Document/Exhibit Description Pages Size
1: 485BPOS Post-Effective Amendment 34 163K
12: EX-27 Financial Data Schedule (Pre-XBRL) 2 12K
8: EX-99.11 Miscellaneous Exhibit 1 8K
9: EX-99.15 Miscellaneous Exhibit 3 17K
10: EX-99.16 Miscellaneous Exhibit 2 9K
2: EX-99.2 Miscellaneous Exhibit 6 29K
3: EX-99.5 Miscellaneous Exhibit 3 19K
4: EX-99.6 Miscellaneous Exhibit 3 14K
5: EX-99.8 Miscellaneous Exhibit 14 53K
6: EX-99.9(B) Miscellaneous Exhibit 9 36K
7: EX-99.9(D) Miscellaneous Exhibit 10 40K
11: EX-99.OTHER Miscellaneous Exhibit 1 7K
As filed with the Securities and Exchange Commission on April 18, 1997
File No. 2-34215
File No. 811-1911
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 61
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 42
--------------------------------------------------------------------------------
SCHRODER CAPITAL FUNDS (DELAWARE)
(FORMERLY SCHRODER CAPITAL FUNDS, INC.)
(Exact Name of Registrant as Specified in Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: 207-879-1900
--------------------------------------------------------------------------------
Catherine S. Wooledge, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)
Copies of Communications to:
Scott M. Shepard, Esq.
Jacobs Persinger & Parker
77 Water Street, New York, New York 10005
Alexandra Poe, Esq.
Schroder Capital Management International Inc.
787 seventh Avenue, 34th Floor
New York, New York 10019
--------------------------------------------------------------------------------
It is proposed that this filing will become effective:
X immediately upon filing pursuant to Rule 485, paragraph (b)
---
on [date] pursuant to Rule 485, paragraph (b)
---
60 days after filing pursuant to Rule 485, paragraph (a)(i)
---
on _________ pursuant to Rule 485, paragraph (a)(i)
---
75 days after filing pursuant to Rule 485, paragraph (a)(ii)
---
on [ ] pursuant to Rule 485, paragraph (a)(ii)
---
this post-effective amendment designates a new effective date for a
---
previously filed post-effective amendment.
---
The Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Accordingly, no fee is payable herewith.
Registrant filed a Rule 24f-2 Notice for its various portfolios with a October
31 fiscal year end on December 27, 1996.
PART A as filed in Post-Effective Amendment No. 58 to its Registration Statement
under the Securities Act of 1933 and Amendment No. 39 to the Registration
Statement under the Investment Company Act of 1940 is incorporated by reference
herein in its entirety by the Registrant.
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(A))
PART B
(Statement of Additional Information offering Investor Shares and
Advisor Shares of Schroder U.S. Equity Fund)
Form N-1A Location in Statement of
Item No. (Caption) Additional Information (Caption)
-------- --------------------- --------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Other Information - Organization
History
13. Investment Objectives and Investment Policies; Investment
Policies Restrictions
14. Management of the Fund Management - Officers and Trustees
15. Control Persons and Principal Not Applicable
Holders of Securities
16. Investment Advisory and Management - Investment Adviser;
Other Services Officers and Trustees;
Administrative Services;
Distribution of Fund Shares;
Service Organizations; Portfolio
Accounting; Fees and Expenses;
Portfolio Transactions - Investment
Decisions; Brokerage and Research
Services; Other Information -
Custodian; Transfer Agent and
Dividend Disbursing Agent; Legal
Counsel; Independent Accountants
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other Other Information - Capitalization
Securities and Voting
19. Purchase, Redemption and Determination of Net Asset Value
Pricing of Securities Being Per Share
Offered
20. Tax Status Taxation
21. Underwriters Management - Distribution of Fund
Shares; Fees and Expenses
22. Calculation of Performance Other Information - Performance
Data Information
23. Financial Statements Not Applicable
SCHRODER U.S. EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1997, AS AMENDED APRIL 18, 1997
--------------------------------------------------------------------------------
[Graphic]
INVESTMENT ADVISER AND ADMINISTRATOR
Schroder Capital Management International Inc. ("SCMI")
DISTRIBUTOR
Schroder Fund Advisors, Inc. ("Schroder Advisors")
SUBADMINISTRATOR
Forum Administrative Services, Limited Liability Company ("Forum")
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Forum Financial Corp. ("FFC")
GENERAL INFORMATION: (207) 879-8903
ACCOUNT INFORMATION: (800) 344-8332
FAX: (207) 879-6206
Investor Shares of Schroder U.S. Equity Fund (the "Fund") are offered for sale
at net asset value with no sales charge as an investment vehicle for
individuals, institutions, corporations and fiduciaries. Advisor Shares of the
Fund also are offered for sale at net asset value to individual investors, in
most cases through Service Organizations (as defined herein). Advisor Shares
incur more expenses than Investor Shares.
This Statement of Additional Information ("SAI") is not a prospectus and is
authorized for distribution only when preceded or accompanied by the Fund's
current Prospectus dated March 1, 1997, as amended from time to time (the
"Prospectus"). This SAI contains additional and more detailed information than
that set forth in the Prospectus and should be read in conjunction with the
Prospectus and retained for future reference. All terms used in this SAI that
are defined in the Prospectus have the meaning assigned in the Prospectus. You
may obtain an additional copy of the Prospectus without charge by writing to the
Fund at Two Portland Square, Portland, Maine 04101 or calling the numbers listed
above.
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . . 3
Convertible Securities . . . . . . . . . . . . . . . . . . . . . 3
Temporary Defensive and Operating Investments. . . . . . . . . . 4
U.S. Government Securities . . . . . . . . . . . . . . . . . . . 4
Illiquid and Restricted Securities . . . . . . . . . . . . . . . 5
Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Loans of Portfolio Securities. . . . . . . . . . . . . . . . . . 5
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . 6
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers and Trustees. . . . . . . . . . . . . . . . . . . . . . 7
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . 9
Subadministrator . . . . . . . . . . . . . . . . . . . . . . . . 10
Distribution of Fund Shares. . . . . . . . . . . . . . . . . . . 10
Service Organizations. . . . . . . . . . . . . . . . . . . . . . 11
Portfolio Accounting . . . . . . . . . . . . . . . . . . . . . . 12
Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 12
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . 13
Investment Decisions . . . . . . . . . . . . . . . . . . . . . . 13
Brokerage and Research Services. . . . . . . . . . . . . . . . . 13
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . 15
Determination of Net Asset Value per Share . . . . . . . . . . . 15
Redemption In-Kind . . . . . . . . . . . . . . . . . . . . . . . 15
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 17
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Capitalization and Voting. . . . . . . . . . . . . . . . . . . . 17
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . 18
Performance Information. . . . . . . . . . . . . . . . . . . . . 18
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Transfer Agent and Dividend Disbursing Agent . . . . . . . . . . 19
Legal Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Independent Accountant . . . . . . . . . . . . . . . . . . . . . 19
Registration Statement . . . . . . . . . . . . . . . . . . . . . 19
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 20
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
2
INTRODUCTION
Schroder U.S. Equity Fund is a diversified, separately managed series of
Schroder Capital Funds (Delaware) (the "Trust"), an open-end management
investment company currently consisting of five separate series, each of which
has a different investment objective and policies.
The Fund's investment objective is to seek growth of capital. There is no
assurance that this objective will be achieved. The Fund invests at least 65%
of its total assets, and normally expect to invest substantially all its assets,
in common stocks, and securities convertible into common stock, of U.S. issuers.
The Fund also may invest in warrants or other rights to purchase common stock,
and to a lesser extent in non-convertible preferred stock and debt securities.
INVESTMENT POLICIES
The Fund's investment objective and policies authorize it to invest in certain
types of securities and to engage in certain investment techniques identified in
"Investment Objective" and "Investment Policies" in the Prospectus. The
following information supplements the discussion in those sections by providing
additional information or elaborating upon the discussion there.
The Fund is a "diversified" portfolio and, as such, at least 75% of its total
assets must be represented by cash and cash items, Government securities and
securities limited in respect of any one issuer to not more than 5% of the
Fund's total assets and to not more than 10% of the voting securities of such
issuer. The classification of the Fund as diversified under the Investment
Company Act of 1940 (the "1940 Act") cannot be changed without the majority
approval of the Fund's shareholders. As used in this SAI, "majority approval of
the Fund's shareholders" means approval of the lesser of: (i) 67% or more of
the Fund's shares present at a meeting if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (ii) more
than 50% of the outstanding shares of the Fund.
The investment objective of the Fund set forth in the Prospectus is a
fundamental policy of the Fund, meaning that it cannot be changed without
majority approval of the Fund's shareholders. A non-fundamental policy could be
changed by the Trust's Board of Trustees (the "Trust Board") without such prior
shareholder approval. Unless otherwise indicated, all of the investment
policies of the Fund described below are also fundamental policies.
The Fund generally purchases securities that are believed to have potential for
capital appreciation. Securities, however, are disposed of in situations where
the Fund's investment adviser believes that such potential is no longer feasible
or the risk of decline in market price is too great. Pursuant to this policy,
the Fund has invested, and normally will invest, substantially all its assets in
common stocks and securities convertible into common stock. The Fund also may
invest in other securities with common stock purchase warrants attached or in
such warrants or other rights to purchase common stock. The Fund also may
invest to a limited degree in non-convertible preferred and debt securities.
Such investments might be made at such times as in the opinion of management
substantially greater yields could be earned on such securities of investment
grade than on U.S. Government securities and bank certificates of deposit. As a
non-fundamental policy, the Fund will not invest more than 15% of its total
assets in such non-convertible preferred and debt securities.
CONVERTIBLE SECURITIES
The Fund may invest in convertible preferred stocks and convertible debt
securities ("convertible securities"). A convertible security is a bond,
debenture, note, preferred stock or other security that may be converted into or
exchanged for a prescribed amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula.
Convertible securities rank senior to common stocks in a corporation's capital
structure and, therefore, carry less risk than the corporation's common stock.
The value of a convertible security is a function of its "investment value" (its
value as if it did not have a conversion privilege), and its "conversion value"
(the security's worth if it were to be exchanged for the underlying security, at
market value, pursuant to its conversion privilege).
3
TEMPORARY DEFENSIVE AND OPERATING INVESTMENTS
For temporary defensive purposes, the Fund may invest all or any portion of its
assets in investment-grade corporate bonds or debentures (meaning for these
purposes bonds or debentures rated "A" or better by Standard & Poor's ("S&P") or
the equivalent thereof), preferred stock, U.S. Government securities or bank
certificates of deposit. (According to S&P, bonds rated "A" have a strong
capacity to pay principal and interest although they are somewhat more
susceptible to the adverse effect of changes in circumstances and economic
conditions.) The conditions under which the Fund may so invest for temporary
defensive purposes will be at times when in the opinion of the investment
adviser, the market appears relatively fully priced or uncertain economic
conditions indicate the advisability of assuming such a temporary defensive
position.
As an operating, non-fundamental policy, the Fund also may invest temporarily in
certain short-term fixed-income securities. Such securities may be used to
invest uncommitted cash balances or to maintain liquidity to meet shareholder
redemptions or other Fund obligations. Such securities might include U.S.
Government securities, commercial paper, bank certificates of deposit, time
deposits and bankers acceptances, and repurchase agreements collateralized by
such securities. The Fund will limit its total investment at any time in these
securities for this operating purpose to not more than 25% of its total assets.
Certain of the securities in which the Fund may invest for either of the
foregoing temporary purposes are more fully described as follows:
U.S. GOVERNMENT SECURITIES
The Fund may invest in securities issued or guaranteed by the U.S. Government
(or its agencies, instrumentalities or government-sponsored enterprises) that
have remaining maturities not exceeding one year. Agencies, instrumentalities
and government-sponsored enterprises that issue or guarantee debt securities
have been established or sponsored by the U.S. Government and include the Bank
for Cooperatives, the Export-Import Bank, the Federal Farm Credit System, the
Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks, the Federal Land Banks, the Federal National Mortgage
Association, the Government National Mortgage Association and the Student Loan
Marketing Association. Except for obligations issued by the U.S. Treasury and
the Government National Mortgage Association, none of the obligations of the
other agencies, instrumentalities or government-sponsored enterprises referred
to above are backed by the full faith and credit of the U.S. Government. There
can be no assurance that the U.S. Government will provide financial support to
these obligations where it is not obligated to do so.
BANK OBLIGATIONS. These securities consist of certificates of deposit and
bankers' acceptances issued by U.S. banks having total assets at the time of
purchase in excess of $1 billion. Such banks must be members of the Federal
Deposit Insurance Corporation. A certificate of deposit is an interest-bearing
negotiable certificate issued by a bank against funds deposited in the bank. A
bankers' acceptance is a short-term draft drawn on a commercial bank by a
borrower, usually in connection with an international commercial transaction.
Although the borrower is liable for payment of the draft, the bank
unconditionally guarantees to pay the draft at its face value on the maturity
date. The foregoing limitation as to banks in whose obligations the Fund may
invest is a non-fundamental policy of the Fund. The Fund also may invest in
time deposits issued by a bank in exchange for the deposit of funds. Similar to
a certificate of deposit, a time deposit earns a specified rate of interest over
a definite time period; however, it cannot be traded in the secondary market.
COMMERCIAL PAPER. These instruments are short-term unsecured promissory notes
issued in bearer form by bank holding companies, corporations and finance
companies. The commercial paper purchased by the Fund for temporary purposes
consists of direct obligations of domestic issuers that, at the time of
investment, are rated "P-1" by Moody's Investor Services ("Moody's") or "A-1" by
S&P, or securities, if not rated, are issued by companies having an outstanding
debt issue currently rated "Aaa" or "Aa" by Moody's or "AAA" or "AA" by S&P.
The rating "P-1" is the highest commercial paper rating assigned by Moody's, and
the rating "A-1" is the highest commercial paper rating assigned by S&P. Such
limitations with respect to commercial paper constitute a non-fundamental policy
of the Fund.
4
REPURCHASE AGREEMENTS. The Fund may invest in securities subject to repurchase
agreements that mature or may be terminated by notice in seven days or less
(normally one day) with member banks of the Federal Reserve System or certain
dealers listed on the Federal Reserve Bank of New York's list of reporting
dealers or their affiliates. In a typical repurchase agreement, the seller of a
security commits itself at the time of the sale to repurchase such security from
the buyer at a mutually agreed-upon time and price. The repurchase price
exceeds the sale price, reflecting an agreed-upon interest rate effective for
the period the buyer owns the security subject to repurchase. The agreed-upon
rate is unrelated to the interest rate on the underlying security. The value of
the underlying collateral is monitored by the Fund's investment adviser at all
times during the term of the repurchase agreement to insure that the value of
the collateral always equals or exceeds the repurchase price. In the event of
default by the seller under the repurchase agreement, the Fund may have
difficulties in exercising its rights to the underlying collateral and may incur
costs and experience time delays in connection with the disposition of such
collateral. To evaluate potential risks, the investment adviser reviews the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements. The foregoing policy with respect to repurchase
agreements is a non-fundamental policy of the Fund.
ILLIQUID AND RESTRICTED SECURITIES
"Illiquid and Restricted Securities" under "Investment Policies" in the
Prospectus sets forth the circumstances in which the Fund may invest in
"restricted securities." In connection with the Fund's original purchase of
restricted securities, it may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the registration
expenses of illiquid restricted securities may also be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund. When
registration is required, however, a considerable period may elapse between the
decision to sell the securities and the time the Fund would be permitted to sell
such securities. A similar delay might be experienced in attempting to sell
such securities pursuant to an exemption from registration. Thus, the Fund may
not be able to obtain as favorable a price as that prevailing at the time of the
decision to sell.
LEVERAGE
The Fund is authorized to borrow money from a bank on its promissory note or
other evidence of indebtedness. Monies borrowed would be invested and any
appreciation thereon, to the extent it exceeded interest paid on the loan, would
cause the net assets value of Fund shares to rise faster than it would
otherwise. If, however, the investment performance of additional monies failed
to cover the Fund's interest charges, the net asset value would decrease faster
than would otherwise be the case. This is the speculative feature known as
"leverage". Any such borrowing: (i) would not exceed one-third of the value of
the Fund's total assets after borrowing; (ii) if at any time it exceeded such
one-third limitation, the Fund would within three days thereafter (not including
Sundays or holidays) or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce its borrowings to the
limitation; and (iii) might or might not be secured and, if secured, all or any
part of the Fund's assets could be pledged. To comply with such limitations,
the Fund might be required to dispose of certain assets when it might be
disadvantageous to do so. Any such borrowings would be subject to Federal
Reserve Board regulations. The Fund has not borrowed money for investment or
any other purpose during the last ten years and, as a non-fundamental policy,
does not borrow for investment in the future.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities subject to the restrictions stated in
the Prospectus. Under applicable regulatory requirements (which are subject to
change), the loan collateral must: (i) on each business day, at least equal the
market value of the loaned securities; and (ii) consist of cash, bank letters of
credit, U.S. Government securities, other cash equivalents or liquid equity
securities in which the Fund is permitted to invest. To be acceptable as
collateral, letters of credit must obligate a bank to pay amounts demanded by
the Fund if the demand meets the terms of the letter. Such terms and the
issuing bank must be satisfactory to the Fund. When lending portfolio
securities, the Fund receives from the borrower an amount equal to the interest
paid or the dividends declared on the loaned securities during the term of the
loan plus the interest on the collateral securities (less any finders' or
administrative fees the Fund pays in arranging the loan). The Fund may share
the interest it receives on
5
the collateral securities with the borrower if it realizes at least a minimum
amount of interest required by the lending guidelines established by the Trust
Board. The Fund will not lend its portfolio securities to any officer,
director, employee or affiliate of the Fund or SCMI. The terms of the Fund's
loans must meet certain tests under the Internal Revenue Code and permit the
Fund to reacquire loaned securities on five business days' notice or in time to
vote on any important matter.
Portfolio securities purchased with cash collateral are subject to possible
depreciation. Loans of securities by the Fund will be subject to termination at
the Fund's or the borrower's option. The Fund may pay reasonable negotiated
fees in connection with loaned securities, so long as such fees are set forth in
a written contract and approved by the Trust Board.
INVESTMENT RESTRICTIONS
The following investment restrictions are in addition to those described under
"The Fund -- Investment Restrictions" in the Prospectus. These restrictions,
which are fundamental policies (except as set forth), provide that the Fund:
1. Will not issue senior securities except that it may borrow money from
a bank on its promissory Fund's total assets after the borrowing; (ii)
if at any time it exceeded such one-third limitation, the Fund would
within three days thereafter (not including Sundays or holidays) or
such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce its borrowings to the
limitation; and (iii) might or might not be secured and, if secured,
all or any part of the Fund's assets could be pledged. To comply with
such limitations, the Fund might be required to dispose of certain
assets when it might be disadvantageous to do so. Any such borrowings
would be subject to Federal Reserve Board regulations. (As a
non-fundamental policy, the Fund does not borrow for investment
purposes.)
2. Will not effect short sales, purchase any security on margin or write
or purchase put and call options.
3. Will not acquire more than 10% of the voting securities of any one
issuer.
4. Will not invest 25% or more of the value of its total assets in any
one industry.
5. Will not engage in the purchase and sale of illiquid interests in real
estate, including illiquid interests in real estate investment trusts.
6. Will not engage in the purchase and sale of commodities or commodity
contracts.
7. Will not invest in companies for the purpose of exercising control or
management.
8. Will not underwrite securities of other issuers, except that the Fund
may acquire portfolio securities, not in excess of 10% of the value of
its total assets, under circumstances where if sold it might be deemed
to be an underwriter for the purposes of the Securities Act of 1933.
9. Will not make loans to other persons except that it may purchase
evidences of indebtedness of a type distributed privately to financial
institutions but not in excess of 10% of the value of its total
assets.
10. Will not acquire securities described in 8 and 9 above which in the
aggregate exceed 10% of the value of the Fund's total assets.
11. Will not invest in other investment companies.
As non-fundamental policies, the Fund: (i) will not invest more than 10% of its
total assets in illiquid securities, including securities described in items 8
and 9 above and repurchase agreements maturing more than seven days; and (ii)
will not engage in writing, buying or selling of stock index futures, options on
stock index futures, financial futures contracts or options thereon.
6
MANAGEMENT
OFFICERS AND TRUSTEES
The following information relates to the principal occupations during the past
five years of each Trustee and executive officer of the Trust and shows the
nature of any affiliation with SCMI.
PETER E. GUERNSEY, Oyster Bay, New York - Trustee of the Trust - Insurance
Consultant since August 1986; prior thereto Senior Vice President, Marsh &
McLennan, Inc., insurance brokers.
RALPH E. HANSMANN (Honorary), 40 Wall Street, New York, New York - Honorary
Trustee of the Trust - Private investor; Director, First Eagle Fund of America,
Inc.; Director, Verde Exploration, Ltd.; Trustee Emeritus, Institute for
Advanced Study; Trustee and Treasurer, New York Public Library; Life Trustee,
Hamilton College.
JOHN I. HOWELL, Greenwich, Connecticut - Trustee of the Trust - Private
Consultant since February 1987; Honorary Director, American International Group,
Inc.; Director, American International Life Assurance Company of New York.
CLARENCE F. MICHALIS, 44 East 64th Street, New York, New York - Trustee of the
Trust - Chairman of the Board of Directors, Josiah Macy, Jr. Foundation
(charitable foundation).
HERMANN C. SCHWAB, 787 Seventh Avenue, New York, New York - Chairman (Honorary)
and Trustee of the Trust - retired since March, 1988; prior thereto, consultant
to SCMI since February 1, 1984.
MARK J. SMITH (b), 33 Gutter Lane, London, England - President and Trustee of
the Trust - First Vice President of SCMI since April 1990; Director and Vice
President, Schroder Advisors.
ROBERT G. DAVY, 787 Seventh Avenue, New York, New York - a Vice President of the
Trust - Director of SCMI and Schroder Capital Management International Ltd.
since 1994; First Vice President of SCMI since July, 1992; prior thereto,
employed by various affiliates of Schroders plc in various positions in the
investment research and portfolio management areas since 1986.
MARGARET H. DOUGLAS-HAMILTON (b) (c), 787 Seventh Avenue, New York, New York -
Vice President of the Trust - Secretary of SCM since July 1995; Secretary of
Schroder Advisors since April 1990; First Vice President and General Counsel of
Schroders Incorporated(b) since May 1987; prior thereto, partner of Sullivan &
Worcester, a law firm.
RICHARD R. FOULKES, 787 Seventh Avenue, New York, New York - a Vice President of
the Trust; Deputy Chairman of SCMI since October 1995; Director and Executive
Vice President of Schroder Capital Management International Ltd. since 1989.
CATHERINE S. WOOLEDGE, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust - Counsel, Forum Financial
Services, Inc. since November 1996. Prior thereto, associate at Morrison &
Foerster, Washington, D.C. from October 1994 to November 1996, associate
corporate counsel at Franklin Resources, Inc. from September 1993 to September
1994, and prior thereto associate at Drinker Biddle & Reath, Philadelphia, PA.
BARBARA GOTTLIEB (c), 787 Seventh Avenue, New York, New York - Assistant
Secretary of the Trust - Assistant Vice President of SWIS since July 1995 prior
thereto held various positions with SWIS affiliates.
ROBERT JACKOWITZ (b) (c), 787 Seventh Avenue, New York, New York - Treasurer of
the Trust - Vice President of SCM since September 1995; Treasurer of SCM and
Schroder Advisors since July 1995; Vice President of SCMI since June 1995; and
Assistant Treasurer of Schroders Incorporated since January 1993.
7
JOHN Y. KEFFER, Two Portland Square, Portland, Maine - Vice President of the
Trust. President of FFC, the Fund's transfer and dividend disbursing agent and
fund accountant and other affiliated entities including Forum Financial
Services, Inc. and Forum Advisors, Inc.
JANE P. LUCAS (c), 787 Seventh Avenue, New York, New York - Vice President of
the Trust - Director and Senior Vice President SCMI; Director of SCM since
September 1995; Assistant Director Schroder Investment Management Ltd. since
June 1991.
GERARDO MACHADO, 787 Seventh Avenue, New York, New York - Assistant Secretary of
the Trust - Associate, SCMI.
CATHERINE A. MAZZA, 787 Seventh Avenue, New York, New York - Vice President of
the Trust - President of Schroder Advisors since 1997; First Vice President of
SCMI and SCM since 1996; prior thereto, held various marketing positions at
Alliance Capital, an investment adviser, since July 1985.
THOMAS G. SHEEHAN, Two Portland Square, Portland, Maine - Assistant Treasurer
and Assistant Secretary of the Trust - Counsel, Forum Financial Services, Inc.
since 1993; prior thereto, Special Counsel, U.S. Securities and Exchange
Commission, Division of Investment Management, Washington, D.C.
FARIBA TALEBI, 787 Seventh Avenue, New York, New York - Vice President of the
Trust - First Vice President of SCMI since April 1993, employed in various
positions in the investment research and portfolio management areas since 1987.
JOHN A. TROIANO (b), 787 Seventh Avenue, New York, New York - Vice President of
the Trust - Managing Director and Senior Vice President of SCMI since October
1995; Director of Schroder Advisors since October 1992; Director of SCMI since
1991; prior thereto, employed by various affiliates of SCMI in various positions
in the investment research and portfolio management areas since 1981.
IRA L. UNSCHULD, 787 Seventh Avenue, New York, New York - Vice President of the
Trust - Vice President of SCMI since April, 1993 and an Associate from July,
1990 to April, 1993; prior to July, 1990, employed by various financial
institutions as a securities or financial analyst.
ALEXANDRA POE, 787 Seventh Avenue, New York, New York - Secretary and Vice
President of the Trust - Vice President of SCMI since August 1996; Fund Counsel
and Senior Vice President of Schroder Advisors since August 1996; prior thereto
an investment management attorney with Gordon Altman Butowsky Weitzen Shalov &
Wein since July 1994; prior thereto counsel and Vice President of Citibank, N.A.
since 1989.
MARY KUNKEMUELLER, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust.
(a) Interested Trustee of the Trust within the meaning of the 1940 Act.
(b) Schroder Advisors is a wholly owned subsidiary of SCMI, which is a wholly
owned subsidiary of Schroders Incorporated, which in turn is an indirect,
wholly owned U.S. subsidiary of Schroders plc.
(c) Schroder Capital Management, Inc. ("SCM") is a wholly owned subsidiary of
Schroder Wertheim Holdings Incorporated which is a wholly owned subsidiary
of Schroders, Incorporated, which in turn is an indirect wholly owned U.S.
subsidiary of Schroders plc.
Officers and Trustees who are interested persons of the Trust receive no salary,
fees or compensation from the Fund. Independent Trustees of the Trust receive
an annual fee of $1,000 and a fee of $250 for each meeting of the Trust Board
attended by them except in the case of Mr. Schwab, who receives an annual fee of
$1,500 and a fee of $500 for each meeting attended. The Fund has no bonus,
profit sharing, pension or retirement plans.
8
The following table provides the fees paid to each Trustee of the Trust for the
fiscal year ended October 31, 1996.
Name of Trustee Aggregate Pension or Estimated Total
Compensation Retirement Annual Compensation
From Trust Benefits Benefits Upon From Trust And
Accrued Retirement Fund Complex
As Part Paid To
of Trust Trustees
Expenses
--------------------------------------------------------------------------------
Mr. Guernsey $1,750 $0 $0 $1,750
Mr. Hansmann 1,375 0 0 1,375
Mr. Howell 1,750 0 0 1,750
Mr. Michalis 1,750 0 0 1,750
Mr. Schwab 3,000 0 0 3,000
Mr. Smith 0 0 0 0
As of February 15, 1997, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Fund's outstanding shares.
While the Trust is a Delaware business trust, certain of its Trustees or
officers are residents of the United Kingdom, and substantially all of their
assets may be located outside of the U.S. As a result it may be difficult for
U.S. investors to effect service upon such persons within the U.S. or to realize
U.S. civil judgments against them. Civil remedies and criminal penalties under
U.S. federal securities laws may be unenforceable in the United Kingdom.
Extradition treaties now in effect between the U.S. and the United Kingdom might
not subject such persons to effective enforcement of the criminal penalties of
such acts.
INVESTMENT ADVISER
SCMI, 787 Seventh Avenue, New York, New York 10019, serves as investment adviser
to the Fund under an Investment Advisory Agreement between the Trust and SCMI.
SCMI is a wholly owned U.S. subsidiary of Schroders Incorporated, the wholly
owned U.S. holding company subsidiary of Schroders plc. Schroders plc is the
holding company parent of a large world wide group of banks and financial
service companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices in eighteen countries. The
Schroder Group specializes in providing investment management services, with
funds under management currently in excess of $150 billion as of December 31,
1996.
Under the Investment Advisory Agreement, SCMI manages the investment and
reinvestment of the Fund's assets and continuously reviews, supervises and
administers its investments. In this regard, it is the responsibility of SCMI
to make decisions relating to the Fund's investments and to place purchase and
sale orders regarding such investments with brokers or dealers selected by it in
its discretion. SCMI also furnishes to the Trust Board, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund.
Under the terms of the Investment Advisory Agreement, SCMI is required to manage
the Fund's investment portfolio in accordance with applicable laws and
regulations. In making its investment decisions, SCMI does not use material
inside information that may be in its possession or in the possession of its
affiliates.
The Investment Advisory Agreement continues in effect provided such continuance
is approved annually: (i) by the holders of a majority of the outstanding
voting securities of the Fund or by the Trust Board; and (ii) by a majority of
the Trustees who are not parties to the Agreement or "interested persons" (as
defined in the 1940 Act) of any such party. The Investment Advisory Agreement
may be terminated without penalty by vote of the Trustees or the shareholders of
the Fund on 60 days' written notice to the investment adviser, or by the
investment adviser on 60 days' written notice to the Trust, and it terminates
automatically if assigned. The Investment Advisory Agreement also provides
that, with respect to the Fund, neither SCMI nor its personnel shall be liable
for any error of judgment
9
or mistake of law or for any act or omission in the performance of duties to
the Fund, except for willful misfeasance, bad faith or gross negligence in
the performance of duties or by reason of reckless disregard of any
obligations and duties under the Investment Advisory Agreement.
Under the terms of the Investment Advisory Agreement, SCMI is entitled to
receive a fee for its services, computed daily and payable monthly, at the
annual rate of 0.75% of the first $100 million of the Fund's average daily net
assets and 0.50% of the Fund's average daily net assets in excess of $100
million. It is the Trust's understanding that although other mutual funds pay
investment advisory fees at annual rates of 0.75% or more of their average net
assets (or a portion thereof), the majority of other mutual funds, regardless of
size, pay advisory fees at rates lower than 0.75% of any portion of their
average net assets. For the fiscal years ended October 31, 1994, 1995 and 1996,
SCMI was paid advisory fees by the Fund an aggregate of $144,539, $140,988 and
$135,128 (after waivers of $4,355), respectively.
SUBADMINISTRATOR
On behalf of the Fund, the Trust has entered into a Subadministration Agreement
with Forum. Under the Subadministration Agreement, Forum provides certain
management and administrative services necessary for the Fund's operations,
other than the investment management and administrative services provided to the
Fund by SCMI pursuant to the Investment Advisory Agreement, including among
other things: (i) preparation of shareholder reports and communications; (ii)
regulatory compliance, such as reports to and filings with the Securities and
Exchange Commission and state securities commissions; and (iii) general
supervision of the operation of the Fund, including coordination of the services
performed by the Fund's investment adviser, transfer agent, custodian,
independent accountants, legal counsel and others. The Subadministration
Agreement is terminable with respect to the Fund without penalty, at any time,
by the Trust Board upon 60 days' written notice to Forum or by Forum upon 60
days' written notice to the Fund.
Under the Subadministration Agreement, Forum is entitled to receive a fee,
computed daily and payable monthly, at the annual rate of 0.10% of the Fund's
average daily net assets. The Trust, SCMI and Schroder Advisors formerly had
entered into a Sub-Administration Agreement with Forum Financial Services, Inc.
("FFSI") that had substantially similar terms and provisions in all material
respects to the current Subadministration Agreement except as to the
circumstances under which the fees were paid. Specifically, payment for FFSI's
services was made by SCMI and was not a separate expense of the Fund. For the
fiscal year ended October 31, 1996, Forum was paid $18,598 for subadministration
services.
DISTRIBUTION OF FUND SHARES
Schroder Advisors, 787 Seventh Avenue, New York, New York 10019, serves as
Distributor of the Fund shares pursuant a Distribution Agreement. Schroder
Advisors is a wholly owned subsidiary of Schroders Incorporated, the parent
company of SCMI, and is a registered broker-dealer organized to act as
administrator and/or distributor of mutual funds.
Under the Distribution Agreement, Schroder Advisors has agreed to use its best
efforts to secure purchases of Fund shares in jurisdictions in which such shares
may be legally offered for sale. Schroder Advisors is not obligated to sell any
specific amount of Fund shares. Further, Schroder Advisors has agreed in the
Distribution Agreement to serve without compensation and to pay from its own
resources all costs and expenses incident to the sale and distribution of Fund
shares including expenses of printing and distribution to prospective investors
of prospectuses and other sales materials and advertising expenses, and the
salaries and expenses of its employees or agents in connection with the
distribution of Fund shares.
Under a Distribution Plan (the "Plan") adopted by the Fund with respect to
Advisor Shares only, the Trust may pay directly or may reimburse the investment
adviser or a broker-dealer registered under the Securities Exchange Act of 1934
(the "1934 Act") (the investment adviser or such registered broker-dealer, if so
designated, being a "distributor" of the Fund's shares) monthly (subject to a
limit of 0.50% per annum of the Fund's average daily net
10
assets) for: (i) advertising expenses including advertising by radio,
television, newspapers, magazines, brochures, sales literature or direct mail;
(ii) costs of printing prospectuses and other materials to be given or sent to
prospective investors; (iii) expenses of sales employees or agents of the
Distributor, including salary, commissions, travel, and related expenses in
connection with the distribution of Fund shares; and (iv) payments to
broker-dealers (other than the Distributor) or other organizations for services
rendered in the distribution of the Fund's shares, including payments in amounts
based on the average daily value of Fund shares owned by shareholders in respect
of which the broker-dealer or organization has a distributing relationship. .
The maximum annual amount currently payable under the Plan is 0.25%, but no
payments may be made under the Plan until the Trust Board so authorizes. Any
payment made pursuant to the Plan is contingent upon the Trust Board's approval.
The Fund is not liable for distribution expenditures of the Distributor in any
given year in excess of the maximum amount (0.50%) per annum of the Fund's
average daily net assets) payable under the Plan in that year. Salary expenses
of sales staff responsible for marketing shares of the Fund may be allocated
among various series of the Trust that have adopted a Plan similar to that of
the Fund on the basis of average net assets; travel expenses are allocated among
the series of the Trust. The Trust Board has concluded that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders.
Without shareholder approval, the Plan may not be amended to increase materially
the costs that the Fund may bear. Other material amendments to the Plan must be
approved by the Trust Board, and by the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any related
agreement, by vote cast in person at a meeting called for the purpose of
considering such amendments. The selection and nomination of the Trustees of
the Trust has been committed to the discretion of the Trustees who are not
"interested persons" of the Trust. The Plan has been approved, and is subject
to annual approval, by the Trust Board and by the Trustees who are not
"interested persons" and have no direct or indirect financial interest in the
operation of the Plan, by vote cast in person at a meeting called for the
purpose of voting on the Plan. The Plan is terminable with respect to the Fund
at any time by a vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Plan or by vote of the holders of a majority of the shares
of the Fund.
SERVICE ORGANIZATIONS
The Fund may also contract with banks, trust companies, broker-dealers or other
financial organizations ("Service Organizations") to provide certain
administrative services to the Fund. The Fund may pay fees (which vary
depending upon the services provided) to Service Organizations in amounts up to
an annual rate of 0.25% of the daily net asset value of the Fund's shares owned
by shareholders with whom the Service Organization had a servicing relationship.
Services provided by Service Organizations may include: (i) providing personnel
and facilities necessary to establish and maintain certain shareholder accounts
and records; (ii) assisting in processing purchase and redemption transactions;
(iii) arranging for the wiring of funds; transmitting and receiving funds in
connection with client orders to purchase or redeem shares; (iv) verifying and
guaranteeing client signatures in connection with redemption orders, transfers
among and changes in client-designated accounts; (v) providing periodic
statements of a client's account balances and, to the extent practicable,
integrating such information with other client transactions; (vi) furnishing
periodic and annual statements and confirmations of all purchases and
redemptions of shares in a client's account; (vii) transmitting proxy
statements, annual reports, and updating prospectuses and other communications
from the Fund to clients; and (viii) such other services as the Fund or a client
reasonably may request, to the extent permitted by applicable statute, rule or
regulation. Neither SCMI nor Schroder Advisors will be a Service Organization
or receive fees for servicing. The Fund has no intention of making any such
payments to Service Organizations with respect to accounts of institutional
investors and, in any event, will make no such payments until the Trust Board
specifically so authorizes.
Some Service Organizations could impose additional or different conditions on
their clients, such as requiring them to invest more than the minimum
investments specified by the Fund or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts that might be paid to
the Service Organization by the Fund. Each Service Organization would agree to
transmit to its clients a schedule of any such fees. Shareholders using Service
Organizations would be urged to consult them regarding any such fees or
conditions.
11
The Glass-Steagall Act and other applicable laws provide that banks may not
engage in the business of underwriting, selling or distributing securities.
There currently is no precedent prohibiting banks from performing administrative
and shareholder servicing functions as Service Organizations. However, judicial
or administrative decisions or interpretations of such laws, as well as changes
in either federal or state statutes or regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could prevent bank
service organization from continuing to perform all or a part of its servicing
activities. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders of the Fund and alternative means for
continuing the servicing of such shareholders would be sought. In that event,
changes in the operation of the Fund might occur and a shareholder serviced by
such a bank might no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.
PORTFOLIO ACCOUNTING
FFC, an affiliate of Forum, performs portfolio accounting services for the Fund
pursuant to a Fund Accounting Agreement with the Trust. The Accounting
Agreement is terminable with respect to the Fund without penalty, at any time by
the Trust Board upon 60 days' written notice to FFC or by FFC upon 60 days'
written notice to the Trust.
Under its agreement, FFC prepares and maintains books and records of the Fund on
behalf of the Trust that are required to be maintained under the 1940 Act,
calculates the net asset value per share of the Fund, calculates dividends and
capital-gain distributions, and prepares periodic reports to shareholders and
the Securities and Exchange Commission. For its services, FFC is entitled to
receive from the Trust a fee of $36,000 per year plus $12,000 per year for each
class of the Fund above one. FFC is entitled to an additional $24,000 per year
with respect to global and international funds. In addition, FFC is paid an
additional $12,000 per year with respect to tax-free money market funds and
funds with more than 25% of their total assets invested in asset-backed
securities, funds that have more than 100 security positions, or funds that have
a monthly portfolio turnover rate of 10% or greater.
FFC is required to use its best judgment and efforts in rendering fund
accounting services and is not liable to the Trust for any action or inaction in
the absence of bad faith, willful misconduct or gross negligence. FFC is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control. The Trust has agreed to indemnify
and hold harmless FFC and, its employees, agents, officers and directors against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses arising out of
or in any way related to FFC's actions taken or failures to act with respect to
a Fund or based, if applicable, upon information, instructions or requests with
respect to a Fund given or made to FFC by an officer of the Trust duly
authorized. This indemnification does not apply to FFC's actions taken or
failures to act in cases of FFC's own bad faith, willful misconduct or gross
negligence.
For the fiscal years ended October 31, 1994, 1995 and 1996, the Fund paid fund
accounting fees of $31,596, $38,000 and $36,000, respectively.
FEES AND EXPENSES
The Fund bears all costs of its operations other than expenses specifically
assumed by Schroder Advisors or SCMI. The costs borne by the Fund include legal
and accounting expenses; Trustees' fees and expenses; insurance premiums,
custodian and transfer agent fees and expenses; brokerage fees and expenses;
expenses of registering and qualifying the Fund's shares for sale with the SEC
and with various state securities commissions; expenses of obtaining quotations
on portfolio securities and pricing of the Fund's shares; a portion of the
expenses of maintaining the Fund's legal existence and of shareholders'
meetings; and expenses of preparation and distribution to existing shareholders
of reports, proxies and prospectuses. Trust expenses directly attributed to the
Fund are charged to the Fund; other expenses are allocated proportionately among
all the series of the Trust in relation to the net assets of each series.
12
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Investment decisions for the Fund and for the other investment advisory clients
of SCMI are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in addition to
basic suitability for the particular client involved, and a particular security
may be bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more other
clients are selling the security. In some instances, one client may sell a
particular security to another client. It also sometimes happens that two or
more clients simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as is possible, averaged
as to price and allocated between such clients in a manner which in SCMI's
opinion is equitable to each and in accordance with the amount being purchased
or sold by each. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES
Decisions with respect to allocation of portfolio brokerage are made by the
Trust's President, a Vice President or Treasurer.
The Investment Advisory Agreement authorizes and directs SCMI to place orders
for the purchase and sale of the Fund's investments with brokers and dealers it
selects and to seek "best execution" of such portfolio transactions. SCMI
places all such orders for the purchase and sale of portfolio securities and
buys and sells securities through a substantial number of brokers and dealers.
In so doing, SCMI uses its best efforts to obtain for the Fund the most
favorable price and execution available. The Fund may, however, pay higher than
the lowest available commission rates when SCMI believes it is reasonable to do
so in light of the value of the brokerage and research services provided by the
broker effecting the transaction. In seeking the most favorable price and
execution, SCMI considers all factors it may deem relevant (including price,
transaction size, the nature of the market for the security, the commission
amount, the timing of the transaction (taking into account market prices and
trends), the reputation, experience and financial stability of the
broker-dealers involved, and the quality of service rendered by the
broker-dealers in other transactions.
It is the Fund's policy, consistent with the best execution, to secure the
highest possible price on sales and the lowest possible price on purchases of
securities. Transactions on U.S. stock exchanges and other agency transactions
involve the payment of negotiated brokerage commissions. Over-the-counter
purchases and sales are transacted directly with principal market makers except
in those circumstances where in the opinion of the Trust's officers better
prices and executions are available elsewhere. Portfolio transactions are
frequently placed with broker-dealers who provide SCMI with research and
statistical assistance. The assistance may include advice as to the
advisability of investing in securities, security analysis and reports, economic
studies, industry studies, receipt of quotations for portfolio valuations and
similar services.
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 services from broker-dealers that execute portfolio
transactions for the clients of such advisers. Consistent with this practice,
SCMI may receive research services from broker-dealers with which SCMI places
the Fund's portfolio transactions. These services, which in some cases may also
be purchased for each, include such items as general economic and security
market review, industry and company reviews, evaluations of securities and
recommendations as to the purchase and sale of securities. Some of these
services are of value to SCMI in advising various of its clients (including the
Fund), although not all of these services are necessarily useful and of value in
managing the Fund. The investment advisory fee paid by the Fund is not reduced
because SCMI and its affiliates receive such services.
As permitted by Section 28(e) of the 1934 Act, SCMI may cause the Fund to pay a
broker-dealer that provides SCMI with "brokerage and research services" (as
defined in the Act) an amount of disclosed commission for
13
effecting a securities transaction for the Fund in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
In addition, SCMI may allocate brokerage transactions to broker-dealers who have
entered into arrangements under which the broker-dealer allocates a portion of
the commission paid by the Fund toward payment of Fund expenses, such as
custodian fees.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, SCMI may
consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
Subject to the general policies of the Fund regarding allocation of portfolio
brokerage as set forth above, the Trust Board has authorized the Fund to employ
Schroder Wertheim & Company, Incorporated ("Schroder Wertheim"), an affiliate of
SCMI, to effect securities transactions of the Fund, on the New York Stock
Exchange only, provided certain other conditions are satisfied as described
below.
Payment of brokerage commissions to Schroder Wertheim for effecting such
transactions is subject to Section 17(e) of the 1940 Act, which requires, among
other things, that commissions for transactions on a national securities
exchange paid by a registered investment company to a broker which is an
affiliated person of such investment company or an affiliated person of another
person so affiliated not exceed the usual and customary broker's commissions for
such transactions. It is the Fund's policy that commissions paid to Schroder
Wertheim will in the judgment of the officers of the Trust responsible for
making portfolio decisions and selecting brokers, be: (i) at least as favorable
as commissions contemporaneously charged by Schroder Wertheim on comparable
transactions for its most favored unaffiliated customers; and (ii) at least as
favorable as those which would be charged on comparable transactions by other
qualified brokers having comparable execution capability. The Trust Board,
including a majority of the non-interested Trustees, has adopted procedures
pursuant to Rule 17e-1 promulgated by the Securities and Exchange Commission
under Section 17(e) to ensure that commissions paid to Schroder Wertheim by the
Fund satisfy the foregoing standards. The Trust Board will review all
transactions at least quarterly for compliance with these procedures.
The Fund has no understanding or arrangement to direct any specific portion of
its brokerage to Schroder Wertheim and will not direct brokerage to Schroder
Wertheim in recognition of research services.
It is further a policy of the Fund that all such transactions effected for the
Fund by Schroder Wertheim on the New York Stock Exchange be in accordance be in
accordance with Rule 11a2-2(T) promulgated under the 1934 Act, which requires in
substance that a member of such exchange not associated with Schroder Wertheim
actually execute the transaction on the exchange floor or through the exchange
facilities. Thus, while Schroder Wertheim will bear responsibility for
determining important elements of execution such as timing and order size,
another firm will actually execute the transaction.
Schroder Wertheim pays a portion of the brokerage commissions it receives from
the Fund to the brokers executing the Fund transactions on the New York Stock
Exchange. In accordance with Rule 11a2-2(T), the Trust Board has entered into
an agreement with Schroder Wertheim permitting it to retain a portion of the
brokerage commissions paid to it by the Fund. This agreement has been approved
by the Trust Board, including a majority of the non-interested Trustees.
During the fiscal years ended October 31, 1994, 1995 and 1996 the total
brokerage commissions paid by the Fund on portfolio transactions were $23,579,
$31,381 and $31,868 respectively. These amounts do not include any spreads or
concessions on principal transactions on a net trade basis. Substantially all
of such commissions were paid to firms which provided SCMI with research and
statistical assistance. No commissions were paid to Schroder Wertheim during
any of the fiscal years ended October 31, 1994, 1995 and 1996.
14
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DETERMINATION OF NET ASSET VALUE PER SHARE
The net asset value per share of the Fund is calculated as of 4:00 p.m. (Eastern
time), Monday through Friday, on each day that the New York Stock Exchange is
open for trading (which excludes the following national business holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day).
Portfolio securities listed on the New York Stock Exchange are valued on the
basis of the last sale on that date on the basis of information obtained from
authoritative sources at the end of the business day. Lacking any sales, they
are valued at the average of the closing bid and asked prices. Securities not
listed on such exchange are valued by the use of quotations on any other
national stock exchange on which the securities are listed, or if unlisted,
published quotations in common use and/or quotations from a market maker or
makers in the security, in each case on the basis of information obtained from
authoritative sources, or if securities for which no quotations are available,
including restricted securities, by such other method as the Trust Board, in
good faith, shall deem to reflect their fair value. If securities are listed on
more than one national stock exchange (other than the New York Stock Exchange),
they are valued on the basis of quotations on the national stock exchange in
which the primary market for the securities exists.
REDEMPTION IN-KIND
In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, shareholders may incur brokerage costs in converting the
securities to cash. An in-kind distribution of portfolio securities is
generally less liquid than cash. The shareholder may have difficulty finding a
buyer for portfolio securities received in payment for redeemed shares.
Portfolio securities may decline in value between the time of receipt by the
shareholder and conversion to cash. A redemption in-kind of portfolio
securities could result in a less diversified portfolio of investments for the
Fund and could affect adversely the liquidity of the investment portfolio of the
Fund.
TAXATION
Under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund and
each other series established from time to time by the Trust Board is treated as
a separate taxpayer for federal income tax purposes with the result that: (i)
each such series must meet separately the income and distribution requirements
for qualification as a regulated investment company; and (ii) the amounts of
investment income and capital gain earned will be determined on a
series-by-series (rather than on a Trust-wide) basis.
The Fund qualified for its last fiscal year as a regulated investment company
under Subchapter M of the Code and intends to so qualify each year so long as
such qualification is in the best interests of its shareholders. To do so, the
Fund intends to distribute to shareholders at least 90% of its "investment
company taxable income" as defined in the Code (which includes, among other
items, dividends, interest and the excess of any net short-term capital gain
over net long-term capital loss), and to meet certain diversification of assets,
source of income, and other requirements of the Code. By so doing, the Fund will
not be subject to federal income tax on its investment company taxable income
and "net capital gain" (the excess of net long-term capital gain over net
short-term capital loss) distributed to shareholders. If the Fund does not meet
all of these Code requirements, it will be taxed as an ordinary corporation, and
its distributions will be taxable to shareholders as ordinary income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of: (i) at least 98% of its ordinary income
(excluding any capital gain or loss) for the calendar year; (ii) at least 98% of
the excess of its capital gain over capital loss realized during the one-year
period ending October 31 of such year; and (iii) all such ordinary income and
capital gain for previous years that were not distributed during such years. A
distribution will be treated as paid during the calendar year if it is
15
declared by the Fund in October, November or December of the year with a record
date in such month and paid by the Fund during January of the following year.
Such distributions will be taxable to shareholders in the calendar year in which
the distributions are declared, rather than the calendar year in which the
distributions are received.
Distributions of investment company taxable income (including net realized
short-term capital gain) are taxable to shareholders as ordinary income.
Generally, dividends of investment income (but not capital gain) from the Fund
will qualify for the federal 70% dividends-received deduction for corporate
shareholders to the extent such dividends do not exceed the aggregate amount of
dividends received by the Fund from domestic corporations, provided the Fund
shares are held by said shareholders for more than 45 days. If securities held
by the Fund are considered to be "debt-financed" (generally, acquired with
borrowed funds), are held by the Fund for less than 46 days (91 days in the case
of certain preferred stock), or are subject to certain forms of hedges or short
sales, the portion of the dividends paid by the Fund that corresponds to the
dividends paid with respect to such securities will not be eligible for the
corporate dividends-received deduction.
Distributions of net long-term capital gain are taxable to shareholders as
long-term capital gain, regardless of the length of time Fund shares have been
held by a shareholder and are not eligible for the dividends-received deduction.
A loss realized by a shareholder on the sale of shares of the Fund with respect
to which capital-gain distributions have been paid will, to the extent of such
capital-gain distributions, be treated as long-term capital loss (even though
such shares may have been held by the shareholder for one year or less).
Further, a loss realized on a disposition will be disallowed to the extent the
shares disposed of are replaced (whether by reinvestment of distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.
All distributions are taxable to the shareholder whether reinvested in
additional shares or received in cash. Shareholders receiving distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share received equal to the net asset value of a share of the
Fund on the reinvestment date. Shareholders will be notified annually as to the
federal tax status of distributions.
Distributions by the Fund reduce the net asset value of the Fund's shares. If a
distribution reduces the net asset value below a shareholder's cost basis, such
distribution nevertheless would be taxable to the shareholder as ordinary income
or capital gain as described above, even though, from an investment standpoint,
it may constitute a partial return of capital. In particular, investors should
be careful to consider the tax implications of buying shares just prior to a
distribution. The price of shares purchased at that time includes the amount of
the forthcoming distribution, which will be returned to the investor in the form
of a taxable distribution.
Upon redemption or sale of his shares, a shareholder will realize a taxable gain
or loss, which will be treated as capital gain or loss if the shares are capital
assets in the shareholder's hands. Such gain or loss generally will be
long-term or short-term depending upon the shareholder's holding period for the
shares.
Ordinary income dividends paid by the Fund to shareholders who are nonresident
aliens is subject to a 30% U.S. withholding tax under existing provisions of the
Code applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
Nonresident shareholders are urged to consult their own tax advisors concerning
the applicability of the U.S. withholding tax.
The Trust is required to report to the Internal Revenue Service (the "IRS") all
distributions as well as gross proceeds from the redemption of the Fund shares,
except in the case of certain exempt shareholders. All such distributions and
proceeds generally will be subject to withholding of federal income tax at a
rate of 31% ("backup withholding") in the case of non-exempt shareholders if:
(i) the shareholder fails to furnish the Trust with and to certify the
shareholder's correct taxpayer identification number or social security number;
(ii) the IRS notifies the Trust that the shareholder has failed to report
properly certain interest and dividend income to the IRS and to respond to
notices to that effect; or (iii) when required to do so, the shareholder fails
to certify that it is not subject to backup withholding. If the withholding
provisions are applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will be reduced by the amount
required to be withheld. Any amounts withheld
16
may be credited against the shareholder's federal income tax liability.
Investors may wish to consult their tax advisors about the applicability of the
backup withholding provisions.
The foregoing discussion relates only to federal income tax law as applicable to
U.S. persons (I.E., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be
subject to state and local taxes, and their treatment under state and local
income tax laws may differ from the federal income tax treatment. Shareholders
should consult their tax advisors with respect to particular questions of
federal, state and local taxation. Shareholders who are not U.S. persons should
consult their tax advisors regarding U.S. and foreign tax consequences of
ownership of shares of the Fund including the likelihood that distributions to
them would be subject to withholding of U.S. tax at a rate of 30% (or a lower
rate under a tax treaty).
OTHER INFORMATION
ORGANIZATION
The Trust was originally organized as a Maryland corporation on July 30, 1969.
On February 29, 1988, the Trust was recapitalized to enable the Trust Board to
establish a series of separately managed investment portfolios, each having a
different investment objective and policies. At the time of the
recapitalization, the Trust's name was changed from "The Cheapside Dollar Fund
Limited" to "Schroder Capital Funds, Inc." On January 9, 1996, the Trust was
reorganized as a Delaware business trust. At that time, the Trust's name was
changed to its present name. The Trust is registered as an open-end management
investment company under the 1940 Act.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The securities regulators of some states, however,
have indicated that they and the courts in their state may decline to apply
Delaware law on this point. To guard against this risk, the Trust Instrument
contains an express disclaimer of shareholder liability for the debts,
liabilities, obligations, and expenses of the Trust. The Trust Instrument
provides for indemnification out of each series' property of any shareholder or
former shareholder held personally liable for the obligations of the series.
The Trust Instrument also provides that each series shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply (or no contractual limitation
of liability was in effect) and the series is unable to meet its obligations.
Forum believes that, in view of the above, there is no risk of personal
liability to shareholders.
CAPITALIZATION AND VOTING
The Trust has authorized an unlimited number of authorized shares of beneficial
interest. The Trust Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate series (such as the Fund)
and may divide series into classes of shares, and the costs of doing so is borne
by the Trust. The Trust currently consists of five separate series, each of
which has separate investment objectives and policies, and two classes, Investor
Shares and Advisor Shares, in each series.
The shares of the Fund are fully paid and nonassessable and have no preferences
as to conversion, exchange, dividends, retirement or other features. Shares
have no preemptive rights and have non-cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
Trustees can elect 100% of the Trustees if they choose to do so. Each
shareholder of record is entitled to one vote for each full share held (and a
fractional vote for each fractional share held). Shares of each series vote
separately to approve investment advisory agreements or changes in investment
objectives and other fundamental policies affecting the series to which they
pertain, but all series vote together in the election of Trustees and
ratification of the selection of independent accountants. Shareholders of any
particular series or class would not be entitled to vote on any matters as to
which such series or class were not affected.
The Trust will not hold annual meetings of shareholders. The matters considered
at an annual meeting typically include the reelection of Trustees, approval of
an investment advisory agreement, and the ratification of the
17
selection of independent accountants. These matters will not be submitted to
shareholders unless a meeting of shareholders is held for some other reason,
such as those indicated below. Each of the Trustees will serve until death,
resignation or removal. Vacancies will be filled by the remaining Trustees,
subject to the provisions of the 1940 Act requiring a meeting of shareholders
for election of Trustees to fill vacancies when less than a majority of Trustees
then in office have been elected by shareholders. Similarly, the selection of
independent accountants and renewal of investment advisory agreements for future
years will be performed annually by the Trust Board. Future shareholder
meetings will be held to elect Trustees if required by the 1940 Act, to obtain
shareholder approval of changes in fundamental investment policies, to obtain
shareholder approval of material changes in investment advisory agreements, to
select new independent accountants if the employment of the Trust's independent
accountants has been terminated, and to seek any other shareholder approval
required under the 1940 Act. The Trust Board has the power to call a meeting of
shareholders at any time when it believes it is necessary or appropriate. In
addition, Trust Instrument provides that a special meeting of shareholders may
be called at any time for any purpose by the holders of at least 10% of the
outstanding shares entitled to be voted at such meeting.
In addition to the foregoing rights, the Trust Instrument provides that holders
of at least two-thirds of the outstanding shares of the Trust may remove any
person serving as a Trustee either by declaration in writing or at a meeting
called for such purpose. Further, the Trust Board is required to call a
shareholders meeting for the purpose of considering the removal of one or more
Trustees if requested in writing to do so by the holders of not less than 10% of
the outstanding shares of the Trust. In addition, the Trust Board is required
to provide certain assistance if requested in writing to do so by ten or more
shareholders of record (who have been such for at least six months), holding in
the aggregate the lesser of: (i) shares of the Trust having a total net asset
value of at least $25,000; or (ii) 1% of the outstanding shares of the Trust,
for the purpose of enabling such holders to communicate with other shareholders
of the Trust with a view to obtaining the requisite signatures to request a
special meeting to consider such removal.
PRINCIPAL SHAREHOLDERS
As of March 31, 1997, the following persons owned of record or beneficially
5% or more of the Fund's shares:
SHAREHOLDER SHARE BALANCE PERCENT OF FUND
Gracechurch Co. 191,211.439 11.34%
75 Wall Street
New York, NY 10265
Schroder Nominees Limited 111,490.262 6.61%
120 Cheapside
London EC2V 6DS England
Wendel & Co. 110,983.024 6.58%
c/o The Bank of New York
Wall Street Station
New York, NY 10268
Fox & Co. 100,988.750 5.99%
P.O. Box 976
New York, NY 10268
PERFORMANCE INFORMATION
Quotations of average annual total return and cumulative total return data of a
class of the Fund will be in advertisements, sales literature, or reports to
shareholders or prospective investors.
18
Average annual total returns are expressed in terms of the average annual
compounded rate of return of a hypothetical investment in a class of shares of
the Fund, and cumulative returns reflect the aggregate amount, over periods of 1
month, 3 months, 1, 3, 5, and 10 years and since inception, each calculated as
shown below.
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge
Average Annual Total Return (assuming as deduction of sales/purchase/
redemption charges)
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
--------------------------------------------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
N(YR) 10/12 1/12 1/4 1/2 1 3 5 10 26
ERV 1127.00 1001.00 1130.30 1056.30 1194.50 1125.00 1937.40 2268.10 13202.9
S 0 0 0 0 0 0 0 0 0
R 0 0 0 0 0 0 0 0 0
T(%) 15.24 1.26 46.74 11.54 19.45 11.25 14.13 12.56 10.74
--------------------------------------------------------------------------------------------------------------------
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the investment over the
specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
CUMULATIVE TOTAL RETURN (assuming as deduction of sales/purchase/redemption
charges)
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
--------------------------------------------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
N(YR) 5/6 1/12 1/4 1/2 1 3 5 10 26
ERV 1127.00 1001.00 1100.30 1056.30 1194.50 1372.20 1937.40 2268.10 13202.9
S 0 0 0 0 0 0 0 0 0
R 0 0 0 0 0 0 0 0 0
C(%) 12.70 0.10 10.03 5.63 19.45 37.72 93.74 226.81 1320.29
--------------------------------------------------------------------------------------------------------------------
19
Quotations of total return reflect only the performance of a hypothetical
investment in a class of shares of the Fund during the particular time period
shown and under the assumptions described. Total returns will vary based on
changes in market conditions and the level of the Fund's, and any
class-specific, expenses. Accordingly, no reported performance figure should be
considered an indication of future performance.
In connection with communicating performance data to current or prospective
investors, these figures may be compared with the performance of other mutual
funds tracked by mutual fund rating services or to various unmanaged indices
that may assume reinvestment of dividends but generally do not have
administrative and management costs.
CUSTODIAN
All securities and cash of the Fund are held by The Chase Manhattan Bank, N.A.,
Chase MetroTech Center, Brooklyn, New York 11245.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
FFC, Portland, Maine, acts as the Fund's transfer agent and dividend disbursing
agent.
LEGAL COUNSEL
Jacobs Persinger & Parker, 77 Water Street, New York, New York 10005, counsel
to the Fund, passes upon certain legal matters in connection with the shares
offered by the Fund.
INDEPENDENT ACCOUNTANT
Coopers & Lybrand L.L.P. serves as independent accountants for the Fund. Coopers
& Lybrand L.L.P. provides audit services and consultation in connection with
review of U.S. Securities and Exchange Commission filings. Their address is One
Post Office Square, Boston, Massachusetts 02109.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933 with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The registration
statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.
20
FINANCIAL STATEMENTS
The audited Statement of Assets and Liabilities, Statement of Operations,
Statements of Changes in Net Assets, Statement of Investments, notes thereto,
and Financial Highlights of the Fund for the fiscal year ended October 31, 1996
and the Report of Independent Accountants thereon (included in the Annual Report
to shareholders), which are delivered along with this SAI, are incorporated
herein by reference.
21
APPENDIX
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE
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.
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
FIXED-INCOME SECURITY RATINGS
A S&P 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 S&P 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
A-1
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.
S&P 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 S&P. Capacity to pay interest and repay principal is extremely
strong.
"AA" Fixed-income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the highest-rated issues
only in small degree.
"A" Fixed-income securities rated "A" have a strong capacity to pay
interest and repay principal although they are somewhat more
susceptible to the adverse effects of changes in circumstances and
economic conditions than fixed-income securities in higher-rated
categories.
COMMERCIAL PAPER RATINGS
S&P 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 S&P 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-2
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
Included in the Prospectus:
Financial Highlights (Schroder U.S. Equity Fund -- Investor Shares).
Incorporated by reference in the Statement of Additional Information for the
Schroder U.S. Equity Fund:
For the fiscal year ended October 31, 1996 - Statement of Assets and
Liabilities, Statement of Operations, Statements of Changes in Net Assets;
Statement of Investments, Notes to Financial Statements, Report of
Independent Accountants (for all Funds, filed with the Securities and
Exchange Commission on January 6, 1997 as part of Registrant's Annual
Report for such Fund pursuant to Rule 30b-1 under the Investment Company
Act of 1940, as amended, and incorporated herein by reference)
(b) EXHIBITS:
(1) Trust Instrument of Schroder Capital Funds (Delaware) (the "Trust") (filed
as Exhibit 1 to Registrant's Post-Effective Amendment No. 46 and incorporated
herein by reference).
(2) BYLAWS dated September 8, 1995, filed herewith.
(3) None.
(4) (a) Sections 2.04 and 2.06 of Registrant's Trust Instrument provide as
follows:
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the Trustees,
Shares shall be transferable on the records of the Trust only by the record
holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby shall consist of
one or more Series and separate and distinct records shall be maintained by the
Trust for each Series and the assets associated with any such Series shall be
held and accounted for separately from the assets of the Trust or any other
Series. The Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Series. A Series may issue any number of Shares and need not
issue shares. At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by a majority
vote abolish that Series and the establishment and designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be Shares
of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series. Each holder of Shares of a Series shall be
entitled to receive his pro rata share of all distributions made with respect to
such Series. Upon redemption of his Shares, such Shareholder shall be paid
solely out of the funds and property of such Series of the Trust."
(5) Investment Advisory Contract between the Trust and Schroder Capital
Management International Inc. dated January 9, 1996 filed herewith.
(6) Distribution Agreement between the Trust and Schroder Fund Advisors Inc.
dated January 9, 1996 filed herewith.
(7) None.
(8) Global Custody Agreement between the Trust and The Chase Manhattan Bank,
N.A. dated January 9, 1996, as amended May 3, 1996 filed herewith.
(9)(a) Form of Administration Agreement between the Trust and Schroder Fund
Advisors Inc. dated (filed as Exhibit (9)(a) to Registrant's Post-Effective
Amendment No. 46 and incorporated herein by reference).
(9)(b) Subadministration Agreement between the Trust and Forum Administrative
Services, Limited Liability Company dated February 1, 1997 filed herewith.
(9)(c) Transfer Agency Agreement between the Trust and Forum Financial Corp.
dated January 9, 1996 (filed as Exhibit 9(c) to Registrant's Post-Effective
Amendment No. 46 and incorporated herein by reference).
(9)(d) Fund Accounting Agreement between the Trust and Forum Financial Corp.
dated January 9, 1996 filed herewith.
(10) Opinion of Jacobs Persinger & Parker as to legality of shares to be issued
by the Trust (filed as Exhibit 10(d) to Registrant's Post - Effective Amendment
No. 46 and incorporated herein by reference).
(11) Consent of Coopers & Lybrand L.L.P. (filed herewith).
(15)(a) Form of Master Distribution Plan adopted by Registrant (filed as
Exhibit 15(a) to Registrant's Post-Effective Amendment No. 46 and incorporated
herein by reference).
(15)(b) Form of Distribution Plan Supplement (filed as Exhibit 15(b) to
Registrant's Post-Effective Amendment No. 46 and incorporated herein by
reference).
(16) Schedule of Sample Performance Calculations -- Schroder U.S. Equity Fund,
filed herewith.
Other Exhibits:
Copies of Powers of Attorney pursuant to which Trustees have signed this
Post-Effective Amendment (filed as Other Exhibits to Post-Effective Amendment
No. 45 and incorporated herein by reference).
Copy of Power of Attorney pursuant to which Mr. Jackowitz has signed this
Post-Effective Amendment (filed as an Other Exhibit to Post-Effective Amendment
No. 45 and incorporated herein by reference).
Copy of Power of Attorney pursuant to which Mr. Smith has signed this
Post-Effective Amendment filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Title of Class Number of Record
Holders as of
March 31, 1997
-------------- ----------------
Schroder U.S. Equity Fund 603
Schroder International Fund 986
Schroder U.S. Smaller Companies Fund 182
Schroder Emerging Markets Fund 31
Institutional Portfolio
Schroder International Smaller Companies Fund 3
Schroder Latin America Fund 1
Schroder Global Asset Allocation Fund N/A
ITEM 27. INDEMNIFICATION.
In accordance with Section 3803 of the Delaware Business Trust Act, SECTION 5.2
of the Registrant's Trust Instrument provides as follows:
"5.2. Indemnification.
"(a) Subject to the exceptions and limitations contained in Section (b) below:
"(i) Every Person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of being or having been a Trustee or officer and against amounts paid
or incurred by him in the settlement thereof;
"(ii) The words "claim," "action," "suit," or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened while in office or thereafter, and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
"(b) No indemnification shall be provided hereunder to a Covered Person:
"(i) Who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Holders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Covered Person's office or (B) not to have
acted in good faith in the reasonable belief that Covered Person's action was in
the best interest of the Trust; or
"(ii) In the event of a settlement, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
Trustee's or officer's office,
"(A) By the court or other body approving the settlement;
"(B) By at least a majority of those Trustees who are neither Interested Persons
of the Trust nor are parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or
"(C) By written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Holder may, by appropriate legal proceedings, challenge any
such determination by the Trustees or by independent counsel.
"(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
"(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 5.2 may be paid by the Trust or Series from time
to time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 5.2; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance payments
or (c) either a majority of the Trustees who are neither Interested Persons of
the Trust nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available facts
(as opposed to a trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to indemnification
under this Section 5.2.
"(e) Conditional advancing of indemnification monies under this Section 5.2 for
actions based upon the 1940 Act may be made only on the following conditions:
(i) the advances must be limited to amounts used, or to be used, for the
preparation or presentation of a defense to the action, including costs
connected with the preparation of a settlement; (ii) advances may be made only
upon receipt of a written promise by, or on behalf of, the recipient to repay
that amount of the advance which exceeds that amount which it is ultimately
determined that he is entitled to receive from the Trust by reason of
indemnification; and (iii) (a) such promise must be secured by a surety bond,
other suitable insurance or an equivalent form of security which assures that
any repayments may be obtained by the Trust without delay or litigation, which
bond, insurance or other form of security must be provided by the recipient of
the advance, or (b) a majority of a quorum of the Trust's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
"(f) In case any Holder or former Holder of any Series shall be held to be
personally liable solely by reason of the Holder or former Holder being or
having been a Holder of that Series and not because of the Holder or former
Holder acts or omissions or for some other reason, the Holder or former Holder
(or the Holder or former Holder's heirs, executors, administrators or other
legal representatives, or, in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets
belonging to the applicable Series to be held harmless from and indemnified
against all loss and expense arising from such liability. The Trust, on behalf
of the affected Series, shall, upon request by the Holder, assume the defense of
any claim made against the Holder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series."
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The following are the directors and principal officers of SCMI, including their
business connections of a substantial nature. The address of each company
listed, unless otherwise noted, is 33 Gutter Lane, London EC2V 8AS, United
Kingdom. Schroder Capital Management International Limited ("Schroder Ltd.") is
a United Kingdom affiliate of SCMI which provides investment management services
international clients located principally in the United States.
David M. Salisbury. Chief Executive Officer, Director and Chairman of
Schroder Capital; Joint Chief Executive and Director of Schroder.
Richard R. Foulkes. Senior Vice President and Managing Director of
Schroder Capital.
John A. Troiano. Managing Director and Senior Vice President. Mr. Troiano
is also a Director of Schroder Ltd.
David Gibson. Senior Vice President and Director of Schroder Capital.
Director of Schroder Wertheim Investment Services Inc.
John S. Ager. Senior Vice President and Director of Schroder Capital.
Sharon L. Haugh. Senior Vice President and Director of Schroder Capital,
Director and Chairman of Schroder Advisors Inc.
Gavin D.L. Ralston. Senior Vice President and Director of Schroder
Capital.
Mark J. Smith. Senior Vice President and Director of Schroder Capital.
Robert G. Davy. Senior Vice President. Mr. Davy is also a Director of
Schroder Ltd. and an officer of open end investment companies for which
SCMI and/or its affiliates provide investment services.
Jane P. Lucas. Senior Vice President and Director of Schroder Capital;
Director of Schroder Advisors Inc.; Director of Schroder Wertheim
Investment Services, Inc.
C. John Govett. Director of Schroder Capital; Group Managing Director of
Schroder Investment Management Ltd. And Director of Schroders plc.
Phillipa J. Gould. Senior Vice President and Director of Schroder
Capital.
Louise Croset. First Vice President and Director of Schroder Capital.
Abdallah Nauphal, Group Vice President and Director.
ITEM 29. PRINCIPAL UNDERWRITERS.
(A) Schroder Fund Advisors Inc., the Registrant's principal underwriter, also
serves as principal underwriter for WSIS Series Trust.
(B) Following is information with respect to each officer and director of
Schroder Fund Advisors Inc., the Distributor of the shares of Schroder
International Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies
Fund, Schroder Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder International Bond Fund and
Schroder Latin America Fund (each a series of the Registrant):
Catherine A. Mazza, President
Mark J. Smith, Director and Vice President.
John A. Troiano, Director and Vice President
Sharon L. Haugh, Director
Robert Jackowitz, Treasurer
Margaret H. Douglas-Hamilton, Secretary
* Address for each is 787 Seventh Avenue, New York, New York 10019 except for
John A. Troiano and Mark J. Smith each of whose address is 33 Gutter Lane,
London, England.
(C) Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by Registrant
with respect to Schroder Cash Reserves Fund pursuant to Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder will be maintained at
the offices of Schroder Capital Management International Inc. and Schroder Fund
Advisors Inc., 787 Seventh Avenue, New York, New York 10019, except that certain
items will be maintained at the following locations:
(a) Forum Financial Corp., Two Portland Square, Portland, Maine 04101
(shareholder records).
(B) Forum Financial Services, Inc., Two Portland Square, Portland, Maine 04101
(corporate minute book).
ITEM 31. MANAGEMENT SERVICES.
Inapplicable.
ITEM 32. UNDERTAKINGS.
(i) Registrant undertakes to file a post-effective amendment, using financial
statements which need not be certified, within four to six months from
the latter of the effective date of Registrant's Securities Act of 1933
Registration Statement relating to the prospectuses offering those shares
or the commencement of public shares of the respective shares; and,
(ii) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof to which the
prospectus relates upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that this post-effective amendment
to the Registration Statement meets all of the requirements for effectiveness
under paragraph (b) of Rule 485 under the Securities Act of 1933 and has duly
caused this amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of New York, and State
of New York on the 17th day of April, 1997.
SCHRODER CAPITAL FUNDS (DELAWARE)
By:/s/ Catherine A. Mazza
-----------------------
Catherine A. Mazza
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the 17th
day of April, 1997.
SIGNATURES TITLE
(a) Principal Executive Officer
MARK J. SMITH President
By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan, Attorney-in-Fact
(b) Principal Financial and
Accounting Officer
ROBERT JACKOWITZ* Treasurer
*By: /s/ Thomas G. Sheehan
-----------------------------
Thomas G. Sheehan, Attorney-in-Fact
(c) Majority of the Trustees
PETER E. GUERNSEY* Trustee
JOHN I. HOWELL* Trustee
HERMANN C. SCHWAB* Trustee
CLARENCE F. MICHALIS* Trustee
*By: /s/ Thomas G. Sheeehan
-----------------------------
Thomas G. Sheehan, Attorney-in-Fact
INDEX TO EXHIBITS
SEQUENTIAL
EXHIBIT PAGE NUMBER
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(2) BYLAWS dated September 8, 1995, filed herewith.
(5) Investment Advisory Contract between the
Trust and Schroder Capital Management
International Inc. dated January 9, 1996 filed
herewith.
(6) Distribution Agreement between the Trust and
Schroder Fund Advisors Inc. dated January 9, 1996
filed herewith.
(8) Global Custody Agreement between the Trust and
The Chase Manhattan Bank, N.A. dated January 9, 1996,
as amended May 3, 1996 filed herewith.
(9)(b) Subadministration Agreement between the Trust and Forum
Administrative Services, Limited Liability Company
dated February 1, 1997 filed herewith.
(9)(d) Fund Accounting Agreement between the Trust and
Forum Financial Corp.dated January 9, 1996 filed herewith.
(11) Consent of Coopers & Lybrand L.L.P.
(15) Multiclass (Rule 18f-3) Plan
(16) Schedule of Sample Performance Calculations -- Schroder
U.S. Equity Fund, filed herewith.
Other Exhibits:
Copy of Power of Attorney pursuant to which Mr. Smith has signed this
Post-Effective Amendment filed herewith.
Dates Referenced Herein and Documents Incorporated by Reference
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