or
at least 50% of its assets are situated in China, Hong Kong SAR, or Taiwan. The
Fund is non-diversified.
o INVESTMENT STRATEGIEE. The Fund invests in a variety of equity
securities, including common and preferred stocks, securities convertible into
common and preferred stocks, and warrants to purchase common or preferred
stocks.
The Fund invests in issuers that Schroder believes offer the potential
for capital growth. In identifying candidates for investment, Schroder considers
a variety of factors, including the issuer's likelihood of above average
earnings growth, the securities' attractive relative valuation, and whether the
issuer has any proprietary advantages. In addition, Schroder takes into account
the risk of local political and/or economic instability and the liquidity of
local markets. Securities generally are sold when they reach fair valuation or
when significantly more attractive investment candidates become available.
The Fund may also do the following:
0 Engage in a variety of transactions involving the use of
options and futures contracts.
0 Engage in currency exchange transactions relating to Chinese
and Taiwanese currencies.
0 Invest in closed-end investment companies.
o PRINCIPAL RISKS.
0 INVESTMENT IN CHINA, HONG KONG SAR, AND TAIWAN. Investment
in China, Hong Kong SAR, and Taiwan entails significant
risks. China is a communist country, and there can be no
assurance that economic or market reforms that have occurred
3
<PAGE>
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 issuers organized or doing
business in China. Additionally, 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.
China gained control of Hong Kong in July 1997. Changes in
Hong Kong's political, economic, or market conditions as a
result of China's control could adversely affect the values
of the Fund's investments in issuers organized or doing
business in Hong Kong.
Continuing hostility between China and Taiwan, over which
China continues to claim sovereignty, may have an adverse
impact on the values of the Fund's investments in either
China or Taiwan, or make investment in either China or
Taiwan impracticable or impossible. The escalation of
hostility between China and Taiwan would likely have a
significant adverse impact on the values of the Fund's
investments in both countries.
0 FOREIGN SECURITIES. Investments in foreign securities entail
risks not present in domestic investments including, among
other things, risks related to political or economic
instability, currency exchange and taxation.
0 SMALL COMPANIES. The Fund may invest a substantial portion
of its assets in small companies (i.e., companies with
market capitalizations below $1 billion), which tend to be
more vulnerable to adverse developments than larger
companies. Small companies may have limited product lines,
markets, or financial resources, or may depend on a limited
management group. Their securities may trade infrequently
and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities
of larger, more widely traded companies. Also, there may be
less publicly available information about small companies or
less market interest in their securities as compared to
larger companies, and it may take longer for the prices of
the securities to reflect the full value of their issuers'
earnings potential or assets.
0 GEOGRAPHIC CONCENTRATION. Because the Fund's investments
will be concentrated in securities of issuers located in
China, Hong Kong SAR, and Taiwan, the Fund will be more
susceptible to the political and economic developments and
market fluctuations in those countries than if it invested
in a geographically more diversified portfolio.
0 NON-DIVERSIFIED FUND. Because the Fund is "non-diversified",
it generally invests its assets in a more limited number of
4
<PAGE>
issuers than a diversified investment company. As a result,
its risk of loss increases if the market value of a security
declines or if an issuer is not able to meet its
obligations.
0 EQUITY SECURITIES. Another risk of investing in the Fund is
the risk that the value of the equity securities in the
portfolio will fall, or will not appreciate as anticipated
by Schroder, due to factors that adversely affect markets in
general or particular companies in the portfolio.
0 DEBT SECURITIES. The Fund invests in debt securities, which
are subject to market risk (the fluctuation of market value
in response to changes in interest rates) and to credit
risks (the risk that the issuer may become unable or
unwilling to make timely payments of principal and
interest).
FEES AND EXPENSES
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU INVEST IN
INVESTOR SHARES OF THE FUND. THE FEES AND EXPENSES HAVE BEEN ESTIMATED BECAUSE
THE FUND HAD NOT COMPLETED A FULL FISCAL YEAR AS OF DECEMBER 31, 1998.
SHAREHOLDER FEES (paid directly from your investment):
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Load None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees(1) 1.15%
Distribution (12b-1) Fees None
Other Expenses 1.09%
Total Annual Fund Operating Expenses 2.24%
Fee Waiver and/or
Expense Limitation(2) 0.24%
Net Expenses(2) 2.00%
- --------------------------
(1) Management Fees shown above include both investment advisory fees and fees
paid for Fund administration.
(2) The Net Expenses shown above reflect the effect of contractually imposed
expense limitations and/or fee waivers in effect through October 31, 1999 on
Total Annual Fund Operating Expenses.
5
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Investor Shares of the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment earns a 5% return
each year and that the Fund's Total Annual Fund Operating Expenses remain the
same as those set forth above (absent the noted Fee Waiver and/or Expense
Limitation). Your actual costs may be higher or lower. Based on these
assumptions, your costs would be*:
1 Year 3 Years
------ -------
$227 $700
- --------------
*Assuming that the Fund's operating expenses remain the same as the Net Expenses
set forth above, based on the other assumptions described above, your costs
would be as follows for 1 year and 3 years, respectively: $203 and $700.
RISKS AND OTHER INVESTMENT STRATEGIES
The Fund may not achieve its objective in all circumstances. The
following provides more detail about the Fund's principal risks and the
circumstances which could adversely affect the value of the Fund's shares or its
total return. It is possible to lose money by investing in the Fund.
RISKS OF INVESTING IN THE FUND
o FOREIGN SECURITIES. There is no limit on the amount of the Fund's
assets that may be invested in foreign securities. Investments in foreign
securities entail certain risks in addition to those discussed above. There may
be a possibility of nationalization or expropriation of assets, confiscatory
taxation, political or financial instability, and diplomatic developments that
could affect the value of the Fund's investments in certain foreign countries.
Since foreign securities normally are denominated and traded in foreign
currencies, the values of the Fund's assets may be affected favorably or
unfavorably by currency exchange rates, currency exchange control regulations,
foreign withholding taxes, and restrictions or prohibitions on the repatriation
of foreign currencies. There may be less information publicly available about a
foreign issuer than about a U.S. issuer, and foreign issuers are not generally
subject to accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some foreign issuers
are less liquid and at times more volatile than securities of comparable U.S.
issuers. Foreign brokerage commissions and other fees are also generally higher
than in the United States. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Fund's assets held abroad) and expenses not present in
the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign
countries may be more limited than those available to investors in the United
States or in other foreign countries. The willingness and ability of foreign
6
<PAGE>
governmental entities to pay principal and interest on government securities
depends on various economic factors, including the issuer's balance of payments,
overall debt level, and cash-flow considerations related to the availability of
tax or other revenues to satisfy the issuer's obligations. If a foreign
governmental entity defaults on its obligations on the securities, the Fund may
have limited recourse available to it. The laws of some foreign countries may
limit the Fund's ability to invest in securities of certain issuers located in
those countries.
If the Fund purchases securities denominated in foreign currencies, a
change in the value of any such currency against the U.S. dollar will result in
a change in the U.S. dollar value of the Fund's assets and the Fund's income
available for distribution. In addition, although at times most of the Fund's
income may be received or realized in these currencies, the Fund will be
required to compute and distribute its income in U.S. dollars. As a result, 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 to shareholders,
the Fund could be required to liquidate portfolio securities to make such
distributions. Similarly, if the Fund incurs an expense in U.S. dollars and the
exchange rate declines before the expense is paid, the Fund would have to
convert a greater amount of U.S. dollars to pay for the expense at that time
that it would have had to convert at the time the Fund incurred the expense. 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.
Special tax considerations apply to foreign securities. In determining
whether to invest in debt securities of foreign issuers, Schroder considers the
likely impact of foreign taxes on the net yield available to the Fund and its
shareholders. Income received by the Fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Any such taxes paid by the Fund will reduce its income
available for distribution to shareholders. In certain circumstances, the Fund
may be able to pass through to shareholders credits for foreign taxes paid.
o RISKS OF SMALLER CAPITALIZATION COMPANIES. The Fund may invest all or
a substantial portion of its assets in companies that are smaller and less
well-known than larger, more widely held companies. Small and mid-cap companies
may offer greater opportunities for capital appreciation than larger companies,
but may also pose certain special risks. They are more likely than larger
companies to have limited product lines, markets or financial resources, or to
depend on a small, inexperienced management group. Securities of smaller
companies may trade less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other securities.
They may also trade in the over-the-counter market or on a regional exchange, or
may otherwise have limited liquidity. These securities may therefore be more
vulnerable to adverse developments than securities of larger companies and the
Fund may have difficulty establishing or closing out their securities positions
in smaller companies at prevailing market prices. Also, there may be less
publicly available information about smaller companies or less market interest
in their securities as compared to larger companies, and it may take longer for
the prices of the securities to reflect the full value of their issuer's
earnings potential or assets.
o DEBT SECURITIES. The Fund may invest in debt securities, which are
subject to the risk of fluctuation of market value in response to changes in
interest rates and the risk that the issuer may default on the timely payment of
principal and interest.
7
<PAGE>
OTHER INVESTMENT STRATEGIES AND TECHNIQUES
In addition to the principal investment strategies described in the
Summary Information section above, the Fund may at times use the strategies and
techniques described below, which involve certain special risks. This Prospectus
does not attempt to disclose all of the various investment techniques and types
of securities that Schroder might use in managing the Fund. As in any mutual
fund, investors must rely on the professional investment judgment and skill of
the Fund's adviser.
o FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange
rates will affect the U.S. dollar value of Fund assets, including 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 political, economic and financial conditions, which may be
difficult to predict. The Fund may engage in currency exchange transactions to
protect against unfavorable fluctuations in exchange rates.
In particular, the Fund may enter into foreign currency exchange
transactions to protect against a change in exchange rates 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").
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"). 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 Schroder believes correlates to the value of
the first currency.
Schroder may buy or sell currencies in "spot" or forward transactions.
"Spot" transactions are executed contemporaneously on a cash basis at the
then-prevailing market rate. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date (which may be any fixed
number of days from the date of the contract agreed upon by the parties) at a
price set at the time of the contract. Forward contracts do not eliminate
fluctuations in the underlying prices of securities and expose the Fund to the
risk that the counterparty is unable to perform.
The Fund incurs foreign exchange expenses in converting assets from one
currency to another. Although there is no limit on the amount of the Fund's
assets that may be invested in foreign currency exchange and foreign currency
forward contracts, the Fund may engage in foreign currency exchange transactions
only to the extent necessary to effect the hedging transactions described above.
Suitable foreign currency hedging transactions may not be available in all
circumstances and there can be no assurance that the Fund will utilize hedging
transactions at any time.
O SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The
Fund may lend portfolio securities to broker-dealers up to one-third of the
Fund's total assets. The Fund may also enter into repurchase agreements without
limit. These transactions must be fully collateralized at all times, but involve
some risk to the Fund if the other party should default on its obligation and
8
<PAGE>
the Fund is delayed or prevented from recovering the collateral. The Fund may
also enter into contracts to purchase securities for a fixed price at a future
date beyond customary settlement time, which may increase its overall investment
exposure and involves a risk of loss if the value of the securities declines
prior to the settlement date.
o INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in
other investment companies or pooled vehicles, including closed-end funds, that
are advised by Schroder or its affiliates or by unaffiliated parties. When
investing in another investment company, the Fund may pay a premium above such
investment company's 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 advisory and administrative fees, and would at the
same time continue to pay its own fees and expenses.
o DERIVATIVE INVESTMENTS. Instead of investing directly in the types of
portfolio securities described in the Summary Information, the Fund may buy or
sell a variety of "derivative" investments to gain exposure to particular
securities or markets, in connection with hedging transactions, and, to the
extent permitted by applicable law, to increase total return. These may include
options, futures, and indices, for example. Derivatives involve the risk that
they may not work as intended under all market conditions. Also, derivatives
often involve the risk that the other party to the transaction will be unable to
meet its obligations or that the Fund will be unable to close out the position
at any particular time or at an acceptable price.
O ZERO-COUPON BONDS. The Fund may invest in zero-coupon bonds.
Zero-coupon bonds are issued at a significant discount from face value and pay
interest only at maturity rather than at intervals during the life of the
security. Zero-coupon bonds allow an issuer to avoid the need to generate cash
to meet current interest payments and, as a result, may involve greater credit
risks than bonds that pay interest currently.
o 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 sales may increase the
amount of capital gains (and, in particular, short-term gains) realized by the
Fund, on which shareholders pay tax.
o TEMPORARY DEFENSIVE STRATEGIES. At times, Schroder 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, Schroder may temporarily use alternate investment strategies primarily
designed to reduce fluctuations in the value of the Fund's assets. In
implementing these "defensive" strategies, the Fund would invest in high-quality
debt securities, cash, or money market instruments to any extent Schroder
considers consistent with such defensive strategies. It is impossible to predict
when, or for how long, the Fund will use these alternate strategies. One risk of
taking such temporary defensive positions is that the Fund may not achieve its
investment objective.
o OTHER INVESTMENTS. The Fund may also invest in other types of
securities and utilize a variety of investment techniques and strategies that
are not described in this Prospectus. These securities and techniques may
subject the Fund to additional risks. Please see the Statement of Additional
9
<PAGE>
Information for additional information about the securities and investment
techniques described in this Prospectus and about additional techniques and
strategies that may be used by the Fund.
MANAGEMENT OF THE FUND
The Trust is governed by a Board of Trustees which has retained
Schroder to manage the investments of the Fund. Subject to the control of the
Trustees, Schroder also manages the Fund's other affairs and business. Schroder
has served as investment adviser to the Fund since inception.
Schroder has been an investment manager since 1962, and currently
serves as investment adviser to the Fund and a broad range of institutional
investors. As of December 31, 1998, Schroder, together with its United Kingdom
affiliate, Schroder Capital Management International Limited, had approximately
$27.1 billion in assets under management. Schroder's address is 787 Seventh
Avenue, New York, New York 10019, and its telephone number is (212) 641-3900.
o INVESTMENT ADVISORY AND ADMINISTRATION FEES PAID BY THE FUND. The Fund
pays a monthly fee at the annual rate of 0.90% of the Fund's average daily net
assets. This fee includes amounts payable to Schroder under the Fund's
Investment Advisory Agreement with Schroder and to Schroder Fund Advisors Inc.
under the Administration Agreement with Schroder Fund Advisors Inc.
o EXPENSE LIMITATIONS AND WAIVERS. In order to limit the Fund's
expenses, Schroder is contractually obligated to reduce its compensation (and,
if necessary, to pay certain other Fund expenses) until October 31, 1999 to the
extent that the Fund's total operating expenses attributable to its Investor
Shares exceed the annual rate of 2.00%.
o PORTFOLIO MANAGERS. Schroder's investment decisions for the Fund are
generally made by an investment manager or an investment team, with the
assistance of an investment committee. The following portfolio manager has had
primary responsibility for making investment decisions for the Fund, since the
years shown below. Her recent professional experience is also shown.
<TABLE>
<S> <C> <C>
Portfolio Manager Since Recent Professional Experience
- ------------------------------------- ----------------------- ---------------------------------------
Heather Crighton Inception (1998) Employed as an investment
professional at Schroder since 1993.
Ms. Crighton is a director and a
First Vice President of Schroder.
- ------------------------------------- ----------------------- ---------------------------------------
</TABLE>
10
<PAGE>
HOW THE FUND'S SHARES ARE PRICED
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 Investor Shares
outstanding. Shares are valued as of the close of trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern time) each day the Exchange is open. The
Trust expects that days, other then weekend days, that the Exchange will not be
open are New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. The Fund values its portfolio securities for which market
quotations are readily available at market value. Short-term investments that
will mature in 60 days or less are stated at amortized cost, which approximates
market value. The Fund values all other securities and assets at their fair
values as determined in accordance with procedures adopted by the Board of
Trustees. 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's shares is
calculated. Because certain of the securities in which the Fund may invest may
trade on days when the Fund does not price its Investor Shares, the net asset
value of the Fund's Investor Shares may change on days when shareholders will
not be able to purchase or redeem their Investor Shares. The net asset value of
the Fund's Investor Shares will generally differ from that of its Advisor
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 Investor Shares and
Advisor Shares.
HOW TO BUY SHARES
You may purchase Investor Shares of the Fund directly from the Trust by
completing an Account Application and sending payment by check or wire as
described below. You may obtain an Account Application from the Trust or from
Forum Shareholder Services, LLC, the Trust's Transfer Agent, P.O. Box 446,
Portland, Maine 04112, or by calling (800) 290-9826.
Investor Shares of the Fund are sold at their net asset value next
determined after the Trust receives your order. In order for you to receive the
Fund's next determined net asset value, the Trust must receive your order before
the close of trading on the New York Stock Exchange.
INVESTMENT MINIMUMS
The minimum investment for initial and additional purchases for the
Fund is as follows:
-------------------------------------- ----------------- -------------------
Initial Additional
Investment Investments
-------------------------------------- ----------------- -------------------
Regular Accounts $250,000 No minimum
-------------------------------------- ----------------- -------------------
Traditional IRAs $2,000 $250
-------------------------------------- ----------------- -------------------
The Trust is authorized to reject any purchase order.
11
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You also may meet the minimum initial investment requirement based in
cumulative purchases by means of a written Statement of Intention, expressing
your intention to invest $250,000 or more in Investor Shares of the Fund within
13 months. You may enter into a Statement of Intention in conjunction with your
initial investment in Investor Shares by completing the appropriate section of
the Account Application. Current Fund shareholders can obtain a Statement of
Intention form by contacting the Transfer Agent. The Fund reserves the right to
redeem your shares in the Fund if, at the end of the Statement of Intention
period, your account does not have a value of at least the minimum initial
investment amount.
PURCHASES BY CHECK
You may purchase shares of the Fund by mailing a check (in U.S. dollars)
payable to the Fund. Third-party checks will not be accepted.
For initial purchases, your check must be accompanied by a completed
Account Application in proper form. The Trust may request additional
documentation to evidence the authority of the person or entity making the
purchase request.
You should mail your check and your completed Account Application to:
Schroder Greater China Fund -- Investor Shares
P.O. Box 446
Portland, Maine 04112
Your payments should clearly indicate the shareholder's name and account number,
if applicable.
PURCHASES BY BANK WIRE/TELEPHONE
If you make your initial investment by wire, your order must be
preceded by a completed Account Application. Upon receipt of the Application,
the Trust will assign you an account number and your account will become active.
Wire orders received prior to the close of trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern Time) on each day the Exchange is open for
trading will be processed at the net asset value determined as of that day.
Wire orders received after that time will be processed at the net asset value
determined thereafter.
Once you have an account number, you may purchase Investor Shares by
telephoning the Transfer Agent at (800) 290-9826 to give notice that you will be
sending funds by wire, and then arranging with your bank to wire funds to the
Trust. Your purchase will not be processed until the Trust has received the
wired funds.
Federal Reserve Bank wire instructions are as follows:
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
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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.
In an effort to prevent unauthorized or fraudulent purchase or
redemption requests by telephone, the Transfer Agent will follow reasonable
procedures 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 purchase or redemption requests, but either or both
may be liable if they do not follow these procedures.
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 shareholders' new address. When an account is
deemed lost, dividends and other distributions that have been returned to the
Transfer Agent are reinvested, and the checks are canceled.
OTHER PURCHASE INFORMATION
Investor Shares of the Fund may be purchased for cash or in exchange
for securities held by the investor, subject to the determination by Schroder
that the securities are acceptable. (For purposes of determining whether
securities will be acceptable, Schroder will consider, among other things,
whether they are liquid securities of a type consistent with the investment
objectives and policies of the Fund and have a readily ascertainable value.) If
the Fund receives securities from an investor in exchange for shares of the
Fund, the Fund will under some circumstances have the same tax basis in the
securities as the investor had prior to the exchange (and the Fund's gain for
tax purposes would be calculated with regard to the investor's tax basis). Any
gain on the sale of those securities would be subject to distribution as capital
gain to all of the Fund's shareholders. Schroder reserves the right to reject
any particular investment. Securities accepted by Schroder will be valued in the
same manner as are the Trust's portfolio securities as of the time of the next
determination of the Fund's net asset value. All dividend, subscription, or
other rights which are reflected in the market price of accepted securities at
the time of valuation become the property of the Fund and must be delivered to
the Fund upon receipt by the investor. Investors may realize a gain or loss upon
the exchange for federal income tax purposes. Investors interested in purchases
through exchange should telephone Schroder at (800) 290-9826.
HOW TO SELL SHARES
You may sell your Investor Shares back to the Fund on any business day
by sending a letter of instruction or stock power form to the Trust, or by
calling the Transfer Agent at (800) 290-9826. The price you will receive for
your Investor Shares is the net asset value next determined after receipt of
your redemption request in good order. A redemption request is in good order if
it includes the exact name in which the shares are registered, the investor's
account number, and the number of shares or the dollar amount of shares to be
redeemed, and, for written requests, if it is signed exactly in accordance with
the registration form. If you hold your Investor Shares in certificate form, you
13
<PAGE>
must submit the certificates and sign the assignment form on the back of the
certificates. Signatures must be guaranteed by a bank, broker-dealer, or certain
other financial institutions. You may redeem your Investor Shares by telephone
only if you elected the telephone redemption privilege option on your Account
Application or otherwise in writing. Shares for which certificates have been
issued may not be redeemed by telephone. The Trust may require additional
documentation from shareholders that are corporations, partnerships, agents,
fiduciaries, or surviving joint owners.
The Trust will pay you for your redemptions as promptly as possible and
normally within seven days after the request for redemption is received in
writing in good order. (The Trust generally sends payment for shares the
business day after a request is received.) Under unusual circumstances, the
Trust may suspend redemptions or postpone payment for more than seven days, as
permitted by law. If you paid for your Investor Shares by check, you will not be
sent redemption proceeds until the check you used to pay for the Investor Shares
has cleared, which may take up to 15 calendar days from the purchase date.
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 the Fund's net assets during any 90-day period for any one shareholder.
If, because of your redemptions, your account balance falls below a
minimum amount set by the Trustees (presently $100,000) of the Fund, the Trust
may choose to redeem your shares in the Fund and pay you for them. You will
receive at least 30 days written notice before the Trust redeems your shares,
and you may purchase additional shares at any time to avoid a redemption. The
Trust may also redeem shares if you own shares of the 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.
The Trust may suspend the right of redemption during any period when:
(1) trading on the New York Stock Exchange is restricted or the Exchange is
closed; (2) the Securities and Exchange Commission 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 you request that your redemption proceeds be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each such signature by an eligible signature
guarantor, such as a member firm of a national securities exchange or a
commercial bank or trust company located in the United States. If you are a
resident of a foreign country, another type of certification may be required.
Please contact the Transfer Agent for more details at (800) 290-9826.
Corporations, fiduciaries, and other types of shareholders may be required to
supply additional documents which support their authority to effect a
redemption.
14
<PAGE>
EXCHANGES
You can exchange your Investor Shares of the Fund for Investor Shares
of any other fund in the Schroder family of funds at any time at their
respective net asset values. The exchange would be treated as a sale of your
Investor Shares and any gain on the exchange may be subject to federal income
tax. To exchange shares, please contact your Service Organization or, if you do
not have a Service Organization, call the Trust at (800) 290-9826.
DIVIDENDS AND DISTRIBUTIONS
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.
YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS:
-- Reinvest all distributions in additional Investor Shares of the
Fund;
-- Receive distributions from net investment income in cash while
reinvesting capital gains distributions in additional Investor
Shares of the Fund;
-- Receive distributions from net investment income in additional
Investor Shares of the Fund while receiving capital gain
distributions in cash; or
-- Receive all distributions in cash.
You can change your distribution option by notifying the Transfer Agent
in writing. If you do not select an option when you open your account, all
distributions by the Fund will be reinvested in Investor Shares of the Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.
TAXES
o TAXES ON DIVIDENDS AND DISTRIBUTIONs. The Fund intends to qualify as
a "regulated investment company" for U.S. 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.
For federal income tax purposes, distributions of investment income are
taxable as ordinary income. Taxes on distributions of capital gains are
determined by how long the Fund owned the investments that generated the gains,
rather than how long you have owned your shares. Distributions are taxable to
you even if they are paid from income or gains earned by the Fund before you
invested (and thus were included in the price you paid for your shares).
Distributions of gains from investments that the Fund owned for more than 12
months will be taxable as capital gains. Distributions of gains from investments
that the Fund owned for 12 months or less will be taxable as ordinary income.
Distributions are taxable whether you received them in cash or reinvested them
in additional shares of the Fund.
15
<PAGE>
o TAXES WHEN YOU SELL OR EXCHANGE YOUR SHARES. Any gain resulting from
the sale or exchange of your shares in the Fund will also generally be subject
to federal income or capital gains tax, depending on your holding period.
o FOREIGN TAXES. Foreign governments may impose taxes on the Fund and its
investments, which generally would reduce the Fund's income. However, an
offsetting tax credit or deduction may be available to shareholders.
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 U.S. 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 U.S. 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.
o CONSULT YOUR TAX ADVISOR ABOUT OTHER POSSIBLE TAX CONSEQUENCES. This
is a summary of certain federal tax consequences of investing in the Fund. You
should consult your tax advisor for more information on your own tax situation,
including possible state and local taxes.
YEAR 2000 DISCLOSURE
The Fund receives services from its investment adviser, administrator,
subadministrator, distributor, transfer agent, custodian and other providers
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 is taking steps that it believes are
reasonably designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by each of the
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. In addition, there can be no assurance that the Year 2000 problem will
not have an adverse impact on companies and other issuers in which the Fund
invests or on the securities markets generally, which may reduce the value of
the Fund's portfolio investments.
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<PAGE>
================================================================================
================================================================================
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN THE RELEVANT PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
<TABLE>
<S> <C> <C>
SCHRODER CAPITAL FUNDS (DELAWARE)(800-730-2932) SCHRODER SERIES TRUST (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 SHORT-TERM INVESTMENT FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
SCHRODER GREATER CHINA FUND
</TABLE>
SCHRODER SERIES TRUST II (800-464-3108)
SCHRODER ALL-ASIA FUND
================================================================================
<PAGE>
[Back Cover] [Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER GREATER CHINA FUND
Schroder Greater China Fund's statement of additional information (SAI) includes
additional information about the Fund. The SAI is incorporated by reference into
this prospectus, which means it is part of this prospectus for legal purposes.
You may get free copies of the SAI, request other information about the Trust
and the Fund, or make shareholder inquiries by calling (800) 290-9826.
You may review and copy information about the Fund, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at (800) SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust and the Fund on the Commission's Internet site at
WWW.SEC.GOV. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-1911.
Schroder Capital Funds (Delaware) INVESTOR SHARES
Two Portland Square
Portland, ME 04101 PROSPECTUS
800-290-9826
May 10, 1999
File No. 811-1911
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
PROSPECTUS
SCHRODER GREATER CHINA FUND
ADVISOR SHARES
May 10, 1999
This prospectus describes Schroder Greater China Fund, a series of shares of
Schroder Capital Funds (Delaware). The Fund seeks long-term growth of capital.
The Fund invests primarily in common stocks and securities of issuers domiciled
or doing business in China, Hong Kong SAR, and Taiwan. The Trust offers Advisor
Shares of the Fund in this prospectus.
Schroder Capital Management International Inc. ("Schroder") manages the Fund.
You can call (800) 290-9826 to find out more about the Fund and other funds in
the Schroder family.
The prospectus explains what you should know about the Fund before you invest.
Please read it carefully.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY INFORMATION...........................................................3
FEES AND EXPENSES.............................................................5
RISKS AND OTHER INVESTMENT STRATEGIES.........................................6
MANAGEMENT OF THE FUND.......................................................10
HOW THE FUND'S SHARES ARE PRICED.............................................11
HOW TO BUY SHARES............................................................11
HOW TO SELL SHARES...........................................................13
ADDITIONAL INFORMATION ABOUT ADVISOR SHARES..................................14
EXCHANGES....................................................................15
DIVIDENDS AND DISTRIBUTIONS..................................................15
TAXES........................................................................16
YEAR 2000 DISCLOSURE.........................................................17
2
<PAGE>
SUMMARY INFORMATION
This summary identifies the investment objective, principal investment
strategies, and principal risks of Schroder Greater China Fund. The Fund offers
Investor Shares, which have higher investment minimums and lower fees and
expenses, in a separate prospectus. The Fund's investment objective may not be
changed without shareholder approval. The investment policies of the Fund may,
unless otherwise specifically stated, be changed by the Board of Trustees of
Schroder Capital Funds (Delaware) without a vote of the shareholders. It is
possible to lose money on investments in the Fund.
SCHRODER GREATER CHINA FUND
o INVESTMENT OBJECTIVE. To seek long-term growth of capital.
o PRINCIPAL INVESTMENTS. The Fund normally invests at least 65% of its
total assets in securities of companies located in China, Hong Kong SAR, and
Taiwan. Schroder will consider an issuer of securities to be located in China,
Hong Kong SAR, or Taiwan if it is organized under the laws of China, Hong Kong
SAR, or Taiwan (or any political subdivision thereof); its primary securities
trading market is in China Hong Kong SAR, 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, Hong Kong SAR, or Taiwan; or
at least 50% of its assets are situated in China, Hong Kong SAR, or Taiwan. The
Fund is non-diversified.
o INVESTMENT STRATEGIES. The Fund invests in a variety of equity
securities, including common and preferred stocks, securities convertible into
common and preferred stocks, and warrants to purchase common or preferred
stocks.
The Fund invests in issuers that Schroder believes offer the potential
for capital growth. In identifying candidates for investment, Schroder considers
a variety of factors, including the issuer's likelihood of above average
earnings growth, the securities' attractive relative valuation, and whether the
issuer has any proprietary advantages. In addition, Schroder takes into account
the risk of local political and/or economic instability and the liquidity of
local markets. Securities generally are sold when they reach fair valuation or
when significantly more attractive investment candidates become available.
The Fund may also do the following:
[] Engage in a variety of transactions involving the use of options
and futures contracts.
[] Engage in currency exchange transactions relating to Chinese and
Taiwanese currencies.
[] Invest in closed-end investment companies.
3
<PAGE>
o PRINCIPAL RISKS.
[] INVESTMENT IN CHINA, HONG KONG SAR, AND TAIWAN. Investment
in China, Hong Kong SAR, and Taiwan entails significant
risks. China is a communist country, and there can be no
assurance that economic or market reforms that 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 issuers organized or doing
business in China. Additionally, 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.
China gained control of Hong Kong in July 1997. Changes in
Hong Kong's political, economic, or market conditions as a
result of China's control could adversely affect the values
of the Fund's investments in issuers organized or doing
business in Hong Kong.
Continuing hostility between China and Taiwan, over which
China continues to claim sovereignty, may have an adverse
impact on the values of the Fund's investments in either
China or Taiwan, or make investment in either China or
Taiwan impracticable or impossible. The escalation of
hostility between China and Taiwan would likely have a
significant adverse impact on the values of the Fund's
investments in both countries.
[] FOREIGN SECURITIES. Investments in foreign securities entail
risks not present in domestic investments including, among
other things, risks related to political or economic
instability, currency exchange and taxation.
[] SMALL COMPANIES. The Fund may invest a substantial portion
of its assets in small companies (i.e., companies with
market capitalizations below $1 billion), which tend to be
more vulnerable to adverse developments than larger
companies. Small companies may have limited product lines,
markets, or financial resources, or may depend on a limited
management group. Their securities may trade infrequently
and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities
of larger, more widely traded companies. Also, there may be
less publicly available information about small companies or
less market interest in their securities as compared to
larger companies, and it may take longer for the prices of
the securities to reflect the full value of their issuers'
earnings potential or assets.
[] GEOGRAPHIC CONCENTRATION. Because the Fund's investments
will be concentrated in securities of issuers located in
China, Hong Kong SAR, and Taiwan, the Fund will be more
susceptible to the political and economic developments and
market fluctuations in those countries than if it invested
in a geographically more diversified portfolio.
4
<PAGE>
[] NON-DIVERSIFIED FUND. Because the Fund is "non-diversified",
it generally invests its assets in a more limited number of
issuers than a diversified investment company. As a result,
its risk of loss increases if the market value of a security
declines or if an issuer is not able to meet its
obligations.
[] EQUITY SECURITIES. Another risk of investing in the Fund is
the risk that the value of the equity securities in the
portfolio will fall, or will not appreciate as anticipated
by Schroder, due to factors that adversely affect markets in
general or particular companies in the portfolio.
[] DEBT SECURITIES. The Fund invests in debt securities, which
are subject to market risk (the fluctuation of market value
in response to changes in interest rates) and to credit
risks (the risk that the issuer may become unable or
unwilling to make timely payments of principal and
interest).
FEES AND EXPENSES
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU INVEST IN
ADVISOR SHARES OF THE FUND. THE FEES AND EXPENSES HAVE BEEN ESTIMATED BECAUSE
THE FUND HAD NOT COMPLETED A FULL FISCAL YEAR AS OF DECEMBER 31, 1998.
SHAREHOLDER FEES (paid directly from your investment):
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Load None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees(1) 1.15%
Distribution (12b-1) Fees None
Other Expenses 1.34%
Total Annual Fund Operating Expenses 2.49%
Fee Waiver and/or
Expense Limitation(2) 0.24%
Net Expenses(2) 2.25%
- --------------------------
(1) Management Fees shown above include both investment advisory fees and fees
paid for Fund administration.
(2) The Net Expenses shown above reflect the effect of contractually imposed
expense limitations and/or fee waivers in effect through October 31, 1999 on
Total Annual Fund Operating Expenses.
5
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Advisor Shares of the Fund for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment earns a 5% return
each year and that the Fund's Total Annual Fund Operating Expenses remain the
same as those set forth above (absent the noted Fee Waiver and/or Expense
Limitation). Your actual costs may be higher or lower. Based on these
assumptions, your costs would be*:
1 Year 3 Years
------ -------
$252 $776
- --------------
*Assuming that the Fund's operating expenses remain the same as the Net Expenses
set forth above, based on the other assumptions described above, your costs
would be as follows for 1 year and 3 years, respectively: $228 and $703.
RISKS AND OTHER INVESTMENT STRATEGIES
The Fund may not achieve its objective in all circumstances. The
following provides more detail about the Fund's principal risks and the
circumstances which could adversely affect the value of the Fund's shares or its
total return. It is possible to lose money by investing in the Fund.
RISKS OF INVESTING IN THE FUND
o FOREIGN SECURITIES. There is no limit on the amount of the Fund's
assets that may be invested in foreign securities. Investments in foreign
securities entail certain risks in addition to those discussed above. There may
be a possibility of nationalization or expropriation of assets, confiscatory
taxation, political or financial instability, and diplomatic developments that
could affect the value of the Fund's investments in certain foreign countries.
Since foreign securities normally are denominated and traded in foreign
currencies, the values of the Fund's assets may be affected favorably or
unfavorably by currency exchange rates, currency exchange control regulations,
foreign withholding taxes, and restrictions or prohibitions on the repatriation
of foreign currencies. There may be less information publicly available about a
foreign issuer than about a U.S. issuer, and foreign issuers are not generally
subject to accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some foreign issuers
are less liquid and at times more volatile than securities of comparable U.S.
issuers. Foreign brokerage commissions and other fees are also generally higher
than in the United States. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Fund's assets held abroad) and expenses not present in
the settlement of domestic investments.
In addition, legal remedies available to investors in certain foreign
countries may be more limited than those available to investors in the United
States or in other foreign countries. The willingness and ability of foreign
governmental entities to pay principal and interest on government securities
depends on
6
<PAGE>
various economic factors, including the issuer's balance of payments, overall
debt level, and cash-flow considerations related to the availability of tax or
other revenues to satisfy the issuer's obligations. If a foreign governmental
entity defaults on its obligations on the securities, the Fund may have limited
recourse available to it. The laws of some foreign countries may limit the
Fund's ability to invest in securities of certain issuers located in those
countries.
If the Fund purchases securities denominated in foreign currencies, a
change in the value of any such currency against the U.S. dollar will result in
a change in the U.S. dollar value of the Fund's assets and the Fund's income
available for distribution. In addition, although at times most of the Fund's
income may be received or realized in these currencies, the Fund will be
required to compute and distribute its income in U.S. dollars. As a result, 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 to shareholders,
the Fund could be required to liquidate portfolio securities to make such
distributions. Similarly, if the Fund incurs an expense in U.S. dollars and the
exchange rate declines before the expense is paid, the Fund would have to
convert a greater amount of U.S. dollars to pay for the expense at that time
that it would have had to convert at the time the Fund incurred the expense. 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.
Special tax considerations apply to foreign securities. In determining
whether to invest in debt securities of foreign issuers, Schroder considers the
likely impact of foreign taxes on the net yield available to the Fund and its
shareholders. Income received by the Fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Any such taxes paid by the Fund will reduce its income
available for distribution to shareholders. In certain circumstances, the Fund
may be able to pass through to shareholders credits for foreign taxes paid.
o RISKS OF SMALLER CAPITALIZATION COMPANIES. The Fund may invest all or
a substantial portion of its assets in companies that are smaller and less
well-known than larger, more widely held companies. Small and mid-cap companies
may offer greater opportunities for capital appreciation than larger companies,
but may also pose certain special risks. They are more likely than larger
companies to have limited product lines, markets or financial resources, or to
depend on a small, inexperienced management group. Securities of smaller
companies may trade less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other securities.
They may also trade in the over-the-counter market or on a regional exchange, or
may otherwise have limited liquidity. These securities may therefore be more
vulnerable to adverse developments than securities of larger companies and the
Fund may have difficulty establishing or closing out their securities positions
in smaller companies at prevailing market prices. Also, there may be less
publicly available information about smaller companies or less market interest
in their securities as compared to larger companies, and it may take longer for
the prices of the securities to reflect the full value of their issuer's
earnings potential or assets.
o DEBT SECURITIES. The Fund may invest in debt securities, which are
subject to the risk of fluctuation of market value in response to changes in
interest rates and the risk that the issuer may default on the timely payment of
principal and interest.
7
<PAGE>
OTHER INVESTMENT STRATEGIES AND TECHNIQUES
In addition to the principal investment strategies described in the
Summary Information section above, the Fund may at times use the strategies and
techniques described below, which involve certain special risks. This Prospectus
does not attempt to disclose all of the various investment techniques and types
of securities that Schroder might use in managing the Fund. As in any mutual
fund, investors must rely on the professional investment judgment and skill of
the Fund's adviser.
o FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange
rates will affect the U.S. dollar value of Fund assets, including 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 political, economic and financial conditions, which may be
difficult to predict. The Fund may engage in currency exchange transactions to
protect against unfavorable fluctuations in exchange rates.
In particular, the Fund may enter into foreign currency exchange
transactions to protect against a change in exchange rates 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").
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"). 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 Schroder believes correlates to the value of
the first currency.
Schroder may buy or sell currencies in "spot" or forward transactions.
"Spot" transactions are executed contemporaneously on a cash basis at the
then-prevailing market rate. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date (which may be any fixed
number of days from the date of the contract agreed upon by the parties) at a
price set at the time of the contract. Forward contracts do not eliminate
fluctuations in the underlying prices of securities and expose the Fund to the
risk that the counterparty is unable to perform.
The Fund incurs foreign exchange expenses in converting assets from one
currency to another. Although there is no limit on the amount of the Fund's
assets that may be invested in foreign currency exchange and foreign currency
forward contracts, the Fund may engage in foreign currency exchange transactions
only to the extent necessary to effect the hedging transactions described above.
Suitable foreign currency hedging transactions may not be available in all
circumstances and there can be no assurance that the Fund will utilize hedging
transactions at any time.
o SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The
Fund may lend portfolio securities to broker-dealers up to one-third of the
Fund's total assets. The Fund may also enter into repurchase agreements without
limit. These transactions must be fully collateralized at all times, but involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral. The Fund may
also enter into contracts to purchase securities for a fixed price at a future
date beyond customary settlement time, which may increase its overall investment
exposure and involves a risk of loss if the value of the securities declines
prior to the settlement date.
8
<PAGE>
o INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in
other investment companies or pooled vehicles, including closed-end funds, that
are advised by Schroder or its affiliates or by unaffiliated parties. When
investing in another investment company, the Fund may pay a premium above such
investment company's 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 advisory and administrative fees, and would at the
same time continue to pay its own fees and expenses.
o DERIVATIVE INVESTMENTS. Instead of investing directly in the types of
portfolio securities described in the Summary Information, the Fund may buy or
sell a variety of "derivative" investments to gain exposure to particular
securities or markets, in connection with hedging transactions, and, to the
extent permitted by applicable law, to increase total return. These may include
options, futures, and indices, for example. Derivatives involve the risk that
they may not work as intended under all market conditions. Also, derivatives
often involve the risk that the other party to the transaction will be unable to
meet its obligations or that the Fund will be unable to close out the position
at any particular time or at an acceptable price.
O ZERO-COUPON BONDS. The Fund may invest in zero-coupon bonds.
Zero-coupon bonds are issued at a significant discount from face value and pay
interest only at maturity rather than at intervals during the life of the
security. Zero-coupon bonds allow an issuer to avoid the need to generate cash
to meet current interest payments and, as a result, may involve greater credit
risks than bonds that pay interest currently.
o 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 sales may increase the
amount of capital gains (and, in particular, short-term gains) realized by the
Fund, on which shareholders pay tax.
o TEMPORARY DEFENSIVE STRATEGIES. At times, Schroder 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, Schroder may temporarily use alternate investment strategies primarily
designed to reduce fluctuations in the value of the Fund's assets. In
implementing these "defensive" strategies, the Fund would invest in high-quality
debt securities, cash, or money market instruments to any extent Schroder
considers consistent with such defensive strategies. It is impossible to predict
when, or for how long, the Fund will use these alternate strategies. One risk of
taking such temporary defensive positions is that the Fund may not achieve its
investment objective.
o OTHER INVESTMENTS. The Fund may also invest in other types of
securities and utilize a variety of investment techniques and strategies that
are not described in this Prospectus. These securities and techniques may
subject the Fund to additional risks. Please see the Statement of Additional
Information for additional information about the securities and investment
techniques described in this Prospectus and about additional techniques and
strategies that may be used by the Fund.
9
<PAGE>
MANAGEMENT OF THE FUND
The Trust is governed by a Board of Trustees which has retained
Schroder to manage the investments of the Fund. Subject to the control of the
Trustees, Schroder also manages the Fund's other affairs and business. Schroder
has served as investment adviser to the Fund since inception.
Schroder has been an investment manager since 1962, and currently
serves as investment adviser to the Fund and a broad range of institutional
investors. As of December 31, 1998, Schroder, together with its United Kingdom
affiliate, Schroder Capital Management International Limited, had approximately
$27.1 billion in assets under management. Schroder's address is 787 Seventh
Avenue, New York, New York 10019, and its telephone number is (212) 641-3900.
o INVESTMENT ADVISORY AND ADMINISTRATION FEES PAID BY THE FUND. The Fund
pays a monthly fee at the annual rate of 0.90% of the Fund's average daily net
assets. This fee includes amounts payable to Schroder under the Fund's
Investment Advisory Agreement with Schroder and to Schroder Fund Advisors Inc.
under the Administration Agreement with Schroder Fund Advisors Inc.
o EXPENSE LIMITATIONS AND WAIVERS. In order to limit the Fund's
expenses, Schroder is contractually obligated to reduce its compensation (and,
if necessary, to pay certain other Fund expenses) until October 31, 1999 to the
extent that the Fund's total operating expenses attributable to its Advisor
Shares exceed the annual rate of 2.25%.
o PORTFOLIO MANAGERS. Schroder's investment decisions for the Fund are
generally made by an investment manager or an investment team, with the
assistance of an investment committee. The following portfolio manager has had
primary responsibility for making investment decisions for the Fund, since the
years shown below. Her recent professional experience is also shown.
<TABLE>
<S> <C> <C>
Portfolio Manager Since Recent Professional Experience
- ----------------- ----- ------------------------------
Heather Crighton Inception (1998) Employed as an investment
professional at Schroder since 1993.
Ms. Crighton is a director and a
First Vice President of Schroder.
</TABLE>
10
<PAGE>
HOW THE FUND'S SHARES ARE PRICED
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 Advisor Shares
outstanding. Shares are valued as of the close of trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern time) each day the Exchange is open. The
Trust expects that days, other then weekend days, that the Exchange will not be
open are New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. The Fund values its portfolio securities for which market
quotations are readily available at market value. Short-term investments that
will mature in 60 days or less are stated at amortized cost, which approximates
market value. The Fund values all other securities and assets at their fair
values as determined in accordance with procedures adopted by the Board of
Trustees. 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's shares is
calculated. Because certain of the securities in which the Fund may invest may
trade on days when the Fund does not price its Advisor Shares, the net asset
value of the Fund's Advisor Shares may change on days when shareholders will not
be able to purchase or redeem their Advisor Shares. The net asset value of the
Fund's Advisor Shares will generally differ from that of its Investor 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 Advisor Shares and Investor
Shares.
HOW TO BUY SHARES
You may purchase Advisor Shares of the Fund directly from the Trust by
completing an Account Application and sending payment by check or wire as
described below. You may obtain an Account Application from the Trust or from
Forum Shareholders Services, LLC, the Trust's Transfer Agent, P.O. Box 446,
Portland, Maine 04112, or by calling (800) 290-9826.
Advisor Shares of the Fund are sold at their net asset value next
determined after the Trust receives your order. In order for you to receive the
Fund's next determined net asset value, the Trust must receive your order before
the close of trading on the New York Stock Exchange.
INVESTMENT MINIMUMS
The minimum investment for initial and additional purchases for the
Fund is as follows:
<TABLE>
<S> <C> <C>
-------------------------------------- ----------------- -------------------
Initial Additional
Investment Investments
-------------------------------------- ----------------- -------------------
Regular Accounts $250,000 No minimum
-------------------------------------- ----------------- -------------------
Traditional IRAs $2,000 $250
-------------------------------------- ----------------- -------------------
</TABLE>
The Trust is authorized to reject any purchase order.
11
<PAGE>
You also may meet the minimum initial investment requirement based in
cumulative purchases by means of a written Statement of Intention, expressing
your intention to invest $250,000 or more in Advisor Shares of the Fund within
13 months. You may enter into a Statement of Intention in conjunction with your
initial investment in Advisor Shares by completing the appropriate section of
the Account Application. Current Fund shareholders can obtain a Statement of
Intention form by contacting the Transfer Agent. The Fund reserves the right to
redeem your shares in the Fund if, at the end of the Statement of Intention
period, your account does not have a value of at least the minimum initial
investment amount.
PURCHASES BY CHECK
You may purchase shares of the Fund by mailing a check (in U.S. dollars)
payable to the Fund. Third-party checks will not be accepted.
For initial purchases, your check must be accompanied by a completed
Account Application in proper form. The Trust may request additional
documentation to evidence the authority of the person or entity making the
purchase request.
You should mail your check and your completed Account Application to:
Schroder Greater China Fund -- Advisor Shares
P.O. Box 446
Portland, Maine 04112
Your payments should clearly indicate the shareholder's name and account number,
if applicable.
PURCHASES BY BANK WIRE/TELEPHONE
If you make your initial investment by wire, your order must be
preceded by a completed Account Application. Upon receipt of the Application,
the Trust will assign you an account number and your account will become active.
Wire orders received prior to the close of trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern Time) on each day the Exchange is open for
trading will be processed at the net asset value determined as of that day.
Wire orders received after that time will be processed at the net asset value
determined thereafter.
Once you have an account number, you may purchase Advisor Shares by
telephoning the Transfer Agent at (800) 290-9826 to give notice that you will be
sending funds by wire, and then arranging with your bank to wire funds to the
Trust. Your purchase will not be processed until the Trust has received the
wired funds.
Federal Reserve Bank wire instructions are 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)
12
<PAGE>
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.
In an effort to prevent unauthorized or fraudulent purchase or
redemption requests by telephone, the Transfer Agent will follow reasonable
procedures 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 purchase or redemption requests, but either or both
may be liable if they do not follow these procedures.
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 shareholders' new address. When an account is
deemed lost, dividends and other distributions that have been returned to the
Transfer Agent are reinvested, and the checks are canceled.
OTHER PURCHASE INFORMATION
Advisor Shares of the Fund may be purchased for cash or in exchange for
securities held by the investor, subject to the determination by Schroder that
the securities are acceptable. (For purposes of determining whether securities
will be acceptable, Schroder will consider, among other things, whether they are
liquid securities of a type consistent with the investment objectives and
policies of the Fund and have a readily ascertainable value.) If the Fund
receives securities from an investor in exchange for shares of the Fund, the
Fund will under some circumstances have the same tax basis in the securities as
the investor had prior to the exchange (and the Fund's gain for tax purposes
would be calculated with regard to the investor's tax basis). Any gain on the
sale of those securities would be subject to distribution as capital gain to all
of the Fund's shareholders. Schroder reserves the right to reject any particular
investment. Securities accepted by Schroder will be valued in the same manner as
are the Trust's portfolio securities as of the time of the next determination of
the Fund's net asset value. All dividend, subscription, or other rights which
are reflected in the market price of accepted securities at the time of
valuation become the property of the Fund and must be delivered to the Fund upon
receipt by the investor. Investors may realize a gain or loss upon the exchange
for federal income tax purposes. Investors interested in purchases through
exchange should telephone Schroder at (800) 290-9826.
HOW TO SELL SHARES
You may sell your Advisor Shares back to the Fund on any business day
by sending a letter of instruction or stock power form to the Trust, or by
calling the Transfer Agent at (800) 290-9826.
The price you will receive for your Advisor Shares is the net asset
value next determined after receipt of your redemption request in good order. A
redemption request is in good order if it includes the exact name in which the
shares are registered, the investor's account number, and the number of shares
or the dollar amount of shares to be redeemed, and, for written requests, if it
is signed exactly in accordance with the registration form. If you hold your
Advisor Shares in certificate form, you must submit the certificates and sign
the assignment form on the back of the certificates. Signatures must be
guaranteed
13
<PAGE>
by a bank, broker-dealer, or certain other financial institutions. You may
redeem your Advisor Shares by telephone only if you elected the telephone
redemption privilege option on your Account Application or otherwise in writing.
Shares for which certificates have been issued may not be redeemed by telephone.
The Trust may require additional documentation from shareholders that are
corporations, partnerships, agents, fiduciaries, or surviving joint owners.
The Trust will pay you for your redemptions as promptly as possible and
normally within seven days after the request for redemption is received in
writing in good order. (The Trust generally sends payment for shares the
business day after a request is received.) Under unusual circumstances, the
Trust may suspend redemptions or postpone payment for more than seven days, as
permitted by law. If you paid for your Advisor Shares by check, you will not be
sent redemption proceeds until the check you used to pay for the Advisor Shares
has cleared, which may take up to 15 calendar days from the purchase date.
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 the Fund's net assets during any 90-day period for any one shareholder.
If, because of your redemptions, your account balance falls below a
minimum amount set by the Trustees (presently $100,000) of the Fund, the Trust
may choose to redeem your shares in the Fund and pay you for them. You will
receive at least 30 days written notice before the Trust redeems your shares,
and you may purchase additional shares at any time to avoid a redemption. The
Trust may also redeem shares if you own shares of the 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.
The Trust may suspend the right of redemption during any period when:
(1) trading on the New York Stock Exchange is restricted or the Exchange is
closed; (2) the Securities and Exchange Commission 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 you request that your redemption proceeds be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each such signature by an eligible signature
guarantor, such as a member firm of a national securities exchange or a
commercial bank or trust company located in the United States. If you are a
resident of a foreign country, another type of certification may be required.
Please contact the Transfer Agent for more details at (800) 290-9826.
Corporations, fiduciaries, and other types of shareholders may be required to
supply additional documents which support their authority to effect a
redemption.
ADDITIONAL INFORMATION ABOUT ADVISOR SHARES
The Trust sells Advisor Shares of the Fund at their net asset value
without any sales charges or loads, so that the full amount of your purchase
payment is invested in the Fund. You also receive the full value of your Advisor
Shares when you sell them back to the Fund, without any deferred sales charge.
SHAREHOLDER SERVICING PLAN. The Trust has adopted a Shareholder
Servicing Plan (the "Service Plan") for the Advisor Shares of the Fund. Under
the Service Plan, the Fund pays fees to Schroder Fund Advisors Inc. at an annual
rate of up to 0.25% of the average daily net assets of the Fund represented by
14
<PAGE>
Advisor Shares. Schroder Fund Advisors Inc. 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 Fund Advisors Inc. 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.
Some Service Organizations may impose additional conditions or fees. For
instance, a Service Organization may require its clients to invest more than the
minimum amounts required by the Trust for initial or subsequent investments or
may charge a direct fee for its services. These fees would be in addition to any
amounts which you pay as a shareholder of the Fund or amounts which might be
paid to the Service Organization by Schroder Fund Advisors Inc. Please contact
your Service Organization for details.
DISTRIBUTION PLAN. The Fund has adopted a Distribution Plan which
allows the Fund to pay distribution fees for the sale and distribution of its
Advisor Shares. Under the Plan, the Fund may pay Schroder Fund Advisors Inc.
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
Trustees have not currently authorized payments under the Distribution Plan,
although payments by the Fund under the Shareholder Service Plan, which will not
exceed the annual rate of 0.25% of the Fund's average daily net assets, will be
deemed to have been made pursuant to the Distribution Plan to the extent such
payments may be considered to be primarily intended to result in the sale of the
Fund's Advisor Shares. To the extent that payments are made in the future under
the Plan, they would be paid out of the Fund's assets attributable to its
Advisor Shares on an ongoing basis, would increase the cost of your investment,
and may cost you more than paying other types of sales charges imposed by other
funds.
EXCHANGES
You can exchange your Advisor Shares of the Fund for Advisor Shares of
any other fund in the Schroder family of funds at any time at their respective
net asset values. The exchange would be treated as a sale of your Advisor Shares
and any gain on the exchange may be subject to federal income tax. To exchange
shares, please contact your Service Organization or, if you do not have a
Service Organization, call the Trust at (800) 290-9826.
DIVIDENDS AND DISTRIBUTIONS
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.
YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS:
[] Reinvest all distributions in additional Advisor Shares of the
Fund;
[] Receive distributions from net investment income in cash while
reinvesting capital gains distributions in additional Advisor
Shares of the Fund;
[] Receive distributions from net investment income in additional
Advisor Shares of the Fund while receiving capital gain
distributions in cash; or
15
<PAGE>
[] Receive all distributions in cash.
You can change your distribution option by notifying the Transfer Agent
in writing. If you do not select an option when you open your account, all
distributions by the Fund will be reinvested in Advisor Shares of the Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.
TAXES
o TAXES ON DIVIDENDS AND DISTRIBUTIONS. The Fund intends to qualify as
a "regulated investment company" for U.S. 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.
For federal income tax purposes, distributions of investment income are
taxable as ordinary income. Taxes on distributions of capital gains are
determined by how long the Fund owned the investments that generated the gains,
rather than how long you have owned your shares. Distributions are taxable to
you even if they are paid from income or gains earned by the Fund before you
invested (and thus were included in the price you paid for your shares).
Distributions of gains from investments that the Fund owned for more than 12
months will be taxable as capital gains. Distributions of gains from investments
that the Fund owned for 12 months or less will be taxable as ordinary income.
Distributions are taxable whether you received them in cash or reinvested them
in additional shares of the Fund.
o TAXES WHEN YOU SELL OR EXCHANGE YOUR SHARES. Any gain resulting from
the sale or exchange of your shares in the Fund will also generally be subject
to federal income or capital gains tax, depending on your holding period.
o FOREIGN TAXES. Foreign governments may impose taxes on the Fund and its
investments, which generally would reduce the Fund's income. However, an
offsetting tax credit or deduction may be available to shareholders.
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 U.S. 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 U.S. 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.
o CONSULT YOUR TAX ADVISOR ABOUT OTHER POSSIBLE TAX CONSEQUENCES. This
is a summary of certain federal tax consequences of investing in the Fund. You
should consult your tax advisor for more information on your own tax situation,
including possible state and local taxes.
16
<PAGE>
YEAR 2000 DISCLOSURE
The Fund receives services from its investment adviser, administrator,
subadministrator, distributor, transfer agent, custodian and other providers
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 is taking steps that it believes are
reasonably designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by each of the
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. In addition, there can be no assurance that the Year 2000 problem will
not have an adverse impact on companies and other issuers in which the Fund
invests or on the securities markets generally, which may reduce the value of
the Fund's portfolio investments.
17
<PAGE>
================================================================================
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN THE RELEVANT PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
<TABLE>
<S><C> <C>
SCHRODER CAPITAL FUNDS (DELAWARE)(800-730-2932) SCHRODER SERIES TRUST (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 SHORT-TERM INVESTMENT FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
SCHRODER GREATER CHINA FUND
</TABLE>
SCHRODER SERIES TRUST II (800-464-3108)
SCHRODER ALL-ASIA FUND
================================================================================
<PAGE>
[Back Cover] [Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER GREATER CHINA FUND
Schroder Greater China Fund's statement of additional information (SAI) includes
additional information about the Fund. The SAI is incorporated by reference into
this prospectus, which means it is part of this prospectus for legal purposes.
You may get free copies of the SAI, request other information about the Trust
and the Fund, or make shareholder inquiries by calling (800) 290-9826.
You may review and copy information about the Fund, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at (800) SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust and the Fund on the Commission's Internet site at
WWW.SEC.GOV. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-1911.
Schroder Capital Funds (Delaware) ADVISOR SHARES
Two Portland Square
Portland, ME 04101 PROSPECTUS
800-290-9826
May 10, 1999
File No. 811-1911
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER GREATER CHINA FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
MAY 10, 1999
This Statement of Additional Information (SAI) is not a prospectus and is only
authorized for distribution when accompanied or preceded by a Prospectus for
Schroder Greater China Fund, as amended or supplemented from time to time. This
SAI relates to the Fund's Investor Shares and Advisor Shares. Investor Shares
and Advisor Shares are offered through separate Prospectuses, each dated May 10,
1999. This SAI contains information which may be useful to investors but which
is not included in the Prospectuses. Investors may obtain free copies of the
Prospectuses by calling the Trust at 1-800-290-9826.
<PAGE>
TABLE OF CONTENTS
TRUST HISTORY.............................................................1
CAPITALIZATION AND SHARE CLASSES..........................................1
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS.................2
INVESTMENT RESTRICTIONS..................................................16
TRUSTEES AND OFFICERS....................................................17
SCHRODER AND ITS AFFILIATES..............................................21
INVESTMENT ADVISORY AGREEMENT............................................21
ADMINISTRATIVE SERVICES..................................................23
DISTRIBUTOR..............................................................23
FUND ACCOUNTING..........................................................25
BROKERAGE ALLOCATION AND OTHER PRACTICES.................................25
DETERMINATION OF NET ASSET VALUE.........................................27
REDEMPTIONS IN KIND......................................................29
TAXES....................................................................29
PRINCIPAL HOLDERS OF SECURITIES..........................................30
CUSTODIAN................................................................31
INDEPENDENT AUDITORS.....................................................31
SHAREHOLDER LIABILITY....................................................31
2
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
STATEMENT OF ADDITIONAL INFORMATION
TRUST HISTORY
Schroder Capital Funds (Delaware) 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 organized
under the laws of the State of Delaware on January 9, 1996. The Trust's Trust
Instrument, which is governed by Delaware law, is on file with the Secretary of
State of the State of Delaware.
FUND CLASSIFICATION
The Trust currently offers shares of beneficial interest of nine series
with separate investment objectives and policies. Shares of Schroder Greater
China Fund, an open-end management investment company, are offered pursuant to
the Prospectuses and this SAI. The Fund is a "non-diversified" investment
company under the 1940 Act, and therefore may invest its assets in a more
limited number of issuers than may diversified investment companies. To the
extent the Fund invests a significant portion of its assets in the securities of
a particular issuer, it will be subject to an increased risk of loss if the
market value of the issuer's securities declines.
CAPITALIZATION AND SHARE CLASSES
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 Fund's shares are presently divided into two
classes, Investor Shares and Advisor Shares. Each class is offered through a
separate Prospectus. Unlike Investor Shares, Advisor Shares are currently
subject to shareholder service fees, so that the performance of the Fund's
Investor Shares should be more favorable than that of the Fund's Advisor Shares
over the same time period.
The Fund may suspend the sale of shares at any time and may refuse any
order to purchase shares. Under unusual circumstances, the Trust may suspend
redemption of Fund shares, or postpone redemption payments for more than seven
days, as permitted by law. If, because of your redemptions, your account balance
falls below a minimum amount set by the Trustees (presently $100,000), the Trust
may choose to redeem your shares in the Fund and pay you for them. You will
receive at least 30 days' written notice before the Trust redeems your shares,
and you may purchase additional shares at any time to avoid a redemption. The
Trust may also redeem shares if you own Fund shares 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.
Shares entitle their holders to one vote per share, with fractional
shares voting proportionally; however, a separate vote will be taken by each
Fund or class of shares on matters affecting the particular Fund or class, as
determined by the Trustees. For example, a change in a fundamental investment
policy for a Fund would be voted upon only by shareholders of that Fund and a
change to a distribution plan relating to a particular class and requiring
shareholder approval would be voted upon only by shareholders of that class.
Shares have noncumulative voting rights. Although the Trust is not required to
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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
Trust Instrument. Shares have no preemptive or subscription rights, and are
transferable. Shares are entitled to dividends as declared by the Trustees, and
if the Fund were liquidated, each class of shares of the Fund would receive the
net assets of the Fund attributable to the class. Because Investor and Advisor
Shares are subject to different expenses, the Fund's dividends and other
distributions will normally differ between the two classes. The Trust may
suspend the sale of shares at any time and may refuse any order to purchase
shares.
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS
In addition to the principal investment strategies and the principal
risks of the Fund described in the Prospectuses, the Fund may employ other
investment practices and may be subject to additional risks which are described
below.
CERTAIN DERIVATIVE INSTRUMENTS
Derivative instruments are financial instruments whose value depends
upon, or is derived from, the value of an underlying asset, such as a security,
index or currency. As described below, the Fund may engage in a variety of
transactions involving the use of derivative instruments, including options and
futures contracts on securities and securities indices and options on futures
contracts. These transactions may be used by the Fund for hedging purposes or,
to the extent permitted by applicable law, to increase its current return. The
Fund may also engage in derivative transactions involving foreign currencies.
See "Foreign Currency Transactions."
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 the sale (exercise price minus commissions) plus the amount
of the premium.
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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.
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 at the time it purchased the call
option.
The Fund may also purchase put and call options to enhance its current
return. The Fund may also buy and sell combinations of put and call options on
the same underlying security to earn additional income.
OPTIONS ON FOREIGN SECURITIES. The Fund may purchase and sell options
on foreign securities if in Schroder's opinion the investment characteristics of
such options, including the risks of investing in
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such options, are consistent with the Fund's investment objectives. It is
expected that risks related to such options will not differ materially from
risks related to options on U.S. securities. However, position limits and other
rules of foreign exchanges may differ from those in the U.S. In addition,
options markets in some countries, many of which are relatively new, may be less
liquid than comparable markets in the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that Schroder 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 Schroder 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. Although the Fund
will enter into an option position only if Schroder believes that a liquid
secondary market exists, 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 Schroder 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 Schroder may be considered such a group. These position
limits may restrict the Fund's ability to purchase or sell options on particular
securities.
As described below, the Fund generally expects that its options
transactions will be conducted on recognized exchanges. In certain instances,
however, the Fund may purchase and sell options in the over-the-counter markets.
Options which 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 over-the-counter options than exchange-traded
options. Options in the over-the-counter market may also involve the risk that
securities dealers participating in such transactions would be unable to meet
their obligations to the Fund. Furthermore, over-the-counter options are not
subject to the protection afforded purchasers of exchange-traded options by The
Options Clearing Corporation. The Fund will, however, engage in over-the-counter
options transactions only when appropriate exchange-traded options transactions
are unavailable and when, in the opinion of Schroder, 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.
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.
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FUTURES CONTRACTS
In order to hedge against the effects of adverse market changes, the
Fund may buy and sell futures contracts on U.S. Government securities and other
debt securities in which the Fund may invest, and on indices of debt securities.
In addition, the Fund may purchase and sell stock index futures to hedge against
changes in stock market prices. The Fund may also, to the extent permitted by
applicable law, buy and sell futures contracts and options on futures contracts
to increase the Fund's current return. All such futures and related options
will, as may be required by applicable law, be traded on exchanges that are
licensed and regulated by the Commodity Futures Trading Commission (the "CFTC").
Depending upon the change in the value of the underlying security or index when
the Fund enters into or terminates a futures contract, the Fund may realize a
gain or loss.
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 Schroder'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
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which would adversely affect the market prices of debt securities held by it and
the prices of such securities increase instead, the Fund will lose part or all
of the benefit of the increased value of its securities which it has hedged
because it will have offsetting losses in its futures positions. In addition, in
such situations, if the Fund has insufficient cash, it may have to sell
securities to meet daily maintenance margin requirements. The Fund may have to
sell securities at a time when it may be disadvantageous to do so.
The Fund may purchase and write put and call options on certain debt
futures contracts, as they become available. Such options are similar to options
on securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an option of the same series.
There is no guarantee that such closing transactions can be effected. The Fund
will be required to deposit initial margin and maintenance margin with respect
to put and call options on futures contracts written by it pursuant to brokers'
requirements, and, in addition, net option premiums received will be included as
initial margin deposits. See "Margin Payments" below. Compared to the purchase
or sale of futures contracts, the purchase of call or put options on futures
contracts involves less potential risk to the Fund because the maximum amount at
risk is the premium paid for the options plus transactions costs. However, there
may be circumstances when the purchase of call or put options on a futures
contract would result in a loss to the Fund when the purchase or sale of the
futures contracts would not, such as when there is no movement in the prices of
debt securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
INDEX FUTURES CONTRACTS AND OPTIONS. The Fund may invest in debt index
futures contracts and stock index futures contracts, and in related options. A
debt index futures contract is a contract to buy or sell units of a specified
debt index at a specified future date at a price agreed upon when the contract
is made. A unit is the current value of the index. 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.
Depending on the change in the value of the index between the time when
the Fund enters into and terminates an index futures transaction, the Fund may
realize a gain or loss. 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).
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The Fund may purchase or sell futures contracts with respect to any
securities indices. 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 indices or sub-indices the movements of which will, in Schroder's
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 that may purchase and sell index futures
contracts may purchase and sell call and put options on the underlying indices
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.
The Fund may also purchase warrants, issued by banks and other
financial institutions, whose values are based on the values from time to time
of one or more securities indices.
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
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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 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 in the prices of the Fund's securities which are the subject of a
hedge. Schroder will, however, attempt to reduce this risk by purchasing and
selling, to the extent possible, futures contracts and related options on
securities and indices 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.
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Successful use of futures contracts and options by the Fund for hedging
purposes is also subject to Schroder'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 Schroder may still not result in a successful hedging
transaction over a very short time period.
LACK OF AVAILABILITY. Because the markets for certain options and
futures contracts and other derivative instruments in which the Fund may 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 instruments may be limited. Suitable
derivative transactions may not be available in all circumstances and there is
no assurance that the Fund will engage in such transactions at any time or from
time to time. The Fund's ability to engage in hedging transactions may also be
limited by certain regulatory and tax considerations.
OTHER RISKS. The Fund will incur brokerage fees in connection with its
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 liquid securities 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.
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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 Schroder 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 one week) subject to the obligation of the seller
to repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust, and only with respect to obligations of the U.S. government or its
agencies or instrumentalities or other high quality short-term debt obligations.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. Schroder 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, the 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 liquid securities 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.
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<PAGE>
LOANS OF FUND PORTFOLIO 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 the Fund's portfolio securities 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, Schroder 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 may involve risks and considerations
different from or in addition to investments in domestic securities. There may
be less information publicly available about a foreign company than about a U.S.
company, and foreign companies 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 companies are less liquid and
at times more volatile than securities of comparable U.S. companies. 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. Also, because foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
assets may be affected favorably or unfavorably by currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversion between currencies.
In addition, with respect to certain foreign countries, there is a
possibility of nationalization or expropriation of assets, imposition of
currency exchange controls, adoption of foreign governmental restrictions
affecting the payment of principal and interest, imposition of withholding or
confiscatory taxes, political or financial instability, and adverse political,
diplomatic or economic developments which could affect the values of investments
in those countries. In certain countries, legal remedies available to investors
may be more limited than those available with respect to investments in the
United States or other countries and it may be more difficult to obtain and
enforce a judgment against a foreign issuer. Also, the laws of some foreign
countries may limit the Fund's ability to invest in securities of certain
issuers located in those countries.
Special tax considerations apply to foreign securities. In determining
whether to invest in 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. It is impossible to
13
<PAGE>
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 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" as described in the Prospectuses.
For transaction hedging purposes, the Fund may 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 Schroder's
opinion, the pricing mechanism and liquidity are satisfactory and the
participants are responsible parties likely to meet their contractual
obligations.
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 precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of the
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of the Fund if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to deliver.
To offset some of the costs to the Fund of hedging against fluctuations
in currency exchange rates, the Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency. Also, suitable foreign
14
<PAGE>
currency hedging transactions may not be available in all circumstances and
there can be no assurance that the Fund will utilize hedging transactions at any
time or from time to time.
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.
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 Schroder 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.
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<PAGE>
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.
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<PAGE>
In addition, the Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, the Fund will be able to have its beneficial ownership of U.S.
Treasury zero-coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
TEMPORARY DEFENSIVE STRATEGIES
As described in the Prospectuses, Schroder may at times judge that
conditions in the securities markets make pursuing the Fund's basic investment
strategies inconsistent with the best interests of its shareholders and may
temporarily use alternate investment strategies primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing these
"defensive" strategies, the Fund would invest in high-quality debt securities,
cash, or money market instruments to any extent Schroder considers consistent
with such defensive strategies. It is impossible to predict when, or for how
long, the Fund will use these alternate strategies.
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<PAGE>
INVESTMENT RESTRICTIONS
The Trust has adopted the following fundamental and non-fundamental
investment restrictions for the Fund. The Fund's fundamental investment
restrictions may not be changed without the affirmative vote of a "majority of
the outstanding voting securities" of the Fund, which is defined in the 1940 Act
to mean the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares and (2) 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. The non-fundamental investment policies described in the
Prospectuses and this SAI are not fundamental and may be changed by the
Trustees, without shareholder approval.
The Fund will not:
1. Purchase any security (other than U.S. Government securities) if as a
result more than 25% of the Fund's total assets would be invested in a
single industry.
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 limited partnership interests (for purpose 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.
9. As a non-fundamental policy, the Fund will not 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
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<PAGE>
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 (other than limitations on
borrowing and illiquid securities) 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.
TRUSTEES AND OFFICERS
The Trustees of the Trust are responsible for the general oversight of
the Trust's business. Subject to such policies as the Trustees may determine,
Schroder furnishes a continuing investment program for each Fund and makes
investment decisions on its behalf. Subject to the control of the Trustees,
Schroder also manages the Fund's other affairs and business.
The Trustees and executive officers of the Trust and their principal
occupations during the last five years are set forth below.
(*) Nancy A. Curtin, Trustee and Chairman of the Trust. 41. 787 Seventh
Avenue, New York, New York. Senior Vice President and Managing Director,
Schroder Capital Management International Inc. Director, Schroder Capital
Management International Ltd. President and Director, Schroder Fund Advisors
Inc. Trustee, Schroder Capital Funds, Schroder Capital Funds II, Schroder Series
Trust and Schroder Series Trust II. Formerly, Director, Barings Asset Management
since 1993.
David N. Dinkins, Trustee. 71. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds, Schroder Capital Funds II, and Schroder Series
Trust. Professor, Columbia University School of International and Public
Affairs. Director, American Stock Exchange, Carver Federal Savings Bank,
Transderm Laboratory Corporation, and The Cosmetics Center, Inc. Formerly,
Mayor, City of New York.
John I. Howell, Trustee. 82. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds, Schroder Capital Funds II, Schroder Series
Trust, and Schroder Series Trust II. Director, American International Life
Assurance Company of New York. Private consultant since 1987.
Peter S. Knight, Trustee. 48. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds, Schroder Capital Funds II, and Schroder Series
Trust. Partner, Wunder, Knight, Levine, Thelen & Forscey. Director, Comsat
Corp., Medicis Pharmaceutical Corp., and Whitman Education Group, Inc. Formerly,
Campaign Manager, Clinton/Gore '96.
Peter E. Guernsey, Trustee. 77. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds, Schroder Capital Funds II, Schroder Series
Trust, and Schroder Series Trust II. Formerly, Senior Vice President, Marsh &
McLennan, Inc.
(*) Sharon L. Haugh, Trustee. 53. 787 Seventh Avenue, New York, New York.
Chairman, Schroder Capital Management Inc. Executive Vice President and
Executive Director, Schroder Capital Management
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International Inc. Chairman and Director, Schroder Fund Advisors Inc. Trustee,
Schroder Capital Funds, Schroder Capital Funds II, and Schroder Series Trust.
William L. Means, Trustee. 59. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Series Trust II. Formerly, Chief Investment Officer, Alaska
Permanent Fund Corporation.
Clarence F. Michalis, Trustee. 77. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds, Schroder Capital Funds II, and Schroder Series
Trust. Chairman of the Board of Directors, Josiah Macy, Jr. Foundation.
Hermann C. Schwab, Trustee. 79. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds, Schroder Capital Funds II, and Schroder Series
Trust. Trustee, St. Luke's/Roosevelt Hospital Center. Formerly, consultant to
Schroder Capital Management International Inc.
Mark Astley, Vice President of the Trust. 34. 787 Seventh Avenue, New York,
New York. First Vice President of Schroder Capital Management International Inc.
Formerly, employed by various affiliates of Schroder Capital Management
International Inc. in various positions in the investment research and portfolio
management areas since 1987.
Robert G. Davy, Vice President of the Trust. 37. 787 Seventh Avenue, New
York, New York. Director of Schroder Capital Management International Inc. and
Schroder Capital Management International Ltd. since 1994; First Vice President
of Schroder Capital Management International Inc. since July 1992. Formerly,
employed by various affiliates of Schroder Capital Management International Inc.
in various positions in the investment research and portfolio management areas
since 1986.
Margaret H. Douglas-Hamilton, Vice President of the Trust. 57. 787 Seventh
Avenue, New York, New York. Director and Secretary of Schroder Capital
Management Inc.
Richard R. Foulkes, Vice President of the Trust. 53. 787 Seventh Avenue,
New York, New York. Deputy Chairman of Schroder Capital Management International
Inc. since October 1995; Director and Executive Vice President of Schroder
Capital Management International Ltd. since 1989.
John Y. Keffer, Vice President of the Trust. 56. Two Portland Square,
Portland, Maine. President of Forum Financial Corp., 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.
Michael Perelstein, Vice President of the Trust. 43. 787 Seventh Avenue,
New York, New York. Director since May 1997 and Senior Vice President of
Schroder Capital Management International Inc. since January 1997. Formerly,
Managing Director of MacKay - Shields Financial Corp.
Catherine A. Mazza, Vice President of the Trust. 39. 787 Seventh Avenue,
New York, New York. First Vice President, Schroder Capital Management
International Inc. and Schroder Capital Management Inc. President, Schroder Fund
Advisors Inc. Vice President, Schroder Capital Funds,
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Schroder Capital Funds II, and Schroder Series Trust. Formerly, Vice President,
Alliance Capital Management L.P.
Alexandra Poe, Secretary and Vice President of the Trust. 38. 787 Seventh
Avenue, New York, New York. Vice President, Schroder Capital Management
International Inc. Senior Vice President, Secretary, and General Counsel,
Schroder Fund Advisors Inc. Vice President and Secretary, Schroder Capital
Funds, Schroder Capital Funds II, and Schroder Series Trust. Assistant
Secretary, Schroder Series Trust II. Formerly, Attorney, Gordon, Altman,
Butowsky, Weitzen, Shalov & Wein; Vice President and Counsel, Citibank, N.A.
Jane E. Lucas, Vice President of the Trust. 38. 787 Seventh Avenue, New
York, New York. Director, Schroder Capital Management Inc. Director and Senior
Vice President, Schroder Capital Management International Inc. Assistant
Director, Schroder Investment Management Ltd.
Fergal Cassidy, Treasurer and Principal Financial and Accounting Officer of
the Trust. 29. 787 Seventh Avenue, New York, New York. Vice President and
Treasurer, Schroder Capital Management Inc. Vice President and Comptroller,
Schroder Capital Management International Inc. Treasurer and Chief Financial
Officer, Schroder Fund Advisors Inc. Assistant Treasurer, Schroder Series Trust.
Formerly, Senior Accountant, Concurrency Management Corp.
Alan Mandel, Assistant Treasurer of the Trust. 41. 787 Seventh Avenue, New
York, New York. First Vice President of Schroder Capital Management
International Inc. since September 1998. Formerly, Director of Mutual Fund
Administration for Salomon Brothers Asset Management; Chief Financial Officer
and Vice President of Mutual Capital Management.
Carin Muhlbaum, Assistant Secretary of the Trust. 36. Vice President of
Schroder Capital Management International Inc. since 1998. Formerly, an
investment management attorney with Seward & Kissel and prior thereto, with
Gordon Altman Butowsky Weitzen Shalov & Wein.
Nicholas Rossi, Assistant Secretary of the Trust. 35. 787 Seventh Avenue,
New York, New York. Associate of Schroder Capital Management International Inc.
since October 1997 and Assistant Vice President of Schroder Fund Advisors Inc.
since March 1998. Formerly, Mutual Fund Specialist, Wilkie Farr & Gallagher;
Fund Administrator, Furman Selz LLC since 1992.
Thomas G. Sheehan, Assistant Treasurer and Assistant Secretary of the
Trust. 44. Two Portland Square, Portland, Maine. Relationship Manager and
Counsel, Forum Financial Services, Inc. since 1993. Formerly, Special Counsel,
U.S. Securities and Exchange Commission, Division of Investment Management,
Washington, D.C.
John A. Troiano, Vice President of the Trust. 38. 787 Seventh Avenue, New
York, New York. Director of Schroder Capital Management Inc. since April 1997;
Chief Executive Officer, since July 1, 1997, of Schroder Capital Management
International Inc. and Managing Director and Senior Vice President of Schroder
Capital Management International Inc. since October 1995. Formerly, employed by
various affiliates of Schroder Capital Management International Inc. in various
positions in the investment research and portfolio management areas since 1981.
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Ira L. Unschuld, Vice President of the Trust. 33. 787 Seventh Avenue, New
York, New York. Group Vice President of Schroder Capital Management
International Inc. since April 1998 and an Associate from July 1990 to April
1993.
Except as otherwise noted, the principal occupations of the Trustees
and officers for the last five years have been with the employers shown above,
although in some cases they have held different positions with such employers or
their affiliates.
TRUSTEE COMPENSATION
Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust, Schroder, or Schroder Fund Advisors Inc. received the following
compensation for the fiscal year ended October 31, 1998:
7 COMPENSATION TABLE
- --------------------------------------------------------------------------------
(2) (3)
AGGREGATE TOTAL COMPENSATION
(1) COMPENSATION FROM TRUST AND
FROM TRUST FUND COMPLEX PAID TO
NAME OF TRUSTEES*
TRUSTEE
- -------------------------------------------------------------------------
David N. Dinkins $3,546 $14,250
- -------------------------------------------------------------------------
Peter E. Guernsey $3,911 $23,750
- -------------------------------------------------------------------------
John I. Howell $3,911 $25,000
- -------------------------------------------------------------------------
Peter S. Knight $3,911 $15,500
- -------------------------------------------------------------------------
William L. Means** $0 $9,500
- -------------------------------------------------------------------------
Clarence F. Michalis $3,911 $14,250
- -------------------------------------------------------------------------
Hermann C. Schwab $3,911 $14,250
- -------------------------------------------------------------------------
* The Total Compensation listed in column (3) for each Trustee includes
compensation for services as a Trustee of the Trust, Schroder Capital Funds
("SCF"), Schroder Capital Funds II ("SCF II"), Schroder Series Trust ("SST"),
and Schroder Series Trust II (formerly Schroder Asian Growth Fund, Inc., "SST
II"). The Trust, SCF, SCF II, SST, and SST II are considered part of the same
"Fund Complex" for these purposes.
** Mr. Means was elected Trustee of the Trust on December 15, 1998.
As of May 7, 1999, the Trustees of the Trust as a group owned less than 1%
of the outstanding shares of each Fund. Mr. Ira Unschuld, principal advisor to
and vice president of Schroder Micro Cap Fund, held _____% of the Investor
Shares of that Fund.
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The Trust's Trust Instrument provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, except if it is determined in the manner specified in the Trust
Instrument that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust or that such
indemnification would relieve any officer or Trustee of any liability to the
Trust or its shareholders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties. The Trust, at its
expense, provides liability insurance for the benefit of its Trustees and
officers.
SCHRODER AND ITS AFFILIATES
Schroder has served as the investment adviser for the Fund since its
inception. Schroder is a wholly-owned subsidiary of Schroder U.S. Holdings Inc.,
which engages through its subsidiary firms in the investment banking, asset
management, and securities businesses. Affiliates of Schroder U.S. Holdings Inc.
(or their predecessors) have been investment managers since 1927. Schroder
itself has been an investment manager since 1962, and, together with its United
Kingdom affiliate, Schroder Capital Management International Limited, served as
investment manager for approximately $27.1 billion as of December 31, 1998.
Schroder U.S. Holdings Inc. is an indirect, wholly-owned U.S. subsidiary of
Schroders plc, a publicly owned holding company organized under the laws of
England. Schroders plc and its affiliates engage in international merchant
banking and investment management businesses, and as of December 31, 1998, had
under management assets of approximately $195 billion.
Schroder Fund Advisors Inc., an affiliate of Schroder that serves as the
Trust's distributor, is a wholly-owned subsidiary of Schroder Capital Management
International Inc. Schroder Capital Management International Inc. is also a
wholly-owned subsidiary of Schroder U.S. Holdings Inc.
INVESTMENT ADVISORY AGREEMENT
Under an Investment Advisory Agreement between the Trust and Schroder
(the "Advisory Agreement"), Schroder, at its expense, provides the Fund with
investment advisory services and advises and assists the officers of the Trust
in taking such steps as are necessary or appropriate to carry out the decisions
of its Trustees regarding the conduct of business of the Trust and the Fund. The
fees to be paid under the Advisory Agreement are set forth in the Prospectuses.
Under the Advisory Agreement, Schroder is required to regularly provide
the Fund with investment research, advice, and supervision and furnishes
continuously investment programs consistent with the investment objective and
policies of the Fund, and determines what securities shall be purchased, what
securities shall be held or sold, and what portion of the Fund's assets shall be
held uninvested, subject always to the provisions of the Trust's Trust
Instrument and By-laws, and the provisions of the 1940 Act, and to the Fund's
investment objective, policies, and restrictions, and subject further to such
policies and instructions as the Trustees may from time to time establish.
Schroder makes available to the Trust, without additional expense to
the Trust, the services of such of its directors, officers, and employees as may
duly be elected Trustees or officers of the Trust, subject to their individual
consent to serve and to any limitations imposed by law. Schroder pays the
compensation and expenses of officers and executive employees of the Trust.
Schroder also provides investment advisory research and statistical facilities
and all clerical services relating to such research, statistical, and investment
work. Schroder pays the Trust's office rent.
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Under the Advisory Agreement, the Trust is responsible for all its
other expenses, including clerical salaries not related to investment
activities; fees and expenses incurred in connection with membership in
investment company organizations; brokers' commissions; payment for portfolio
pricing services to a pricing agent, if any; legal expenses; auditing expenses;
accounting expenses; taxes and governmental fees; fees and expenses of the
transfer agent and investor servicing agent of the Trust; the cost of preparing
share certificates or any other expenses, including clerical expenses, incurred
in connection with the issue, sale, underwriting, redemption, or repurchase of
shares; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of the Trustees of the Trust who are not affiliated
with Schroder; the cost of preparing and distributing reports and notices to
shareholders; public and investor relations expenses; and fees and disbursements
of custodians of the Fund's assets. The Trust is also responsible for its
expenses incurred in connection with litigation, proceedings, and claims and the
legal obligation it may have to indemnify its officers and Trustees with respect
thereto.
Schroder's compensation under the Advisory Agreement may be reduced in
any year if the Fund's expenses exceed the limits on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Fund are qualified for offer or sale.
The Advisory Agreement may be terminated without penalty by vote of the
Trustees, by the shareholders of the Fund, or by Schroder on 60 days' written
notice. The Advisory Agreement also terminates without payment of any penalty in
the event of its assignment. In addition, the Advisory Agreement may be amended
only by a vote of the shareholders of the Fund, and the Advisory Agreement
provides that it will continue in effect from year to year only so long as such
continuance is approved at least annually with respect to the Fund by vote of
either the Trustees or the shareholders of the Fund, and, in either case, by a
majority of the Trustees who are not "interested persons" of Schroder. In each
of the foregoing cases, the vote of the shareholders is the affirmative vote of
a "majority of the outstanding voting securities" as defined in the 1940 Act.
Forum Administrative Services, LLC ("FAdS") and Forum Shareholder
Services, LLC ("Forum") provide certain accounting, transfer agency, and other
services to the Trust. The Trust compensates FAdS and Forum on a basis approved
by the Trustees.
Schroder has agreed, until October 31, 1999, to reduce the compensation
it is entitled to receive as investment adviser of the Fund to the extent that
the Fund's total operating expenses attributable to its Investor Shares exceed
an annual rate of 2.00% of the Fund's average daily net assets and to the extent
that the Fund's total operating expenses attributable to its Advisor Shares
exceed an annual rate of 2.25% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES
On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Fund Advisors Inc., under which Schroder Fund Advisors
Inc. 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 Fund Advisors Inc. is a wholly owned subsidiary of
Schroder and is a registered broker-dealer organized to act as administrator and
distributor of mutual funds.
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For providing administrative services Schroder Fund Advisors Inc. is
entitled to receive a monthly fee at the annual rate of 0.25% of the Fund's
average daily net assets. The administration agreement is terminable with
respect to the Fund without penalty, at any time, by the Trustees upon 60 days'
written notice to Schroder Fund Advisors Inc. or by Schroder Fund Advisors Inc.
upon 60 days' written notice to the Trust.
The Trust has entered into a subadministration agreement with FAdS.
Under its agreement, FAdS assists Schroder Fund Advisors Inc. 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 of 0.10% of
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.
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Trust, Schroder Fund
Advisors Inc. (the "Distributor"), 787 Seventh Avenue, New York, New York 10019,
serves as the distributor for the Trust's continually offered shares. The
Distributor pays all of its own expenses in performing its obligations under the
Distribution Agreement. The Distributor is not obligated to sell any specific
amount of shares of the Fund. Please see "Administrative Services" for ownership
information regarding the Distributor.
DISTRIBUTION PLAN FOR ADVISOR SHARES. The Fund has adopted a
Distribution Plan under Rule 12b-1 of the 1940 Act pursuant to which the Fund
may pay the Distributor compensation in an amount limited in any fiscal year to
the annual rate of 0.25% of the Fund's average daily net assets attributable to
Advisor Shares. The Trustees have not authorized any payments under the
Distribution Plan, although they may at any time authorize payments at an annual
rate of up to 0.50% of the Fund's average daily net assets attributable to
Advisor Shares. The Distribution Plan also relates to payments made pursuant to
the Trust's Shareholder Servicing Plan for Advisor Shares, to the extent such
payments may be deemed to be primarily intended to result in the sale of the
Fund's Advisor Shares. See "Shareholder Servicing Plan for Advisor Shares"
below.
The various costs and expenses that may be paid or reimbursed under the
Distribution Plan include advertising expenses, costs of printing prospectuses
and other materials to be given or sent to prospective investors, expenses of
sales employees or agents of the Distributor, including salary, commissions,
travel and related expenses in connection with the distribution of Advisor
Shares, payments to broker-dealers who advise shareholders regarding the
purchase, sale, or retention of Advisor Shares, and payments to banks, trust
companies, broker-dealers (other than the Distributor) or other financial
organizations.
The Distribution Plan may not be amended to increase materially the
amount of distribution expenses permitted thereunder without the approval of a
majority of the outstanding Advisor Shares of the Fund. Any other material
amendment to the Distribution Plan must be approved both by a majority of the
Trustees and a majority of those Trustees ("Qualified 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 Distribution Plan
or in any related agreement, by vote cast in person at a meeting called for the
purpose. The Distribution Plan will continue in effect for successive one-year
periods
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provided each such continuance is approved by a majority of the Trustees and the
Qualified Trustees by vote cast in person at a meeting called for the purpose.
The Distribution Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by vote of a majority of the Fund's outstanding Advisor
Shares.
SHAREHOLDER SERVICING PLAN FOR ADVISOR SHARES. The Fund has also adopted
a Shareholder Servicing Plan (the "Service Plan") for its Advisor Shares. Under
the Service Plan, the Fund pays fees to the Distributor at an annual rate of up
to 0.25% of the average daily net assets of the Fund attributable to its Advisor
Shares. The Distributor 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 the Distributor at a rate not exceeding 0.25% of the
average daily net assets of the Advisor Shares of the 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. 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 the
Distributor. Please contact your Service Organization for details.
The various costs and expenses that may be paid or reimbursed under the
Distribution Plan include advertising expenses, costs of printing prospectuses
and other materials to be given or sent to prospective investors, expenses of
sales employees or agents of the Distributor, including salary, commissions,
travel and related expenses in connection with the distribution of Advisor
Shares, payments to broker-dealers who advise shareholders regarding the
purchase, sale, or retention of Advisor Shares, and payments to banks, trust
companies, broker-dealers (other than the Distributor) or other financial
organizations.
The Distribution Plan may not be amended to increase materially the
amount of distribution expenses permitted thereunder without the approval of a
majority of the outstanding Advisor Shares of the Fund. Any other material
amendment to the Distribution Plan must be approved both by a majority of the
Trustees and a majority of those Trustees ("Qualified 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 Distribution Plan
or in any related agreement, by vote cast in person at a meeting called for the
purpose. The Distribution Plan will continue in effect for successive one-year
periods provided each such continuance is approved by a majority of the Trustees
and the Qualified Trustees by vote cast in person at a meeting called for the
purpose. The Distribution Plan may be terminated at any time by vote of a
majority of the Qualified Trustees or by vote of a majority of the Fund's
outstanding Advisor Shares.
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No payments have yet been made under the Service Plan because the Fund
has no Advisor Shares outstanding.
FUND ACCOUNTING
Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of
Forum, performs fund accounting services for the Fund pursuant to an agreement
with the Trust. Under the Accounting 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
each Fund above one. Forum Accounting is entitled to an additional $24,000 per
year for global and international funds, and an additional $12,000 per year with
respect to tax-free money market funds, funds with more than 25% of their total
assets invested in asset-backed securities, funds that have more than 100
security positions, and funds that have a monthly turnover rate of 10% or more.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Schroder may place portfolio transactions with broker-dealers which
furnish, without cost, certain research, statistical, and quotation services of
value to Schroder and its affiliates in advising the Trust and other clients,
provided that it shall always seek best price and execution with respect to
transactions. Certain investments may be appropriate for the Trust and for other
clients advised by Schroder. Investment decisions for the Trust and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment, and the size of their investments generally. Frequently,
a particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients of Schroder on the same
day. In such event, such transactions will be allocated among the clients in a
manner believed by Schroder to be equitable to each. In some cases, this
procedure could have an adverse effect on the price or amount of the securities
purchased or sold by the Trust. Purchase and sale orders for the Trust may be
combined with those of other clients of Schroder in the interest of achieving
the most favorable net results for the Trust.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock exchanges
and other agency transactions involve the payment by the Trust of negotiated
brokerage commissions. Such commissions vary among different brokers. Also, a
particular broker may charge different commissions according to such factors as
the difficulty and size of the transaction. Transactions in foreign securities
often involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States, and therefore certain portfolio
transaction costs may be higher than the costs for similar transactions executed
on U.S. securities exchanges. There is generally no stated commission in the
case of securities traded in the over-the-counter markets, but the price paid by
the Trust usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the
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price paid by the Trust includes a disclosed, fixed commission or discount
retained by the underwriter or dealer.
Schroder places all 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, it uses its best efforts to obtain the best price and
execution available. In seeking the best price and execution, Schroder considers
all factors it deems relevant, including price, the size of the transaction, the
nature of the market for the security, the amount of the commission, the timing
of the transaction (taking into account market prices and trends), the
reputation, experience, and financial stability of the broker-dealer involved,
and the quality of service rendered by the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research, statistical, and quotation services from broker-dealers
that execute portfolio transactions for the clients of such advisers. Consistent
with this practice, Schroder receives research, statistical, and quotation
services from many broker-dealers with which it places the Trust's portfolio
transactions. These services, which in some cases may also be purchased for
cash, include such matters 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
Schroder and its affiliates in advising various of their clients (including the
Trust), 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 Schroder and its affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and by the Advisory Agreement, Schroder may cause the Fund to pay a
broker that provides brokerage and research services to Schroder an amount of
disclosed commission for effecting a securities transaction for the Fund in
excess of the commission which another broker would have charged for effecting
that transaction. Schroder's authority to cause the Fund to pay any such greater
commissions is also subject to such policies as the Trustees may adopt from time
to time.
To the extent permitted by law, the Fund may engage in brokerage
transactions with Schroder & Co. Inc. ("Schroder & Co."), an affiliate of
Schroder, to effect securities transactions on the New York Stock Exchange only
or Schroder Securities Limited and its affiliates (collectively, "Schroder
Securities"), affiliates of Schroder, to effect securities transactions on
various foreign securities exchanges on which Schroder Securities has trading
privileges. Consistent with regulations under the 1940 Act, the Fund has adopted
procedures which are reasonably designed to provide that any commissions or
other remuneration the Fund pays to Schroder & Co. and Schroder Securities do
not exceed the usual and customary broker's commission. In addition, the Fund
will adhere to the rule, under the Securities Exchange Act of 1934, governing
floor trading. This rule permits the Fund to effect, but not execute, exchange
listed securities transactions with Schroder & Co. Schroder & Co. pays a portion
of the brokerage commissions it receives from the Fund to the brokers executing
the transactions. Also, due to securities law limitations, the Fund may be
required to limit purchases of securities in a public offering if Schroder & Co.
or Schroder Securities or one of their affiliates is a member of the syndicate
for that offering.
The Fund does not have any understanding or arrangement to direct any
specific portion of its brokerage to Schroder & Co. or Schroder Securities, and
will not direct brokerage to Schroder & Co. or Schroder Securities in
recognition of research services.
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The Fund has paid no brokerage commissions to Schroder & Co. or Schroder
Securities since its inception.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of shares of the Fund is
determined daily as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time) on each day the Exchange is open for trading.
Any assets or liabilities initially expressed in terms of foreign 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 New York Stock Exchange
is normally closed on the following national holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving, and Christmas.
The Trustees have established procedures for the valuation of the Fund's
securities, as follows:
Equity securities listed or traded on a domestic or foreign stock
exchange for which last sales information is regularly reported are valued at
their last reported sales prices on such exchange on that day or, in the absence
of sales that day, at values based on the closing mid-market price, or, if none,
the last sales price on the preceding trading day. (Where the securities are
traded on more than one exchange, they are valued on the exchange on which the
security is primarily traded.) Unlisted securities for which over-the-counter
market quotations are readily available generally are valued at the most
recently reported mid-market prices. Securities that do not have readily
available market quotations are valued at fair value pursuant to procedures
established by the Trustees. Fixed income securities are valued based on
quotations provided by the pricing services approved by the Trustees. Money
market instruments having a remaining maturity of 60 days or less may be valued
at amortized cost unless Schroder believes another valuation is more
appropriate.
Reliable market quotations are not considered to be readily available
for long-term corporate bonds and notes, certain preferred stocks, tax-exempt
securities or certain foreign securities. These investments are stated at fair
value on the basis of valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal, institutional-size trading
units of such securities using methods based on market transactions for
comparable securities and various relationships between securities which are
generally recognized by institutional traders.
If any securities held by the Fund are restricted as to resale, Schroder
will obtain a valuation based on the current bid for the restricted security
from one or more independent dealers or other parties reasonably familiar with
the facts and circumstances of the security. If Schroder is unable to obtain a
fair valuation for a restricted security from an independent dealer or other
independent party, a pricing committee (comprised of certain directors and
officers at Schroder) will determine the bid value of such security. The
valuation procedures applied in any specific instance are likely to vary from
case to case. However, consideration is generally given to the financial
position of the issuer and other fundamental analytical data relating to the
investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by the Trust
in connection with such disposition). In addition, specific factors are also
generally considered, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities, and any available
analysts' reports regarding the issuer.
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Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the New
York Stock Exchange. The values of these securities used in determining the net
asset value of the Trust's shares are computed as of such times. Also, because
of the amount of time required to collect and process trading information as to
large numbers of securities issues, the values of certain securities (such as
convertible bonds and U.S. Government Securities) are determined based on market
quotations collected earlier in the day at the latest practicable time prior to
the close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange which will
not be reflected in the computation of the Trust's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value, in the manner described
above.
The proceeds received by the Fund for each issue or sale of its shares,
and all income, earnings, profits, and proceeds thereof, subject only to the
rights of creditors, will be specifically allocated to the Fund, and constitute
the underlying assets of the Fund. The underlying assets of the Fund will be
segregated on the Trust's books of account, and will be charged with the
liabilities in respect of the Fund and with a share of the general liabilities
of the Trust. The Fund's assets will be further allocated among its constituent
classes of shares on the Trust's books of account. Expenses with respect to any
two or more Funds or classes may be allocated in proportion to the net asset
values of the respective Funds or classes except where allocations of direct
expenses can otherwise be fairly made to a specific Fund or class.
REDEMPTIONS IN KIND
In consideration of the best interests of the remaining shareholders,
the Trust may pay certain redemption proceeds in whole or in part by a
distribution in kind of securities held by the Fund in lieu of cash. The Trust
will, however, redeem Investor Shares or Advisor Shares of the Fund solely in
cash up to the lesser of $250,000 or 1% of the Fund's net assets during any
90-day period for any one shareholder. The Trust does not expect to redeem
shares in kind under normal circumstances. If your shares are redeemed in kind,
you should expect to incur transaction costs upon the disposition of the
securities received in the distribution.
TAXES
The Fund intends to qualify each year and elect to be taxed as a regulated
investment company under Subchapter M of the United States Internal Revenue Code
of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, the Fund will not be subject to federal income
tax on any of its net investment income or net realized capital gains that are
distributed to shareholders.
In order to qualify as a "regulated investment company," the Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies,
and (b) diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government Securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total assets
of the Fund and not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any issuer (other than U.S. Government Securities).
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If the Fund fails to distribute in a calendar year substantially all of
its ordinary income for such year and substantially all of its capital gain net
income for the one-year period ending October 31 (or later if the Fund is
permitted so to elect and so elects), plus any retained amount from the prior
year, that Fund will be subject to a 4% excise tax on the undistributed amounts.
A dividend paid to shareholders by the Fund in January of a year generally is
deemed to have been paid by the Fund on December 31 of the preceding year, if
the dividend was declared and payable to shareholders of record on a date in
October, November, or December of that preceding year. The Fund intends
generally to make distributions sufficient to avoid imposition of the 4% excise
tax. In order to receive the favorable tax treatment accorded regulated
investment companies and their shareholders, moreover, the Fund must in general
distribute with respect to each taxable year at least 90% of the sum of its
taxable net investment income, its net tax-exempt income, and, the excess, if
any, of net short-term capital gains over net long-term capital losses for such
year.
The Fund's distributions will be taxable to you as ordinary income to
the extent derived from the Fund's investment income and net short-term gains
(that is, net gains from capital assets held for no more than one year).
Distributions designated by the Fund as deriving from net gains on capital
assets held for more than one year will be taxable to you as long-term capital
gains (generally subject to a 20% tax rate), regardless of how long you have
held the shares. Distributions will be taxable to you 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.
Upon the disposition of shares of the Fund (whether by sale, exchange,
or redemption), a shareholder will realize a gain or loss. Such gain or loss
will be capital gain or loss if the shares are capital assets in the
shareholder's hands, and will be long-term or short-term generally depending
upon the shareholder's holding period for the shares. Long-term capital gains
will generally be taxed at a federal income tax rate of 20%. Any loss realized
by a shareholder on a disposition of shares held by the shareholder for six
months or less will be treated as a long-term capital loss to the extent of any
distributions of capital gain dividends received by the shareholder with respect
to such shares. In general, any loss realized upon a taxable disposition of
shares will be treated as long-term capital loss if the shares have been held
for more than one year, and otherwise as short-term capital loss. With respect
to investment income and gains received by the Fund from sources outside the
United States, such income and gains may be subject to foreign taxes which are
withheld at the source. The effective rate of foreign taxes in which the Fund
will be subject depends on the specific countries in which its assets will be
invested and the extent of the assets invested in each such country and,
therefore, cannot be determined in advance.
The Fund's ability to use options, futures, and forward contracts and
other hedging techniques, and to engage in certain other transactions, may be
limited by tax considerations. The Fund's transactions in
foreign-currency-denominated debt instruments and its hedging activities will
likely produce a difference between its book income and its taxable income. This
difference may cause a portion of the Fund's distributions of book income to
constitute returns of capital for tax purposes or require the Fund to make
distributions exceeding book income in order to permit the Trust to continue to
qualify, and be taxed under Subchapter M of the Code, as a regulated investment
company. The tax consequences of certain hedging transactions have been modified
by the Taxpayer Relief Act of 1997.
Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which the Fund has invested and
their face value ("original issue discount") is considered to be income to the
Fund each year, even though the Fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the net investment income of the Fund which must be
distributed to shareholders in order to maintain the qualification of the Fund
as a regulated investment company and to avoid federal income tax at the level
of the Fund.
This discussion of the federal income tax and state tax treatment of the
Trust and its shareholders is based on the law as of the date of this SAI.
PRINCIPAL HOLDERS OF SECURITIES
As of ________ __, 1999, the Trustees of the Trust and, except a noted
below, the officers of the Trust, as a group owned less than 1% of the
outstanding shares of either class of each Fund of the Trust.
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The following table lists those shareholders that owned 5% or more of the
shares of the Fund as of May 7, 1999, and therefore are controlling persons of
the Fund. Because these shareholders hold a substantial number of shares, they
may be able to require that the Trust hold special shareholder meetings and may
be able to determine the outcome of any shareholder vote.
Schroders Incorporated 100%
787 Seventh Ave.
New York, NY 10019
CUSTODIAN
The Chase Manhattan Bank, through its Global Custody Division located at
125 London Wall, London EC2Y 5AJ, United Kingdom, acts as custodian of the
assets of the Fund. The custodian's responsibilities include safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on the Fund's investments. The
custodian does not determine the investment policies of the Fund or decide which
securities the Fund will buy or sell.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC, Two Portland Square, Portland, Maine
04101, is the Fund's transfer agent and dividend disbursing agent.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, the Trust's independent accountants, provide
audit services, tax return preparation services, and assistance and consultation
in connection with the Trust's various Securities and Exchange Commission
filings. Their address is One Post Office Square, Boston, Massachusetts 02109.
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
serves as counsel to the Trust.
SHAREHOLDER LIABILITY
Under Delaware law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Trust Instrument disclaims shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the Trustees.
The Trust's Trust Instrument provides for indemnification out of the Fund's
property for all loss and expense of any shareholder held personally liable for
the obligations of the Fund. Thus the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Fund would be unable to meet its obligations.
32
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Trust Instrument of Registrant Amended and Restated as of March 13, 1998
(see Note 1).
(b) Bylaws of Registrant dated September 8, 1995 (see Note 2).
(c) See the following Articles and Sections in the Trust Instrument filed as
Exhibit (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.
(d) (1) Investment Advisory Agreement between the Trust and Schroder Capital
Management International Inc. ("SCMI") dated as of September 14, 1998
with respect to Schroder Greater China Fund and Schroder Cash Reserves
Fund (see Note 1).
(2) Investment Advisory Agreement between the Trust and SCMI dated as of
January 9, 1996, with respect to Schroder U.S. Diversified Growth Fund
(see Note 2).
(3) 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 3).
(4) 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 3).
(5) 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 4).
(6) Investment Advisory Agreement between the Trust and SCMI dated as of
March 5, 1997, with respect to Schroder International Bond Fund (see
Note 4).
(7) Investment Advisory Agreement between the Trust and SCMI dated as of
March 5, 1997, with respect to Schroder Micro Cap Fund (see Note 4).
(8) Investment Advisory Agreement between the Trust and SCMI dated as of
November 26, 1996, with respect to Schroder Emerging Markets Fund (see
Note 4).
(e) Distribution Agreement between the Trust and Schroder Fund Advisors Inc.
dated as of December 15, 1998, with respect to Schroder U.S. Diversified
Growth Fund, Schroder Emerging Markets Fund Institutional Portfolio,
Schroder International Fund, Schroder U.S. Smaller Companies Fund, Schroder
International Smaller Companies Fund, Schroder Emerging Markets Fund,
Schroder Cash Reserves Fund, Schroder International Bond Fund, Schroder
Greater China Fund and Schroder Micro Cap Fund (see Note 5).
(f) Not Applicable.
(g) (1) 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 U.S. Smaller Companies Fund,
Schroder International Smaller Companies Fund, Schroder U.S.
Diversified Growth Fund, Schroder Emerging Markets Fund, Schroder Cash
Reserves Fund, Schroder International Bond Fund, Schroder Greater
China Fund and Schroder Micro Cap Fund (see Note 4).
(2) Custody Agreement between the Trust and Norwest Bank N.A. dated as
of________with respect to Schroder U.S. Diversified Growth Fund,
Schroder Micro Cap Fund and Schroder U.S. Smaller Companies Fund (see
Note 5).
(h) (1) Administration Agreement between the Trust and Schroder Fund Advisors
Inc. dated as of November 26, 1996, with respect to Schroder
International Fund, Schroder U.S. Smaller Companies Fund, Schroder
Emerging Markets Fund Institutional Portfolio, Schroder International
Smaller Companies Fund, Schroder Micro Cap Fund, Schroder Emerging
Markets Fund, Schroder Cash Reserves Fund, Schroder International Bond
Fund and Schroder Greater China Fund (see Note 1).
<PAGE>
(2) 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. Diversified Growth Fund, Schroder
U.S. Smaller Companies Fund, Schroder Emerging Markets Fund
Institutional Portfolio, Schroder International Smaller Companies Fund,
Schroder Micro Cap Fund, Schroder Emerging Markets Fund, Schroder Cash
Reserves Fund, Schroder Greater China Fund and Schroder International
Bond Fund (see Note 1).
(3) Transfer Agency Agreement between the Trust and Forum Shareholder
Services, LLC dated as of January 9, 1996, as amended, with respect to
Schroder Emerging Markets Fund Institutional Portfolio, Schroder
International Fund, Schroder U.S. Smaller Companies Fund, Schroder
International Smaller Companies Fund, Schroder U.S. Diversified Growth
Fund, Schroder Emerging Markets Fund, Schroder Cash Reserves Fund,
Schroder Greater China Fund, Schroder International Bond Fund and
Schroder Micro Cap Fund (see Note 4).
(4) 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. Diversified Growth Fund, Schroder
U.S. Smaller Companies Fund, Schroder Emerging Markets Fund
Institutional Portfolio, Schroder International Smaller Companies Fund,
Schroder Cash Reserves Fund, Schroder Micro Cap Fund, Schroder Greater
China Fund and Schroder Emerging Markets Fund (see Note 4).
(5) Shareholder Service Plan adopted by the Trust with respect to Schroder
Greater China Fund (see Note 6).
(i) (1) Opinion and consent of Smith Katzenstein Furlow LLP as to the legalit
of the securities previously registered (see Note 4).
(2) Opinion and consent of Jacobs Persinger & Parker with respect to
Schroder International Fund, Schroder U.S. Equity Fund and Schroder
U.S. Smaller Companies Fund (see Note 7).
(3) Opinion and consent of David I. Goldstein, Esq. as to the legality of
the securities being registered (see Note 8).
(j) Not Applicable.
(k) No financial statements were omitted from Item 22.
(l) Not Applicable.
(m) Distribution Plan adopted by Registrant dated as of January 9, 1996 with
respect to Advisor 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
Cash Reserves Fund, Schroder Greater China Fund, Schroder International
Bond Fund and Schroder U.S. Diversified Growth Fund (see Note 3).
(n) Not Applicable.
(o) Multiclass (Rule 18f-3) Plan adopted by Trust (see Note 9).
Other Exhibits:
Power of Attorney forms pursuant to which this Post-Effective Amendment
is signed (see Note 10). Power of Attorney from Fergal Cassidy (see
Note 1).
Power of Attorney from Sharon L. Haugh (see Note 1).
Power of Attorney from David N. Dinkins (see Note 1).
Power of Attorney from Peter S. Knight (see Note 1).
Power of Attorney from Hermann C. Schwab (see Note 1).
Power of Attorney from Mark J. Smith (see Note 1).
Power of Attorney from John I. Howell (see Note 1).
Power of Attorney from Peter E. Guernsey (see Note 1).
Power of Attorney from Clarence F. Michalis (see Note 1).
<PAGE>
- ---------------
Notes:
1 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
68 via EDGAR on September 30, 1998, accession number 0001004402-98-000531.
2 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
61 via EDGAR on April 18, 1997, accession number 0000912057-97-013527.
3 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
63 via EDGAR on July 18, 1997, accession number 001004402-97-000035.
4 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
66 via EDGAR on February 27, 1998, accession number 0001004402-98-000149.
5 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
70 via EDGAR on December 31, 1998, accession number 0001004402-98-000679.
6 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
67 via EDGAR on July 17, 1998, accession number 001004402-98-000399.
7 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
54 via EDGAR on October 24, 1996, accession number 0000912057-96-023645.
8 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
69 via EDGAR on November 30, 1998, accession number 0001004402-98-000621.
9 Exhibit incorporated by reference as filed on Post-Effective Amendment No.
65 via EDGAR on January 27, 1998, accession number 0001004402-98-000053
10 Exhibit incorporated herein by reference as filed on Post-Effective
Amendment No. 62 via EDGAR on June 30, 1997, accession number
0001004402-97-000030.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
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 to the matter based upon a review of
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Schroder Capital Management International Inc.
The following is a description of any business, profession, vocation or
employment of a substantial nature in which the investment adviser of
the registrant, Schroder Capital Management International Inc.
("SCMI"), and each trustee or officer of the 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 787 Seventh
Avenue, 34th Floor, New York, NY 10019. 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 Chairman, Director SCMI
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
Director Schroders plc.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President, Director Schroders Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman, Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Certain 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.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director, Senior Vice President Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David R. Robertson Group Vice President SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Fund Advisors Inc.
----------------------------------
------------------------------------
Director of Institutional Business Oppenheimer Funds, Inc.
resigned 2/98
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Ellen B. Sullivan Group Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Catherine A. Mazza Group Vice President SCMI
------------------------------------ ----------------------------------
President, Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Heather F. Crighton First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ira Unschuld Group Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul M. Morris Senior Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Principal, Senior Portfolio Manager Weiss, Peck & Greer LLC
resigned 12/96
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Susan B. Kenneally First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
*Schroder Ltd. and Schroders plc. are located at 31 Gresham St.,
London EC2V 7QA, United Kingdom.
(b) Schroder Investment Management International Ltd.
The following is a description of any business, profession, vocation or
employment of a substantial nature in which the investment subadviser
of Schroder International Smaller Companies Portfolio, Schroder
Investment Management International Ltd. ("SIMIL"), and each trustee or
officer of the investment subadviser 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 below is set forth in the note following the table. 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.
<PAGE>
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connections*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Hugh Westrope Bolland Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroders (C.I.) Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Investment Management
(Hong Kong)
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Properties Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Personal Investment
Management
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director, Chief Executive Officer Schroder Investment Management
Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Schroder Investment Management
(Australasia) Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Schroder Investment Management
(UK) Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jennifer A. Bonathan Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Capital Management
International Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Nigel J. Burnham Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Finance Officer, First Vice SCMI
President
------------------------------------ ----------------------------------
Finance Officer, First Vice Schroder Capital Management
President International Limited
------------------------------------ ----------------------------------
Assistant Vice President Schroder Fund Advisors, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert G. Davy Director SIMIL
------------------------------------ ----------------------------------
Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Denis H. Clough Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management
International Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Investment Management
(UK) Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SIMIL
------------------------------------ ----------------------------------
Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Madeleine S. Hall Director SIMIL
----------------------------------
------------------------------------ ----------------------------------
Director Schroder Investment Management
(UK) Limited
------------------------------------ ----------------------------------
Assistant Director Schroder Investment Management
Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jeremy A. Hill Chairman, Director SIMIL
------------------------------------ ----------------------------------
Commissioner PT Schroder Investment
Management Indonesia
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Schroder Investment Management
(Hong Kong) Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Schroder Investment Management
(Japan) Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Korea Schroder Fund Management
Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Investment Management
Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director/Chairman Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ian Johnson Secretary SIMIL
------------------------------------ ----------------------------------
Secretary Schroder Capital Management
International Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Assistant Secretary J. Henry Schroder & Co., Limited
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Jan Anthony Kingzett Director SIMIL
------------------------------------- ----------------------------------
Deputy Chairman Schroder Investment Management
(Japan) Limited
------------------------------------- ----------------------------------
Chairman Schroder Investment Trust
Management Limited
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Schroder Investment Management
(Singapore) Limited
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Schroder Investment Management
Limited
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Maggie Lay Wah Lee Director SIMIL
------------------------------------- ----------------------------------
Director Schroder Investment Management
(Singapore) Limited
----------------------------------
-------------------------------------
Director Schroder Investment Management
Limited
----------------------------------- ------------------------------------- ----------------------------------
<PAGE>
----------------------------------- ------------------------------------- ----------------------------------
Richard A. Mountford Chief Executive Officer, Chief SIMIL
Operating Officer, Director
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director, Deputy Chairman Schroder Investment Management
(Singapore) Limited
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Schroder Investment Management
(UK) Limited
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Schroder Investment Management
Limited
----------------------------------- ------------------------------------- ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Nicola Ralston Deputy Chairman, Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Nicola Jane Richards Director SIMIL
------------------------------------ ----------------------------------
Division Director Schroder Investment Management
Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Christopher N. Rodgers Director SIMIL
------------------------------------ ----------------------------------
Director Schroder Investment Management
Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Investment Management
(UK) Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David M. Salisbury Director SIMIL
------------------------------------ ----------------------------------
Chairman, Director SCMI
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.
------------------------------------ ----------------------------------
Director Schroders plc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Daniele Serruya Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Assistant Director, Investment Schroder Investment Management
Manager Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Olaf N. Siedler Director SIMIL
------------------------------------ ----------------------------------
Director Schroder Investment Management
(UK) Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Manager Schroder Investment Management
Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Hugh M. Stewart Director SIMIL
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Investment Management
(UK) Limited
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Manager Schroder Investment Management
Limited
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Thomas J. Willoughby Chief Compliance Officer SIMIL
------------------------------------ ----------------------------------
Schroder Unit Trust Limited Director
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
Each of SCMI, Schroder Capital Management International Limited,
Schroder Investment Management Limited, Schroder Investment Management
(UK) Limited, Schroder Investment Management (Europe), Korea Schroder
Fund Management Limited and Schroder Personal Investment Management,
are located at 33 Gutter Lane, London EC2V 8AS United Kingdom.
<PAGE>
Schroder Investment Management (Singapore) Limited is located at
#47-01 OCBC Centre, Singapore.
Schroder Investment Management (Hong Kong) Limited is located at 8
Connaight Place, Hong Kong.
Schroder Investment Management (Australasia) Limited is located at 225
George Place, Sydney Australia.
PT Schroder Investment Management Indonesia is located at Lippo Plaza
Bldg., 25 Jakarta, 12820.
Schroders (C.I.) Limited is located at St. Peter Port, Guernsey,
Channel Islands, GY1 3UF.
Schroder Properties Limited is located at Senator House, 85 Queen
Victoria Street, London EC4V 4EJ, United Kingdom.
Schroder Fund Advisors Inc. is located at 787 Seventh Avenue, 34th
Floor, New York, NY 10019.
Schroder Ltd. and Schroders plc. are located at 31 Gresham St., London
EC2V 7QA, United Kingdom.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Schroder Fund Advisors Inc., the Registrant's principal underwriter, also
serves as principal underwriter for:
Schroder Series Trust
Schroder Series Trust II
(b) Following is information with respect to each officer and director of
Schroder Fund Advisors, Inc. the Distributor of the shares of Schroder
Emerging Markets Fund Institutional Portfolio, Schroder International Fund,
Schroder U.S. Smaller Companies Fund, Schroder International Smaller
Companies Fund, Schroder U.S. Diversified Growth Fund, Schroder Emerging
Markets Fund, Schroder International Bond Fund, Schroder Micro Cap Fund and
Schroder Greater China Fund (each, a series of the Registrant):
<TABLE>
<S> <C> <C>
Name Position with Underwriter Position with Registrant
---- ------------------------- ------------------------
Catherine A. Mazza President, Director Vice President
Mark J. Smith Director Trustee, President
Sharon L. Haugh Chairman and Director Trustee
Fergal Cassidy Treasurer and Chief Financial Officer Treasurer
Alexandra Poe General Counsel and Senior Vice President Vice President and Secretary
Alan Mandel Senior Vice President Assistant Treasurer
</TABLE>
Business address for each is 787 Seventh Avenue, New York, New York
10019 except for Mark J. Smith, whose business address is 31 Gresham
St., London EC2V 7QA, United Kingdom.
(c) Not Applicable.
ITEM 28. 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 Fund Advisors Inc. (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).
<PAGE>
ITEM 29. MANAGEMENT SERVICES
None.
ITEM 30. UNDERTAKINGS
Registrant undertakes to furnish upon request and without charge to
each person to whom a prospectus is delivered a copy of Registrant's
latest annual report to shareholders relating to the fund to which the
prospectus relates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
post-effective amendment number 73 to the Registrant's 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 May 7, 1999.
SCHRODER CAPITAL FUNDS (DELAWARE)
By: /s/ Alexandra Poe
----------------------------
Alexandra Poe
Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement has been signed below by the following
persons on May 7, 1999.
Principal Executive Officer
Mark J. Smith, President
By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan
Attorney-in-Fact*
Principal Financial Officer
/s/ Fergal Cassidy
- ---------------------------
Fergal Cassidy, Treasurer
The Trustees
Peter E. Guernsey, Trustee
John I. Howell, Trustee
Hermann C. Schwab, Trustee
Clarence F. Michalis, Trustee
Mark J. Smith, Trustee
David N. Dinkins, Trustee
Peter S. Knight, Trustee
Sharon L. Haugh, Trustee
By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan
Attorney-in-Fact*
* Pursuant to powers of attorney filed as Other Exhibits to this registration
statement.