<PAGE> 1
As filed with the Securities and Exchange Commission on February 25, 1999
Securities Act File No. 33-65632;
Investment Company Act File No. 811-7840
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 11 [X]
AND/OR
REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 13 [X]
(Check appropriate box or boxes)
------------------------------------
SCHRODER SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
787 Seventh Avenue, New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 492-6000
It is proposed that this filing will become effective (check appropriate
box):
___ Immediately upon filing pursuant to paragraph (b)
X On March 1, 1999 pursuant to paragraph (b)
---
___ 60 days after filing pursuant to paragraph (a)(1)
___ On (date) pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ On (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
CATHERINE A. MAZZA
VICE PRESIDENT
SCHRODER SERIES TRUST
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(Name and Address of Agent for Service)
Copies to:
TIMOTHY W. DIGGINS, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
<PAGE> 2
SCHRODERS
PROSPECTUS
INVESTOR SHARES
MARCH 1, 1999
[GRAPHIC OMITTED]
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER MIDCAP VALUE FUND
SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER SHORT-TERM INVESTMENT FUND
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> 3
[SCHRODER LOGO]
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PROSPECTUS
MARCH 1, 1999
SCHRODER SERIES TRUST
Investor Shares
This prospectus describes five mutual funds offered by Schroder Series Trust.
The Trust offers Investor Shares of the Funds in this prospectus. Schroder
Capital Management Inc. ("Schroder") manages the Funds.
SCHRODER LARGE CAPITALIZATION EQUITY FUND seeks long-term growth of
capital. The Fund invests primarily in equity securities of companies
with large market capitalizations (generally more than $5 billion).
SCHRODER SMALL CAPITALIZATION VALUE FUND seeks capital appreciation. The
Fund invests primarily in equity securities of companies with small
market capitalizations (generally less than $1.5 billion).
SCHRODER MIDCAP VALUE FUND seeks long-term capital appreciation. The
Fund invests primarily in equity securities of mid-cap companies
(companies with market capitalizations of between $750 million and $5
billion).
SCHRODER INVESTMENT GRADE INCOME FUND seeks current income consistent
with preservation of capital. Growth of capital is a secondary
objective, to the extent consistent with the Fund's principal objective.
The Fund invests primarily in investment grade fixed-income securities.
SCHRODER SHORT-TERM INVESTMENT FUND seeks as high a rate of income as
Schroder believes is consistent with preservation of capital and
maintenance of liquidity. The Fund invests in a portfolio of
high-quality short-term debt instruments, but it is not a money market
fund.
You can call Schroder at (800) 464-3108 to find out more about these Funds and
other funds in the Schroder family.
The prospectus explains what you should know about the Funds 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> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY INFORMATION......................................... 4
Schroder Large Capitalization Equity Fund................ 5
Schroder Small Capitalization Value Fund................. 6
Schroder MidCap Value Fund............................... 7
Schroder Investment Grade Income Fund.................... 8
Schroder Short-Term Investment Fund...................... 10
Fees and Expenses........................................ 12
PRINCIPAL RISKS AND OTHER STRATEGIES........................ 14
MANAGEMENT OF THE FUNDS..................................... 18
HOW THE FUNDS' SHARES ARE PRICED............................ 20
HOW TO BUY SHARES........................................... 20
HOW TO SELL SHARES.......................................... 22
EXCHANGES................................................... 22
DIVIDENDS AND DISTRIBUTIONS................................. 22
TAXES....................................................... 23
YEAR 2000 DISCLOSURE........................................ 23
FINANCIAL HIGHLIGHTS........................................ 24
</TABLE>
<PAGE> 5
(THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
3
<PAGE> 6
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)
Schroder International Fund
Schroder Emerging Markets Fund
Schroder International Bond Fund
Schroder International Smaller Companies Fund
Schroder U.S. Diversified Growth Fund
Schroder Micro Cap Fund
Schroder U.S. Smaller Companies Fund
SCHRODER SERIES TRUST
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
Schroder All-Asia Fund
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SUMMARY INFORMATION
The Funds offered by Schroder Series Trust provide a broad range of investment
choices. The summaries on the following pages identify each Fund's investment
objective, principal investment strategies, and principal risks.
Below each Fund's description is a bar chart showing how the investment returns
of that 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 that 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 (where more than
one calendar year of performance is shown) and by 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
investments in the Funds.
4
<PAGE> 7
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- Investment Objective. To seek long-term growth of capital.
- Principal Investment Strategies. The Fund normally invests at least 65%
of its assets in equity securities of companies with large market
capitalizations (generally more than $5 billion). The Fund invests in a
variety of equity securities, including common and preferred stocks and
warrants to purchase common and preferred stocks.
In selecting securities for the Fund, Schroder focuses on issuers it
believes offer the possibility for growth of capital from earnings
potential and other factors not fully reflected in current market prices.
Such factors may include, for example, a company's probable future
earnings, the ratio of its price to earnings, and its relative strength,
as well as other factors Schroder may consider significant in a
particular industry or under varying market conditions.
- Principal Risks. The principal risks of investing in the Fund include 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 particular companies in the portfolio and/or the U.S.
equities market in general. The Fund is particularly sensitive to the
risks associated with "growth" securities, which are issued by companies
that Schroder expects to have relatively rapid earnings growth. Growth
securities typically trade at higher multiples of current earnings than
other securities and may be more sensitive to changes in a company's
current or expected earnings.
SCHRODER LARGE CAPITALIZATION EQUITY FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
CALENDAR YEAR END SCHRODER LARGE CAPITALIZATION EQUITY FUND
- ----------------- -----------------------------------------
<S> <C>
1995 28.29
1996 19.94
1997 26.25
1998 32.31
</TABLE>
During the periods shown above, the highest quarterly return was 23.50% for the
quarter ended December 31, 1998, and the lowest was -10.88% for the quarter
ended September 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 2/16/94)
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Schroder Large Capitalization Equity Fund 32.31% 19.35%
- -------------------------------------------------------------------------------------------
Standard & Poor's 500 Index* 28.58% 24.36%
- -------------------------------------------------------------------------------------------
</TABLE>
* The Standard & Poor's 500 Index is a market weighted composite index of 500
large capitalization U.S. companies and reflects the reinvestment of
dividends.
5
<PAGE> 8
SCHRODER SMALL CAPITALIZATION VALUE FUND
- Investment Objective. To seek capital appreciation.
- Principal Investment Strategies. The Fund normally invests at least 65%
of its assets in equity securities of companies with small market
capitalizations (generally less than $1.5 billion). The Fund invests in a
variety of equity securities, including common and preferred stocks and
warrants to purchase common and preferred stocks.
The Fund normally invests primarily in equity securities Schroder
believes to be undervalued. In selecting securities for the Fund,
Schroder analyzes, among other things, a company's financial data and
business fundamentals in an attempt to identify companies whose potential
for earnings growth or whose financial or business assets are undervalued
by the market in general.
- Principal Risks. The principal risks of investing in the Fund include 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 particular companies in the portfolio. The Fund is
particularly sensitive to this risk because it invests primarily in small
capitalization companies, which tend to be more vulnerable to adverse
developments than larger companies. The Fund is also particularly
sensitive to the risks associated with "value" securities, which are
issued by companies that may have experienced adverse developments or may
be subject to special risks that have caused their securities to be out
of favor. The Fund is also subject to the risk of general declines in the
U.S. equity market.
SCHRODER SMALL CAPITALIZATION VALUE FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER SMALL CAPITALIZATION VALUE FUND
----------------------------------------
<S> <C>
'1995' 23.39
'1996' 23.91
'1997' 32.13
'1998' -6.19
</TABLE>
During the periods shown above, the highest quarterly return was 20.45% for the
quarter ended June 30, 1997, and the lowest was -19.42% for the quarter ended
September 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 2/16/94)
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Schroder Small Capitalization Value Fund -6.19% 12.80%
- -------------------------------------------------------------------------------------------
Russell 2000 Index* -2.55% 11.54%
- -------------------------------------------------------------------------------------------
</TABLE>
* The Russell 2000 Index is a capitalization weighted broad based index of 2,000
small capitalization U.S. companies.
6
<PAGE> 9
SCHRODER MIDCAP VALUE FUND
- Investment Objective. To seek long-term capital appreciation.
- Principal Investment Strategies. The Fund normally invests at least 65%
of its assets in equity securities of mid-cap companies - companies with
market capitalizations of between $750 million and $5 billion. The Fund
invests in a variety of equity securities, including common and preferred
stocks, and warrants to purchase common and preferred stocks.
The Fund normally invests primarily in equity securities Schroder
believes to be undervalued. In selecting securities for the Fund,
Schroder analyzes, among other things, a company's financial data and
business fundamentals in an attempt to identify companies whose potential
for earnings growth or whose financial or business assets are undervalued
by the market in general.
- Principal Risks. The principal risks of investing in the Fund include 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 particular companies in the portfolio. The Fund is more
sensitive to this risk because it invests primarily in mid-cap companies,
which tend to be more vulnerable to adverse developments than larger
companies (though often less so than small capitalization companies). The
Fund is also particularly sensitive to the risks associated with "value"
securities, which are issued by companies that may have experienced
adverse developments or may be subject to special risks that have caused
their securities to be out of favor. The Fund is also subject to the risk
of general declines in the U.S. equity market.
SCHRODER MIDCAP VALUE FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER MIDCAP VALUE FUND - INVESTOR SHARES
--------------------------------------------
<S> <C>
'1998' 2.19%
</TABLE>
During the period shown above, the highest quarterly return was 24.26% for the
quarter ended December 31, 1998, and the lowest was -22.19% for the quarter
ended September 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 8/1/97)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Schroder MidCap Value Fund 2.19% 6.50%
- -------------------------------------------------------------------------------------------
Standard & Poor's Midcap 400 Index* 19.11% 18.32%
- -------------------------------------------------------------------------------------------
</TABLE>
* The Standard & Poor's Midcap 400 Index is a market weighted composite index of
400 stocks in the middle capitalization sector of the U.S. equities market.
7
<PAGE> 10
SCHRODER INVESTMENT GRADE INCOME FUND
- Investment Objective. To seek current income consistent with preservation
of capital. Growth of capital is a secondary objective, to the extent
consistent with the Fund's principal objective.
- Principal Investment Strategies. The Fund normally invests at least 90%
of its assets in U.S. Government securities and in debt securities and
preferred stocks that are "investment grade" quality. To be considered
"investment grade," the securities must be rated (at the time of
investment) in the four highest grades by Moody's Investors Service, Inc.
or Standard and Poor's Ratings Services or determined by Schroder to be
of comparable quality. The Fund will not invest more than 25% of its
assets in securities ranked below the third highest grade by Moody's or
Standard and Poor's. The Fund may invest a substantial portion of its
assets in mortgage-backed certificates and other securities representing
ownership interests in mortgage pools, including collateralized mortgage
obligations.
Schroder may take full advantage of the entire range of maturities of the
securities in which the Fund may invest. Schroder may also adjust the
average maturity of the Fund's portfolio from time to time, depending on
its assessment of relative yields on securities of different maturities
and expectations of future changes in interest rates. Thus, at certain
times, the average maturity of the Fund's portfolio may be relatively
short (from under one year to five years, for example) and at other times
may be relatively long (more than ten years, for example). To the extent
consistent with the Fund's principal objective, Schroder also attempts to
achieve growth of capital for the Fund by identifying issuers of
securities which are undervalued by the market, including issuers in
particular sectors of the fixed-income market.
- Principal Risks. The principal risks of investing in the Fund include the
risk that interest rates will rise or fall in ways not anticipated by
Schroder. For example, if interest rates were to rise, the values of
fixed-income securities held by the Fund would typically fall. Securities
having longer maturities would tend to experience greater price declines
in response to rising interest rates. As described above, the average
maturity of the Fund's portfolio will vary, but may be relatively long at
times. If the Fund held securities with relatively long maturities at a
time when interest rates were to rise, the value of the Fund's shares
would likely fall more than if the Fund had invested in securities with
shorter maturities. The Fund is also subject to the risk that the issuer
of a fixed-income security will have its credit rating downgraded or will
be unable to pay its obligations when due. This could cause the Fund's
portfolio securities to decline in value, especially where an issuer
defaults on its obligations. The Fund attempts to minimize credit risk by
investing primarily in investment grade securities.
The Fund's investment in mortgage-backed securities may involve special
risks relating to unanticipated rates of prepayment on the mortgages
underlying the securities. Falling interest rates may tend to increase
prepayments, which could significantly shorten the effective maturities
of mortgage-backed securities. Similarly, rising interest rates may tend
to reduce prepayments, which could significantly lengthen the effective
maturities. When interest rates decline, significant unscheduled
prepayments on the underlying mortgages would have to be reinvested at
the then-prevailing lower rates. Therefore, the Fund's mortgage-backed
securities may have less potential for capital appreciation during
periods of falling interest rates than other fixed-income securities of
comparable maturities. However, the securities may have a comparable risk
of decline in market value during periods of rising interest rates.
8
<PAGE> 11
SCHRODER INVESTMENT GRADE INCOME FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER INVESTMENT GRADE INCOME FUND - INVESTOR SHARES
<S> <C>
1995 18.31
1996 2.04
1997 8.23
1998 7.79
</TABLE>
During the periods shown above, the highest quarterly return was 6.50% for the
quarter ended June 30, 1995, and the lowest was -2.21% for the quarter ended
March 31, 1996.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 2/22/94)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Schroder Investment Grade Income Fund 7.79% 6.33%
- ---------------------------------------------------------------------------------------------------
Lehman Brothers Government/Corporate Index* 9.47% 7.57%
- ---------------------------------------------------------------------------------------------------
</TABLE>
* The Lehman Brothers Government/Corporate Index is a composite of
approximately 5,000 investment grade government and corporate debt issues
with maturities greater than 1 year.
The yield on the Fund's Investor Shares for the 30-day period ended January 31,
1999 was 5.22%. Please call Schroder at (800) 464-3108 for more recent yield
information for the Fund.
9
<PAGE> 12
SCHRODER SHORT-TERM INVESTMENT FUND
- Investment Objective. To seek as high a rate of income as Schroder
believes is consistent with preservation of capital and maintenance of
liquidity. While the Fund intends to invest in short-term securities, it
is not a money-market fund. The Fund's net asset value will fluctuate
based on changes in interest rates and other factors affecting the values
of the Fund's portfolio securities.
- Principal Investment Strategies. The Fund will normally invest all of its
assets in a portfolio of high-quality short-term instruments consisting
of any or all of the following: prime commercial paper; U.S. Government
securities; corporate obligations rated at least Aa by Moody's or AA by
Standard & Poor's; bankers' acceptances, bank certificates of deposit or
bank time deposits; repurchase agreements with respect to U.S. Government
securities or any of the other fixed-income securities described above;
and other securities (such as certain mortgage-backed securities) rated
at least Aa or P-1 by Moody's or AA or A-1 by Standard & Poor's or, under
certain circumstances, determined by Schroder to be of comparable
quality.
All of the Fund's investments will normally have remaining maturities of
three years or less at the time of investment. The Fund will normally
invest at least 65% of its assets in obligations with remaining
maturities of two years or less at the time of investment. The average
maturity of the Fund's portfolio securities based on their dollar value
generally will not exceed one year at the time of each investment. When a
security is subject to a repurchase agreement, the amount and maturity of
the Fund's investment will be determined by reference to the amount and
term of the repurchase agreement, not by reference to the underlying
security.
A portion of the securities held by the Fund may consist of asset-backed
securities, including mortgage-backed certificates and other securities
representing ownership interests in mortgage pools, including
collateralized mortgage obligations. Schroder will calculate the
"maturity" of such an obligation and other similar obligations, for
purposes of determining the Fund's compliance with the requirements set
out above, based on Schroder's estimate of the period of time remaining
until all of the scheduled payments in respect of that obligation will
have been made. That period may be shorter than the stated maturity of
the obligation.
- Principal Risks. The principal risks of investing in the Fund include the
risk that interest rates will rise or fall in ways not anticipated by
Schroder. For example, if interest rates were to rise, the values of
fixed-income securities held by the Fund would typically fall. The Fund
is also subject to the risk that the issuer of a fixed-income security
will have its credit rating downgraded or will be unable to pay its
obligation when due. This could cause the Fund's portfolio securities to
decline in value, especially where an issuer defaults on its obligations.
The Fund attempts to minimize both interest rate risk and credit risk by
investing in a portfolio of high-quality short-term instruments. However,
the Fund is not a money market fund and its net asset value will
fluctuate based on changes in interest rates and other factors affecting
the values of the Fund's portfolio securities.
The Fund's investment in mortgage-backed securities may involve special
risks relating to unanticipated rates of prepayment on the mortgages
underlying the securities. Falling interest rates may tend to increase
prepayments, which could significantly shorten the effective maturities
of mortgage-backed securities. Similarly, rising interest rates may tend
to reduce prepayments, which could significantly lengthen the effective
maturities. When interest rates decline, significant unscheduled
prepayments on the underlying mortgages would have to be reinvested at
the then-prevailing lower rates. Therefore, the Fund's mortgage-backed
securities may have less potential for capital appreciation during
periods of falling interest rates than other fixed-income securities of
comparable maturities. However, the securities may have a comparable risk
of decline in market value during periods of rising interest rates.
10
<PAGE> 13
SCHRODER SHORT-TERM INVESTMENT FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER SHORT-TERM INVESTMENT FUND - INVESTOR
SHARES
----------------------------------------------
<S> <C>
'1995' 5.23%
'1996' 4.55%
'1997' 4.87%
'1998' 4.89%
</TABLE>
During the periods shown above, the highest quarterly return was 1.55% for the
quarter ended September 30, 1995, and the lowest was 0.98% for each of the
quarters ended June 30, 1996 and December 31, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 1/11/94)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Schroder Short-Term Investment Fund 4.89% 4.42%
- -------------------------------------------------------------------------------------------
90 Day U.S. Treasury Bill* 5.01% 5.19%
- -------------------------------------------------------------------------------------------
</TABLE>
* The 90 Day U.S. Treasury Bill return represents a four-week average return on
the 90 day U.S. Treasury Bill.
The yield on the Fund's Investor Shares for the 30-day period ended January 31,
1999 was 4.87%. Please call Schroder at (800) 464-3108 for more recent yield
information for the Fund.
11
<PAGE> 14
FEES AND EXPENSES
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU INVEST IN
INVESTOR SHARES OF THE FUNDS.
SHAREHOLDER FEES
(paid directly from your investment):
<TABLE>
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Load None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets):
<TABLE>
<CAPTION>
SCHRODER LARGE SCHRODER SMALL SCHRODER SCHRODER SCHRODER
CAPITALIZATION CAPITALIZATION MIDCAP INVESTMENT GRADE SHORT-TERM
EQUITY FUND VALUE FUND VALUE FUND INCOME FUND INVESTMENT FUND
-------------- -------------- ---------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Management Fees 0.75% 0.95% 0.90% 0.50% 0.40%
Distribution (12b-1) Fees None None None None None
Other Expenses 0.45 0.34 1.57 0.75 0.72
Total Annual Fund
Operating Expenses 1.20 1.29 2.47 1.25 1.12
Fee Waiver and/or
Expense Limitation 0.25(1) N/A 1.12(1) 0.50(1) 0.09(1)
Net Expenses 0.95(1) 1.29 1.35(1) 0.75(1) 1.03(1)
</TABLE>
(1) The Net Expenses shown above for Schroder Large Capitalization Equity Fund,
Schroder MidCap Value Fund, Schroder Investment Grade Income Fund, and
Schroder Short-Term Investment Fund show the effect of contractually imposed
expense limitations and/or fee waivers, in effect through October 31, 1999,
on the Total Annual Fund Operating Expenses of the Funds. See "Management of
the Funds" below.
12
<PAGE> 15
EXAMPLE
This Example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Investor Shares of a Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment earns a 5% return each
year and that the Fund's Total Annual Fund Operating Expenses remain the same as
those set forth on the previous page (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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Schroder Large Capitalization Equity Fund* $123 $383 $ 663 $1,461
Schroder Small Capitalization Value Fund $132 $411 $ 712 $1,564
Schroder MidCap Value Fund* $253 $778 $1,330 $2,832
Schroder Investment Grade Income Fund* $128 $399 $ 690 $1,518
Schroder Short-Term Investment Fund* $115 $358 $ 620 $1,369
</TABLE>
* Assuming that each of these Fund's operating expenses remain the same as the
Net Expenses set forth on the previous page, based on the other assumptions
above your costs of investing in the Fund would be as follows for 1 year, 3
years, 5 years, and 10 years, respectively:
Schroder Large Capitalization Equity Fund -- $97, $304, $528, $1,171
Schroder MidCap Value Fund -- $138, $430, $744, $1,632
Schroder Investment Grade Income Fund -- $77, $241, $418, $933
Schroder Short-Term Investment Fund -- $106, $329, $571, $1,264
13
<PAGE> 16
PRINCIPAL RISKS AND OTHER STRATEGIES
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
A Fund may not achieve its objective in all circumstances and you could lose
money by investing. The following provides more detail about the Funds'
principal risks and the circumstances which could adversely affect the value of
a Fund's shares.
SCHRODER LARGE CAPITALIZATION EQUITY, SCHRODER SMALL CAPITALIZATION VALUE, AND
SCHRODER MIDCAP VALUE FUNDS
These Funds invest primarily in equity securities. The principal risks of
investing in these Funds include the risk that their portfolio securities will
decline in value due to factors affecting the issuing companies, their
industries, or the equity markets generally. These risks may be greater for
Schroder Small Capitalization Value Fund and Schroder MidCap Value Fund, which
invest primarily in small and mid-cap companies, respectively. Securities of
small and mid-cap companies tend to be more vulnerable to adverse developments
than larger companies.
- - General Risks of Equity Securities. The values of equity securities may
decline for a number of reasons which directly relate to the issuing company,
such as lower demand for the company's products or services or poor decisions
made by such company's management. Equity securities may also decline due to
factors which affect a particular industry or industries, such as labor
shortages or increased production costs. Equity securities may also decline
due to general market conditions which are not specifically related to a
company or industry, such as adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or currency rates,
or adverse investor sentiment.
- - Growth Securities. Each Fund may invest in securities of companies that
Schroder believes have earnings that will grow relatively rapidly. A principal
strategy of Schroder Large Capitalization Equity Fund is to invest in growth
securities. These growth securities typically trade at higher multiples of
current earnings than other securities. Therefore, the values of growth
securities may be more sensitive to changes in current or expected earnings
than the values of other securities.
- - Value Securities. Each Fund may also invest in companies that may not be
expected to experience significant earnings growth, but whose securities
Schroder believes are undervalued. A principal strategy of Schroder Small
Capitalization Value Fund and Schroder MidCap Value Fund is to invest in value
securities. These companies may have experienced adverse business developments
or may be subject to special risks that have caused their securities to be out
of favor. If Schroder's assessment of a company's prospects is wrong, or if
the market does not recognize the value of the company, the price of its
securities may decline or may not approach the value that Schroder
anticipates.
- - Risks of Smaller Capitalization Companies. Schroder Small Capitalization Value
Fund and Schroder MidCap Value Fund invest in companies which are smaller and
less well-known than larger, more widely held companies. Small and mid-cap
companies may offer greater opportunities for capital appreciation than larger
companies, but may also involve certain special risks. They are more likely
than larger companies to have limited product lines, markets or financial
resources, or to depend on a small, inexperienced management group. Securities
of smaller companies may trade less frequently and in lesser volume than more
widely held securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or on a
regional exchange, or may
14
<PAGE> 17
otherwise have limited liquidity. These securities may therefore be more
vulnerable to adverse developments than securities of larger companies and the
Funds may have difficulty establishing or closing out their securities positions
in smaller companies at prevailing market prices. Also, there may be less
publicly available information about smaller companies or less market interest
in their securities as compared to larger companies, and it may take longer for
the prices of the securities to reflect the full value of their issuers'
earnings potential or assets.
SCHRODER INVESTMENT GRADE INCOME AND SCHRODER SHORT-TERM INVESTMENT FUNDS
These Funds invest primarily in fixed-income securities. The other Funds may
also invest a portion of their assets in fixed-income securities. All
fixed-income securities are subject to some degree of market (or interest rate)
risk and credit risk.
- - Market (Interest Rate) Risk of Fixed-Income Securities. Changes in the market
values of fixed-income securities are largely an inverse function of changes
in the current level of interest rates. During periods of falling interest
rates, the values of fixed-income securities generally rise. During periods of
rising interest rates, the values of fixed-income securities generally
decline. Fluctuations in the market value of a Fund's fixed-income securities
generally will not affect interest income on securities already held by the
Fund, but will be reflected in the Fund's net asset value.
When interest rates are falling or remain relatively flat, a portfolio of
long-term fixed-income securities will generally outperform a short-term
portfolio. On the other hand, when interest rates are rising, a short-term
portfolio will generally outperform a long-term portfolio. In general,
fixed-income portfolios with longer average maturities generally have a
greater potential for total return than shorter maturity portfolios, but are
also subject to greater levels of market risk.
As its name suggests, Schroder Short-Term Investment Fund is managed to have a
relatively short average portfolio maturity. Therefore, that Fund is subject
to a relatively small level of market risk. Depending upon Schroder's current
investment outlook and strategy, the average maturity of Schroder Investment
Grade Income Fund's portfolio may be relatively short at times (from under one
year to five years, for example) and may be relatively long at other times
(more than ten years, for example). That Fund may be subject to relatively
high levels of market risk when its average portfolio maturity is long.
- - Credit Risk of Fixed-Income Securities. Credit risk associated with
fixed-income securities relates to the ability of the issuer to make scheduled
payments of principal and interest on an obligation. A portfolio of
fixed-income securities is subject to some degree of risk that the issuers of
the securities will have their credit ratings downgraded or will default,
potentially reducing the portfolio's share price and income level. Nearly all
fixed-income securities are subject to some credit risk, whether the issuers
of the securities are corporations, states or local governments, or foreign
governments. Even certain U.S. Government securities are subject to credit
risk. The Funds will not necessarily dispose of a security when its rating is
reduced below its rating at the time of purchase, although Schroder will
monitor the investment to determine whether keeping the security will help to
achieve the Fund's investment objective.
Schroder Investment Grade Income Fund and Schroder Short-Term Investment Fund
each invests in a portfolio of higher-rated fixed-income securities which
involve a lesser degree of credit risk than lower quality securities. However,
the yields available from these Funds are generally lower than the yields
available from fixed-income funds that invest in lower quality securities.
15
<PAGE> 18
- - Risks of Mortgage-Backed Securities. Schroder Investment Grade Income Fund and
Schroder Short-Term Investment Fund may invest a portion of their assets in
mortgage-backed certificates and other securities representing ownership
interests in mortgage pools, including collateralized mortgage obligations.
Interest and principal payments on the mortgages underlying mortgage-backed
securities are passed through to the holder of the mortgage-backed securities.
Prepayments of principal and interest on mortgages underlying mortgage-backed
securities may result from the voluntary prepayment, refinancing, or
foreclosure of the underlying mortgage loans, and may significantly shorten
the effective maturities of mortgage-backed securities, especially during
periods of declining interest rates. Similarly, during periods of rising
interest rates, a reduction in the rate of prepayments may significantly
lengthen the effective maturities of such securities.
Mortgage-backed securities may offer yields higher than those available from
many other types of debt securities, but they are less effective than other
types of securities as a means of "locking in" attractive long-term interest
rates. This is caused by the possibility of significant unscheduled
prepayments resulting from declines in mortgage interest rates. These
prepayments would have to be reinvested at the then-prevailing lower rates. As
a result, a Fund's mortgage-backed securities may have less potential for
capital appreciation during periods of declining interest rates than other
fixed-income securities of comparable maturities, although such obligations
may have a comparable risk of decline in market value during periods of rising
interest rates.
ADDITIONAL INFORMATION REGARDING PRINCIPAL INVESTMENT STRATEGIES
The following provides additional information regarding the Funds' principal
investment strategies not discussed in the Summary Information section above.
- - Temporary Defensive Strategies. At times, Schroder may judge that conditions
in the securities markets make pursuing a 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 a Fund's assets. In
implementing these "defensive" strategies, the Fund would invest in
high-quality fixed-income 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, a Fund will use these alternate
strategies.
- - Changes in Investment Objectives and Policies. The investment objectives and
policies of each Fund may, unless otherwise specifically stated, be changed by
the Trustees of the Trust without a vote of the shareholders. As a matter of
policy, the Trustees would not materially change an investment objective of a
Fund without shareholder approval.
- - Percentage Investment Limitations. Unless otherwise noted, all percentage
limitations on Fund investments listed in this prospectus will apply at the
time of investment. A Fund would not violate these limitations unless an
excess or deficiency occurs or exists immediately after and as a result of an
investment.
OTHER INVESTMENTS STRATEGIES AND TECHNIQUES
In addition to the principal investment strategies described in the Summary
Information section above, the Funds 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 Funds. As in any mutual
fund, investors must rely on the professional investment judgment and skill of
the fund's adviser.
16
<PAGE> 19
- - Securities Loans and Repurchase Agreements. Each Fund may lend portfolio
securities amounting to not more than 25% of its assets to broker-dealers, and
may enter into repurchase agreements on up to 25% of its assets. These
transactions must be fully collateralized at all times, but involve some risk
to a Fund if the other party should default on its obligation and the Fund is
delayed or prevented from realizing the collateral.
- - When-Issued, Delayed Delivery, and Forward Commitment Transactions. Each Fund
may purchase securities on a when-issued, delayed delivery, or forward
commitment basis. These transactions involve a commitment by the Fund to
purchase a security for a predetermined price or yield, with payments and
delivery taking place more than seven days in the future, or after a period
longer than the customary settlement period for that type of security. These
transactions may increase the overall investment exposure for a Fund and
involve a risk of loss if the value of the securities declines prior to the
settlement date.
- - 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.
- - Variable and Floating Rate Instruments. Certain obligations purchased by
Schroder Investment Grade Income Fund and Schroder Short-Term Investment Fund
may be variable or floating rate instruments and may involve a demand or
interest rate reset feature. Variable or floating rate instruments bear
interest at a rate which varies with changes in market rates. The holder of an
instrument with a demand feature may tender the instrument back to the issuer
at par value prior to maturity. When interest rates fall, variable and
floating rate instruments generally will not increase in value as much as
fixed-rate instruments of similar credit quality, although they will generally
lose less value than similarly rated fixed-rate instruments when interest
rates rise. When determining the maturity of a variable or floating rate
instrument, a Fund may look to the date the demand feature can be exercised,
or to the date the interest rate is readjusted, rather than to the stated
maturity of the instrument. The absence of an active secondary market for
these instruments could make it difficult for a Fund to dispose of them.
- - Zero-Coupon Bonds. Each 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 risk
than bonds that pay interest currently.
- - Derivative Investments. Each of the Funds may engage in a variety of
transactions involving the use of derivative instruments for purposes of
increasing its investment return or hedging against market changes. These may
include options, futures, and indices, for example. Derivative instruments
involve the risk that they may not work as intended under all market
conditions. Also, derivatives often involve the risk that the other party to
the transaction will be unable to meet its obligations.
- - Portfolio Turnover. The length of time a Fund has held a particular security
is not generally a consideration in investment decisions. The investment
policies of a Fund may lead to frequent changes in the Fund's investments,
particularly in periods of volatile market movements. A change in the
securities held by a Fund is known as "portfolio turnover." Portfolio turnover
generally involves some expense to a Fund, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities and
reinvestment in other securities. Such sales may increase the amount of
capital gains (and, in particular, short-term gains) realized by the Funds, on
which shareholders may pay taxes.
17
<PAGE> 20
- - Other Investments. The Funds may also invest in other types of securities and
utilize a variety of investment techniques and strategies which are not
described in this prospectus, such as investment in foreign securities and the
use of foreign currency transactions. These securities and techniques may
subject the Funds 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 Funds.
MANAGEMENT OF THE FUNDS
The Trust is governed by a Board of Trustees which has retained Schroder to
manage the investments of each Fund. Subject to the control of the Trustees,
Schroder also manages the Funds' other affairs and business. Schroder has served
as investment adviser to each of the Funds since inception.
Schroder has been an investment manager since 1962, and currently serves as
investment adviser to the Funds and a broad range of institutional investors.
Schroder's address is 787 Seventh Avenue, New York, New York 10019, and its
telephone number is (800) 464-3108.
- - Management Fees Paid by the Funds. For the fiscal year ended October 31, 1998,
the Funds paid management fees to Schroder at the following annual rates
(based on the average daily net assets of each Fund taken separately):
Schroder Large Capitalization Equity Fund - 0.59%; Schroder Small
Capitalization Value Fund - 0.95%; Schroder MidCap Value Fund - 0.90%;
Schroder Investment Grade Income Fund - 0.21%; and Schroder Short-Term
Investment Fund - 0.40%. The amounts paid by each Fund except Schroder Small
Capitalization Value Fund reflect expense limitations and/or waivers described
below.
- - Expense Limitations and Waivers. In order to limit the Funds' expenses,
Schroder is contractually obligated to reduce its compensation (and, if
necessary, to pay certain other Fund expenses) until October 31, 1999 to the
extent that each Fund's total operating expenses attributable to its Investor
Shares exceed the following annual rates (based on the average daily net
assets of each Fund taken separately): Schroder Large Capitalization Equity
Fund - 1.55%; Schroder Small Capitalization Value Fund - 1.70%; Schroder
MidCap Value Fund - 1.35%; Schroder Investment Grade Income Fund - 1.12%; and
Schroder Short-Term Investment Fund - 1.03%. In addition, Schroder is
contractually obligated, through October 31, 1999, to waive a portion of the
management fees it is entitled to receive from Schroder Large Capitalization
Equity Fund and from Schroder Investment Grade Income Fund. As a result,
during the period of the waiver, Schroder Large Capitalization Equity Fund
will pay management fees to Schroder at the annual rate of 0.50% of the Fund's
average daily net assets, and Schroder Investment Grade Income Fund will pay
no management fees.
18
<PAGE> 21
- - Portfolio Managers. Schroder's investment decisions for each of the Funds are
generally made by a committee of investment professionals at Schroder. The
following directors and officers of Schroder have had primary responsibility
for making recommendations to the committee for the noted Funds since the
years shown below. Their recent professional experience is also shown.
<TABLE>
<CAPTION>
SCHRODER FUND PORTFOLIO MANAGER SINCE RECENT PROFESSIONAL EXPERIENCE
------------- ----------------- ----- ------------------------------
<S> <C> <C> <C>
Large Capitalization Equity Fund Paul Morris 1997 Employed as an investment professional
at Schroder since 1997. Prior to
joining Schroder, Mr. Morris served as
Principal Senior Portfolio Manager at
Weiss, Peck & Greer, L.L.C. from 1995
to 1996, and as Managing Director at
Union Bank of Switzerland from 1987 to
1995.
Small Capitalization Value Fund Nancy B. Tooke Inception Employed as an investment professional
(1994) at Schroder since 1994.
MidCap Value Fund Nancy B. Tooke Inception See above.
(1997)
Investment Grade Income Fund Robert C. Michele 1998 Employed as an investment professional
at Schroder since 1998. Prior to
joining Schroder, Mr. Michele served
as a Managing Director and Portfolio
Manager at Black Rock Financial
Management from 1995 to 1998, and as a
Director at CS First Boston Investment
Management from 1993 to 1995.
Richard Gotterer 1998 Employed as an investment professional
at Schroder since 1993.
Short-Term Investment Fund Robert C. Michele 1998 See above.
Richard Gotterer 1998 See above.
</TABLE>
19
<PAGE> 22
HOW THE FUNDS' SHARES ARE PRICED
Each Fund calculates the net asset value of its Investor Shares by dividing the
total value of its assets attributable to its Investor Shares, less its
liabilities attributable to those shares, by the number of its Investor Shares
outstanding. Shares are valued as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern Time) each day the Exchange is
open. The Trust expects that days, other 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 Funds value their 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 Funds value all other securities and assets at their fair
values as determined by Schroder.
HOW TO BUY SHARES
The Trust sells Investor Shares of the Funds at their net asset value without
any sales charges or loads, so that the full amount of your purchase payment is
invested in the Fund you select.
Investors may purchase Investor Shares of the Funds by completing an Account
Application and sending payment by check or wire as described below. An Account
Application may be obtained from (i) Schroder Fund Advisors Inc., the Trust's
principal underwriter, (ii) the Trust's transfer agent, Boston Financial Data
Services, Inc. ("BFDS"), Two Heritage Drive, North Quincy, Massachusetts 02171,
or (iii) by calling (800) 464-3108.
Investor Shares of each of the Funds are sold at their net asset value next
determined after Schroder Fund Advisors Inc. receives your order. In order for
you to receive that day's net asset value, Schroder Fund Advisors Inc. must
receive your order before the close of regular trading on the New York Stock
Exchange.
The minimum initial investment in Investor Shares of the Trust is $25,000 (which
you may allocate in any amounts among the various Funds). Schroder Fund Advisors
Inc. may, in its sole discretion, accept smaller initial or subsequent
investments so long as the investor is an employee of Schroder or any of its
affiliates or has an investment account with Schroder with a minimum balance
specified by Schroder from time to time. None of the Funds issue share
certificates.
PURCHASES BY CHECK
Purchases may be made by mailing a check (in U.S. dollars), payable to (i)
Schroder Series Trust if you are purchasing shares of two or more Funds or (ii)
the name of the Fund to be purchased (e.g., Schroder Small Capitalization Value
Fund) if you are purchasing shares of a single Fund. Third-party checks will not
be accepted.
For initial purchases, the check must be accompanied by a completed Account
Application in proper form. Further documentation may be requested to evidence
the authority of the person or entity making the subscription request.
Complete and sign the Account Application and mail it with your check to:
Schroder Series Trust
P.O. Box 8507
Boston, MA 02266
20
<PAGE> 23
PURCHASES BY WIRE
If your initial investment is 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 regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time) on each day the Exchange is open for trading
will be processed at the net asset value determined as of that day. Wire orders
received after that time will be processed at the net asset value determined
thereafter.
Federal Reserve Bank wire instructions are as follows:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
ABA: 011000028
Attn: Schroder Series Trust
DDA: 9904-650-0
FBO: Account Registration
A/C: Account Number Assigned By BFDS - Name of Fund(s).
AUTOMATIC PURCHASES
You can make regular investments of $100 or more per month or quarter in
Investor Shares of the Funds through automatic deductions from your bank
account. Please complete the appropriate section of the Account Application if
you would like to utilize this option. For more information, please call (800)
464-3108.
OTHER PURCHASE INFORMATION
Investor Shares of each 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 in question and have a readily ascertainable value.) If a
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 Funds' net asset values. 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 relevant Fund and must be delivered to the
Fund upon receipt by the investor. A gain or loss for federal income tax
purposes may be realized by investors upon the exchange. Investors interested in
purchases through exchange should telephone Schroder at (800) 464-3108.
Schroder Fund Advisors Inc., Schroder, or their affiliates may, at their own
expense and out of their own assets, provide compensation to dealers or other
financial intermediaries in connection with sales of Trust shares or shareholder
servicing. In some instances, this compensation may be made available only to
certain dealers or other financial intermediaries who have sold or are expected
to sell significant amounts of shares of the Trust. If you purchase or sell
shares through a financial intermediary, the intermediary may charge a fee for
its services. Consult your financial intermediary for information.
21
<PAGE> 24
HOW TO SELL SHARES
You may sell your Investor Shares back to a Fund any day the New York Stock
Exchange is open by sending a letter of instruction or stock power form to BFDS.
When you sell your shares, you will get back the full value of the shares,
without any deferred sales charge. The price you will receive is the net asset
value next determined after receipt of your redemption request in good order. A
redemption request is in good order if it includes the exact name in which the
shares are registered, the investor's account number, and the number of shares
or the dollar amount of shares to be redeemed, and if it is signed exactly in
accordance with the registration form. Signatures must be guaranteed by a bank,
broker/dealer, or certain other financial institutions. BFDS may require
additional documentation from shareholders that are corporations, partnerships,
agents, fiduciaries, or surviving joint owners.
The Trust will pay you for your redemptions as promptly as possible and in any
event within seven days after the request for redemption is received in writing
by BFDS 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 own fewer shares than a minimum amount set by the Trustees (presently 50
shares) of any Fund, the Trust may choose to redeem your shares in that 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 any
Fund above a maximum amount set by the Trustees. There is currently no maximum,
but the Trustees may establish one at any time, which could apply to both
present and future shareholders.
EXCHANGES
You can exchange your Investor Shares of any Fund for Investor Shares of any
other Fund, or another series in the Schroder family of funds, at any time at
their respective net asset values. To exchange shares, please call (800)
464-3108. The Trust reserves the right to change or suspend the exchange
privilege at any time. Shareholders would be notified of any such change or
suspension.
DIVIDENDS AND DISTRIBUTIONS
- - Schroder Large Capitalization Equity Fund, Schroder Small Capitalization Value
Fund, and Schroder MidCap Value Fund. Each of these Funds distributes any net
investment income and any net realized capital gains at least once a year.
Distributions from net investment income, if any, are expected to be small.
- - Schroder Investment Grade Income Fund. This Fund distributes net investment
income monthly and any net realized capital gains at least once a year.
- - Schroder Short-Term Investment Fund. This Fund declares all of its net income
as a dividend each day the Fund is open for business. Dividends are declared
each business day to shareholders of record at the time of the declaration.
You begin earning dividends on the day after the Fund receives payment for
your shares. The Fund's net income for Saturdays, Sundays, and holidays is
declared as a dividend on the next business day. Each month's dividends will
be paid on the last day of that month (or, if that day is not a business day,
on the preceding business day). A shareholder who withdraws the entire balance
of an account at any time during the month will be paid all dividends declared
through the date of the withdrawal.
22
<PAGE> 25
YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS:
- - Reinvest all distributions in additional Investor Shares of your Fund;
- - Receive any distributions from net investment income in cash while reinvesting
capital gains distributions in additional Investor Shares of your Fund; or
- - Receive all distributions in cash.
You can change your distribution option by notifying BFDS in writing. If you do
not select an option when you open your account, all distributions by a Fund
will be reinvested in Investor Shares of that Fund. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the period in which the reinvestment occurs.
TAXES
- - 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 your 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 a Fund before you invested (and thus were included in the
price you paid for your shares). Distributions of gains from investments that
a 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 Funds.
- - Taxes when you sell or exchange your shares. Any gain resulting from the sale
or exchange of your shares of the Funds (including an exchange for Investor
Shares of another Fund) will also generally be subject to federal income tax.
- - Consult your tax advisor about other possible tax consequences. This is a
summary of certain federal income tax consequences of investing in a 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 Funds receive services from Schroder, Schroder Fund Advisors Inc., BFDS,
State Street Bank and Trust Company, 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 Funds' other major service
providers. There can be no assurance, however, that these steps will be
sufficient to avoid any adverse impact on the Funds from this problem. 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 Funds invest or on
the securities markets generally, which may reduce the value the Funds'
portfolio investments.
23
<PAGE> 26
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of each of the Funds 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 a Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by Arthur Andersen LLP, whose report, along with each Fund's financial
statements, are included in the Funds' annual report to shareholders. The annual
report is available upon request.
SCHRODER LARGE CAPITALIZATION EQUITY FUND
(For an Investor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
--------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994(1)
------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of
Period $ 14.48 $ 12.18 $ 11.12 $ 9.45 $ 10.00
Income from Investment Operations:
Net Investment Income 0.05(2) 0.10 0.11 0.11(2) 0.06(2)
Net Realized and Unrealized Gain
(Loss) on Investments 2.95 3.04 1.92 1.63 (0.61)
------- ------- ------- ------- -------
Total from Investment Operations 3.00 3.14 2.03 1.74 (0.55)
------- ------- ------- ------- -------
Less Distributions:
From Net Investment Income (0.09) (0.11) (0.13) (0.07) 0.00
From Net Realized Capital Gains (2.64) (0.73) (0.84) 0.00 0.00
------- ------- ------- ------- -------
Total Distributions (2.73) (0.84) (0.97) (0.07) 0.00
------- ------- ------- ------- -------
Net Asset Value at End of Period $ 14.75 $ 14.48 $ 12.18 $ 11.12 $ 9.45
======= ======= ======= ======= =======
Total Return 23.91% 26.18% 19.30% 18.63% (5.50%)(3)
Ratios & Supplemental Data
Net Assets at End of Period
(000's) $60,694 $45,552 $42,905 $38,088 $21,309
Ratio of Operating Expenses to
Average Net Assets 1.04%(2) 1.23% 1.26% 1.40%(2) 1.30%(2)(4)
Ratio of Net Investment Income to
Average Net Assets 0.36% 0.63% 0.94% 1.27% 1.37%(4)
Portfolio Turnover Rate 161.11% 64.91% 56.83% 83.15% 102.56%(3)
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses and/or a
management fee waiver by Schroder Capital Management Inc. (See Note 3 to the
Trust's financial statements.) Had the Investment Adviser not undertaken to
pay, reimburse or waive expenses related to the Fund, the Net Investment
Income per share and Ratio of Operating Expenses to Average Net Assets would
have been as follows: 1998 - $0.03 and 1.20%, 1995 - $0.11 and 1.45%,
1994 - $0.02 and 2.17%, respectively.
(3) Not annualized.
(4) Annualized.
24
<PAGE> 27
SCHRODER SMALL CAPITALIZATION VALUE FUND
(For an Investor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994(1)
------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of
Period $ 17.67 $ 13.05 $ 10.77 $ 9.77 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) (0.02) (0.05) (0.05) (0.03)(2) 0.00(2)
Net Realized and Unrealized Gain
(Loss) on Investments (2.05) 5.65 2.34 1.03 (0.23)
------- ------- ------- ------- -------
Total from Investment Operations (2.07) 5.60 2.29 1.00 (0.23)
------- ------- ------- ------- -------
Less Distributions:
From Net Realized Capital Gains (2.69) (0.98) (0.01) 0.00 0.00
------- ------- ------- ------- -------
Total Distributions (2.69) (0.98) (0.01) 0.00 0.00
------- ------- ------- ------- -------
Net Asset Value at End of Period $ 12.91 $ 17.67 $ 13.05 $ 10.77 $ 9.77
======= ======= ======= ======= =======
Total Return (13.29%) 48.46% 21.17% 10.27% (2.30%)(3)
Ratios & Supplemental Data
Net Assets at End of Period
(000's) $67,814 $96,709 $48,614 $47,929 $21,193
Ratio of Operating Expenses to
Average Net Assets 1.29% 1.32% 1.43% 1.56%(2) 1.45%(2)(4)
Ratio of Net Investment Income to
Average Net Assets (0.14%) (0.36%) (0.34%) (0.29%) 0.17%(4)
Portfolio Turnover Rate 87.51% 77.48% 81.63% 45.74% 18.53%(3)
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income (Loss) is after reimbursement of certain expenses by
Schroder Capital Management Inc. (See Note 3 to the Trust's financial
statements.) Had the Investment Adviser not undertaken to pay or reimburse
expenses related to the Fund, the Net Investment Income (Loss) per share and
Ratio of Operating Expenses to Average Net Assets would have been as
follows: 1995 - $(0.03) and 1.62%, 1994 - $(0.04) and 3.15%, respectively.
(3) Not annualized.
(4) Annualized.
25
<PAGE> 28
SCHRODER MIDCAP VALUE FUND
(For an Investor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1998 1997(1)
----------- ------------
<S> <C> <C>
Net Asset Value at Beginning of Period $ 10.36 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss)(2) (0.01) 0.00
Net Realized and Unrealized Gain (Loss) on Investments (0.63) 0.36
------- -------
Total from Investment Operations (0.64) 0.36
------- -------
Less Distributions:
From Net Realized Capital Gains 0.00 0.00
------- -------
Total Distributions 0.00 0.00
------- -------
Net Asset Value at End of Period $ 9.72 $ 10.36
======= =======
Total Return (6.18%) 3.60%(3)
Ratios & Supplemental Data
Net Assets at End of Period (000's) $10,484 $10,066
Ratio of Operating Expenses to Average Net Assets(2) 1.35% 1.35%(4)
Ratio of Net Investment Income to Average Net Assets (0.06%) (0.13%)(4)
Portfolio Turnover Rate 165.62% 11.96%(3)
</TABLE>
(1) For the period August 1, 1997 (commencement of investment operations)
through October 31, 1997.
(2) Net Investment Income (Loss) is after reimbursement of certain expenses by
Schroder Capital Management Inc. (See Note 3 to the Trust's financial
statements.) Had the Investment Adviser not undertaken to pay or reimburse
expenses related to the Fund, the Net Investment Income (Loss) per share and
Ratio of Operating Expenses to Average Net Assets would have been as
follows: 1998 - $(0.12) and 2.47%, 1997 - $(0.06) and 4.33%, respectively.
(3) Not annualized.
(4) Annualized.
26
<PAGE> 29
SCHRODER INVESTMENT GRADE INCOME FUND
(For an Investor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
---------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994(1)
------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of
Period $ 9.77 $ 9.70 $ 9.93 $ 9.14 $ 10.00
Income from Investment Operations:
Net Investment Income(2) 0.54 0.49 0.53 0.59 0.34
Net Realized and Unrealized Gain
(Loss) on Investments 0.23 0.16 (0.11) 0.79 (0.83)
------- ------- ------- ------- -------
Total from Investment Operations 0.77 0.65 0.42 1.38 (0.49)
------- ------- ------- ------- -------
Less Distributions:
From Net Investment Income (0.54) (0.49) (0.53) (0.59) (0.34)
From Net Realized Capital Gains 0.00 (0.09) (0.12) 0.00 0.00
Tax Return of Capital 0.00 0.00 0.00 0.00 (0.03)
------- ------- ------- ------- -------
Total Distributions (0.54) (0.58) (0.65) (0.59) (0.37)
------- ------- ------- ------- -------
Net Asset Value at End of Period $ 10.00 $ 9.77 $ 9.70 $ 9.93 $ 9.14
======= ======= ======= ======= =======
Total Return 8.10% 7.68% 4.38% 15.62% (4.90%)(3)
Ratios & Supplemental Data
Net Assets at End of Period
(000's) $28,134 $26,683 $23,708 $23,704 $12,905
Ratio of Operating Expenses to
Average Net Assets(2) 0.89% 1.12% 1.12% 1.06% 0.87%(4)
Ratio of Net Investment Income to
Average Net Assets 5.47% 5.58% 5.46% 6.35% 6.39%(4)
Portfolio Turnover Rate 112.69% 43.65% 68.76% 113.50% 115.63%(3)
</TABLE>
(1) For the period February 22, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses and/or a
management fee waiver by Schroder Capital Management Inc. (See Note 3 to the
Trust's financial statements.) Had the Investment Adviser not undertaken to
pay, reimburse or waive expenses related to the Fund, the Net Investment
Income per share and Ratio of Operating Expenses to Average Net Assets would
have been as follows: 1998 - $0.51 and 1.25%, 1997 - $0.47 and 1.33%,
1996 - $0.52 and 1.24%, 1995 - $0.56 and 1.50%, 1994 - $0.21 and 3.98%,
respectively.
(3) Not annualized.
(4) Annualized.
27
<PAGE> 30
SCHRODER SHORT-TERM INVESTMENT FUND
(For an Investor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
---------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994(1)
------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of
Period $ 9.87 $ 9.87 $ 9.88 $ 9.88 $ 10.00
Income from Investment Operations:
Net Investment Income 0.46(2) 0.46(2) 0.45 0.49(2) 0.30(2)
Net Realized and Unrealized Gain
(Loss) on Investments 0.03 (0.00) 0.00 0.00 (0.12)
------- ------- ------- ------- -------
Total from Investment Operations 0.49 0.46 0.45 0.49 0.18
------- ------- ------- ------- -------
Less Distributions:
From Net Investment Income (0.46) (0.46) (0.45) (0.49) (0.30)
In Excess of Net Investment
Income 0.00 0.00 (0.01) 0.00 0.00
------- ------- ------- ------- -------
Total Distributions (0.46) (0.46) (0.46) (0.49) (0.30)
------- ------- ------- ------- -------
Net Asset Value at End of Period $ 9.90 $ 9.87 $ 9.87 $ 9.88 $ 9.88
======= ======= ======= ======= =======
Total Return 5.09% 4.74% 4.63% 5.02% 1.83%(3)
Ratios & Supplemental Data
Net Assets at End of Period
(000's) $30,054 $27,346 $30,527 $33,936 $30,771
Ratio of Operating Expenses to
Average Net Assets 1.03%(2) 1.03%(2) 1.00% 0.95%(2) 0.78%(2)(4)
Ratio of Net Investment Income to
Average Net Assets 4.65% 4.64% 4.50% 4.91% 4.48%(4)
Portfolio Turnover Rate 92.95% 65.57% 154.66% 27.86% 71.38%(3)
</TABLE>
(1) For the period January 11, 1994 (commencement of investment operations)
through October 31, 1994.
(2) Net Investment Income is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust's financial statements.)
Had the Investment Adviser not undertaken to pay or reimburse expenses
related to the Fund, the Net Investment Income per share and Ratio of
Operating Expenses to Average Net Assets would have been as follows: 1998 -
$0.45 and 1.12%, 1997 - $0.46 and 1.05%, 1995 - $0.47 and 1.08%,
1994 - $0.24 and 1.66%, respectively.
(3) Not annualized.
(4) Annualized.
28
<PAGE> 31
SCHRODER SERIES TRUST
Schroder Series Trust's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about the
Funds. The SAI and the financial statements included in the Trust'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
trust's annual report discusses the market conditions and investment strategies
that significantly affected each Fund's performance during its last fiscal year.
You may get free copies of these materials, request other information about a
Fund, or make shareholder inquiries by calling 800-464-3108.
You may review and copy information about the Trust, 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 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 811-7840.
SCHRODER SERIES TRUST
P.O. Box 8507
Boston, MA 02266
800-464-3108
0399WS
File No. 811-7840
1
<PAGE> 32
SCHRODERS
PROSPECTUS
ADVISOR SHARES
MARCH 1, 1999
[GRAPHIC OMITTED]
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER MIDCAP VALUE FUND
SCHRODER INVESTMENT GRADE INCOME FUND
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> 33
[SCHRODER LOGO]
- --------------------------------------------------------------------------------
PROSPECTUS
MARCH 1, 1999
SCHRODER SERIES TRUST
Advisor Shares
This prospectus describes four mutual funds offered by Schroder Series Trust.
The Trust offers Advisor Shares of the Funds in this prospectus. Schroder
Capital Management Inc. ("Schroder") manages the Funds.
SCHRODER LARGE CAPITALIZATION EQUITY FUND seeks long-term growth of
capital. The Fund invests primarily in equity securities of companies
with large market capitalizations (generally more than $5 billion).
SCHRODER SMALL CAPITALIZATION VALUE FUND seeks capital appreciation. The
Fund invests primarily in equity securities of companies with small
market capitalizations (generally less than $1.5 billion).
SCHRODER MIDCAP VALUE FUND seeks long-term capital appreciation. The
Fund invests primarily in equity securities of mid-cap companies
(companies with market capitalizations of between $750 million and $5
billion).
SCHRODER INVESTMENT GRADE INCOME FUND seeks current income consistent
with preservation of capital. Growth of capital is a secondary
objective, to the extent consistent with the Fund's principal objective.
The Fund invests primarily in investment grade fixed-income securities.
You can call Schroder at (800) 464-3108 to find out more about these Funds and
other funds in the Schroder family.
The prospectus explains what you should know about the Funds 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> 34
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY INFORMATION......................................... 4
Schroder Large Capitalization Equity Fund................ 5
Schroder Small Capitalization Value Fund................. 6
Schroder MidCap Value Fund............................... 7
Schroder Investment Grade Income Fund.................... 8
Fees and Expenses........................................ 10
PRINCIPAL RISKS AND OTHER STRATEGIES........................ 12
MANAGEMENT OF THE FUNDS..................................... 16
HOW THE FUNDS' SHARES ARE PRICED............................ 17
HOW TO BUY SHARES........................................... 18
HOW TO SELL SHARES.......................................... 18
EXCHANGES................................................... 19
ADDITIONAL INFORMATION ABOUT ADVISOR SHARES................. 20
DIVIDENDS AND DISTRIBUTIONS................................. 20
TAXES....................................................... 21
YEAR 2000 DISCLOSURE........................................ 21
FINANCIAL HIGHLIGHTS........................................ 22
</TABLE>
<PAGE> 35
(THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
3
<PAGE> 36
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)
Schroder International Fund
Schroder Emerging Markets Fund
Schroder International Bond Fund
Schroder International Smaller Companies Fund
Schroder U.S. Diversified Growth Fund
Schroder Micro Cap Fund
Schroder U.S. Smaller Companies Fund
SCHRODER SERIES TRUST
Schroder Large Capitalization Equity Fund
Schroder Small Capitalization Value Fund
Schroder MidCap Value Fund
Schroder Investment Grade Income Fund
SCHRODER SERIES TRUST II
Schroder All-Asia Fund
- --------------------------------------------------------------------------------
SUMMARY INFORMATION
The Funds offered by Schroder Series Trust provide a broad range of investment
choices. The summaries on the following pages identify each Fund's investment
objective, principal investment strategies, and principal risks.
Below each Fund's description is a bar chart showing how the investment returns
of the Fund have varied from year to year and a table showing how the Fund's
average annual returns compare to a broad-based securities market index.
Schroder Small Capitalization Value Fund is the only Fund that has had Advisor
Shares outstanding for a full calendar year. For that reason, the bar chart and
table for that Fund show performance of its Advisor Shares, which have not been
offered for the full life of the Fund. Because the other Funds do not have a
full calendar year of performance to show for Advisor Shares, the bar chart and
table for each of these Funds show performance of its Investor Shares, which
have been offered since the inception of each Fund. The bar chart and table
provide some indication of the risks of investing in the Fund by showing the
variability of its returns (where more than one calendar year of performance is
shown) and by 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 investments in the Funds.
4
<PAGE> 37
SCHRODER LARGE CAPITALIZATION EQUITY FUND
- Investment Objective. To seek long-term growth of capital.
- Principal Investment Strategies. The Fund normally invests at least 65%
of its assets in equity securities of companies with large market
capitalizations (generally more than $5 billion). The Fund invests in a
variety of equity securities, including common and preferred stocks and
warrants to purchase common and preferred stocks.
In selecting securities for the Fund, Schroder focuses on issuers it
believes offer the possibility for growth of capital from earnings
potential and other factors not fully reflected in current market prices.
Such factors may include, for example, a company's probable future
earnings, the ratio of its price to earnings, and its relative strength,
as well as other factors Schroder may consider significant in a
particular industry or under varying market conditions.
- Principal Risks. The principal risks of investing in the Fund include 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 particular companies in the portfolio and/or the U.S.
equities market in general. The Fund is particularly sensitive to the
risks associated with "growth" securities, which are issued by companies
that Schroder expects to have relatively rapid earnings growth. Growth
securities typically trade at higher multiples of current earnings than
other securities and may be more sensitive to changes in a company's
current or expected earnings.
SCHRODER LARGE CAPITALIZATION EQUITY FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
-----------------------------------------
<S> <C>
'1995' 28.29%
'1996' 19.94%
'1997' 26.25%
'1998' 32.31%
</TABLE>
During the periods shown above, the highest quarterly return was 23.50% for the
quarter ended December 31, 1998, and the lowest was -10.88% for the quarter
ended September 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 2/16/94)
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Schroder Large Capitalization Equity
Fund* 32.31% 19.35%
- -------------------------------------------------------------------------------------------
Standard & Poor's 500 Index** 28.58% 24.36%
- -------------------------------------------------------------------------------------------
</TABLE>
* The bar chart and table show performance of the Fund's Investor Shares, which
are offered in a different prospectus. Although Advisor Shares and Investor
Shares would have similar annual returns (because all the Fund's shares
represent interests in the same portfolio of securities), Advisor Share
performance would be lower than Investor Share performance because of the
higher expenses paid by Advisor Shares.
** The Standard & Poor's 500 Index is a market weighted composite index of 500
large capitalization U.S. companies and reflects the reinvestment of
dividends.
5
<PAGE> 38
SCHRODER SMALL CAPITALIZATION VALUE FUND
- Investment Objective. To seek capital appreciation.
- Principal Investment Strategies. The Fund normally invests at least 65%
of its assets in equity securities of companies with small market
capitalizations (generally less than $1.5 billion). The Fund invests in a
variety of equity securities, including common and preferred stocks and
warrants to purchase common and preferred stocks.
The Fund normally invests primarily in equity securities Schroder
believes to be undervalued. In selecting securities for the Fund,
Schroder analyzes, among other things, a company's financial data and
business fundamentals in an attempt to identify companies whose potential
for earnings growth or whose financial or business assets are undervalued
by the market in general.
- Principal Risks. The principal risks of investing in the Fund include 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 particular companies in the portfolio. The Fund is
particularly sensitive to this risk because it invests primarily in small
capitalization companies, which tend to be more vulnerable to adverse
developments than larger companies. The Fund is also particularly
sensitive to the risks associated with "value" securities, which are
issued by companies that may have experienced adverse developments or may
be subject to special risks that have caused their securities to be out
of favor. The Fund is also subject to the risk of general declines in the
U.S. equity market.
SCHRODER SMALL CAPITALIZATION VALUE FUND - ADVISOR SHARES
<TABLE>
<CAPTION>
SCHRODER SMALL CAPITALIZATION VALUE FUND
----------------------------------------
<S> <C>
'1998' -6.6%
</TABLE>
During the periods shown above, the highest quarterly return was 14.74% for the
quarter ended December 31, 1998, and the lowest was -19.42% for the quarter
ended September 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
SINCE INCEPTION OF
AVERAGE ANNUAL TOTAL RETURNS ADVISOR SHARES
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (9/26/97)
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Schroder Small Capitalization Value Fund -6.60% -8.58%
- -------------------------------------------------------------------------------------------
Russell 2000 Index* -2.55% -3.80%
- -------------------------------------------------------------------------------------------
</TABLE>
* The Russell 2000 Index is a capitalization weighted broad based index of 2,000
small capitalization U.S. companies.
6
<PAGE> 39
SCHRODER MIDCAP VALUE FUND
- Investment Objective. To seek long-term capital appreciation.
- Principal Investment Strategies. The Fund normally invests at least 65%
of its assets in equity securities of mid-cap companies - companies with
market capitalizations of between $750 million and $5 billion. The Fund
invests in a variety of equity securities, including common and preferred
stocks, and warrants to purchase common and preferred stocks.
The Fund normally invests primarily in equity securities Schroder
believes to be undervalued. In selecting securities for the Fund,
Schroder analyzes, among other things, a company's financial data and
business fundamentals in an attempt to identify companies whose potential
for earnings growth or whose financial or business assets are undervalued
by the market in general.
- Principal Risks. The principal risks of investing in the Fund include 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 particular companies in the portfolio. The Fund is more
sensitive to this risk because it invests primarily in mid-cap companies,
which tend to be more vulnerable to adverse developments than larger
companies (though often less so than small capitalization companies). The
Fund is also particularly sensitive to the risks associated with "value"
securities, which are issued by companies that may have experienced
adverse developments or may be subject to special risks that have caused
their securities to be out of favor. The Fund is also subject to the risk
of general declines in the U.S. equity market.
SCHRODER MIDCAP VALUE FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER MIDCAP VALUE FUND - INVESTOR SHARES
--------------------------------------------
<S> <C>
'1998' 2.19%
</TABLE>
During the period shown above, the highest quarterly return was 24.26% for the
quarter ended December 31, 1998, and the lowest was -22.19% for the quarter
ended September 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 8/1/97)
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Schroder MidCap Value Fund* 2.19% 6.50%
- -------------------------------------------------------------------------------------------
Standard & Poor's Midcap 400 Index** 19.11% 18.32%
- -------------------------------------------------------------------------------------------
</TABLE>
* The bar chart and table show performance of the Fund's Investor Shares, which
are offered in a different prospectus. Although Advisor Shares and Investor
Shares would have similar annual returns (because all the Fund's shares
represent interests in the same portfolio of securities), Advisor Share
performance would be lower than Investor Share performance because of the
higher expenses paid by Advisor Shares.
** The Standard & Poor's Midcap 400 Index is a market weighted composite index
of 400 stocks in the middle capitalization sector of the U.S. equities
market.
7
<PAGE> 40
SCHRODER INVESTMENT GRADE INCOME FUND
- Investment Objective. To seek current income consistent with preservation
of capital. Growth of capital is a secondary objective, to the extent
consistent with the Fund's principal objective.
- Principal Investment Strategies. The Fund normally invests at least 90%
of its assets in U.S. Government securities and in debt securities and
preferred stocks that are "investment grade" quality. To be considered
"investment grade," the securities must be rated (at the time of
investment) in the four highest grades by Moody's Investors Service, Inc.
or Standard and Poor's Ratings Services or determined by Schroder to be
of comparable quality. The Fund will not invest more than 25% of its
assets in securities ranked below the third highest grade by Moody's or
Standard and Poor's. The Fund may invest a substantial portion of its
assets in mortgage-backed certificates and other securities representing
ownership interests in mortgage pools, including collateralized mortgage
obligations.
Schroder may take full advantage of the entire range of maturities of the
securities in which the Fund may invest. Schroder may also adjust the
average maturity of the Fund's portfolio from time to time, depending on
its assessment of relative yields on securities of different maturities
and expectations of future changes in interest rates. Thus, at certain
times, the average maturity of the Fund's portfolio may be relatively
short (from under one year to five years, for example) and at other times
may be relatively long (more than ten years, for example). To the extent
consistent with the Fund's principal objective, Schroder also attempts to
achieve growth of capital for the Fund by identifying issuers of
securities which are undervalued by the market, including issuers in
particular sectors of the fixed-income market.
- Principal Risks. The principal risks of investing in the Fund include the
risk that interest rates will rise or fall in ways not anticipated by
Schroder. For example, if interest rates were to rise, the values of
fixed-income securities held by the Fund would typically fall. Securities
having longer maturities would tend to experience greater price declines
in response to rising interest rates. As described above, the average
maturity of the Fund's portfolio will vary, but may be relatively long at
times. If the Fund held securities with relatively long maturities at a
time when interest rates were to rise, the value of the Fund's shares
would likely fall more than if the Fund had invested in securities with
shorter maturities. The Fund is also subject to the risk that the issuer
of a fixed-income security will have its credit rating downgraded or will
be unable to pay its obligations when due. This could cause the Fund's
portfolio securities to decline in value, especially where an issuer
defaults on its obligations. The Fund attempts to minimize credit risk by
investing primarily in investment grade securities.
The Fund's investment in mortgage-backed securities may involve special
risks relating to unanticipated rates of prepayment on the mortgages
underlying the securities. Falling interest rates may tend to increase
prepayments, which could significantly shorten the effective maturities
of mortgage-backed securities. Similarly, rising interest rates may tend
to reduce prepayments, which could significantly lengthen the effective
maturities. When interest rates decline, significant unscheduled
prepayments on the underlying mortgages would have to be reinvested at
the then-prevailing lower rates. Therefore, the Fund's mortgage-backed
securities may have less potential for capital appreciation during
periods of falling interest rates than other fixed-income securities of
comparable maturities. However, the securities may have a comparable risk
of decline in market value during periods of rising interest rates.
8
<PAGE> 41
SCHRODER INVESTMENT GRADE INCOME FUND - INVESTOR SHARES
<TABLE>
<CAPTION>
SCHRODER INVESTMENT GRADE INCOME FUND -
INVESTOR SHARES
---------------------------------------
<S> <C>
'1995' 18.31%
'1996' 2.04%
'1997' 8.23%
'1998' 7.79%
</TABLE>
During the periods shown above, the highest quarterly return was 6.50% for the
quarter ended June 30, 1995, and the lowest was -2.21% for the quarter ended
March 31, 1996.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS LIFE OF FUND
(FOR PERIODS ENDED DECEMBER 31, 1998) PAST ONE YEAR (SINCE 2/22/94)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Schroder Investment Grade Income Fund* 7.79% 6.33%
- ---------------------------------------------------------------------------------------------------
Lehman Brothers Government/Corporate Index** 9.47% 7.57%
- ---------------------------------------------------------------------------------------------------
</TABLE>
* The bar chart and table show performance of the Fund's Investor Shares, which
are offered in a different prospectus. Although Advisor Shares and Investor
Shares would have similar annual returns (because all the Fund's shares
represent interests in the same portfolio of securities), Advisor Share
performance would be lower than Investor Share performance because of the
higher expenses paid by Advisor Shares.
** The Lehman Brothers Government/Corporate Index is a composite of
approximately 5,000 investment grade government and corporate debt issues
with maturities greater than 1 year.
The yield on the Fund's Investor Shares for the 30-day period ended January 31,
1999 was 5.22%. Please call Schroder at (800) 464-3108 for more recent yield
information for the Fund.
9
<PAGE> 42
FEES AND EXPENSES
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU INVEST IN
ADVISOR SHARES OF THE FUNDS.
SHAREHOLDER FEES
(paid directly from your investment):
<TABLE>
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Load None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets):
<TABLE>
<CAPTION>
SCHRODER LARGE SCHRODER SMALL SCHRODER SCHRODER
CAPITALIZATION CAPITALIZATION MIDCAP INVESTMENT GRADE
EQUITY FUND VALUE FUND VALUE FUND INCOME FUND
-------------- -------------- ---------- ----------------
<S> <C> <C> <C> <C>
Management Fees 0.75% 0.95% 0.90% 0.50%
Distribution (12b-1) Fees(1) None None None None
Other Expenses 0.70 0.59 1.82 1.00
(includes a 0.25% shareholder
servicing fee)(1)
Total Annual Fund
Operating Expenses 1.45 1.54 2.72 1.50
Fee Waiver and/or
Expense Limitation 0.25(2) N/A 1.12(2) 0.50(2)
Net Expenses 1.20(2) 1.54 1.60(2) 1.00(2)
</TABLE>
(1) Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, with respect to its Advisor
Shares. Although the Trustees have not currently authorized payments under
the Distribution Plans, payments by a Fund under its Shareholder Servicing
Plan for Advisor Shares, which will not exceed the annual rate of 0.25% of a
Fund's average daily net assets attributable to its Advisor Shares, will be
deemed to have been made pursuant to the 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.
(2) The Net Expenses shown above for Schroder Large Capitalization Equity Fund,
Schroder MidCap Value Fund, and Schroder Investment Grade Income Fund show
the effect of contractually imposed expense limitations and/or fee waivers,
in effect through October 31, 1999, on the Total Annual Fund Operating
Expenses of the Funds. See "Management of the Funds" below.
10
<PAGE> 43
EXAMPLE
This Example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Advisor Shares of a Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment earns a 5% return each
year and that the Fund's Total Annual Fund Operating Expenses remain the same as
those set forth on the previous page (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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Schroder Large Capitalization Equity Fund* $149 $462 $ 797 $1,745
Schroder Small Capitalization Value Fund $158 $490 $ 845 $1,845
Schroder MidCap Value Fund* $279 $855 $1,457 $3,083
Schroder Investment Grade Income Fund* $154 $477 $ 824 $1,801
</TABLE>
* Assuming that each of these Fund's operating expenses remain the same as the
Net Expenses on the previous page, based on the other assumptions above your
costs of investing in the Fund would be as follows for 1 year, 3 years, 5
years, and 10 years, respectively:
Schroder Large Capitalization Equity Fund -- $123, $383, $663, $1,461
Schroder MidCap Value Fund -- $164, $509, $877, $1,912
Schroder Investment Grade Income Fund -- $103, $320, $555, $1,229
11
<PAGE> 44
PRINCIPAL RISKS AND OTHER STRATEGIES
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
A Fund may not achieve its objective in all circumstances and you could lose
money by investing. The following provides more detail about the Funds'
principal risks and the circumstances which could adversely affect the value of
a Fund's shares.
SCHRODER LARGE CAPITALIZATION EQUITY, SCHRODER SMALL CAPITALIZATION VALUE, AND
SCHRODER MIDCAP VALUE FUNDS
These Funds invest primarily in equity securities. The principal risks of
investing in these Funds include the risk that their portfolio securities will
decline in value due to factors affecting the issuing companies, their
industries, or the equity markets generally. These risks may be greater for
Schroder Small Capitalization Value Fund and Schroder MidCap Value Fund, which
invest primarily in small and mid-cap companies, respectively. Securities of
small and mid-cap companies tend to be more vulnerable to adverse developments
than larger companies.
- - General Risks of Equity Securities. The values of equity securities may
decline for a number of reasons which directly relate to the issuing company,
such as lower demand for the company's products or services or poor decisions
made by such company's management. Equity securities may also decline due to
factors which affect a particular industry or industries, such as labor
shortages or increased production costs. Equity securities may also decline
due to general market conditions which are not specifically related to a
company or industry, such as adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or currency rates,
or adverse investor sentiment.
- - Growth Securities. Each Fund may invest in securities of companies that
Schroder believes have earnings that will grow relatively rapidly. A principal
strategy of Schroder Large Capitalization Equity Fund is to invest in growth
securities. These growth securities typically trade at higher multiples of
current earnings than other securities. Therefore, the values of growth
securities may be more sensitive to changes in current or expected earnings
than the values of other securities.
- - Value Securities. Each Fund may also invest in companies that may not be
expected to experience significant earnings growth, but whose securities
Schroder believes are undervalued. A principal strategy of Schroder Small
Capitalization Value Fund and Schroder MidCap Value Fund is to invest in value
securities. These companies may have experienced adverse business developments
or may be subject to special risks that have caused their securities to be out
of favor. If Schroder's assessment of a company's prospects is wrong, or if
the market does not recognize the value of the company, the price of its
securities may decline or may not approach the value that Schroder
anticipates.
- - Risks of Smaller Capitalization Companies. Schroder Small Capitalization Value
Fund and Schroder MidCap Value Fund invest in companies which are smaller and
less well-known than larger, more widely held companies. Small and mid-cap
companies may offer greater opportunities for capital appreciation than larger
companies, but may also involve certain special risks. They are more likely
than larger companies to have limited product lines, markets or financial
resources, or to depend on a small, inexperienced management group. Securities
of smaller companies may trade less frequently and in lesser volume than more
widely held securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or on a
regional exchange, or may
12
<PAGE> 45
otherwise have limited liquidity. These securities may therefore be more
vulnerable to adverse developments than securities of larger companies and the
Funds may have difficulty establishing or closing out their securities positions
in smaller companies at prevailing market prices. Also, there may be less
publicly available information about smaller companies or less market interest
in their securities as compared to larger companies, and it may take longer for
the prices of the securities to reflect the full value of their issuers'
earnings potential or assets.
SCHRODER INVESTMENT GRADE INCOME FUND
Schroder Investment Grade Income Fund invests primarily in fixed-income
securities. The other Funds may also invest a portion of their assets in
fixed-income securities. All fixed-income securities are subject to some degree
of market (or interest rate) risk and credit risk.
- - Market (Interest Rate) Risk of Fixed-Income Securities. Changes in the market
values of fixed-income securities are largely an inverse function of changes
in the current level of interest rates. During periods of falling interest
rates, the values of fixed-income securities generally rise. During periods of
rising interest rates, the values of fixed-income securities generally
decline. Fluctuations in the market value of a Fund's fixed-income securities
generally will not affect interest income on securities already held by the
Fund, but will be reflected in the Fund's net asset value.
When interest rates are falling or remain relatively flat, a portfolio of
long-term fixed-income securities will generally outperform a short-term
portfolio. On the other hand, when interest rates are rising, a short-term
portfolio will generally outperform a long-term portfolio. In general,
fixed-income portfolios with longer average maturities generally have a
greater potential for total return than shorter maturity portfolios, but are
also subject to greater levels of market risk.
Depending upon Schroder's current investment outlook and strategy, the average
maturity of Schroder Investment Grade Income Fund's portfolio may be
relatively short at times (from under one year to five years, for example) and
may be relatively long at other times (more than ten years, for example). The
Fund may be subject to relatively high levels of market risk when its average
portfolio maturity is long.
- - Credit Risk of Fixed-Income Securities. Credit risk associated with
fixed-income securities relates to the ability of the issuer to make scheduled
payments of principal and interest on an obligation. A portfolio of
fixed-income securities is subject to some degree of risk that the issuers of
the securities will have their credit ratings downgraded or will default,
potentially reducing the portfolio's share price and income level. Nearly all
fixed-income securities are subject to some credit risk, whether the issuers
of the securities are corporations, states or local governments, or foreign
governments. Even certain U.S. Government securities are subject to credit
risk. The Funds will not necessarily dispose of a security when its rating is
reduced below its rating at the time of purchase, although Schroder will
monitor the investment to determine whether keeping the security will help to
achieve the Fund's investment objective.
Schroder Investment Grade Income Fund invests in a portfolio of higher-rated
fixed-income securities which involve a lesser degree of credit risk than
lower quality securities. However, the yield available from this Fund is
generally lower than the yields available from fixed-income funds that invest
in lower quality securities.
13
<PAGE> 46
- - Risks of Mortgage-Backed Securities. Schroder Investment Grade Income Fund may
invest a portion of its assets in mortgage-backed certificates and other
securities representing ownership interests in mortgage pools, including
collateralized mortgage obligations. Interest and principal payments on the
mortgages underlying mortgage-backed securities are passed through to the
holder of the mortgage-backed securities. Prepayments of principal and
interest on mortgages underlying mortgage-backed securities may result from
the voluntary prepayment, refinancing, or foreclosure of the underlying
mortgage loans, and may significantly shorten the effective maturities of
mortgage-backed securities, especially during periods of declining interest
rates. Similarly, during periods of rising interest rates, a reduction in the
rate of prepayments may significantly lengthen the effective maturities of
such securities.
Mortgage-backed securities may offer yields higher than those available from
many other types of debt securities, but they are less effective than other
types of securities as a means of "locking in" attractive long-term interest
rates. This is caused by the possibility of significant unscheduled
prepayments resulting from declines in mortgage interest rates. These
prepayments would have to be reinvested at the then-prevailing lower rates. As
a result, a Fund's mortgage-backed securities may have less potential for
capital appreciation during periods of declining interest rates than other
fixed-income securities of comparable maturities, although such obligations
may have a comparable risk of decline in market value during periods of rising
interest rates.
ADDITIONAL INFORMATION REGARDING PRINCIPAL INVESTMENT STRATEGIES
The following provides additional information regarding the Funds' principal
investment strategies not discussed in the Summary Information section above.
- - Temporary Defensive Strategies. At times, Schroder may judge that conditions
in the securities markets make pursuing a 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 a Fund's assets. In
implementing these "defensive" strategies, the Fund would invest in
high-quality fixed-income 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, a Fund will use these alternate
strategies.
- - Changes in Investment Objectives and Policies. The investment objectives and
policies of each Fund may, unless otherwise specifically stated, be changed by
the Trustees of the Trust without a vote of the shareholders. As a matter of
policy, the Trustees would not materially change an investment objective of a
Fund without shareholder approval.
- - Percentage Investment Limitations. Unless otherwise noted, all percentage
limitations on Fund investments listed in this prospectus will apply at the
time of investment. A Fund would not violate these limitations unless an
excess or deficiency occurs or exists immediately after and as a result of an
investment.
OTHER INVESTMENTS STRATEGIES AND TECHNIQUES
In addition to the principal investment strategies described in the Summary
Information section above, the Funds 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
14
<PAGE> 47
securities that Schroder might use in managing the Funds. As in any mutual fund,
investors must rely on the professional investment judgment and skill of the
fund's adviser.
- - Securities Loans and Repurchase Agreements. Each Fund may lend portfolio
securities amounting to not more than 25% of its assets to broker-dealers, and
may enter into repurchase agreements on up to 25% of its assets. These
transactions must be fully collateralized at all times, but involve some risk
to a Fund if the other party should default on its obligation and the Fund is
delayed or prevented from realizing the collateral.
- - When-Issued, Delayed Delivery, and Forward Commitment Transactions. Each Fund
may purchase securities on a when-issued, delayed delivery, or forward
commitment basis. These transactions involve a commitment by the Fund to
purchase a security for a predetermined price or yield, with payments and
delivery taking place more than seven days in the future, or after a period
longer than the customary settlement period for that type of security. These
transactions may increase the overall investment exposure for a Fund and
involve a risk of loss if the value of the securities declines prior to the
settlement date.
- - 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.
- - Variable and Floating Rate Instruments. Certain obligations purchased by
Schroder Investment Grade Income Fund may be variable or floating rate
instruments and may involve a demand or interest rate reset feature. Variable
or floating rate instruments bear interest at a rate which varies with changes
in market rates. The holder of an instrument with a demand feature may tender
the instrument back to the issuer at par value prior to maturity. When
interest rates fall, variable and floating rate instruments generally will not
increase in value as much as fixed-rate instruments of similar credit quality,
although they will generally lose less value than similarly rated fixed-rate
instruments when interest rates rise. When determining the maturity of a
variable or floating rate instrument, a Fund may look to the date the demand
feature can be exercised, or to the date the interest rate is readjusted,
rather than to the stated maturity of the instrument. The absence of an active
secondary market for these instruments could make it difficult for a Fund to
dispose of them.
- - Zero-Coupon Bonds. Each 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 risk
than bonds that pay interest currently.
- - Derivative Investments. Each of the Funds may engage in a variety of
transactions involving the use of derivative instruments for purposes of
increasing its investment return or hedging against market changes. These may
include options, futures, and indices, for example. Derivative instruments
involve the risk that they may not work as intended under all market
conditions. Also, derivatives often involve the risk that the other party to
the transaction will be unable to meet its obligations.
- - Portfolio Turnover. The length of time a Fund has held a particular security
is not generally a consideration in investment decisions. The investment
policies of a Fund may lead to frequent changes in the Fund's investments,
particularly in periods of volatile market movements. A change in the
securities held by a Fund is known as "portfolio turnover." Portfolio turnover
generally involves some expense to
15
<PAGE> 48
a 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 Funds, on which shareholders may
pay taxes.
- - Other Investments. The Funds may also invest in other types of securities and
utilize a variety of investment techniques and strategies which are not
described in this prospectus, such as investment in foreign securities and the
use of foreign currency transactions. These securities and techniques may
subject the Funds 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 Funds.
MANAGEMENT OF THE FUNDS
The Trust is governed by a Board of Trustees which has retained Schroder to
manage the investments of each Fund. Subject to the control of the Trustees,
Schroder also manages the Funds' other affairs and business. Schroder has served
as investment adviser to each of the Funds since inception.
Schroder has been an investment manager since 1962, and currently serves as
investment adviser to the Funds and a broad range of institutional investors.
Schroder's address is 787 Seventh Avenue, New York, New York 10019, and its
telephone number is (800) 464-3108.
- - Management Fees Paid by the Funds. For the fiscal year ended October 31, 1998,
the Funds paid management fees to Schroder at the following annual rates
(based on the average daily net assets of each Fund taken separately):
Schroder Large Capitalization Equity Fund - 0.59%; Schroder Small
Capitalization Value Fund - 0.95%; Schroder MidCap Value Fund - 0.90%; and
Schroder Investment Grade Income Fund - 0.21%. The amounts paid by each Fund
except Schroder Small Capitalization Value Fund reflect expense limitations
and/or waivers described below.
- - Expense Limitations and Waivers. In order to limit the Funds' expenses,
Schroder is contractually obligated to reduce its compensation (and, if
necessary, to pay certain other Fund expenses) until October 31, 1999 to the
extent that each Fund's total operating expenses attributable to its Advisor
Shares exceed the following annual rates (based on the average daily net
assets of each Fund taken separately): Schroder Large Capitalization Equity
Fund - 1.80%; Schroder Small Capitalization Value Fund - 1.95%; Schroder
MidCap Value Fund - 1.60%; and Schroder Investment Grade Income Fund - 1.37%.
In addition, Schroder is contractually obligated, through October 31, 1999, to
waive a portion of the management fees it is entitled to receive from Schroder
Large Capitalization Equity Fund and from Schroder Investment Grade Income
Fund. As a result, during the period of the waiver, Schroder Large
Capitalization Equity Fund will pay management fees to Schroder at the annual
rate of 0.50% of the Fund's average daily net assets, and Schroder Investment
Grade Income Fund will pay no management fees.
16
<PAGE> 49
- - Portfolio Managers. Schroder's investment decisions for each of the Funds are
generally made by a committee of investment professionals at Schroder. The
following directors and officers of Schroder have had primary responsibility
for making recommendations to the committee for the noted Funds since the
years shown below. Their recent professional experience is also shown.
<TABLE>
<CAPTION>
SCHRODER FUND PORTFOLIO MANAGER SINCE RECENT PROFESSIONAL EXPERIENCE
------------- ----------------- ----- ------------------------------
<S> <C> <C> <C>
Large Capitalization Equity Fund Paul Morris 1997 Employed as an investment professional
at Schroder since 1997. Prior to
joining Schroder, Mr. Morris served as
Principal Senior Portfolio Manager at
Weiss, Peck & Greer, L.L.C. from 1995
to 1996, and as Managing Director at
Union Bank of Switzerland from 1987 to
1995.
Small Capitalization Value Fund Nancy B. Tooke Inception Employed as an investment professional
(1994) at Schroder since 1994.
MidCap Value Fund Nancy B. Tooke Inception See above.
(1997)
Investment Grade Income Fund Robert C. Michele 1998 Employed as an investment professional
at Schroder since 1998. Prior to
joining Schroder, Mr. Michele served
as a Managing Director and Portfolio
Manager at Black Rock Financial
Management from 1995 to 1998, and as a
Director at CS First Boston Investment
Management from 1993 to 1995.
Richard Gotterer 1998 Employed as an investment professional
at Schroder since 1993.
</TABLE>
HOW THE FUNDS' SHARES ARE PRICED
Each Fund calculates the net asset value of its Advisor Shares by dividing the
total value of its assets attributable to its Advisor Shares, less its
liabilities attributable to those shares, by the number of its Advisor Shares
outstanding. Shares are valued as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern Time) each day the Exchange is
open. The Trust expects that days, other 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 Funds value their 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 Funds value all other securities and assets at their fair
values as determined by Schroder.
17
<PAGE> 50
HOW TO BUY SHARES
You can purchase Advisor Shares of any of the Funds through a Service
Organization such as a bank, trust company, broker-dealer, or other financial
organization having an arrangement with Schroder Fund Advisors Inc., the Trust's
principal underwriter. 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 are sold at their net asset value per share next determined after
the Trust receives your order. The minimum initial investment in Advisor Shares
of a Fund is $2,500, except that the minimum for an IRA account is $2,000. In
order for you to receive the net asset value determined on any day, Schroder
Fund Advisors Inc. must receive your order before the close of regular trading
on the New York Stock Exchange.
If the Advisor 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. None of the Funds
issues share certificates. The Trust or Boston Financial Data Services, Inc.,
the Trust's transfer agent (the "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 or your Service Organization.
OTHER PURCHASE INFORMATION
Each Fund reserves the right to reject any purchase, in whole or in part, and to
suspend the offering of its shares for any period of time. A Fund may also
change or waive any minimum investment amounts from time to time.
Schroder Fund Advisors Inc., Schroder, or their affiliates may, at their own
expense and out of their own assets, provide compensation to dealers or other
financial intermediaries in connection with sales of Trust shares or shareholder
servicing. In some instances, this compensation may be made available only to
certain dealers or other financial intermediaries who have sold or are expected
to sell significant amounts of shares of the Trust.
HOW TO SELL SHARES
You can sell your Advisor Shares back to a Fund any day the New York Stock
Exchange is open, either through your Service Organization or directly to the
Fund. If your shares are held in the name of a Service Organization, you may
only sell the shares through that Service Organization.
The price you will receive when you sell your shares is the net asset value per
share next determined after the Transfer Agent receives the redemption request
in proper form. Each Fund will make payment for redeemed shares within seven
days thereafter. Under unusual circumstances, the Trust may suspend redemptions,
or postpone payment for more than seven days, as permitted by law. If you
purchase shares of a Fund by check (including certified check) and redeem them
shortly thereafter, the Fund will delay payment of the redemption proceeds for
up to fifteen days after the Fund receives the check or until the check has
cleared, whichever occurs first. 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.
18
<PAGE> 51
If you own fewer shares than a minimum amount set by the Trustees (presently 50
shares) of any Fund, the Trust may choose to redeem your shares in that 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 your shares if you own shares of
any Fund above a maximum amount set by the Trustees. There is currently no
maximum, but the Trustees may establish one at any time, which could apply to
both present and future shareholders.
SELLING SHARES THROUGH YOUR SERVICE ORGANIZATION
Your Service Organization and the Transfer Agent must receive your redemption
request before the close of regular trading on the New York Stock Exchange to
receive that day's net asset value. Your Service Organization will be
responsible for furnishing all necessary documentation to the Transfer Agent,
and may charge you for its services.
SELLING SHARES DIRECTLY TO A FUND
If your Advisor Shares are held in your own name (rather than in the name of
your Service Organization), you may redeem your shares by mailing a written
request for redemption to the Transfer Agent that:
(1) states the number of shares or dollar amount to be redeemed;
(2) identifies your account number; and
(3) is signed by you and all other owners of the account exactly as their
names appear on the account.
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 required 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) 464-3108. 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 provide complete wiring instructions
for your Service Organization or your own account, as appropriate.
EXCHANGES
You can exchange your Advisor Shares of any Fund for Advisor Shares of any other
Fund, or another series in the Schroder family of funds, at any time at their
respective net asset values. Contact your Service Organization or the Transfer
Agent for details. The Trust reserves the right to change or suspend the
exchange privilege at any time. Shareholders would be notified of any such
change or suspension.
19
<PAGE> 52
ADDITIONAL INFORMATION ABOUT
ADVISOR SHARES
The Trust sells Advisor Shares of the Funds at their net asset value without any
sales charges or loads, so that the full amount of your purchase payment is
invested in the Fund you select. You also receive the full value of your Advisor
Shares when you sell them back to a Fund, without any deferred sales charge.
- - Shareholder Servicing Plan. The Trust has adopted a Shareholder Servicing Plan
(the "Service Plan") for the Advisor Shares of each Fund. Under the Service
Plan, each 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 Fund
shareholder or amounts which Schroder Fund Advisors Inc. may pay to the
Service Organization. Please contact your Service Organization for details.
- - Distribution Plans. Each 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 Plans, each 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 Funds presently make no payments under the Distribution Plans,
although the Trustees may at any time authorize payments at an annual rate of
up to 0.50% of a Fund's average daily net assets attributable to its Advisor
Shares. To the extent that payments are made in the future under the Plans,
they would be paid out of a 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 a Fund's Shareholder Servicing Plan for Advisor Shares will be
deemed to have been made pursuant to its 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.
DIVIDENDS AND DISTRIBUTIONS
- - Schroder Large Capitalization Equity Fund, Schroder Small Capitalization Value
Fund, and Schroder MidCap Value Fund. Each of these Funds distributes any net
investment income and any net realized capital gains at least once a year.
Distributions from net investment income, if any, are expected to be small.
- - Schroder Investment Grade Income Fund. This Fund distributes net investment
income monthly and any net realized capital gains at least once a year.
20
<PAGE> 53
YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS:
- - Reinvest all distributions in additional Advisor Shares of your Fund;
- - Receive any distributions from net investment income in cash while reinvesting
capital gains distributions in additional Advisor Shares of your Fund; 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 a Fund will be reinvested in Advisor Shares of that Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.
TAXES
- - 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 your 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 a Fund before you invested (and thus were included in the
price you paid for your shares). Distributions of gains from investments that
a 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 Funds.
- - Taxes when you sell or exchange your shares. Any gain resulting from the sale
or exchange of your shares of the Funds (including an exchange for Advisor
Shares of another Fund) will also generally be subject to federal income tax.
- - Consult your tax advisor about other possible tax consequences. This is a
summary of certain federal income tax consequences of investing in a 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 Funds receive services from Schroder, Schroder Fund Advisors Inc., the
Transfer Agent, State Street Bank and Trust Company, 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
Funds' other major service providers. There can be no assurance, however, that
these steps will be sufficient to avoid any adverse impact on the Funds from
this problem. 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
Funds invest or on the securities markets generally, which may reduce the value
the Funds' portfolio investments.
21
<PAGE> 54
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of Schroder Small Capitalization Value Fund and Schroder MidCap
Value Fund since the inception date of Advisor Shares of those Funds. (No
Advisor Shares of Schroder Large Capitalization Equity Fund or Schroder
Investment Grade Income Fund were outstanding through October 31, 1998.) 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 a Fund, assuming reinvestment of all dividends
and distributions. This information has been audited by Arthur Andersen LLP,
whose report, along with each Fund's financial statements, are included in the
Funds' annual report to shareholders. The annual report is available upon
request.
SCHRODER SMALL CAPITALIZATION VALUE FUND
(For an Advisor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1998 1997(1)
----------- ------------
<S> <C> <C>
Net Asset Value at Beginning of Period $ 17.67 $18.29
Income from Investment Operations:
Net Investment Loss (0.02)(2) (0.01)
Net Realized and Unrealized Loss on Investments (2.10) (0.61)
------- ------
Total from Investment Operations (2.12) (0.62)
------- ------
Less Distributions:
From Net Realized Capital Gains (2.69) 0.00
------- ------
Total Distributions (2.69) 0.00
------- ------
Net Asset Value at End of Period $ 12.86 $17.67
======= ======
Total Return (13.63%) (3.39%)(3)
Ratios & Supplemental Data
Net Assets at End of Period (000's) $ 49 $ 56
Ratio of Operating Expenses to Average Net Assets 1.54%(2) 1.46%(4)
Ratio of Net Investment Income to Average Net Assets (0.42%) 0.63%(4)
Portfolio Turnover Rate 87.51% 77.48%(5)
</TABLE>
(1) For the period September 26, 1997 (initial offering date of Advisor Shares
of the Fund) through October 31, 1997.
(2) Net Investment Loss is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust's financial statements.)
Had the Investment Adviser not undertaken to pay or reimburse expenses
related to the Fund, the Net Investment Loss per share and Ratio of
Operating Expenses to Average Net Assets would have been as follows:
1998 - $(3.68) and 77.44%, respectively.
(3) Not annualized.
(4) Annualized.
(5) Represents the Fund's portfolio turnover rate for the entire fiscal year
ended October 31, 1997.
22
<PAGE> 55
SCHRODER MIDCAP VALUE FUND
(For an Advisor Share outstanding throughout the period.)
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31,
1998(1)
------------
<S> <C>
Net Asset Value at Beginning of Period $ 9.30
Income from Investment Operations:
Net Investment Loss(2) (0.00)
Net Realized and Unrealized Gain on Investments 0.42
-------
Total from Investment Operations 0.42
-------
Less Distributions:
From Net Realized Capital Gains 0.00
-------
Total Distributions 0.00
-------
Net Asset Value at End of Period $ 9.72
=======
Total Return 4.52%(3)
Ratios & Supplemental Data
Net Assets at End of Period (000's) $ 3
Ratio of Operating Expenses to Average Net Assets(2) 1.60%(4)
Ratio of Net Investment Income to Average Net Assets (1.06%)(4)
Portfolio Turnover Rate 165.62%(5)
</TABLE>
(1) For the period October 23, 1998 (initial offering date of Advisor Shares of
the Fund) through October 31, 1998.
(2) Net Investment Loss is after reimbursement of certain expenses by Schroder
Capital Management Inc. (See Note 3 to the Trust's financial statements.)
Had the Investment Adviser not undertaken to pay or reimburse expenses
related to the Fund, the Net Investment Loss per share and Ratio of
Operating Expenses to Average Net Assets would have been as follows:
1998 - $(1.38) and 671.68%, respectively.
(3) Not annualized.
(4) Annualized.
(5) Represents the Fund's portfolio turnover rate for the entire fiscal year
ended October 31, 1998.
23
<PAGE> 56
SCHRODER SERIES TRUST
Schroder Series Trust's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about the
Funds. The SAI and the financial statements included in the Trust'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
trust's annual report discusses the market conditions and investment strategies
that significantly affected each Fund's performance during its last fiscal year.
You may get free copies of these materials, request other information about a
Fund, or make shareholder inquiries by calling 800-464-3108.
You may review and copy information about the Trust, 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 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 811-7840.
SCHRODER SERIES TRUST
P.O. Box 8507
Boston, MA 02266
800-464-3108
0399WS
File No. 811-7840
2
<PAGE> 57
SCHRODER SERIES TRUST
Schroder Large Capitalization Equity Fund
Schroder Small Capitalization Value Fund
Schroder MidCap Value Fund
Schroder Investment Grade Income Fund
Schroder Short-Term Investment Fund
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 the
Funds, as amended or supplemented from time to time. This SAI relates to the
Funds' Investor Shares and Advisor Shares. Investor Shares are offered through a
Prospectus dated March 1, 1999, and Advisor Shares are offered through a
Prospectus 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 Schroder Capital Management
Inc. ("Schroder"), the Trust's investment adviser, at 1-800-464-3108.
Certain disclosure has been incorporated by reference into this SAI from the
Funds' annual report. For a free copy of the annual report, please call
1-800-464-3108.
<PAGE> 58
TABLE OF CONTENTS
<TABLE>
<S> <C>
TRUST HISTORY ....................................................... 1
FUND CLASSIFICATION ................................................. 1
CAPITALIZATION AND SHARE CLASSES .................................... 1
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISK ............ 2
INVESTMENT RESTRICTIONS ............................................. 17
TRUSTEES AND OFFICERS ............................................... 20
SCHRODER AND ITS AFFILIATES ......................................... 23
MANAGEMENT CONTRACTS ................................................ 23
PRINCIPAL UNDERWRITER ............................................... 25
BROKERAGE ALLOCATION AND OTHER PRACTICES ............................ 26
DETERMINATION OF NET ASSET VALUE .................................... 28
REDEMPTIONS IN KIND ................................................. 30
TAXES ............................................................... 30
PRINCIPAL HOLDERS OF SECURITIES ..................................... 32
PERFORMANCE INFORMATION ............................................. 34
CUSTODIAN ........................................................... 36
TRANSFER AGENT AND DIVIDEND-PAYING AGENT ............................ 36
INDEPENDENT AUDITORS ................................................ 36
SHAREHOLDER LIABILITY ............................................... 36
FINANCIAL STATEMENTS ................................................ 36
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS ...................... A-1
</TABLE>
<PAGE> 59
SCHRODER SERIES TRUST
STATEMENT OF ADDITIONAL INFORMATION
TRUST HISTORY
Schroder Series Trust is a Massachusetts business trust organized under
the laws of The Commonwealth of Massachusetts on May 6, 1993. The Trust's
Agreement and Declaration of Trust, which is governed by Massachusetts law, is
on file with the Secretary of State of The Commonwealth of Massachusetts. The
Trust's principal office is located at 787 Seventh Avenue, New York, New York
10019 (which is also the address of Schroder's principal office), and its
telephone number is (212) 641-3900. Prior to March 1997, the name of the Trust
was "WSIS Series Trust."
FUND CLASSIFICATION
The Trust currently offers shares of beneficial interest of five series
(the "Funds") with separate investment objectives and policies. Each Fund is an
open-end, management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). Each Fund is also a "diversified" investment
company under the 1940 Act. This means that with respect to 75% of a Fund's
total assets, the Fund may not invest in securities of any issuer if,
immediately after such investment, more than 5% of the total assets of the Fund
(taken at current value) would be invested in the securities of that issuer
(this limitation does not apply to investments in U.S. Government securities). A
Fund is not subject to this limitation with respect to the remaining 25% of its
total assets. To the extent a 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. Each Fund's shares (except the Short-Term Investment
Fund) are presently divided into two classes, Investor Shares and Advisor
Shares. The Short-Term Investment Fund offers Investor Shares only. 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 a
Fund's Investor Shares should be more favorable than that of the Fund's Advisor
Shares over the same time period.
A 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 you own fewer shares than a minimum amount set by
the Trustees (presently 50 shares) of any Fund, the Trust may choose to redeem
your shares in that 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 any Fund above a maximum amount set by the Trustees.
There is currently no maximum, but the Trustees may establish one at any time,
which could apply to both present and future shareholders.
-1-
<PAGE> 60
Shares entitle their holders to one vote per share, with fractional
shares voting proportionally; however, a separate vote will be taken by each
Fund or class of shares on matters affecting the particular Fund or class, as
determined by the Trustees. For example, a change in a fundamental investment
policy of 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
Declaration of Trust. Shares have no preemptive, subscription, or conversion
rights, and are transferable.
Shares are entitled to dividends as declared by the Trustees, and if a
Fund were liquidated, each class of shares of the Fund would receive the net
assets of the Fund attributable to the class. Because Investor Shares and
Advisor Shares are subject to different expenses, a Fund's dividends and other
distributions will normally differ between the two classes.
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS
In addition to the principal investment strategies and the principal
risks of the Funds described in the Prospectuses, each Fund may employ other
investment practices and may be subject to additional risks which are described
below. Because the following is a combined description of investment strategies
and risks for all the Funds, certain strategies and/or risks described below may
not apply to your Fund. Unless a strategy or policy described below is
specifically prohibited by the investment restrictions listed in the
Prospectuses, under "Investment Restrictions" in this SAI, or by applicable law,
a Fund may engage in each of the practices described below.
CERTAIN DERIVATIVE INSTRUMENTS
Derivatives 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. Each Fund may engage in transactions involving the use of
various derivative instruments described below. These transactions may be used
by a Fund for hedging purposes or, to the extent permitted by applicable law, to
increase its current return. In addition to the transactions described in this
section, Funds may also engage in derivative transactions involving foreign
currencies. See "Foreign Currency Transactions."
OPTIONS
Each Fund may purchase and sell covered put and call options on its
portfolio securities to enhance investment performance and to protect against
changes in market prices.
COVERED CALL OPTIONS. A Fund may write covered call options on
securities it holds 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,
-2-
<PAGE> 61
at all times while obligated as a writer, either owns the underlying securities
(or comparable securities satisfying the cover requirements of the securities
exchanges), or has the right to acquire such securities through immediate
conversion of securities.
In return for the premium received when it writes a covered call
option, the Fund gives up some or all of the opportunity to profit from an
increase in the market price of the securities covering the call option during
the life of the option. The Fund retains the risk of loss should the price of
such securities decline. If the option expires unexercised, the Fund realizes a
gain equal to the premium, which may be offset by a decline in price of the
underlying security. If the option is exercised, the Fund realizes a gain or
loss equal to the difference between the Fund's cost for the underlying security
and the proceeds of sale (exercise price minus commissions) plus the amount of
the premium.
A Fund may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. A Fund may enter into
closing purchase transactions in order to free itself to sell the underlying
security or to write another call on the security, realize a profit on a
previously written call option, or protect a security from being called in an
unexpected market rise. Any profits from a closing purchase transaction may be
offset by a decline in the value of the underlying security. Conversely, because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from a
closing purchase transaction is likely to be offset in whole or in part by
unrealized appreciation of the underlying security owned by the Fund.
COVERED PUT OPTIONS. A Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash and
high-grade short-term debt obligations or other permissible collateral equal to
the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, the Fund also
receives interest on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put option, the Fund assumes the risk
that it may be required to purchase the underlying security for an exercise
price higher than its then current market value, resulting in a potential
capital loss unless the security later appreciates in value.
A Fund may terminate a put option that it has written before it expires
by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. A Fund may also purchase put options
to protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it sold
the underlying security instead of buying the put option.
-3-
<PAGE> 62
A Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
A Fund may also purchase put and call options to enhance its current
return. A 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. A 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 a Fund may be unable at times to close out
such positions, or that hedging transactions may not accomplish their purpose
because of imperfect market correlations. The successful use of these strategies
depends on the ability of 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 a 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, a Fund may be
forced to continue to hold, or to purchase at a fixed price, a security on which
it has sold an option at a time when 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
Funds' 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 Funds
and other clients of Schroder may be considered such a group. These position
limits may restrict the Funds' ability to purchase or sell options on particular
securities.
As described below, each Fund generally expects that its options
transactions will be conducted on recognized exchanges. In certain instances,
however, a 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
-4-
<PAGE> 63
over-the-counter market may also involve the risk that securities dealers
participating in such transactions would be unable to meet their obligations to
a Fund. Furthermore, over-the-counter options are not subject to the protection
afforded purchasers of exchange-traded options by The Options Clearing
Corporation. A 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. A Fund
will treat over-the-counter options (and, in the case of options sold by the
Fund, the underlying securities held by the Fund) as illiquid investments as
required by applicable law. Government regulations may also restrict the Trust's
use of options.
FUTURES CONTRACTS
In order to hedge against the effects of adverse market changes, each
Fund that may invest in debt securities may buy and sell futures contracts on
U.S. Government securities and other debt securities in which the Fund may
invest, and on indices of debt securities. In addition, each Fund that may
invest in equity securities may purchase and sell stock index futures to hedge
against changes in stock market prices. Each Fund may also, to the extent
permitted by applicable law, buy and sell futures contracts and options on
futures contracts to increase the Fund's current return. All such futures and
related options will, as may be required by applicable law, be traded on
exchanges that are licensed and regulated by the Commodity Futures Trading
Commission (the "CFTC"). Depending upon the change in the value of the
underlying security or index when a 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 -- a Fund
will legally obligate itself to accept the future delivery of the underlying
security and pay the agreed price. By selling futures on debt securities --
assuming a "short" position -- it will legally obligate itself to make the
future delivery of the security against payment of the agreed price. Open
futures positions on debt securities will be valued at the most recent
settlement price, unless that price does not, in the judgment of persons acting
at the direction of the Trustees as to the valuation of the Trust's assets,
reflect the fair value of the contract, in which case the positions will be
valued by the Trustees or such persons.
Positions taken in the futures markets are not normally held to
maturity, but are instead liquidated through offsetting transactions that may
result in a profit or a loss. While futures positions taken by a Fund will
usually be liquidated in this manner, a Fund may instead make or take delivery
of the underlying securities whenever it appears economically advantageous to
the Fund to do so. A clearing corporation associated with the exchange on which
futures are traded assumes responsibility for such closing transactions and
guarantees that a Fund's sale and purchase obligations under closed-out
positions will be performed at the termination of the contract.
Hedging by use of futures on debt securities seeks to establish more
certainly than would otherwise be possible the effective rate of return on
portfolio securities. A Fund may, for example, take a "short" position in the
futures market by selling contracts for the future delivery of debt
-5-
<PAGE> 64
securities held by the Fund (or securities having characteristics similar to
those held by the Fund) in order to hedge against an anticipated rise in
interest rates that would adversely affect the value of the Fund's portfolio
securities. When hedging of this character is successful, any depreciation in
the value of portfolio securities may substantially be offset by appreciation in
the value of the futures position.
On other occasions, a Fund may take a "long" position by purchasing
futures on debt securities. This would be done, for example, when the Trust
expects to purchase for the Fund particular securities when it has the necessary
cash, but expects the rate of return available in the securities markets at that
time to be less favorable than rates currently available in the futures markets.
If the anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Fund of purchasing
the securities may be offset, at least to some extent, by the rise in the value
of the futures position taken in anticipation of the subsequent securities
purchase.
Successful use by a Fund of futures contracts on debt securities is
subject to Schroder's ability to predict correctly movements in the direction of
interest rates and other factors affecting markets for debt securities. For
example, if a Fund has hedged against the possibility of an increase in interest
rates which would adversely affect the market prices of debt securities held by
it and the prices of such securities increase instead, the Fund will lose part
or all of the benefit of the increased value of its securities which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily maintenance margin requirements. The Fund may have
to sell securities at a time when it may be disadvantageous to do so.
A Fund may purchase and write put and call options on certain debt
futures contracts, as they become available. Such options are similar to options
on securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an option of the same series.
There is no guarantee that such closing transactions can be effected. A Fund
will be required to deposit initial margin and maintenance margin with respect
to put and call options on futures contracts written by it pursuant to brokers'
requirements, and, in addition, net option premiums received will be included as
initial margin deposits. See "Margin Payments" below. Compared to the purchase
or sale of futures contracts, the purchase of call or put options on futures
contracts involves less potential risk to a Fund because the maximum amount at
risk is the premium paid for the options plus transactions costs. However, there
may be circumstances when the purchase of call or put options on a futures
contract would result in a loss to a Fund when the purchase or sale of the
futures contracts would not, such as when there is no movement in the prices of
debt securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
INDEX FUTURES CONTRACTS AND OPTIONS. A 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
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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
a Fund enters into and terminates an index futures transaction, the Fund may
realize a gain or loss. The following example illustrates generally the manner
in which index futures contracts operate. The Standard & Poor's 100 Stock Index
is composed of 100 selected common stocks, most of which are listed on the New
York Stock Exchange. The S&P 100 Index assigns relative weightings to the common
stocks included in the Index, and the Index fluctuates with changes in the
market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if a Fund enters into a futures contract to buy 100
units of the S&P 100 Index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $184 on that future date, the Fund will gain
$400 (100 units x gain of $4). If the Fund enters into a futures contract to
sell 100 units of the stock index at a specified future date at a contract price
of $180 and the S&P 100 Index is at $182 on that future date, the Fund will lose
$200 (100 units x loss of $2).
A Fund may purchase or sell futures contracts with respect to any
securities 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 a Fund's investments successfully using futures
contracts and related options, a 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 portfolio securities.
Options on index futures contracts are similar to options on securities
except that options on index futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the holder would assume the underlying futures
position and would receive a variation margin payment of cash or securities
approximating the increase in the value of the holder's option position. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the difference
between the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
As an alternative to purchasing and selling call and put options on
index futures contracts, each of the Funds which 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
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put), and the writer undertakes the obligation to sell or buy (as the case may
be), units of an index at a stated exercise price during the term of the option.
Instead of giving the right to take or make actual delivery of securities, the
holder of an index option has the right to receive a cash "exercise settlement
amount". This amount is equal to the amount by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of the exercise,
multiplied by a fixed "index multiplier".
A Fund may purchase or sell options on stock indices in order to close
out its outstanding positions in options on stock indices which it has
purchased. A Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of
call or put options on an index involves less potential risk to a Fund because
the maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar to
those risks relating to the purchase or sale of index futures contracts.
A 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 a Fund purchases or sells a futures contract, it
is required to deposit with its custodian an amount of cash, U.S. Treasury
bills, or other permissible collateral equal to a small percentage of the amount
of the futures contract. This amount is known as "initial margin". The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to a Fund upon termination of the contract, assuming a Fund satisfies its
contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market". These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying debt security rises above the delivery price, the Fund's position
declines in value. The Fund then pays the broker a variation margin payment
equal to the difference between the delivery price of the futures contract and
the market price of the securities underlying the futures contract. Conversely,
if the price of the underlying security falls below the delivery price of the
contract, the Fund's futures position increases in value. The broker then must
make a variation margin payment equal to the difference between the delivery
price of the futures contract and the market price of the securities underlying
the futures contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or a gain.
Such closing transactions involve additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market for such
futures. Although the Trust intends to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active
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secondary market, there is no assurance that a liquid secondary market on an
exchange or board of trade will exist for any particular contract or at any
particular time. If there is not a liquid secondary market at a particular time,
it may not be possible to close a futures position at such time and, in the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin. However, in the event financial futures
are used to hedge portfolio securities, such securities will not generally be
sold until the financial futures can be terminated. In such circumstances, an
increase in the price of the portfolio securities, if any, may partially or
completely offset losses on the financial futures.
In addition to the risks that apply to all options transactions, there
are several special risks relating to options on futures contracts. The ability
to establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
such a market will develop. Although a Fund generally will purchase only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options with the result that a Fund would have to exercise the options
in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by a
Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or in the prices of a 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 a Fund's
portfolio securities sought to be hedged.
Successful use of futures contracts and options by a Fund for hedging
purposes is also subject to Schroder's ability to predict correctly movements in
the direction of the market. It is possible that, where a Fund has purchased
puts on futures contracts to hedge its portfolio against a decline in the
market, the securities or index on which the puts are purchased may increase in
value and the value of securities held in the portfolio may decline. If this
occurred, the Fund would lose money on the puts and also experience a decline in
value in its portfolio securities. In addition, the prices of futures, for a
number of reasons, may not correlate perfectly with movements in the underlying
securities or index due to certain market distortions. First, all participants
in the futures market are subject to margin deposit requirements. Such
requirements may cause investors to close futures contracts through offsetting
transactions which could distort the normal relationship between the underlying
security or index and the 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 a Fund may invest
(including markets located in foreign countries) are
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relatively new and still developing and may be subject to regulatory restraints,
a 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 a Fund will engage in such
transactions at any time or from time to time. A Fund's ability to engage in
hedging transactions may also be limited by certain regulatory and tax
considerations.
OTHER RISKS. Funds will incur brokerage fees in connection with their
futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while a Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss.
FORWARD COMMITMENTS
Each Fund may enter into contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward commitments")
if the Fund holds, and maintains until the settlement date in a segregated
account, cash or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the Fund enters into offsetting contracts for the forward
sale of other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the Fund's other assets. Where
such purchases are made through dealers, the Funds rely on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to the
Fund of an advantageous yield or price.
Although a Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, a Fund may dispose of a commitment prior
to settlement if Schroder deems it appropriate to do so. A Fund may realize
short-term profits or losses upon the sale of forward commitments.
CERTAIN INVESTMENTS IN FIXED-INCOME SECURITIES
In addition to Schroder Investment Grade Income Fund and Schroder
Short-Term Investment Fund (each of which invests primarily in fixed-income
securities), each of the remaining Funds may invest a portion of its assets in
fixed-income securities if Schroder believes they would help achieve the Fund's
objective. The general risks associated with investments in fixed-income
securities are described in the Prospectuses. Fixed-income securities in which
these remaining Funds may invest will be rated, at the time of investment, at
least Baa by Moody's Investors Service, Inc. or BBB by Standard & Poor's Ratings
Services or, if unrated, determined by Schroder at the time of investment to be
of comparable quality. Securities rated Baa or BBB lack outstanding investment
characteristics, have speculative characteristics, and are subject to greater
credit and market risks than higher-rated securities. A description of the
various ratings assigned to fixed-income securities by Moody's and Standard &
Poor's is included in Appendix A to this SAI. These Funds may also hold a
portion of their assets in cash or money market instruments.
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REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. A repurchase agreement
is a contract under which the Fund acquires a security for a relatively short
period (usually not more than 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 a 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, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, a Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if a Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.
WHEN-ISSUED SECURITIES
Each Fund may from time to time purchase securities on a "when-issued"
basis. Debt securities are often issued on this basis. The price of such
securities, which may be expressed in yield terms, is fixed at the time a
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between purchase and
settlement, no payment is made by a Fund and no interest accrues to the Fund. To
the extent that assets of a Fund are held in cash pending the settlement of a
purchase of securities, that Fund would earn no income. While a Fund may sell
its right to acquire when-issued securities prior to the settlement date, a Fund
intends actually to acquire such securities unless a sale prior to settlement
appears desirable for investment reasons. At the time a Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the amount due and the value of the security in
determining the Fund's net asset value. The market value of the when-issued
securities may be more or less than the purchase price payable at the settlement
date. Each Fund will establish a segregated account in which it will maintain
cash and U.S. Government Securities or other high-grade debt obligations at
least equal in value to commitments for when-issued securities. Such segregated
securities either will mature or, if necessary, be sold by the Fund on or before
the settlement date.
LOANS OF FUND PORTFOLIO SECURITIES
A Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government Securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) a Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund
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loaned will not at any time exceed one-third of the total assets of the Fund. In
addition, it is anticipated that the Fund may share with the borrower some of
the income received on the collateral for the loan or that it will be paid a
premium for the loan. Before a Fund enters into a loan, 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, a Fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be voted
by a Fund if the holders of such securities are asked to vote upon or consent to
matters materially affecting the investment. A Fund will not lend portfolio
securities to borrowers affiliated with a Fund.
FOREIGN SECURITIES
Each Fund may invest without limit in securities principally traded in
foreign markets, although it is not currently expected that any of the Funds
will invest in securities of foreign issuers to a substantial degree. Each 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
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 a 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 a Fund's
assets may be affected favorably or unfavorably by currency exchange rates and
exchange control regulations, and a 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 a 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 for a
Fund seeking current income, Schroder will consider the likely impact of foreign
taxes on the net yield available to the Fund and its shareholders. Income
received by a Fund from sources within foreign countries may be
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reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of a Fund's assets to be invested in
various countries is not known, and tax laws and their interpretations may
change from time to time and may change without advance notice. Any such taxes
paid by a Fund will reduce its net income available for distribution to
shareholders.
FOREIGN CURRENCY TRANSACTIONS
Each Fund may engage in currency exchange transactions to protect
against uncertainty in the level of future foreign currency exchange rates and
to increase current return. A Fund may engage in both "transaction hedging" and
"position hedging".
When it engages in transaction hedging, a Fund enters into foreign
currency transactions with respect to specific receivables or payables of a Fund
generally arising in connection with the purchase or sale of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging, a Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
A Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging. A Fund
may also enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes, a Fund may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives a Fund the right to assume a short position in the futures contract until
expiration of the option. A put option on currency gives a Fund the right to
sell a currency at an exercise price until the expiration of the option. A call
option on a futures contract gives a Fund the right to assume a long position in
the futures contract until the expiration of the option. A call option on
currency gives a Fund the right to purchase a currency at the exercise price
until the expiration of the option. A Fund will engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in 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, a Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which securities held by a Fund are denominated or are
quoted in their principal trading markets or an increase in the value of
currency for securities which a Fund expects to purchase. In connection with
position hedging, a Fund may purchase put or call options on foreign currency
and foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. A Fund may also purchase or sell foreign
currency on a spot basis.
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The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of a
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency a Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities exceeds
the amount of foreign currency a Fund is obligated to deliver.
To offset some of the costs to a Fund of hedging against fluctuations
in currency exchange rates, a Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency. Also, suitable foreign currency hedging transactions may not be
available in all circumstances and there can be no assurance that a Fund will
utilize hedging transactions at any time or from time to time.
A 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
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predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in foreign currency futures contracts and related options may
be closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although a Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate
similarly to options on securities, and are traded primarily in the
over-the-counter market, although options on foreign currencies have recently
been listed on several exchanges. Such options will be purchased or written only
when Schroder believes that a liquid secondary market exists for such options.
There can be no assurance that a liquid secondary market will exist for a
particular option at any specific time. Options on foreign currencies are
affected by all of those factors which influence exchange rates and investments
generally.
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
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which they buy and sell various currencies. Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of exchange
should a Fund desire to resell that currency to the dealer.
ZERO-COUPON SECURITIES
Zero-coupon securities in which a Fund may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity.
Zero-coupon securities usually trade at a deep discount from their face or par
value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest. As a result, the net asset value of shares of a Fund
investing in zero-coupon securities may fluctuate over a greater range than
shares of other Funds of the Trust and other mutual funds investing in
securities making current distributions of interest and having similar
maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-term bonds
or notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on
Treasuries ("CATS"). CATS and TIGRS are not considered U.S. Government
securities. The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.
In addition, the Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, a Fund will be able to have its beneficial ownership of U.S.
Treasury zero-coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
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<PAGE> 75
TEMPORARY DEFENSIVE STRATEGIES
As described in the Prospectuses, Schroder may at times judge that
conditions in the securities markets make pursuing a 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 a 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, a Fund
will use these alternate strategies.
LIQUIDITY
A Fund will not invest more than 15% of its net assets in securities
determined by Schroder to be illiquid. Certain securities that are restricted as
to resale may nonetheless be resold by a Fund in accordance with Rule 144A under
the Securities Act of 1933, as amended. Such securities may be determined by
Schroder to be liquid for purposes of compliance with the limitation on a Fund's
investment in illiquid securities. There can, however, be no assurance that a
Fund will be able to sell such securities at any time when Schroder deems it
advisable to do so or at prices prevailing for comparable securities that are
more widely held.
INVESTMENT RESTRICTIONS
The Trust has adopted the following investment restrictions which may
not be changed without the affirmative vote of a "majority of the outstanding
voting securities" of the affected 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.
A Fund may not:
1. (a) (For all Funds except the MidCap Value Fund). Borrow money
in excess of 10% of the value (taken at the lower of cost or
current value) of its total assets (not including the amount
borrowed) at the time the borrowing is made, and then only
from banks as a temporary measure (not for leverage) in
situations which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or
emergency purposes. Such borrowings will be repaid before any
additional investments are purchased.
(b) (For the MidCap Value Fund only). Borrow money in excess
of 10% of the value of its total assets (not including the
amount borrowed) at the time the borrowing is made, and then
only from banks as a temporary measure (not for leverage) in
situations which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or
emergency purposes. Such borrowings will be repaid before any
additional investments are purchased.
2. (a) (For all Funds except the MidCap Value Fund). Pledge,
hypothecate, mortgage, or otherwise encumber its assets in
excess of 15% of its total assets (taken at the lower
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<PAGE> 76
of cost and current value) and then only in connection with
borrowings permitted by restriction 1(a) above.
(b) (For the MidCap Value Fund only). Pledge, hypothecate,
mortgage, or otherwise encumber its assets in excess of 15% of
its total assets and then only in connection with borrowings
permitted by restriction 1(b) above.
3. Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales
of securities, and except that it may make margin payments in
connection with transactions in futures contracts, options,
and other financial instruments.
4. (For all Funds except the MidCap Value Fund). Make short sales
of securities or maintain a short position for the account of
a Fund unless at all times when a short position is open it
owns an equal amount of such securities or owns securities
which, without payment of any further consideration, are
convertible into or exchangeable for securities of the same
issue as, and in equal amount to, the securities sold short.
5. Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter
under the federal securities laws.
6. Purchase or sell real estate or interests in real estate
limited partnerships, although it may purchase securities of
issuers which deal in real estate, securities which are
secured by interests in real estate, and securities
representing interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
7. Purchase or sell commodities or commodity contracts, except
that it may purchase or sell financial futures contracts and
options and other financial instruments.
8. Make loans, except by purchase of debt obligations in which a
Fund may invest consistent with its investment policies, by
entering into repurchase agreements with respect to not more
than 25% of its total assets (taken at current value), or
through the lending of its portfolio securities with respect
to not more than 25% of its total assets.
9. (For all Funds except the MidCap Value Fund). Invest in
securities of any issuer, if officers and Trustees of the
Trust and officers and directors of Schroder who beneficially
own more than 0.5% of the securities of that issuer together
own more than 5% of such securities.
10. (For all Funds except the MidCap Value Fund). As to 75% of its
assets, invest in securities of any issuer if, immediately
after such investment, more than 5% of the total assets of a
Fund (taken at current value) would be invested in the
securities of such issuer; provided that this limitation does
not apply to securities issued or
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<PAGE> 77
guaranteed as to principal or interest by the U.S. Government
or its agencies or instrumentalities.
11. (For all Funds except the MidCap Value Fund). Acquire more
than 10% of the voting securities of any issuer.
12. Invest more than 25% of the value of its total assets in
securities of issuers in any one industry. (Securities issued
or guaranteed as to principal or interest by the U.S.
Government or its agencies or instrumentalities are not
considered to represent industries.)
13. (For all Funds except the MidCap Value Fund). Buy or sell oil,
gas, or other mineral leases, rights, or royalty contracts,
although it may purchase securities of issuers which deal in,
represent interests in, or are secured by interests in such
leases, rights, or contracts, and it may acquire or dispose of
such leases, rights, or contracts acquired through the
exercise of its rights as a holder of debt obligations secured
thereby.
14. (For all Funds except the MidCap Value Fund). Make investments
for the purpose of gaining control of a company's management.
15. Issue any class of securities which is senior to the Fund's
shares of beneficial interest. (For the purpose of this
restriction, none of the following is deemed to be, or to
create a class of, senior securities: any borrowing permitted
by restriction (1) above; any pledge or other encumbrance of
assets permitted by restriction (2) above; any collateral
arrangement with respect to options, futures contracts,
options on futures contracts, or other financial instruments,
or with respect to initial or variation margin; and the
purchase or sale of, or the Fund's otherwise entering into,
options, forward contracts, futures contracts, options on
futures contracts, or other financial instruments.
In addition, it is contrary to the Trust's present policy, which may be
changed without shareholder approval, for any of the Funds to invest more than
15% of its net assets in securities which are not readily marketable, including
securities restricted as to resale (other than securities restricted as to
resale but determined by the Trustees, or persons designated by the Trustees to
make such determinations, to be readily marketable).
---------
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for investment restrictions 1 through 15 listed above, the other 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 a Fund's investment objective without
shareholder approval.
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<PAGE> 78
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 Funds' 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. The mailing address
of each of the officers and Trustees is 787 Seventh Avenue, New York, New York
10019.
David N. Dinkins, Trustee. 71. Trustee, Schroder Capital Funds,
Schroder Capital Funds II, and Schroder Capital Funds (Delaware). 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. Trustee, Schroder Capital Funds, Schroder
Capital Funds II, Schroder Capital Funds (Delaware), and Schroder Series Trust
II. Director, American International Life Assurance Company of New York. Private
consultant since 1987.
Peter S. Knight, Trustee. 48. Trustee, Schroder Capital Funds, Schroder
Capital Funds II, and Schroder Capital Funds (Delaware). Partner, Wunder,
Knight, Levine, Thelen & Forcey. Director, Comsat Corp., Medicis Pharmaceutical
Corp., and Whitman Education Group, Inc. Formerly, Campaign Manager,
Clinton/Gore '96.
Peter E. Guernsey, Trustee. 77. Trustee, Schroder Capital Funds,
Schroder Capital Funds II, Schroder Capital Funds (Delaware) and Schroder Series
Trust II. Formerly, Senior Vice President, Marsh & McLennan, Inc.
(*) Sharon L. Haugh, Trustee. 53. 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 Capital
Funds (Delaware).
William L. Means, Trustee. 60. Trustee, Schroder Capital Funds,
Schroder Capital Funds II, Schroder Capital Funds (Delaware), and Schroder
Series Trust II. Formerly, Chief Investment Officer, Alaska Permanent Fund
Corporation, and Investment Officer, State of Alaska, Department of Revenue.
Clarence F. Michalis, Trustee. 77. Trustee, Schroder Capital Funds,
Schroder Capital Funds II, and Schroder Capital Funds (Delaware). Chairman of
the Board of Directors, Josiah Macy, Jr. Foundation.
Hermann C. Schwab, Trustee. 79. Trustee, Schroder Capital Funds,
Schroder Capital Funds II, and Schroder Capital Funds (Delaware). Trustee, St.
Luke's/Roosevelt Hospital Center. Formerly, consultant to Schroder Capital
Management International Inc.
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<PAGE> 79
(*) Mark J. Smith, Trustee and Chairman of the Trust. 36. 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
Capital Funds (Delaware). Vice President, Schroder Series Trust II.
Ashbel C. Williams, Jr., President of the Trust. 44. President,
Schroder Capital Management Inc. Formerly, Executive Director, Florida State
Board of Administration.
Catherine A. Mazza, Vice President of the Trust. 39. 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 Capital Funds (Delaware).
Formerly, Vice President, Alliance Capital Management L.P.
Alexandra Poe, Clerk of the Trust. 38. 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 Capital Funds (Delaware).
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. Senior Vice President,
Schroder Capital Management International Inc.
Fergal Cassidy, Treasurer and Principal Financial and Accounting
Officer of the Trust. 29. Treasurer and Principal Financial and Accounting
Officer of Schroder Capital Funds, Schroder Capital Funds (Delaware), and
Schroder Capital Funds II. Vice President and Treasurer of Schroder Capital
Management Inc. and Vice President and Comptroller of Schroder Capital
Management International Inc. Treasurer and Chief Financial Officer, Schroder
Fund Advisors Inc. Formerly, Senior Accountant, Concurrency Management Corp.
Alan Mandel, Assistant Treasurer of the Trust. 41. Assistant Treasurer
of Schroder Capital Funds, Schroder Capital Funds (Delaware), and Schroder
Capital Funds II. First Vice President of Schroder Capital Management
International Inc. Formerly, Director of Mutual Fund Administration for Salomon
Brothers Asset Management; Chief Financial Officer and Vice President of Mutual
Capital Management.
Carin Muhlbaum, Assistant Clerk of the Trust. 36. Assistant Secretary
of Schroder Capital Funds, Schroder Capital Funds (Delaware), and Schroder
Capital Funds II. Vice President of Schroder Capital Management International
Inc. Formerly, an investment management attorney with Seward & Kissel and prior
thereto, with Gordon Altman Butowsky Weitzen Shalov & Wein.
Nicholas Rossi, Assistant Clerk of the Trust. 35. Associate of Schroder
Capital Management International Inc. since October 1997 and Assistant Vice
President of Schroder Fund Advisors Inc. since March 1998. Formerly, Mutual Fund
Specialist, Willkie Farr & Gallagher; Fund Administrator, Furman Selz LLC.
- ------------------------
(*) 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> 80
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.
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. with the exception of
Schroder Series Trust II, and $1,250 per meeting attended in person or $500 per
meeting attended by telephone for such investment companies. 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 such
investment companies based on their relative net assets. Payment of meeting fees
are 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.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3)
AGGREGATE TOTAL COMPENSATION
AGGREGATE FROM TRUST AND
NAME OF COMPENSATION FUND COMPLEX PAID TO
TRUSTEE FROM TRUST TRUSTEES*
- ----------------------------- ------------ ---------------------
<S> <C> <C>
David N. Dinkins $3,822 $14,250
- ------------------------------------------------------------------------
Peter E. Guernsey** $2,572 $23,750
- ------------------------------------------------------------------------
John I. Howell $4,488 $25,000
- ------------------------------------------------------------------------
Peter S. Knight $4,488 $15,500
- ------------------------------------------------------------------------
William L. Means** $0 $ 9,500
- ------------------------------------------------------------------------
Clarence F. Michalis** $2,572 $14,250
- ------------------------------------------------------------------------
Hermann C. Schwab** $2,572 $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 Capital Funds (Delaware)
("SCFD"), and/or Schroder Series Trust II (formerly Schroder Asian Growth Fund,
Inc., "SST II"). The Trust, SCF, SCF II, SCFD, and SST II are considered part of
the same "Fund Complex" for these purposes.
** Messrs. Guernsey, Michalis, and Schwab were elected Trustees of the Trust in
December 1997. Mr. Means was elected Trustee of the Trust in December 1998.
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<PAGE> 81
The Agreement and Declaration of Trust of the Trust 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 Agreement and Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Trust or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his or her duties. The Trust,
at its expense, provides liability insurance for the benefit of its Trustees and
officers.
SCHRODER AND ITS AFFILIATES
Schroder has served as the investment adviser for the Trust and each of
the Funds since their inceptions. Schroder is a wholly owned subsidiary of
Schroder US Holdings Inc., which engages through its subsidiary firms in the
investment banking, asset management, and securities businesses. Affiliates of
Schroder US 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 $3.4 billion as of December 31,
1998. Schroder US 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 principal underwriter, is a wholly owned subsidiary of Schroder
Capital Management International Inc. Schroder Capital Management International
Inc. is also a wholly owned subsidiary of Schroder US Holdings Inc. See
"Principal Underwriter" below.
MANAGEMENT CONTRACTS
Under Management Contracts between the Trust and Schroder (the
"Management Contracts"), Schroder, at its expense, provides the Funds 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 Management Contracts are set forth in the
Prospectuses.
In providing investment advisory services to the various Funds of the
Trust, Schroder regularly provides the Funds 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 a Fund's assets shall be held uninvested,
subject always to the provisions of the Trust's Agreement and Declaration of
Trust and By-laws, and of the 1940 Act, as amended, and to a 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
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<PAGE> 82
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.
Under the Management Contracts, 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 Funds' 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 Management Contracts may be reduced
in any year if a 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.
State Street Bank and Trust Company ("State Street") provides certain
accounting, transfer agency, and other services to the Trust. The Trust
compensates State Street on a basis approved by the Trustees.
The Management Contracts provide that Schroder shall not be subject to
any liability for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with rendering services to the Trust in the
absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of its duties.
The Management Contracts may be terminated without penalty by vote of
the Trustees as to any Fund by the shareholders of that Fund, or by Schroder on
60 days' written notice. Each Management Contract also terminates without
payment of any penalty in the event of its assignment. In addition, each
Management Contract may be amended only by a vote of the shareholders of the
affected Fund(s), and each Management Contract 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 a Fund by vote of either the Trustees or the
shareholders of the Fund, and, in either case, by a majority of the Trustees who
are not "interested persons" of Schroder. In each of the foregoing cases, the
vote of the shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the 1940 Act.
Recent Management Fees. For its fiscal years ended October 31, 1998,
1997, and 1996, respectively, pursuant to the relevant Management Contract, each
Fund paid fees to Schroder as follows (reflecting reductions in such fees
pursuant to expense limitations and/or waivers in effect during such periods):
Schroder Large Capitalization Equity Fund - $336,444, $386,774, and $318,145;
Schroder Small Capitalization Value Fund - $849,196, $738,419, and $471,712;
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Schroder Investment Grade Income Fund - $56,085, $68,842, and $97,566; Schroder
Short-Term Investment Fund - $88,011, $115,947, and $133,208; and Schroder
MidCap Value Fund $0, $0, and N/A (the MidCap Value Fund commenced operations in
August 1997).
Schroder waived its fees in the following amounts during the fiscal
years ended October 31, 1998, 1997, and 1996, respectively, pursuant to expense
limitations and/or waivers in effect during such periods: Schroder Large
Capitalization Equity Fund - $92,467, $0, and $0; Schroder Small Capitalization
Value Fund - $13,941, $0, and $0; Schroder Investment Grade Income Fund -
$98,978, $51,045, and $29,635; Schroder Short-Term Investment Fund - $26,333,
$8,528, and $0; and Schroder MidCap Value Fund $104,762, $14,908, and N/A.
Schroder paid an additional $25,506 in fiscal 1998 and $34,610 in fiscal 1997 in
other Fund expenses with respect to the MidCap Value Fund in order to effect the
expense limitation for that Fund.
PRINCIPAL UNDERWRITER
Pursuant to a Distribution Contract with the Trust, Schroder Fund
Advisors Inc. (the "Distributor"), 787 Seventh Avenue, New York, New York 10019,
serves as the principal underwriter for the Trust's continually offered shares.
The Distributor pays all of its own expenses in performing its obligations under
the Distribution Contract. The Distributor is not obligated to sell any specific
amount of shares of any Fund. Please see "Schroder and its Affiliates" for
ownership information regarding the Distributor.
Distribution Plan for Advisor Shares. Each Fund (except for the
Short-Term Investment Fund) has adopted a Distribution Plan under Rule 12b-1 of
the 1940 Act pursuant to which the Fund may pay the Distributor compensation in
an amount limited in any fiscal year to the annual rate of 0.50% of the Fund's
average daily net assets attributable to Advisor Shares. The Funds have neither
made nor presently make payments under the Distribution Plans, although the
Trustees may at any time authorize payments at an annual rate of up to 0.50% of
a Fund's average daily net assets attributable to Advisor Shares. The
Distribution Plans also relate to payments made pursuant to the Trust's
Shareholder Servicing Plan for Advisor Shares (see below), to the extent such
payments may be deemed to be primarily intended to result in the sale of a
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 Plans 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.
A 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 relevant 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
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<PAGE> 84
person at a meeting called for the purpose. Each 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. Each 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. Each Fund (except for
the Short-Term Investment Fund) has also adopted a Shareholder Servicing Plan
(the "Service Plan") for its Advisor Shares. Under the Service Plan, each 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 various financial
institutions ("Service Organizations") pursuant to which the Service
Organizations provide administrative support services to their customers who are
shareholders of Advisor Shares of the Funds.
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 each Fund for which the
Service Organization is the Service Organization of record. These administrative
services may include, but are not limited to, the following functions:
establishing and maintaining accounts and records relating to clients of the
Service Organization; answering shareholder inquiries regarding the manner in
which purchases, exchanges, and redemptions of Advisor Shares of the Trust may
be effected and other matters pertaining to the Trust's services; providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records; assisting shareholders in arranging for processing
purchase, exchange, and redemption transactions; arranging for the wiring of
funds; guaranteeing shareholder signatures in connection with redemption orders
and transfers and changes in shareholder-designated accounts; integrating
periodic statements with other customer transactions; and providing such other
related services as the shareholder may request.
Some Service Organizations may impose additional conditions or fees,
such as requiring clients to invest more than the minimum amounts required by
the Trust for initial or subsequent investments or charging a direct fee for
services. Such fees would be in addition to any amounts which might be paid to
the Service Organization by the Distributor. Please contact your Service
Organization for details.
The Service Plan was initially adopted for each Fund (except for the
Short-Term Investment Fund) in September 1997. In the fiscal years ended October
31, 1998 and 1997, respectively, the Trust paid an aggregate of $56 and $10 to
the Distributor under the Service Plan, all of which was, in turn, paid by the
Distributor to Service Organizations. All such payments were made by the Small
Capitalization Value Fund.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Schroder may place portfolio transactions with broker-dealers which
furnish, without cost, certain research, statistical, and quotation services of
value to Schroder and its affiliates in advising the Trust and other clients,
provided that it shall always seek best price and execution with respect to
transactions. Certain investments may be appropriate for the Trust and for other
clients advised by Schroder. Investment decisions for the Trust and other
clients are made with a view to achieving
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<PAGE> 85
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. Subject to seeking the most favorable price and execution
available, Schroder may consider sales of shares of the Funds as a factor in the
selection of broker-dealers.
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. 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 for the Trust and buys and sells securities for the Trust through a
substantial number of brokers and dealers. In so doing, it uses its best efforts
to obtain for the Trust the best price and execution available. In seeking the
best price and execution, Schroder, having in mind the Trust's best interests,
considers all factors it deems relevant, including, by way of illustration,
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
which execute portfolio transactions for the clients of such advisers.
Consistent with this practice, Schroder receives research, statistical, and
quotation services from many broker-dealers with which it places the Trust's
portfolio transactions. These services, which in some cases may also be
purchased for cash, include such matters as general economic and security market
reviews, industry and company reviews, evaluations of securities, and
recommendations as to the purchase and sale of securities. Some of these
services are of value to Schroder and its affiliates in advising various of
their clients (including the Trust), although not all of these services are
necessarily useful and of value in managing the Trust. The management fees paid
by the Funds are not reduced because Schroder and its affiliates receive such
services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
and by the Management Contracts, Schroder may cause a Fund to pay a broker which
provides brokerage and research services to Schroder an amount of disclosed
commission for effecting a securities transaction
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<PAGE> 86
for the Fund in excess of the commission which another broker would have charged
for effecting that transaction. Schroder's authority to cause a Fund to pay any
such greater commissions is also subject to such policies as the Trustees may
adopt from time to time.
To the extent permitted by law, the Funds may engage in brokerage
transactions with Schroder & Co. Inc. ("Schroder & Co.") or Lewco Securities
Corp. ("Lewco"), each of which is an affiliate of Schroder, or with unaffiliated
brokers who trade or clear through Schroder & Co. or Lewco. Consistent with
regulations under the 1940 Act, the Funds have adopted procedures which are
reasonably designed to provide that any commissions or other remuneration the
Funds pay to Schroder & Co. and Lewco do not exceed the usual and customary
broker's commission. The procedures require periodic review of these
transactions by the Trustees. In addition, the Funds will adhere to the rule,
under the Securities Exchange Act of 1934, governing floor trading. This rule
permits the Funds to effect, but not execute, exchange listed securities
transactions with Schroder & Co. and Lewco. Also, due to securities law
limitations, the Funds may be required to limit purchases of securities in a
public offering if Schroder & Co. or Lewco or one of their affiliates is a
member of the syndicate for that offering. The Funds paid no brokerage
commissions to Schroder & Co. and Lewco in the fiscal years ended October 31,
1998, 1997, and 1996.
In the fiscal years ended October 31, 1998, 1997, and 1996,
respectively, the Funds paid brokerage commissions in the following amounts:
Schroder Large Capitalization Equity Fund - $94,703, $70,042, and $56,986;
Schroder Small Capitalization Value Fund - $316,011, $206,472, and $151,845;
Schroder Investment Grade Income Fund - $0, $0, and $0; and Schroder MidCap
Value Fund - $71,042, $17,043, and N/A (the MidCap Value Fund commenced
operations in August 1997). Schroder Short-Term Investment Fund paid no
brokerage commissions in the fiscal years ended October 31, 1998, 1997, and
1996.
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 $320,427,886, (100% of the Trust's aggregate agency
and underwritten transactions, on which approximately $481,756 of commissions
were paid) with brokers and dealers (other than Schroder & Co. and Lewco) 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.
DETERMINATION OF NET ASSET VALUE
Each Fund calculates the net asset value per share of each class of its
shares by dividing the total value of the Fund's assets attributable to shares
of that class, less its liabilities attributable to those shares, by the number
of such shares outstanding. 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. The New York Stock Exchange is normally closed on the
following national holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas. The net asset value of shares of a particular class
of a Fund will generally differ from that of the Fund's other classes of shares
due to the variance in daily net income realized by and dividends paid on each
class of shares, and any differences in the expenses of the different classes.
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<PAGE> 87
Equity securities traded on a national securities exchange are valued
at their last-reported sale price on the principal exchange, or, if traded in
the over-the-counter market or on a national securities exchange for which no
sales took place on the day of valuation, at the last available bid price. Debt
securities are valued on the basis of valuations provided by pricing services
that determine valuations for normal institutional size trading units of debt
securities, or through obtaining independent quotes from market makers.
Short-term debt instruments with a remaining maturity of 60 days or less are
valued at amortized cost, which approximates market value. Certain foreign
securities are valued by a pricing service and others are valued by the Trust's
custodian based on outside pricing sources. Securities for which current market
quotations are not readily available and all other assets are valued at fair
value as determined in accordance with procedures approved by the Trustees.
If any securities held by a 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
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 a significant amount of time is 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 values. 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 each 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 such Fund, and
constitute the underlying assets of that Fund. The underlying assets of each
Fund will be segregated on the Trust's books of account, and will be charged
with the liabilities in respect of such Fund and with a share of the general
liabilities of the Trust. Each 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.
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<PAGE> 88
REDEMPTIONS IN KIND
The Trust had agreed to redeem shares of each 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 any redemption proceeds exceeding this amount in
whole or in part by a distribution in kind of securities held by a 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
Each 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, a 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. As a Massachusetts
business trust, a Fund under present law will not be subject to any excise or
income taxes in Massachusetts.
In order to qualify as a "regulated investment company," a Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies,
and (b) diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government Securities, securities of other regulated
investment companies, 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 or securities of other regulated
investment companies).
If a 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 a 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 a Fund in January of a year generally is
deemed to have been paid by that 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. Each 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, a 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.
A 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 a Fund as deriving from net gains on capital
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<PAGE> 89
assets held for more than one year will be taxable to you as long-term capital
gains (generally subject to a 20% tax rate for non-corporate shareholders),
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 each of the Funds for the preceding year.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when a Fund's net asset value also reflects unrealized losses.
Upon the disposition of shares of a 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% for non-corporate
shareholders. 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. In addition, 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. With respect to investment income and gains received by
a Fund from sources outside the United States, such income and gains may be
subject to foreign taxes which are withheld at the source. Such taxes would
reduce the Fund's yield on the securities. The effective rate of foreign taxes
to which a 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.
A 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. A 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 Fund to continue to
qualify, and be taxed under Subchapter M of the Code, as a regulated investment
company.
Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which a 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
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<PAGE> 90
level of the Fund. Thus, the Fund could be required to liquidate other
investments in order to satisfy its distribution requirements.
In order to permit Schroder Investment Grade Income Fund to maintain a
more stable monthly dividend, that Fund may from time to time pay out less than
the entire amount of net investment income earned in any particular period. Any
such amount retained by the Fund would be available to stabilize future
dividends. As a result, the dividends paid by the Fund for any particular period
may be more or less than the amount of net investment income actually earned by
the Fund during the period. None of the Funds intends to distribute in respect
of any taxable year more than the Fund's net income for federal income tax
purposes for that year, nor does any of the Funds intend to stabilize its
dividends in any year in such a manner as to cause the Fund to pay federal tax.
In order to avoid dilution of the undistributed net investment income
of Schroder Investment Grade Income Fund, that Fund follows an accounting
practice known as "equalization." A portion of the purchase price paid for
shares of the Fund (including shares purchased by reinvestment of Fund
distributions) equal to the undistributed net investment income per share of the
Fund at the time of purchase is segregated for accounting purposes and is
available for payment of future dividends. As a result, future dividends may
include a non-taxable return of capital to shareholders.
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 16, 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.
The following table shows the percentage of the outstanding shares of
each Fund owned as of February 16, 1999 by the Schroder & Co. Inc.
Profit-Sharing, Savings Incentive, and Pension Plans (the "Schroder & Co.
Plans") (all located at 787 Seventh Avenue, New York, NY 10019), and the Lewco
Securities Corp. Profit Sharing and Thrift Plans (the "Lewco Plans") (located at
Lewco Securities Corp., 34 Exchange Place, Jersey City, NJ 07311). Certain of
the directors and officers of Schroder and Schroder & Co. Inc., and certain of
the officers of the Trust, are participants in one or more of the Schroder & Co.
Plans. Schroder & Co. Inc. owns 80.0% of the outstanding voting securities of
Lewco Securities Corp.
<TABLE>
<CAPTION>
% of Fund Shares
Owned by
Schroder & Co. and Lewco Plans
------------------------------
<S> <C>
Schroder Large Capitalization Equity Fund 62.41%
Schroder Small Capitalization Value Fund 28.82%
Schroder Investment Grade Income Fund 81.39%
Schroder Short-Term Investment Fund 91.84%
Schroder MidCap Value Fund 50.17%
</TABLE>
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<PAGE> 91
Due to their ownership of shares of each Fund, the Schroder & Co. Plans
and the Lewco Plans may be deemed to control each Fund.
To the knowledge of the Trust, as of February 16, 1999, no other person
owned of record or beneficially more than 5% of the outstanding Investor or
Advisor Shares of any Fund, except as set forth below.
<TABLE>
<CAPTION>
Percentage of
Outstanding
Shares of the
Record or Beneficial Owner Fund Class Class Owned
- ---------------------------------------- -------------------- -------------- -------------
<S> <C> <C> <C>
Fidelity Investments Institution Large Capitalization Institutional 22.69%
Operations Co. Equity Fund
FBO Certain Employee Benefit Plans
Robert Hunter, Vice President
100 Magellan Way #KWIC
Covington, KY 4105-1987
National Investor Services Corp. Large Capitalization Advisor 100%
FBO Jonathan Berger Equity Fund
55 Water Street
New York, NY 10041-3299
The Hillman Foundation Inc. Small Capitalization Investor 6.45%
Ronald W. Wertz, Secretary Value Fund
2000 Grant Building
Pittsburgh, PA 15219-2300
Fidelity Investments Institution Small Capitalization Advisor 77%
Operations Co. Value Fund
FBO Certain Employee Benefit Plans
Robert Hunter, Vice President
100 Magellan Way #KWIC
Covington, KY 4105-1987
FBO A/C # W10-513091-8-01 MidCap Value Fund Investor 6.62%
c/o Lewco Securities Corporation
34 Exchange Place, 4th Floor
Jersey City, NJ 07302-3885
FTC & Co. MidCap Value Fund Advisor 100%
Attn: Data Lynx #225
P.O. Box 173736
Denver, CO 80217-3736
Robert J. Chamine Short-Term Investment Investor 5.59%
68 Buena Vista Avenue Fund
Rumson, NJ 07760
</TABLE>
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<PAGE> 92
PERFORMANCE INFORMATION
Certain Funds may advertise the yield of each class of its shares.
Yield is presented for a specified 30-day period (the "base period"). Yield for
a class of shares of a Fund is based on the amount determined by (i) calculating
the aggregate of dividends and interest earned by the Fund and attributable to
the class during the base period less the Fund's expenses attributable to the
class and accrued for that period, and (ii) dividing that amount by the product
of (A) the average daily number of shares of the class of the Fund outstanding
during the base period and entitled to receive dividends and (B) the net asset
value per share of the class of the Fund on the last day of the base period. The
result is annualized on a compounding basis to determine the yield. For this
calculation, interest earned on debt obligations held by a Fund is generally
calculated using the yield to maturity (or first expected call date) of such
obligations based on their market values (or, in the case of receivables-backed
securities such as Ginnie Maes, based on cost). Dividends on equity securities
are accrued daily at their stated dividend rates. The yield of Investor Shares
of Schroder Investment Grade Income Fund and Schroder Short-Term Investment Fund
for the thirty-day period ended October 31, 1998 was 5.19% and 4.73%,
respectively.
Average annual total return of a class of shares of a Fund for one-,
five-, and ten-year periods (or for such shorter periods as shares of that class
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, although annualized
figures may also be shown in advertisements. Total return calculations assume
reinvestment of all Fund dividends and 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 a
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 a Fund's investment objectives and policies.
Quotations of yield or total return for any period when an expense limitation is
in effect will be greater than if the limitation had not been in effect. These
factors should be considered when comparing the investment results of a Fund's
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
Funds for the one-year period ended October 31, 1998 and for the period from the
commencement of a Fund's operations until October 31, 1998. The table also sets
forth total return information for a 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 a Fund attributable to its Advisor
Shares). PLEASE NOTE THAT THE HIGHER EXPENSES APPLICABLE TO A FUND'S ADVISOR
SHARES SHOULD HAVE THE EFFECT OF REDUCING THE TOTAL RETURN OF THE ADVISOR SHARES
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<PAGE> 93
BELOW THAT OF THE INVESTOR SHARES BY THE AMOUNT OF SUCH HIGHER EXPENSES,
COMPOUNDED OVER THE RELEVANT PERIOD.
TOTAL RETURN FOR PERIODS ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>
SINCE
INCEPTION INCEPTION INCEPTION
OF FUND DATE OF DATE OF
FUND CLASS 1 YEAR (ANNUALIZED) FUND CLASS YIELD***
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Schroder Large Investor Shares 23.91% 16.98% 2/16/94 2/16/94 N/A
Capitalization
Equity Fund Advisor Shares* 23.60% 16.69% 1/19/99
- ------------------------------------------------------------------------------------------------------------------------
Schroder Investor Shares 8.10% 6.37% 2/22/94 2/22/94 5.19%
Investment Grade
Income Fund Advisor Shares* 7.83% 6.10% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
Schroder Short- Investor Shares 5.09% 4.45% 1/11/94 1/11/94 4.73%
Term Investment
Fund
- ------------------------------------------------------------------------------------------------------------------------
Schroder Small Investor Shares -13.29% 11.66% 2/16/94 2/16/94 N/A
Capitalization
Value Fund Advisor Shares** -13.63% 11.35% 9/26/97
- ------------------------------------------------------------------------------------------------------------------------
Schroder MidCap Investor Shares -6.18% -2.24% 8/1/97 8/1/97 N/A
Value Fund
Advisor Shares** -6.41% -2.48% 10/23/98
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Pro forma based on Investor Shares performance.
** As noted, the inception dates of Advisor Shares of the Small Capitalization
Value Fund and the MidCap Value Fund was September 26, 1997 and October 23,
1998, respectively. Total return for Advisor Shares of these Funds reflects pro
forma information (based on Investor Share performance) through the day before
these inceptions dates, and actual total return from the inception dates through
October 31, 1998. The actual total return of Advisor Shares of the Small
Capitalization Value Fund from September 26, 1997 through October 31, 1998 was
- -16.56% and the actual total return of Advisor Shares of the MidCap Value Fund
from October 23, 1998 through October 31, 1998 was 4.52%.
*** For the 30-day period ended October 31, 1998.
From time to time, Schroder may reduce its compensation or assume
expenses of a Fund in order to reduce the Fund's expenses, as described in the
Trust's current Prospectuses. Any such waiver or assumption would increase a
Fund's yield and total return for each class of shares during the period of the
waiver or assumption.
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<PAGE> 94
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is the custodian of the Trust's assets. The custodian's
responsibilities include safeguarding and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. The custodian does not
determine the investment policies of the Trust or decide which securities the
Trust will buy or sell.
TRANSFER AGENT AND DIVIDEND-PAYING AGENT
Boston Financial Data Services, Inc., Two Heritage Drive, Quincy,
Massachusetts 02171, serves as registrar, transfer agent and dividend-paying
agent for the Trust.
INDEPENDENT AUDITORS
Arthur Andersen LLP, 1345 Avenue of the Americas, New York, NY 10105,
is the Trust's independent accountants and provides audit services, tax return
preparation services, and assistance and consultation in connection with the
Trust's various Securities and Exchange Commission filings.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust 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 Agreement and Declaration of Trust provides
for indemnification out of a Fund's property for all loss and expense of any
shareholder held personally liable for the obligations of a 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.
FINANCIAL STATEMENTS
The Financial Statements required by Part B and the related Report of
Independent Public 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 December 30, 1998 (Accession
Number: 0000950135-98-006447).
-36-
<PAGE> 95
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
Fixed-Income Security Ratings
"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of
the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge". Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of
such issues.
"Aa" Fixed-income securities which are rated "Aa" are judged to be of
high quality by all standards. Together with the "Aaa" group they
comprise what are generally known as high grade fixed-income
securities. They are rated lower than the best fixed-income
securities because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" Fixed-income securities which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
"Baa" Fixed-income securities which are rated "Baa" are considered as
medium grade obligations; i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are
considered investment grade.
"Ba" Fixed-income securities which are rated "Ba" are judged to have
speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments
may be very moderate, and therefore not well safeguarded during
both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
"B" Fixed-income securities which are rated "B" generally lack
characteristics of the desirable investment. Assurance of interest
and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
"Caa" Fixed-income securities which are rated "Caa" are of poor
standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.
"Ca" Fixed-income securities which are rated "Ca" present obligations
which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
A-1
<PAGE> 96
"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) 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-2
<PAGE> 97
"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 rates "AAA", "AA", "A", and "BBB" are
considered invest grade.
"BB" Fixed-income securities rated "BB" have less near-term
vulnerability to default than other speculative grade fixed-income
securities. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity or willingness to pay
interest and repay principal.
"B" Fixed-income securities rated "B" have a greater vulnerability to
default but presently have the capacity to meet interest payments
and principal repayments. Adverse business, financial or economic
conditions would likely impair capacity or willingness to pay
interest and repay principal.
"CCC" Fixed-income securities rated "CCC" have a current identifiable
vulnerability to default, and the obligor is dependent upon
favorable business, financial and economic conditions to meet
timely payments of interest and repayments of principal. In the
event of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay
principal.
"CC" The rating "CC" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied
"CCC" rating.
"C" The rating "C" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied
"CCC-" rating.
"CI" The rating "CI" is reserved for fixed-income securities on which
no interest is being paid.
"D" The rating "D" is reserved for fixed-income securities when the
issue is in payment default, or the obligor has filed for
bankruptcy. The D rating category is used when interest payments
or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless Standard & Poor's
believes that such payments will made during such grace period.
"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
A-3
<PAGE> 98
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 within 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 this designation are, however, somewhat more vulnerable
to the adverse effects of changes in circumstances than
obligations carrying the higher designations.
A-4
<PAGE> 99
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) - Agreement and Declaration of Trust is filed
herewith
(b) - Bylaws are filed herewith
(c) (i) - Forms of certificate representing shares of
beneficial interest*
(ii) - Portions of Agreement and Declaration of Trust
Relating to Shareholders' Rights are filed
herewith
(iii)- Portions of Bylaws Relating to Shareholders'
Rights are filed herewith
(d) (i) - Management Contract is filed herewith
(ii) - Form of Management Contract for MidCap Value
Fund*
(e) - Distributor's Contract is filed herewith
(f) - Inapplicable
(g) - Custodian Agreement is filed herewith
(h) (i) - Transfer Agent and Service Agreement is filed
herewith
(ii) - Administration Agreement is filed herewith
(iii)- Form of Shareholder Service Agreement for Advisor
Shares*
(iv) - Form of Shareholder Servicing Plan for
Advisor Shares*
(i) - Opinion and Consent of Ropes & Gray is filed
herewith
(j) - Consent of Independent Public Accountants is
filed herewith
(k) - Inapplicable
(l) - Initial Capital Agreement is filed herewith
(m) - Form of Distribution Plan and Agreement for
Advisor Shares*
(n) - Financial Data Schedules for fiscal 1998 are
filed herewith
(o) - Multiclass (Rule 18f-3) Plan*
(p) (i) - Powers of Attorney for Messrs. Dinkins, Howell,
Knight, and Williams*
(ii) - Powers of Attorney for Messrs. Smith and Cassidy,
and Ms. Haugh*
(iii)- Powers of Attorney for Messrs. Guernsey and
Means*
- ----------------------------------
* Previously filed.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUNDS
The Schroder & Co. Inc. Profit-Sharing, Savings Incentive, and Pension
Plans and the Lewco Securities Corp. Profit Sharing and Thrift Plans may be
deemed to "control" certain of the Funds. See "Principal Holders of Securities"
in the Statement of Additional Information.
<PAGE> 100
ITEM 25. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
provides as follows:
SECTION 1. The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding (a) not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Trust or (b)
to be liable to the Trust or its Shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), shall be paid from time
to time by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article, provided, however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the Trust shall be
insured against losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter (provided that a
majority of the disinterested Trustees then in office act on 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 full trial type
inquiry), that there is reason to believe that such Covered Person will be found
entitled to indemnification under this Article.
SECTION 2. As to any matter disposed of (whether by a compromise
payment, pursuant to a consent decree or otherwise) without an adjudication by a
court, or by any other body before which the proceeding was brought, that such
Covered Person either (a) did not act in good faith in the reasonable belief
that his or her action was in the best interests of the Trust or (b) is liable
to the Trust or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office, indemnification shall be provided if (a) approved as in the
best interests of the Trust, after notice that it involves such indemnification,
by at least a majority of the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees then in office act on
the matter) upon a determination, based upon a review of readily available facts
(as opposed to a full trial type inquiry) that such Covered Person acted in good
faith in the reasonable belief that his or her action was in the best interests
of the Trust and is not liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, or (b) there has been
obtained an opinion in writing of independent legal counsel, based upon a review
of readily available facts (as opposed to a full trial type inquiry), to the
effect that such Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the Trust
and that such indemnification would not protect such Covered Person against any
liability to the Trust to which he or she would otherwise be subject by reason
of willful misfeasance, bad faith, gross
-2-
<PAGE> 101
negligence or reckless disregard of the duties involved in the conduct of his or
her office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
SECTION 3. The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators, and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the 1940 Act (or who has been exempted from being an
"interested person" by any rule, regulation or order of the Securities and
Exchange Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
-------------------
Reference is made to the Distributor's Contract, filed herewith, which
contains provisions for the indemnification by Schroder Fund Advisors Inc. of
the Registrant and Trustees and officers of the Registrant under certain
circumstances. Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees and officers of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee or officer of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such Trustee or officer in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The directors and officers of the Registrant's investment adviser have
been engaged during the past two fiscal years in no business, vocation, or
employment of a substantial nature other than as directors, officers, or
employees of the investment adviser or certain of its corporate affiliates,
except the following, whose principal occupations during that period, other than
as directors or officers of the investment adviser or certain of its corporate
affiliates, are as follows: Ashbel C. Williams, Jr., President and Director, who
was Executive Director, Florida State Board of Administration; Paul M. Morris,
Director, who was Principal and Senior Portfolio Manager at Weiss Peck & Greer,
L.L.C.; and Susan S. Hager, Vice President, who was an Analyst at Pioneering
Management. The address of the investment adviser and its corporate affiliates
is 787 Seventh Avenue, New York, New York 10019.
-3-
<PAGE> 102
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Schroder Fund Advisors Inc. currently acts as the principal
underwriter for each Fund of Registrant and each series of Schroder Capital
Funds (Delaware), Schroder Capital Funds, Schroder Capital Funds II, and
Schroder Series Trust II.
(b) The directors and officers of the Registrant's principal
underwriter are as follows:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Registrant with Underwriter
- ---- --------------------- --------------------------
<S> <C> <C>
Kathleen Adams None Vice President
Nigel Burnham None Assistant Vice President
Fergal Cassidy Treasurer Treasurer; Chief Financial
Officer
Victoria Drake None Assistant Secretary
Barbara Gottlieb Assistant Clerk Vice President
James L. Gray None Senior Vice President
Lynne D. Gravelle None Vice President
Sharon L. Haugh Trustee Director; Chairman
Sean P. Keegan None Vice President
Catherine A. Mazza Vice President President
Alexandra Poe Clerk General Counsel; Senior Vice
President; Secretary
Mark J. Smith Trustee and Chairman Director; Senior Vice President
M. Randall Strickland None Vice President
</TABLE>
The principal business address of each person listed above is 787
Seventh Avenue, New York, New York 10019.
(c) Inapplicable.
-4-
<PAGE> 103
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts, books, and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are Registrant's Clerk,
Alexandra Poe; Registrant's investment adviser, Schroder Capital Management
Inc.; Registrant's custodian, State Street Bank & Trust Company; and
Registrant's transfer agent and registrar, Boston Financial Data Services, Inc.
The address of the Clerk and investment adviser is 787 Seventh Avenue, New York,
New York 10019. The address of the custodian is 225 Franklin Street, Boston,
Massachusetts 02110. The address of the transfer agent and registrar is Two
Heritage Drive, Quincy, Massachusetts, 02171.
ITEM 29. MANAGEMENT SERVICES
None.
ITEM 30. UNDERTAKINGS
(a) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
(b) The Registrant undertakes, if requested to do so by the
holders of at least 10% of the Registrant's outstanding shares
of beneficial interest, to call a meeting of shareholders for
the purpose of voting upon the question of removal of a
Trustee or Trustees and to assist in communications with other
shareholders as required by Section 16(c) of the Investment
Company Act of 1940.
NOTICE
A copy of the Agreement and Declaration of Trust of Schroder Series
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Registrant by an officer of the Registrant as an officer and not
individually and that the obligations of or arising out of this instrument are
not binding upon any of the Trustees, officers, or shareholders individually but
are binding only upon the assets and property of the Registrant.
-5-
<PAGE> 104
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has met all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement 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 this 22nd day of February, 1999.
SCHRODER SERIES TRUST
By: /s/ Catherine A. Mazza
--------------------------------
Name: Catherine A. Mazza
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on this 22nd day of February, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* President of the Trust
- -------------------------------
Ashbel C. Williams, Jr.
*
- ------------------------------- Treasurer and
Fergal Cassidy Principal Financial and
Accounting Officer of the
Trust
* Trustee
- -------------------------------
David N. Dinkins
* Trustee
- -------------------------------
John I. Howell
* Trustee
- -------------------------------
Peter S. Knight
* Trustee
- -------------------------------
Peter E. Guernsey
* Trustee
- -------------------------------
Sharon L. Haugh
</TABLE>
<PAGE> 105
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Trustee
- -------------------------------
Clarence F. Michalis
* Trustee
- -------------------------------
William L. Means
Trustee
- -------------------------------
Hermann C. Schwab
* Trustee and
- ------------------------------- Chairman of the
Mark J. Smith Trust
* By: /s/ Catherine A. Mazza
--------------------------
Catherine A. Mazza
Attorney-In-Fact
</TABLE>
<PAGE> 106
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Title Page
- ----------- ----- ----
<S> <C> <C>
(a) Agreement and Declaration of Trust
(b) Bylaws
(c)(ii) Portions of Agreement and Declaration of Trust relating to
Shareholders' Rights
(c)(iii) Portions of Bylaws relating to Shareholders' Rights
(d)(i) Management Contract
(e) Distributor's Contract
(g) Custodian Agreement
(h)(i) Transfer Agent and Service Agreement
(h)(ii) Administration Agreement
(i) Opinion and Consent of Ropes & Gray
(j) Consent of Independent Public Accountants
(l) Initial Capital Agreement
(n)(ex.27) Financial Data Schedules
</TABLE>
<PAGE> 1
Exhibit (a)
SCHRODER SERIES TRUST
AGREEMENT AND DECLARATION OF TRUST
(As amended through March 1, 1997)
This AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts,
this 6th day of May, 1993 by the Trustees hereunder and by the holders of shares
of beneficial interest to be issued hereunder as hereinafter provided
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustee has agreed to manage all property coming into his
hands as trustee of a Massachusetts voluntary association with transferable
shares in accordance with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustee hereby declares that he will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustee hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
NAME
Section 1. This Trust shall be known as "Schroder Series Trust", and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
DEFINITIONS
Section 2. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to
time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV;
<PAGE> 2
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be
divided from time to time or, if more than one series or class of
Shares is authorized by the Trustees, the equal proportionate
transferable units into which each series or class of Shares shall be
divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) shall have the
meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time;
(i) The term "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust
representing the beneficial interest of Shareholders in such respective
portfolios; and
(j) The term "class" or "class of Shares" refers to the division of
Shares representing any series into two or more classes as provided in
Article III, Section 1 hereof.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed investment
primarily in securities, debt instruments and other instruments and rights of a
financial character.
ARTICLE III
Shares
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in one or more
series as the Trustees may, without shareholder approval, authorize. Each series
shall be preferred over all other series in respect of the assets allocated to
that series within the meaning of the 1940 Act and
-2-
<PAGE> 3
shall represent a separate investment portfolio of the Trust. The beneficial
interest in each series shall at all times be divided into Shares, without par
value, each of which shall, except as provided in the following sentence,
represent an equal proportionate interest in the series with each other Share of
the same series, none having priority or preference over another. The Trustees
may, without Shareholder approval, divide the Shares of any series into two or
more classes, Shares of each such class having such preferences and special or
relative rights and privileges (including conversion rights, if any) as the
Trustees may determine and as shall be set forth in the Bylaws. The number of
Shares authorized shall be unlimited. The Trustees may from time to time divide
or combine the Shares of any series or class into a greater or lesser number
without thereby changing the proportionate beneficial interest in the series or
class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the books of
the Trust or a transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each series and class and as to the number of Shares of each
series and class held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 3. The Trustees shall accept investments in the Trust from such
persons and on such terms and for such consideration, which may consist of cash
or tangible or intangible property or a combination thereof, as they or the
Bylaws from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares
of each series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to the
series of Shares with respect to which the same were received by the Trust for
all purposes, subject only to the rights of creditors, and shall be so handled
upon the books of account of the Trust and are herein referred to as "assets of"
such series.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
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STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property giving only
the rights provided in this Declaration of Trust or the Bylaws. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms of this Declaration of Trust and the
Bylaws and to have become a party thereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE IV
The Trustees
ELECTION
Section 1. A Trustee may be elected either by the Trustees or by the
Shareholders. The number of Trustees shall be fixed from time to time by the
Trustees and, at or after the sale to the public of any shares of the Trust,
shall be not less than three. Each Trustee elected by the Trustees or the
Shareholders shall serve until he or she retires, resigns, is removed or dies or
until the next meeting of Shareholders called for the purpose of electing
Trustees and until the election and qualification of his or her successor. At
any meeting called for the purpose, a Trustee may be removed by vote of the
holders of two-thirds of the outstanding Shares. The initial Trustee, who shall
serve until the first meeting of Shareholders at which Trustees are elected and
until his successor is elected and qualified, or until he sooner dies, resigns
or is removed, shall be E. William Smethurst, Jr. and such other persons as the
Trustee or Trustees then in office shall, prior to any sale of Shares pursuant
to a public offering, appoint.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 2. The death, declination, resignation, retirement, removal or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
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POWERS
Section 3. Subject to the provisions of this Declaration of Trust, the
business of the Trust shall be managed by the Trustees, and they shall have all
powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that such Bylaws do not reserve that
right to the Shareholders; they may fill vacancies in or add to their number,
and may elect and remove such officers and appoint and terminate such agents as
they consider appropriate; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more Trustees,
including an executive committee which may, when the Trustees are not in
session, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; they may employ one or more custodians of the assets of
the Trust and may authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities, retain a transfer agent or a Shareholder servicing
agent, or both, provide for the distribution of Shares by the Trust, through one
or more principal underwriters or otherwise, set record dates for the
determination of Shareholders with respect to various matters, and in general
delegate such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees, and to any agent or employee of the Trust or
to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in
the name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise;
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(f) Subject to the provisions of Article III, Section 3, to allocate
assets, liabilities, income and expenses of the Trust to a particular
series of Shares or to apportion the same among two or more series,
provided that any liabilities or expenses incurred by or arising in
connection with a particular series of Shares shall be payable solely
out of the assets of that series; and to the extent necessary or
appropriate to give effect to the preferences and special or relative
rights and privileges of any classes of Shares, to allocate assets,
liabilities, income and expenses of a series to a particular class of
Shares of that series or to apportion the same among two or more
classes of Shares of that series;
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of
which is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer,
and to pay calls or subscriptions with respect to any security held in
the Trust;
(h) To join other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem
proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and
pledge the Trust property or any part thereof to secure any of or all
such obligations;
(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance policies insuring
the Shareholders, Trustees, officers, employees, agents, investment
advisers or managers, principal underwriters, or independent
contractors of the Trust individually against all
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claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify
such person against such liability; and
(n) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for any or all
of the Trustees, officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees. Except as otherwise
provided herein or from time to time in the Bylaws, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
the Trustees (a quorum being present), within or without Massachusetts,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office.
PAYMENT OF EXPENSES BY TRUST
Section 4. The Trustees are authorized to pay or to cause to be paid
out of the assets of the Trust all expenses, fees, charges, taxes, and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and
such other agents or independent contractors and such other expenses and charges
as the Trustees may deem necessary or proper to incur, provided, however, that
all expenses, fees, charges, taxes and liabilities incurred by or arising in
connection with a particular series of Shares shall be payable solely out of the
assets of that series.
OWNERSHIP OF ASSETS OF THE TRUST
Section 5. Title to all of the assets of each series of Shares and of
the Trust shall at all times be considered as vested in the Trustees.
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ADVISORY, MANAGEMENT AND DISTRIBUTION
Section 6. Subject to a favorable Majority Shareholder Vote, the
Trustees may, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services with any corporation, trust,
association or other organization (the "Manager"), every such contract to comply
with such requirements and restrictions as may be set forth in the Bylaws; and
any such contract may contain such other terms interpretive of or in addition to
said requirements and restrictions as the Trustees may determine, including,
without limitation, authority to determine from time to time what investments
shall be purchased, held, sold or exchanged and what portion, if any, of the
assets of the Trust shall be held uninvested and to make changes in the Trust's
investments. The Trustees may also, at any time and from time to time, contract
with the Manager or any other corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with such requirements
and restrictions as may be set forth in the Bylaws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee employee, manager,
adviser, principal underwriter or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for
any parent or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or distributor's
contract, or transfer, Shareholder servicing or other agency contract
may have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that
(ii) any corporation, trust, association or other organization with
which an advisory or management contract or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other
agency contract may have been or may hereafter be made also has an
advisory or management contract, or transfer, Shareholder servicing or
other agency contract with one or more other corporations, trusts,
associations, or other organizations, or has other business or
interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
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ARTICLE V
Shareholders' Voting Powers and Meetings
VOTING POWERS
Section 1. Subject to the voting powers of one or more classes of
Shares as set forth elsewhere in this Declaration of Trust or in the Bylaws, the
Shareholders shall have power to vote only (i) for the election of Trustees as
provided in Article IV, Section 1, (ii) for the removal of Trustees as provided
in Article IV, Section 1, (iii) with respect to any Manager as provided in
Article IV, Section 6, (iv) with respect to any termination of this Trust to the
extent and as provided in Article IX, Section 4, (v) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (vii) with respect to such
additional matters relating to the Trust as may be required by this Declaration
of Trust, the Bylaws or any registration of the Trust with the Securities and
Exchange Commission (or any successor agency) or any state, or as the Trustees
may consider necessary or desirable. Each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote on any matter submitted to
a vote of Shareholders, all Shares of the Trust then entitled to vote shall,
except as otherwise provided in the Bylaws, be voted in the aggregate as a
single class without regard to series or classes of shares, except (1) when
required by the 1940 Act or when the Trustees shall have determined that the
matter affects one or more series or classes of Shares materially differently,
Shares shall be voted by individual series or class; and (2) when the Trustees
have determined that the matter affects only the interests of one or more series
or classes, then only Shareholders of such series or classes shall be entitled
to vote thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares of any series or class are issued,
the Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to be taken by
Shareholders as to such series or class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all series or classes may
be called by the Trustees from time to time for the purpose of taking action
upon any matter requiring the vote or authority of the Shareholders of such
series or classes as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least
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seven days before such meeting, postage prepaid, stating the time, place and
purpose of the meeting, to each Shareholder entitled to vote at such meeting at
the Shareholder's address as it appears on the records of the Trust. If the
Trustees shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at least 10%
of the then outstanding shares of all series and classes entitled to vote at
such meeting requesting a meeting to be called for a purpose requiring action by
the Shareholders as provided herein or in the Bylaws, then Shareholders holding
at least 10% of the then outstanding Shares of all series and classes entitled
to vote at such meeting may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees. Notice of a meeting need not be given to any
Shareholder if a written waiver of notice, executed by him or her before or
after the meeting, is filed with the records of the meeting, or to any
Shareholder who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her.
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of Shares entitled to vote on a particular
matter shall be a quorum for the transaction of business on that matter at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust or the Bylaws requires that holders of any series or class
shall vote as an individual series or class, then thirty percent of the
aggregate number of Shares of that series or class entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that series
or class. Any lesser number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except when a
larger vote is required by any provision of law or of this Declaration of Trust
or the Bylaws, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, provided that where any provision of law or of
this Declaration of Trust or the Bylaws requires that the holders of any series
or class shall vote as an individual series or class then a majority of the
Shares of that series or class voted on the matter (or a plurality with respect
to the election of a Trustee) shall decide that matter insofar as that series or
class is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter (or such
larger proportion thereof as shall be required by any express provision of this
Declaration of Trust or the Bylaws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
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ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions, not inconsistent
with this Declaration of Trust, regarding Shareholders' voting powers, the
conduct of meetings and related matters.
ARTICLE VI
Distributions, Redemptions and Repurchases
DISTRIBUTIONS
Section 1. The Trustees may each year, or more frequently if they so
determine, distribute to the Shareholders of each series out of the assets of
such series such amounts as the Trustees may determine. Any such distribution to
the Shareholders of a particular series shall be made to said Shareholders pro
rata in proportion to the number of Shares of such series held by each of them,
except to the extent otherwise required or permitted by the preferences and
special or relative rights and privileges of any classes of Shares of that
Series, and any distribution to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the number of
Shares of such class held by each of them. Such distributions shall be made in
cash, Shares or other property, or a combination thereof, as determined by the
Trustees. Any such distribution paid in Shares will be paid at the net asset
value thereof as determined in accordance with the Bylaws.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of any certificate for the
Shares to be purchased, a proper instrument of transfer and a request directed
to the Trust or a person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize; and the Trust will pay therefor the
net asset value thereof, as next determined in accordance with the Bylaws, less
any redemption charge fixed by the Trustees. Payment for said Shares shall be
made by the Trust to the Shareholder within seven days after the date on which
the request is made. The obligation set forth in this Section 2 is subject to
the provision that in the event that any time the New York Stock Exchange is
closed for other than customary weekends or holidays, or, if permitted by rules
of the Securities and Exchange Commission, during periods when trading on the
Exchange is restricted or during any emergency which makes it impractical for
the Trust to dispose of its investments or to determine fairly the value of its
net assets, or during any other period permitted by order of the Securities and
Exchange Commission for the protection of investors, such obligation may be
suspended or postponed by the Trustees. The Trust may also purchase or
repurchase Shares at a price not exceeding the net asset value of such Shares in
effect when the purchase or repurchase or any contract to purchase or repurchase
is made.
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REDEMPTION AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and at any time
to redeem Shares of any Shareholder at the net asset value thereof as determined
in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer
Shares than, or Shares having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees; or (ii) to the extent that
such Shareholder owns Shares of a particular series of Shares equal to or in
excess of a percentage of the outstanding Shares of that series determined from
time to time by the Trustees; or (iii) to the extent that such Shareholder owns
Shares of the Trust representing a percentage equal to or in excess of such
percentage of the aggregate number of outstanding Shares of the Trust or the
aggregate net asset value of the Trust determined from time to time by the
Trustees.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
COMPENSATION
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
LIMITATION OF LIABILITY
Section 2. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, manager or
principal underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
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ARTICLE VIII
Indemnification
TRUSTEES, OFFICERS, ETC.
Section 1. The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding (a) not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interest of the Trust or (b)
to be liable to the Trust or its Shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), shall be paid from time
to time by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article, provided, however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the Trust shall be
insured against losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter (provided that a
majority of the disinterested Trustees then in office act on 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 full trial type
inquiry) that there is reason to believe that such Covered Person will be found
entitled to indemnification under this Article.
COMPROMISE PAYMENT
Section 2. As to any matter disposed of (whether by a compromise
payment, pursuant to a consent decree or otherwise) without an adjudication by a
court, or by any other body before which the proceeding was brought, that such
Covered Person either (a) did not act in good faith in the reasonable belief
that his or her action was in the best interests of the Trust or (b) is liable
to the Trust or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office, indemnification shall be provided if (a) approved as in the
best interests of the Trust, after notice that it involves such
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indemnification, by at least a majority of the disinterested Trustees acting on
the matter (provided that a majority of the disinterested Trustees then in
office act on the matter) upon a determination, based upon a review of readily
available facts (as opposed to a full trial type inquiry) that such Covered
Person acted in good faith in the reasonable belief that his or her action was
in the best interests of the Trust and is not liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office,
or (b) there has been obtained an opinion in writing of independent legal
counsel, based upon a review of readily available facts (as opposed to a full
trial type inquiry) to the effect that such Covered Person appears to have acted
in good faith in the reasonable belief that his or her action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
INDEMNIFICATION NOT EXCLUSIVE
Section 3. The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the 1940 Act (or who has been exempted from being an
"interested person" by any rule, regulation or order of the Securities and
Exchange Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representative or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled to be
held
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harmless from and indemnified against all loss and expense arising from such
liability, but only out of the assets of the particular series of Shares of
which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting with or having
any claim against the Trust or a particular series of Shares shall look only to
the assets of the Trust or the assets of that particular series of Shares for
payment under such credit, contract or claim, and neither the Shareholders nor
the Trustees, nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officer or officers shall give notice that
this Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustee or Trustees or as
officer or officers and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust, and may contain such
further recital as he or she or they may deem appropriate, but the omission
thereof shall not operate to bind any Trustee or Trustees or officer or officers
or Shareholder or Shareholders individually.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEE
Section 3. No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
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DURATION AND TERMINATION OF TRUST
Section 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of Shareholders holding at least two-thirds of the Shares of each series
entitled to vote or by the Trustees by written notice to the Shareholders. Any
series of Shares may be terminated at any time by vote of Shareholders holding
at least two-thirds of the Shares of such series entitled to vote or by the
Trustees by written notice to the Shareholders of such series. Upon termination
of the Trust or of any one or more series of Shares, after paying or otherwise
providing for all charges, taxes, expenses and liabilities, whether due or
accrued or anticipated, of the Trust or of the particular series as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash or shares or other property, or any combination
thereof, and distribute the proceeds to the Shareholders of the series involved,
ratably according to the number of Shares of such series held by the several
Shareholders of such series on the date of termination, except to the extent
otherwise required or permitted by the preferences and special or relative
rights and privileges of any classes of Shares of that series, provided that any
distribution to the Shareholders of a particular class of Shares shall be made
to such Shareholders pro rata in proportion to the number of Shares of such
class held by each of them.
FILING AND COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trust with the Secretary of State of The
Commonwealth of Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such amendments have been made and as to any
matters in connection with the Trust hereunder, and, with the same effect as if
it were the original, may rely on a copy certified by an officer of the Trust to
be a copy of this instrument or of any such amendments. In this instrument and
in any such amendment, references to this instrument and all expressions like
"herein", "hereof" and "hereunder" shall be deemed to refer to this instrument
as amended or affected by any such amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
APPLICABLE LAW
Section 6. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts
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business trust and, without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
AMENDMENTS
Section 7. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
to do so by vote of Shareholders holding a majority of the Shares entitled to
vote, except that an amendment which in the determination of the Trustees shall
affect the holders of one or more series or classes of Shares but not the
holders of all outstanding series and classes shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of each series
and class affected and no vote of Shareholders of a series or class not affected
shall be required. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting,
or supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholders' vote.
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IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
in the City of Boston, Massachusetts for himself and his assigns, as of the day
and year first above written.
/s/ E. William Smethurst, Jr.
---------------------------------------
E. William Smethurst, Jr.
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston,
Then personally appeared the above named E. William Smethurst, Jr. and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Francis E. Defiore
---------------------------------------
Notary Public
My Commission Expires: 5/25/95
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Exhibit (b)
BYLAWS
OF
SCHRODER SERIES TRUST
As amended through February 13, 1997
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the Massachusetts business trust established by the
Declaration of Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust
shall be located in New York, New York.
ARTICLE 2
Meetings of Trustees
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Clerk or an Assistant Clerk or by the
officer or the Trustees calling the meeting.
2.3 NOTICE OF SPECIAL MEETINGS. It shall be sufficient notice to a
Trustee of a special meeting to send notice by mail at least forty-eight hours
or by telegram at least twenty-four hours before the meeting addressed to the
Trustee at his or her usual or last known business or residence address or to
give notice to him or her in person or by telephone at least twenty-four hours
before the meeting. Notice of a special meeting need not be given to any Trustee
if a written waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the lack of
notice to him or her. Neither notice of a meeting nor a waiver of a notice need
specify the purposes of the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of
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the votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees by
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
President, a Treasurer, a Clerk and such other officers, if any, as the Trustees
from time to time may in their discretion elect. The Trust may also have such
agents as the Trustees from time to time may in their discretion appoint. The
Chairman, if any, shall be a Trustee and may but need to be a shareholder; and
any other officer may but need not be a Trustee or a shareholder. Any two or
more offices may be held by the same person. A Trustee may but need not be a
shareholder.
3.2 ELECTION. The President, the Treasurer and the Clerk shall be
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3 TENURE. The President, the Treasurer and the Clerk shall hold
office in each case until he or she dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise provide, the
Chairman, if any, shall preside at all meetings of the shareholders and of the
Trustees; if there is no Chairman or in the absence of the Chairman, the
President shall preside at all meetings of the shareholders. Unless the Trustees
otherwise provide, the President shall be the chief executive officer.
3.6 TREASURER. Unless the Trustees shall provide otherwise, the
Treasurer shall be the chief financial and accounting officer of the Trust, and
shall, subject to the provisions of the Declaration of Trust and to any
arrangement made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be in charge of
the
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valuable papers, books of account and accounting records of the Trust, and
shall have such other duties and powers as may be designated from time to time
by the Trustees or by the President. The chief accounting officer of the Trust
shall be elected by the Trustees and shall have tenure as provide in Paragraph
3.3 of these Bylaws.
3.7. CLERK. The Clerk shall record all proceedings of the shareholders
and the Trustees in books to be kept therefor, which books or a copy thereof
shall be kept at the principal office of the Trust. In the absence of the Clerk
from any meeting of the shareholders or Trustees, an Assistant Clerk, or if
there be none or if he or she is absent, a temporary Clerk chosen at such
meeting shall record the proceedings thereof in the aforesaid books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman,
if any, the President or the Clerk or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time. The Trustees may remove any officer elected by them with or
without cause. Except to the extent expressly provided in a written agreement
with the Trust, no Trustee or officer resigning and no officer removed shall
have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 QUORUM; VOTING. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may participate in a
meeting of such Committee by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
ARTICLE 5
Reports
5.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
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ARTICLE 6
Fiscal Year
6.1 GENERAL. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and subsequent fiscal
years shall end on such date in subsequent years.
ARTICLE 7
Seal
7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts", together with the name of the Trust and the year
of its organization cut or engraved thereon but, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 GENERAL. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, a Vice President or the Treasurer and need not bear the seal of
the Trust.
ARTICLE 9
Issuance of Shares and Share Certificates
9.1 SALE OF SHARES. Except as otherwise determined by the Trustees, the
Trust will issue and sell for cash or securities from time to time full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than the par value per share, if any, and not
less than the net asset value per share, if any, as from time to time determined
in accordance with the Declaration of Trust and these Bylaws and, in the case of
fractional shares, at a proportionate reduction in such price. In the case of
shares sold for securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the Trust as stated in
the Declaration of Trust and these Bylaws. The officers of the Trust are
severally authorized to take all such actions as may be necessary or desirable
to carry out this Paragraph 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
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The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate is signed by a
transfer agent or by a registrar. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall cease to be such
officer before such certificate is issued, it may be issued by the Trust with
the same effect as if he or she were such officer at the time of its issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust, with the
approval of any two officers of the Trust, is authorized to issue and
countersign replacement certificates for the shares of the Trust which have been
lost, stolen or destroyed upon (i) receipt of an affidavit or affidavits of loss
or non-receipt and of an indemnity agreement executed by the registered holder
or his or her legal representative and supported by an open penalty surety bond,
said agreement and said bond in all cases to be in form and content satisfactory
to and approved by the President or the Treasurer, or (ii) receipt of such other
documents as may be approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder and entitled to vote
thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1 CERTAIN DEFINITIONS. When used herein the following words shall
have the following meanings: "Distributor" shall mean any one or more
corporations, firms or associations which have distributor's or principal
underwriter's contracts in effect with the Trust. "Manager" shall mean any
corporation, firm or association which may at the time have an advisory or
management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR TRUSTEES. The Trust will
not lend any of its assets to the Distributor or Manager or to any officer or
director of the Distributor or Manager or any officer or Trustee of the Trust,
and shall not permit any officer or Trustee of the Trust or any officer or
director of the Distributor or Manager to deal for or on behalf of the Trust
with himself or herself as principal or agent, or with any partnership,
association or corporation in which he or she has a financial interest; provided
that the foregoing provisions
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shall not prevent (a) officers and Trustees of the Trust or officers and
directors of the Distributor or Manager from buying, holding or selling shares
in the Trust or from being partners, officers or directors of or otherwise
financially interested in the Distributor or the Manager; (b) purchases or sales
of securities or other property if such transaction is permitted by or is exempt
or exempted from the provisions of the Investment Company Act of 1940 or any
Rule or Regulation thereunder, all as amended from time to time, and if such
transaction does not involve any commission or profit to any security dealer who
is, or one or more of whose partners, shareholders, officers or directors is, an
officer or Trustee of the Trust or an officer or director of the Distributor or
Manager; (c) employment of legal counsel, registrar, transfer agent, shareholder
servicing agent, dividend disbursing agent, or custodian who is, or has a
partner, shareholder, officer or director who is, an officer or Trustee of the
Trust or an officer or director of the Distributor or Manager; and (d) sharing
statistical, research, legal, and management expenses and office hire and
expenses with any other investment company in which an officer or Trustee of the
Trust or an officer or director of the Distributor or Manager is an officer or
director or otherwise financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY CUSTODIAN SUBJECT
TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust shall be held
by or deposited with one or more banks or trust companies having
(according to its last published report) not less than $5,000,000
aggregate capital, surplus and undivided profits (any such bank or
trust company being hereby designated as "Custodian"), provided such a
Custodian can be found ready and willing to act; subject to such rules,
regulations, and orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any Custodian to,
deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities pursuant to which all
securities of any particular class or series of any issue deposited
within the system may be transferred or pledged by bookkeeping entry,
without physical delivery. The Custodian may appoint, subject to the
approval of the Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract with each
Custodian regarding the powers, duties, and compensation of such
Custodian with respect to the cash and securities of the Trust held by
such Custodian. Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve
of any Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor Custodian;
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(ii) require that the cash and securities owned by
the Trust be delivered directly to the successor Custodian;
and
(iii) in the event that no successor Custodian can be
found, submit to the shareholders, before permitting delivery
of the cash and securities owned by the Trust otherwise than
to a successor Custodian, the question whether the Trust shall
be liquidated or shall function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each shareholder
of record at least semi-annually a statement of the condition of the Trust and
of the results of its operations, containing all information required by
applicable laws or regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset value per
share of the Trust (or, if the Trust has more than one series of shares, of each
series of the Trust) shall mean: (i) the value of all the assets of such series;
(ii) less total liabilities of such series; (iii) divided by the number of
shares of such series outstanding, in each case at the time of each
determination. Except as otherwise determined by the Trustees, the net asset
value per share of the Trust (or of each series) shall be determined no less
frequently than once daily, Monday through Friday, on days on which the New York
Stock Exchange is open for trading, at such time or times that the Trustees set
at least annually.
In valuing the portfolio investments of the Trust (or of any series),
securities for which market quotations are readily available shall be valued at
prices which, in the opinion of the Trustees or the person designated by the
Trustees to make the determination, most nearly represent the market value of
such securities, and other securities and assets shall be valued at their fair
value as determined by or pursuant to the direction of the Trustees, which in
the case of debt obligations, commercial paper, and repurchase agreements may,
but need not, be on the basis of yields for securities of comparable maturity,
quality, and type, or on the basis of amortized cost. Expenses and liabilities
of the Trust shall be accrued each day. Liabilities may include such reserves
for taxes, estimated accrued expenses, and contingencies as the Trustees or
their designates may in their sole discretion deem fair and reasonable under the
circumstances. No accruals shall be made in respect of taxes on unrealized
appreciation of securities owned unless the Trustees shall otherwise determine.
ARTICLE 11
Shareholders
11.1 MEETINGS. A meeting of the shareholders shall be called by the
Clerk whenever ordered by the Trustees or the President or requested in writing
by the holder or holders of at least one-tenth of the outstanding shares
entitled to vote at such meeting. If the Clerk, when so ordered or requested,
refuses or neglects for more than two days to call such meeting, the Trustees,
the President or the shareholders so requesting may, in the name of the Clerk,
call the meeting by giving notice thereof in the manner required when notice is
given by the Clerk.
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11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record may apply to
the Trustees for assistance in communicating with other shareholders for the
purpose of calling a meeting in order to vote upon the question of removal of a
Trustee. When ten or more shareholders of record who have been such for at least
six months preceding the date of application and who hold in the aggregate
shares having a net asset value of at least $25,000 so apply, the Trustees shall
within five business days either:
(i) afford to such applicants access to a list of names and addresses
of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders
of record and the approximate cost of mailing material to them, and,
within a reasonable time thereafter, mail, at the applicants' expense,
materials submitted by the applicants to all such shareholders of
record. The Trustees shall not be obligated to mail materials which
they believe to be misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the shareholders of
any series or class of shares of the Trust who are entitled to vote or act at
any meeting or any adjournment thereof, or who are entitled to receive payment
of any dividend or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date of any meeting
of shareholders or more than 60 days before the date of payment of any dividend
or of any other distribution, as the record date for determining the
shareholders of such series or class having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer books for all
or part of such period.
11.4 PROXIES. The placing of a shareholder's name on a proxy pursuant
to telephone or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
Amendments to the Bylaws
12.1 GENERAL. Except as otherwise expressly stated herein, these Bylaws
may be amended or repealed, in whole or in part, by a majority of the Trustees
then in office at any meeting of the Trustees, or by one or more writings signed
by such a majority.
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Exhibit (c)(ii)
(PORTIONS OF AGREEMENT AND DECLARATION OF TRUST
RELATING TO SHAREHOLDERS' RIGHTS)
SCHRODER SERIES TRUST
AGREEMENT AND DECLARATION OF TRUST
******
ARTICLE I
Name and Definitions
******
(c) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time or, if more than one series or class of Shares is authorized by the
Trustees, the equal proportionate transferable units into which each series or
class of Shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
******
(i) The term "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust representing
the beneficial interest of Shareholders in such respective portfolios; and
(j) The term "class" or "class of Shares" refers to the division of Shares
representing any series into two or more classes as provided in Article III,
Section 1 hereof.
******
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ARTICLE III
Shares
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in one or more
series as the Trustees may, without shareholder approval, authorize. Each series
shall be preferred over all other series in respect of the assets allocated to
that series within the meaning of the 1940 Act and shall represent a separate
investment portfolio of the Trust. The beneficial interest in each series shall
at all times be divided into Shares, without par value, each of which shall,
except as provided in the following sentence, represent an equal proportionate
interest in the series with each other Share of the same series, none having
priority or preference over another. The Trustees may, without Shareholder
approval, divide the Shares of any series into two or more classes, Shares of
each such class having such preferences and special or relative rights and
privileges (including conversion rights, if any) as the Trustees may determine
and as shall be set forth in the Bylaws. The number of Shares authorized shall
be unlimited. The Trustees may from time to time divide or combine the Shares of
any series or class into a greater or lesser number without thereby changing the
proportionate beneficial interest in the series or class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the books of
the Trust or a transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each series and class and as to the number of Shares of each
series and class held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 3. The Trustees shall accept investments in the Trust from such
persons and on such terms and for such consideration, which may consist of cash
or tangible or intangible property or a combination thereof, as they or the
Bylaws from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares
of each series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same
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may be, shall irrevocably belong to the series of Shares with respect to which
the same were received by the Trust for all purposes, subject only to the rights
of creditors, and shall be so handled upon the books of account of the Trust and
are herein referred to as "assets of" such series.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property giving only
the rights provided in this Declaration of Trust or the Bylaws. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms of this Declaration of Trust and the
Bylaws and to have become a party thereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
******
ARTICLE IV
The Trustees
******
POWERS
Section 3. Subject to the provisions of this Declaration of Trust, the
business of the Trust shall be managed by the Trustees, and they shall have all
powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this
Declaration of Trust providing for the
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conduct of the business of the Trust and may amend and repeal them to the extent
that such Bylaws do not reserve that right to the Shareholders; they may fill
vacancies in or add to their number, and may elect and remove such officers and
appoint and terminate such agents as they consider appropriate; they may appoint
from their own number, and terminate, any one or more committees consisting of
two or more Trustees, including an executive committee which may, when the
Trustees are not in session, exercise some or all of the power and authority of
the Trustees as the Trustees may determine; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities, retain a transfer agent or a
Shareholder servicing agent, or both, provide for the distribution of Shares by
the Trust, through one or more principal underwriters or otherwise, set record
dates for the determination of Shareholders with respect to various matters, and
in general delegate such authority as they consider desirable to any officer of
the Trust, to any committee of the Trustees, and to any agent or employee of the
Trust or to any such custodian or underwriter.
******
ARTICLE V
Shareholders' Voting Powers and Meetings
VOTING POWERS
Section 1. Subject to the voting powers of one or more classes of
Shares as set forth elsewhere in this Declaration of Trust or in the Bylaws, the
Shareholders shall have power to vote only (i) for the election of Trustees as
provided in Article IV, Section 1, (ii) for the removal of Trustees as provided
in Article IV, Section 1, (iii) with respect to any Manager as provided in
Article IV, Section 6, (iv) with respect to any termination of this Trust to the
extent and as provided in Article IX, Section 4, (v) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (vii) with respect to such
additional matters relating to the Trust as may be required by this Declaration
of Trust, the Bylaws or any registration of the Trust with the Securities and
Exchange Commission (or any successor agency) or any state, or as the Trustees
may consider necessary or desirable. Each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote on any matter submitted to
a vote of Shareholders, all Shares of the Trust then entitled to vote shall,
except as otherwise
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<PAGE> 5
provided in the Bylaws, be voted in the aggregate as a single class without
regard to series or classes of shares, except (1) when required by the 1940 Act
or when the Trustees shall have determined that the matter affects one or more
series or classes of Shares materially differently, Shares shall be voted by
individual series or class; and (2) when the Trustees have determined that the
matter affects only the interests of one or more series or classes, then only
Shareholders of such series or classes shall be entitled to vote thereon. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares of any series or class are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law, this Declaration
of Trust or the Bylaws to be taken by Shareholders as to such series or class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all series or classes may
be called by the Trustees from time to time for the purpose of taking action
upon any matter requiring the vote or authority of the Shareholders of such
series or classes as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least seven days before such meeting, postage prepaid, stating
the time, place and purpose of the meeting, to each Shareholder entitled to vote
at such meeting at the Shareholder's address as it appears on the records of the
Trust. If the Trustees shall fail to call or give notice of any meeting of
Shareholders for a period of 30 days after written application by Shareholders
holding at least 10% of the then outstanding shares of all series and classes
entitled to vote at such meeting requesting a meeting to be called for a purpose
requiring action by the Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 10% of the then outstanding Shares of all series
and classes entitled to vote at such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees. Notice of a meeting need not be
given to any Shareholder if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Shareholder who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her.
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QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of Shares entitled to vote on a particular
matter shall be a quorum for the transaction of business on that matter at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust or the Bylaws requires that holders of any series or class
shall vote as an individual series or class, then thirty percent of the
aggregate number of Shares of that series or class entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that series
or class. Any lesser number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except when a
larger vote is required by any provision of law or of this Declaration of Trust
or the Bylaws, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, provided that where any provision of law or of
this Declaration of Trust or the Bylaws requires that the holders of any series
or class shall vote as an individual series or class then a majority of the
Shares of that series or class voted on the matter (or a plurality with respect
to the election of a Trustee) shall decide that matter insofar as that series or
class is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter (or such
larger proportion thereof as shall be required by any express provision of this
Declaration of Trust or the Bylaws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions, not inconsistent
with this Declaration of Trust, regarding Shareholders' voting powers, the
conduct of meetings and related matters.
ARTICLE VI
Distributions, Redemptions and Repurchases
DISTRIBUTIONS
Section 1. The Trustees may each year, or more frequently if they so
determine, distribute to the Shareholders of each series out of the assets of
such series such amounts as the Trustees may determine. Any such distribution to
the Shareholders of a particular
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<PAGE> 7
series shall be made to said Shareholders pro rata in proportion to the number
of Shares of such series held by each of them, except to the extent otherwise
required or permitted by the preferences and special or relative rights and
privileges of any classes of Shares of that Series, and any distribution to the
Shareholders of a particular class of Shares shall be made to such Shareholders
pro rata in proportion to the number of Shares of such class held by each of
them. Such distributions shall be made in cash, Shares or other property, or a
combination thereof, as determined by the Trustees. Any such distribution paid
in Shares will be paid at the net asset value thereof as determined in
accordance with the Bylaws.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of any certificate for the
Shares to be purchased, a proper instrument of transfer and a request directed
to the Trust or a person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize; and the Trust will pay therefor the
net asset value thereof, as next determined in accordance with the Bylaws, less
any redemption charge fixed by the Trustees. Payment for said Shares shall be
made by the Trust to the Shareholder within seven days after the date on which
the request is made. The obligation set forth in this Section 2 is subject to
the provision that in the event that any time the New York Stock Exchange is
closed for other than customary weekends or holidays, or, if permitted by rules
of the Securities and Exchange Commission, during periods when trading on the
Exchange is restricted or during any emergency which makes it impractical for
the Trust to dispose of its investments or to determine fairly the value of its
net assets, or during any other period permitted by order of the Securities and
Exchange Commission for the protection of investors, such obligation may be
suspended or postponed by the Trustees. The Trust may also purchase or
repurchase Shares at a price not exceeding the net asset value of such Shares in
effect when the purchase or repurchase or any contract to purchase or repurchase
is made.
REDEMPTION AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and at any time
to redeem Shares of any Shareholder at the net asset value thereof as determined
in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer
Shares than, or Shares having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees; or (ii) to the extent that
such Shareholder owns Shares of a particular series of Shares equal to or in
excess of a percentage of the outstanding Shares of that series determined from
time to time by the Trustees; or (iii) to the extent that such
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<PAGE> 8
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
ARTICLE VIII
Indemnification
******
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representative or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled to be
held harmless from and indemnified against all loss and expense arising from
such liability, but only out of the assets of the particular series of Shares of
which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting with or having
any claim against the Trust or a particular series of Shares shall look only to
the assets of the Trust or the assets of that particular series of Shares for
payment under such credit, contract or claim, and neither the Shareholders nor
the Trustees, nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officer or officers shall give notice that
this Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustee or Trustees or as
officer or officers and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders
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<PAGE> 9
individually but are binding only upon the assets and property of the Trust, and
may contain such further recital as he or she or they may deem appropriate, but
the omission thereof shall not operate to bind any Trustee or Trustees or
officer or officers or Shareholder or Shareholders individually.
******
DURATION AND TERMINATION OF TRUST
Section 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of Shareholders holding at least two-thirds of the Shares of each series
entitled to vote or by the Trustees by written notice to the Shareholders. Any
series of Shares may be terminated at any time by vote of Shareholders holding
at least two-thirds of the Shares of such series entitled to vote or by the
Trustees by written notice to the Shareholders of such series. Upon termination
of the Trust or of any one or more series of Shares, after paying or otherwise
providing for all charges, taxes, expenses and liabilities, whether due or
accrued or anticipated, of the Trust or of the particular series as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash or shares or other property, or any combination
thereof, and distribute the proceeds to the Shareholders of the series involved,
ratably according to the number of Shares of such series held by the several
Shareholders of such series on the date of termination, except to the extent
otherwise required or permitted by the preferences and special or relative
rights and privileges of any classes of Shares of that series, provided that any
distribution to the Shareholders of a particular class of Shares shall be made
to such Shareholders pro rata in proportion to the number of Shares of such
class held by each of them.
******
AMENDMENTS
Section 9. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
to do so by vote of Shareholders holding a majority of the Shares entitled to
vote, except that an amendment which in the determination of the Trustees shall
affect the holders of one or more series or classes of Shares but not the
holders of all outstanding series and classes shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of each series
and class affected and no vote of Shareholders of a series or class not affected
shall be required. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting,
or supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholders' vote.
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Exhibit (c)(iii)
(PORTIONS OF BYLAWS OF SCHRODER SERIES TRUST
RELATING TO SHAREHOLDERS' RIGHTS)
*********
ARTICLE 9
Issuance of Shares and Share Certificates
9.1 SALE OF SHARES. Except as otherwise determined by the Trustees, the
Trust will issue and sell for cash or securities from time to time full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than the par value per share, if any, and not
less than the net asset value per share, if any, as from time to time determined
in accordance with the Declaration of Trust and these Bylaws and, in the case of
fractional shares, at a proportionate reduction in such price. In the case of
shares sold for securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the Trust as stated in
the Declaration of Trust and these Bylaws. The officers of the Trust are
severally authorized to take all such actions as may be necessary or desirable
to carry out this Paragraph 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate is signed by a
transfer agent or by a registrar. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall cease to be such
officer before such certificate is issued, it may be issued by the Trust with
the same effect as if he or she were such officer at the time of its issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust, with the
approval of any two officers of the Trust, is authorized to issue and
countersign replacement certificates for the shares of the Trust which have been
lost, stolen or destroyed upon (i) receipt of an affidavit or affidavits of loss
or non-receipt and of an indemnity agreement executed by the registered holder
or his or her legal representative and supported by an open penalty surety bond,
said agreement and said bond in all cases to be in form and content satisfactory
to and approved by
<PAGE> 2
the President or the Treasurer, or (ii) receipt of such other documents as may
be approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder and entitled to vote
thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
*********
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each shareholder
of record at least semi-annually a statement of the condition of the Trust and
of the results of its operations, containing all information required by
applicable laws or regulations.
**********
ARTICLE 11
Shareholders
11.1 MEETINGS. A meeting of the shareholders shall be called by the
Clerk whenever ordered by the Trustees or the President or requested in writing
by the holder or holders of at least one-tenth of the outstanding shares
entitled to vote at such meeting. If the Clerk, when so ordered or requested,
refuses or neglects for more than two days to call such meeting, the Trustees,
the President or the shareholders so requesting may, in the name of the Clerk,
call the meeting by giving notice thereof in the manner required when notice is
given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record may apply to
the Trustees for assistance in communicating with other shareholders for the
purpose of calling a meeting in order to vote upon the question of removal of a
Trustee. When ten or more shareholders of record who have been such for at least
six months preceding the date of application and who
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<PAGE> 3
hold in the aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of names and addresses
of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders
of record and the approximate cost of mailing material to them, and,
within a reasonable time thereafter, mail, at the applicants' expense,
materials submitted by the applicants to all such shareholders of
record. The Trustees shall not be obligated to mail materials which
they believe to be misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the shareholders of
any series or class of shares of the Trust who are entitled to vote or act at
any meeting or any adjournment thereof, or who are entitled to receive payment
of any dividend or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date of any meeting
of shareholders or more than 60 days before the date of payment of any dividend
or of any other distribution, as the record date for determining the
shareholders of such series or class having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer books for all
or part of such period.
11.4 PROXIES. The placing of a shareholder's name on a proxy pursuant
to telephone or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
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<PAGE> 1
Exhibit (d)(i)
SCHRODER SERIES TRUST
MANAGEMENT CONTRACT
This Management Contract dated as of August 9, 1994, as amended and
restated as of June 4, 1997, between SCHRODER SERIES TRUST, a Massachusetts
business trust (the "Trust"), and SCHRODER CAPITAL MANAGEMENT INC., a Delaware
corporation (the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO THE TRUST.
(a) The Manager, at its expense, will furnish continuously an
investment program for each of the series of shares of beneficial interest of
the Trust (each, a "Fund"), will determine what investments shall be purchased,
held, sold, or exchanged by each of the Funds and what portion, if any, of the
assets of a Fund shall be held uninvested and shall, on behalf of each Fund,
make changes in the Fund's investments. In the performance of its duties, the
Manager will comply with the provisions of the Agreement and Declaration of
Trust and Bylaws of the Trust and each Fund's stated investment objectives,
policies, and restrictions, and will use its best efforts to safeguard and
promote the welfare of the Trust and to comply with other policies which the
Trustees may from time to time determine and shall exercise the same care and
diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by
the Trust as provided in Section 1(d), will furnish all necessary investment and
related management facilities, including salaries of personnel, required for it
to execute its duties faithfully. The Manager will pay the compensation, if any,
of certain officers of the Trust carrying out the investment management and
related duties provided for by this Contract.
(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for each Fund's account with brokers
or dealers selected by the Manager. In the selection of such brokers or dealers
and the placing of such orders, the Manager shall use its best efforts to obtain
for each Fund the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for a
Fund the most favorable price and execution available, the Manager, bearing in
mind the Trust's best interests at all times, shall consider all factors
<PAGE> 2
it deems relevant, including, by way of illustration, 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 or
dealer involved, and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Trust may
determine, the Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Contract or otherwise solely by reason of its
having caused a Fund to pay a broker or dealer that provides brokerage and
research services to the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission that
another broker or dealer would have charged for effecting that transaction, if
the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to other clients of the Manager as to which the Manager exercises investment
discretion. The Trust hereby agrees with the Manager that any entity or person
associated with the Manager which is a member of a national securities exchange
is authorized to effect any transaction on such exchange for the account of the
Trust and any Fund thereof which is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and the Trust
hereby consents to the retention of compensation for such transactions in
accordance with Rule 11a2- 2(T)(a)(2)(iv).
(d) The Manager shall not be obligated to pay any expenses of or
for the Trust not expressly assumed by the Manager pursuant to this Section 1
other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers, and
employees of the Trust may be a shareholder, director, officer, or employee of,
or be otherwise interested in, the Manager, and in any person controlled by or
under common control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have an interest in
the Trust. It is also understood that the Manager and any person controlled by
or under common control with the Manager have and may have advisory, management,
service, or other contracts with other organizations and persons, and may have
other interests and business.
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3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.
The Trust will pay to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses borne by
the Manager pursuant to Section 1, fees in respect of each of the Funds,
computed and paid quarterly at the following annual rates (based on the assets
of each Fund taken separately):
Schroder Equity Value Fund -- 0.75% of average net asset value Schroder
Small Capitalization Value Fund -- 0.95% of average net asset value
Schroder High Yield Income Fund -- 0.90% of average net asset value
Schroder Investment Grade Income Fund -- 0.50% of average net asset
value Schroder Short-Term Investment Fund -- 0.40% of average net asset
value.
Such average net asset value shall be determined by taking an average
of all of the determinations of such net asset value during such quarter at the
close of business on each business day during such quarter in which this
Contract is in effect. Such fees shall be payable for each fiscal quarter within
30 days after the close of such quarter and shall commence accruing as of the
date of the initial issuance of shares of the Trust to the public.
In the event that expenses of any Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of that Fund
are qualified for offer or sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of any Fund exceed any expense
limitation which the Manager may, by written notice to the Trust, voluntarily
declare to be effective subject to such terms and conditions as the Manager may
prescribe in such notice, the compensation due the Manager shall be reduced,
and, if necessary, the Manager shall assume expenses of that Fund, to the extent
required by such expense limitation.
If the Manager shall serve for less than the whole of a quarter, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment be approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the affected Fund, and by the vote, cast
in person at a meeting
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called for the purpose of voting on such approval, of a majority of the Trustees
of the Trust who are not interested persons of the Trust or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract as
to one or more Funds or as to the Trust as a whole by not more than sixty days
nor less than thirty days written notice delivered or mailed by registered mail,
postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of any Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Contract, then this Contract shall
automatically terminate (as to the Trust as a whole or as to the affected Fund,
as the case may be) at the close of business on August 9, 1996 or the expiration
of one year from the effective date of the last such continuance, whichever is
later.
Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the affected Fund.
Termination of this Contract pursuant to this Section 5 will be without
the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of a Fund means the affirmative vote, at a duly
called and held meeting of such shareholders, (a) of the holders of 67% or more
of the shares of the Fund present (in person or by proxy) and entitled to vote
at such meeting, if the holders of more than 50% of the outstanding shares of
the Fund entitled to vote at such meeting are present in person or by proxy, or
(b) of the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person", and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940, as amended, and the
Rules and Regulations
-4-
<PAGE> 5
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner consistent with the
Investment Company Act of 1940, as amended, and the Rules and Regulations
thereunder; and the term "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934, as amended, and the Rules
and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith, or gross negligence
on the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust or to
any shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees, officers, or
shareholders of the Trust but are binding only upon the assets and property of
the Trust.
IN WITNESS WHEREOF, SCHRODER SERIES TRUST and SCHRODER CAPITAL
MANAGEMENT INC. have each caused this instrument to be signed in duplicate in
its behalf by its President or Vice President thereunto duly authorized.
SCHRODER SERIES TRUST
By: /s/ Ashbel C. Williams, Jr.
--------------------------------------
SCHRODER CAPITAL MANAGEMENT INC.
By: /s/ Sharon L. Haugh
--------------------------------------
-5-
<PAGE> 1
Exhibit (e)
DISTRIBUTOR'S CONTRACT
SCHRODER SERIES TRUST
This Distributor's Contract dated as of July 5, 1995, as amended and
restated as of June 4, 1997, by and between SCHRODER SERIES TRUST, a
Massachusetts business trust (the "Trust"), and SCHRODER FUND ADVISORS INC., a
New York corporation ("Distributor").
WHEREAS, the Trust and Distributor are desirous of entering into an
agreement providing for the distribution by Distributor of shares of beneficial
interest ("shares") of each of the series (each, a "Fund") of the Trust;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Trust hereby appoints Distributor as a distributor of shares of each
of the Funds, and Distributor hereby accepts such appointment, all as set forth
below:
1. RESERVATION OF RIGHT NOT TO SELL. The Trust reserves the right
to refuse at any time or times to sell any of its shares hereunder for any
reason.
2. SALES OF SHARES TO DISTRIBUTOR AND SALES BY DISTRIBUTOR.
Distributor will, as agent for the Trust, sell shares of each Fund at their
public offering price to such persons and upon such conditions as the Trustees
of the Trust may from time to time determine. The public offering price of
shares of a Fund shall be the net asset value of such shares then in effect. On
every sale the Trust shall receive the applicable net asset value of the shares.
3. SALES OF SHARES BY THE TRUST. The Trust reserves the right to
issue shares at any time directly to its shareholders as a stock dividend or
stock split and to sell shares to its shareholders or to other persons at not
less than net asset value.
4. REPURCHASE OF SHARES. Distributor will act as agent for the
Trust in connection with the repurchase of shares of the various Funds by the
Trust upon the terms and conditions set forth in the then current Prospectus and
Statement of Additional Information of the Trust.
5. BASIS OF PURCHASES AND SALES OF SHARES. Distributor does not
agree to sell any specific number of shares. Shares will be sold by Distributor
only against orders therefor. Distributor will not purchase shares from anyone
other than the Trust except in accordance with Section 4, and will not take
"long" or "short" positions in shares contrary to the Agreement and Declaration
of Trust of the Trust.
6. RULES OF NASD, ETC. Distributor will conform to the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. and the
laws regarding the sale of securities in any jurisdiction in which it sells,
directly or indirectly, any shares. Distributor also agrees to furnish to the
Trust sufficient copies of any agreements or plans it intends to use
<PAGE> 2
in connection with any sales of shares in adequate time for the Trust to file
and clear them with the proper authorities before they are put in use, and not
to use them until so filed and cleared.
7. DISTRIBUTOR INDEPENDENT CONTRACTOR. Distributor shall be an
independent contractor, and neither Distributor nor any of its officers or
employees, as such, is or shall be an employee of the Trust. Distributor is
responsible for its own conduct and the employment, control, and conduct of its
agents and employees and for injury to such agents or employees or to others
through its agents or employees. Distributor assumes full responsibility for its
agents and employees under applicable statutes and agrees to pay all employer
taxes thereunder.
Distributor will maintain at its own expense insurance against public
liability in such an amount as the Trustees of the Trust may from time to time
reasonably request.
8. EXPENSES. Distributor will pay all of its own expenses in
performing itsobligations hereunder.
9. INDEMNIFICATION OF TRUST. Distributor agrees to indemnify and
hold harmless the Trust and each person who has been, is, or may hereafter be a
Trustee, officer, or employee of the Trust against expenses reasonably incurred
by any of them in connection with any claim or in connection with any action,
suit, or proceeding to which any of them may be a party, which arises out of or
is alleged to arise out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to state a material
fact, on the part of Distributor or any agent or employee of Distributor or any
other person for whose acts Distributor is responsible or is alleged to be
responsible unless such misrepresentation or omission was made in reliance upon
written information furnished to Distributor by the Trust or agents or
representatives of the Trust. Distributor agrees likewise to indemnify and hold
harmless the Trust and each such person in connection with any claim or in
connection with any action, suit, or proceeding which arises out of or is
alleged to arise out of Distributor's failure to exercise reasonable care and
diligence with respect to its services rendered in connection with investment,
reinvestment, automatic withdrawal, and other plans for shares. The term
"expenses" includes amounts paid in satisfaction of judgments or in settlements
which are made with Distributor's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the Trust or
any such person may be entitled as a matter of law.
10. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Contract may be amended only
if such amendment be approved either by action of the Trustees of the Trust or
at a meeting of the shareholders of the affected Fund or Funds by the
affirmative vote of a majority of the outstanding shares of such Fund or Funds,
and by a majority of the Trustees of the Trust who are not interested persons of
the Trust or of Distributor by vote cast in person at a meeting called for the
purpose of voting on such approval.
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<PAGE> 3
11. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and shall remain in
full force and effect continuously (unless terminated automatically as set forth
in Section 10) until terminated in respect of any Fund or Funds:
(a) Either by the Trust or Distributor by not more than
sixty (60) days nor less than ten (10) days written notice delivered or
mailed by registered mail, postage prepaid, to the other party; or
(b) If the continuance of the Contract after July 5, 1996
is not specifically approved at least annually by the Trustees of the
Trust or the shareholders of the affected Fund or Funds by the
affirmative vote of a majority of the outstanding shares of the
affected Fund or Funds, and by a majority of the Trustees of the Trust
who are not interested persons of the Trust or of Distributor by vote
cast in person at a meeting called for the purpose of voting on such
approval.
Action by the Trust or any Fund under (a) above may be taken either (i)
by vote of the Trustees or (ii) by the affirmative vote of a majority of the
outstanding shares of the Trust or the affected Fund or Funds. The requirement
under (b) above that continuance of this Contract be "specifically approved at
least annually" shall be construed in a manner consistent with the Investment
Company Act of 1940 and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 11 shall be
without the payment of any penalty.
12. CERTAIN DEFINITIONS. For purposes of this Contract, the
"affirmative vote of a majority of the outstanding shares" of the Trust or a
Fund means the affirmative vote, at a duly called and held meeting of
shareholders of the Trust or the Fund, as the case may be, (a) of the holders of
67% or more of the shares of the Trust or the Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders of more than 50% of
the outstanding shares of the Trust or the Fund entitled to vote at such meeting
are present in person or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Trust or the Fund entitled to vote at such meeting,
whichever is less.
For the purposes of the Contract, the terms "interested person" and
"assignment" shall have the meanings defined in the Investment Company Act of
1940, subject however, to such exemptions as may be granted by the Securities
and Exchange Commission under said Act.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually,
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<PAGE> 4
and that the obligations of or arising out of this instrument are not binding
upon any of the Trustees, officers, or shareholders individually but are binding
only upon the assets and property of the Trust.
IN WITNESS WHEREOF, each of SCHRODER SERIES TRUST and SCHRODER FUND
ADVISORS INC. has caused this Distributor's Contract to be signed in duplicate
in its behalf.
SCHRODER SERIES TRUST
By: /s/ Ashbel C. Williams, Jr.
--------------------------------------
SCHRODER FUND ADVISORS INC.
By: /s/ Sharon L. Haugh
--------------------------------------
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<PAGE> 1
Exhibit (g)
CUSTODIAN CONTRACT
Between
WSIS SERIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment of Custodian and Property to be Held By It ................. 1
2. Duties of the of the Custodian with Respect to Property
Fund Held by the Custodian in the United States ....................... 3
2.1 Holding Securities .............................................. 3
2.2 Delivery of Securities .......................................... 3
2.3 Registration of Securities ...................................... 8
2.4 Bank Accounts ................................................... 9
2.5 Availability of Federal Funds ................................... 10
2.6 Collection of Income ............................................ 11
2.7 Payment of Fund Monies .......................................... 11
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased ............................................ 15
2.9 Appointment of Agents ........................................... 15
2.10 Deposit of Fund Assets in Securities System ..................... 15
2.10A Fund Assets Held in the Custodian's Direct Paper System ......... 18
2.11 Segregated Account .............................................. 20
2.2 Ownership Certificates for Tax Purposes ......................... 22
2.3 Proxies ......................................................... 22
2.14 Communications Relating to Portfolio Securities ................. 22
3. Duties of the Custodian with Respect to Property of the
Fund Held Outside of the United States ................................ 23
3.1 Appointment of Foreign Sub-Custodians ........................... 23
3.2 Assets to be Held ............................................... 24
3.3 Foreign Securities Depositories ................................. 24
3.4 Agreements with Foreign Banking Institutions .................... 25
3.5 Access of Independent Accountants of the Fund.................... 26
3.6 Reports by Custodian ............................................ 26
3.7 Transactions in Foreign Custody Account ......................... 26
3.8 Liability of Foreign Sub-Custodians ............................. 27
3.9 Liability of Custodian .......................................... 28
3.10 Reimbursement for Advances ...................................... 29
3.11 Monitoring Responsibilities ..................................... 30
3.12 Branches of U.S. Banks .......................................... 30
3.13 Tax Law ......................................................... 31
4. Payments for Sales or Repurchase or Redemptions of Shares of
the Fund .............................................................. 32
5. Proper Instructions ................................................... 33
6. Actions Permitted Without Express Authority ........................... 33
7. Evidence of Authority ................................................. 34
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income ..................... 35
9. Records ............................................................... 35
10. Opinion of Fund's Independent Accountants ............................. 36
11. Reports to Fund by Independent Public Accountants ..................... 36
12. Compensation of Custodian ............................................. 37
13. Responsibility of Custodian ........................................... 37
14. Effective Period, Termination and Amendment ........................... 39
15. Successor Custodian ................................................... 41
16. Interpretive and Additional Provisions ................................ 42
17. Additional Funds ...................................................... 43
18. Massachusetts Law to Apply ............................................ 43
19. Prior Contracts ....................................................... 43
20. Declaration of Trust .................................................. 44
21. Shareholder Communications Election ................................... 44
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between WSIS Series Trust, a business trust organized and
existing under the laws of Massachusetts, having its principal place of business
at 787 Seventh Avenue, New York, New York, 10019, hereinafter called the "Fund",
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in five series,
Wertheim Equity Value Fund, Wertheim Small Capitalization Value Fund, Wertheim
High Yield Income Fund, Wertheim Investment Grade Income Fund, and Wertheim
Short-Term Investment Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities")
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<PAGE> 5
and securities it desires to be held outside the United States ("foreign
securities") pursuant to the provisions of the Declaration of Trust. The Fund on
behalf of the Portfolio(s) agrees to deliver to the Custodian all securities and
cash of the Portfolios, and all payments of income, payments of principal or
capital distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it for
such new or treasury shares of beneficial interest of the Fund representing
interests in the Portfolios, ("Shares") as may be issued or sold from time to
time. The Custodian shall not be responsible for any property of a Portfolio
held or received by the Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
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<PAGE> 6
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System" and (b) commercial
paper of an issuer for which State Street Bank and Trust Company acts as
issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to Section
2.10A.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from the Fund on behalf of the applicable Portfolio,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
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<PAGE> 7
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1 in each case to the
extent permitted by Section 2.3; or for exchange for a different
number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units;
-4-
<PAGE> 8
PROVIDED that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street, delivery" custom; provided
that in any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the
-5-
<PAGE> 9
exercise of such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of
the Portfolio, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of the Treasury,
the Custodian may deliver securities prior to the receipt of such
collateral provided that the Custodian shall promptly notify the
Fund if such collateral is not credited;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, BUT ONLY against receipt of amounts
borrowed;
-6-
<PAGE> 10
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other similar arrangements in
connection with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the
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<PAGE> 11
Fund, for delivery to such Transfer Agent or to the holders of
shares in connection with distributions in kind, as may be described
from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee signed by an officer of
the Fund and certified by the Clerk or an Assistant Clerk,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of
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<PAGE> 12
any nominee of the Custodian (or of any agent appointed pursuant to
Section 2.9 or any sub-custodian appointed pursuant to Article 1) which
nominee shall be assigned exclusively to the Portfolio, UNLESS the Fund
has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as the Portfolio. All securities accepted by the
Custodian on behalf of any Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form. If, however, the
Fund specifically directs the Custodian to maintain securities in "street
name", the Custodian shall utilize its best efforts only to timely collect
income due the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds
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<PAGE> 13
held by the Custodian for a Portfolio may be deposited by it to its credit
as Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; PROVIDED, however, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Trustees of the Fund. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian only
in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, (a) invest in such instruments as may be set forth in such
instructions on the same day as received all federal funds received after
a time agreed upon between the Custodian and the Fund; and (b) make
federal funds available to such Portfolio as of specified times agreed
upon from time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
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<PAGE> 14
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its age nt and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest and other payments when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Custodian will have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable
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<PAGE> 15
Portfolio, which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out monies of a Portfolio in the following
cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of
title to such options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Portfolio or
in the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the case of repurchase
agreements entered into between
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<PAGE> 16
the Fund on behalf of the Portfolio and the Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Portfolio or (e)
for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transactions may be effected prior
to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
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4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses of
the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Clerk or an Assistant Clerk, specifying the amount
of such payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
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2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article 2 as the Custodian may from time to time
direct; PROVIDED, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the bOok-entry system authorized by the U.S. Department
of the Treasury and
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certain federal agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board and Securities
and Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall identify
by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Portfolio. The
Custodian shall transfer securities sold
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for the account of the Portfolio upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of the Portfolio. Copies of all advices from the Securities
System of transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. The Custodian
shall furnish the Fund promptly on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio
in the form of a written advice or notice and shall furnish to the
Fund on behalf of the Portfolio copies of daily transaction sheets
reflecting each day's transactions in the Securities System for the
account of the Portfolio;
4) The Custodian shall provide to the Fund for the Portfolio with any
report obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
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5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from use
of the Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees, or from failure of the Custodian or any such agent
to enforce effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if
and to the extent that the Portfolio has not been made whole for any
such loss or damage.
2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
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1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
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<PAGE> 23
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the Direct
Paper System for the account of the Portfolio;
6) The Custodian shall provide to the Fund on behalf of the Portfolio
any report created by or received by the Custodian from any other
person on its system of internal accounting control and procedures
for safeguarding securities deposited in the Direct Paper System as
the Fund may reasonably request from time to time.
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of
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<PAGE> 24
the Portfolio, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading Commission
or any registered contract market), or of any similar organization or
organizations, regarding escrow, account deposits, or other similar
arrangements in connection with transactions by the Portfolio, (ii) for
purposes of segregating cash or government securities in connection with
options purchased or sold by the Portfolio or commodity futures contracts
or options thereon purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, BUT ONLY, in the case of clause
(iv), upon receipt of, in addition to Proper Instructions from the Fund
on behalf of the applicable Portfolio, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Clerk or an Assistant Clerk,
setting forth the purpose or purposes of such segregated
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account and declaring such purposes to be proper purposes of the Fund.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.13 PROXIES. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund on behalf of the Portfolio and
the maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities
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being held for the Portfolio. With respect to tender or exchange offers
or any other similar transaction, the Custodian shall transmit promptly
to the Portfolio all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange or similar offer. If
the Portfolio desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Portfolio shall
notify the Custodian of the action the Fund desires the Custodian to take
at least three business days prior to the date on which the Custodian is
to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Trustees, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories
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to act as sub-custodian. Upon receipt by the Custodian of Proper
Instructions as defined in Section 5 of this Contract, the Fund may
instruct the Custodian by delivery of the Proper Instructions to the
Custodian to cease the employment of any one or more such sub-custodians
for maintaining custody of the Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
assets of each applicable Portfolio shall at all times be held separate
from the assets of any sub-custodian and the books and records of the
sub-custodian shall at all times show that such assets are held for the
Custodian as Custodian for its clients or for the applicable Portfolio.
The books and records of the Custodian shall at all times indicate the
beneficial ownership of the applicable Portfolio.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Portfolios shall
be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving
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as sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall be substantially in the form set forth
in Exhibit 1 hereto and shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for safe custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of, or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.
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3.5 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.6 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, periodic reports in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to or
from each custodial account maintained by a sub-custodian for the
Custodian on behalf of each applicable Portfolio indicating, as to
securities acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.7 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT
(a) Except as otherwise provided in paragraph (b) of this Section 3.7,
the provision of Sections 2.2 and 2.7 of this Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the
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contrary, settlement and payment for securities received for the account
of each applicable Portfolio and delivery of securities maintained for
the account of each applicable Portfolio may be effected in accordance
with the customary established securities trading or securities
processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent
for such purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser or
dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of
such securities absent such nominee's negligence, bad faith or breach of
obligation.
3.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless, the
Custodian and each Portfolio from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the
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election of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.9 LIABILITY OF CUSTODIAN. Except as otherwise provided in this Section, the
Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to
sub-custodians generally in this Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank as contemplated
by paragraph 3.12 hereof, provided, however, that the Custodian shall not
be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any similar act or event beyond the
Custodian's control. Notwithstanding the foregoing provisions of this
paragraph 3.9, (i) with respect to the use by the Custodian of any
foreign sub-custodian, the Custodian shall be liable to the Fund for any
loss, damage, cost, expense, liability or claim resulting from such use
if and to the extent caused by any negligence, misfeasance or misconduct
of the Custodian or any of its agents or
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any its or their employees, or from any failure of the Custodian or any
such agent to enforce effectively such rights as it may have against the
foreign sub-custodian, (ii) in delegating custody duties to State Street
London Ltd., the Custodian shall not be relieved of any responsibility to
the Fund for any loss due to such delegation, except such loss as may
result, from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or other
losses under circumstances where the Custodian and State Street London
Ltd. have exercised reasonable care.
3.10 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security
therefor and
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should the Fund fail to repay the Custodian promptly, the Custodian shall
be entitled to utilize available cash and to dispose of such Portfolios
assets to the extent necessary to obtain reimbursement.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.12 BRANCHES OF U.S. BANKS
(a) Except as otherwise set forth in this Contract, the provisions hereof
shall not apply where the custody of the Portfolios assets is maintained
in a foreign branch
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of a banking institution which is a "bank" as defined by Section 2(a)(5)
of the Investment Company Act of 1940 meeting the qualification set forth
in Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund
with the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.13 TAX LAW
The Custodian shall be responsible to use reasonable professional efforts
to assist each Portfolio with respect to any claim for exemption or
refund under the tax law of jurisdictions in which the Portfolio has
invested. The Custodian and each Portfolio shall consult and cooperate to
facilitate the appropriate administration of tax matters connected with
the income and securities of each Portfolio to which this Contract
relates. The Custodian will be entitled to rely without separate duty of
inquiry on any representation or information relating to tax status that
it is supplied by a Portfolio.
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4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUNDS
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and the By-laws of the Fund and any
applicable votes of the Board of Trustees of the Fund pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of a Portfolio, the
Custodian is authorized upon receipt of instructions from the Transfer Agent to
wire funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the holder of Shares,
when presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
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5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give Proper Instructions with
respect to the transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the Clerk or an
Assistant Clerk as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor
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expenses of handling securities or other similar items relating to its
duties under this Contract, provided that all such payments shall be
accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio except
as otherwise directed by the Board of Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust and By-laws as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
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8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION
OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.
9. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of
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the Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's
registration statement and amendments thereto, the Fund's Form N-1A, and Form
N-SAR or other annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios, at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the
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<PAGE> 40
Custodian under this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
12. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. [The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence in carrying out
the provisions of this Contract.] It shall be entitled to rely on and may act
upon
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<PAGE> 41
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim to the extent such loss,
damage, cost, expense, liability or claim results from, or is caused by,
nationalization, expropriation, currency restrictions, or acts of war or
terrorism, or any other similar act or event beyond the Custodian's control.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money
other than cash held by the Custodian on behalf of the Fund pursuant to this
Contract or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money other than cash held by the Custodian on behalf of the Fund
pursuant to this Contract or incurring liability of some other form, the Fund
on behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
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<PAGE> 42
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities other than cash or securities held by the
Custodian on behalf of the Fund pursuant to this Contract for any purpose for
the benefit of a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with
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<PAGE> 43
respect to a Portfolio act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Clerk or an Assistant Clerk that the Board of
Trustees of the Fund has approved the initial use of a particular Securities
System by such Portfolio and the receipt of an annual certificate of the Clerk
or an Assistant Clerk that the Board of Trustees has reviewed the use by such
Portfolio of such Securities System, as required in each case by Rule 17f-4
under the Investment Company Act of 1940, as amended and that the Custodian
shall not with respect to a Portfolio act under Section 2.10A hereof in the
absence of receipt of an initial certificate of the Clerk or an Assistant Clerk
that the Board of Trustees has approved the initial use of the Direct Paper
System by such Portfolio and the receipt of an annual certificate of the Clerk
or an Assistant Clerk that the Board of Trustees has reviewed the use by such
Portfolio of the Direct Paper System; provided further, however, that the Fund
shall not amend or terminate this Contract in contravention of any applicable
federal or state law or regulations, or any provision of the Declaration of
Trust or By-laws of the Fund, and further provided, that the Fund on behalf of
one or more of the Portfolios may at any time by action of its Board of Trustees
(i) substitute another bank or trust company for the Custodian by giving notice
as described above to the Custodian, or (ii) immediately terminate this Contract
in the event of the appointment of a conservator or receiver for the Custodian
by the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
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<PAGE> 44
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements pursuant to this Contract.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, or one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System and shall deliver to such successor Custodian all Funds and
other property held by it with respect to each applicable Portfolio.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company
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<PAGE> 45
Act of 1940, doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian on behalf of each applicable Portfolio
and all instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of each applicable Portfolio
and to transfer to an account of such successor custodian all of the securities
of each such Portfolio held in any Securities System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint
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<PAGE> 46
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state laws or
regulations or any provision of the Declaration of Trust or By-laws of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Wertheim Equity Value Fund, Wertheim Small Capitalization Value
Fund, Wertheim High Yield Income Fund, Wertheim Investment Grade Income Fund,
and Wertheim Short-Term Investment Fund with respect to which it desires to have
the Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, each such series of Shares shall become a Portfolio
hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
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<PAGE> 47
20. DECLARATION OF TRUST
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Fund as
Trustees and not individually and that the obligations of or arising out of this
instrument are not binding upon any of the Trustees or beneficiaries
individually, but binding only upon the assets and property of the Fund.
21. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any
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<PAGE> 48
purpose other than corporate communications. Please indicate below whether the
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 27th day of October, 1993.
ATTEST WSIS SERIES TRUST
/s/ Robert Bruno By /s/ Tony Coelho
- ------------------------------- --------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ E. Soloman By /s/ Ronald E. Logue
- ------------------------------- -------------------------------
Executive Vice President
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<PAGE> 49
[WSIS LETTERHEAD]
WSIS SERIES TRUST
March 30, 1995
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Re: Amendment to Custodian Contract
Ladies and Gentlemen:
Reference is made to the Custodian Contract between you and the undersigned
(the "Trust") dated October 27, 1993 (the "Custodian Contract"). You and the
Trust hereby agree that the Custodian Contract is hereby amended to provide
that, notwithstanding any other provision of such Contract, for purposes of the
payment of expenses of the Trust, "proper Instructions" shall mean a writing
signed or initialed by two or more persons as the Trustees shall have from time
to time authorized.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, officers or shareholders of
the Trust individually but are binding only upon the assets and property of the
Trust.
If this letter reflects your understanding of our agreement, please sign in
the space indicated below, whereupon this letter shall become a binding
agreement between us. This letter is governed by the internal laws of The
Commonwealth of Massachusetts without regard to conflict of laws provisions and
is executed under seal.
Very truly yours,
WSIS SERIES TRUST
By /s/ Robert Bruno
-----------------------
Name: Robert Bruno
Title: Secretary and Clerk
Accepted and agreed under seal:
STATE STREET BANK AND TRUST COMPANY
By /s/ Ronald E. Logue
----------------------------
Name: Ronald E. Logue
Title: Executive Vice President
<PAGE> 50
SCHRODER FUND ADVISORS INC. [SCHORODERS LOGO]
787 Seventh Avenue
New York, N.Y. 10019-6016
Telephone 212-641-3800
Facsimile 212-641-3897
August 1, 1997
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This is to advise you that Schroder Series Trust has established a new
series of shares to be known as Schroder MidCap Value Fund. In accordance with
the Additional Funds provision in Section 17 of the Custodian Contract dated
October 27, 1993 and Article 10 of the Transfer Agent and Service Agreement
dated October 27, 1993 and the Authorized Shares provision in Section 3 of the
Administration Agreement dated October 27, 1993 between the Trust and State
Street Bank and Trust Company, the Trust hereby requests that you act as
Custodian, Transfer Agent and Administrator for the new series under the terms
of the respective contracts.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one to the Trust and retaining one copy for
your records.
Schroder Series Trust State Street Bank and Trust Company
By: /s/ Catherine A. Mazza By: /s/ K. Cuocolo
---------------------- ----------------------------
Catherine A. Mazza
Title: Vice President Title: Senior Vice President
------------------- -------------------------
Date: 10/13/97 Date: 10/29/97
-------------------- --------------------------
<PAGE> 1
Exhibit (h)(i)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
WSIS SERIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of the Bank ....... 2
Article 2 Fees and Expenses .............................. 6
Article 3 Representations and Warranties of the Bank ..... 7
Article 4 Representations and Warranties of the Fund ..... 7
Article 5 Data Access and Proprietary Information ........ 8
Article 6 Indemnification ................................ 11
Article 7 Standard of Care ............................... 14
Article 8 Covenants of the Fund and the Bank ............. 14
Article 9 Termination of Agreement ....................... 15
Article 10 Additional Funds ............................... 16
Article 11 Assignment ..................................... 16
Article 12 Amendment ...................................... 17
Article 13 Massachusetts Law to Apply ..................... 17
Article 14 Force Majeure .................................. 17
Article 15 Consequential Damages .......................... 17
Article 16 Merger of Agreement ............................ 17
Article 17 Limitations of Liability of the Trustees
and the Shareholders ........................... 18
Article 18 Counterparts ................................... 18
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 27 day of October, 1993, by and between WSIS
SERIES TRUST, a Massachusetts business trust (the "Fund"), and STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company having its principal office and
place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the
"Bank").
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in five series,
Wertheim Equity Value Fund, Wertheim Small Capitalization Value Fund, Wertheim
High Yield Income Fund, Wertheim Investment Grade Income Fund, and Wertheim
Short-Term Investment Fund (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 10, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the
Bank as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
<PAGE> 4
Article 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund, on behalf of the Portfolios, hereby employs and appoints
the Bank to act as, and the Bank agrees to act as its transfer agent for the
authorized and issued shares of beneficial interest of the Fund representing
interests in each of the respective Portfolios ("Shares"), dividend disbursing
agent, custodian of certain retirement plans and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of each
of the respective Portfolios of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information as in
effect from time to time ("prospectus") of the Fund on behalf of the applicable
Portfolio, including without limitation any periodic investment plan or periodic
withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as applicable
and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Declaration of Trust of the Fund (the "Custodian");
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<PAGE> 5
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(viii) Issue replacement certificates for those certificates alleged
to have been lost, stolen, mutilated or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and the
Fund and protecting the Bank and the Fund,
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<PAGE> 6
and the Bank at its option, with the consent of the Fund may
issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of Shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of Shares
which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Bank shall also provide
the Fund on a regular basis with the total number of Shares
which are authorized and issued and outstanding and, except as
otherwise contemplated hereby, shall have no obligation, when
recording the issuance of Shares, to monitor the legality of the
issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall except as may
otherwise be established in accordance with (d) below: (i) perform the customary
services of a transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without
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<PAGE> 7
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, mailing Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and
mailing confirmation forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii) provide a
system which will enable the Fund to monitor the total number of Shares sold in
each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue sky reporting
for each State and (ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of the Bank for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time
-5-
<PAGE> 8
by agreement between the Fund on behalf of each Portfolio and the Bank per the
attached service responsibility schedule. The Bank may at times perform only a
portion of these services and the Fund or its agent may perform these services
on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing between the
Fund and the Bank.
Article 2 FEES AND EXPENSES
2.01 For performance by the Bank pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.02 below may be changed from time to time subject to
mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees on behalf of each of the Portfolios to reimburse the Bank for reasonable
out-of-pocket expenses, including but not limited to confirmation production,
postage, forms, telephone, microfilm, microfiche, tabulating proxies, records
storage or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses reasonably incurred by
the Bank at the request or with the consent of the Fund, will be reimbursed by
the Fund on behalf of the applicable Portfolio.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses within five
-6-
<PAGE> 9
days following the mailing of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all Shareholder
accounts shall be advanced to the Bank by the Fund, at the request of the Bank,
at least seven (7) days prior to the mailing date of such materials.
Article 3 REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
-7-
<PAGE> 10
4.03 All corporate proceedings required by said Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of the Fund being
offered for sale.
Article 5 DATA ACCESS AND PROPRIETARY INFORMATION
5.01 The Fund acknowledges that the data bases, computer programs,
screen format, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank on
data bases under the control and ownership of the Bank ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary information
(collectively, but not including any Customer Data "Proprietary Information")
of substantial value to the Bank. In no event shall Proprietary Information be
deemed Customer Data. The Fund agrees to treat all Proprietary Information as
proprietary to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as may be provided
hereunder. Without
-8-
<PAGE> 11
limiting the foregoing, the Fund agrees for itself and its employees and agents
except as may be required pursuant to applicable law:
(a) to access Customer Data solely from locations as may be agreed
in writing by the Bank and the Fund and solely in accordance
with the Bank's applicable user documentation agreed to by the
Fund;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform the Bank in a timely manner of such fact and
dispose of such information in accordance with the Bank's
instructions;
(d) to refrain from causing or allowing third-party data required
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.
-9-
<PAGE> 12
Notwithstanding the foregoing, nothing in this Agreement shall
restrict the ability of the Fund to obtain access to or make copies of, or
otherwise to use or consult freely all Customer Data in the Bank's possession or
control, or be read to derogate from the Fund's sole legal ownership of such
Customer Data.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain certain
data included in the Data Access Services are solely responsible for the
contents of such data and the Fund agrees absent any negligence, bad faith, or
misfeasance by the Bank, to make no claim against the Bank arising out of the
contents of such third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
-10-
<PAGE> 13
5.03 If the transactions available to the Fund include the ability
to originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information (such transactions constituting a "COEFI"), then in such
event the Bank shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long as such
instruction is undertaken in conformity with security procedures established by
the Bank from time to time and agreed to by the Fund (which agreement may be
established by the Fund's use of such procedure).
Article 6 INDEMNIFICATION
6.01 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, reasonable costs, charges, reasonable
counsel fees, payments, reasonable expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
-11-
<PAGE> 14
which (i) are received by the Bank or its agents or subcontractors, and (ii)
have been prepared, maintained or performed by the Fund or any other person or
firm (other than the Bank in any respect) on behalf of the Fund including but
not limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund on behalf of the
applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel of the Fund with respect to any
matter arising in connection with the services to be performed by the Bank under
this Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund on behalf of the applicable
Portfolio for any action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. The Bank, its affiliated
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data,
-12-
<PAGE> 15
records or documents provided the Bank or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Fund, and reasonably believed to be genuine and to have been originated
by the proper person or persons, and shall not be held to have notice of any
change of authority of any person, until receipt of written notice thereof from
the Fund. The Bank, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or former registrar, or
of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of such
assertion, and shall keep the Fund advised with respect to all developments
concerning such claim. The Fund shall have the option to participate with the
Bank in the defense of such claim or to defend against said claim in its own
name or in the name of the Bank, in which event the Fund shall have no further
obligation to indemnify the Bank for any expenses thereafter incurred by the
Bank in connection with such defense. The Bank shall in no case confess any
claim or make any compromise in any case in which the Fund may be required to
indemnify the Bank except with the Fund's prior written consent.
-13-
<PAGE> 16
Article 7 STANDARD OF CARE
7.01 The Bank shall at all times act in good faith and agrees to use
its best efforts to insure the accuracy of all services performed under this
Agreement, but assumes no responsibility and shall not be liable for loss or
damage due to errors unless said errors are caused by its negligence, bad faith,
or willful misconduct, or that of its employees.
Article 8 COVENANTS OF THE FUND AND THE BANK
8.01 The Fund shall on behalf of each of the Portfolios promptly
furnish to the Bank the following:
(a) A certified copy of the resolution of the Trustees of the Fund
authorizing the appointment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and
all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may reasonably deem advisable
unless otherwise agreed to by the Bank and the Fund. To the extent required by
Section 31 of the Investment Company Act of 1940, as amended, and the Rules
thereunder, the Bank agrees that all such records prepared or
-14-
<PAGE> 17
maintained by the Bank relating to the services to be performed by the Bank
hereunder are, regardless of how maintained or prepared, the property of the
Fund and will be preserved, maintained and made available in accordance with
such Section and Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
8.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 9 TERMINATION OF AGREEMENT
9.01 This Agreement may be terminated by either party upon sixty
(60) days written notice to the other.
9.02 Should the Fund exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund on behalf of the applicable Portfolio(s).
-15-
<PAGE> 18
Article 10 ADDITIONAL FUNDS
10.01 In the event that the Fund establishes one or more series of
Shares in addition to Wertheim Equity Value Fund, Wertheim Small Capitalization
Value Fund, Wertheim High Yield Income Fund, Wertheim Investment Grade Income
Fund, and Wertheim Short-Term Investment Fund with respect to which it desires
to have the Bank render services under the terms hereof, it shall so notify the
Bank in writing, and if the Bank agrees in writing to provide such services,
such series of Shares shall become a Portfolio hereunder.
Article 11 ASSIGNMENT
11.01 Except as provided in Section 11.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
11.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
11.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions.
-16-
<PAGE> 19
Article 12 AMENDMENT
12.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Trustees of the Fund.
Article 13 MASSACHUSETTS LAW TO APPLY
13.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 14 FORCE MAJEURE
14.01 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control and not the result of its negligence or
misfeasance, such party shall not be liable for damages to the other for any
damages resulting from such failure to perform or otherwise from such causes.
Article 15 CONSEQUENTIAL DAMAGES
15.01 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 16 MERGER OF AGREEMENT
16.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
-17-
<PAGE> 20
Article 17 LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
17.01 A copy of the Declaration of Trust of the Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or Shareholders individually but are
binding only upon the assets and property of the Fund.
Article 18 COUNTERPARTS
18.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
-18-
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
WSIS SERIES TRUST
BY: /s/ Tony Coelho
----------------------------------
ATTEST:
/s/ Robert Bruno
- ----------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
----------------------------------
Executive Vice President
ATTEST:
/s/ E. Soloman
- ----------------------
-19-
<PAGE> 22
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares. X X
2. Issue Shares and hold Shares in
Shareholders accounts. X
3. Receive redemption requests. X X
4. Effect transactions 1-3 above
directly with broker-dealers. X
5. Pay over monies to redeeming
Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends
and distributions. X
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and
accurate control book for each
issue of securities. X
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current
Shareholders. X
15. Withhold taxes on U.S. resident
and non-resident alien accounts. X
16. Prepare and file U.S. Treasury
Department forms. X
17. Prepare and mail account and
confirmation statements for
Shareholders. X
-20-
<PAGE> 23
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
18. Provide Shareholder account
information. X
19. Blue sky reporting. X
* Such services are more fully described in Article 1.02 (a), (b) and
(c) of the Agreement.
WSIS SERIES TRUST
BY:
----------------------------------
ATTEST:
- ----------------------
STATE STREET BANK AND TRUST COMPANY
BY:
----------------------------------
Executive Vice President
ATTEST:
- ----------------------
-21-
<PAGE> 24
SCHRODER FUND ADVISORS INC. [SCHORODERS LOGO]
787 Seventh Avenue
New York, N.Y. 10019-6016
Telephone 212-641-3800
Facsimile 212-641-3897
August 1, 1997
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This is to advise you that Schroder Series Trust has established a new
series of shares to be known as Schroder MidCap Value Fund. In accordance with
the Additional Funds provision in Section 17 of the Custodian Contract dated
October 27, 1993 and Article 10 of the Transfer Agent and Service Agreement
dated October 27, 1993 and the Authorized Shares provision in Section 3 of the
Administration Agreement dated October 27, 1993 between the Trust and State
Street Bank and Trust Company, the Trust hereby requests that you act as
Custodian, Transfer Agent and Administrator for the new series under the terms
of the respective contracts.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one to the Trust and retaining one copy for
your records.
Schroder Series Trust State Street Bank and Trust Company
By: /s/ Catherine A. Mazza By: /s/ K .Cuocolo
---------------------- ----------------------------
Catherine A. Mazza
Title: Title: Senior Vice President
------------------- -------------------------
Vice President
Date: 10/13/97 Date: 10/29/97
-------------------- --------------------------
<PAGE> 1
Exhibit (h)(ii)
ADMINISTRATION AGREEMENT
Agreement dated as of October 27, 1993 between State Street
Bank and Trust Company, a Massachusetts trust company (the "Bank") and WSIS
Series Trust (the "Trust").
WHEREAS, the Bank provides certain administrative and other
services to investment companies and others; and
WHEREAS, the Trust desires to retain the Bank to render
certain administrative and other services with respect to the Trust and the Bank
is willing to render such services on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT OF BANK
The Trust hereby appoints the Bank to act as administrator
with respect to the Trust for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The Bank
accepts such appointment and agrees to render the services stated herein and to
provide the office facilities and the personnel required by it to perform such
services. In connection with such appointment, the Trust will deliver to the
Bank copies of each of the following documents and will deliver to it all future
amendments and supplements, if any:
A. Certified copies of the Agreement and Declaration
of Trust as presently in effect and as amended from time to time;
B. The Trust's most recent registration statement on
Form N-1A as filed with, and declared effective by, the U.S. Securities and
Exchange Commission, and all amendments thereto;
C. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
D. Certified copies of the resolutions of the Trust's
Board of Trustees authorizing: (1) this Agreement, (2) certain officers and
trustees of the Trust to give instructions to the Bank pursuant to this
Agreement and (3) certain officers and employees of the Trust to sign checks and
pay expenses on behalf of the Trust, respectively;
<PAGE> 2
E. A copy of the Investment Advisor Agreement between the
Trust and Wertheim Schroeder Investment Services, Inc. (the "Advisor");
F. A copy of the Custodian Agreement between the Trust and
its custodian;
G. A copy of the Transfer Agency and Registrar Agreement
between the Trust and its transfer agent; and
H. Such other certificates, documents or opinions which
the Bank may, in its reasonable discretion, deem necessary or appropriate in the
proper performance of its duties.
2. REPRESENTATION AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Trust that:
A. It is a Massachusetts trust company, duly organized and
existing in good standing under the laws of the Commonwealth of
Massachusetts;
B. It is duly qualified to carry on its business in the
Commonwealth of Massachusetts;
C. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement; and
D. It has and will continue to have and maintain the
necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
3. AUTHORIZED SHARES
The Trust certifies to the Bank that, as of the close of
business on the date of this Agreement, the Trust is authorized to issue an
unlimited number of shares of beneficial interest of each series listed on
Schedule A attached hereto.
4. ADMINISTRATION SERVICES
The Bank shall discharge the responsibilities set forth in
Schedule B hereof subject to the control of the Trust in accordance with
procedures established from time to time between the Trust and the Bank.
2
<PAGE> 3
The Bank and the Trust agree that all services provided
hereunder are subject to review and correction by the Trust's accountants and/or
legal counsel and the services provided by Bank shall not constitute the
practice of public accountancy or law.
5. SERVICES TO BE OBTAINED BY THE TRUST
The Trust shall provide for any of its own:
A. Organizational expenses;
B. Services of an independent accountant;
C. Services of outside legal and tax counsel (including
such counsel's review of the Trust's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company, and other
reports and materials prepared by the Bank under this Agreement);
D. Any services contracted for by the Trust directly
from parties other than the Bank;
E. Trading operations and brokerage fees, commissions
and transfer taxes in connection with the purchase and sale of securities for
the Trust;
F. Investment advisory services;
G. Taxes, insurance premiums and other fees and
expenses applicable to its operation;
H. Costs incidental to any meetings of shareholders
including, but not limited to, legal and accounting fees, proxy filing fees and
the preparation, printing and mailing of any proxy materials;
I. Administration of and costs incidental to
Trustees' meetings, including fees and expenses of Trustees;
J. The salary and expenses of any officer, trustee or
employee of the Trust;
K. Costs incidental to the preparation, printing and
distribution of the Trust's registration statements and any amendments thereto,
and shareholder reports;
L. All applicable registration fees and filing fees
required under the securities laws of the United States and state regulatory
authorities;
3
<PAGE> 4
M. Preparation and filing of the Trust's tax returns,
Form N-1A, Annual Report and Semi-Annual Report on Form N-SAR, and all notices,
registrations and amendments associated with applicable tax and securities laws
of the United States and state regulatory authorities; and
N. Fidelity bond and directors' and officers' liability
insurance.
6. FEES
The Bank shall receive from the Trust such compensation for
the Bank's services provided pursuant to this Agreement as may be agreed to from
time to time in a written fee schedule approved by the parties hereto and
initially set forth herein in Schedule C attached hereto. In addition, the Bank
shall be reimbursed by the Trust for the out-of-pocket costs incurred in
connection with this Agreement.
7. INSTRUCTIONS
At any time the Bank may apply to any officer or trustee of
the Trust for instructions and may consult with legal counsel for the Trust, or
its outside legal counsel (in which event such counsel shall be reasonably
satisfactory to the Trust), the outside counsel for the Trust or the auditors
for the Trust at the expense of the Trust (other than in the case of the Bank's
own legal counsel), with respect to any matter arising in connection with the
services to be performed by the Bank under this Agreement. The Bank shall not be
liable and shall be indemnified by the Trust for any action taken or omitted by
it in good faith in reliance upon such instructions or upon any paper or
document believed by it to be genuine and to have been signed by the proper
person or persons. The Bank shall not be held to have notice of any change of
authority of any person until receipt of written notice thereof from the Trust.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
a. The Bank shall be responsible for the performance of only
such duties as are set forth herein and shall have no responsibility for the
actions or activities of any other party including other service providers. The
Bank shall have no liability for any loss or damage resulting from the
performance or nonperformance of its duties hereunder unless solely caused by or
resulting from the negligence or willful misconduct of the Bank,
4
<PAGE> 5
its officers or employees. In any event, the Bank's liability shall be limited
to two and one half (2 1/2) times its total annual compensation earned and fees
paid during the preceding twelve months (or if this Agreement has been in effect
for less than twelve months, all fees paid during the period that this Agreement
has been in effect plus all fees payable for the remainder of the initial twelve
month period) for all services provided to the Trust under this Agreement, the
Custodian Contract and the Transfer Agency and Service Agreement for any
liability suffered by the Advisor or the Trust including, but not limited to,
any liability relating to qualification of the Trust as a regulated investment
company or any liability relating to the Trust's compliance with any federal or
state tax or securities statute, regulation or ruling.
b. The Trust shall indemnify and hold the Bank harmless from
all loss, cost, damage and expense, including reasonable expenses for counsel,
incurred by the Bank resulting from any claim, demand, action or suit in
connection with the Bank's acceptance of this Agreement, any action or omission
by it in the performance of its duties hereunder, or as a result of acting upon
any instructions reasonably believed by it to have been executed by a duly
authorized officer of the Advisor or of the Trust, provided that this
indemnification shall not apply to actions or omissions of the Bank, its
officers or employees to the extent resulting from the negligence or willful
misconduct of any of them.
c. The Trust will be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
which might be the subject of the indemnification provided above. In the event
the Trust elects to assume the defense of any such suit and retain such counsel,
the Bank or any other person entitled to such indemnification, named as
defendant or defendants in the suit, may retain additional counsel but shall
bear the fees and expenses of such counsel unless the Trust shall have
specifically authorized the retaining of such counsel.
d. The indemnification contained herein shall survive the
termination of this Agreement.
e. This Section 8 shall not apply with respect to services
covered by the Custodian Agreement or the Transfer Agency and Registrar
Agreement.
9. CONFIDENTIALITY
The Bank agrees that, except as otherwise required by law, it
will keep confidential the terms of this Agreement, all
5
<PAGE> 6
records and information in its possession relating to the Trust or its
shareholders or shareholder accounts and will not disclose the same to any
person except at the request or with the written consent of the Trust.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
The Trust assumes full responsibility for complying with all
applicable requirements of the Investment Company Act, the Securities Act of
1933, the Securities Exchange Act of 1934, and the Internal Revenue Code of
1986, all as amended, and any laws, rules and regulations issued thereunder.
The Bank shall maintain and preserve for the periods
prescribed by the Trust or applicable law such records relating to the services
to be performed by the Bank under this Agreement as are required pursuant to the
Investment Company Act. All such records shall at all times remain the property
of the Trust, shall be readily accessible during normal business hours, and
shall be promptly surrendered upon the termination of the Agreement or otherwise
on written request. Records other than documentary records shall be surrendered
in usable machine-readable form.
11. STATUS OF THE BANK
The services of the Bank to the Trust are not to be deemed
exclusive, and the Bank shall be free to render similar services to others. The
Bank shall be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Trust from time to time, have no
authority to act or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
12. PRINTED MATTER
Neither party shall publish or circulate any printed matter
which contains any reference to the other party without such party's prior
written approval. The Trust may circulate such printed matter as refers in
accurate terms to the Bank's appointment hereunder provided that the Bank is
given a copy of such material prior to its first use.
13. TERM, AMENDMENT AND TERMINATION
This Agreement may be modified or amended from time to time by
mutual agreement between the parties hereto. The Agreement shall remain in
effect for a period of one year from the date the Trust first accepts money for
investment, and shall
6
<PAGE> 7
automatically continue in effect thereafter with respect to the Trust unless
terminated by a party at the end of such period or thereafter on sixty (60)
days' prior written notice. Upon termination of this Agreement, the Trust shall
pay to the Bank such compensation as may be due under the terms hereof as of the
date of such termination including reasonable out-of-pocket expenses associated
with such termination.
14. NOTICES
Any notice or other communication authorized or required by
this Agreement to be given to any party mentioned herein shall be sufficiently
given if addressed to such party and mailed postage prepaid or delivered to its
principal office.
15. NON-ASSIGNABILITY
This Agreement shall not be assigned by any of the parties
hereto without the prior consent in writing of the other parties.
16. SUCCESSORS
This Agreement shall be binding on and shall inure to the
benefit of the Trust and the Bank and their respective successors.
17. ENTIRE AGREEMENT
This Agreement (and any Compliance Manual and Trust Profile as
may be prepared by the Bank and accepted and agreed to by the Trust) contains
the entire understanding between the parties hereto and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing. This Agreement cannot be
modified or terminated except in accordance with its terms or by a writing
signed by all parties.
18. GOVERNING LAW
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
19. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
7
<PAGE> 8
A copy of the Declaration of Trust of the Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or Shareholders individually but are
binding only upon the assets and property of the Fund.
8
<PAGE> 9
WSIS SERIES TRUST
By: /s/ Tony Coelho
-------------------------------------
Name: Tony Coelho
-----------------------------------
Title: President
----------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
-------------------------------------
Name: Ronald E. Logue
----------------
Title: Executive Vice President
-------------------------
9
<PAGE> 10
SCHEDULE A
TO
ADMINISTRATION AGREEMENT
TRUST
Wertheim Equity Value Fund
Wertheim Small Capitalization Value Fund
Wertheim High Yield Income Fund
Wertheim Investment Grade Income Fund
Wertheim Short-Term Investment Fund
10
<PAGE> 11
SCHEDULE B
TO
ADMINISTRATION AGREEMENT
Services Provided by the Bank:
(a) Oversee the determination and publication of the Trust's net
asset value in accordance with the Trust's policy as adopted
from time to time by the Board of Trustees;
(b) Oversee the maintenance by State Street Bank and Trust Company
of certain books and records of the Trust as required under
Rule 31a-1(b)(4) of the Investment Company Act of 1940;
(c) Prepare on a timely basis the Trust's federal, state and local
income tax returns for review by the Trust's independent
accountants and filing by the Trust treasurer;
(d) Review the appropriateness of and arrange for payment of the
Trust's expenses;
(e) Prepare on a timely basis for review and approval by officers
of the Trust financial information for the Trust's semi-annual
and annual reports, proxy statements and other communications
with shareholders required or otherwise to be sent to Trust
shareholders, and arrange for the printing and dissemination
of such reports and communications to shareholders;
(f) Prepare on a timely basis for review by an officer of and
counsel for the Trust the Trust's periodic financial report
required to be filed with the Securities and Exchange
Commission ("SEC") on Form N-SAR and Form N-1A and such other
reports, forms or filings, as may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the
Trust as may be mutually agreed upon and not otherwise
appropriately prepared by the Trust's investment adviser,
custodian, counsel or auditors;
(h) Make such reports and recommendations to the Board concerning
the performance of the independent accountants as the Board
may reasonably request or deems appropriate;
11
<PAGE> 12
(i) Make such reports and recommendations to the Board concerning
the performance and fees of the Trust's custodian and transfer
and dividend disbursing agent as the Board may reasonably
request or deems appropriate;
(j) Oversee and review calculations of fees paid to the Advisor,
the investment adviser, the custodian, and the transfer agent;
(k) Consult with the Trust's officers, independent accountants,
legal counsel, custodian and transfer and dividend disbursing
agent in establishing the accounting policies of the Trust;
(l) Review implementation of any dividend reinvestment programs
authorized by the Board of Trustees;
(m) Respond to or refer to the Trust's officers or transfer agent,
shareholder inquiries relating to the Trust.
(n) Provide periodic testing of portfolios to assist the Trust's
advisor in complying with Internal Revenue Code mandatory
qualification requirements, the requirements of the Investment
Company Act and Trust prospectus limitations as may be
mutually agreed upon and quarterly reports to the Trustees as
to such compliance.
(o) Prepare recommendations of distributions to be made by each of
the Portfolios in order to comply with the requirements
outlined in paragraph (n) above, for review by the Trust's
auditors and officers.
Certain details of the scope of the Bank services hereunder may be
documented in the Compliance Manual and Trust Profile as amended from time to
time with consent of the parties.
12
<PAGE> 13
SCHEDULE B-2
REGISTRATION OF TRUST SHARES
WITH STATE SECURITIES ADMINISTRATORS
The Bank will prepare required documentation and register Trust shares in
accordance with the securities laws of each state or jurisdiction in which Trust
shares are offered or sold as determined by the Trust. The registration services
shall consist of the following:
1. Filing of Trust initial registration statements and
amendments thereto (N-1A);
2. Amending state registration statements as required;
3. Filing, on behalf of the Trust, Trust sales reports and
advertising literature where applicable;
4. Payment at the expense of the Trust of all Trust state
registration and filing fees;
5. Filing post effective amendments to the prospectuses and
statements of additional information (SAI);
6. Filing of annual reports, supplements and stickers, and
proxy statements; and
7. The performance of additional services which the Bank and the
Advisor may agree upon in writing.
Unless otherwise noted in writing by the Bank, registration services by the Bank
shall not include determining the availability of institutional exemptions under
a state's blue sky law. Any such determination shall be made by the Advisor or
its legal counsel. In connection with the services described herein, the Advisor
shall cause the Trust to issue in favor of the Bank a power of attorney to
register Trust shares on behalf of the Trust, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
13
<PAGE> 14
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of July 1994 that WSIS SERIES TRUST (the
"Trust") makes, constitutes, and appoints STATE STREET BANK AND TRUST COMPANY
(the "Bank") with principal offices at 225 Franklin Street, Boston,
Massachusetts the Trust's lawful attorney-in-fact for the Bank to do as if the
Trust were itself acting, the following:
1. REGISTRATION OF TRUST SHARES. The power to register shares of the Trust
in each jurisdiction in which Trust shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and
file any and all Trust applications, including without limitation,
applications to register shares, to register agents, consents,
including consents to service of process, reports, including without
limitation, all periodic reports, claims for exemption, or other
documents and instruments now or hereafter required or appropriate in
the judgement of the Bank in connection with the registration of Trust
shares.
2. CHECKS. The power to draw, endorse, and deposit checks in the name of
the Trust in connection with the registration of Trust shares with
state securities administrators.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by Bank of such termination of
authority. Nothing herein shall be construed to constitute the appointment of
the Bank as or otherwise authorize the Bank to act as an officer, director or
employee of the Trust.
3. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of the
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or Shareholders
individually but are binding only upon the assets and property of the
Fund.
14
<PAGE> 15
IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
WSIS SERIES TRUST
By: /s/ Tony Coelho
------------------------------
Name: Tony Coelho
----------------------------
Title: President
---------------------------
15
<PAGE> 16
SCHRODER FUND ADVISORS INC. [SCHORODERS LOGO]
787 Seventh Avenue
New York, N.Y. 10019-6016
Telephone 212-641-3800
Facsimile 212-641-3897
August 1, 1997
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This is to advise you that Schroder Series Trust has established a new
series of shares to be known as Schroder MidCap Value Fund. In accordance with
the Additional Funds provision in Section 17 of the Custodian Contract dated
October 27, 1993 and Article 10 of the Transfer Agent and Service Agreement
dated October 27, 1993 and the Authorized Shares provision in Section 3 of the
Administration Agreement dated October 27, 1993 between the Trust and State
Street Bank and Trust Company, the Trust here by requests that you act as
Custodian, Transfer Agent and Administrator for the new series under the terms
of the respective contracts.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one to the Trust and retaining one copy for
your records.
Schroder Series Trust State Street Bank and Trust Company
By: /s/ Catherine A. Mazza By: /s/ K. Cuocolo
---------------------- ----------------------------
Catherine A. Mazza
Title: Title: Senior Vice President
------------------- -------------------------
Vice President
Date: 10/13/97 Date: 10/29/97
-------------------- --------------------------
<PAGE> 1
Exhibit (i)
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
TELECOPIER (617) 951-7050
WRITER'S DIRECT DIAL NUMBER: (617) 951-7000
November 10, 1993
WSIS Series Trust
787 Seventh Avenue
New York, New York 10019
Gentlemen:
We are furnishing this opinion in connection with Registration
Statement No. 33-65632 on Form N-1A filed under the Securities Act of 1933, as
amended, by WSIS Series Trust (the "Trust") for the registration of an
indefinite number of shares of beneficial interest (the "Shares") which may be
issued in several series of shares. The Shares are proposed to be sold pursuant
to a Distributor's Contract in the form filed as an exhibit to the Registration
Statement (the "Distributor's Contract") to be entered into between the Trust
and Wertheim Schroder & Co. Incorporated.
We have acted as counsel for the Trust since its organization. We are
familiar with the action taken by its Trustees to authorize the issuance of the
Shares. We have examined its records of trustee and shareholder action, its
Bylaws, and its Agreement and Declaration of Trust on file at the Office of the
Secretary of State of The Commonwealth of Massachusetts. We have examined
executed copies of such Registration Statement, and amendments thereto, in the
form filed or to be filed with the Securities and Exchange Commission, and such
other documents as we deem necessary for the purposes of this opinion.
We assume that upon sale of the Shares the Trust will receive the net
asset value thereof.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that when the Shares are
issued and sold pursuant to the Distributor's Contract, they will be validly
issued, fully paid, and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
<PAGE> 2
WSIS Series Trust
November 10, 1993
Page 2
circumstances, be held liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust 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 Agreement and Declaration of Trust provides for
indemnification, out of the property of a series of shares, of any shareholder
of that series held personally liable solely by reason of his being or having
been a shareholder. Thus, the risk of a shareholder's incurring financial loss
on account of shareholder liability is limited to circumstances in which that
series of shares itself would be unable to meet its obligations.
We consent to the filing of this opinion as an exhibit to such
Registration Statement.
Sincerely yours,
/s/ Ropes & Gray
----------------------------------------
Ropes & Gray
<PAGE> 1
Exhibit (j)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated December 11, 1998 on the financial statements of Schroder Series Trust for
the year ended October 31, 1998 and to all references to our Firm included in
or made part of the registration statement of Schroder Series Trust filed on
Form N-1A (Amendment No. 11), Investment Company Act File No. 811-7840 with
the Securities and Exchange Commission.
ARTHUR ANDERSEN LLP
/s/ ARTHUR ANDERSEN LLP
-------------------------------
New York, New York
February 23, 1999
<PAGE> 1
Exhibit(l)
November 5, 1993
WSIS Series Trust
787 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
In connection with your sale to us today of 10,000 shares of beneficial
interest (the "Shares") in WSIS Series Trust (the "Fund"), we understand that:
(i) the Shares have not been registered under the Securities Act of 1933, as
amended; (ii) your sale of the Shares to us is in reliance on the sale's being
exempt under Section 4(2) of the Act as not involving any public offering; and
(iii) in part, your reliance on such exemption is predicated on our
representation, which we hereby confirm, that we are acquiring the Shares for
investment and for our own account as the sole beneficial owner hereof, and not
with a view to or in connection with any resale or distribution of any or all of
the Shares or of any interest therein. We hereby agree that we will not sell,
assign or transfer the Shares or any interest therein except upon repurchase or
redemption by the Fund unless and until the Shares have been registered under
the Securities Act of 1933, as amended, or you have received an opinion of your
counsel indicating to your satisfaction that such sale, assignment or transfer
will not violate the provisions of the Securities Act of 1933, as amended, or
any rules and regulations promulgated thereunder.
This letter is intended to take effect as an instrument under seal,
shall be construed under the laws of The Commonwealth of Massachusetts, and is
delivered at New York, New York, as of the date written above.
Very truly yours,
WERTHEIM, SCHRODER INVESTMENT SERVICES, INC.
By: /s/ E. William Smethurst, Jr.
----------------------------------------
E. William Smethurst, Jr.
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<APPREC-INCREASE-CURRENT> (316,048)
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<NUMBER-OF-SHARES-REDEEMED> 479,624
<SHARES-REINVESTED> 147,906
<NET-CHANGE-IN-ASSETS> 1,450,851
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (45,476)
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<GROSS-EXPENSE> 339,632
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<EXPENSE-RATIO> 0.89
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000908802
<NAME> SCHRODER SERIES TRUST
<SERIES>
<NUMBER> 5
<NAME> SCHRODER SHORT-TERM INVESTMENT FUND - INVESTOR SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 32,017,605
<INVESTMENTS-AT-VALUE> 32,156,725
<RECEIVABLES> 255,989
<ASSETS-OTHER> 6,865
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,419,579
<PAYABLE-FOR-SECURITIES> 2,050,537
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 314,824
<TOTAL-LIABILITIES> 2,365,361
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30,030,263
<SHARES-COMMON-STOCK> 3,034,881
<SHARES-COMMON-PRIOR> 2,771,195
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (3,572)
<ACCUMULATED-NET-GAINS> (111,593)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,120
<NET-ASSETS> 30,054,218
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,622,892
<OTHER-INCOME> 0
<EXPENSES-NET> 294,246
<NET-INVESTMENT-INCOME> 1,328,646
<REALIZED-GAINS-CURRENT> (74)
<APPREC-INCREASE-CURRENT> 113,160
<NET-CHANGE-FROM-OPS> 1,441,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,334,421
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,559,113
<NUMBER-OF-SHARES-REDEEMED> 2,430,714
<SHARES-REINVESTED> 135,287
<NET-CHANGE-IN-ASSETS> 2,707,912
<ACCUMULATED-NII-PRIOR> 977
<ACCUMULATED-GAINS-PRIOR> (108,961)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 114,344
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 320,579
<AVERAGE-NET-ASSETS> 28,576,868
<PER-SHARE-NAV-BEGIN> 9.87
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 0.03
<PER-SHARE-DIVIDEND> (0.46)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.9
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
