<PAGE>
SCHRODER U.S. SMALLER COMPANIES FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
July ___, 1996
Dear Shareholder:
We are pleased to forward to your attention the attached Notice
and Proxy Statement for the Special Meeting of Shareholders of Schroder
U.S. Smaller Companies Fund (the "Fund"), a series of Schroder Capital
Funds (Delaware) (the "Trust"), to be held on July 31, 1996. The Proxy
Statement contains three proposals. Please take the time to read these
materials and cast your vote as the proposals to be voted on are important
to the Fund and to you as a shareholder.
In Proposal 1, the Trust's Board of Trustees seeks shareholder
approval of a new fundamental investment policy that will enable the Fund
to invest all of its investable assets in another investment company (the
"Core Portfolio") having substantially the same investment objective,
policies and limitations ("Core and Gateway Fund Structure"). Under this
structure, the only investment securities that would be held by the Fund
would be the Fund's interest in the Core Portfolio. The Board believes
that conversion to the Core and Gateway Fund Structure may lead to certain
cost savings by spreading operational expenses over a larger asset base
because multiple institutional investors will be able to pool their assets
for investment management purposes rather than managing their assets
separately, while simultaneously marketing separate investment products
with distinct, proprietary labels. Accordingly, the Board believes that
conversion to the Core and Gateway Fund Structure is an appropriate step
for the Fund. It is important to note that Schroder Capital Management
International Inc. will serve as the Core Portfolio's investment adviser.
In addition to the proposed conversion to the Core and Gateway
Fund Structure, the Board also requests, in Proposal 2 that shareholders
approve the amendment of the Fund's investment objective and in Proposal 3
that shareholders approve the amendment of certain of the Fund's
fundamental investment policies and limitations. The amendments are
proposed in order to provide the Board with greater flexibility to respond
to future developments without the costs and delays associated with a
shareholder meeting. The proposed amendments will not, however, change
the Fund's emphasis of investing primarily in companies with smaller
market capitalizations.
THE BOARD RECOMMENDS APPROVAL OF EACH PROPOSAL AND URGES YOU TO
COMPLETE YOUR PROXY CARD AND RETURN IT AS SOON AS POSSIBLE.
<PAGE>
Page 2
We appreciate your participation and prompt response to this
matter and thank you for your continued support.
Yours sincerely,
Hermann C. Schwab
Chairman
<PAGE>
SCHRODER U.S. SMALLER COMPANIES FUND
(a series of Schroder Capital Funds (Delaware))
Two Portland Square
Portland, Maine 04101
_________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on July 31, 1996
_________________________
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Schroder U.S. Smaller Companies Fund (the "Fund"), a series
of Schroder Capital Funds (Delaware) (the "Trust"), will be held at the
offices of the Trust, Two Portland Square, Portland, Maine, on July 31,
1996 at 10:00 a.m. Eastern time for the following purposes:
(1) approval of a new investment policy that permits the Fund to
invest all of its investment assets in a corresponding portfolio
of an open-end investment company having substantially the same
investment objective and policies as the Fund;
(2) approval of the amendment of the Fund's investment objective;
(3) approval of the amendment of certain of the Fund's fundamental
investment policies and limitations; and
(4) to transact any other business as may properly come before the
Meeting and any adjournment thereof.
The Board of Trustees of the Trust has fixed the close of business on
___________________, 1996 as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting or any
adjournment thereof.
By order of the Board of Trustees,
MARGARET H. DOUGLAS-HAMILTON
Secretary
New York, New York
July , 1996
--
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATIONS, WE
URGE YOU TO INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE
AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>
SCHRODER U.S. SMALLER COMPANIES FUND
(a series of Schroder Capital Funds (Delaware))
Two Portland Square
Portland, Maine 04101
_________________________
PROXY STATEMENT
_________________________
Special Meeting of Shareholders
To Be Held on July 31, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Trustees (the "Board") of Schroder
Capital Funds (Delaware) (the "Trust"), a Delaware business trust, for use
at a Special Meeting of Shareholders, and any adjournment thereof (the
"Meeting"), of Schroder U.S. Smaller Companies Fund (the "Fund"), a series
of the Trust. The Meeting is to be held at the offices of the Trust, Two
Portland Square, Portland, Maine, on July 31, 1996 at 10:00 a.m. Eastern
time, for the purposes set forth in the accompanying Notice of Special
Meeting of Shareholders. The solicitation is made primarily by the
mailing of this Proxy Statement and the accompanying form of Proxy on or
about July ___, 1996. The Fund will furnish, without charge, a copy of
its most recent annual report and semi-annual report succeeding such
annual report, if any, to shareholders upon request to the Fund at the
address above (or call 1-800-344-8332).
The solicitation of proxies will be primarily by mail but also may include
telephone or oral communications by officers of the Trust or by regular
employees of Schroder Capital Management International Inc. ("SCMI"), the
Fund s investment adviser, Forum Financial Services, Inc. ("Forum"), the
Fund s sub-administrator, Forum Financial Corp., the Fund s transfer
agent, Schroder Fund Advisors Inc. ("Schroder Advisors"), the Fund s
distributor, or affiliates of each of these entities. The costs of the
Meeting and the preparation, printing and mailing of proxies will be borne
by the Fund. The address of SCMI and Schroder Advisors is 787 Seventh
Avenue, New York, New York 10019. The address of Forum and Forum
Financial Corp. is Two Portland Square, Portland, Maine 04101.
<PAGE>
Shares may be voted in person or by proxy. Each whole share is entitled
to one vote and each fractional share is entitled to a proportionate
fractional vote. All properly executed proxies received prior to the
Meeting will be voted at the Meeting, and any adjournment thereof, in
accordance with the instructions marked thereon or otherwise provided
thereon.
The persons designated on the enclosed proxy cards will vote in accordance
with your direction as indicated thereon if your proxy card is received
properly executed. Unless instructions to the contrary are marked,
proxies will be voted FOR the approval of each of the Proposals described
herein. Any shareholder may revoke the shareholder s proxy at any time
prior to exercise thereof by giving written notice to Forum Financial
Corp., the Fund s transfer agent, at P.O. Box 446, Portland, Maine 04112
or by signing and mailing another proxy at a later date. To be effective,
such revocation must be received by Forum Financial Corp. prior to the
Meeting. In addition, if you attend the Meeting in person, you may, if
you wish, vote by ballot at the Meeting, thereby canceling any proxy
previously given.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present but will not be voted
for or against any adjournment. Accordingly, abstentions and broker non-
votes effectively will be votes against adjournment. In addition,
abstentions and broker non-votes will not be counted as votes cast for
purposes of determining whether sufficient votes have been received to
approve a Proposal. Broker non-votes are shares held in street name for
which the broker indicates that instructions have not been received from
the beneficial owners or other persons entitled to vote and the broker
does not have discretionary voting authority. In completing proxies,
shareholders should be aware that checking the box labeled ABSTAIN will
result in the shares covered by the proxy being treated as if they were
voted AGAINST the Proposal.
One-third of the shares of the Fund outstanding on _______________, 1996
(the "Record Date"), represented in person or by proxy, must be present to
constitute a quorum. A quorum is required for the transaction of business
by the Fund at the Meeting. If less than a quorum is present the Meeting
maybe adjourned.
As of the Record Date, there were ____________________ shares of the Fund
outstanding. Set forth below is certain information as to all persons
known to the Trust who owned of record or beneficially 5% or more of the
Fund s outstanding shares as of the Record Date.
- 2 -<PAGE>
Percentage of
Number of Outstanding
Shares Shares
--------- -----------
Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), independent accountants of
the Trust for its current fiscal year ending October 31, 1996, has been
given the opportunity to make a statement if it so desires at the Meeting.
Coopers & Lybrand is not expected to be present at the Meeting but will be
available should any matter arise requiring its presence.
Required Votes
Approval of each Proposal requires the affirmative vote of "a majority of
the outstanding voting securities" of the Fund as defined in the
Investment Company Act of 1940 (the "1940 Act"). Under the 1940 Act, this
means the affirmative vote of the lesser of (1) 67% or more of the Fund s
shares present at the Meeting or represented by proxy if the holders of
more than 50% of the outstanding shares are present in person or by proxy
at the Meeting or (2) more than 50% of the Fund s outstanding shares.
With respect to Proposal 3, shareholders of the Fund may vote against the
changes proposed with respect to specific fundamental investment
restrictions in the manner indicated on the proxy card.
- 3 -<PAGE>
PROPOSAL 1
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT POLICY PERMITTING INVESTMENT OF
THE FUND S ASSETS IN ANOTHER INVESTMENT COMPANY
Introduction: Core and Gateway(REGISTERED TRADEMARK)
At a meeting held on May 16, 1996, the Board considered and approved,
subject to shareholder approval, the adoption of a new fundamental
investment policy with respect to the Fund which would allow the Fund to
invest all of its investable assets in another investment company (the
"Core and Gateway Fund Structure"). The Core and Gateway Fund Structure,
commonly known as the master-feeder fund structure, is an arrangement that
allows several investment companies with different shareholder-related
features or distribution channels, but having the same investment
objective, policies and restrictions, to combine their investments by
investing all of their assets in the same portfolio instead of managing
them separately, thereby achieving certain economies of scale. For
example, a fund offering its shares at net asset value (not subject to a
sales charge) might pool its investments with another fund having the same
investment objective and policies that offers its shares subject to a
front-end or contingent deferred sales charge.
Under the Core and Gateway Fund Structure, a fund ("Gateway Portfolio")
invests all its investment assets in another investment company (the "Core
Portfolio") having substantially the same investment objective and
policies in exchange for shares of beneficial interest in the Core
Portfolio. The following illustration compares a traditional mutual fund
structure, whereby a fund invests directly in the securities that comprise
its investment portfolio, to the Core and Gateway Fund Structure, whereby
one or more Gateway Portfolios invest in a Core Portfolio, which in turn
invests in portfolio securities.
[Graphics illustrating Traditional Fund Structure and Core and Gateway
Fund Structure.]
Conversion to the Core and Gateway Fund Structure may serve to attract
other collective investment vehicles with different shareholder servicing
or distribution arrangements and with shareholders that would not have
invested in a fund. In this event, additional assets may allow for
operating expenses to be spread over a larger asset base. No assurance
can be given, however, that the Core and Gateway Fund Structure will serve
- 4 -<PAGE>
to increase overall assets under management or result in the Fund
achieving greater operational efficiencies.
New Investment Policy
Certain fundamental investment restrictions of the Fund, such as those
limiting investment in a single issuer or concentration in an industry,
may prevent it from investing all of its assets in another investment
company. The Board proposes that these restrictions be modified by adding
the following fundamental investment policy:
Notwithstanding any other investment policy or
restriction, the Fund may seek to achieve its
investment objective by holding, as its only
investment securities, the securities of another
investment company having substantially the same
investment objective and policies as the Fund.
If this policy is approved by shareholders, the Board currently expects
that on or about August 1, 1996, the Fund will invest all of its
investment assets in a newly created series (the "Portfolio") of Schroder
Capital Funds (the "Schroder Core"). The Portfolio would invest in
securities of the same type, and in accordance with the same objective (as
proposed to be amended in Proposal 2 below), as the Fund. Shareholders
would continue to hold shares of the Fund, and the Fund would hold an
interest in the Portfolio. The Core and Gateway Fund Structure will not
alter the rights and privileges of shareholders of the Fund. The value of
a shareholder's investment in the Fund will be the same immediately after
the Fund's investment in the Portfolio as immediately before that
investment. In addition, the Fund s methods of operation and shareholder
services would not be materially affected by its investment in the
Portfolio, except that the assets of the Fund may be managed as part of a
larger pool.
Following the Fund's conversion to the Core and Gateway Fund Structure,
the Board would retain the right to withdraw the Fund s investments from
the Portfolio at any time. In the event of such withdrawal, the Fund
would then resume investing directly in individual securities of other
issuers or invest in another Core Portfolio.
In approving the new fundamental policy with respect to the Fund, the
Board determined that (1) such investment is in the best interests of the
Fund and its shareholders; and (2) the interests of existing shareholders
of the Fund will not be diluted as a result of effecting the transaction.
The Board considered, among other things, the possible operational
efficiencies offered by the structure. The Board believes that, [after
- 5 -<PAGE>
applicable waivers and reimbursements], investment in the Portfolio will
not materially increase costs to the Fund s shareholders. For more
information about the Fund s expenses after conversion to the Core and
Gateway Fund Structure, see "Comparative Expense Information" below.
Additional Information Regarding the Portfolio and the Schroder Core
The Portfolio will be a series of the Schroder Core which, like the Trust,
is an open-end management investment company under the 1940 Act. The
Schroder Core is organized as a Delaware business trust and currently
consists of two series. Interests in the Portfolio will not be available
for purchase by members of the general public. Rather, the Portfolio will
serve as an investment vehicle for different types of collective
investment entities such as mutual funds, commingled institutional trust
funds and offshore investment funds. As of the date of this Proxy
Statement, one other mutual fund (in addition to the Fund) has stated its
intention of investing in the Portfolio.
The investment objective and policies of the Portfolio will be
substantially the same as those of the Fund (as proposed to be amended in
Proposals 2 and 3 below). In seeking to achieve the same objective as the
Fund, the Portfolio will invest in the same type of securities and engage
in the same transactions permitted by the investment policies and
restrictions of the Fund (as proposed to be amended in Proposal 3 below).
SCMI, currently the Fund s investment adviser, will be the investment
adviser of the Portfolio. See "Advisory Services" below. Forum, who
currently performs administrative services with respect to the Fund, will
perform similar services for the Portfolio. See "Administrative Services"
below. Likewise, other entities that currently perform services for the
Fund, such as the Fund s custodian, will perform substantially similar
services for the Portfolio.
The Portfolio will value its assets at the same time, on the same days,
and pursuant to the same method as the Fund currently values its assets.
Investors in the Portfolio will have no preemptive or conversion rights.
The Portfolio normally will not hold meetings of investors except as
required under the 1940 Act. As an investor in the Portfolio, the Fund
will be entitled to vote in proportion to its relative interest in the
Portfolio. As to any issue on which Fund shareholders vote, the Fund will
vote its interest in the Portfolio in proportion to the votes cast by its
shareholders. If there are other investors in the Portfolio, there can be
no assurance that any issue that receives a majority of the votes cast by
the Fund s shareholders will receive a majority of votes cast by all
Portfolio shareholders. Investors holding at least a 10% interest in the
Portfolio will be able to call a meeting of shareholders for certain
purposes affecting only the Portfolio, and shareholders holding at least a
- 6 -<PAGE>
10% interest in the Schroder Core will be able to call a meeting to remove
any Trustee. A Trustee may be removed upon the vote of the holders of
interests qualified to vote representing two-thirds of the value of the
Schroder Core.
Generally, the Fund will hold a meeting of its shareholders to obtain
instructions on how to vote its interest in the Portfolio when the
Portfolio is conducting a meeting of its shareholders. However, subject
to applicable statutory and regulatory requirements, the Fund will not
seek instructions from its shareholders with respect to (1) any proposal
relating to the Portfolio which, if made with respect to the Fund, would
not require the vote of Fund shareholders, or (2) any proposal relating to
the Portfolio that is identical to a proposal previously approved by the
Fund s shareholders.
Investments in the Portfolio may not be transferred to another investor,
but an investor may withdraw all or any portion of its investment at any
time. Upon liquidation of the Portfolio, investors in the Portfolio would
be entitled to share pro rata in the net assets of the Portfolio available
for distribution to investors.
Under Delaware law, investors in the Schroder Core 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 Schroder Core's Trust Instrument contains an express disclaimer
of investor liability for the debts, liabilities, obligations and expenses
of the Schroder Core. The Trust Instrument provides for indemnification
out of each series' property of any investor or former investor 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 an investor for any act or obligation of the series
and satisfy any judgment thereon. Thus, the risk of an investor incurring
financial loss on account of investor 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.
Trustees and Officers of the Schroder Core
Subject to the provisions of its Trust Instrument, the business of the
Schroder Core is supervised by its Trustees, who serve indefinite terms
and who have all powers necessary or convenient to carry out their
responsibilities. The same individuals currently serve as Trustees of the
Schroder Core and the Trust. A majority of Trustees then in office
generally would be able to appoint successor Trustees and fill vacancies,
- 7 -<PAGE>
provided that at least a majority of the Trustees has been elected by
shareholders. Trustees of the Schroder Core who are not interested
persons of the Schroder Core receive the same compensation that the
Trust s Independent Trustees currently receive. Compensation paid to the
Trust's Independent Trustees will be reduced in the event that the Fund
converts to the Core and Gateway Fund Structure.
Officers of the Schroder Core are elected by the Schroder Core's Trustees
and serve at the pleasure of the Board. The same individuals currently
serve as officers of the Schroder Core and the Trust. None of the
officers receive compensation from the Schroder Core or the Trust.
Advisory Services
SCMI, which currently serves as investment adviser to the Fund (in this
capacity, the "Adviser"), will act as investment adviser to the Portfolio
pursuant to an investment advisory contract with the Schroder Core (the
"Core Contract"). Subject to the general control of the Schroder Core s
Board of Trustees, SCMI will make investment decisions for the Portfolio
and will continuously review, supervise and administer the Portfolio s
investment program.
The Core Contract will be substantially similar in all material respects
to the current investment advisory contract with respect to the Fund (the
"Current Fund Contract") except with respect to its fee rate. Under the
Core Contract with respect to the Portfolio, SCMI will receive an advisory
fee of 0.60% of the Portfolio's average daily net asset. Under the
Current Fund Contract, SCMI currently receives a monthly advisory fee
equal to 0.50% of the first $100 million of the Fund's average daily net
assets; 0.40% of the next $150 million of the Fund's average daily net
assets and 0.35% of the Fund's average daily net assets in excess of $250
million. For the fiscal year ended October 31, 1995, the Fund paid SCMI
an advisory fee of 0.50% of the Fund's average daily net assets. The
Current Fund Contract would also be amended to provide, however, that no
fee would be paid under the Contract to the extent the Fund invests all of
its investment assets in another investment company, as would be the case
under the Core and Gateway Fund Structure.
Like the Current Fund Contract, the Core Contract will continue in effect
with respect to the Portfolio provided such continuance is approved
annually (1) by the holders of a majority of the outstanding voting
interests of the Portfolio or by the Board of Trustees of the Schroder
Core and (2) by a majority of the Trustees of the Schroder Core who are
not parties to such contract or "interested persons" (as defined in the
1940 Act) of any such party. Like the Current Fund Contract, the Core
Contract could be terminated without penalty by a vote of the Trustees of
the Schroder Core or the interestholders of the Portfolio on 60 days
- 8 -<PAGE>
written notice to SCMI, or by SCMI on 60 days written notice to the
Schroder Core and would terminate automatically if assigned.
The investment management team of Fariba Talebi, a Vice President of the
Trust, and a First Vice President of SCMI, and Ira Unschuld, a Vice
President of the Trust and of SCMI, with the assistance of an investment
committee, will be primarily responsible for the day-to-day management of
the investment portfolio of the Portfolio, a function they currently
perform for the Fund. Ms. Talebi and Mr. Unschuld have been employed by
SCMI in the investment research and management areas since 1987 and 1990,
respectively.
SCMI's investment advisory contract with the Fund would continue in effect
after the conversion. However, SCMI would not receive any fee from the
Fund for investment advisory services to the extent the Fund's assets were
invested in another investment company. Continuation of the contract with
the Fund would enable the Fund, in the event it withdrew its assets from
the Portfolio to resume investing directly in individual securities of
other issuers with no interruption in investment advisory services.
Administrative Services
Pursuant to an administrative services contract with the Trust, Schroder
Advisors currently provides management and administrative services
necessary for the Fund s operations other than any management services
provided to the Fund by SCMI pursuant to the Fund Contract, including
among other things, (1) preparation of shareholder reports and
communications, (2) regulatory compliance, such as reports to and filings
with the Securities and Exchange Commission and state securities
commissions, and (3) 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. For administrative services with respect to the Fund, Schroder
Advisors receives from that Fund a fee of 0.25% of the first $100 million
of the Fund's average daily net assets, 0.20% of the next $150 million of
the Fund's average daily net assets, and 0.175% of the Fund's average
daily net assets in excess of $250 million. Schroder Advisors is a
wholly-owned subsidiary of SCMI, and is a registered broker-dealer
organized to act as an administrator and distributor of mutual funds.
The Trust and Schroder Advisors have entered into a sub-administration
agreement with Forum with respect to the Fund. Pursuant to the sub-
administration agreement, Forum assists Schroder Advisors with certain of
its responsibilities under the administrative services agreement,
including shareholder reporting and regulatory compliance. Payment for
Forum s services is made by Schroder Advisors and is not a separate
expense of the Fund.
- 9 -<PAGE>
The administrative services contract and the sub-administration agreement
are terminable with respect to the Fund without penalty, at any time, by
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 that Fund s Rule 12b-1 plan or in the administrative services
agreement or sub-administration agreement, upon not more than 60 days
written notice to Schroder Advisors or Forum as appropriate, or by vote of
the holders of a majority of the shares of the Fund, or, upon 60 days
notice, by Schroder Advisors or Forum. The administrative services
agreement will terminate automatically in the event of its assignment.
If the Fund were invested in the Portfolio, Schroder Advisors and Forum
would receive administrative services fees with respect to the Fund
calculated on a different basis than currently. Schroder Advisors and
Forum would receive administrative services fees with respect to the Fund
of 0.25% and 0.075%, respectively, of the Fund s average daily net assets.
The fees paid to Forum would be paid by the Fund and not by Schroder, as
is currently the case. In addition, the Fund would be responsible for its
pro rata portion of the administrative services fees paid by the Portfolio
relating to administrative services performed on behalf of Portfolio by
Forum. For these services, Forum will receive administrative services
fees paid by the Portfolio of 0.075% of the Portfolio s average daily net
assets.
Although the proposed administrative services fees paid directly or
indirectly by the Fund would exceed the current fee paid by the Fund for
administrative services, the Board believes that this change is justified
in light of the complexity of the Core and Gateway Fund Structure and the
overall benefits to shareholders.
Comparative Expense Information
The following information is intended to show the various expenses that an
investor in the Fund would bear directly or indirectly after conversion of
the Fund to the Core and Gateway Fund Structure in comparison to those
borne under the existing structure.
Annual Operating Expenses
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
- 10 -<PAGE>
Actual (1) Pro Forma Pro Forma Pro Forma
Fund Fund Portfolio Combined
--------------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investor Advisor Investor Advisor Investor Advisor Investor Advisor
Shares Shares Shares Shares Shares Shares Shares Shares
-------- ------- -------- ------- -------- ------- --------- -------
Management 0.75% 0.75% 0.325% 0.325% 0.675% 0.675% 1.00% 1.00%
Fees(2)
Rule 12b-1 Fees 0.00% 0.25% 0.000% 0.250% 0.000% 0.000% 0.00% 0.25%
Other Expenses 0.74% 0.99%
----- ----- -------- --------- -------- -------- -------- --------
Total Operating 1.49% 1.99%
Expenses ===== ===== ======= ======== ========
</TABLE>
________________
(1) Expenses for the fiscal year ended October 31, 1995.
Advisor Shares expenses have been restated to reflect
current fees borne by holders of Advisor Shares.
(2) Management Fees reflect the fees paid for investment
advisory and administrative services.
The table below compares actual fees paid to SCMI under the
Current Fund Contract for the fiscal year ended October 31, 1995
with the fees that would have been payable had the Fund invested
all of its investment assets in the Portfolio for the same
period:
Actual Fees Payable under Core and
Fees Paid Gateway Fund Structure % Change
--------- --------------------------- --------
$71,188 $__________ ______%
- 11 -<PAGE>
Example. The following illustrates the expenses on a $1,000 investment in
the Fund under the existing and proposed fund structures assuming (1) a 5%
annual return, (2) reinvestment of all dividends and distributions, and
(3) full redemption at the end of each period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Existing Structure-Investor Class $15 $47 $ 81 $178
Existing Structure-Advisor Class $20 $62 $107 $232
Core and Gateway Structure-Investor Class $ $ $ $
Core and Gateway Structure-Advisor Class $ $ $ $
</TABLE>
The purpose of the table and example is to assist investors in
understanding the various costs and expenses an investor in shares of the
Fund would bear directly or indirectly after conversion of the Fund to the
Core and Gateway Fund Structure in comparison to those borne under the
existing fund structure. The example should not be considered a
representation of past or future expenses or return. Actual expenses and
return may be greater or less than those shown.
Tax Consequences of Investment in the Portfolio
The Trust will receive an opinion from its tax counsel, Seward & Kissel,
on or prior to the date of the Fund s conversion to the Core and Gateway
Fund Structure, that the Fund s investment of all of its assets in the
Portfolio will not have tax effects with regard to the Fund, the Trust and
the Fund s shareholders. While no ruling has been requested from the
Internal Revenue Service ("IRS") concerning the foregoing, and the IRS is
not bound by the opinion of counsel, the Board believes that an opinion of
counsel provides sufficient authority on the tax effects of the Fund s
investment in the Portfolio, in view of the nature and complexity of such
investment.
It is intended that the Fund will continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of
- 12 -<PAGE>
1986. In each taxable year that the Fund so qualifies, the Fund (but not
its shareholders) will be relieved of Federal income tax on that part of
its investment company taxable income and net capital gain that is
distributed to its shareholders. Neither the Fund nor the Portfolio is
expected to be required to pay any Federal income or excise taxes.
Distributions from the Fund, except for distributions from the Fund
designated as long-term capital gain distributions, will continue to be
taxable to its shareholders as ordinary income, whether received in cash
or reinvested in Fund shares.
Evaluation by the Board
At a meeting held on May 16, 1996, the Board considered and determined to
seek shareholder approval of a new fundamental investment policy that
would allow the Fund to convert to the Core and Gateway Fund Structure.
Management of the Trust presented to the Board the potential benefits,
along with the costs and potential risks, of the Fund converting to this
structure. In this regard the Board considered the following.
Management of the Trust presented information concerning steps which some
mutual funds have taken to avoid the erosion of assets under management
while developing a competitive advantage in the mutual funds marketplace.
The Core and Gateway Fund Structure, as approved by the Board, is designed
to retain current assets and to attract new assets to the structure.
Management believes that the retention of assets would assist the Fund in
its efforts to keep operational costs from rising significantly. In
addition, in the view of management, a larger asset base may allow the
purchase of individual investment securities in larger amounts, which may
reduce certain transactional and custodial expenses.
The Board recognized that (1) certain of the benefits of the Core and
Gateway Fund Structure would likely arise only if the Portfolio was to
grow through investments in the Portfolio by investors other than the
Fund; and (2) there is no assurance that, even if other investors invest
in the Portfolio, expense savings or other benefits will be realized. In
addition, the Board recognized that SCMI, Schroder Advisors, Forum and
other service providers to the Funds may benefit through increased
economies of scale in the event that assets rise, without a corresponding
benefit to Fund shareholders. In particular, conversion to the Core and
Gateway Fund Structure may enable SCMI and Schroder Advisors to increase
assets under management through attraction and development of new
investment vehicles with less risk than would be possible without this
structure. As a result, SCMI and Schroder Advisors could earn fees with
less risk of limited success than is typical in the early, developmental
years of an investment vehicle, since new investors in the Portfolio will
be presented with the ability to pool their assets in an established
vehicle.
- 13 -<PAGE>
The Board considered that the Portfolio will pay a higher advisory fee
than is currently paid by the Fund under the Current Fund Contract. In
addition, the Board considered the fact that the Fund will pay more for
administrative services under the Core and Gateway Fund Structure than it
does currently. The Board also considered the fact that the proposed
advisory and administration fees, unlike the Fund's current advisory and
administration fees, are not structured to decline as the Portfolio
reaches certain asset levels. In determining that the proposed fee
restructurings and fee increases are fair and reasonable, the Board
considered, among other things, the size and nature of the Fund, the value
of the benefit that the Fund will realize through investment advisory
services and administrative services, comparative data as to investment
advisory fees and expense ratios of comparable funds, and the nature and
complexity of the Core and Gateway Fund Structure.
Management informed the Board that, depending upon the size of the Fund at
the time of conversion, [and after applicable waivers and reimbursements],
the combined expense ratio of the Fund and the Portfolio will be
approximately equal to the expense ratio of the Fund if it continued to
invest directly in investment securities. [The Board considered that,
without applicable expense reimbursements and fee waivers, expenses for
each Fund would be higher under the Core and Gateway Fund Structure than
under each Fund s current operating structure.]
The Board also considered, among other things, (1) the costs of the
proposed change in fund structure, (2) other options to the proposed
change, and (3) the tax-free nature of the proposed change.
After consideration of the foregoing and all other relevant factors, the
Board, including a majority of the Independent Trustees, determined that
(1) the conversion of the Fund to the Core and Gateway Fund Structure is
in the best interests of the Fund and (2) the interests of the Fund's
shareholders will not be diluted as a result of the conversion. Even if
this proposal is approved by the Fund's shareholders, the Board will
retain the right to delay or not to proceed with the conversion if it
determines that it would not be in the best interests of the Fund and its
shareholders to do so.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1
PROPOSAL 2
APPROVAL OF THE AMENDMENT OF THE FUND'S INVESTMENT OBJECTIVE
- 14 -<PAGE>
At a meeting held on May 16, 1996, the Board considered and determined to
seek shareholder approval of the amendment of the Fund's investment
objective. The Fund's current investment objective is capital
appreciation through investment in a diversified portfolio which under
normal conditions will have at least 65% of its total assets invested in
equity securities of companies having market capitalizations under $1
billion. The Board proposes that the investment objective be amended to
provide that the Fund's investment objective is capital appreciation.
In connection with the proposed amendment of the Fund's investment
objective, the Board has also adopted a new non-fundamental policy (the
"New Policy") for the Fund that can be changed by the Board without
shareholder approval. Under the New Policy, the Fund will seek to achieve
its investment objective by investing, under normal market conditions, at
least 65% of its total assets in equity securities of companies domiciled
in the United States that, at the time of purchase, have market
capitalizations of $1.5 billion or less. The New Policy, by increasing
the maximum market capitalization from $1 billion to $1.5 billion,
increases the universe of companies that may be considered for purposes of
the 65% requirement. SCMI believes that such an increase in maximum
market capitalization is appropriate due to the ever increasing market
capitalizations of companies in general. The New Policy will only become
effective if shareholders approve this proposal.
The Board believes the proposed amendment of the Fund's investment
objective is in the best interest of the Fund and its shareholders. As a
result of the amendment, the Board will be able to amend the New Policy in
response to economic or other developments without the costs and delay
associated with a shareholder meeting.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 2
PROPOSAL 3
APPROVAL OF THE AMENDMENT OF CERTAIN OF THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES AND LIMITATIONS
Pursuant to the 1940 Act, the Fund has adopted certain
fundamental investment restrictions and policies, which are set forth in
the Fund's prospectus and statement of additional information, and which
may only be changed with shareholder approval. Investment restrictions
- 15 -<PAGE>
and policies that the Fund has not designated as being fundamental are
considered to be "non-fundamental" and may be changed by the Fund's Board
without shareholder approval.
Certain of the fundamental restrictions that the Fund has adopted
in the past reflect regulatory, business or industry conditions, practices
or requirements that are no longer in effect. Other fundamental
restrictions reflect regulatory requirements which remain in effect, but
which are not required to be stated as fundamental, or in some cases even
as non-fundamental, restrictions.
Accordingly, the Board has approved revisions to the Fund's
fundamental restrictions to simplify, modernize and make more uniform
those investment restrictions that are required to be fundamental, and to
eliminate those fundamental restrictions that are not legally required.
In some instances, existing fundamental restrictions that are eliminated
because they are not required to be fundamental would be reclassified as
non-fundamental restrictions.
The Board believes that the proposed changes to the Fund's
fundamental restrictions will enhance management's ability to manage
efficiently and effectively the Fund's assets in changing regulatory and
investment environments. Additionally, by reducing to a minimum those
policies that can be changed only by shareholder vote, the Fund will be
able to avoid the costs and delays associated with a shareholder meeting
when making changes to its investment policies that, at a future date, the
Board considers desirable. Although the proposed changes in fundamental
restrictions will allow the Fund greater flexibility to respond to future
investment opportunities, the Board does not anticipate that the changes,
individually or in the aggregate, will result at this time in a material
change in the level of investment risk associated with an investment in
the Fund.
A description of each proposed change to the Fund's fundamental
investment restrictions is set forth below. A complete list of the Fund's
proposed fundamental investment restrictions is set forth in Appendix A.
In addition, a description of those non-fundamental investment
restrictions that would be adopted in conjunction with the elimination of
certain fundamental restrictions are also set forth below. Any non-
fundamental investment restriction may be modified or eliminated by the
Board at any future date without any further approval of shareholders. A
complete list of the Fund's proposed non-fundamental investment
restrictions is set forth in Appendix B.
If the proposed changes are approved by shareholders at the
Meeting, the Fund's prospectus and statement of additional information
will be revised to reflect those changes. This will occur as soon as
practicable following the Meeting.
- 16 -<PAGE>
Proposed Changes. The following is the text and a summary description of
the proposed changes to the Fund's fundamental restrictions, together with
the text of those non-fundamental restrictions that would be adopted in
connection with the elimination of certain of the Fund's current
fundamental restrictions. With respect to each restriction, if a
percentage restriction is adhered to at the time of any investment or
transaction, a later increase or decrease in percentage resulting in a
change in the values of the Fund's portfolio securities or the amount of
its total assets will not be considered a violation of the fundamental
restriction.
1. Amendment of Fundamental Restriction on Portfolio
Diversification.
Current Fundamental Restriction:
"The Fund cannot invest in a securities (except those of the U.S.
Government or its agencies or instrumentalities) of any issuer if
immediately thereafter (a) more than 5% of the Fund's total
assets would be invested in securities of that issuer, or (b) the
Fund would then own more than 10% of that issuer's voting
securities."
Proposed Fundamental Restriction:
"With respect to 75% of its assets, the Fund may not purchase a
security other than a U.S. Government Security if, as a result,
more than 5% of the Fund's total assets would be invested in the
securities of a single issuer or the Fund would own more than 10%
of the outstanding voting securities of any single issuer."
Discussion:
The Fund is classified as a "diversified" investment company
under the 1940 Act and must have a fundamental restriction
establishing the percentage limitations with respect to
investments in individual issuers. The Fund's current
restriction is more limiting than required by the 1940 Act.
Accordingly, the Board is proposing that the restriction be
amended to conform to the requirements imposed by the 1940 Act on
a diversified investment company. The restriction as amended
would enable the Fund to invest up to 25% of its assets without
regard to any percentage limitation with respect to investment in
a single issuer.
- 17 -<PAGE>
2. Amendment of Fundamental Restriction on Concentration.
Current Fundamental Restriction:
"The Fund cannot concentrate investments in any particular
industry; therefore the Fund will not purchase the securities of
companies in any one industry if, thereafter, 25% or more of the
Fund's total assets would consist of securities of companies in
that industry."
Proposed Fundamental Restriction:
"The Fund may not purchase securities if, immediately after the
purchase, 25% or more of the value of the Fund's total assets
would be invested in the securities of issuers conducting their
principal business activities in the same industry; provided,
however, that there is no limit on investments in U.S. Government
Securities or repurchase agreements."
Discussion:
The proposed change to the Fund's fundamental concentration
policy would clarify that the restriction does not apply to
investments in U.S. Government Securities or repurchase
agreements.
3. Amendment of Fundamental Restriction on Borrowing.
Current Fundamental Restriction:
"The Fund cannot borrow money from banks for temporary emergency
purposes and then only in an amount not exceeding 5% of the value
of the total assets of the Fund."
Proposed Fundamental Restriction:
"The Fund may borrow money from banks or by entering into reverse
repurchase agreements, provided that such borrowings do not
exceed 33 1/3% of the value of the Fund's total assets (computed
immediately after the borrowing)."
Discussion:
The Board believes that changing the Fund's fundamental
restriction in the manner proposed will provide flexibility for
future contingencies. The amendment of this restriction will not
result in a change to the Fund's current operations. Rather,
current percentage limitations on borrowings will continue as a
- 18 -<PAGE>
non-fundamental restriction. Accordingly, in addition to the
modification of the existing fundamental restriction, if
shareholders approve this Proposal, the Fund would become subject
to the following non-fundamental restriction: "The Fund's
borrowings for other than temporary or emergency purposes or
meeting redemption requests may not exceed an amount equal to 5%
of the value of the Fund's net assets."
4. Amendment of Fundamental Restriction on Making Loans.
Current Fundamental Restrictions:
"The Fund may lend portfolio securities (other than in repurchase
transactions) to brokers, dealers and other financial
institutions meeting specified credit conditions, if the loan is
collateralized in accordance with applicable regulatory
requirements and if, after any loan, the value of the securities
loaned does not exceed 25% of the value of the Fund's total
assets."
"The Fund cannot lend money except in connection with the
acquisition of that portion of publicly-distributed debt
securities which the Fund's investment policies and restrictions
permit it to purchase; the Fund may also make loans of portfolio
securities and enter into repurchase agreements."
Proposed Fundamental Restriction:
"The Fund may not make loans, except the Fund may enter into
repurchase agreements, purchase debt securities that are
otherwise permitted investments and lend portfolio securities."
Discussion:
The proposed fundamental restriction clarifies that loans of
portfolio securities will be excluded from the general
fundamental restriction on making loans and eliminates the
percentage restriction on loans. The Board believes that
changing the Fund's fundamental restriction in the manner
proposed will provide flexibility in the event of future
developments. The amendment of this restriction will not result
in a change to the Fund's current operations. Rather, the
current percentage limitation will continue as a non-fundamental
restriction. Accordingly, in addition to the modification of the
existing fundamental restriction, if shareholders approve this
Proposal, the Fund would become subject to the following non-
fundamental restriction: "The Fund may not lend portfolio
securities if the total value of all loaned securities would
exceed 25% of the Fund's total assets."
- 19 -<PAGE>
5. Amendment of Fundamental Restriction on Real Estate
Investments.
Current Fundamental Restriction:
"The Fund cannot invest in real estate or in interests in real
estate, but may purchase readily marketable securities of
companies holding real estate or interests therein."
Proposed Fundamental Restriction:
"The Fund may not purchase or sell real estate or any interest
therein, except that the Fund may invest in debt obligations
secured by real estate or interests therein or securities issued
by companies that invest in real estate or interests therein."
Discussion:
The proposed change clarifies the exceptions to the prohibition
on investing in real estate.
6. Addition of Fundamental Restriction on Issuing Senior
Securities.
Proposed Fundamental Restriction:
"The Fund may not issue senior securities except to the extent
permitted by the 1940 Act."
Discussion:
The 1940 Act establishes limits on the ability of a Fund to issue
senior securities. The addition of this fundamental restriction
clarifies the extent to which the Fund may issue senior
securities. The addition of this provision will not result in a
change to the Fund's current operations.
7. Amendment and Reclassification of Fundamental Restriction on
Short Sales.
Current Fundamental Restriction:
"The Fund cannot make short sales of securities except "short
sales against-the-box"; in such short sales, at all times during
- 20 -<PAGE>
which a short position is open, the Fund must own an equal amount
of such securities, or by virtue of ownership of securities have
the right, without payment of further consideration, to obtain an
equal amount of the securities sold short; no more than 15% of
the Fund's net asset will be held as collateral for such short
sales at any one time."
Discussion:
The Fund is not required to establish a fundamental restriction
on short sales. Consistent with the Board's determination to
promote flexibility and efficiency in the event of future changes
in the law, the Board believes that the Fund's fundamental
restriction on this subject should be eliminated and replaced by
a non-fundamental restriction. If shareholders approve this
Proposal, the Fund would become subject to the following non-
fundamental restriction: "The Fund may not purchase securities
on margin, or make short sales of securities (except short sales
against the box), except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio
securities. The Fund may make margin deposits in connection with
permitted transactions in options, futures contracts and options
on futures contracts."
8. Amendment and Reclassification of Fundamental Restriction on
Pledging Assets.
Current Fundamental Restriction:
"The Fund cannot pledge, mortgage or hypothecate its assets to
any extent greater than 10% of the value of the total assets of
the Fund."
Discussion:
The Fund is not required to have a fundamental restriction on its
ability to pledge securities. However, certain state securities
laws or regulations require the Fund to establish at least a non-
fundamental restriction on this subject. In order to maximize
the Fund's flexibility in the event of future changes in state
securities laws or regulations, the Board believes that the
Fund's restriction on pledging securities should be eliminated
and replaced with a non-fundamental restriction that does not
have a 10% limitation. If shareholders approve this Proposal,
the Fund would become subject to the following non-fundamental
restriction: "The Fund may not pledge, mortgage, hypothecate or
encumber any of its assets except to secure permitted
borrowings."
- 21 -<PAGE>
9. Amendment and Reclassification of Fundamental Restriction on
Investments in Other Investment Companies.
Current Fundamental Restriction:
"The Fund cannot purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase of securities of
closed-end investment companies and only if immediately
thereafter not more than (i) 3% of the total outstanding voting
stock of such company is owned by the Fund, (ii) 5% of the Fund's
total assets, taken at market value, would be invested in any one
such company, or (iii) 10% of the Fund's total assets, taken at
market value, would be invested in such securities."
Discussion:
The Fund's current fundamental restriction conforms to the limits
under the 1940 Act. However, the Fund is not required to have a
fundamental restriction on this subject. In order to maximize
the Fund's flexibility in the event of future changes in federal
and state securities laws or regulations, the Board believes that
the Fund's restriction on investments in other investment
companies should be amended and reclassified as a non-fundamental
restriction. If shareholders approve this Proposal, the Fund
would become subject to the following non-fundamental
restriction: "The Fund may not invest in securities of another
investment company, except to the extent permitted by the 1940
Act."
10. Amendment and Reclassification of Fundamental Restriction on
Investments in Oil, Gas or Other Mineral Exploration or
Development Programs.
Current Fundamental Restriction:
"The Fund cannot invest in interests in oil, gas or other mineral
exploration or development programs but may purchase readily
marketable securities of companies which operate, invest in, or
sponsor such programs."
Discussion:
The Fund is not required to have a fundamental restriction with
respect to oil, gas or mineral investments, but certain state
securities laws or regulations require the Fund to establish at
- 22 -<PAGE>
least a non-fundamental restriction on this subject. In order to
maximize the Fund's flexibility in the event of future changes in
state securities laws or policies, the Board believes that the
Fund's restriction on oil, gas and mineral investments should be
amended and reclassified as a non-fundamental restriction. If
shareholders approve this Proposal, the Fund would become subject
to the following non-fundamental restriction: "The Fund may not
invest in interests in oil and gas or interests in other mineral
exploration or development programs."
11. Amendment and Reclassification of Fundamental Restriction on
Margin Transactions.
Current Fundamental Restriction:
"The Fund cannot purchase securities on margin; however, the Fund
may make margin deposits in connection with any Hedging
Instruments which it may use as permitted by any of its other
fundamental policies."
Discussion:
The Fund is not required to have a fundamental restriction on its
ability to engage in margin transactions. However, certain state
securities laws or regulations require the Fund to establish at
least a non-fundamental restriction on this subject. In order to
maximize the Fund's flexibility in the event of future changes in
state securities laws or regulations, the Board believes that the
Fund's restriction on margin transactions should be amended and
reclassified as non-fundamental. If shareholders approve this
Proposal, the Fund would become subject to the following non-
fundamental restriction: "The Fund may not purchase securities
on margin, or make short sales of securities (except short sales
against the box), except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio
securities. The Fund may make margin deposits in connection with
permitted transactions in options, futures contracts and options
on futures contracts."
12. Elimination of Fundamental Restriction Regarding Percentage
Requirements.
Current Fundamental Restriction:
"The Fund cannot deviate from the percentage requirements listed
under `Investment Objective and Policies' and `Additional
- 23 -<PAGE>
Investment Policies and Risk Considerations' [in the
Prospectus]."
Discussion:
The Fund is not required to set forth all of its percentage
limitations as fundamental policies. Accordingly, in order to
maximize the Fund's flexibility, the Board believes that the
Fund's percentage limitations should be made non-fundamental
except with respect to the percentage limitations set forth in
Appendix A. For more information on the current limitations
covered by this restriction, please see the Fund's prospectus.
13. Elimination of Fundamental Restriction on Investing for the
Purpose of Control.
Current Fundamental Restriction:
"The Fund cannot invest in companies for the purpose of acquiring
control or management thereof."
Discussion:
There is no legal requirement that the Fund have a fundamental
restriction on this subject, and the Fund's Board believes that
it is in the best interest of the Fund to remove such a
restriction. The elimination of this restriction would clarify
that the Fund may exercise freely its rights as a shareholder of
the companies in which the Fund invests. The Fund does not
intend to become involved in directing or administering the day-
to-day operations of any company. However, SCMI believes that it
should be able to communicate freely the Fund's views as a
shareholder on important matters of policy to a company's
management, its board of directors, and its shareholders, when it
believes that such action or policy may affect significantly the
value of its investment. The activities that the Fund might
engage in, either individually or with others, include seeking
changes in a company's direction, seeking the sale of a company
or a portion of its assets, or participating in a takeover effort
or in opposition to a takeover effort. SCMI believes that the
Fund currently may engage in such activities without necessarily
violating this provision. Nevertheless, the existence of the
provision might give rise to a claim that such activities did in
fact constitute investing for control or management. Although
the Fund could be drawn into lawsuits whether or not this
provision is eliminated, SCMI believes that, on balance,
elimination of this provision would be beneficial to the Fund.
Any activities conducted by the Fund will continue to be limited
to those instances where SCMI believes that potential litigation
risk and expense is offset by the potential for substantial
- 24 -<PAGE>
enhancement or preservation of the value of the Fund's
investments.
14. Elimination of Fundamental Restriction on Investing in
Commodities.
Current Fundamental Restriction:
"The Fund cannot invest in commodities or commodity contracts
other than Hedging Instruments which it may use as permitted by
any of its other fundamental policies, whether or not any such
Hedging Instrument is considered to be a commodity or commodity
contract."
Discussion:
There is no legal requirement that a Fund have a fundamental
restriction on this subject, and the Fund's Board believes that
it is in the best interest of the Fund to eliminate such a
restriction.
15. Elimination of Fundamental Restriction on Puts and Calls.
Current Fundamental Restriction:
"The Fund cannot purchase or write puts or calls except as
permitted by any of its other investment policies."
Discussion:
There is no legal requirement that a Fund have a fundamental
restriction on this subject, and the Fund's Board believes that
it is in the best interest of the Fund to eliminate such a
restriction.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 3
OTHER BUSINESS
Management knows of no other business to be presented at the Meeting. If
any additional matters should be properly presented, it is intended that
- 25 -<PAGE>
the enclosed proxy will be voted on such matters in accordance with the
judgment of the persons designated in the proxy.
ADDITIONAL INFORMATION
Submission of Shareholder Proposals
It is anticipated that, following the Meeting, neither the Trust nor the
Fund will hold any shareholder meetings except as required by Federal law
or Delaware state law. Shareholders wishing to submit proposals,
including proposals to nominate persons for election as Trustees, for
inclusion in a proxy statement for a subsequent shareholder meeting should
send proposals to the Assistant Secretary of Schroder Capital Funds
(Delaware), David I. Goldstein, in care of Forum Financial Group, Two
Portland Square, Portland, Maine 04101.
Notice to Banks, Broker-Dealers and Voting Trustees and Their Nominees
Banks, broker-dealers and voting trustees and their nominees should advise
the Assistant Treasurer of Schroder Capital Funds (Delaware), Thomas G.
Sheehan, in care of Forum Financial Group, Two Portland Square, Portland,
Maine 04101, whether, with respect to shares of record held by them, other
persons are beneficial owners of shares for which proxies are being
solicited and, if so, the number of copies of the Proxy Statement needed
in order to supply copies to the beneficial owners of the shares.
You Are Urged To Complete, Date, Sign And Return The Enclosed Proxy
Promptly
By order of the Board of Trustees,
MARGARET H. DOUGLAS-HAMILTON
Secretary
New York, New York
July __, 1996
- 26 -<PAGE>
APPENDIX A
PROPOSED FUNDAMENTAL INVESTMENT RESTRICTIONS
(1) With respect to 75% of its assets, the Fund may not
purchase a security other than a U.S. Government Security if, as
a result, more than 5% of the Fund's total assets would be
invested in the securities of a single issuer or the Fund would
own more than 10% of the outstanding voting securities of any
single issuer.
(2) The Fund may not purchase securities if, immediately
after the purchase, 25% or more of the value of the Fund's total
assets would be invested in the securities of issuers conducting
their principal business activities in the same industry;
provided, however, that there is no limit on investments in U.S.
Government Securities or repurchase agreements.
(3) The Fund may borrow money from banks or by entering into
reverse repurchase agreements, provided that such borrowings do
not exceed 33 1/3% of the value of the Fund's total assets
(computed immediately after the borrowing).
(4) The Fund may not issue senior securities except to the
extent permitted by the 1940 Act.
(5) The Fund may not underwrite securities of other issuers,
except to the extent that the Fund may be considered to be acting
as an underwriter in connection with the disposition of portfolio
securities.
(6) The Fund may not make loans, except the Fund may enter
into repurchase agreements, purchase debt securities that are
otherwise permitted investments and lend portfolio securities.
(7) The Fund may not purchase or sell real estate or any
interest therein, except that the Fund may invest in debt
obligations secured by real estate or interests therein or
securities issued by companies that invest in real estate or
interests therein.
<PAGE>
APPENDIX B
PROPOSED NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
(a) The Fund's borrowings for other than temporary or
emergency purposes or meeting redemption requests may not exceed
an amount equal to 5% of the value of the Fund's net assets.
(b) The Fund may not acquire securities or invest in
repurchase agreements with respect to any securities if, as
result, more than 15% of the Fund's net assets (taken at current
value) would be invested in repurchase agreements not entitling
the holder to payment of principal within seven days and in
securities which are not readily marketable, including securities
that are not readily marketable by virtue of restrictions on the
sale of such securities to the public without registration under
the 1933 Act ("Restricted Securities").
(c) The Fund may not invest in securities of another
investment company, except to the extent permitted by the 1940
Act.
(d) The Fund may not purchase securities on margin, or make
short sales of securities (except short sales against the box),
except for the use of short-term credit necessary for the
clearance of purchases and sales of portfolio securities. The
Fund may make margin deposits in connection with permitted
transactions in options, futures contracts and options on futures
contracts.
(e) The Fund may not invest in securities (other than fully-
collateralized debt obligations) issued by companies that have
conducted continuous operations for less than three years,
including the operations of predecessors unless guaranteed as to
principal and interest by an issuer in whose securities the Fund
could invest, if, as a result, more than 5% of the value of the
Fund's total assets would be so invested.
(f) The Fund may not pledge, mortgage, hypothecate or
encumber any of its assets except to secure permitted borrowings.
(g) The Fund may not invest in or hold securities of any
issuer if, to the Trust's knowledge, officers and trustees of the
<PAGE>
Trust or officers and directors of the Fund's investment adviser,
individually owning beneficially more than 1/2 of 1% of the
securities of the issuer, in the aggregate own more than 5% of
the issuer's securities.
(h) The Fund may not invest in interests in oil and gas or
interests in other mineral exploration or development programs.
(i) The Fund may not lend portfolio securities if the total
value of all loaned securities would exceed 25% of the Fund's
total assets.
(j) The Fund may not purchase real estate limited partnership
interests.
(k) The Fund may not invest in warrants if, as a result, more
than 5% of the Fund's net assets would be so invested or if, more
than 2% of the Fund's net assets would be invested in warrants
that are not listed on the New York or American Stock Exchanges.
<PAGE>
Schroder U.S. Smaller Companies Fund
(a series of Schroder Capital Funds (Delaware))
Two Portland Square
Portland, Maine 04101
PROXY
This Proxy is Solicited on Behalf of the Board of Directors
Revoking any such prior appointments, the undersigned appoints Thomas G.
Sheehan and David I. Goldstein (or, if only one shall act, that one)
proxies with the power of substitution to vote all of the shares of
Schroder U.S. Smaller Companies Fund (the "Fund"), a series of Schroder
Capital Funds (Delaware) (the "Trust"), registered in the name of the
undersigned at the Special Meeting of Shareholders of the Trust (the
"Meeting") to be held at the offices of the Trust, Two Portland Square,
Portland, Maine, on July 31, 1996 at 10:00 a.m. Eastern time, and at any
adjournment or adjournments thereof.
The Board of Directors Recommends a Vote FOR the Proposals Listed Below.
PROPOSAL 1
To approve a new investment policy that permits
the Fund to invest all of its investment assets in a
corresponding portfolio of an open-end investment company
having substantially the same investment objective and
policies as the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
PROPOSAL 2
To approve the amendment of the Fund's investment
objective.
FOR ____ AGAINST ____ ABSTAIN ____
Please Sign and Date this Proxy and Return it in the Enclosed Envelope.
<PAGE>
PROPOSAL 3
To approve the amendment of certain of the Fund's fundamental
investment policies and limitations.
FOR ____ AGAINST ____ ABSTAIN ____
In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Meeting. Receipt is acknowledged
of the Proxy Statement for the Special Meeting of Shareholders to be held
on July 31, 1996. (NOTE: Checking the box labeled ABSTAIN will result in
the shares covered by the Proxy being treated as if they were voted
AGAINST the proposal.)
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Authorized Signature Date
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Printed Name (and Title if Applicable)
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Authorized Signature (Joint Investor) Date
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Printed Name (and Title if Applicable)
Please Sign and Date this Proxy and Return it in the Enclosed Envelope.
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