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As filed with the Securities and Exchange Commission on February 26, 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.72
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 53
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:
[X] immediately upon filing pursuant to Rule 485, paragraph (b)
on_________________ pursuant to Rule 485, paragraph (b)
60 days after filing pursuant to Rule 485, paragraph (a)(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 Emerging Markets Fund
Institutional Portfoilio.
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
PROSPECTUS
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
ADVISOR SHARES
March 1, 1999
This prospectus describes Schroder Emerging Markets Fund Institutional
Portfolio, a series of shares of Schroder Capital Funds (Delaware). The Fund
seeks long-term capital appreciation through direct or indirect investment in
equity and debt securities of issuers domiciled or doing business in emerging
market countries. The Trust offers Advisor Shares of the Fund in this
Prospectus.
THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING
SUBSTANTIALLY ALL OF ITS INVESTABLE ASSETS IN SCHRODER EMERGING MARKETS
FUND INSTITUTIONAL PORTFOLIO (THE "PORTFOLIO"), A SEPARATELY MANAGED,
NON-DIVERSIFIED PORTFOLIO OF SCHRODER CAPITAL FUNDS THAT HAS THE SAME
INVESTMENT OBJECTIVE AS, AND INVESTMENT POLICIES THAT ARE SUBSTANTIALLY
SIMILAR TO THOSE OF, THE FUND
Schroder Capital Management International Inc. ("Schroder") manages the Fund.
You can call (800) 730-2932 to find out more about the Fund and other funds in
the Schroder family.
This 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..............................................................6
OTHER INVESTMENT STRATEGIES AND RISKS..........................................8
MANAGEMENT OF THE FUND........................................................12
HOW THE FUND'S SHARES ARE PRICED..............................................13
HOW TO BUY SHARES.............................................................14
HOW TO SELL SHARES............................................................16
ADDITIONAL INFORMATION ABOUT ADVISOR SHARES...................................18
EXCHANGES.....................................................................19
DIVIDENDS AND DISTRIBUTIONS...................................................19
TAXES.........................................................................19
YEAR 2000 DISCLOSURE..........................................................20
FINANCIAL HIGHLIGHTS..........................................................20
<PAGE>
SUMMARY INFORMATION
This summary identifies the investment objective, principal investment
strategies, and principal risks of Schroder Emerging Markets Fund Institutional
Portfolio. The Trust offers Investor Shares of the Fund, which 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.
IN REVIEWING THE FUND'S INVESTMENT OBJECTIVE AND POLICIES BELOW, YOU SHOULD
ASSUME THAT THE INVESTMENT OBJECTIVE AND POLICIES OF THE PORTFOLIO ARE THE SAME
IN ALL MATERIAL RESPECTS AS THOSE OF THE FUND. SCHRODER IS THE INVESTMENT
ADVISER TO THE FUND AND TO THE PORTFOLIO.
After the narrative describing the Fund is a chart showing how the investment
returns of the Fund's Advisor Shares have varied from year to year. The chart
shows returns for each full calendar year since the Fund has had Advisor Shares
outstanding. The table following the chart shows how the Fund's average annual
returns for the last year and since inception of the Advisor Shares compare to a
broad-based securities market index. The bar chart and table provide some
indication of the risks of investing in the Fund by showing the variability of
its returns and comparing the Fund's performance to a broad measure of market
performance. PAST PERFORMANCE IS NOT NECESSARILY AN INDICATION OF FUTURE
PERFORMANCE. It is possible to lose money on an investment in the Fund.
For a discussion of recent market and portfolio developments affecting the
Fund's performance, see the Fund's most recent financial reports. You can call
the Trust at (800) 290-9826 to request a free copy of the financial reports.
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
o INVESTMENT OBJECTIVE. To seek long-term capital appreciation through
direct or indirect investment in equity and debt securities of issuers domiciled
or doing business in emerging market countries in regions such as Southeast
Asia, Latin America, and Eastern and Southern Europe.
o PRINCIPAL INVESTMENTS. The Fund normally invests at least 65% of its
total assets in securities of companies determined by Schroder to be "emerging
market" issuers. The Fund may invest the remaining 35% of its assets in
securities of issuers located anywhere in the world. The Fund may invest in
equity or debt securities of any kind. The Fund is non-diversified.
o INVESTMENT STRATEGIES. The Fund invests primarily in equity
securities of issuers domiciled or doing business in "emerging market" countries
in regions such as Southeast Asia, Latin America, Eastern and Southern Europe,
and Africa. "Emerging market" countries are countries not included at the time
of investment in the Morgan Stanley International World Index of major world
economies. Economies currently in the Index include: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States. Schroder may at times
determine based on its own analysis that an economy included in the Index should
3
<PAGE>
nonetheless be considered an emerging market country, in which case that country
would constitute an emerging market country for purposes of the Fund's
investments. There is no limit on the amount of the Fund's assets that may be
invested in securities of issuers domiciled in any one country.
The Fund invests in issuers and countries 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 also may do the following:
0 Invest in securities of closed-end investment
companies that invest primarily in foreign
securities, including securities of emerging market
issuers.
0 Invest up to 35% of its assets in debt securities,
including lower-quality, high-yielding debt
securities (commonly known as "junk bonds"), which
entail certain risks.
o PRINCIPAL RISKS.
0 EMERGING MARKETS. The Fund may invest in "emerging
market" countries whose securities markets may
experience heightened levels of volatility. The risks
of investing in emerging markets include greater
political and economic uncertainties than in foreign
developed markets, currency transfer restrictions, a
more limited number of potential buyers, and an
emerging market country's dependence on revenue from
particular commodities or international aid.
Additionally, the securities markets and legal
systems in emerging market countries may only be in a
developmental stage and may provide few, or none, of
the advantages or protections of markets or legal
systems available in more developed countries.
Emerging market countries may experience extremely
high levels of inflation, which may adversely affect
those countries' economies and securities markets.
0 FOREIGN SECURITIES. Investments in foreign securities
entail risks not present in domestic investments
including, among others, risks related to political
or economic instability, currency exchange, and
taxation.
0 SMALL COMPANIES. The Fund invests primarily in small
companies, 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
4
<PAGE>
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. There is no limit on the
amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country.
To the extent that the Fund invests a substantial
amount of its assets in one country, it will be more
susceptible to the political and economic
developments and market fluctuations in that country
than if it invested in a more geographically
diversified portfolio.
0 NON-DIVERSIFIED MUTUAL FUND. The Fund is a
"non-diversified" mutual fund, and will invest its
assets in a more limited number of issuers than may
other diversified investment companies. To the extent
the Fund focuses on fewer issues, 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 generally 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).
0 JUNK BONDS. Junk bonds reflect a greater
possibility that adverse changes in the financial
condition of the issuer or in general economic
conditions, or an unanticipated rise in interest
rates, may impair the ability of the issuer to make
payments of interest and principal. If this were
to occur, the values of securities held by the Fund
may become more volatile.
The bar chart and table below provide some indication of the risks of investing
in the Fund by showing the variability of its returns and comparing the Fund's
performance to a broad measure of market performance.
5
<PAGE>
- --------------------------------------------------------------------------------
[EDGAR REPRESENTATION OF GRAPH/CHART]
1997 1998
- ---- ----
- -5.41 -25.46
- --------------------------------------------------------------------------------
During the periods shown above, the highest quarterly return was 16.59% for the
quarter ended December 31, 1998, and the lowest was -22.09% for the quarter
ended September 30, 1998.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------ ----------------- -------------------- ----------------
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS SINCE INCEPTION OF
ENDING DECEMBER 31, 1998) LAST ONE YEAR ADVISOR SHARES
(11/21/96)
- ------------------------------------------------ ----------------- -------------------- ----------------
- ------------------------------------------------ ----------------- -------------------- ----------------
Schroder Emerging Markets Fund Institutional -25.46% -14.01%
Portfolio
- ------------------------------------------------ ----------------- -------------------- ----------------
- ------------------------------------------------ ----------------- -------------------- ----------------
*Morgan Stanley Capital International Emerging -25.33% -17.88%
Markets Free Index
- ------------------------------------------------ ----------------- -------------------- ----------------
</TABLE>
* The Morgan Stanley Capital International Emerging Markets Free Index is an
unmanaged market capitalization index of companies representative of the market
structure of 25 emerging countries in Europe, Latin America, and the Pacific
Basin. The Index reflects actual buyable opportunities for the non-domestic
investor by taking into account local market restrictions on share ownership by
foreigners.
FEES AND EXPENSES
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU INVEST IN
ADVISOR SHARES OF THE FUND. THE FUND'S ANNUAL FUND OPERATING EXPENSES INCLUDE
THE FUND'S PRO RATA PORTION OF ALL OPERATING EXPENSES OF THE PORTFOLIO.
SHAREHOLDER FEES (paid directly from your investment):
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Load None
6
<PAGE>
Maximum Sales Load Imposed on Reinvested Dividends None
Purchase Charge (based on amount invested)(1) 0.50%
Redemption Charge (as a percentage of the net asset value
of shares redeemed) (1) 0.50%
Exchange Fee None
- --------------------------
(1) The Purchase and Redemption Charges are collected by the Fund and paid to
the Portfolio to compensate the other investors in the Portfolio for expenses
incurred in connection with purchases and sales of portfolio securities.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees 1.10%
Distribution (12b-1) Fees(2) 0%
Other Expenses (includes a 0.25% 0.87%
shareholder servicing fee)
Total Annual Fund Operating Expenses 1.97%
Fee Waiver and/or Expense Limitations(3) 0.36%
Net Expenses(3) 1.61%
- --------------------------
(2) The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, with respect to its Advisor Shares.
Although the Trustees have not currently authorized payments under the
Distribution Plan, payments by the Fund under its 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.
(3) 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 of the Fund, as well as a contractually
imposed limitation on the Portfolio's expenses of 1.18%.
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 either retain all of your shares or 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:
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Assuming no redemption $249 $664 $1,105 $2,330
Assuming full redemption $300 $718 $1,163 $2,397
at end of period
</TABLE>
7
<PAGE>
- --------------
* Assuming that the Fund's operating expenses remain the same as Net Expenses
set forth above, based on the other assumptions described above, your costs
would be as follows: for 1 year, 3 years, 5 years, and 10 years, respectively:
$213, $557, $924, and $1,956 (assuming no redemption) or $265, $612, $983,
$2,025 (assuming full redemption at end of period.)
OTHER INVESTMENT STRATEGIES AND RISKS
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. You could lose money by investing.
RISKS OF INVESTING IN THE FUND
o EMERGING MARKETs. The Fund intends to invest a substantial portion of
its assets in securities of issuers in emerging market countries. An issuer will
be considered to be an emerging market issuer if Schroder determines that: (1)
it is organized under the laws of an emerging market country; (2) its primary
securities trading market is in an emerging market country; (3) at least 50% of
the issuer's revenues or profits are derived from goods produced or sold,
investments made, or services performed in emerging market countries; or (4) at
least 50% of its assets are situated in emerging market countries.
The prices of securities of issuers in emerging market countries are
subject to greater volatility than those of issuers in more developed countries.
Investments in emerging market countries are subject to the same risks
applicable to foreign investments generally, although those risks may be
increased due to conditions in such countries. For example, the securities
markets and legal systems in emerging market countries may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Fund may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Fund may also invest a substantial
portion of its assets in securities traded in the over-the-counter markets in
emerging market countries and not on any exchange, which may affect the
liquidity of the investment and expose the Fund to the credit risk of its
counterparties in trading those investments. Emerging market countries may
experience extremely high rates of inflation, which may adversely affect those
countries' economies and securities markets.
o INVESTMENT IN ASIA. Certain Asian markets have experienced
devaluation and/or significant volatility during the past several years.
Schroder cannot predict whether, when and to what extent the Asian markets will
recover. To the extent that the Fund focuses its investments in any Asian
countries, the Fund will be susceptible to adverse political, economic and
market developments in those countries.
o FOREIGN SECURITIES. Investments in foreign securities entail certain
risks. There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and diplomatic
developments that could affect the value of the Fund's investments in certain
foreign countries. Since foreign securities 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
8
<PAGE>
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 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
than 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 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. Additionally, the Fund may invest in lower-quality,
high-yielding debt securities, commonly known as junk bonds. Lower-rated debt
securities are predominantly speculative and tend to be more susceptible than
other debt securities to adverse changes in the financial condition of the
issuer, general economic conditions, or an unanticipated rise in interest rates,
which may affect an issuer's ability to pay interest and principal. This would
likely make the values of the securities held by the Fund more volatile and
9
<PAGE>
could limit the Fund's ability to liquidate its securities. Changes by
recognized rating services in their ratings of any fixed-income security and in
the perceived ability of an issuer to make payments of interest and principal
also may affect the value of these investments.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include a variety of
securities that differ in their interest rates, maturities, and dates of issue.
Securities issued or guaranteed by agencies or instrumentalities of the U.S.
Government may or may not be supported by the full faith and credit of the
United States or by the right of the issuer to borrow from the U.S. Treasury.
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.
10
<PAGE>
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 for hedging purposes. 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-quarter 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.
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 increas
total return. These may include options, futures, and indices, for example.
Derivatives involve the risk that they may not work as intended due to
unanticipated developments in market conditions or other causes. 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.
11
<PAGE>
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.
OTHER INVESTMENTS. The Fund may also invest in other types of
securities and utilize a variety of investment techniques and strategies which
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.
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 Emerging Markets Fund Institutional Portfolio, the Portfolio
in which the Fund invests, is managed under the direction of a board of trustees
of Schroder Capital Funds. Schroder has served as investment adviser to the
Portfolio since inception.
Schroder has been an investment manager since 1962, and currently serves as
investment adviser to the Fund, the Portfolio, 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 FEES PAID BY THE PORTFOLIO. For the fiscal year
ended October 31, 1998 the Portfolio paid investment advisory fees to Schroder
at the annual rate of 0.718% (based on the average net assets of the Portfolio).
Schroder is contractually obligated to waive 0.15% of the advisory fees
payable by the Portfolio until October 31, 1999. The Fund, because of its
investment in the Portfolio, bears a proportionate part of the investment
advisory fees (and other expenses) paid by the Portfolio (based on the
percentage of the Portfolio's assets attributable to the Fund).
The Fund has entered into an investment advisory agreement with
Schroder pursuant to which Schroder would manage the Fund's assets directly in
the event that the Fund were to cease investing substantially all of its assets
in the Portfolio. Schroder will not receive any fees under that agreement so
long as the Fund continues to invest substantially all of its assets in the
Portfolio or in another investment company.
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
12
<PAGE>
extent that the Fund's total operating expenses attributable to its Advisor
Shares exceed the annual rate of 1.70 %, but in no event will the Fund's Net
Expenses of Advisor Shares be more than 0.25% higher than the Net Expenses of
the Fund's Investor Shares.
o PORTFOLIO MANAGERS. Schroder's investment decisions for the Fund and
the Portfolio are generally made by an investment manager or an investment team,
with the assistance of an investment committee. The following portfolio managers
have had primary responsibility for making investment decisions for the
Portfolio or the Fund, as the case may be, since the years shown below. Their
recent professional experience is also shown.
<TABLE>
<S> <C> <C> <C>
- ------------------------------- ----------------------------- -----------------------------
Portfolio Manager Since Recent Professional
Experience
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
John Troiano Inception (1995) Employed as an investment
professional at Schroder
since 1986. Mr. Troiano is
the Chief Executive and
director of Schroder, and a
Vice President of the Trust
and of Schroder Capital
Funds.
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
Heather Crighton Inception (1995) Employed as an investment
professional at Schroder
since 1993. Ms. Crighton
is a director and a First
Vice President of Schroder.
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
Mark Bridgeman Inception (1995) Employed as an investment
professional at Schroder
since 1990. Mr. Bridgeman
is a First Vice President
of Schroder.
- ------------------------------- ----------------------------- -----------------------------
</TABLE>
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.) each day the Exchange is open. The Trust expects
that days, other than 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 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
13
<PAGE>
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 or
through a service organization such as a bank, trust company, broker-dealer, or
other financial organization (a Service Organization) having an arrangement with
Schroder Fund Advisors Inc., the distributor of the Trust's shares. If you do
not have a Service Organization, Schroder Fund Advisors Inc. can provide you
with a list of available firms. Your Service Organization is responsible for
forwarding all of the necessary documentation to the Trust, and may charge for
its services.
Advisor Shares of the Fund are sold at their net asset value next
determined after the Trust receives your order, plus a purchase charge of 0.50%
of the amount invested. The purchase charge, which is not a sales charge, is
assessed by the Fund and paid to the Portfolio to compensate other investors in
the Portfolio for expenses incurred in purchasing securities due to an
investment in the Fund. The purchase charge is not assessed on the reinvestment
of dividends or distributions or on purchases through an in-kind subscription.
In order for you to receive the Fund's next determined net asset value, the
Trust must receive your order before the close of regular trading on the New
York Stock Exchange.
If the shares you purchase will be held in your own name (rather than
in the name of your Service Organization), your payment for the shares must be
accompanied by a completed Account Application in proper form. The Trust or
Forum Shareholder Services, LLC, the Trust's Transfer Agent, may request
additional documentation, such as copies of corporate resolutions and
instruments of authority, from corporations, administrators, executors, personal
representatives, directors, or custodians. You may obtain an Account Application
from the Transfer Agent, P.O. Box 446, Portland, Maine 04112, or by calling
(800) 344-8332. You also may obtain an Account Application from your Service
Organization.
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.
14
<PAGE>
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 Emerging Markets Fund Institutional Portfolio -- 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
next determined thereafter.
Once you have an account number, you may purchase Advisor Shares
through your Service Organization or by telephoning the Transfer Agent at (800)
344-8332 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 Emerging Markets Fund Institutional Portfolio
-- Advisor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class
(I.E., Advisor Shares), the account name and number, address, confirmation
number, amount to be wired, name of the wiring bank, and name and telephone
number of the person to be contacted in connection with the order.
15
<PAGE>
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.
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) 344-8332.
HOW TO SELL SHARES
You may sell your Advisor Shares back to the Fund on any day the New
York Stock Exchange is open, either through your Service Organization or
directly to the Fund. If your shares are held in the name of a Service
Organization, you may only sell the shares through that Service Organization.
The Service Organization may charge you for its services. If you choose to sell
your shares directly to the Fund, you may do so by sending a letter of
instruction or stock power form to the Trust, or by calling the Transfer Agent
at (800) 344-8332.
The price you will receive is the net asset value next determined after
receipt of your redemption request in good order, plus a redemption charge of
0.50% of the amount redeemed. The redemption charge, which is not a sales
charge, is assessed by the Fund and paid to the Portfolio to compensate the
other investors in the Portfolio for expenses incurred in connection with sales
of portfolio securities. The redemption charge is not assessed on shares
acquired through the reinvestment of dividends or distributions or on
redemptions in kind. For purposes of computing the redemption charge,
redemptions by a shareholder are deemed to be made in the following order: (i)
from Advisor Shares purchased through the reinvestment of dividends and
distributions (with respect to which no redemption charge is applied) and (ii)
from Advisor Shares for which the redemption charge is applicable, on a first
purchased, first redeemed basis.
16
<PAGE>
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 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.
If you redeem shares through your Service Organization, your Service
Organization is responsible for ensuring that the Transfer Agent receives your
redemption request in proper form and at the appropriate time.
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 purchase the 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.
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) 344-8332.
Corporations, fiduciaries, and other types of shareholders may be required to
supply additional documents which support their authority to effect a
redemption.
17
<PAGE>
WIRE TRANSFERS
If your Service Organization receives Federal Reserve wires, you may
instruct that your redemption proceeds be forwarded by wire to your account with
your Service Organization; you may also instruct that your redemption proceeds
be forwarded to you by a wire transfer. Please indicate your Service
Organization's or your own complete wiring instructions.
ADDITIONAL INFORMATION ABOUT ADVISOR SHARES
o 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
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.
o DISTRIBUTION PLANS. 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.
Payments under the Fund's Shareholder Servicing Plan for Advisor Shares
will be considered to have been made pursuant to the Fund's Distribution Plan,
to the extent such payments may be deemed to be primarily intended to result in
the sale of the Fund's Advisor Shares.
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. To exchange shares, please call (800) 344-8332.
18
<PAGE>
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
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. 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 TAX TREATMENT OF PORTFOLIOS. None of the Portfolios is required to
pay federal income tax because each is classified as a partnership for federal
income tax purposes. All interest, dividends, gains and losses of a Portfolio
will be deemed to have been "passed through" to a Fund in proportion to the
Fund's holdings in the Portfolio, regardless of whether such interest,
dividends, gains or losses have been distributed by the Portfolio. Each
Portfolio intends to conduct its operations so that a Fund, if it invests all of
its assets in the Portfolio, may qualify as a regulated investment company.
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.
19
<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.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
financial performance of the Fund since the Fund's Advisor shares were first
offered. Certain information reflects financial results for a single Fund share.
The total returns represent the rate that an investor would have earned or lost
on an investment in Advisor Shares of the Fund, assuming reinvestment of all
dividends and distributions. This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, are included in the Fund's annual report to shareholders. The annual
report is available upon request.
20
<PAGE>
Schroder Emerging Markets Fund Institutional Portfolio Fund - Advisor Shares
<TABLE>
<S> <C> <C>
For the Year Ended For the Period Ended
October 31, October 31,
1998 1997(1)
-------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.11 $11.28
INVESTMENT OPERATIONS:
Net Investment Income (Loss)(2) 0.08 0.03
Net Realized and Unrealized Gain (Loss) on Investments (3.39) 0.19)
Total from Investment Operations (3.31) (0.16)
Distributions from Net Investment Income (0.01) (0.01)
NET ASSET VALUE, END OF PERIOD $7.79 $11.11
===== ======
Total Return(3)(4) (29.81)% (1.42)%
Ratios/Supplementary Data
NET ASSETS, END OF PERIOD (IN THOUSANDS) $20,472 $25,280
Ratios to Average Net Assets:
Expenses After Expense Limitations(2) 1.61% 1.66%(5)
Expenses Before Expense Limitations(2) 1.97% 2.03%(5)
Net Investment Income (Loss) After Expense Limitations(2) 0.82% 0.27%(5)
Portfolio Turnover Rate(6) 67% 43%
(1) Advisor Class shares were first issued on November 21, 1996.
(2) Includes the Fund's proportionate share of income and expenses of the
Portfolio.
(3) Total return calculations do not include the purchase or
redemption fee of 0.50%, respectively.
(4) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(5) Annualized.
(6) Rate represents the turnover of the Portfolio.
</TABLE>
21
<PAGE>
================================================================================
<TABLE>
<S> <C> <C> <C>
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.
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 INVESTMENT GRADE INCOME FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER SERIES TRUST II (800) 464-3108
SCHRODER ALL-ASIA FUND
================================================================================
</TABLE>
22
<PAGE>
[Back Cover] [Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
The Fund's statement of additional information (SAI) and annual and semi-annual
reports to shareholders include additional information about the Fund. The SAI
and the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this Prospectus, which means
they are part of this Prospectus for legal purposes. The Fund's annual report
discusses the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. You may get free
copies of these materials, 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
March 1, 1999
File No. 811-1911
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
PROSPECTUS
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
INVESTOR SHARES
March 1, 1999
This prospectus describes Schroder Emerging Markets Fund Institutional
Portfolio, a series of shares of Schroder Capital Funds (Delaware). The Fund
seeks long-term capital appreciation through direct or indirect investment in
equity and debt securities of issuers domiciled or doing business in emerging
market countries. The Trust offers Investor Shares of the Fund in this
Prospectus.
THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING SUBSTANTIALLY
ALL OF ITS INVESTABLE ASSETS IN SCHRODER EMERGING MARKETS FUND INSTITUTIONAL
PORTFOLIO (THE "PORTFOLIO"), A SEPARATELY MANAGED, NON-DIVERSIFIED PORTFOLIO OF
SCHRODER CAPITAL FUNDS THAT HAS THE SAME INVESTMENT OBJECTIVE AS, AND INVESTMENT
POLICIES THAT ARE SUBSTANTIALLY SIMILAR TO THOSE OF, THE FUND.
Schroder Capital Management International Inc. ("Schroder") manages the Fund.
You can call (800) 730-2932 to find out more about the Fund and other funds in
the Schroder family.
This 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.............................................6
OTHER INVESTMENT STRATEGIES AND RISKS.........................7
MANAGEMENT OF THE FUND.......................................11
HOW THE FUND'S SHARES ARE PRICED.............................12
HOW TO BUY SHARES............................................13
HOW TO SELL SHARES...........................................15
EXCHANGES....................................................17
DIVIDENDS AND DISTRIBUTIONS..................................17
TAXES........................................................17
YEAR 2000 DISCLOSURE.........................................18
FINANCIAL HIGHLIGHTS.........................................18
2
<PAGE>
SUMMARY INFORMATION
This summary identifies the investment objective, principal investment
strategies, and principal risks of Schroder Emerging Markets Fund Institutional
Portfolio. The Trust offers Advisor Shares of the Fund, 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. As a matter of policy, the Board of Trustees of the
Trust would not materially change the Fund's investment objective without
shareholder approval.
IN REVIEWING THE FUND'S INVESTMENT OBJECTIVE AND POLICIES BELOW, YOU SHOULD
ASSUME THAT THE INVESTMENT OBJECTIVE AND POLICIES OF THE PORTFOLIO ARE THE SAME
IN ALL MATERIAL RESPECTS AS THOSE OF THE FUND. SCHRODER IS THE INVESTMENT
ADVISER TO THE FUND AND TO THE PORTFOLIO.
After the narrative describing the Fund is a chart showing how the investment
returns of the Fund's Investor Shares have varied from year to year. The chart
shows returns for each full calendar year since the Fund commenced operations.
The table following the chart shows how the Fund's average annual returns for
the last year and for the life of the Fund compare to a broad-based securities
market index. The bar chart and table provide some indication of the risks of
investing in the Fund by showing the variability of its returns and comparing
the Fund's performance to a broad measure of market performance. PAST
PERFORMANCE IS NOT NECESSARILY AN INDICATION OF FUTURE PERFORMANCE. It is
possible to lose money on an investment in the Fund.
For a discussion of recent market and portfolio developments affecting the
Fund's performance, see the Fund's most recent financial reports. You can call
the Trust at (800) 290-9826 to request a free copy of the financial reports.
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
o INVESTMENT OBJECTIVE. To seek long-term capital appreciation through
direct or indirect investment in equity and debt securities of issuers domiciled
or doing business in emerging market countries in regions such as Southeast
Asia, Latin America, and Eastern and Southern Europe.
o PRINCIPAL INVESTMENTS. The Fund normally invests at least 65% of its
total assets in securities of companies determined by Schroder to be "emerging
market" issuers. The Fund may invest the remaining 35% of its assets in
securities of issuers located anywhere in the world. The Fund may invest in
equity or debt securities of any kind. The Fund is non-diversified.
o INVESTMENT STRATEGIES. The Fund invests primarily in equity
securities of issuers domiciled or doing business in "emerging market" countries
in regions such as Southeast Asia, Latin America, Eastern and Southern Europe,
and Africa. "Emerging market" countries are countries not included at the time
of investment in the Morgan Stanley International World Index of major world
economies. Economies currently in the Index include: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States. Schroder may at times
determine based on its own analysis that an economy included in the Index should
nonetheless be considered an emerging market country, in which case that country
would constitute an emerging market country for purposes of the
3
<PAGE>
Fund's investments. There is no limit on the amount of the Fund's assets that
may be invested in securities of issuers domiciled in any one country.
The Fund invests in issuers and countries 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 also may do the following:
0 Invest in securities of closed-end investment
companies that invest primarily in foreign
securities, including securities of emerging market
issuers.
0 Invest up to 35% of its assets in debt securities,
including lower-quality, high-yielding debt
securities (commonly known as "junk bonds"), which
entail certain risks.
o PRINCIPAL RISKS.
0 EMERGING MARKETS. The Fund may invest in "emerging
market" countries whose securities markets may
experience heightened levels of volatility. The risks
of investing in emerging markets include greater
political and economic uncertainties than in foreign
developed markets, currency transfer restrictions, a
more limited number of potential buyers, and an
emerging market country's dependence on revenue from
particular commodities or international aid.
Additionally, the securities markets and legal
systems in emerging market countries may only be in a
developmental stage and may provide few, or none, of
the advantages or protections of markets or legal
systems available in more developed countries.
Emerging market countries may experience extremely
high levels of inflation, which may adversely affect
those countries' economies and securities markets.
0 FOREIGN SECURITIES. Investments in foreign securities
entail risks not present in domestic investments
including, among others, risks related to political
or economic instability, currency exchange, and
taxation.
0 SMALL COMPANIES. The Fund invests primarily in small
companies, 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
4
<PAGE>
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.
O GEOGRAPHIC CONCENTRATION. There is no limit on the
amount of the Fund's assets that may be invested in
securities of issuers domiciled in any one country. To
the extent that the Fund invests a substantial amount
of its assets in one country, it will be more
susceptible to the political and economic developments
and market fluctuations in that country than if it
invested in a more geographically diversified
portfolio.
0 NON-DIVERSIFIED MUTUAL FUND. The Fund is a
"non-diversified" mutual fund, and will invest its
assets in a more limited number of issuers than may
diversified investment companies. To the extent the
Fund focuses on fewer issuers, 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 generally 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).
O JUNK BONDS. Junk bonds reflect a greater possibility
that adverse changes in the financial condition of the
issuer or in general economic conditions, or an
unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and
principal. If this were to occur, the values of
securities held by the Fund may become more volatile.
The bar chart and table below provide some indication of the risks of investing
in the Fund by showing the variability of its returns and comparing the Fund's
performance to a broad measure of market performance.
5
<PAGE>
[EDGAR REPRESETNATION OF GRAPH CHART]
Calendar Year End Annual Return
- ----------------- -------------
1996 7.93%
1997 -5.21%
1998 -25.29%
During the periods shown above, the highest quarterly return was 16.65% for the
quarter ended December 31, 1998, and the lowest was -21.96% for the quarter
ended September 30, 1998.
<TABLE>
<S> <C> <C>
- ------------------------------------------------ ----------------------- -----------------------
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS LAST ONE YEAR LIFE OF FUND
ENDING DECEMBER 31, 1998) (SINCE 3/31/95)
- ------------------------------------------------ ----------------------- -----------------------
- ------------------------------------------------ ----------------------- -----------------------
Schroder Emerging Markets Fund Institutional -25.29% -5.06%
Portfolio
- ------------------------------------------------ ----------------------- -----------------------
- ------------------------------------------------ ----------------------- -----------------------
*Morgan Stanley Capital International Emerging -25.33% -7.13%
Markets Free Index
- ------------------------------------------------ ----------------------- -----------------------
</TABLE>
* The Morgan Stanley Capital International Emerging Markets Free Index is an
unmanaged market capitalization index of companies representative of the market
structure of 25 emerging countries in Europe, Latin America, and the Pacific
Basin. The Index reflects actual buyable opportunities for the non-domestic
investor by taking into account local market restrictions on share ownership by
foreigners.
6
<PAGE>
FEES AND EXPENSES
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU INVEST IN
INVESTOR SHARES OF THE FUND. THE FUND'S ANNUAL OPERATING EXPENSES INCLUDE THE
FUND'S PRO RATA PORTION OF ALL OPERATING EXPENSES OF THE PORTFOLIO.
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
Purchase Charge (based on amount invested)(1) 0.50%
Redemption Charge (as a percentage of the net asset value
of shares redeemed)(1) 0.50%
Exchange Fee None
- --------------------------
(1) The Purchase and Redemption Charges are collected by the Fund and paid to
the Portfolio to compensate the other investors in the Portfolio for expenses
incurred in connection with purchases and sales of portfolio securities.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees 1.10%
Distribution (12b-1) Fees None
Other Expenses 0.54%
Total Annual Fund Operating Expenses 1.64%
Fee Waiver and/or Expense Limitation(2) 0.28%
Net Expenses(2) 1.36%
- --------------------------
(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 Operating Expenses, as well as a contractually imposed limitation
on the Portfolio's expenses of 1.18%.
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 either retain all of your shares or 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
Operating Expenses remain the same as those set forth above (absent the noted
Fee Waiver and/or Expense Limitation). Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Assuming no redemption $216 $565 $937 $1,984
Assuming full redemption
at end of period $267 $620 $996 $2,053
</TABLE>
- --------------
* Assuming that the Fund's operating expenses remain the same as the Net
Expenses shown above, based on the other assumptions described above, your costs
would be as follows: Assuming no redemption, $188, $478, $790, and $1,675 for
the 1, 3, 5, and 10 year periods, respectively. Assuming full redemption at end
of period, $239, $533, $850, and $1,746 for the 1, 3, 5, and 10 year periods,
respectively.
OTHER INVESTMENT STRATEGIES AND RISKS
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. You could lose money by investing.
RISKS OF INVESTING IN THE FUND
o EMERGING MARKETS. The Fund intends to invest a substantial portion of
its assets in securities of issuers in emerging market countries. An issuer will
be considered to be an emerging market issuer if Schroder determines that: (1)
it is organized under the laws of an emerging market country; (2) its primary
securities trading market is in an emerging market country; (3) at least 50% of
the issuer's revenues or profits are derived from goods produced or sold,
investments made, or services performed in emerging market countries; or (4) at
least 50% of its assets are situated in emerging market countries.
The prices of securities of issuers in emerging market countries are
subject to greater volatility than those of issuers in more developed countries.
Investments in emerging market countries are subject to the same risks
applicable to foreign investments generally, although those risks may be
increased due to conditions in such countries. For example, the securities
markets and legal systems in emerging market countries may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Fund may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Fund may also invest a substantial
portion of its assets in securities traded in the over-the-counter markets in
emerging market countries and not on any exchange, which may affect the
liquidity of the investment and expose the Fund to the credit risk of its
counterparties in trading those investments. Emerging market countries may
experience extremely high rates of inflation, which may adversely affect those
countries' economies and securities markets.
o INVESTMENT IN ASIA. Certain Asian markets have experienced
devaluation and/or significant volatility during the past several years.
Schroder cannot predict whether, when and to what extent the Asian markets will
recover. To the extent that the Fund focuses its investments in any Asian
countries, the Fund will be susceptible to adverse political, economic and
market developments in those countries.
o FOREIGN SECURITIES. Investments in foreign securities entail certain
risks. There may be a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and diplomatic
developments that could affect the value of the Fund's investments in certain
foreign countries. Since foreign securities normally are denominated and
8
<PAGE>
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 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
than 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 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. Additionally, the Fund may invest in lower-quality,
high-yielding debt securities, commonly known as junk bonds. Lower-rated debt
securities are predominantly speculative and tend to be more susceptible than
other debt securities to adverse changes in the financial condition of the
issuer, general economic conditions, or an unanticipated rise in interest rates,
which may affect an issuer's
9
<PAGE>
ability to pay interest and principal. This would likely make the values of the
securities held by the Fund more volatile and could limit the Fund's ability to
liquidate its securities. Changes by recognized rating services in their ratings
of any fixed-income security and in the perceived ability of an issuer to make
payments of interest and principal also may affect the value of these
investments.
o U.S. GOVERNMENT SECURITIES. U.S. Government securities include a variety
of securities that differ in their interest rates, maturities, and dates of
issue. Securities issued or guaranteed by agencies or instrumentalities of the
U.S. Government may or may not be supported by the full faith and credit of the
United States or by the right of the issuer to borrow from the U.S. Treasury.
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.
10
<PAGE>
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 for hedging purposes. 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-quarter 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.
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 increase
total return. These may include options, futures, and indices, for example.
Derivatives involve the risk that they may not work as intended due to
unanticipated developments in market conditions or other causes. 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.
11
<PAGE>
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 which
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.
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 Emerging Markets Fund Institutional Portfolio, the Portfolio
in which the Fund invests, is managed under the direction of a board of trustees
of Schroder Capital Funds. Schroder has served as investment adviser to the
Portfolio since inception.
Schroder has been an investment manager since 1962, and currently serves as
investment adviser to the Fund, the Portfolio, 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 FEES PAID BY THE PORTFOLIO. For the fiscal year
ended October 31, 1998 the Portfolio paid investment advisory fees to Schroder
at the annual rate of 0.718% (based on the average net assets of the Portfolio).
Schroder is contractually obligated to waive 0.15% of the advisory fees payable
by the Portfolio until October 31, 1999. The Fund, because of its investment in
the Portfolio, bears a proportionate part of the investment advisory fees (and
other expenses) paid by the Portfolio (based on the percentage of the
Portfolio's assets attributable to the Fund).
The Fund has entered into an investment advisory agreement with
Schroder pursuant to which Schroder would manage the Fund's assets directly in
the event that the Fund were to cease investing substantially all of its assets
in the Portfolio. Schroder will not receive any fees under that agreement so
long as the Fund continues to invest substantially all of its assets in the
Portfolio or in another investment company.
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)
12
<PAGE>
until October 31, 1999 to the extent that the Fund's total operating expenses
attributable to its Investor Shares exceed the annual rate of 1.45%.
o PORTFOLIO MANAGERS. Schroder's investment decisions for the Fund and
the Portfolio are generally made by an investment manager or an investment team,
with the assistance of an investment committee. The following portfolio managers
have had primary responsibility for making investment decisions for the
Portfolio or the Fund, as the case may be, since the years shown below. Their
recent professional experience is also shown.
<TABLE>
<S> <C> <C>
- ------------------------------- ----------------------------- -----------------------------
Portfolio Manager Since Recent Professional
Experience
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
John Troiano Inception (1995) Employed as an investment
professional at Schroder
since 1986. Mr. Troiano is
the Chief Executive and
director of Schroder, and a
Vice President of the Trust
and of Schroder Capital
Funds.
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
Heather Crighton Inception (1995) Employed as an investment
professional at Schroder
since 1993. Ms. Crighton
is a director and a First
Vice President of Schroder.
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
Mark Bridgeman Inception (1995) Employed as an investment
professional at Schroder
since 1990. Mr. Bridgeman
is a First Vice President
of Schroder.
- ------------------------------- ----------------------------- -----------------------------
- ------------------------------- ----------------------------- -----------------------------
</TABLE>
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.) each day the Exchange is open. The Trust expects
that days, other than 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 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
13
<PAGE>
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 or
through a service organization such as a bank, trust company, broker-dealer, or
other financial organization (a Service Organization) having an arrangement with
Schroder Fund Advisors Inc., the distributor of the Trust's shares. If you do
not have a Service Organization, Schroder Fund Advisors Inc. can provide you
with a list of available firms. Your Service Organization is responsible for
forwarding all of the necessary documentation to the Trust, and may charge for
its services.
Investor Shares of the Fund are sold at their net asset value next
determined after the Trust receives your order, plus a purchase charge of 0.50%
of the amount invested. The purchase charge, which is not a sales charge, is
assessed by the Fund and paid to the Portfolio to compensate other investors in
the Portfolio for expenses incurred in purchasing securities due to an
investment in the Fund. The purchase charge is not assessed on the reinvestment
of dividends or distributions or on purchases through an in-kind subscription.
In order for you to receive the Fund's next determined net asset value, the
Trust must receive your order before the close of regular trading on the New
York Stock Exchange.
If the shares you purchase will be held in your own name (rather than
in the name of your Service Organization), your payment for the shares must be
accompanied by a completed Account Application in proper form. The Trust or
Forum Shareholder Services, LLC, the Trust's Transfer Agent, may request
additional documentation, such as copies of corporate resolutions and
instruments of authority, from corporations, administrators, executors, personal
representatives, directors, or custodians. You may obtain an Account Application
from the Transfer Agent, P.O. Box 446, Portland, Maine 04112, or by calling
(800) 344-8332. You also may obtain an Account Application from your Service
Organization.
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.
14
<PAGE>
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 Emerging Markets Fund Institutional Portfolio -- 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
next determined thereafter.
Once you have an account number, you may purchase Investor Shares
through your Service Organization or by telephoning the Transfer Agent at (800)
344-8332 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.
15
<PAGE>
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 Emerging Markets Fund Institutional Portfolio -- Investor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)
The wire order must specify the name of the Fund, the shares' class
(i.e., Investor Shares), the account name and number, address, confirmation
number, amount to be wired, name of the wiring bank, and name and telephone
number of the person to be contacted in connection with the order.
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.
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) 344-8332.
HOW TO SELL SHARES
You may sell your Investor Shares back to the Fund on any day the New
York Stock Exchange is open, either through your Service Organization or
directly to the Fund. If your shares are held in the name of a Service
Organization, you may only sell the shares through that Service Organization.
The Service Organization may charge you for its services. If you choose to sell
your shares directly to the Fund, you
16
<PAGE>
may do so by sending a letter of instruction or stock power form to the Trust,
or by calling the Transfer Agent at (800) 344-8332.
The price you will receive is the net asset value next determined after
receipt of your redemption request in good order, plus a redemption charge of
0.50% of the amount redeemed. The redemption charge, which is not a sales
charge, is assessed by the Fund and paid to the Portfolio to compensate the
other investors in the Portfolio for expenses incurred in connection with sales
of portfolio securities. The redemption charge is not assessed on shares
acquired through the reinvestment of dividends or distributions or on
redemptions in kind. For purposes of computing the redemption charge,
redemptions by a shareholder are deemed to be made in the following order: (i)
from Investor Shares purchased through the reinvestment of dividends and
distributions (with respect to which no redemption charge is applied) and (ii)
from Investor Shares for which the redemption charge is applicable, on a first
purchased, first redeemed basis.
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 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.
If you redeem shares through your Service Organization, your Service
Organization is responsible for ensuring that the Transfer Agent receives your
redemption request in proper form and at the appropriate time.
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 purchase the 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.
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
17
<PAGE>
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) 344-8332.
Corporations, fiduciaries, and other types of shareholders may be required to
supply additional documents which support their authority to effect a
redemption.
WIRE TRANSFERS
If your Service Organization receives Federal Reserve wires, you may
instruct that your redemption proceeds be forwarded by wire to your account with
your Service Organization; you may also instruct that your redemption proceeds
be forwarded to you by a wire transfer. Please indicate your Service
Organization's or your own complete wiring instructions.
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. To exchange shares, please call (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.
18
<PAGE>
TAXES
o TAXES ON DIVIDENDS AND DISTRIBUTIONs. 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 TAX TREATMENT OF PORTFOLIOS. None of the Portfolios is required to
pay federal income tax because each is classified as a partnership for federal
income tax purposes. All interest, dividends, gains and losses of a Portfolio
will be deemed to have been "passed through" to a Fund in proportion to the
Fund's holdings in the Portfolio, regardless of whether such interest,
dividends, gains or losses have been distributed by the Portfolio. Each
Portfolio intends to conduct its operations so that a Fund, if it invests all of
its assets in the Portfolio, may qualify as a regulated investment company.
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.
19
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
financial performance of the Fund for the past 5 years or since the Fund
commenced operations. Certain information reflects financial results for a
single Fund share. The total returns represent the rate that an investor would
have earned or lost on an investment in Investor Shares of the Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, are included in the Fund's annual report to shareholders.
The annual report is available upon request.
20
<PAGE>
Schroder Emerging Markets Fund Institutional Portfolio Fund - Investor Shares
<TABLE>
<S> <C> <C> <C> <C>
For the Year Ended For the Period Ended
October 31, October 31,
1998 1997 1996 1995(1)
----------------- ------------------ -------------------------
------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.08 $11.06 $10.63 $10.00
------ ------ ------ ------
INVESTMENT OPERATIONS:
Net Investment Income (Loss) 0.12(2) 0.06(2) 0.02(2) 0.02
Net Realized and Unrealized Gain
(Loss) on Investments (3.39) (0.03) 0.43 0.61
------ ------ ---- ----
Total from Investment Operations (3.27) 0.03 0.45 0.63
------ ---- ---- ----
Distributions from Net Investment Income (0.04) (0.01) (0.02) -
------ ------ ------ -
NET ASSET VALUE, END OF PERIOD $7.77 $11.08 $11.06 $10.63
===== ====== ====== ======
Total Return(3)(4) (29.64)% 0.27% 4.22% 6.30%
Ratios/Supplementary Data
NET ASSETS, END OF PERIOD (IN THOUSANDS) $111,463 $179,436 $167,570 $18,423
Ratios to Average Net Assets:
Expenses After Expense Limitations 1.36%(2) 1.41%(2) 1.60%(2) 1.58%(5)
Expenses Before Expense Limitations 1.64%(2) 1.62%(2) 1.71%(2) 2.45%(5)
Net Investment Income (Loss) After
Expense Limitations 1.11%(2) 0.51%(2) 0.36%(2) 0.46%(5)
Portfolio Turnover Rate(6) 67% 43% 103% 44%
</TABLE>
(1) The Fund commenced operations on March 31, 1995, and converted to a
master-feeder structure on November 1, 1995.
(2) Includes the Fund's proprtionate share of income and expenses of the
Portfolio.
(3) Total return calculation does not include the purchase or redemption fee of
0.50%, respectively.
(4) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(5) Annualized.
(6) The rate after October 31, 1995, represents the turnover of the Portfolio.
<PAGE>
================================================================================
FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL (800-730-2932) FOR COMPLETE INFORMATION AND TO OBTAIN THE
RELEVANT PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
SCHRODER CAPITAL FUNDS (DELAWARE) (800-730-2932)
SCHRODER INTERNATIONAL FUND
SCHRODER EMERGING MARKETS FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND
SCHRODER INTERNATIONAL BOND FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND
SCHRODER SERIES TRUST (800-464-3108)
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER MIDCAP VALUE FUND
SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER SERIES TRUST II (800-464-3108)
SCHRODER ALL-ASIA FUND
================================================================================
<PAGE>
[Back Cover] [Logo]
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
The Fund's statement of additional information (SAI) and annual and semi-annual
reports to shareholders include additional information about the Fund. The SAI
and the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this Prospectus, which means
they are part of this Prospectus for legal purposes. The Fund's annual report
discusses the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. You may get free
copies of these materials, 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
March 1, 1999
File No. 811-1911
<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)
SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 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 Emerging Markets Fund Institutional Portfolio, 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 March 1, 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
800-290-9826.
Certain disclosure has been incorporated by reference into this SAI from the
Fund's annual report. For a free copy of the annual report, please call
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.........................................................18
SCHRODER AND ITS AFFILIATES...................................................22
INVESTMENT ADVISORY AGREEMENT.................................................23
ADMINISTRATIVE SERVICES.......................................................25
DISTRIBUTOR...................................................................26
FUND ACCOUNTING...............................................................28
BROKERAGE ALLOCATION AND OTHER PRACTICES......................................28
DETERMINATION OF NET ASSET VALUE..............................................31
REDEMPTIONS IN KIND...........................................................32
TAXES.........................................................................32
PRINCIPAL HOLDERS OF SECURITIES...............................................34
PERFORMANCE INFORMATION.......................................................35
CUSTODIAN.....................................................................36
INDEPENDENT ACCOUNTANTS.......................................................36
SHAREHOLDER LIABILITY.........................................................37
FINANCIAL STATEMENTS..........................................................37
APPENDIX.....................................................................A-1
<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 Emerging
Markets Fund Institutional Portfolio 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
1
<PAGE>
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
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
2
<PAGE>
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.
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.
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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 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
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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.
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.
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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 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
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stocks included in the Index, and the Index fluctuates with changes in the
market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if the Fund enters into a futures contract to buy 100
units of the S&P 100 Index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $184 on that future date, the Fund will gain
$400 (100 units x gain of $4). If the Fund enters into a futures contract to
sell 100 units of the stock index at a specified future date at a contract price
of $180 and the S&P 100 Index is at $182 on that future date, the Fund will lose
$200 (100 units x loss of $2).
The Fund may purchase or sell futures contracts with respect to any
securities 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".
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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 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
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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.
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.
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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.
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.
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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.
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
The Fund may invest without limit in securities principally traded in
foreign markets. The Fund may also invest without limit in Eurodollar
certificates of deposit and other certificates of deposit issued by United
States branches of foreign banks and foreign branches of United States banks.
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
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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 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".
When it engages in transaction hedging, the Fund enters into foreign
currency transactions with respect to specific receivables or payables of the
Fund generally arising in connection with the purchase or sale of its portfolio
securities. The Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging, the Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
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The Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging. The
Fund may also enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes, the Fund may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Fund the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Fund the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Fund the right to assume a
long position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option. The Fund will engage in
over-the-counter transactions only when appropriate exchange-traded transactions
are unavailable and when, in Schroder's opinion, the pricing mechanism and
liquidity are satisfactory and the participants are responsible parties likely
to meet their contractual obligations.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which securities held by the Fund are denominated or are
quoted in their principal trading markets or an increase in the value of
currency for securities which the Fund expects to purchase. In connection with
position hedging, the Fund may purchase put or call options on foreign currency
and foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. The Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of the
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of the Fund if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to deliver.
To offset some of the costs to the Fund of hedging against fluctuations
in currency exchange rates, the Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency. Also, suitable foreign currency hedging transactions may not be
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<PAGE>
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
14
<PAGE>
particular option at any specific time. Options on foreign currencies are
affected by all of those factors which influence exchange rates and investments
generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the U.S.
options markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.
ZERO-COUPON SECURITIES
Zero-coupon securities in which the Fund may invest are debt
obligations which are generally issued at a discount and payable in full at
maturity, and which do not provide for current payments of interest prior to
maturity. Zero-coupon securities usually trade at a deep discount from their
face or par value and are subject to greater market value fluctuations from
changing interest rates than debt obligations of comparable maturities which
make current distributions of interest. As a result, the net asset value of
shares of the Fund investing in zero-coupon securities may fluctuate over a
greater range than shares of other Funds of the Trust and other mutual funds
investing in securities making current distributions of interest and having
similar maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-term bonds
or notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on
Treasuries ("CATS"). CATS and TIGRS are not considered U.S. government
securities. The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.
15
<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.
16
<PAGE>
INVESTMENT RESTRICTIONS
The Trust has adopted the following fundamental and non-fundamental
investment restrictions for each 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. As a matter of policy, the Trustees
would not materially change the Fund's investment objective without shareholder
approval.
THE PORTFOLIO IN WHICH SCHRODER EMERGING MARKETS FUND INSTITUTIONAL
PORTFOLIO INVESTS HAS SUBSTANTIALLY THE SAME INVESTMENT RESTRICTIONS AS THE
FUND. IN REVIEWING THE DESCRIPTION OF THE FUND'S INVESTMENT RESTRICTIONS BELOW,
YOU SHOULD ASSUME THAT THE INVESTMENT RESTRICTIONS OF THE PORTFOLIO ARE THE SAME
IN ALL MATERIAL RESPECTS AS THOSE OF THE FUND.
The Fund will not:
1. Underwrite securities of other companies (except insofar as the Fund
might be deemed to be an underwriter in the resale of any securities
held in its portfolio);
2. Invest in commodities or commodity contracts (other than hedging
instruments, which it may use as permitted by any of its other
fundamental policies, whether or not any such hedging instrument is
considered to be a commodity or a commodity contract);
3. Purchase securities on margin; however, the Fund may make margin
deposits in connection with any hedging instruments which it may use as
permitted by any of its other fundamental policies;
4. Purchase or write puts or calls except as permitted by any of its
other fundamental policies;
5. Lend money except in connection with the acquisition of debt securities
that the Fund's investment policies and restrictions permit it to
purchase. The Fund may make loans of portfolio securities and enter
into repurchase agreements;
6. As a non-fundamental policy, invest in or hold securities of any issuer
if officers or Trustees of the Trust or Schroder individually owning
more than 0.5% of the securities of such issuer together own more than
5% of the securities of such issuer;
7. As a non-fundamental policy, invest more than 5% of the value of its
total assets in securities of issuers having a record, together with
predecessors, of less than three years of continuous operation;
8. Make short sales of securities;
17
<PAGE>
9. Invest in interests in oil, gas or other mineral exploration or
development programs (but may purchase readily marketable securities of
companies which operate, invest in, or sponsor such programs);
10. Invest in real estate or in interests in real estate (but may purchase
readily marketable securities of companies holding real estate or
interests therein);
11. As a non-fundamental policy, the Fund will not invest more than 15% of
its assets in securities determined by Schroder to be illiquid. Certain
securities that are restricted as to resale may nonetheless be resold
by the Fund in accordance with Rule 144A under the Securities Act of
1933, as amended. Such securities may be determined by Schroder to be
liquid for purposes of compliance with the limitation on the Fund's
investment in illiquid securities.
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.
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.
18
<PAGE>
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 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 J. Smith, President and Trustee of the Trust. 36. 787 Seventh
Avenue, New York, New York. Director and Senior Vice President, Schroder Capital
Management International Limited and Schroder Capital Management International
Inc. Director, Schroder Investment Management Ltd., Schroder Fund Advisors Inc.,
and Schroder Japanese Warrant Fund Ltd. Trustee, Schroder Capital Funds,
Schroder Capital Funds II, and Schroder Series Trust. Vice President, Schroder
Series Trust II.
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.
- ------------------------------------
(*) Trustee who is an "interested person" (as defined in the 1940 Act)
of the Trust, Schroder, or Schroder Fund Advisors Inc.
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<PAGE>
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, 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. Senior Vice President, Schroder Capital Management International
Inc.
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
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<PAGE>
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.
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. receive an annual
retainer of $11,000 for their services as Trustees of all open-end investment
companies distributed by Schroder Fund Advisors Inc., and $1,250 per meeting
attended in person or $500 per meeting attended by telephone. Members of an
Audit Committee for one or more of such investment companies receive an
additional $1,000 per year. Payment of the annual retainer is allocated among
the various investment companies based on their relative net assets. Payment of
meeting fees is allocated only among those investment companies to which the
meeting relates.
The following table sets forth information regarding compensation paid
for the fiscal year ended October 31, 1998 to the disinterested Trustees.
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<PAGE>
COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
(2) (3)
(1) AGGREGATE TOTAL COMPENSATION FROM TRUST
COMPENSATION AND
NAME OF FROM TRUST FUND COMPLEX PAID TO 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
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* 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 February 1, 1999, the Trustees of the Trust as a group owned less
than 1% of the outstanding shares of the Fund.
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.
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<PAGE>
SCHRODER AND ITS AFFILIATES
Schroder has served as the investment adviser for the Fund and the
Portfolio since their 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 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 each Fund.
The fees to be paid under the Advisory Agreement are set forth in the
Prospectuses. As long as the Fund invests all of its assets in the Portfolio (or
another investment company), Schroder is not entitled to receive any advisory
fees pursuant to the Advisory Agreement. In the event that the Fund did not
invest all of its assets in the Portfolio or another investment company,
Schroder would be entitled to receive advisory fees monthly at the annual rate
of 1.00% of the Fund's average daily net assets.
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 objectives and
policies of the various Funds, and determines, for the various Funds, 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 of the 1940 Act, and
to the Fund's investment objectives, 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 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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<PAGE>
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 Investment
Company Act of 1940.
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.
THE PORTFOLIO
The Fund currently invests all of its assets in the Portfolio, which
has the same investment objective and substantially the same investment policies
as the Fund. As long as the Fund remains completely invested in the Portfolio
(or any other investment company), Schroder is not entitled to receive any
investment advisory fee with respect to the Fund. The Fund may withdraw its
investment from the Portfolio at any time if the Trust's Board of Trustees
determines that it is in the best interests of the Fund and its shareholders to
do so. The Trust has retained Schroder as investment adviser to manage the
Fund's assets in the event that the Fund withdraws its investment from its
related Portfolio.
Schroder is the investment advisor to the related Portfolio pursuant to
an investment advisory agreement (the "Portfolio Advisory Agreement") between
Schroder and Schroder Capital Funds, on behalf of the Portfolio. Schroder
receives an investment advisory fee with respect to the related Portfolio. The
Portfolio Advisory Agreement is the same in all material respects as the
Investment Advisory Agreement between the Trust on behalf of the Fund and
Schroder. As investment adviser to the Portfolio, Schroder is entitled to
24
<PAGE>
monthly advisory fees at the annual rate of 1.00% of the Portfolio's daily net
assets. The Fund bears a proportionate part of the investment advisory fees paid
by the Portfolio (based on the percentage of the Portfolio's assets attributable
to the Fund).
RECENT INVESTMENT ADVISORY FEES. Of the total investment advisory fees paid by
the Portfolio to Schroders, the portion borne indirectly by the Fund during the
three most recent fiscal years is set forth in the following table. The fees
listed in the table reflect reductions pursuant to expense limitations in effect
during such periods.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Investment Advisory Fees Paid Investment Advisory Fees Paid Investment Advisory Fees Paid
for Fiscal Year Ended 10/31/98 for Fiscal Year Ended 10/31/97 for Fiscal Year Ended 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
$1,265,439 $1,778,645 $1,115,324
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
FEE WAIVERS
Schroder voluntarily waived its fees in the following amounts during the
three most recent fiscal years pursuant to voluntary expense limitations and/or
waivers in effect during such periods. The portion of the amounts waived with
respect to the investment advisory fees indirectly borne by the Fund are as
follows:
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Fees Waived During Fiscal Fees Waived During Fiscal Fees Waived During Fiscal
Year Ended 10/31/98 Year Ended 10/31/97 Year Ended 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
$496,353 $472,493 $51,560
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
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.
For providing administrative services Schroder Fund Advisors Inc. is
entitled to receive a monthly fee at the annual rate of 0.05%of the Fund's
average daily net assets for each of the Gateway and the Core. 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.
25
<PAGE>
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 0.05% at
the Gateway and 0.10% at the Core on 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.
During the three most recent fiscal years, the Fund paid the following
fees to Schroder Fund Advisors Inc. and FAdS pursuant to the administration
agreement and the subadministration agreement. The fees listed in the following
table reflect reductions pursuant to fee waivers and expense limitations in
effect during such periods.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Administration Fees Paid for Administration Fees Paid for Administration Fees Paid for
Fiscal Year Ended 10/31/98 Fiscal Year Ended 10/31/97 Fiscal Year Ended 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
Schroder Fund Advisors Inc. Schroder Fund Advisors Schroder Fund Advisors
$176,172 Inc. $225,571 Inc. $50,434
FAdS $264,261 FAdS $325,948 FAdS $175,124
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
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 Investment Company Act of 1940
pursuant to which the Fund may pay the Distributor compensation in an amount
26
<PAGE>
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 a 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.
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
27
<PAGE>
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 following table shows the aggregate amounts paid by the Trust to the
Distributor under the Service Plan during the three most recent fiscal years.
All of such amounts were, in turn, repaid by the Distributor to Service
Organizations.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Fees Paid Pursuant to Fees Paid Pursuant to Fees Paid Pursuant to
Service Plan During Fiscal Service Plan During Fiscal Service Plan During
Year Ended 10/31/98 Year Ended 10/31/97 Fiscal Year Ended 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
$58,775 $43,522 $0
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
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.
In the event that the Fund invests all or substantially all of its investment
assets in the Portfolio, the annual fee payable by the Fund to Forum Accounting
will be $12,000, which will be in addition to the Fund's proportion of the fees
payable by the Portfolio to Forum Accounting (which will, with the exception of
the class-based fees, be similar to those described above with respect to the
Fund).
The tables below show the amount of fees paid by the Fund to Forum
Accounting during the three most recent fiscal years.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Accounting Fees Paid During Accounting Fees Paid Accounting Fees Paid
Fiscal Year Ended 10/31/98 During Fiscal Year Ended During Fiscal Year Ended
10/31/97 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
$65,078 $76,488 $73,000
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
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
28
<PAGE>
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 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 or the Portfolio), although not all of these services are necessarily
useful and of value in managing the Fund or the Portfolio. The investment
advisory fee paid by the Fund or the Portfolio is not reduced because 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 Agreements and the Portfolio Advisory Agreement,
Schroder may cause the Fund or the Portfolio to pay a broker that provides
29
<PAGE>
brokerage and research services to Schroder an amount of disclosed commission
for effecting a securities transaction for the Fund or the Portfolio in excess
of the commission which another broker would have charged for effecting that
transaction. Schroder's authority to cause the Fund or the Portfolio to pay any
such greater commissions is also subject to such policies as the Trustees (or
the Trustees of Schroder Capital Funds, in the case of the Portfolio) may adopt
from time to time.
To the extent permitted by law, the Fund or the Portfolio 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 and the
Portfolio have adopted procedures which are reasonably designed to provide that
any commissions or other remuneration the Fund or the Portfolio pay to Schroder
& Co. and Schroder Securities do not exceed the usual and customary broker's
commission. In addition, the Fund and the Portfolio will adhere to the rule,
under the Securities Exchange Act of 1934, governing floor trading. This rule
permits the Fund and the Portfolio 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 or a Portfolio to the brokers
executing the transactions. Also, due to securities law limitations, the Fund or
the Portfolio 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.
Neither the Fund nor the Portfolio has any understanding or arrangement
to direct any specific portion of its brokerage to Schroder & Co. or Schroder
Securities, and neither will direct brokerage to Schroder & Co. or Schroder
Securities in recognition of research services.
The following table shows the aggregate brokerage commissions paid for the
three most recent fiscal years. The amounts listed represent aggregate brokerage
commissions paid by the Portfolio.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Brokerage Commissions Paid Brokerage Commissions Paid Brokerage Commissions
During Fiscal Year Ended During Fiscal Year Ended Paid During Fiscal Year
10/31/98 10/31/97 Ended 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
$1,013,671 $1,413,998 $101,087
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
In the fiscal year ended October 31, 1998, Schroder, on behalf of the
Trust, placed agency and underwritten transactions having an approximate
aggregate dollar value of $________, (___% of the Trust's aggregate agency and
underwritten transactions, on which approximately $_______ of commissions were
paid) with brokers and dealers (other than Schroder & Co. and Schroder
Securities) whose research, statistical, and quotation services Schroder
considered to be particularly useful to it and its affiliates. However, many of
such transactions were placed with such brokers and dealers without regard to
the furnishing of such services.
30
<PAGE>
The following table shows the aggregate brokerage commissions paid to
Schroder & Co. and Schroder Securities for the three most recent fiscal years,
as well as the percentage such commissions represented of all transactions on
which the Fund paid brokerage commissions during such fiscal year. The amounts
listed represent aggregate brokerage commissions paid by the Portfolio.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------
Brokerage Commissions Paid Brokerage Commissions Paid Brokerage Commissions
During Fiscal Year Ended During Fiscal Year Ended Paid During Fiscal Year
10/31/98 10/31/97 Ended 10/31/96
- ------------------------------ ---------------------------- ---------------------------
- ------------------------------ ---------------------------- ---------------------------
Schroder & Co. $0 0% Schroder & Co. $0 0% Schroder & Co. $0 0%
Schroder Securities $0 0% Schroder Securities $0 0% Schroder Securities $0 0%
- ------------------------------ ---------------------------- ---------------------------
</TABLE>
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of shares of each 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 Years 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 are valued at their latest sale prices on such exchange
on that day prior to the time when the assets are valued. In the absence of
sales that day, such securities are valued at the mid-market prices. (Where the
securities are traded on more than one exchange, they are valued on the exchange
that Schroder designates as the primary market.) Unlisted securities for which
over-the-counter market quotations are readily available are valued at the
latest available mid-market prices prior to the time of valuation. Securities
that do not have readily available market quotations are valued at fair value
pursuant to procedures established by the Trustees. Debt securities having a
maturity of more than 60 days are valued at the mid-market prices determined by
a portfolio pricing service or obtained from active market makers on the basis
of reasonable inquiry. Short-term debt securities having a remaining maturity of
60 days or less are valued at cost, adjusted for amortization of premiums and
accretion of discounts.
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, their
fair value is generally determined as the amount which the Trust could
reasonably expect to realize from an orderly disposition of such securities over
a reasonable period of time. 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
31
<PAGE>
holding, the prices of any recent transactions or offers with respect to such
securities, and any available analysts' reports regarding the issuer.
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
The Trust has agreed to redeem 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. In consideration of the best interests of the remaining
shareholders, the Trust may pay certain redemption proceeds exceeding this
amount in whole or in part by a distribution in kind of securities held by the
Fund in lieu of cash. 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
32
<PAGE>
(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).
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.
33
<PAGE>
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 February 1, 1999, the Trustees of the Trust and, except as noted
below, the officers of the Trust, as a group owned less than 1% of the
outstanding shares of either class of each Fund.
34
<PAGE>
HOLDERS OF 5% OR MORE OF OUTSTANDING SHARES
<TABLE>
<S> <C> <C> <C> <C>
% OF
NUMBER NUMBER OF SHARES
OF INVESTOR ADVISOR OF FUND
SHARES SHARES CLASS
OWNED
- ---------------------------------------------------------- ---------------- ----------------- ----------------
The Robert Wood Johnson Foundation
P.O. Box 2316
College Road at Route One
Princeton, NJ 08543 36.47
4,917,050.5
University of Chicago 28.65
450 N Cityfront Plaza Drive, Suite 440 3,862,600.7
Chicago, IL 60611
Baptist Foundation of Texas 12.38
1601 Elm Street, Suite 1700 1,668,533.6
Dallas, TX 75201
NationsBanc Montgomery 100.00
600 Montgomery Street 4th Floor 2,847,560.8
San Francisco, CA 94111
</TABLE>
35
<PAGE>
PERFORMANCE INFORMATION
Average annual total return of a class of shares of the Fund for one-,
five-, and ten-year periods (or for such shorter periods as shares of that class
of shares of the Fund have been offered) is determined by calculating the actual
dollar amount of investment return on a $1,000 investment in that class of
shares at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return for a
period of one year or less is equal to the actual return during that period.
Total return calculations assume reinvestment of all Fund distributions at net
asset value on their respective reinvestment dates. Total return may be
presented for other periods.
ALL PERFORMANCE DATA IS BASED ON PAST INVESTMENT RESULTS AND DOES NOT
PREDICT FUTURE PERFORMANCE. Investment performance of a particular class of the
Fund's shares, which will vary, is based on many factors, including market
conditions, the composition of the Fund's portfolio, and the Fund's operating
expenses attributable to that class of shares. Investment performance also often
reflects the risks associated with the Fund's investment objectives and
policies. Quotations of yield or total return for any period when an expense
limitation is in effect will be greater than if the limitation had not been in
effect. These factors should be considered when comparing the investment results
of the Fund's shares to those of various classes of other mutual funds and other
investment vehicles. Performance for each Fund's shares may be compared to
various indices.
The table below sets forth the total return of Investor Shares of the
Fund for most recent fiscal year and for the period from the commencement of the
Fund's operations until October 31, 1998. The table also sets forth total return
information for the Fund's Advisor Shares for any periods (or partial periods)
when they were outstanding, and pro forma total return information for periods
(or partial periods) when there were no Advisor Shares outstanding. Pro forma
total return information for Advisor Shares is estimated by restating the total
return of Investor Shares for the same period to reflect the actual fees and
expenses applicable to Advisor Shares, which are higher than the fees and
expenses applicable to Investor Shares (for instance, Advisor Shares are subject
to shareholder servicing fees paid at a rate of up to 0.25% of the average daily
net asset value of the Fund attributable to its Advisor Shares). PLEASE NOTE
THAT THE HIGHER EXPENSES APPLICABLE TO THE FUND'S ADVISOR SHARES SHOULD HAVE THE
EFFECT OF REDUCING THE TOTAL RETURN OF THE ADVISOR SHARES BELOW THAT OF THE
INVESTOR SHARES BY THE AMOUNT OF SUCH HIGHER EXPENSES, COMPOUNDED OVER THE
RELEVANT PERIOD.
TOTAL RETURN FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------- -------------- ---------------------- ----------------- -----------------
SINCE INCEPTION INCEPTION DATE
OF FUND INCEPTION DATE OF CLASS
CLASS 1 YEAR (ANNUALIZED) OF FUND
- ---------------------- -------------- ---------------------- ----------------- -----------------
- ---------------------- -------------- ---------------------- ----------------- -----------------
Investor Shares (25.29)% (5.06)% 3/31/95 3/31/95
Advisor Shares* (25.46)% (5.06)% 11/21/96
- ---------------------- -------------- ---------------------- ----------------- -----------------
</TABLE>
* Total return for Advisor Shares of the Fund reflects pro forma information
(based on Investor Share performance) through November 20, 1996, and actual
total return from November 21, 1996 (the inception date of Advisor Shares of
the Fund) through October 31, 1998. The actual total return of Advisor
Shares of the Fund from November 21, 1996 through October 31, 1998 (not
annualized) was _______%.
36
<PAGE>
From time to time, Schroder, Forum or any of their affiliates that
provide services to the Fund may reduce their compensation or assume
expenses of the Fund in order to reduce the Fund's expenses, as described in
the Trust's current Prospectuses. Any such waiver or assumption would
increase the Fund's total return for each class of shares during the period
of the waiver or assumption.
THE PORTFOLIO
The Portfolio is a separate series of Schroder Capital Funds, an
open-end management investment company. Schroder Capital Funds is a business
trust organized under the laws of the State of Delaware.
The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. The Portfolio may have other
investors, each of whom will invest on the same conditions as the related
Fund and will pay a proportionate share of the Portfolio's expenses.
The Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in the Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. If the
Portfolio has investors other than the Fund, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all Portfolio shareholders. If other
investors hold a majority interest of the Portfolio, they could have voting
control of the Portfolio.
The Portfolio does not sell its shares directly to the public. Another
investor (such as an investment company) in the Portfolio that might sell its
shares to the public would not be required to sell its shares at the same
offering price as the Fund, and could have different fees and expenses than the
Fund. Therefore, the Fund's shareholders may have different returns than
shareholders of another investment company that invests in the Portfolio.
The investors in the Portfolio, including the related Fund, have agreed
to indemnify Schroder Capital Funds, and such trust's trustees and officers,
against certain claims.
CERTAIN RISKS OF INVESTING IN THE PORTFOLIO. The Fund's investment in
the Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if the Portfolio has a large investor other than
the Fund and that investor redeems its interests in the Portfolio, the
Portfolio's remaining investors (including the Fund) might bear a larger portion
of the Portfolio's operating expenses. This would result in lower returns for
the Fund.
The Fund may withdraw its entire investment from the Portfolio at any
time, if the Trustees determine that it is in the best interests of the Fund and
its shareholders to do so. Such a withdrawal may result in a distribution in
kind of portfolio securities by the Portfolio, which could adversely affect the
liquidity of the Fund's assets. If the Fund converted those securities to cash,
it would likely incur brokerage fees or other transaction costs. In the event
that the Fund withdraws its entire investment from the Portfolio, the Fund's
inability to find a suitable replacement investment could have a significant
negative impact on the Fund's shareholders.
37
<PAGE>
Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk that this would cause an investor
financial loss, however, is limited to circumstances in which the Portfolio
would be unable to meet its obligations. Schroder considers this risk to be
remote. Upon liquidation of the Portfolio, investors in the Portfolio (including
the related Fund) would be entitled to share pro rata in the Portfolio's net
assets available for distribution to investors.
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 and the Portfolio. 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 ACCOUNTANTS
PricewaterhouseCoopers LLP, the Trust's independent accountants, provide
audit services and tax return preparation services. 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.
38
<PAGE>
FINANCIAL STATEMENTS
The fiscal year end of the Fund is October 31.
The following Financial Statements required by Part B and the related
Report of Independent Accountants are incorporated herein by reference to the
Trust's Annual Report, dated October 31, 1998, which was filed electronically
with the Securities and Exchange Commission on January 29, 1999 (Accession
Number: 0001004402-99-000051).
39
<PAGE>
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
FIXED-INCOME SECURITY RATINGS
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group they comprise what are
generally known as high grade fixed-income securities. They are rated lower than
the best fixed-income securities because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
"A" Fixed-income securities which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.
"Baa" Fixed-income securities which are rated "Baa" are considered as medium
grade obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack characteristics
40
<PAGE>
of the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Rating Refinements: Moody's may apply numerical modifiers, "1", "2",
and "3" in each generic rating classification from "Aa" through "B" in its
municipal fixed-income security rating system. The modifier "1" indicates that
the security ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and a modifier "3" indicates that
the issue ranks in the lower end of its generic rating category.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. The ratings apply to Municipal Commercial Paper as well as taxable
Commercial Paper. Moody's employs the following three designations, all judged
to be investment grade, to indicate the relative repayment capacity of rated
issuers: "Prime-1", "Prime-2", "Prime-3".
Issuers rated "Prime-1" have a superior capacity for repayment of
short-term promissory obligations. Issuers rated "Prime-2" have a strong
capacity for repayment of short-term promissory obligations; and Issuers rated
"Prime-3" have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.
STANDARD & POOR'S RATING GROUP("STANDARD & POOR'S")
FIXED-INCOME SECURITY RATINGS
A Standard & Poor's fixed-income security rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
41
<PAGE>
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.
"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the highest-rated issues only in
small degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.
"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for fixed-income securities in this category than for
fixed-income securities in higher-rated categories.
Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.
"BB" Fixed-income securities rated "BB" have less near-term vulnerability to
default than other speculative grade fixed-income securities. However, it faces
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity or willingness to
pay interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to default
but presently have the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions would likely
impair capacity or willingness to pay interest and repay principal.
"CCC" Fixed-income securities rated "CCC" have a current identifiable
vulnerability to default, and the obligor is dependent upon favorable business,
financial and economic conditions to meet timely payments of interest and
repayments of principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and repay
principal.
42
<PAGE>
"CC" The rating "CC" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied "CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities subordinated
to senior debt which is assigned an actual or implied "CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which no
interest is being paid.
"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are regarded
as having predominantly speculative characteristics with respect to capacity to
pay interest and repay principal. "BB" indicates the least degree of speculation
and "C" the highest degree of speculation. While such fixed-income securities
will likely have some quality and protective characteristics, these are
out-weighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by the
addition of a plus or minus sign to show relative standing with the major
ratings categories.
COMMERCIAL PAPER RATINGS
Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
Issues assigned "A" ratings are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation "1", "2", and "3" to indicate the relative degree of safety.
"A-1" Indicates that the degree of safety regarding timely payment is very
strong.
"A-2" Indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying
43
<PAGE>
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
44
<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).
(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 legality
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) Opinion of Independent Auditors (filed herewith).
(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) Financial Data Schedules (filed herewith).
(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).
- ---------------
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 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
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
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
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
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
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.
<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
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
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
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
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.
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).
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 certifies that it
meets all of the requirements for effectiveness of this registration statement
under rule 485(b) under the Securities Act of 1933, as amended, and has duly
caused this post-effective amendment number 3 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 February 26, 1999.
Schroder Series Trust II
By: /s/ Catherine A. Mazza
Catherine A. Mazza
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 February 26, 1999.
Principal Executive Officer
Louise Croset, President
By: /s/ Thomas G. Sheehan
Thomas G. Sheehan
Attorney-in-Fact*
Principal Financial Officer
/s/ Fergal Cassidy
Fergal Cassidy, Treasurer
A majority of the Trustees
Peter Sedgwickl, Trustee and Chairman
Peter E. Guernsey, Trustee
John I. Howell, Trustee
William L. Means, Trustee
David M. Salisbury, Trustee
Louise Croset, 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, Schroder
Capital Funds has duly caused this amendment to the Registration Statement for
Schroder Series Trust II to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
February 26, 1999.
Schroder Capital Funds
By: /s/ Catherine A. Mazza
Catherine A. Mazza
Vice President
Pursuant to the requirements of the Securities Act of 1940, this Registration
Statement amendment of Schroder Series Trust II has been signed below
by the following persons on February 26, 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
Hon. 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.
<PAGE>
Index To Exhibits
Exhibit
(j) Opinion of Independent Auditors
(m) Financial Data Schedules
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Schroder Capital Funds (Delaware):
We consent to the incorporation by reference in Amendment No. 53 to the
Registration Statement of the Schroder Capital Funds (Delaware) consisting of
Investor and Advisor Shares of Schroder Emerging Markets Fund Institutional
Portfolio, (the "Fund") on Form N-1A (File No. 811-1911) under the Investment
Company Act of 1940, as amended, and Post-Effective Amendment No. 72 to the
Registration Statement on Form N-1A (File No. 2-34215) under the Securities Act
of 1933, as amended, of our report dated December 22, 1998 on our audits of the
financial statements and financial highlights of the Fund, which report is
incorporated by reference in the Amendment and Post-Effective Amendment to the
Registration Statement. We consent to the references to our Firm under the
captions "Financial Highlights" in the Prospectuses and "Independent
Accountants" in the Statement of Additional Information for the aforementioned
Fund.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO (FUND)
ANNUAL REPORT DATED OCTOBER 31, 1998.
</LEGEND>
<CIK> 0000019532
<NAME> SCHRODER CAPITAL FUNDS (DE)
<SERIES>
<NUMBER> 041
<NAME> SCHRODER EMERGING MARKETS INSTIT. PORTF. (FUND)-ADV
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-1-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 132,008,241
<INVESTMENTS-AT-VALUE> 132,008,241
<RECEIVABLES> 5,155
<ASSETS-OTHER> 8,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 132,021,929
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86,862
<TOTAL-LIABILITIES> 86,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209,607,201
<SHARES-COMMON-STOCK> 2,627,257
<SHARES-COMMON-PRIOR> 2,276,150
<ACCUMULATED-NII-CURRENT> 898,098
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43,814,136)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (28,119,941)
<NET-ASSETS> 131,935,067
<DIVIDEND-INCOME> 3,648,832
<INTEREST-INCOME> 696,549
<OTHER-INCOME> (2,081,219)
<EXPENSES-NET> 372,933
<NET-INVESTMENT-INCOME> 1,891,229
<REALIZED-GAINS-CURRENT> (33,857,609)
<APPREC-INCREASE-CURRENT> (30,037,143)
<NET-CHANGE-FROM-OPS> (62,003,523)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26,384
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 663,007
<NUMBER-OF-SHARES-REDEEMED> 314,314
<SHARES-REINVESTED> 2,414
<NET-CHANGE-IN-ASSETS> (72,780,695)
<ACCUMULATED-NII-PRIOR> 431,813
<ACCUMULATED-GAINS-PRIOR> (10,764,936)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 389,539
<AVERAGE-NET-ASSETS> 23,946,738
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> (3.39)
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.79
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO (FUND)
ANNUAL REPORT DATED OCTOBER 31, 1998.
</LEGEND>
<CIK> 0000019532
<NAME> SCHRODER CAPITAL FUNDS (DE)
<SERIES>
<NUMBER> 040
<NAME> SCHRODER EMERGING MARKETS INSTIT. PORTF. (FUND)-INV
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-1-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 132,008,241
<INVESTMENTS-AT-VALUE> 132,008,241
<RECEIVABLES> 5,155
<ASSETS-OTHER> 8,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 132,021,929
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86,862
<TOTAL-LIABILITIES> 86,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209,607,201
<SHARES-COMMON-STOCK> 14,347,436
<SHARES-COMMON-PRIOR> 16,199,944
<ACCUMULATED-NII-CURRENT> 898,098
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (50,450,291)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (28,119,941)
<NET-ASSETS> 131,935,067
<DIVIDEND-INCOME> 3,648,832
<INTEREST-INCOME> 696,549
<OTHER-INCOME> (2,081,219)
<EXPENSES-NET> 372,933
<NET-INVESTMENT-INCOME> 1,891,229
<REALIZED-GAINS-CURRENT> (33,857,609)
<APPREC-INCREASE-CURRENT> (30,037,143)
<NET-CHANGE-FROM-OPS> (62,003,523)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 596,860
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,945,917
<NUMBER-OF-SHARES-REDEEMED> 4,830,885
<SHARES-REINVESTED> 32,460
<NET-CHANGE-IN-ASSETS> (72,780,695)
<ACCUMULATED-NII-PRIOR> 431,813
<ACCUMULATED-GAINS-PRIOR> (10,764,936)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<AVERAGE-NET-ASSETS> 152,217,783
<PER-SHARE-NAV-BEGIN> 11.08
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> (3.39)
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.77
<EXPENSE-RATIO> 1.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
