<PAGE>
SCHRODER SERIES TRUST
SCHRODER LARGE CAPITALIZATION EQUITY FUND
------------------------
NOTICE OF MEETING OF SHAREHOLDERS
SEPTEMBER 8, 2000
---------------------
To the Shareholders:
This is to notify you that a Meeting of Shareholders of Schroder Large
Capitalization Equity Fund, a series of Schroder Series Trust, will be held on
September 8, 2000 at 10:00 a.m., Eastern Time, at the offices of the Trust, 787
Seventh Avenue, 34th Floor, New York, New York 10019, for the following
purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization
providing for (a) the transfer of all of the assets of Schroder Large
Capitalization Equity Fund to Schroder U.S. Diversified Growth Fund, a series of
Schroder Capital Funds (Delaware), in exchange for shares of Schroder U.S.
Diversified Growth Fund and the assumption by Schroder U.S. Diversified Growth
Fund of all of the liabilities of Schroder Large Capitalization Equity Fund, and
(b) the distribution of such shares to the shareholders of Schroder Large
Capitalization Equity Fund in complete liquidation of Schroder Large
Capitalization Equity Fund.
2. To transact such other business as may properly come before the meeting.
The Trustees have fixed the close of business on June 30, 2000 as the record
date for determination of shareholders entitled to notice of, and to vote at,
the Meeting.
By order of the Board of Trustees
Alan M. Mandel, CLERK
July 19, 2000
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
<PAGE>
PROSPECTUS/PROXY STATEMENT
July 19, 2000
This Prospectus/Proxy Statement relates to the proposed merger (the
"Merger") of Schroder Large Capitalization Equity Fund (the "Large Cap Fund")
into Schroder U.S. Diversified Growth Fund (the "Diversified Growth Fund"). The
Large Cap Fund is a series of Schroder Series Trust, and the Diversified Growth
Fund is a series of Schroder Capital Funds (Delaware). The Large Cap Fund and
the Diversified Growth Fund are sometimes referred to in this Prospectus/Proxy
Statement as the "Funds."
The Merger is to be effected through the transfer of all of the assets of
the Large Cap Fund to the Diversified Growth Fund in exchange for Investor
Shares of the Diversified Growth Fund (the "Merger Shares") and the assumption
by the Diversified Growth Fund of all of the liabilities of the Large Cap Fund.
This will be followed by the distribution of the Merger Shares to the
shareholders of the Large Cap Fund in liquidation of the Large Cap Fund. As a
result of the proposed transaction, each shareholder of the Large Cap Fund will
receive in exchange for his or her Large Cap Fund shares Diversified Growth Fund
shares equal in value at the date of the exchange to the aggregate value of the
shareholder's Large Cap Fund shares. Because the Funds have different net asset
values, you may end up with a number of shares that differs from the number you
originally held, but the total dollar value of your shares at the time of the
Merger will remain the same.
Because you are being asked to approve transactions which would result in
your receiving shares of the Diversified Growth Fund, this Proxy Statement also
serves as a Prospectus for the Merger Shares of the Diversified Growth Fund.
Schroder Series Trust is an open-end series management investment company
organized as a Massachusetts business trust, and Schroder Capital Funds
(Delaware) is an open-end series management investment company organized as a
Delaware business trust.
This Prospectus/Proxy Statement explains what you should know before
investing in the Diversified Growth Fund. Please read it carefully and keep it
for future reference.
The following documents have been filed with the Securities and Exchange
Commission (the "SEC") and are incorporated into this Prospectus/Proxy Statement
by reference:
- each Fund's current Prospectus for Investor Shares, dated March 1, 2000
(each a "Fund Prospectus");
- each Fund's current Statement of Additional Information, dated March 1,
2000 (each a "Fund SAI");
- the Statement of Additional Information relating to this Prospectus/Proxy
Statement dated July 19, 2000 (the "Merger SAI");
- the Report of Independent Accountants and financial statements in respect
of each Fund included in each Fund's Annual Report to Shareholders for the
fiscal year ended October 31, 1999 (each an "Annual Report"); and
- unaudited financial statements in respect of each Fund included in each
Fund's Semiannual Report to Shareholders for the period ended April 30,
2000 (each a "Semiannual Report").
This Prospectus/Proxy Statement is accompanied by a copy of the Diversified
Growth Fund's Investor Shares Prospectus and the Diversified Growth Fund's
Annual and Semiannual Reports. For free copies of the Fund Prospectuses, Fund
SAIs, the Merger SAI, Annual Reports, or Semiannual Reports, please call
800-464-3108 or write to Schroder Mutual Funds at:
Schroder Mutual Funds
P.O. Box 8507
Boston, MA 02266
<PAGE>
The SEC has not approved or disapproved these securities or passed upon the
accuracy or adequacy of this Prospectus/Proxy Statement. Any representation to
the contrary is a crime.
The Diversified Growth Fund may not achieve its goals, and is not intended
as a complete investment program. An investment in the Diversified Growth Fund
is not a deposit in a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. You can lose money
by investing in the Diversified Growth Fund.
OVERVIEW OF THE MERGER
PROPOSED TRANSACTIONS
The Trustees of Schroder Series Trust and Schroder Capital Funds (Delaware),
on behalf of each of the Funds, have approved transactions involving the Merger
of the Large Cap Fund into the Diversified Growth Fund. The Merger is proposed
to be accomplished pursuant to an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Large Cap Fund to the Diversified
Growth Fund in exchange for shares of the Diversified Growth Fund and the
assumption by the Diversified Growth Fund of all the liabilities of the Large
Cap Fund, followed by the liquidation of the Large Cap Fund.
As a result of the proposed Merger, the Large Cap Fund will receive a number
of Merger Shares of the Diversified Growth Fund equal in value to the value of
the net assets of the Large Cap Fund being transferred. Following the transfer,
(i) the Large Cap Fund will distribute to each shareholder a number of full and
fractional Merger Shares of the Diversified Growth Fund equal in value to the
aggregate value of the shareholder's Large Cap Fund Investor Shares and
(ii) the Large Cap Fund will be liquidated.
The Investor Shares of the Diversified Growth Fund have characteristics
substantially similar to those of the Investor Shares of the Large Cap Fund.
The Trustees of Schroder Series Trust unanimously recommend that
shareholders of the Large Cap Fund approve the Merger. In reaching that
conclusion, the Trustees considered that the Merger offers shareholders the
opportunity to pursue a similar investment objective in a larger fund, which has
the potential over time to offer lower expenses and economies of scale. See "The
Proposal: Approval of Agreement and Plan of Reorganization--Background and
Reasons for the Proposed Merger."
It is anticipated that the reorganization will be completed on or about
September 11, 2000, or as soon as practicable after shareholder approval.
OPERATING EXPENSES
The following tables provide a summary of Fund expenses, showing estimated
expenses of the Funds before the Merger and, on a pro forma basis, of the
Diversified Growth Fund after the Merger.
The tables are provided to help you understand an investor's share of the
operating expenses which each Fund incurs. The examples show the estimated
cumulative expenses attributable to a hypothetical $10,000 investment in the
Large Cap Fund, the Diversified Growth Fund, and on a pro forma basis, over
specified periods. By translating "Net Expenses" into dollar amounts, these
examples help you compare the costs of investing in each particular Fund with
the costs of investing in other mutual funds.
2
<PAGE>
NOTE: THE LARGE CAP FUND HAS BEEN NOTIFIED THAT IN AUGUST 2000 A SUBSTANTIAL
PORTION OF THE INVESTMENT IN THE FUND BY PARTICIPANTS IN CERTAIN 401(k) AND
SIMILAR RETIREMENT PLANS WILL BE REDEEMED. BECAUSE THOSE PLANS OWN A SUBSTANTIAL
PORTION OF THE FUND'S OUTSTANDING SHARES (APPROXIMATELY 57% AS OF THE RECORD
DATE), OTHER EXPENSES, TOTAL FUND OPERATING EXPENSES, AND NET EXPENSES OF THAT
FUND HAVE BEEN RESTATED AS OF APRIL 30, 2000, ASSUMING THE REDEMPTION HAD
OCCURRED ON THAT DATE, IN ORDER TO REFLECT EXPECTED HIGHER FUND EXPENSES
FOLLOWING THE REDEMPTION. EXPENSES OF THE DIVERSIFIED GROWTH FUND ARE ALSO SHOWN
AS OF APRIL 30, 2000.
<TABLE>
<CAPTION>
SCHRODER LARGE SCHRODER U.S. PRO FORMA EXPENSES
CAPITALIZATION DIVERSIFIED GROWTH SCHRODER U.S. DIVERSIFIED
EQUITY FUND FUND GROWTH FUND
-------------- ------------------ -------------------------
<S> <C> <C> <C>
SHAREHOLDER FEES
(expenses that are deducted from Fund
assets)
Maximum Sales Load Imposed on Purchases.... None None None
Maximum Deferred Sales Load................ None None None
Maximum Sales Load Imposed on Reinvested
Dividends................................ None None None
Redemption Fee............................. None None None
Exchange Fee............................... None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees
Investor Shares.......................... 0.75% 0.75% 0.75%
------ ----- -----
12b-1 Fees
Investor Shares.......................... 0.00% 0.00% 0.00%
------ ----- -----
Other Expenses(1)
Investor Shares.......................... 0.89% 1.13% 0.59%
------ ----- -----
Total Fund Operating Expenses(1)
Investor Shares.......................... 1.64% 1.88% 1.34%
------ ----- -----
Fee Waiver and/or Expense Limitation(1,2)
Investor Shares.......................... 0.25% 0.38% 0.25%
------ ----- -----
NET EXPENSES(1,2)
Investor Shares.......................... 1.39% 1.50% 1.09%
====== ===== =====
</TABLE>
------------------------
(1) If Other Expenses, Total Fund Operating Expenses, and Net Expenses of the
Funds had not been restated as described above, they would be approximately
as follows (shown, in each case, as of April 30, 2000):
<TABLE>
<CAPTION>
SCHRODER LARGE SCHRODER U.S. PRO FORMA EXPENSES
CAPITALIZATION DIVERSIFIED GROWTH SCHRODER U.S. DIVERSIFIED
EQUITY FUND FUND GROWTH FUND
-------------- ------------------ -------------------------
<S> <C> <C> <C>
Other Expenses........................... 0.50% 1.13% 0.41%
Total Fund Operating Expenses............ 1.25% 1.88% 1.16%
Fee Waiver and/or Expense
Limitation(2).......................... 0.25% 0.38% 0.25%
Net Expenses(2).......................... 1.00% 1.50% 0.91%
</TABLE>
(2) The Net Expenses shown above reflect the effect of certain contractually
imposed expense limitations and/or fee waivers, in effect through
October 31, 2000. Specifically, Total Fund Operating Expenses may not exceed
the following annual rates (based on the average daily net assets of a
Fund): Large Cap Fund--1.55%; Diversified Growth Fund--1.50%. In addition,
through that date, investment advisory fees paid by the Large Cap Fund will
be limited to the annual rate of .50% of the Fund's average daily
3
<PAGE>
net assets. Following the Merger, investment advisory fees paid by the
Diversified Growth Fund, through that date, will likewise be limited to the
annual rate of .50% of the Fund's average daily net assets.
EXAMPLE OF FUND EXPENSES:
An investment of $10,000 would incur the following expenses, assuming 5%
annual return, constant expenses, and redemption at the end of each time
period:*
<TABLE>
<CAPTION>
PRO FORMA EXPENSES
SCHRODER SCHRODER SCHRODER
LARGE CAPITALIZATION U.S. DIVERSIFIED U.S. DIVERSIFIED
EQUITY FUND GROWTH FUND GROWTH FUND
-------------------- ---------------- ------------------
<S> <C> <C> <C>
1 year..................................... $ 168 $ 193 $ 137
3 years.................................... $ 521 $ 596 $ 427
5 years.................................... $ 898 $1,025 $ 738
10 years................................... $1,956 $2,217 $1,621
</TABLE>
------------------------
* Assuming that both Funds' operating expenses remain the same as the Net
Expenses set forth in the Annual Fund Operating Expenses table on p. 3, based
on the other assumptions described above, your costs would be as follows for
one year, three years, five years and ten years, respectively:
Schroder Large Capitalization Equity Fund--$142, $443, $765 and $1,677.
Schroder U.S. Diversified Growth Fund--$154, $477, $824 and $1,801.
Pro Forma Expenses Schroder U.S. Diversified Growth Fund--$112, $348, $604 and
$1,334.
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes no gain or loss will be recognized by the
Large Cap Fund or its shareholders as a result of the Merger, and the aggregate
tax basis of the Merger Shares received by each Large Cap Fund shareholder will
be the same as the aggregate tax basis of the shareholder's Large Cap Fund
shares. See "Information about the Merger--Federal Income Tax Consequences."
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES, AND RESTRICTIONS
The investment objectives, policies, and restrictions of the Funds, and
certain differences between them, are summarized below. For a more detailed
description of the investment techniques used by the Funds, please see each
Fund's Prospectus. For information concerning the risks associated with
investments in the Funds, see "Other Investment Strategies and Risks," below.
The Large Cap Fund and the Diversified Growth Fund have similar investment
objectives. The investment objective of the Diversified Growth Fund is to seek
growth of capital. The Diversified Growth Fund normally invests substantially
all of its assets in equity securities of companies in the United States. The
Diversified Growth Fund normally invests in securities of companies with market
capitalizations of more than $5 billion (at the time of investment). The
investment objective of the Large Cap Fund is to seek long-term growth of
capital. The Large Cap Fund normally invests at least 65% of its assets in
equity securities of companies with large market capitalizations (generally more
than $5 billion).
Both Funds invest in a variety of equity securities including common and
preferred stocks and warrants to purchase common and preferred stocks. Both
Funds focus on companies that Schroder believes offer the potential for capital
growth, and select securities on the basis of such factors as, for example, a
company's probable future earnings, the ratio of its price to earnings, and its
relative strength or proprietary advantage within a particular industry. The
Funds may invest in companies that are in industry segments that are
experiencing rapid growth. A Fund may also invest in companies whose market
value per share is thought to be undervalued. The Diversified Growth Fund may
invest in relatively less well-known companies that have any of these
characteristics or other characteristics identified by Schroder.
4
<PAGE>
The principal risks of investing in a Fund include the risk that the value
of the equity securities in the portfolio will fall, or will not appreciate as
anticipated by the Fund's investment adviser, due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities market in
general. Each Fund is particularly sensitive to the risks associated with
"growth" securities, which are issued by companies that Schroder expects to have
relatively rapid earnings growth. Growth securities typically trade at higher
multiples of current earnings than other securities and may be more sensitive to
changes in a company's current or expected earnings.
Investment decisions for both Funds are made by Schroder's U.S. equity
investment team.
Total return information for the Large Cap Fund and the Diversified Growth
Fund is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 12/31/99--INVESTOR SHARES*
<TABLE>
<CAPTION>
LIFE OF
LARGE CAP FUND
1 YEAR 5 YEARS 10 YEARS 2/16/94
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Schroder Large Capitalization Equity Fund....... 12.45% 23.65% N/A 18.15%
Schroder U.S. Diversified Growth Fund........... 30.91% 25.08% 17.45% N/A
</TABLE>
------------------------
* Performance is for Investor Shares of both Funds. Periods of more than one
year show average annual performance. Fund performance data is calculated
after giving effect to all expenses and sales charges. For further information
about the Funds' performance, including information about
waivers/reimbursements that affected each Fund's performance, see the Fund
Prospectuses.
COMPARISON OF DISTRIBUTION POLICIES AND PURCHASE EXCHANGE AND REDEMPTION
PROCEDURES
The Funds have identical procedures as to dividends and distributions. The
Funds declare and pay dividends annually. Each Fund distributes any net realized
capital gains annually. IT IS EXPECTED THAT, SHORTLY PRIOR TO THE EXCHANGE DATE
(AS DEFINED IN THE AGREEMENT AND PLAN OF REORGANIZATION), THE LARGE CAP FUND
WILL DECLARE AND DISTRIBUTE AS A SPECIAL DIVIDEND ANY INVESTMENT COMPANY TAXABLE
INCOME (COMPUTED WITHOUT REGARD TO THE DEDUCTION FOR DIVIDENDS PAID) AND ANY NET
REALIZED CAPITAL GAINS THROUGH THE EXCHANGE DATE NOT PREVIOUSLY DISTRIBUTED.
The Funds have identical procedures for purchasing shares. Each of the Funds
offers one class of shares, Investor Shares. Investor Shares of the Funds may be
purchased at their net asset value next determined, without any sales charges or
loads, through Schroder Fund Advisors Inc. ("SFA"), the distributor of the
Funds' shares.
Shares of each Fund generally can be exchanged for Investor Shares of most
other funds in the Schroder family of funds. For more details, see each Fund
Prospectus and SAI.
The Funds have identical redemption procedures. Shares of a Fund may be
redeemed at the net asset value next determined after receipt of the redemption
request, on any day the New York Stock Exchange is open. Shares can be redeemed
by contacting the relevant Fund by mail or by telephone.
See each Fund Prospectus for further information.
OTHER INVESTMENT STRATEGIES AND RISKS
In addition to the principal investment strategies described above, the
Diversified Growth Fund and the Large Cap Fund may under certain circumstances
use other strategies described below, which involve certain special risks.
Because the investment strategies of the Funds are substantially similar, as
described
5
<PAGE>
more fully above under "Comparison of Investment Objectives, Policies, and
Restrictions," the following strategies and risks, described in connection with
the Diversified Growth Fund, are substantially the same as those associated with
an investment in the Large Cap Fund:
DEBT SECURITIES. The Diversified Growth Fund may invest in debt securities,
which are subject to the risk of fluctuation of market value in response to
changes in interest rates and the risk that the issuer may default on the timely
payment of principal and interest. Also, the Fund may invest to a limited extent
in junk bonds, which are lower-quality, high-yielding debt securities rated
below Baa or BBB by Moody's Investors Service, Inc. or Standard & Poor's Ratings
Services (or, if they are unrated, determined by Schroder to be of comparable
quality). Lower-rated debt securities are predominantly speculative and tend to
be more susceptible than other debt securities to adverse changes in the
financial condition of the issuer, general economic conditions, or an
unanticipated rise in interest rates, which may affect an issuer's ability to
pay interest and principal. This would likely make the values of the securities
held by the Fund more volatile and could limit its ability to liquidate
securities. Changes in the ratings of any fixed-income security and in the
perceived ability of an issuer to make payments of interest and principal also
may affect the value of these investments.
ZERO-COUPON BONDS. The Diversified Growth Fund may invest in zero-coupon bonds.
Zero-coupon bonds are issued at a significant discount from face value and pay
interest only at maturity rather than at intervals during the life of the
security. Zero-coupon bonds allow an issuer to avoid the need to generate cash
to meet current interest payments and, as a result, may involve greater credit
risks than bonds that pay interest currently. The Fund is required to distribute
the income on these securities as the income accrues, even though the Fund is
not receiving the income in cash on a current basis. Thus, the Fund may have to
sell other investments, including when it may not be advisable to do so, to make
income distributions.
DERIVATIVE INSTRUMENTS. To the extent permitted by the Diversified Growth Fund's
investment policies as set forth in its Prospectus or listed in the Statement of
Additional Information, instead of investing directly in the types of portfolio
securities described in this Prospectus/Proxy and in the Fund's Prospectus, the
Fund may buy or sell a variety of "derivative" instruments to gain exposure to
particular securities or markets, in connection with hedging transactions and to
increase total return. These may include, for example, options and futures
contracts (including options and futures contracts on securities). Derivatives
involve the risk that they may not work as intended due to unanticipated
developments in market conditions or other causes. Also, derivatives often
involve the risk that the other party to the transaction will be unable to meet
its obligations or that the Fund will be unable to close out the position at any
particular time or at an acceptable price.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include a variety of
securities that differ in their interest rates, maturities, and dates of issue.
Securities issued or guaranteed by agencies or instrumentalities of the U.S.
Government may or may not be supported by the full faith and credit of the
United States or by the right of the issuer to borrow from the U.S. Treasury.
PORTFOLIO TURNOVER. The length of time the Diversified Growth Fund has held a
particular security is not generally a consideration in investment decisions.
The investment policies of the Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by the Fund is known as "portfolio turnover." Portfolio
turnover generally involves some expense to the Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestment in other securities. Such sales may increase the
amount of capital gains (and, in particular, short-term gains) realized by the
Fund, on which shareholders may pay tax.
TEMPORARY DEFENSIVE STRATEGIES. At times, Schroder may judge that conditions in
the securities markets make pursuing the Diversified Growth Fund's basic
investment strategy inconsistent with the best interests of its shareholders. At
such times, Schroder may temporarily use alternate investment strategies
primarily designed to reduce fluctuations in the value of the Fund's assets. In
implementing these "defensive"
6
<PAGE>
strategies, the Fund would invest in high-quality fixed-income securities, cash,
or money market instruments to any extent Schroder considers consistent with
such defensive strategies. It is impossible to predict when, or for how long,
the Fund will use these alternate strategies. One risk of taking such temporary
defensive positions is that the Fund may not achieve its investment objective.
OTHER INVESTMENTS. The Diversified Growth Fund may also invest in other types of
securities and utilize a variety of investment techniques and strategies that
are not described in this Prospectus/Proxy Statement. These securities and
techniques may subject the Fund to additional risks. Please see the Fund's SAI
for additional information about the securities and investment techniques
described in the Fund's Prospectus and about additional techniques and
strategies that may be used by the Fund.
A description of the risks associated with an investment in the Diversified
Growth Fund may be found in the Diversified Growth Fund's Prospectus under the
caption "Other Investment Strategies and Risks," and in the SAI under the
caption "Miscellaneous Investments, Investment Practices and Risks."
The values of all securities and other instruments held by the Diversified
Growth Fund vary from time to time in response to a wide variety of market
factors. Consequently, the net asset value per share of the Diversified Growth
Fund will vary, and may be less at the time of redemption than it was at the
time of investment.
MEETING OF SHAREHOLDERS
This Prospectus/Proxy Statement is being furnished in connection with a
Meeting of Shareholders of the Large Cap Fund to be held on September 8, 2000
(the "Meeting"), and the solicitation of proxies from and on behalf of the
shareholders of the Large Cap Fund for use at the Meeting. The Meeting is being
held to consider the proposed Merger of the Large Cap Fund into the Diversified
Growth Fund by the transfer of all of the Large Cap Fund's assets and
liabilities to the Diversified Growth Fund in exchange for the Merger Shares.
This Prospectus/Proxy Statement and the enclosed form of proxy are being mailed
to shareholders on or about July 24, 2000.
The Trustees of Schroder Series Trust know of no matters other than those
set forth herein to be brought before the Meeting. If, however, any other
matters properly come before the Meeting, it is the Trustees' intention that
proxies will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
THE PROPOSAL: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
Shareholders of the Large Cap Fund are being asked to approve a Merger
between the Large Cap Fund and the Diversified Growth Fund. The Merger is
proposed to take place pursuant to an Agreement and Plan of Reorganization
between the Large Cap Fund and the Diversified Growth Fund (the "Agreement")
substantially in the form attached to this Prospectus/Proxy Statement as
APPENDIX A.
The Agreement provides, among other things, for the transfer of all of the
assets of the Large Cap Fund to the Diversified Growth Fund in exchange for
(i) the issuance to the Large Cap Fund of the Merger Shares, the number of which
will be calculated based on the value of the net assets attributable to the
Investor Shares of the Large Cap Fund acquired by the Diversified Growth Fund
and the net asset value per Investor Share of the Diversified Growth Fund and
(ii) the assumption by the Diversified Growth Fund of all of the liabilities of
the Large Cap Fund, as more fully described below under "Information About the
Merger."
After receipt of the Merger Shares, the Large Cap Fund will cause the Merger
Shares to be distributed to its shareholders, in complete liquidation of the
Large Cap Fund. Each shareholder of the Large Cap Fund will receive a number of
full and fractional Investor Shares of the Diversified Growth Fund equal in
value at the date of the exchange to the aggregate value of the shareholder's
Large Cap Fund Investor Shares.
7
<PAGE>
BOARD OF TRUSTEES' RECOMMENDATION. THE BOARD OF TRUSTEES OF SCHRODER
SERIES TRUST HAS VOTED UNANIMOUSLY TO APPROVE THE AGREEMENT AND PLAN OF
REORGANIZATION PROVIDING FOR THE PROPOSED MERGER AND TO RECOMMEND THAT
SHAREHOLDERS OF THE LARGE CAP FUND ALSO APPROVE THE AGREEMENT AND PLAN OF
REORGANIZATION PROVIDING FOR THE MERGER FOR SUCH FUND.
BACKGROUND AND REASONS FOR THE PROPOSED MERGER
The Board of Trustees of Schroder Series Trust, including all of its
Trustees who are not "interested persons" of Schroder Series Trust (the
"Independent Trustees"), has unanimously determined that the Merger would be in
the best interests of the Large Cap Fund, and that the interests of the Fund's
shareholders would not be diluted as a result of effecting the Merger. At a
meeting held on May 23, 2000, the Board unanimously approved the proposed Merger
and recommended its approval by shareholders.
The principal reasons why the Board of Trustees is recommending the Merger
are as follows:
(i) POTENTIAL DECREASES IN OVERALL EXPENSES. The Merger has the
potential to result in aggregate operating expenses that would be lower than
those expected to be borne by the Large Cap Fund. As noted above, it is
likely that the Large Cap Fund will experience substantial redemptions in
the coming months, resulting in increased operating expenses. Schroder
believes that the Merger has the potential to result in lower expenses for
the combined Fund over time, because the single, larger combined Fund is
likely to experience greater economies of scale than each of the smaller
Funds separately. In addition, the Diversified Growth Fund has experienced
better long-term performance than has the Large Cap Fund, and so has greater
potential for growth (and so reduced expenses) over time through new
subscriptions to the Fund. Of course, there can be no assurance that the
Merger will result in savings in operating expenses to shareholders.
(ii) APPROPRIATE INVESTMENT OBJECTIVES, ETC. The investment objective,
policies, and restrictions of the Diversified Growth Fund are similar to
those of the Large Cap Fund, and the Trustees believe that an investment in
shares of the Diversified Growth Fund will provide shareholders with an
investment opportunity comparable to that currently afforded by the Large
Cap Fund.
(iii) CONTINUED INVESTMENT IN A MUTUAL FUND WITHOUT RECOGNITION OF GAIN
OR LOSS FOR FEDERAL INCOME TAX PURPOSES. The proposed reorganization will
permit Large Cap Fund shareholders to keep their investment in an open-end
mutual fund, without recognition of gain or loss for federal income tax
purposes. If the Large Cap Fund were to liquidate and shareholders were to
receive the net asset value of their shares in liquidating distributions,
gain or loss would be recognized for federal income tax purposes. See
"Information About the Merger--Federal Income Tax Consequences" below.
INFORMATION ABOUT THE MERGER
AGREEMENT AND PLAN OF REORGANIZATION. The proposed Agreement and Plan of
Reorganization provides that the Diversified Growth Fund will acquire all of the
assets of the Large Cap Fund in exchange for the issuance of the Merger Shares
and for the assumption by the Diversified Growth Fund of all of the liabilities
of the Large Cap Fund, all as of the Exchange Date (as defined in the
Agreement). The following discussion of the Agreement is qualified in its
entirety by the full text of the Agreement, the form of which is attached as
APPENDIX A to this Prospectus/Proxy Statement.
The Large Cap Fund will sell all of its assets to the Diversified Growth
Fund, and, in exchange, the Diversified Growth Fund will assume all of the
liabilities of the Large Cap Fund and deliver to the Large Cap Fund a number of
full and fractional Merger Shares having an aggregate net asset value equal to
the value of the assets of the Large Cap Fund, less the value of the liabilities
of the Large Cap Fund assumed by the Diversified Growth Fund.
8
<PAGE>
Immediately following the Exchange Date, the Large Cap Fund will distribute
pro rata to its shareholders of record as of the close of business on the
Exchange Date the full and fractional Merger Shares received by the Large Cap
Fund. As a result of the proposed transaction, each holder of Investor Shares of
the Large Cap Fund will receive a number of Merger Shares equal in aggregate
value at the Exchange Date to the value of the Investor Shares of the Large Cap
Fund held by the shareholder. This distribution will be accomplished by the
establishment of accounts on the share records of the Diversified Growth Fund in
the names of the Large Cap Fund shareholders, each account representing the
respective number of full and fractional Merger Shares due such shareholder.
Because the shares of the Diversified Growth Fund will not be represented by
certificates, certificates for Merger Shares will not be issued.
The consummation of the Merger is subject to the conditions set forth in the
Agreement, any of which may be waived, except for the condition requiring
shareholder approval of the Agreement. The Agreement may be terminated and the
Merger abandoned at any time, before or after approval by the shareholders of
the Large Cap Fund, prior to the Exchange Date, by mutual consent of the Funds
or, if any condition set forth in the Agreement has not been fulfilled and has
not been waived by the party entitled to its benefits, by such party.
All legal and accounting fees and expenses, printing expenses, other fees
and expenses (other than portfolio transfer taxes (if any), brokerage and other
similar expenses, all of which will be borne by the relevant Fund) incurred in
connection with the consummation of the transactions contemplated by the
Agreement will be borne by Schroder and/or its affiliates. Notwithstanding the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by any other party of such
expenses would result in the disqualification of the first party as a "regulated
investment company" within the meaning of Section 851 of the Internal Revenue
Code of 1986, as amended (the "Code").
DESCRIPTION OF THE MERGER SHARES. Full and fractional Merger Shares will be
issued to the Large Cap Fund's shareholders in accordance with the procedure
under the Agreement as described above. The Merger Shares are Investor Shares of
the Diversified Growth Fund, which have characteristics substantially similar to
those of the Investor Shares of the Large Cap Fund.
ORGANIZATION. Each of the Merger Shares will be fully paid and nonassessable by
the Diversified Growth Fund when issued, will be transferable without
restriction, and will have no preemptive or conversion rights. The Trust
Instrument of Schroder Capital Funds (Delaware) (the "Declaration of Trust")
permits Schroder Capital Funds (Delaware) to divide its shares, without
shareholder approval, into two or more series of shares representing separate
investment portfolios and to further divide any such series, without shareholder
approval, into two or more classes of shares having such preferences and special
or relative rights and privileges as the Trustees may determine. The Diversified
Growth Fund currently has one class of shares outstanding, Investor Shares. The
rights of shareholders of the Large Cap Fund and the Diversified Growth Fund are
comparable, although there are slight differences. See "Information About the
Funds" below.
FEDERAL INCOME TAX CONSEQUENCES. As a condition to the Large Cap Fund's
obligation to consummate the Merger, the Large Cap Fund will receive an opinion
from Ropes & Gray, counsel to Schroder Series Trust, to the effect that, on the
basis of the existing provisions of the Code, current administrative rules, and
court decisions, for federal income tax purposes: (i) under Section 361 of the
Code, no gain or loss will be recognized by the Large Cap Fund upon the transfer
of its assets to the Diversified Growth Fund in exchange for the Merger Shares
and the assumption by the Diversified Growth Fund of the liabilities of the
Large Cap Fund, or upon the distribution of the Merger Shares by the Large Cap
Fund to its shareholders in liquidation; (ii) under Section 354 of the code, no
gain or loss will be recognized by shareholders of the Large Cap Fund on the
distribution of Merger Shares to them in exchange for their shares of the Large
Cap Fund; (iii) under Section 358 of the Code, the aggregate tax basis of the
Merger Shares that the Large Cap Fund's shareholders receive in connection with
the reorganization will be the same as the aggregate
9
<PAGE>
tax basis of their Large Cap Fund shares exchanged therefor; (iv) under
Section 1223(1) of the Code, a Large Cap Fund shareholder's holding period for
the Merger Shares received pursuant to the Agreement will be determined by
including the holding period for the Large Cap Fund shares exchanged for the
Merger Shares, provided that the shareholder held the Large Cap Fund shares as a
capital asset; (v) under Section 1032 of the Code, no gain or loss will be
recognized by the Diversified Growth Fund upon the receipt of the assets of the
Large Cap Fund in exchange for Merger Shares and the assumption by the
Diversified Growth Fund of the liabilities of the Large Cap Fund; (vi) under
Section 362(b) of the Code, the Diversified Growth Fund's tax basis in the
assets that the Diversified Growth Fund receives from the Large Cap Fund will be
the same as the Large Cap Fund's basis in such assets immediately prior to the
transfer; and (vii) under Section 1223(2) of the Code, the Diversified Growth
Fund's holding period in such assets will include the Large Cap Fund's holding
period in such assets. The opinion will be based on certain factual
certifications made by officers of Schroder Series Trust, and will also be based
on customary assumptions.
IT IS EXPECTED THAT, SHORTLY PRIOR TO THE EXCHANGE DATE (AS DEFINED IN THE
AGREEMENT), THE LARGE CAP FUND WILL DECLARE AND DISTRIBUTE AS A SPECIAL DIVIDEND
ANY INVESTMENT COMPANY TAXABLE INCOME (COMPUTED WITHOUT REGARD TO THE DEDUCTION
FOR DIVIDENDS PAID) AND ANY NET REALIZED CAPITAL GAINS THROUGH THE EXCHANGE DATE
NOT PREVIOUSLY DISTRIBUTED.
CAPITALIZATION. The following tables show the capitalization of the Diversified
Growth Fund and the Large Cap Fund as of April 30, 2000 and of the Diversified
Growth Fund on a pro forma basis as of that date, giving effect to the proposed
acquisition by the Diversified Growth Fund of the assets and liabilities of the
Large Cap Fund at net asset value:
CAPITALIZATION TABLE
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SCHRODER SCHRODER
LARGE CAPITALIZATION U.S. DIVERSIFIED PRO FORMA
EQUITY FUND GROWTH FUND COMBINED
-------------------- ---------------- ---------
<S> <C> <C> <C>
Net assets (000's omitted)
Investor.......................................... $55,292 $15,960 $71,263
Advisor(1)........................................ 11 N/A N/A
Shares outstanding (000's omitted)
Investor.......................................... 4,068 2,179 9,724
Advisor(1)........................................ 1 N/A N/A
Net asset value per share
Investor.......................................... $13.59 $7.33 $7.33
Advisor(1)........................................ $13.55 N/A N/A
</TABLE>
------------------------
(1) All Advisor Shares were converted to Investor Shares on June 23, 2000.
Information in the Capitalization Table has not been restated to reflect
expected redemptions by certain shareholders as described in the Note to the
Table on page 3.
Pro forma financial statements of the Diversified Growth Fund as of and for
the twelve-month period ended April 30, 2000 are included in the Merger SAI.
Because the Agreement provides that the Diversified Growth Fund will be the
surviving Fund following the Merger, the pro forma financial statements reflect
the transfer of the assets and liabilities of the Large Cap Fund to the
Diversified Growth Fund as contemplated by the Agreement.
10
<PAGE>
INFORMATION ABOUT THE FUNDS
Schroder Investment Management North America Inc. ("Schroder") (itself and
its predecessors) has been in the business of investment management since 1962.
It is a wholly owned subsidiary of Schroders plc, which, through other
subsidiaries, has been in the investment management business since 1804.
Schroder is the investment adviser to each Fund under investment advisory
agreements adopted pursuant to the Investment Company Act of 1940, as amended.
Under the Delaware Business Trust Act (the "Delaware Act"), a shareholder of
a Delaware business trust such as Schroder Capital Funds (Delaware) is entitled
to the same limitation of personal liability extended to stockholders of
Delaware corporations. No similar statutory authority exists with respect to a
Massachusetts business trust such as Schroder Series Trust, although the risk of
such liability is generally thought to be minimal. Similarly, the Delaware Act
provides that, should a Delaware trust issue multiple series of shares, each
series will not be liable for the debts of another series. This same limitation
should exist generally with respect to a Massachusetts business trust such as
Schroder Series Trust as a result of the provisions contained in its Declaration
of Trust.
Shareholder rights differ slightly between the two trusts. Shareholder votes
are subject to a quorum of 30% in Schroder Series Trust, but of one-third in
Schroder Capital Funds (Delaware). While shareholders of Schroder Series Trust
may act through written consents executed by a majority, shareholders of
Schroder Capital Funds (Delaware) may act only through unanimous written
consent. Amendments to Schroder Series Trust require a majority vote of affected
shareholders, except for name changes or amendments intended to cure
ambiguities, whereas shareholder approval of amendments to Schroder Capital
Funds (Delaware) is required only if an amendment changes voting rights or
amending procedures. The Trustees of Schroder Capital Funds (Delaware) may
abolish a series without shareholder approval, and retain authority to
reorganize or to merge with another entity without shareholder approval,
provided that the resulting entity is an open-end investment company. Schroder
Capital Funds (Delaware), or any series thereof, may be terminated by either a
majority vote of the shareholders of each affected series or a majority vote of
the aggregated shareholders subject to a majority vote of the Trustees; Schroder
Series Trust, or any series within the Trust, may be terminated by a two-thirds
shareholder vote or by the Trustees with written notice to the shareholders.
Other information regarding the Funds, including information with respect to
their investment objectives, policies and restrictions and financial history may
be found in the Merger SAI, the Fund Prospectuses, the SAI and the Annual and
Semiannual Reports, which are available upon request by calling 800-464-3108.
Other information filed by Schroder Series Trust and Schroder Capital Funds
(Delaware) with respect to the Funds can be inspected and copied at the Public
Reference Facilities maintained by the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300,
New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates,
or at no charge from the EDGAR database on the SEC's website at "www.sec.gov."
VOTING INFORMATION
REQUIRED SHAREHOLDER VOTE. Approval of the proposed Merger for the Large Cap
Fund will require the affirmative vote of two-thirds or more of the Investor
Shares of the Large Cap Fund.
RECORD DATE, QUORUM, AND METHOD OF TABULATION. Shareholders of record of the
Large Cap Fund at the close of business on June 30, 2000 (the "Record Date")
will be entitled to notice of and to vote at the Meeting or any adjournment
thereof. The holders of thirty percent of the Investor Shares of the Large Cap
Fund outstanding at the close of business on the Record Date present in person
or represented by proxy will
11
<PAGE>
constitute a quorum for the Meeting, although a larger percentage will be
required for approval of the Merger. Shareholders are entitled to one vote for
each share held, with fractional shares voting proportionally.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by Schroder Series Trust as tellers for the Meeting. The tellers will
count the total number of votes cast "FOR" approval of the Proposal for purposes
of determining whether sufficient affirmative votes have been cast. The tellers
will count shares represented by proxies that reflect abstentions and "broker
non-votes" (I.E., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or the
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) as shares that are present
and entitled to vote on the matter for purposes of determining the presence of a
quorum. Abstentions and broker non-votes have the effect of negative votes on
the Proposal relating to the Merger.
SHARES OUTSTANDING AND BENEFICIAL OWNERSHIP. As of the Record Date, as shown on
the books of the Large Cap Fund, there were issued and outstanding 3,758,530
shares of beneficial interest of the Large Cap Fund.
As of the Record Date, the officers and Trustees of Schroder Series Trust as
a group beneficially owned less than 1% of the outstanding shares of the Large
Cap Fund. As of the Record Date, 56.93% of the outstanding shares of the Large
Cap Fund were owned by the Schroder & Co. Inc. Profit-Sharing, Savings
Incentive, and Pension Plans (the "Schroder & Co. Plans") (all located at
787 Seventh Avenue, New York, NY 10019) and the Lewco Securities Corp. Profit
Sharing and Thrift Plans (the "Lewco Plans") (located at Lewco Securities Corp.,
34 Exchange Place, Jersey City, NJ 07311). Certain directors and officers of
Schroder Investment Management North America Inc. and certain Trustees and
officers of Schroder Series Trust may be participants in one or more of the
Schroder & Co. Plans or Lewco Plans. Due to their ownership of shares of the
Large Cap Fund, the Schroder & Co. Plans and the Lewco Plans may be deemed to
control that Fund. Schroder Series Trust has been notified that in August 2000 a
substantial portion of those shares will be redeemed.
As of the Record Date, to the best of the knowledge of the Funds, the
following persons owned of record or beneficially 5% or more of the outstanding
shares of the Large Cap Fund and the Diversified Growth Fund:
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
RECORD OR BENEFICIAL OWNER FUND SHARES OWNED
--------------------------------------- -------------------------------- -------------------------
<S> <C> <C>
Fidelity Investments Institutional Large Capitalization Equity Fund 26.98%
Operations Co.
Robert Hunter, Vice President
100 Magellan Way # KW1C
Covington, KY 41015-1999
New York Life Trust Co.* Large Capitalization Equity Fund 25.05%
Attn: Bill Perret
260 Cherry Hill Road 4th Floor
Parsippany, NJ 07054-1108
Jupiter & Co.* Large Capitalization Equity Fund 20.68%
C/O Investors Bank & Trust
P.O. Box 913D
FPG 90
Boston, MA 02117-9130
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
RECORD OR BENEFICIAL OWNER FUND SHARES OWNED
--------------------------------------- -------------------------------- -------------------------
<S> <C> <C>
Salomon Smith Barney Large Capitalization Equity Fund 7.98%
333 W. 34th Street 7th Floor
New York, NY 10001-2483
State Street Bank & Trust Co.* Large Capitalization Equity Fund 6.23%
Trustee of the Lewco Securities Pension
Plan
T26501 Attn: Paul Chwaliszewski
P.O. Box 351
Boston, MA 02101-0351
Wendel & Co. A/C 178075 U.S. Diversified Growth Fund 11.86%
C/O The Bank of New York
Attn: Mutual Fund/Reorg Dept.
P.O. Box 1066 Wall Street Station
New York, NY 10268-1066
Security Nominees Inc. U.S. Diversified Growth Fund 8.92%
One State Street
New York, NY 10004-1417
Wendel & Co. A/C 056391 U.S. Diversified Growth Fund 5.86%
C/O The Bank of New York
Attn: Mutual Fund/Reorg Dept.
P.O. Box 1066 Wall Street Station
New York, NY 10268-1066
Fox & Co. U.S. Diversified Growth Fund 5.85%
P.O. Box 976
New York, NY 10268-0976
</TABLE>
------------------------
* Shares held in these accounts are also reflected in the statement of ownership
by the Schroder & Co. and Lewco Plans above.
SOLICITATION OF PROXIES. Solicitation of proxies by personal interview, mail,
and telephone, may be made by officers and Trustees of Schroder Series Trust and
the employees of Schroder and its affiliates. In addition, the firm of D.F. King
& Co., Inc., 77 Water Street, 20th Floor, New York, NY 10015 ("D.F. King") has
been retained to assist in the solicitation of proxies. The costs for
solicitation of proxies, like the other costs associated with the Merger of the
Funds, will be borne by Schroder. See "Information About the Merger."
SHAREHOLDER VOTING BY TELEPHONE. In addition to voting by mail or in person at
the meetings, shareholders may give voting instructions over the telephone by
calling D.F. King at 800-488-8095. When receiving instructions by telephone, the
D.F. King representative is required to ask for the shareholder's full name,
address, social security or employer identification number, title (if the person
giving the proxy is authorized to act for an entity, such as a corporation), and
the number of shares of the Fund owned, and to confirm that the proxy statement
has been received in the mail. If the information provided matches the
information provided to D.F. King by Schroder, then the D.F. King representative
will explain the process. D.F. King is not permitted to recommend to
shareholders how to vote, other than to read any recommendation included in the
proxy statement. D.F. King will record the shareholder's instructions and
transmit them to the official tabulator and send the shareholder a letter or
mailgram to confirm the vote. That letter will also ask the shareholder to call
D.F. King immediately if the confirmation does not reflect the voting
instructions correctly. Shareholders may receive a call from a representative of
D.F. King if Schroder has not yet received their votes. D.F. King may ask
shareholders for authority by telephone to permit D.F. King
13
<PAGE>
to sign a proxy on their behalf. D.F. King will record all instructions it
receives from shareholders by telephone, and the proxies it signs in accordance
with those instructions, in accordance with the procedures set forth above.
Schroder Series Trust believes that these procedures are reasonably designed to
determine accurately shareholders' identities and voting instructions.
REVOCATION OF PROXIES. Any shareholder giving a proxy has the power to revoke it
by mail (addressed to the Clerk of Schroder Series Trust at 787 Seventh Avenue,
34th Floor, New York, New York 10019) or in person at the Meeting, by executing
a superseding proxy, or by submitting a notice of revocation to the Clerk of
Schroder Series Trust. All properly executed proxies received in time for the
Meeting will be voted as specified in the proxy, or, if no specification is made
FOR the proposal (set forth in the Notice of Meeting) to approve the Agreement
and Plan of Reorganization relating to the Merger.
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS OF SHAREHOLDERS. The Declaration of
Trust does not provide for annual meetings of shareholders, and Schroder
Series Trust does not currently intend to hold such a meeting for shareholders
of the Large Cap Fund in 2000. Shareholder proposals for inclusion in a proxy
statement for any subsequent meeting of the Large Cap Fund's shareholders must
be received by Schroder Series Trust a reasonable period of time prior to any
such meeting. If the Merger is consummated, there will be no further meetings of
the shareholders of the Large Cap Fund.
ADJOURNMENT. If sufficient votes in favor of any proposal are not received by
the time scheduled for the Meeting, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
Any adjournment will require the affirmative vote of a majority of the votes
cast on the question in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the Proposal. They
will vote against any such adjournment those proxies required to be voted
against the Proposal.
July 19, 2000
14
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
May 23, 2000 in Boston, Massachusetts, by and between Schroder Series Trust, a
Massachusetts business trust, on behalf of its Schroder Large Capitalization
Equity Fund series (the "Large Cap Fund"), and Schroder Capital Funds
(Delaware), a Delaware business trust, on behalf of its Schroder U.S.
Diversified Growth Fund series (the "Diversified Growth Fund").
PLAN OF REORGANIZATION
(a) The Large Cap Fund will sell, assign, convey, transfer, and deliver to
the Diversified Growth Fund on the Exchange Date (as defined in Section 6) all
of its properties and assets. In consideration therefor, the Diversified Growth
Fund shall, on the Exchange Date, assume all of the liabilities of the Large Cap
Fund existing at the Valuation Time (as defined in Section 4) and deliver to the
Large Cap Fund a number of full and fractional Investor Shares of beneficial
interest of the Diversified Growth Fund (the "Merger Shares") having an
aggregate net asset value equal to the value of the assets of the Large Cap Fund
attributable to the Investor Shares of the Large Cap Fund transferred to the
Diversified Growth Fund on such date less the value of the liabilities of the
Large Cap Fund attributable to the Investor Shares of the Large Cap Fund assumed
by the Diversified Growth Fund on that date. It is intended that the
reorganization described in this agreement shall be a tax-free reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transaction described in paragraph (a) of this
Agreement, the Large Cap Fund shall distribute in complete liquidation to its
shareholders of record as of the Exchange Date the Merger Shares, each such
shareholder being entitled to receive that proportion of such Merger Shares
which the number of Investor Shares of beneficial interest of the Large Cap Fund
held by such shareholder bears to the number of Investor Shares of the Large Cap
Fund outstanding on such date. Certificates representing the Merger Shares will
not be issued. All issued and outstanding Investor Shares of the Large Cap Fund
will simultaneously be canceled on the books of the Large Cap Fund.
(c) As promptly as practicable after the liquidation of the Large Cap Fund
as aforesaid, the Large Cap Fund shall be dissolved pursuant to the provisions
of the Agreement and Declaration of Trust of Schroder Series Trust (the
"Declaration of Trust"), and applicable law, and its legal existence terminated.
AGREEMENT
The Diversified Growth Fund and the Large Cap Fund represent, warrant, and
agree as follows:
1. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF THE DIVERSIFIED GROWTH
FUND. The Diversified Growth Fund represents and warrants to and agrees with
the Large Cap Fund that:
a. The Diversified Growth Fund is a series of Schroder Capital Funds
(Delaware), a Delaware business trust duly established and validly existing
under the laws of The State of Delaware, and has power to own all of its
properties and assets and to carry out its obligations under this Agreement.
Schroder Capital Funds (Delaware) is qualified as a foreign association in
every jurisdiction where required, except to the extent that failure to so
qualify would not have a material adverse effect on Schroder Capital Funds
(Delaware). Each of Schroder Capital Funds (Delaware) and the Diversified
Growth Fund has all necessary federal, state and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement.
b. [Reserved]
A-1
<PAGE>
c. A statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments (indicating
their market values) of the Diversified Growth Fund as of and for the year
ended October 31, 1999, and for the six months ending April 30, 2000, have
been furnished to the Large Cap Fund. Such statements of assets and
liabilities and schedules fairly present the financial position of the
Diversified Growth Fund as of such dates and such statements of operations
and changes in net assets fairly reflect the results of its operations and
changes in net assets for the periods covered thereby in conformity with
generally accepted accounting principles.
d. The current prospectus and statement of additional information of
Schroder Capital Funds (Delaware), each dated March 1, 2000 (collectively,
as from time to time amended, the "Diversified Growth Fund Prospectus"),
which previously have been furnished to the Large Cap Fund, did not as of
such date and do not contain as of the date hereof, with respect to the
Diversified Growth Fund, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
e. There are no material legal, administrative or other proceedings
pending or, to the knowledge of Schroder Capital Funds (Delaware) or the
Diversified Growth Fund, threatened against Schroder Capital Funds
(Delaware) or the Diversified Growth Fund, which assert liability on the
part of the Diversified Growth Fund. The Diversified Growth Fund knows of no
facts which might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated.
f. The Diversified Growth Fund has no known liabilities of a material
nature, contingent or otherwise, other than those shown belonging to it on
its statement of assets and liabilities as of April 30, 2000, those incurred
in the ordinary course of its business as an investment company since
April 30, 2000 and those to be assumed pursuant to this Agreement. Prior to
the Exchange Date, the Diversified Growth Fund will endeavor to quantify and
to reflect on its balance sheet all of its material known liabilities and
will advise the Large Cap Fund of all material liabilities, contingent or
otherwise, incurred by it subsequent to April 30, 2000, whether or not
incurred in the ordinary course of business.
g. As of the Exchange Date, the Diversified Growth Fund will have filed
all federal and other tax returns and reports which, to the knowledge of the
officers of Schroder Capital Funds (Delaware), are required to be filed by
the Diversified Growth Fund and will have paid or will pay all federal and
other taxes shown to be due on said returns or on any assessments received
by the Diversified Growth Fund. All tax liabilities of the Diversified
Growth Fund have been adequately provided for on its books, and no tax
deficiency or liability of the Diversified Growth Fund has been asserted,
and no question with respect thereto has been raised or is under audit, by
the Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid.
h. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Diversified
Growth Fund of the transactions contemplated by this Agreement, except such
as may be required under the Securities Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
1940 Act and state insurance, securities or blue sky laws (which term as
used herein shall include the laws of the District of Columbia and of Puerto
Rico).
i. The registration statement (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission") by Schroder
Capital Funds (Delaware) on Form N-14 on behalf of the Diversified Growth
Fund and relating to the Merger Shares issuable hereunder and the proxy
statement of the Large Cap Fund relating to the meeting of the Large Cap
Fund shareholders referred to in Section 7(a) herein (together with the
documents incorporated therein by reference, the "Large Cap Fund Proxy
Statement"), on the effective date of the Registration Statement, (i) will
comply in all material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and
A-2
<PAGE>
the rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
At the time of the shareholders meeting referred to in Section 7(a) and on
the Exchange Date, the prospectus which is contained in the Registration
Statement, as amended or supplemented by any amendments or supplements filed
with the Commission by Schroder Capital Funds (Delaware), and the Large Cap
Fund Proxy Statement will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that none of the representations and warranties in this subsection shall
apply to statements in or omissions from the Registration Statement or the
Large Cap Fund Proxy Statement made in reliance upon and in conformity with
information furnished in writing by the Large Cap Fund to the Diversified
Growth Fund specifically for use in the Registration Statement or the Large
Cap Fund Proxy Statement.
j. There are no material contracts outstanding to which the Diversified
Growth Fund is a party, other than as are or will be disclosed in the
Diversified Growth Fund Prospectus, the Registration Statement or the Large
Cap Fund Proxy Statement.
k. All of the issued and outstanding shares of beneficial interest of
the Diversified Growth Fund have been offered for sale and sold in
conformity with all applicable federal and state securities laws (including
any applicable exemptions therefrom), or the Diversified Growth Fund has
taken any action necessary to remedy any prior failure to have offered for
sale and sold such shares in conformity with such laws.
l. The Diversified Growth Fund qualifies and will at all times through
the Exchange Date qualify for taxation as a "regulated investment company"
under Sections 851 and 852 of the Code.
m. The issuance of the Merger Shares pursuant to this Agreement will be
in compliance with all applicable federal and state securities laws.
n. The Merger Shares to be issued to the Large Cap Fund have been duly
authorized and, when issued and delivered pursuant to this Agreement, will
be legally and validly issued and will be fully paid and non-assessable by
the Diversified Growth Fund, and no shareholder of the Diversified Growth
Fund will have any preemptive right of subscription or purchase in respect
thereof.
o. All issued and outstanding shares of the Diversified Growth Fund
are, and at the Exchange Date will be, duly authorized, validly issued,
fully paid and non-assessable by the Diversified Growth Fund. The
Diversified Growth Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any Diversified Growth Fund
shares, nor is there outstanding any security convertible into any
Diversified Growth Fund shares.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE LARGE CAP FUND. The
Large Cap Fund represents and warrants to and agrees with the Diversified
Growth Fund that:
a. The Large Cap Fund is a series of Schroder Series Trust, a
Massachusetts business trust duly established and validly existing under the
laws of The Commonwealth of Massachusetts, and has power to own all of its
properties and assets and to carry out this Agreement. Schroder
Series Trust is qualified as a foreign association in every jurisdiction
where required, except to the extent that failure to so qualify would not
have a material adverse effect on Schroder Series Trust. Each of Schroder
Series Trust and the Large Cap Fund has all necessary federal, state and
local authorizations to own all of its properties and assets and to carry on
its business as now being conducted and to carry out this Agreement.
b. [Reserved]
c. A statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments (indicating
their market values) of the Large Cap Fund as of and
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for the year ended October 31, 1999, and for the six months ending
April 30, 2000, have been furnished to the Diversified Growth Fund. Such
statements of assets and liabilities and schedules fairly present the
financial position of the Large Cap Fund as of such dates, and such
statements of operations and changes in net assets fairly reflect the
results of its operations and changes in net assets for the periods covered
thereby, in conformity with generally accepted accounting principles.
d. The current prospectus and statement of additional information of
Schroder Series Trust, each dated March 1, 2000 (collectively, as from time
to time amended, the "Large Cap Fund Prospectus"), which has been previously
furnished to the Diversified Growth Fund, did not contain as of such dates
and does not contain, with respect to the Large Cap Fund, any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
e. There are no material legal, administrative or other proceedings
pending or, to the knowledge of Schroder Series Trust or the Large Cap Fund,
threatened against Schroder Series Trust or the Large Cap Fund, which assert
liability on the part of the Large Cap Fund. The Large Cap Fund knows of no
facts which might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated.
f. There are no material contracts outstanding to which the Large Cap
Fund is a party, other than as are disclosed in Schroder Series Trust's
registration statement on Form N-1A or the Large Cap Fund Prospectus.
g. The Large Cap Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown on the Large Cap Fund's
statement of assets and liabilities as of April 30, 2000 referred to above
and those incurred in the ordinary course of its business as an investment
company since such date. Prior to the Exchange Date, the Large Cap Fund will
endeavor to quantify and to reflect on its balance sheet all of its material
known liabilities and will advise the Diversified Growth Fund of all
material liabilities, contingent or otherwise, incurred by it subsequent to
April 30, 2000, whether or not incurred in the ordinary course of business.
h. As of the Exchange Date, the Large Cap Fund will have filed all
federal and other tax returns and reports which, to the knowledge of the
officers of Schroder Series Trust, are required to be filed by the Large Cap
Fund and will have paid or will pay all federal and other taxes shown to be
due on said returns or on any assessments received by the Large Cap Fund.
All tax liabilities of the Large Cap Fund have been adequately provided for
on its books, and no tax deficiency or liability of the Large Cap Fund has
been asserted, and no question with respect thereto has been raised or is
under audit, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
i. At the Exchange Date, Schroder Series Trust, on behalf of the Large
Cap Fund, will have full right, power and authority to sell, assign,
transfer and deliver the Investments (as defined below) and any other assets
and liabilities of the Large Cap Fund to be transferred to the Diversified
Growth Fund pursuant to this Agreement. At the Exchange Date, subject only
to the delivery of the Investments and any such other assets and liabilities
as contemplated by this Agreement, the Diversified Growth Fund will acquire
the Investments and any such other assets and liabilities subject to no
encumbrances, liens or security interests whatsoever and without any
restrictions upon the transfer thereof, except as previously disclosed to
the Diversified Growth Fund. As used in this Agreement, the term
"Investments" shall mean the Large Cap Fund's investments shown on the
schedule of its investments as of April 30, 2000 referred to in Section 2(c)
hereof, as supplemented with such changes in the portfolio as the Large Cap
Fund shall make, and changes resulting from stock dividends, stock
split-ups, mergers and similar corporate actions through the Exchange Date.
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<PAGE>
j. No registration under the 1933 Act of any of the Investments would
be required if they were, as of the time of such transfer, the subject of a
public distribution by either of the Diversified Growth Fund or the Large
Cap Fund, except as previously disclosed to the Diversified Growth Fund by
the Large Cap Fund.
k. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Large Cap
Fund of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, 1934 Act, the 1940 Act or state insurance,
securities or blue sky laws.
l. The Registration Statement and the Large Cap Fund Proxy Statement,
on the effective date of the Registration Statement, (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. At the time of the shareholders meeting referred to in
Section 7(a) and on the Exchange Date, the Large Cap Fund Proxy Statement
and the Registration Statement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that none of the representations and warranties in this subsection
shall apply to statements in or omissions from the Registration Statement or
the Large Cap Fund Proxy Statement made in reliance upon and in conformity
with information furnished in writing by the Diversified Growth Fund to the
Large Cap Fund or Schroder Series Trust specifically for use in the
Registration Statement or the Large Cap Fund Proxy Statement.
m. The Large Cap Fund qualifies and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company" under
Section 851 and 852 of the Code.
n. At the Exchange Date, the Large Cap Fund will have sold such of its
assets, if any, as are necessary to assure that, after giving effect to the
acquisition of the assets of the Large Cap Fund pursuant to this Agreement,
the Diversified Growth Fund will remain a "diversified company" within the
meaning of Section 5(b)(1) of the 1940 Act and in compliance with such other
mandatory investment restrictions as are set forth in the Prospectus, as
amended through the Exchange Date.
o. All of the issued and outstanding shares of beneficial interest of
the Large Cap Fund shall have been offered for sale and sold in conformity
with all applicable federal and state securities laws (including any
applicable exemptions therefrom), or the Large Cap Fund has taken any action
necessary to remedy any prior failure to have offered for sale and sold such
shares in conformity with such laws.
p. All issued and outstanding shares of the Large Cap Fund are, and at
the Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Large Cap Fund. The Large Cap Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of the Large Cap Fund shares, nor is there outstanding any
security convertible into any of the Large Cap Fund shares.
3. REORGANIZATION.
a. Subject to the requisite approval of the shareholders of the Large
Cap Fund and to the other terms and conditions contained herein (including
the Large Cap Fund's obligation to distribute to its shareholders all of its
investment company taxable income and net capital gain as described in
Section 8(m)), the Large Cap Fund agrees to sell, assign, convey, transfer
and deliver to the Diversified Growth Fund, and the Diversified Growth Fund
agrees to acquire from the Large Cap Fund, on the Exchange Date all of the
Investments and all of the cash and other properties and assets of the Large
Cap Fund, whether accrued or contingent (including cash received by the
Large Cap Fund upon the liquidation by the Large Cap Fund of any
Investments), in exchange for that number of
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<PAGE>
shares of beneficial interest of the Diversified Growth Fund provided for in
Section 4 and the assumption by the Diversified Growth Fund of all of the
liabilities of the Large Cap Fund, whether accrued or contingent, existing
at the Valuation Time (as defined below) except for the Large Cap Fund's
liabilities, if any, arising in connection with this Agreement. Pursuant to
this Agreement, the Large Cap Fund will, as soon as practicable after the
Exchange Date, distribute all of the Merger Shares received by it to the
shareholders of the Large Cap Fund in exchange for their Investor Shares of
the Large Cap Fund.
b. The Large Cap Fund will pay or cause to be paid to the Diversified
Growth Fund any interest, cash or such dividends, rights and other payments
received by it on or after the Exchange Date with respect to the Investments
and other properties and assets of the Large Cap Fund, whether accrued or
contingent, received by it on or after the Exchange Date. Any such
distribution shall be deemed included in the assets transferred to the
Diversified Growth Fund at the Exchange Date and shall not be separately
valued unless the securities in respect of which such distribution is made
shall have gone "ex" such distribution prior to the Valuation Time, in which
case any such distribution which remains unpaid at the Exchange Date shall
be included in the determination of the value of the assets of the Large Cap
Fund acquired by the Diversified Growth Fund.
4. VALUATION TIME. The Valuation Time shall be 4:00 p.m. Eastern time on
the Exchange Date or such earlier or later day as may be mutually agreed
upon in writing by the parties hereto (the "Valuation Time"). On the
Exchange Date, the Diversified Growth Fund will deliver to the Large Cap
Fund a number of full and fractional Merger Shares having an aggregate net
asset value equal to the value of the assets of the Large Cap Fund
attributable to the Investor Shares of the Large Cap Fund transferred to the
Diversified Growth Fund on such date less the value of the liabilities of
the Large Cap Fund attributable to the Investor Shares of the Large Cap Fund
assumed by the Diversified Growth Fund on that date.
a. The net asset value of the Merger Shares to be delivered to the
Large Cap Fund, the value of the assets attributable to the Investor Shares
of the Large Cap Fund, and the value of the liabilities attributable to the
Investor Shares of the Large Cap Fund to be assumed by the Diversified
Growth Fund, shall in each case be determined as of the Valuation Time.
b. The net asset value of the Merger Shares shall be computed in the
manner set forth in the Diversified Growth Fund Prospectus. The value of the
assets and liabilities of the Investor Shares of the Large Cap Fund shall be
determined by the Diversified Growth Fund, in cooperation with the Large Cap
Fund, pursuant to procedures which the Diversified Growth Fund would use in
determining the fair market value of the Diversified Growth Fund's assets
and liabilities.
c. No adjustment shall be made in the net asset value of either the
Large Cap Fund or the Diversified Growth Fund to take into account
differences in realized and unrealized gains and losses.
d. The Large Cap Fund shall distribute the Merger Shares to the
shareholders of the Large Cap Fund by furnishing written instructions to the
Diversified Growth Fund's transfer agent, which will as soon as practicable
open accounts for each Large Cap Fund shareholder in accordance with such
written instructions.
e. The Diversified Growth Fund shall assume all liabilities of the
Large Cap Fund, whether accrued or contingent, in connection with the
acquisition of assets and subsequent dissolution of the Large Cap Fund or
otherwise, except for the Large Cap Fund's liabilities, if any, pursuant to
this Agreement.
5. EXPENSES, FEES, ETC.
a. The parties hereto understand and agree that the costs of all
transactions contemplated by the Agreement are being borne by Schroder
Investment Management North America Inc. and/or its
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affiliates. Notwithstanding any of the foregoing, expenses will be paid in
any event by the party directly incurring such expenses if and to the extent
that the payment by the other party of such expenses would result in the
disqualification of such party as a regulated investment company within the
meaning of Section 851 of the Code.
b. [Reserved]
c. [Reserved]
d. In the event the transactions contemplated by this Agreement are not
consummated for any reason, Schroder Investment Management North America
Inc. and/or its affiliates shall bear all expenses incurred in connection
with such transactions.
e. Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated,
no party shall be liable to the other party for any damages resulting
therefrom, including, without limitation, consequential damages, except as
specifically set forth above.
6. EXCHANGE DATE. Delivery of the assets of the Large Cap Fund to be
transferred, assumption of the liabilities of the Large Cap Fund to be
assumed, and the delivery of the Merger Shares to be issued shall be made at
Boston, Massachusetts, as of September 8, 2000, or at such other date agreed
to by the Diversified Growth Fund and the Large Cap Fund, the date and time
upon which such delivery is to take place being referred to herein as the
"Exchange Date."
7. MEETINGS OF SHAREHOLDERS; DISSOLUTION.
a. Schroder Series Trust, on behalf of the Large Cap Fund, agrees to
call a meeting of the Large Cap Fund's shareholders to be held as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of its assets to and the assumption
of all of its liabilities by the Diversified Growth Fund as herein provided
and adopting this Agreement.
b. The Large Cap Fund agrees that the liquidation and dissolution of
the Large Cap Fund will be effected in the manner provided in the
Declaration of Trust in accordance with applicable law and that on and after
the Exchange Date, the Large Cap Fund shall not conduct any business except
in connection with its liquidation and dissolution.
c. The Diversified Growth Fund, in consultation with the Large Cap Fund
and based in part on information furnished by the Large Cap Fund, has filed
the Registration Statement with the Commission. Each of the Large Cap Fund
and the Diversified Growth Fund will cooperate with the other, and each will
furnish to the other the information relating to itself required by the 1933
Act, the 1934 Act and the 1940 Act, and the rules and regulations thereunder
to be set forth in the Registration Statement.
8. CONDITIONS TO THE DIVERSIFIED GROWTH FUND'S OBLIGATIONS. The obligations
of the Diversified Growth Fund hereunder shall be subject to the following
conditions:
a. That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Large Cap
Fund entitled to vote.
b. That the Large Cap Fund shall have furnished to the Diversified
Growth Fund a statement of the Large Cap Fund's assets and liabilities, with
values determined as provided in Section 4 of this Agreement, together with
a list of Investments with their respective tax costs, all as of the
Valuation Time, certified on the Large Cap Fund's behalf by Schroder
Series Trust's President (or any Vice President) and Treasurer (or any
Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, that there has been no material adverse change in the
financial position of the Large Cap Fund since April 30, 2000, other than
changes in the Investments and other assets and properties since that date
or changes in the market value of the Investments and other assets of the
Large Cap Fund, or changes due to dividends paid or losses from operations.
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<PAGE>
c. That the Large Cap Fund shall have furnished to the Diversified
Growth Fund a statement, dated the Exchange Date, signed by Schroder
Series Trust's President (or any Vice President) and Treasurer (or any
Assistant Treasurer) certifying that as of the Valuation Time and as of the
Exchange Date all representations and warranties of the Large Cap Fund made
in this Agreement are true and correct in all material respects as if made
at and as of such dates and the Large Cap Fund has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such dates.
d. [Reserved]
e. That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
f. That the Diversified Growth Fund shall have received an opinion of
Ropes & Gray, counsel to the Large Cap Fund, in form satisfactory to counsel
to the Diversified Growth Fund, and dated the Exchange Date, to the effect
that (i) Schroder Series Trust is a Massachusetts business trust duly formed
and is validly existing under the laws of The Commonwealth of Massachusetts
and has the power to own all its properties and to carry on its business as
presently conducted; (ii) this Agreement has been duly authorized, executed
and delivered by Schroder Series Trust on behalf of the Large Cap Fund and,
assuming that the Registration Statement, the Large Cap Fund Prospectus and
the Large Cap Fund Proxy Statement comply with the 1933 Act, the 1934 Act
and the 1940 Act and assuming due authorization, execution and delivery of
this Agreement by Schroder Capital Funds (Delaware) on behalf of the
Diversified Growth Fund, is a valid and binding obligation of Schroder
Series Trust on behalf of the Large Cap Fund; (iii) Schroder Series Trust,
on behalf of the Large Cap Fund, has power to sell, assign, convey, transfer
and deliver the assets contemplated hereby and, upon consummation of the
transactions contemplated hereby in accordance with the terms of this
Agreement, the Large Cap Fund will have duly sold, assigned, conveyed,
transferred and delivered such assets to the Diversified Growth Fund;
(iv) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, violate the
Declaration of Trust or By-Laws or any provision of any agreement known to
such counsel to which Schroder Series Trust or the Large Cap Fund is a party
or by which it is bound; and (v) to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Schroder Series Trust on
behalf of the Large Cap Fund of the transactions contemplated hereby, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act
and such as may be required under state securities or blue sky laws.
g. [Reserved]
h. That the Diversified Growth Fund shall have received an opinion of
Ropes & Gray (which opinion would be based upon certain factual
representations and subject to certain qualifications), dated the Exchange
Date, in form satisfactory to the Diversified Growth Fund and its counsel,
to the effect that, on the basis of the existing provisions of the Code,
current administrative rules, and the court decisions, for federal income
tax purposes (i) no gain or loss will be recognized by the Diversified
Growth Fund upon receipt of the Investments transferred to the Diversified
Growth Fund pursuant to this Agreement in exchange for the Merger Shares;
(ii) the aggregate basis to the Diversified Growth Fund of the Investments
will be the same as the aggregate basis of the Investments in the hands of
the Large Cap Fund immediately prior to such exchange; and (iii) the
Diversified Growth Fund's holding periods with respect to the Investments
will include the respective periods for which the Investments were held by
the Diversified Growth Fund.
i. That the assets of the Large Cap Fund to be acquired by the
Diversified Growth Fund will include no assets which the Diversified Growth
Fund, by reason of charter limitations or of investment restrictions
disclosed in the Registration Statement in effect on the Exchange Date, may
not properly acquire.
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<PAGE>
j. That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have
been instituted or, to the knowledge of Schroder Capital Funds (Delaware) or
the Diversified Growth Fund, threatened by the Commission.
k. That Schroder Series Trust shall have received from the Commission,
any relevant state securities administrator and any relevant state insurance
regulatory authority such order or orders as are reasonably necessary or
desirable under the 1933 Act, the 1934 Act, the 1940 Act, and any applicable
state securities or blue sky laws or state insurance laws in connection with
the transactions contemplated hereby, and that all such orders shall be in
full force and effect.
l. That all actions taken by Schroder Series Trust on behalf of the
Large Cap Fund in connection with the transactions contemplated by this
Agreement and all documents incidental thereto shall be satisfactory in form
and substance to the Diversified Growth Fund and its counsel.
m. That, prior to the Exchange Date, the Large Cap Fund shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the shareholders of the
Large Cap Fund (i) all of the excess of (x) the Large Cap Fund's investment
income excludable from gross income under Section 103(a) of the Code over
(y) the Large Cap Fund's deductions disallowed under Sections 265 and
171(a)(2) of the Code, (ii) all of the Large Cap Fund's investment company
taxable income (as defined in Section 852 of the Code) for its taxable years
ending on or after October 31, 1999, and on or prior to the Exchange Date
(computed in each case without regard to any deduction for dividends paid),
and (iii) all of the Large Cap Fund's net capital gain realized (after
reduction for any capital loss carryover), in each case for the taxable year
ending on October 31, 1999 and all subsequent taxable periods ending on or
prior to the Exchange Date.
n. That the Large Cap Fund shall have furnished to the Diversified
Growth Fund a certificate, signed by the President (or any Vice President)
and the Treasurer (or any Assistant Treasurer) of Schroder Series Trust, as
to the tax cost to the Large Cap Fund of the securities delivered to the
Diversified Growth Fund pursuant to this Agreement, together with any such
other evidence as to such tax cost as the Diversified Growth Fund may
reasonably request.
o. That the Large Cap Fund's custodian shall have delivered to the
Diversified Growth Fund a certificate identifying all of the assets of the
Large Cap Fund held or maintained by such custodian as of the Valuation
Time.
p. That the Large Cap Fund's transfer agent shall have provided to the
Diversified Growth Fund (i) the originals or true copies of all of the
records of the Large Cap Fund in the possession of such transfer agent as of
the Exchange Date, (ii) a certificate setting forth the number of shares of
the Large Cap Fund outstanding as of the Valuation Time, and (iii) the name
and address of each holder of record of any shares and the number of shares
held of record by each such shareholder.
9. CONDITIONS TO THE LARGE CAP FUND'S OBLIGATIONS. The obligations of the
Large Cap Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Large Cap
Fund entitled to vote.
b. That Schroder Capital Funds (Delaware), on behalf of the Diversified
Growth Fund, shall have executed and delivered to the Large Cap Fund an
Assumption of Liabilities dated as of the Exchange Date pursuant to which
the Diversified Growth Fund will assume all of the liabilities of the Large
Cap Fund existing at the Valuation Time in connection with the transactions
contemplated by this Agreement, other than liabilities arising pursuant to
this Agreement.
c. That the Diversified Growth Fund shall have furnished to the Large
Cap Fund a statement, dated the Exchange Date, signed by the President (or
any Vice President) and Treasurer (or any
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Assistant Treasurer) of Schroder Capital Funds (Delaware) certifying that as
of the Valuation Time and as of the Exchange Date all representations and
warranties of the Diversified Growth Fund made in this Agreement are true
and correct in all material respects as if made at and as of such dates, and
that the Diversified Growth Fund has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied at
or prior to each of such dates.
d. That there shall not be any material litigation pending or
threatened with respect to the matters contemplated by this Agreement.
e. That the Large Cap Fund shall have received an opinion of counsel to
the Diversified Growth Fund, in form satisfactory to counsel to the Large
Cap Fund, and dated the Exchange Date, to the effect that (i) Schroder
Capital Funds (Delaware) is a Delaware business trust duly formed and is
validly existing under the laws of the State of Delaware and has the power
to own all its properties and to carry on its business as presently
conducted; (ii) the Merger Shares to be issued and delivered to the Large
Cap Fund as provided for by this Agreement are duly authorized for issuance
and upon such issuance will be validly issued and will be fully paid and
non-assessable by Schroder Capital Funds (Delaware) and the Diversified
Growth Fund, and under the Delaware Business Trust Act, 12 DEL. C.
Sections3801 ET SEQ. and the Declaration of Trust, the issuance of the
Merger Shares is not subject to preemptive rights; (iii) this Agreement has
been duly authorized, executed and delivered by Schroder Capital Funds
(Delaware) on behalf of the Diversified Growth Fund and, assuming that the
Diversified Growth Fund Prospectus, the Registration Statement and the Large
Cap Fund Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940
Act and assuming due authorization, execution and delivery of this Agreement
by Schroder Series Trust on behalf of the Large Cap Fund, is a valid and
binding obligation of Schroder Capital Funds (Delaware) and the Diversified
Growth Fund; (iv) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, violate
the Trust Instrument or By-Laws, or any provision of any agreement known to
such counsel to which Schroder Capital Funds (Delaware) or the Diversified
Growth Fund is a party or by which it is bound; (v) no consent, approval,
authorization or order of any court or governmental authority is required
for the consummation by Schroder Capital Funds (Delaware) on behalf of the
Diversified Growth Fund of the transactions contemplated herein, except such
as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws; and
(vi) the Registration Statement has become effective under the 1933 Act, and
to the best of the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.
f. That the Large Cap Fund shall have received an opinion of Ropes &
Gray, dated the Exchange Date (which opinion would be based upon certain
factual representations and subject to certain qualifications), in form
satisfactory to the Large Cap Fund and its counsel, to the effect that, on
the basis of the existing provisions of the Code, current administrative
rules, and court decisions, for federal income tax purposes: (i) no gain or
loss will be recognized by the Large Cap Fund as a result of the
reorganization; (ii) no gain or loss will be recognized by shareholders of
the Large Cap Fund on the distribution of Merger Shares to them in exchange
for their shares of the Large Cap Fund; (iii) the aggregate tax basis of the
Merger Shares that the Large Cap Fund's shareholders receive in exchange for
their Large Cap Fund shares will be the same as the aggregate tax basis of
the Large Cap Fund shares; and (iv) a shareholder's holding period for the
Merger Shares received pursuant to the Agreement will be determined by
including the holding period for the Large Cap Fund shares exchanged for the
Merger Shares, provided that the shareholder held the Large Cap Fund shares
as a capital asset.
g. That all actions taken by Schroder Capital Funds (Delaware) on
behalf of the Diversified Growth Fund in connection with the transactions
contemplated by this Agreement and all documents incidental thereto shall be
satisfactory in form and substance to the Large Cap Fund and its counsel.
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h. That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have
been instituted or, to the knowledge of Schroder Capital Funds (Delaware) or
the Diversified Growth Fund, threatened by the Commission.
i. That Schroder Capital Funds (Delaware) shall have received from the
Commission, any relevant state securities administrator and any relevant
state insurance regulatory authority such order or orders as are reasonably
necessary or desirable under the 1933 Act, the 1934 Act, the 1940 Act, and
any applicable state securities or blue sky laws or state insurance laws in
connection with the transactions contemplated hereby, and that all such
orders shall be in full force and effect.
10. [Reserved]
11. WAIVER OF CONDITIONS. Each of the Large Cap Fund and the Diversified
Growth Fund, after consultation with counsel and by consent of the trustees
of Schroder Series Trust and Schroder Capital Funds (Delaware), as the case
may be, on its behalf or an officer authorized by such trustees, may waive
any condition to their respective obligations hereunder, except for the
conditions set forth in Sections 8(a), 8(h), 9(a) and 9(f).
12. NO BROKER, ETC. Each of the Large Cap Fund and the Diversified Growth
Fund represents that there is no person who has dealt with it or Schroder
Series Trust and Schroder Capital Funds (Delaware), as the case may be, who
by reason of such dealings is entitled to any broker's or finder's or other
similar fee or commission arising out of the transactions contemplated by
this Agreement.
13. TERMINATION. The Large Cap Fund and the Diversified Growth Fund may, by
consent of the trustees of Schroder Series Trust and Schroder Capital Funds
(Delaware), respectively, on behalf of each Fund, terminate this Agreement.
If the transactions contemplated by this Agreement have not been
substantially completed by December 31, 2000, this Agreement shall
automatically terminate on that date unless a later date is agreed to by the
Large Cap Fund and the Diversified Growth Fund.
14. [Reserved]
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any
certificates delivered pursuant to this Agreement shall be deemed to have
been material and relied upon by each of the parties, notwithstanding an
investigation made by them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the
subject matter hereof, constitutes the only understanding with respect to
such subject matter, may not be changed except by a letter of agreement
signed by each party hereto, and shall be construed in accordance with and
governed by the laws of The Commonwealth of Massachusetts.
17. DECLARATION OF TRUST. A copy of the Declaration of Trust of Schroder
Series Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
on behalf of the trustees of Schroder Series Trust on behalf of the Large
Cap Fund as trustees and not individually and that the obligations of this
instrument are not binding upon any of the trustees, officers or
shareholders of Schroder Series Trust individually but are binding only upon
the assets and property of the Large Cap Fund.
18. TRUST INSTRUMENT. Notice is hereby given that the Trust Instrument of
Schroder Capital Funds (Delaware) is executed on behalf of the trustees of
Schroder Capital Funds (Delaware) on behalf of the Diversified Growth Fund
as trustees and not individually and that the obligations of this instrument
are not binding upon any of the trustees, officers or shareholders of
Schroder Capital
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Funds (Delaware) individually but are binding only upon the assets and
property of the Diversified Growth Fund.
<TABLE>
<S> <C> <C>
SCHRODER SERIES TRUST,
on behalf of its Schroder Large Capitalization
Equity Fund series
By: /s/ Alexandra Poe
-------------------------------
Alexandra Poe, President
SCHRODER CAPITAL FUNDS (DELAWARE),
on behalf of its Schroder U.S. Diversified
Growth Fund series
By: /s/ Alexandra Poe
-------------------------------
Alexandra Poe, President
</TABLE>
A-12
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
July 19, 2000
This Statement of Additional Information (the "SAI") relates to the proposed
merger (the "Merger") of Schroder Large Capitalization Equity Fund, a series of
Schroder Series Trust, a Massachusetts business trust (the "Large Cap Fund"),
into Schroder U.S. Diversified Growth Fund, a series of Schroder Capital Funds
(Delaware), a Delaware business trust (the "Diversified Growth Fund").
This SAI contains information which may be of interest to shareholders but
which is not included in the Prospectus/Proxy Statement dated July 19, 2000 (the
"Prospectus/Proxy Statement") of the Diversified Growth Fund which relates to
the Merger. As described in the Prospectus/Proxy Statement, the Merger would
involve the transfer of all the assets of the Large Cap Fund in exchange for
shares of the Diversified Growth Fund and the assumption of all the liabilities
of the Large Cap Fund by the Diversified Growth Fund. The Large Cap Fund would
distribute the Diversified Growth Fund shares it receives to its shareholders in
complete liquidation of the Large Cap Fund.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with
the Securities and Exchange Commission and is available upon request and without
charge by writing to Schroder Mutual Funds, P.O. Box 8507, Boston, Massachusetts
02266 or by calling 800-464-3108.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Additional Information about the Diversified Growth and the Large Cap
I. Funds.................................................................... B-2
II. Financial Statements....................................................... B-2
</TABLE>
B-1
<PAGE>
I. Additional Information about the Diversified Growth and the Large Cap
Funds.
Additional information about the Diversified Growth Fund is incorporated by
reference to Post-Effective Amendment No. 76 to the Schroder Capital Funds
(Delaware) Registration Statement on Form N-1A (filed on February 29, 2000)
(Registration Nos. 2-34215 and 811-1911) (Accession No. 0000912057-00-009074).
Additional information about the Large Cap Fund is incorporated by reference to
Post-Effective Amendment No. 12 to the Schroder Series Trust Registration
Statement on Form N-1A (filed on February 29, 2000) (Registration Nos. 33-65632
and 811-7840) (Accession No. 0000912057-00-009075).
II. Financial Statements.
This Statement of Additional Information is accompanied by the Annual
Reports for the year ended October 31, 1999 of the Diversified Growth Fund and
Large Cap Fund (the "Annual Reports") (Accession Nos. 0000912057-99-011065 and
0000912057-99-011019), which contain historical financial information regarding
such Funds. The Annual Reports have been filed with the Securities and Exchange
Commission and are incorporated herein by reference.
Pro forma financial statements of the Diversified Growth Fund are provided
on the following pages.
B-2
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------ ------------------------------------------
LARGE U.S. USDGF LARGE U.S. USDGF
CAPITALIZATION DIVERSIFIED PRO FORMA CAPITALIZATION DIVERSIFIED PRO FORMA
VALUE GROWTH COMBINING VALUE GROWTH COMBINING
--------------------- ----------- ---------- ----------------------------------- -------------- ----------- -----------
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS--97.7%
BASIC INDUSTRY--2.0%
10,900 -- 10,900 Alcoa $ 707,138 $ -- $ 707,138
20,200 -- 20,200 International Paper 742,350 -- 742,350
-------------- ----------- -----------
1,449,488 -- 1,449,488
-------------- ----------- -----------
BASIC MATERIALS--1.2%
-- 3,900 3,900 Avery Dennison -- 255,938 255,938
-- 4,200 4,200 Sealed Air -- 233,625 233,625
-- 3,400 3,400 Weyerhaeuser -- 181,688 181,688
-- 5,300 5,300 Willamette Industries -- 202,394 202,394
-------------- ----------- -----------
-- 873,645 873,645
-------------- ----------- -----------
CAPITAL GOODS--7.6%
-- 9,900 9,900 American Power Conversion -- 349,594 349,594
-- 4,700 4,700 Danaher -- 268,488 268,488
-- 5,400 5,400 Dover -- 274,388 274,388
20,500 -- 20,500 Emerson Electric 1,124,938 -- 1,124,938
13,100 -- 13,100 General Electric 2,059,975 -- 2,059,975
22,500 -- 22,500 Honeywell International 1,260,000 -- 1,260,000
-- 1,194 1,194 Illinois Tool Works -- 76,491 76,491
-------------- ----------- -----------
4,444,913 968,961 5,413,874
-------------- ----------- -----------
COMPUTER HARDWARE--15.7%
28,000 -- 28,000 Cisco Systems 1,941,188 -- 1,941,188
10,900 -- 10,900 E M C 1,514,419 -- 1,514,419
20,600 -- 20,600 Intel 2,612,338 -- 2,612,338
23,700 -- 23,700 Sun Microsystems 2,178,919 -- 2,178,919
16,300 -- 16,300 Tellabs 893,444 -- 893,444
12,600 -- 12,600 Texas Instruments 2,052,225 -- 2,052,225
-------------- ----------- -----------
11,192,533 -- 11,192,533
-------------- ----------- -----------
COMPUTER SERVICES--10.5%
16,200 -- 16,200 Electronic Data Systems 1,113,750 -- 1,113,750
6,800 -- 6,800 Citrix Systems 415,225 -- 415,225
-- 3,700 3,700 DST Systems -- 274,494 274,494
26,600 -- 26,600 Microsoft 1,855,350 -- 1,855,350
-- 3,800 3,800 Network Solutions Class A -- 562,400 562,400
-- 11,600 11,600 Onvell -- 227,650 227,650
31,600 -- 31,600 Oracle 2,526,025 -- 2,526,025
-- 3,600 3,600 Verisign -- 501,750 501,750
-------------- ----------- -----------
5,910,350 1,566,294 7,476,644
-------------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the pro forma combining financial
statements.
B-3
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------ ------------------------------------------
LARGE U.S. USDGF LARGE U.S. USDGF
CAPITALIZATION DIVERSIFIED PRO FORMA CAPITALIZATION DIVERSIFIED PRO FORMA
VALUE GROWTH COMBINING VALUE GROWTH COMBINING
--------------------- ----------- ---------- ----------------------------------- -------------- ----------- -----------
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER CYCLICAL--9.6%
-- 5,400 5,400 Circuit City Stores -- Circuit City $ -- $ 317,588 $ 317,588
Group
24,100 -- 24,100 Costco Wholesale 1,302,906 -- 1,302,906
-- 9,200 9,200 Dollar General -- 210,450 210,450
-- 3,800 3,800 Dow Jones & Company -- 246,525 246,525
-- 11,500 11,500 Family Dollar Stores -- 219,219 219,219
-- 7,800 7,800 Harley Davidson -- 310,538 310,538
-- 8,100 8,100 Harrahs Entertainment -- 166,556 166,556
-- 5,300 5,300 Hertz Class A -- 165,294 165,294
-- 6,750 6,750 Infinity Broadcasting -- 229,078 229,078
-- 7,000 7,000 Jones Apparel Group -- 207,813 207,813
-- 3,700 3,700 Knight Ridder -- 181,531 181,531
19,800 -- 19,800 Lowes 980,100 -- 980,100
-- 5,600 5,600 New York Times Class A -- 230,650 230,650
-- 16,200 16,200 Park Place Entertainment -- 207,563 207,563
-- 4,000 4,000 Tiffany & Company -- 290,750 290,750
19,400 -- 19,400 Wal Mart Stores 1,074,275 -- 1,074,275
-- 3,400 3,400 Whirlpool -- 221,425 221,425
-- 4,900 4,900 Young & Rubicam -- 272,869 272,869
-------------- ----------- -----------
3,357,281 3,477,849 6,835,130
-------------- ----------- -----------
CONSUMER STAPLES--6.7%
17,700 -- 17,700 Anheuser Busch 1,248,956 -- 1,248,956
18,900 -- 18,900 Colgate Polmolive 1,079,663 -- 1,079,663
14,200 -- 14,200 Disney, Walt 615,038 -- 615,038
-- 10,400 10,400 Hormel Foods -- 158,600 158,600
18,300 -- 18,300 Time Warner 1,645,856 -- 1,645,856
-------------- ----------- -----------
4,589,513 158,600 4,748,113
-------------- ----------- -----------
ENERGY--7.6%
11,800 -- 11,800 Chevron 1,004,475 -- 1,004,475
52,600 -- 52,600 Conoco 1,252,538 -- 1,252,538
-- 6,900 6,900 Dynegy Class A -- 451,519 451,519
-- 11,100 11,100 EOG Resources -- 276,113 276,113
21,600 -- 21,600 Exxon Mobil 1,678,050 -- 1,678,050
-- 10,300 10,300 Imperial Oil -- 242,050 242,050
-- 4,200 4,200 Kerr McGee -- 217,350 217,350
-- 3,900 3,900 Vastar Resources -- 314,438 314,438
-------------- ----------- -----------
3,935,063 1,501,470 5,436,533
-------------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the pro forma combining financial
statements.
B-4
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------ ------------------------------------------
LARGE U.S. USDGF LARGE U.S. USDGF
CAPITALIZATION DIVERSIFIED PRO FORMA CAPITALIZATION DIVERSIFIED PRO FORMA
VALUE GROWTH COMBINING VALUE GROWTH COMBINING
--------------------- ----------- ---------- ----------------------------------- -------------- ----------- -----------
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES--11.4%
-- 4,000 4,000 Allmerica Financial $ -- $ 216,500 $ 216,500
13,507 -- 13,507 American International Group 1,481,549 -- 1,481,549
25,500 4,500 30,000 Capital One Financial 1,115,625 196,875 1,312,500
27,200 -- 27,200 Citigroup 1,616,700 -- 1,616,700
26,200 -- 26,200 Federal National Mortgage 1,580,188 -- 1,580,188
Association
43,100 -- 43,100 FleetBoston Financial 1,527,356 -- 1,527,356
-- 4,000 4,000 MGIC Investment -- 191,250 191,250
-- 2,200 2,200 Old Kent Financial -- 66,275 66,275
-- 5,300 5,300 UnionBanCal -- 146,744 146,744
-------------- ----------- -----------
7,321,418 817,644 8,139,062
-------------- ----------- -----------
HEALTH CARE--7.9%
27,100 -- 27,100 Bristol Myers Squibb 1,421,056 -- 1,421,056
26,000 -- 26,000 Medtronic 1,350,375 -- 1,350,375
28,600 -- 28,600 Schering Plough 1,152,938 -- 1,152,938
14,700 -- 14,700 Warner Lambert 1,673,044 -- 1,673,044
-------------- ----------- -----------
5,597,413 -- 5,597,413
-------------- ----------- -----------
TECHNOLOGY--6.5%
-- 8,200 8,200 Analog Devices -- 629,863 629,863
-- 15,500 15,500 ARM Holdings ADR -- 492,125 492,125
-- 12,600 12,600 Atmel -- 616,613 616,613
-- 7,600 7,600 Celestica -- 414,675 414,675
-- 8,600 8,600 Concord EFS -- 192,425 192,425
-- 7,600 7,600 Fiserv -- 349,125 349,125
-- 3,000 3,000 Lexmark International Group -- 354,000 354,000
-- 8,850 8,850 Symbol Technologies -- 493,388 493,388
-- 6,000 6,000 Teradyne -- 660,000 660,000
-- 4,400 4,400 Waters -- 416,900 416,900
-------------- ----------- -----------
-- 4,619,114 4,619,114
-------------- ----------- -----------
TELECOMMUNICATIONS--8.4%
-- 9,600 9,600 ADC Telecommunications -- 583,200 583,200
27,600 -- 27,600 AT&T Wireless Group 878,025 -- 878,025
28,400 -- 28,400 GTE 1,924,100 -- 1,924,100
27,200 -- 27,200 MCI WorldCom 1,235,900 -- 1,235,900
17,000 -- 17,000 U.S. West 1,210,188 -- 1,210,188
-- 2,600 2,600 United States Cellular -- 156,163 156,163
-------------- ----------- -----------
5,248,213 739,363 5,987,576
-------------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the pro forma combining financial
statements.
B-5
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------ ------------------------------------------
LARGE U.S. USDGF LARGE U.S. USDGF
CAPITALIZATION DIVERSIFIED PRO FORMA CAPITALIZATION DIVERSIFIED PRO FORMA
VALUE GROWTH COMBINING VALUE GROWTH COMBINING
--------------------- ----------- ---------- ----------------------------------- -------------- ----------- -----------
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION--1.1%
-- 7,800 7,800 Canadian National Railway $ -- $ 218,888 $ 218,888
-- 9,900 9,900 Canadian Pacific -- 235,744 235,744
-- 5,000 5,000 Kansas City Southern Industries -- 359,375 359,375
-------------- ----------- -----------
-- 814,007 814,007
-------------- ----------- -----------
UTILITIES--1.5%
25,100 -- 25,100 PECO Energy 1,046,356 -- 1,046,356
----------- ----------- -----------
TOTAL COMMON STOCKS
(Cost - $49,728,703, $11,718,699,
and $61,447,402, respectively) 54,092,541 15,536,947 69,629,488
----------- ----------- -----------
SHORT TERM INVESTMENTS--3.7%
2,154,713 501,587 2,656,300 SSgA U.S. Government 2,154,713 501,587 2,656,300
-------------- ----------- -----------
Money Market Fund
(Cost - $2,154,713, $501,587, and
$2,656,300, respectively)
TOTAL MARKET VALUE--101.4%
(Cost - $51,883,416, $12,220,286,
and $64,103,702, respectively) 56,247,254 16,038,534 72,285,788
OTHER ASSETS LESS (944,209) (78,155) (1,022,364)
LIABILITIES--(1.4%)
-------------- ----------- -----------
TOTAL NET ASSETS--100.0% $55,303,045 $15,960,379 $71,263,424
============== =========== ===========
</TABLE>
The accompanying notes are an integral part of the pro forma combining financial
statements.
B-6
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
USDGF
LARGE CAPITALIZATION U.S. DIVERSIFIED PRO FORMA
EQUITY FUND GROWTH FUND COMBINING
-------------------- ---------------- ------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value.................... $56,247,254 $16,038,534 $72,285,788
Dividends receivable................................... 35,050 1,860 36,910
Interest receivable.................................... 5,963 2,452 8,415
Receivable for Fund shares sold........................ 5,242 13,366 18,608
Prepaid expenses....................................... 2,180 112 2,292
Due from Investment Adviser............................ 1,696 2,984 4,680
----------- ----------- -----------
TOTAL ASSETS......................................... 56,297,385 16,059,308 72,356,693
----------- ----------- -----------
LIABILITIES
Payable for securities purchased....................... 843,733 -- 843,733
Payable for Fund shares redeemed....................... 48,924 40,744 89,668
Advisory fee payable................................... 22,925 8,556 31,481
Accrued expenses and other liabilities................. 78,758 49,629 128,387
----------- ----------- -----------
TOTAL LIABILITIES.................................... 994,340 98,929 1,093,269
----------- ----------- -----------
NET ASSETS........................................... $55,303,045 $15,960,379 $71,263,424
=========== =========== ===========
NET ASSETS
Capital paid-in........................................ $42,970,263 $10,256,518 $53,226,781
Undistributed (distributions in excess of) net
investment income.................................... 3,700 (61,161) (57,461)
Accumulated net realized gain on investments........... 7,965,244 1,946,774 9,912,018
Net unrealized appreciation of investments............. 4,363,838 3,818,248 8,182,086
----------- ----------- -----------
Net Assets............................................. $55,303,045 $15,960,379 $71,263,424
=========== =========== ===========
INVESTOR SHARES:
Net Assets........................................... $55,292,434 $15,960,379 $71,263,424
Net asset value, offering and redemption price per
share.............................................. $ 13.59 $ 7.33 $ 7.33
Total shares outstanding at end of period............ 4,067,645 2,178,773 9,723,527
ADVISOR SHARES:
Net Assets........................................... $ 10,611 -- --
Net asset value, offering and redemption price per
share.............................................. $ 13.55 -- --
Total shares outstanding at end of period.............. 783 -- --
Cost of securities..................................... $51,883,416 $12,220,286 $64,103,702
</TABLE>
The accompanying notes are an integral part of the pro forma combining financial
statements.
B-7
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
U.S. USDGF
LARGE CAPITALIZATION DIVERSIFIED PRO FORMA
EQUITY FUND GROWTH FUND ADJUSTMENTS COMBINING
-------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income............... $ 602,710 $ 81,753 $ -- $ 684,463
Interest income............... 53,774 8,281 -- 62,055
Foreign taxes................. -- (953) -- (953)
----------- ---------- --------- -----------
TOTAL INVESTMENT INCOME... 656,484 89,081 -- 745,565
----------- ---------- --------- -----------
EXPENSES
Investment advisory fees.... 491,182 108,834 533 (a) 600,549
Shareholder servicing
fees...................... 105 -- (105)(b) --
Administrative fees......... 67,898 -- (67,898)(b) --
Sub-administration fees..... -- 14,634 64,147 (c) 78,781
Custodian fees.............. 50,873 50,785 (50,873)(b) 50,785
Audit fees.................. 18,752 23,183 (18,752)(b) 23,183
Legal fees.................. 22,121 21,062 (22,121)(b) 21,062
Trustees fees............... 9,908 2,426 (1,152)(b) 11,182
Transfer agent fees......... 94,307 24,857 (89,307)(b) 29,857
Printing expenses........... 10,016 12,459 (4,634)(b) 17,841
Registration fees........... 20,989 17,447 (19,352)(b) 19,084
Other....................... 8,847 1,114 (3,024)(b) 6,937
----------- ---------- --------- -----------
TOTAL EXPENSES............ 794,998 276,801 (212,538) 859,261
----------- ---------- --------- -----------
Expenses borne by Investment
Adviser................... (21,843) (46,218) 68,061 (d) --
Expenses waived............. (162,747) (13,122) (23,734)(d) (199,603)
----------- ---------- --------- -----------
NET EXPENSES.............. 610,408 217,461 (168,211) 659,658
----------- ---------- --------- -----------
NET INVESTMENT INCOME..... 46,076 (128,380) 168,211 85,907
----------- ---------- --------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain on
investments sold.......... 10,077,702 3,627,997 -- 13,705,699
Net realized gain on foreign
currency transactions..... -- 22 -- 22
----------- ---------- --------- -----------
Net realized gain on
investments and foreign
currency transactions..... 10,077,702 3,628,019 -- 13,705,721
----------- ---------- --------- -----------
Change in net unrealized
appreciation on
investments............... (6,412,602) 604,087 -- (5,808,515)
----------- ---------- --------- -----------
Net Gain (Loss)............. 3,665,100 4,232,106 -- 7,897,206
----------- ---------- --------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 3,711,176 $4,103,726 $ 168,211 $ 7,983,113
=========== ========== ========= ===========
</TABLE>
--------------------------
(a) Adjusted to reflect the effect of contractual investment advisory fee
payable by USDGF to Schroder Investment Management North America Inc.
("SIMNA"), the Fund's investment adviser. Under the agreement between the
Fund and SIMNA, SIMNA provides investment management services and is
entitled to receive for its services compensation payable monthly at the
annual rate of 0.75% up to $100 million of the Fund's average daily net
assets, and 0.50% of amounts in excess of $100 million of such assets.
(b) Adjustment reflects expected savings when the two Funds become one.
B-8
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND ("USDGF")
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED APRIL 30, 2000 (CONTINUED)
(UNAUDITED)
(c) Under a sub-administration agreement with State Street Bank and Trust
Company ("State Street"), USDGF, together with other mutual funds managed by
SIMNA and certain related entities, pays fees to State Street based on the
combined average daily net assets of all of the Funds in the Schroder
complex, according to the following annual rates: 0.06% of the first $1.7
billion of such assets, 0.04% of the next $1.7 billion, and 0.02% of assets
in excess of $3.4 billion, subject to certain minimum requirements.
(d) Reflects adjustment to the level of the Acquiring Fund's expense limitation.
SIMNA is contractually obligated to reduce its compensation (and, if
necessary, to pay certain other Fund expenses) until October 31, 2000 to the
extent that USDGF's total operating expenses exceed the rate of 1.50% of the
Fund's average daily net assets.
The accompanying notes are an integral part of the pro forma combining financial
statements.
B-9
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
APRIL 30, 2000
(UNAUDITED)
NOTE 1. BASIS OF PRO FORMA PRESENTATION
The unaudited Pro Forma Combining Schedule of Investments and Statements of
Assets and Liabilities assumes the exchange described in the next paragraph
occurred as of April 30, 2000 and the unaudited Pro Forma Combining Statements
of Operations for the twelve-month period ended April 30, 2000 assumes the
exchange occurred as of May 1, 1999. These statements have been derived from
books and records utilized in calculating the daily net asset value of each Fund
at April 30, 2000 and for the twelve-month period then ended.
The pro forma combining financial statements and the accompanying Pro Forma
Schedule of Investments give effect to the proposed Agreement and Plan of
Reorganization between Schroder Large Capitalization Equity Fund and Schroder
U.S. Diversified Growth Fund and the consummation of the transactions
contemplated therein to be accounted for as a tax-free reorganization of
investment companies. The Agreement and Plan of Reorganization would be
accomplished by an exchange of Investor Shares of Schroder U.S. Diversified
Growth Fund for the net assets of Schroder Large Capitalization Equity Fund and
the distribution of Investor Shares of Schroder U.S. Diversified Growth Fund to
Schroder Large Capitalization Equity Fund shareholders. If the Agreement and
Plan of Reorganization were to have taken place at April 30, 2000, Schroder
Large Capitalization Equity Fund shareholders would have received 7,544,754
shares of Schroder U.S. Diversified Growth Fund Investor Shares.
The unaudited pro forma combining financial statements should be read in
conjunction with the historical financial statements of the Funds incorporated
by reference in the Statement of Additional Information.
The Schroder Large Capitalization Equity Fund's Advisor Shares will be converted
to Investor Shares as of June 23, 2000.
NOTE 2. PRO FORMA ADJUSTMENTS
Pro forma adjustments have been made to reflect the contractual expenses of the
combined entities and adjustments from expected savings when the two Funds
become one.
B-10
<PAGE>
SCHRODER LARGE CAPITALIZATION EQUITY FUND
a Series of Schroder Series Trust
PROXY SOLICITED BY THE BOARD OF TRUSTEES
FOR A MEETING OF SHAREHOLDERS ON SEPTEMBER 8, 2000
The shareholder signing on the reverse side of this proxy card hereby appoints
Alan M. Mandel, Carin F. Muhlbaum and Alexandra Poe, and each of them
separately, proxies with power of substitution to each, and hereby authorizes
them to represent and to vote, as designated below, at the Meeting of
Shareholders (the "Meeting") of the Fund indicated above to be held at the
offices of Schroder Series Trust to be held at 787 Seventh Avenue, New York, New
York 10019 on September 8, 2000 at 10:00 a.m. (Eastern Time), and at any
adjournment thereof, all of the shares of the Fund which the shareholder signing
on the reverse side of this proxy card would be entitled to vote if personally
present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSAL.
--------------------------------------------------------------------------------
TO VOTE BY MAIL, PLEASE VOTE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. TO VOTE BY TELEPHONE, CALL 1-800-488-8095.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------------------ -----------------------------------------
------------------------------------ -----------------------------------------
------------------------------------ -----------------------------------------
[SC375 - SCHRODER SERIES TRUST LARGE CAPITALIZATION EQUITY FUND] [FILE NAME:
SC3752.ELX] [VERSION - 3] [07/06/00 (06/27/00)] SC3752
<PAGE>
<TABLE>
<CAPTION>
<S><C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL.
FOR AGAINST ABSTAIN
----------------------------------------------------- I. Proposal to approve the Agreement and Plan / / / / / /
SCHRODER LARGE CAPITALIZATION EQUITY FUND of Reorganization providing for the Merger
----------------------------------------------------- of the Schroder Large Capitalization
Equity Fund with Schroder U.S. Diversified
Growth Fund, as described in the
Prospectus/Proxy Statement and the
CONTROL NUMBER: Agreement and Plan of Reorganization.
RECORD DATE SHARES:
Mark box at right if an address change or comment has been / /
noted on the reverse side of this card.
---------- ----------------------------------------------------------------------
Please be sure to sign and date this Proxy. Date NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY CARD.
--------------------------------------------------------- All joint owners should sign. When signing as executor, administrator,
attorney, trustee or guardian or as custodian for a minor, please
give full title as such. If a corporation, please sign in full
corporate name and indicate the signer's office. If a partner, sign
in the partnership name.
-----Shareholder sign here------Co-owner sign here------- ----------------------------------------------------------------------
[SC375 - SCHRODER SERIES TRUST LARGE CAPITALIZATION EQUITY FUND] [FILE NAME: SC3751.ELX]
[VERSION - 3] [07/06/00 (06/27/00)] SC3751
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