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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
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Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Schroder Series Trust
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if other than the Registrant)
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/ / Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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SCHRODER SERIES TRUST
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER MIDCAP VALUE FUND
July , 2000
DEAR SHAREHOLDER:
You are cordially invited to attend the Meeting of Shareholders (the
"Meeting") of Schroder Investment Grade Income Fund, Schroder Small
Capitalization Value Fund, and Schroder MidCap Value Fund, each a series of
Schroder Series Trust, to be held on , , 2000, at 9:00 a.m., Eastern
time, at the offices of the Trust at 787 Seventh Avenue, New York, New York. At
the Meeting, shareholders will be asked to vote on the matters listed in the
attached Notice of Meeting of Shareholders.
Although the Trustees would like very much to have each shareholder attend
the Meeting, they realize that this is not possible. Whether or not you plan to
be present at the Meeting, your vote is needed. PLEASE COMPLETE, SIGN, AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR
THIS PURPOSE.
We look forward to seeing you at the Meeting or receiving your proxy so your
shares may be voted at the Meeting.
Sincerely yours,
Alexandra Poe
PRESIDENT
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE SO AS TO BE REPRESENTED AT THE MEETING.
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SCHRODER SERIES TRUST
SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER MIDCAP VALUE FUND
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NOTICE OF MEETING OF SHAREHOLDERS
------------------------
A Meeting of Shareholders (the "Meeting") of Schroder Investment Grade
Income Fund, Schroder Small Capitalization Value Fund, and Schroder MidCap Value
Fund, each a series of Schroder Series Trust (the "Trust"), will be held at the
offices of the Trust at 787 Seventh Avenue, 34th Floor, New York, New York, on
, 2000, at 9:00 a.m., Eastern time, for the following purposes:
To approve or disapprove:
I. A proposal to adopt a new investment objective for Schroder Investment
Grade Income Fund.
II. The following proposals to revise or eliminate fundamental investment
policies of the Funds, each to be considered separately by the particular
Fund (shareholders of Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund will consider each of proposals A through
G; shareholders of Schroder MidCap Value Fund will consider proposals B
and C only):
A. To eliminate the Fund's fundamental policy regarding short sales.
B. To revise the Fund's fundamental policy regarding borrowing.
C. To eliminate the Fund's fundamental policy regarding pledging or
otherwise encumbering assets.
D. To eliminate the Fund's fundamental policy regarding purchasing
securities which are also owned by officers and Trustees of the Trust
and its affiliates.
E. To eliminate the Fund's fundamental policy regarding buying or
selling oil, gas, or other mineral leases, rights or royalty
contracts.
F. To eliminate the Fund's fundamental policy regarding investments made
for the purpose of gaining control of a company's management.
G. To revise the Fund's fundamental policy regarding limits on acquiring
the voting securities of any one issuer.
III. To consider and act upon such other matters as may properly come before
the Meeting.
Shareholders of record as of the close of business on June 30, 2000 are
entitled to notice of and to vote at the Meeting.
By order of the Trustees,
Alan M. Mandel
CLERK
July , 2000
PLEASE RESPOND -- YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE, SIGN, DATE, AND MAIL THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
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SCHRODER SERIES TRUST
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER MIDCAP VALUE FUND
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PROXY STATEMENT
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The enclosed proxy is solicited on behalf of the Trustees of Schroder Series
Trust (the "Trust") for use at the Meeting of Shareholders (the "Meeting") of
Schroder Investment Grade Income Fund, Schroder Small Capitalization Value Fund,
and Schroder MidCap Value Fund (each a "Fund", and collectively, the "Funds"),
each a series of the Trust, to be held on , 2000, at 9:00 a.m.,
Eastern time, at the offices of the Trust at 787 Seventh Avenue, New York, New
York, and at any adjournment thereof. The Meeting will be held for the purposes
set forth in the accompanying Notice of Meeting of Shareholders (the "Notice").
Shareholders of record as of the close of business on June 30, 2000 (the "Record
Date") are entitled to notice of and to vote at the Meeting or at any adjourned
session. The Notice, the Proxy Statement and the enclosed form of proxy are
first being mailed or otherwise made available to shareholders on or about
, 2000.
Shares represented by duly executed proxies will be voted in accordance with
the specification made. If no specification is made, shares will be voted in
accordance with the recommendations of the Trustees. You may revoke a proxy at
any time before it is exercised, by sending or delivering a written revocation
to the Clerk of the Trust (which will be effective when it is received by the
Clerk), by properly executing a later-dated proxy, or by attending the Meeting,
requesting return of your proxy, and voting in person.
As of the Record Date, there were outstanding shares of Schroder
Investment Grade Income Fund, shares of Schroder Small Capitalization
Value Fund, and shares of Schroder MidCap Value Fund. Each share is
entitled to one vote, with fractional shares voting proportionally.
Schroder Investment Management North America Inc. ("SIMNA") is the
investment adviser of each Fund and Schroder Fund Advisors Inc. ("Schroder Fund
Advisors") is the principal underwriter of each Fund. The address of SIMNA and
of Schroder Fund Advisors is 787 Seventh Avenue, New York, New York 10019. The
address of State Street Bank and Trust Company, the administrator for each Fund,
is 225 Franklin Street, Boston, Massachusetts 02110.
COPIES OF THE MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ISSUED BY THE TRUST
AND INCLUDING INFORMATION ABOUT THE FUNDS MAY BE OBTAINED WITHOUT CHARGE. FOR
COPIES, PLEASE CALL THE TRUST AT 800-464-3108 OR WRITE THE TRUST AT P.O. BOX
8507, BOSTON, MA 02266.
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SUMMARY OF PROPOSALS AND FUNDS AFFECTED.
The following table identifies the various proposals set forth in the Proxy
Statement and indicates which Fund(s) are affected thereby. An "X" denotes that
a Fund is affected by the proposal and that the Fund's shareholders are
solicited with respect to that proposal.
<TABLE>
SCHRODER SCHRODER SMALL
INVESTMENT GRADE CAPITALIZATION VALUE SCHRODER MIDCAP
PROPOSAL INCOME FUND FUND VALUE FUND
<S> <C> <C> <C>
I. Proposal to adopt a new X
investment objective
II.A. Proposal to eliminate the
Fund's fundamental policy X X
regarding short sales
II. B. Proposal to revise the
Fund's fundamental policy X X X
regarding borrowing
II. C. Proposal to eliminate the
Fund's fundamental policy X X X
regarding pledging or otherwise
encumbering assets
II. D. Proposal to eliminate the
Fund's fundamental policy
regarding purchasing securities X X
which are also owned by officers
and Trustees of the Trust and its
affiliates
II. E. Proposal to eliminate the
Fund's fundamental policy
regarding buying or selling oil, X X
gas, or other mineral leases,
rights, or royalty contracts
II. F. Proposal to eliminate the
Fund's fundamental policy
regarding investments made for the X X
purpose of gaining control of a
company's management
II. G. Proposal to revise the
Fund's fundamental policy
regarding limits on acquiring the X X
voting securities of any one
issuer
</TABLE>
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I. NEW INVESTMENT OBJECTIVE FOR SCHRODER INVESTMENT GRADE INCOME FUND
INVESTMENT OBJECTIVE. Based on its investment outlook and analysis of the
fixed income securities markets and other economic factors, SIMNA believes that
the long-term investment performance of Schroder Investment Grade Income Fund
may be enhanced if the Fund is managed in accordance with an investment
objective of seeking maximum long-term total return. Using research and analyses
regarding market sectors, individual issuers, and market conditions, SIMNA hopes
to produce favorable long-term total returns for the Fund by investing in
fixed-income securities, and by using an active trading strategy and various
derivative strategies to take advantage of perceived inefficiencies in
fixed-income markets.
SIMNA has recommended that the Fund change its investment objective to
reflect this investment strategy.
The Fund's current investment objective is:
"To seek current income consistent with preservation of capital. Growth
of capital is a secondary objective, to the extent consistent with the
Fund's principal objective."
The proposed new investment objective is:
"To seek maximum long-term total return consistent with preservation of
capital."
The Trustees have approved the new investment objective and are recommending
that it be approved by the Fund's shareholders.
INVESTMENT POLICIES. Under the proposed new investment objective, the
Fund's investment program would be expanded to include a broader range of fixed
income and other securities. In addition to U.S. Government securities,
corporate debt securities, money market instruments, and various mortgage-
backed securities, the Fund would also be permitted to invest in preferred
stocks and, to a substantial extent, in debt securities denominated in
currencies other than the U.S. dollar, including securities of developing
countries and of private issuers in those countries.
In addition, SIMNA has recommended that the Fund be permitted to invest a
higher percentage of its assets in lower-rated debt securities (sometimes
referred to as "junk bonds"), which generally offer higher yields than
higher-rated debt securities and may offer the potential for greater capital
appreciation. Currently, the Fund may not invest more than 25% of its assets in
securities rated below the third highest rating category by Moody's Investor
Services, Inc. or Standard and Poor's Ratings Services, and will normally not
invest more than 10% of its assets in junk bonds. SIMNA has recommended that
these policies be changed so that the Fund may invest up to 35% of its assets in
junk bonds.
Under the new investment program, SIMNA may also place greater emphasis on
the use of derivative instruments, such as options, futures contracts, and
options on futures contracts, in an attempt to increase the Fund's total return.
In addition, as described in Proposal II below, the Fund would be able to engage
in short sales.
If the proposed investment objective is approved by shareholders, the name
of the Fund will be changed to "Schroder Total Return Fixed Income Fund."
Appendix A to this Proxy Statement describes the Fund's principal investment
strategies proposed to be implemented if the proposed new investment objective
is approved. The Fund's new investment objective and policies will be
non-fundamental, which means they may be changed in the future by vote of the
Trustees without shareholder approval.
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RISKS. SIMNA believes that the changes outlined above have the potential to
enhance the Fund's long-term investment return. However, the changes are also
likely to subject the Fund to potentially higher levels of risk and volatility.
APPENDIX A INCLUDES A DESCRIPTION OF A NUMBER OF THE PRINCIPAL RISKS OF
INVESTING IN THE FUND AFTER IMPLEMENTATION OF THE PROPOSED CHANGES. PLEASE READ
THESE SECTIONS CAREFULLY.
TRUSTEES' RECOMMENDATION. Based on SIMNA's recommendations, the Trustees
unanimously recommend that shareholders vote FOR changing the Fund's investment
objective as described above.
REQUIRED VOTE. Approval of this proposal requires the affirmative vote of
more than 50% of the shares of Schroder Investment Grade Income Fund voted at
the meeting, if a quorum is present. Thirty percent (30%) of the Fund's shares
entitled to vote at the Meeting, present in person or represented by proxy,
shall constitute a quorum for purposes of voting on the matter. If shareholders
of the Fund vote to approve this proposal, then the proposal will become
effective regardless of the outcome of shareholder votes on any of the measures
under Proposal II.
II. ELIMINATION OF OR REVISIONS TO FUNDAMENTAL INVESTMENT POLICIES
As described in the following proposals, SIMNA has recommended that
shareholders of the noted Funds approve the elimination of or revisions to
certain fundamental investment policies. The purpose of each of these proposed
changes is to increase a Fund's investment flexibility and/or reduce compliance
burdens by: (1) modernizing and broadening the scope of fundamental policies
that are required under applicable law and (2) eliminating restrictive policies
that various state securities authorities formerly imposed on certain types of
mutual funds.
BACKGROUND
The Investment Company Act of 1940, as amended (the "1940 Act"), requires a
registered investment company like the Trust, and each series of the Trust, such
as the Funds, to have "fundamental" investment policies governing certain of its
investment practices. Investment companies may also voluntarily designate
policies relating to other investment practices as fundamental. "Fundamental"
investment policies can be changed only by a shareholder vote. Certain of the
Funds' fundamental investment policies were adopted in the past in response to
regulatory, business, or industry requirements, and conditions that in many
cases no longer prevail. For example, the National Securities Markets
Improvement Act of 1996 eliminated many restrictions then required under state
law, by preempting state securities ("Blue Sky") regulations for many investment
companies. The specific proposals, and SIMNA's reasons for recommending them,
are described below. Note that shareholders of the MidCap Value Fund are being
solicited only with regard to proposals B and C below, because the other
proposals relate to investment restrictions that don't currently apply to the
MidCap Value Fund.
PROPOSALS
A. ELIMINATION OF FUNDAMENTAL POLICY REGARDING SHORT SALES.
(Proposed for Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund Only)
A short sale involves the sale of a security that is later borrowed from a
broker or other institution to complete the sale. Each of Schroder Investment
Grade Income Fund and Schroder Small Capitalization
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Value Fund currently observes a fundamental investment policy(1) which allows
each Fund to engage in short sales only "against the box." Generally, this means
that the Fund must contemporaneously own or have the right to acquire at no
additional cost securities identical to, or convertible into or exchangeable
for, those securities it sells short. Short sales "against the box" are
generally used to hedge against the risk of decline in the value of securities
held in a portfolio.
If shareholders of a Fund approve this proposal, the policy will be
eliminated for that Fund, thereby permitting the Fund to engage in short sales
that are not "against the box."
SCHRODER INVESTMENT GRADE INCOME FUND. In connection with Schroder
Investment Grade Income Fund's proposed new investment objective and investment
program described in Proposal I above, SIMNA has recommended permitting the Fund
to engage in expanded uses of short sales in an attempt to hedge against changes
in interest rates, to adjust the portfolio duration of the Fund, or to increase
the Fund's potential for total return. SIMNA believes that it may be able to use
short sales to take advantage of temporary disparities in pricing in the
fixed-income securities markets. For instance, SIMNA may be able "lock in" gains
associated with these temporary disparities by purchasing a fixed-income
security and taking a short position with respect to the same security trading
at a higher price. SIMNA may also use short sales for the Fund to hedge against
the risk that the price of a fixed-income security held by the Fund will
decline. SIMNA believes that these strategies will provide the Fund will
additional flexibility in pursuing its proposed new investment objective.
SCHRODER SMALL CAPITALIZATION VALUE FUND. In selecting investments for
Schroder Small Capitalization Value Fund, SIMNA analyzes, among other things, a
company's financial data and business fundamentals in an attempt to identify
small capitalization companies whose financial or business assets or whose
prospects for earnings growth are undervalued by the market. SIMNA believes that
a useful by-product of this analysis is the identification of companies who
securities are overvalued by the market. In this regard, SIMNA believes that it
may be able to enhance Fund performance by using short sales when it anticipates
that the price of an overvalued security will decline. Accordingly, SIMNA has
recommended that the Fund be permitted to engage in short sales that are not
"against the box" in order to take advantage of this strategy.
Each Fund's use of short sales would involve certain risks, including
potential losses if the market price of the security sold short increases
between the date when the Fund enters into the short position and the date when
the Fund closes the short position, or if a portfolio strategy of which the
short is a part is otherwise unsuccessful. Please see Appendix A to this Proxy
Statement for a description of certain risks associated with short sales.
B. REVISED FUNDAMENTAL POLICY REGARDING BORROWING.
(Proposed for all Funds)
If this proposal is approved by the shareholders of a Fund, that Fund's
fundamental policy relating to borrowing money will be amended and restated to
read as follows:
------------------------
(1) The policy provides that each Fund may not: "Make short sales of
securities or maintain a short position for the account of the Fund unless at
all times when a short position is open it owns an equal amount of such
securities or owns securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short."
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"The Fund may not borrow money, except to the extent permitted by
applicable law."
Under its current fundamental policy(2), each Fund generally may borrow
money in an amount only up to 10% of the value of its total assets (not
including the amount borrowed), and then only from banks as a temporary measure
(not for leverage) in situations which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or emergency purposes.
In addition, any borrowings must be repaid by a Fund before the Fund purchases
any additional investments.
The 1940 Act generally permits a mutual fund to borrow from banks in an
amount equal to one-third of its total assets, including the amount borrowed.
SIMNA has recommended the revised policy to give each Fund the flexibility to
borrow up to that higher legal limit.
SIMNA believes that the change would afford each Fund increased flexibility
to borrow money for administrative purposes, including to satisfy net
redemptions of the Fund's shares. This may minimize situations in which a Fund
is forced to sell portfolio securities, at possibly disadvantageous prices, in
order to satisfy redemption requests. Under the proposed new policy, a Fund
would no longer be required to repay borrowings before it purchases additional
investments. Accordingly, a Fund could borrow money when that would be
advantageous without having to suspend or otherwise alter its normal investment
practices.
The proposed policy would also permit each Fund to borrow money for the
purpose of investing in additional securities. This practice, known as
"leverage", increases the Fund's market exposure and its risk. SIMNA currently
has no expectation of using borrowed money for leverage. When a Fund has
borrowed money for leverage and its investments increase or decrease in value,
the Fund's net asset value will normally increase or decrease more than if it
had not borrowed money. A Fund will also incur interest expense on borrowed
money. The extent to which a Fund borrows money, and the amount it may borrow,
depend on market conditions and interest rates. Successful use of leverage
depends on SIMNA's ability to predict market movements correctly.
C. ELIMINATION OF FUNDAMENTAL POLICY REGARDING PLEDGING OR OTHERWISE
ENCUMBERING ASSETS.
(Proposed for all Funds)
Schroder Investment Grade Income Fund and Schroder Small Capitalization
Value Fund each observe a fundamental policy providing that the Fund may not:
"pledge, hypothecate, mortgage, or otherwise encumber its assets in excess of
15% of its total assets (taken at the lower of cost and current value) and then
only in connection with [the Fund's current fundamental policy regarding
borrowing described in Section II.B of this Proxy Statement]". Schroder MidCap
Value Fund observes a similar
------------------------
(2) The policies for Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund provide that neither Fund may: "Borrow money in
excess of 10% of the value (taken at the lower of cost or current value) of its
total assets (not including the amount borrowed) at the time the borrowing is
made, and then only from banks as a temporary measure (not for leverage) in
situations which might otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such borrowings will be
repaid before any additional investments are purchased." The policy for Schroder
MidCap Value Fund provides that the Fund may not: "Borrow money in excess of 10%
of the value of its total assets (not including the amount borrowed) at the time
the borrowing is made, and then only from banks as a temporary measure (not for
leverage) in situations which might otherwise require the untimely disposition
of portfolio investments or extraordinary or emergency purposes. Such borrowings
will be repaid before any additional investments are purchased."
6
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fundamental policy providing that the Fund may not: "pledge, hypothecate,
mortgage, or otherwise encumber its assets in excess of 15% of its total assets
and then only in connection with [the Fund's current fundamental policy
regarding borrowing described in Section II.B of this Proxy Statement]." If
shareholders of a Fund approve this proposal, the noted policy will be
eliminated for that Fund.
These policies were adopted by the Funds in response to Blue Sky
requirements which no longer apply. Although none of the Funds currently intends
to change its current practices with respect to pledging or otherwise
encumbering its assets, SIMNA would like to reserve the flexibility to permit
the Funds to engage in these practices to the extent permitted by applicable
law.
Pledging or otherwise encumbering Fund assets entails certain risks. For
instance, a Fund could incur costs or encounter delays in recovering the amounts
pledged or, in the event of the insolvency of the pledgee, the Fund might not be
able to recover some or all of the pledged assets.
D. ELIMINATION OF FUNDAMENTAL POLICY REGARDING PURCHASING SECURITIES
WHICH ARE ALSO OWNED BY OFFICERS AND TRUSTEES OF THE TRUST AND ITS
AFFILIATES.
(Proposed for Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund Only)
Each of Schroder Investment Grade Income Fund and Schroder Small
Capitalization Value Fund currently has a fundamental policy which provides that
the Fund may not: "invest in securities of any issuer, if officers and Trustees
of the Trust and officers and directors of [SIMNA] who beneficially own more
than 0.5% of the securities of that issuer together own more than 5% of such
securities." If shareholders of a Fund approve this proposal, the policy will be
eliminated for that Fund.
The policy was adopted by each Fund in response to Blue Sky requirements
which no longer apply. SIMNA has recommended eliminating the policy because it
is not required by law, and because SIMNA and the Trust each observe other
compliance policies and procedures designed to address the types of potential
conflicts addressed by the fundamental policy.
E. ELIMINATION OF FUNDAMENTAL POLICY REGARDING INVESTMENTS IN OIL, GAS,
OR OTHER MINERAL LEASES, RIGHTS, OR ROYALTY CONTRACTS.
(Proposed for Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund Only)
Each of Schroder Investment Grade Income Fund and Schroder Small
Capitalization Value Fund currently has a fundamental policy which provides that
the Fund may not: "buy or sell oil, gas, or other mineral leases, rights, or
royalty contracts, although it may purchase securities of issuers which deal in,
represent interests in, or are secured by interests in such leases, rights, or
contracts, and it may acquire or dispose of such leases, rights, or contracts
acquired through the exercise of its rights as a holder of debt obligations
secured thereby." If shareholders of a Fund approve this proposal, the policy
will be eliminated for that Fund.
The policy was adopted by each Fund in response to Blue Sky requirements
which no longer apply. SIMNA has recommended eliminating the policy because it
is not required by law and complicates the Funds' and SIMNA's compliance
obligations.
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The Funds have no intention of buying or selling oil, gas or other mineral
leases, rights or royalty contracts.
F. ELIMINATION OF FUNDAMENTAL POLICY REGARDING INVESTMENTS MADE FOR THE
PURPOSE OF GAINING CONTROL OF A COMPANY'S MANAGEMENT.
(Proposed for Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund Only)
Each of Schroder Investment Grade Income Fund and Schroder Small
Capitalization Value Fund currently has a fundamental policy which provides that
it may not: "make investments for the purpose of gaining control of a company's
management." If shareholders of a Fund approve this proposal, the policy will be
eliminated for that Fund.
The policy was adopted by each Fund in response to Blue Sky law requirements
which no longer apply. Although neither Fund currently intends to invest in a
company for purpose of exercising control over the company, SIMNA has
recommended the proposal because it could potentially enhance a Fund's ability
to protect or enhance the value of its investments through the exercise of
influence, in appropriate circumstances, on the management of companies in which
the Funds invest. SIMNA would do so consistent with any limitation imposed from
time to time by applicable law and SIMNA's proxy voting policies.
G. REVISED FUNDAMENTAL POLICY REGARDING ACQUIRING THE VOTING SECURITIES
OF ANY ONE ISSUER.
(Proposed for Schroder Investment Grade Income Fund and Schroder
Small Capitalization Value Fund Only)
If this proposal is approved by the shareholders of Schroder Investment
Grade Income Fund or Schroder Small Capitalization Value Fund, that Fund's
fundamental policy relating to acquiring the voting securities of any one issuer
will be amended and restated to read as follows:
"The Fund may not, as to 75% of its assets, invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time
of such investment) of the outstanding voting securities of any one
issuer; provided that this limitation does not apply to securities issued
or guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities or to securities of other investment
companies."
In order to be classified as a "diversified" investment company under
Section 5(b)(1) of the 1940 Act, an investment company must limit the amount of
an issuer's voting securities it holds in accordance with that Section. Schroder
Investment Grade Income Fund and Schroder Small Capitalization Value Fund each
observe a fundamental investment policy providing that the Fund may not:
"acquire more than 10% of the voting securities of any issuer." This policy is
more restrictive than is required for "diversified" investment companies under
Section 5(b)(1). If the proposed new fundamental policy is adopted, each Fund
would be permitted to hold the maximum amount of an issuer's voting securities
permitted by Section 5(b)(1).
In particular, under each Fund's current policy, the 10% limit applies to
all of the Fund's assets. Under the new policy, and in accordance with Section
5(b)(1), the 10% limit would only apply with respect to 75% of the Fund's total
assets. Therefore, with respect to the remaining 25% of each Fund's assets, the
Fund could hold more than 10% of an issuer's outstanding voting securities. In
addition, consistent with Section 5(b)(1), the proposed new policy would not
apply to U.S. Government securities or securities of other investment companies.
8
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SIMNA has proposed the new policy to give each Fund increased flexibility to
take larger positions in a particular issuer to the extent permitted for
"diversified" investment companies under the 1940 Act. The proposed new policy,
if adopted, could increase the risk associated with a Fund by permitting it to
invest a greater percentage of its assets in a single issuer. In this regard,
the Fund may be more vulnerable to changes in the value of a particular security
and to economic, political or other factors affecting a particular issuer.
TRUSTEES' RECOMMENDATIONS. Based on SIMNA's recommendations, the Trustees
unanimously recommend that shareholders of the noted Funds vote FOR each of
Proposals II.A, II.B, II.C, II.D, II.E, II.F, and II.G.
REQUIRED VOTE. Approval by a Fund of each of Proposals II.A, II.B, II.C,
II.D, II.E, II.F, and II.G requires the affirmative vote of "majority of the
outstanding voting securities" of that Fund (as defined in the 1940 Act), which
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares of the Fund present at a
meeting if more than 50% of the outstanding shares of the Fund are represented
at the meeting in person or by proxy. Thirty percent (30%) of the shares of a
Fund entitled to vote at the Meeting, present in person or represented by proxy,
shall constitute a quorum for purposes of voting on the matter by such Fund,
although a larger percentage will be necessary to approve the proposals.
Approval by the shareholders of any individual Fund of any of the proposals
above will be effective regardless of the outcome of shareholder voting for that
Fund in connection with any of the other proposals.
III. MISCELLANEOUS
SHARE OWNERSHIP INFORMATION. To the knowledge of the Trust, as of June ,
2000, the Trustees of the Trust and, except as noted below, the officers of the
Trust, as a group owned less than 1% of the outstanding shares of either class
of each Fund.
The following table shows the percentage of the outstanding shares of each
Fund owned as of June , 2000 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 SIMNA and certain officers of the Trust are participants in one or more of
the Schroder & Co. Plans or Lewco Plans.
<TABLE>
<CAPTION>
% OF FUND SHARES
OWNED BY
SCHRODER & CO. AND LEWCO PLANS
------------------------------
<S> <C>
Schroder Investment Grade Income Fund........ %
Schroder Small Capitalization Value Fund..... %
Schroder MidCap Value Fund................... %
</TABLE>
[Due to their ownership of shares of each Fund, the Schroder & Co. Plans and
the Lewco Plans may be deemed to control each Fund.] The Trust has been notified
that in August 2000, the investments of the Schroder & Co. Plans and the Lewco
Plans will be redeemed.
9
<PAGE>
To the knowledge of the Trust, as of June , 2000, no other person owned of
record or beneficially more than 5% of the outstanding shares of any of the
Funds, except as set forth below.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
RECORD OR BENEFICIAL OWNER FUND SHARES OWNED
------------------------------------------- ------------------------------------------- -------------
<S> <C> <C>
[To be provided.]
</TABLE>
OTHER BUSINESS. The Trustees know of no other business to be brought before
the Meeting. However, if any other matters properly come before the Meeting, it
is the Trustees' intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named as proxy in the enclosed form of proxy card.
SOLICITATION OF PROXIES. In addition to the solicitation of proxies by
mail, the Trustees of the Trust and employees of SIMNA or its affiliates may
solicit proxies in person or by telephone. The Trust has retained D.F. King &
Co., Inc. ("D.F. King"), , New York, NY , to aid in the
solicitation of proxies. The costs of retaining D.F. King and other expenses
incurred in connection with the solicitation of proxies, other than expenses in
connection with solicitation by the employees of SIMNA, will be borne by SIMNA.
The anticipated cost associated with the solicitation of proxies by D.F. King is
$ .
ADJOURNMENT. In the event that sufficient votes in favor of any of the
proposals set forth in the accompanying Notice are not received by the time
scheduled for the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting for a reasonable time after the date set for the
original Meeting to permit further solicitation of proxies with respect to any
such proposals. In addition, if, in the judgment of the persons named as
proxies, subsequent developments make it advisable to defer action on any
proposal, the persons named as proxies may propose one or more adjournments of
the Meeting for a reasonable time in order to defer action on such proposal as
they deem advisable. Any such adjournments 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, as required by the Trust's Agreement and
Declaration of Trust and Bylaws. The persons named as proxies will vote in favor
of such adjournment on any proposal those proxies which they are entitled to
vote in favor of such proposal. They will vote against any such adjournment all
proxies which withhold authority to vote for such proposal. The costs of any
such additional solicitation and of any adjourned session will be borne by
SIMNA.
SHAREHOLDER VOTING BY TELEPHONE. In addition to voting by mail or in person
at the meetings, you may give your voting instructions over the telephone by
calling [800-xxx-xxxx.] A representative of D.F. King will answer your call.
When receiving your instructions by telephone, the D.F. King representative is
required to ask you for your 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), the number of shares of the Fund
owned, and to confirm that you have received the proxy statement in the mail. If
the information you provide matches the information provided to D.F. King by
SIMNA, then the D.F. King representative will explain the process. D.F. King is
not permitted to recommend to you how to vote, other than to read any
recommendation included in the proxy statement. D.F. King will record your
instructions and transmit them to the official tabulator and send you a letter
or mailgram to confirm your vote. That letter will also ask you to call D.F.
King immediately if the confirmation does not reflect your instructions
correctly. You may receive a call from a representative of D.F. King if SIMNA
has not yet received your vote. D.F. King may ask you for authority, by
telephone to permit D.F. King to sign a proxy on your behalf. D.F. King will
record all instructions it receives from shareholders by telephone, and the
proxies it signs in accordance
10
<PAGE>
with those instructions, in accordance with the procedures set forth above. The
Trustees believe those procedures are reasonably designed to determine
accurately the shareholder's identity and voting instructions.
TABULATION OF VOTES. Votes cast by proxy or in person at the Meeting will
be counted by one or more persons appointed by the President of the Trust to act
as tellers for the Meeting. The tellers will count the total number of votes
cast "FOR" each proposal for purposes of determining whether sufficient
affirmative votes have been cast. The tellers will count shares represented by
proxies that withhold authority to vote or that reflect abstentions or "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 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. With
respect to Proposal I to change the investment objective of Schroder Investment
Grade Income Fund, neither abstentions nor broker non-votes will have any effect
on the outcome of the proposal. With respect to all other Proposals to revise or
eliminate a fundamental investment policy, abstentions and broker non-votes will
have the effect of negative votes on the proposals.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS OF
SHAREHOLDERS. The Trust's Agreement and Declaration of Trust does not provide
for annual meetings of shareholders, and the Trust does not currently intend to
hold such a meeting in 2000. Shareholder proposals for inclusion in the Trust's
proxy statement for any subsequent meeting must be received by the Trust a
reasonable period of time prior to any such meeting.
11
<PAGE>
APPENDIX A
SCHRODER TOTAL RETURN FIXED INCOME FUND
(formerly, Schroder Investment Grade Income Fund)
- INVESTMENT OBJECTIVE. To seek maximum long-term total return consistent with
preservation of capital.
- PRINCIPAL INVESTMENT STRATEGIES. The Fund normally invests at least 65% of
its assets in fixed-income securities that are "investment grade" quality. To
be considered "investment grade", the securities must be rated (at the time
of investment) in one of the four highest grades by Moody's Investors
Service, Inc. or Standard and Poor's Ratings Services, or determined by
Schroder to be of comparable quality. The Fund may invest the remainder of
its assets in securities rated below investment grade.
The Fund normally expects to invest a substantial portion of its assets in
U.S. Government securities. The Fund may also invest in a variety of other
fixed-income securities, including corporate debt securities, preferred
stocks, and money market instruments. The Fund may invest up to 20% of its
assets in debt securities denominated in currencies other than the U.S.
dollar, including up to 10% of its assets in securities of developing
countries and of private issuers in those countries.
The Fund may invest a substantial portion of its assets in mortgage-backed
certificates and other securities representing ownership interests in
mortgage pools, including collateralized mortgage obligations, and in other
types of asset-backed securities. In addition, the Fund may buy or sell a
variety of derivative and related instruments with respect to fixed-income
securities, indices and interest rates for risk management or investment
purposes. These may include short sales, options, futures contracts, and
options on futures contracts.
The Fund may trade its portfolio securities actively to take advantage of
perceived inefficiencies in the fixed-income markets based on Schroder's
research and analyses regarding market sectors, individual issuers, and
market conditions. The Fund's active trading strategy may lead to high
levels of portfolio turnover, which may involve higher Fund expenses and tax
liability for shareholders.
The Fund will normally maintain an average portfolio duration of between
three and seven years. Portfolio duration is a measure of the expected life
of a fixed income security that was developed as a more precise alternative
to the concept of "term to maturity", and is used to determine the
sensitivity of a security's price to changes in interest rates.
- PRINCIPAL RISKS.
DEBT SECURITIES. The principal risks of investing in the Fund include the
risk that interest rates will rise or fall in ways not anticipated by
Schroder. For example, if interest rates were to rise, the value of
fixed-income securities held by the Fund would typically fall. Securities
having longer durations would tend to experience greater price declines in
response to rising interest rates. If the Fund's portfolio duration is
relatively long at a time when interest rates were to rise, the value of the
Fund's shares would likely fall more than if the Fund had invested in
securities with shorter durations. By contrast, if interest rates were to
fall, the value of fixed-income securities held by the Fund would typically
rise. Securities having shorter durations would tend to experience smaller
price increases in response to falling interest rates. If the Fund's
portfolio duration is relatively short at a time when interest rates were to
decline, the value of the Fund's shares would likely rise less than if the
Fund had invested in securities with longer durations.
The Fund is also subject to the risk that the issuer of a fixed-income
security will have its credit rating downgraded or will be unable to pay its
obligations when due. This could cause the Fund's portfolio securities to
decline in value, especially where an issuer defaults on its obligations.
12
<PAGE>
JUNK BONDS. The Fund may invest up to 35% of its assets in securities rated
below investment grade (sometimes referred to as "junk bonds"). Lower-rated
securities lack outstanding investment characteristics and have speculative
characteristics and are subject to greater credit and market risks than
higher-rated securities. The lower ratings of such securities reflect a
greater possibility that adverse changes in the financial condition of the
issuer or in general economic conditions, or an unanticipated rise in
interest rates, may impair the ability of the issuer to make payments of
interest and principal. The values of lower rated securities held by the
Fund may be more volatile than those of higher rated securities.
MORTGAGE-BACKED SECURITIES. The Fund's investment in mortgage-backed
securities may involve special risks relating to unscheduled prepayment on
the mortgages underlying the securities. Falling interest rates tend to
increase prepayments, which could significantly shorten the effective
maturities of mortgage-backed securities. Similarly, rising interest rates
tend to reduce prepayments, which could significantly lengthen the effective
maturities. When interest rates decline, significant unscheduled prepayments
on the underlying mortgages would have to be reinvested at the
then-prevailing lower rates. Therefore, the Fund's mortgage-backed
securities may have less potential for capital appreciation during periods
of falling interest rates than other fixed-income securities of comparable
maturities. However, the securities have a comparable risk of decline in
market value during periods of rising interest rates. The Fund's investments
in other types of asset-backed securities are subject to risks similar to
those associated with mortgage-backed securities.
SHORT SALES. The Fund may sell securities short. The Fund may sell a
security short and borrow the same security from a broker or other
institution to complete the sale when Schroder anticipates that the price of
the security will decline, or when Schroder attempts to take advantage of
temporary disparities in pricing in the fixed-income securities markets.
Short positions may result in a loss if the market price of the security in
question increases between the date when the Fund enters into the short
position and the date when the Fund closes the short position, or if a
portfolio strategy of which the short position is a part is otherwise
unsuccessful.
FOREIGN SECURITIES. Investments in foreign securities entail risks not
present in domestic investments including, among others, risks related to
political or economic instability, currency exchange, and taxation.
Investments in securities of issuers in developing countries may experience
high levels of volatility. Risks of investing in such countries include
greater political and economic instability than in foreign developed
markets, currency transfer restrictions, a more limited number of potential
buyers, and uncertainties associated with dependence on revenue from
particular commodities or international aid.
ACTIVE TRADING STRATEGY. The Fund is also subject to the risk that
Schroder's active trading strategy will not be successful, which depends
greatly on Schroder's ability to analyze and identify inefficiencies
accurately in fixed-income markets, sectors and issuers, and to predict
market movements generally.
DERIVATIVES. The Fund's use of derivative instruments involves the risk
that the instrument may not work as intended due to unanticipated
developments in market conditions or other causes. 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. When the Fund uses derivatives
for investment purposes, it could lose more than the original cost of the
investment and its potential loss could be unlimited. Also, suitable
derivative transactions may not be available in all circumstances, and there
can be no assurance that the Fund will engage in these transactions when
that would be beneficial.
13
<PAGE>
[SCHRODER INVESTMENT GRADE INCOME FUND]
SCHRODER SERIES TRUST
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR MEETING OF SHAREHOLDERS ON ________, 2000
The undersigned hereby appoints Alan M. Mandel, Alexandra Poe, and Carin
Muhlbaum, 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 Schroder Investment Grade
Income Fund (the "Fund"), a series of Schroder Series Trust (the "Trust"), on
_______, 2000 at 9:00 a.m. Eastern time, and any adjournments thereof, all of
the shares of the Fund which the undersigned would be entitled to vote if
personally present.
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.
-------------------------------------------------
Signature
-------------------------------------------------
Signature (if held jointly)
-------------------------------------------------
Date
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER SIGNING ABOVE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH PROPOSAL.
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
Proposals I, II.A, II.B, II.C, II.D, II.E, II.F., and II.G.
<PAGE>
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C> <C> <C>
I. To approve a new investment objective for the Fund. / / / / / /
II.A. To eliminate the Fund's fundamental policy regarding short sales. / / / / / /
II.B. To revise the Fund's fundamental policy regarding borrowing. / / / / / /
II.C. To eliminate the Fund's fundamental policy regarding pledging / / / / / /
or otherwise encumbering assets.
II.D. To eliminate the Fund's fundamental policy regarding purchasing / / / / / /
securities which are also owned by officers and Trustees of the
Trust and its affiliates.
II.E. To eliminate the Fund's fundamental policy regarding buying or / / / / / /
selling oil, gas, or other mineral leases, rights or royalty contracts.
II.F. To eliminate the Fund's fundamental policy regarding investments / / / / / /
made for the purpose of gaining control of a company's management.
II.G. To revise the Fund's fundamental policy regarding limits on / / / / / /
acquiring the voting securities of any one issuer.
</TABLE>
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
[SCHRODER SMALL CAPITALIZATION VALUE FUND]
SCHRODER SERIES TRUST
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR MEETING OF SHAREHOLDERS ON _______, 2000
The undersigned hereby appoints Alan M. Mandel, Alexandra Poe, and Carin
Muhlbaum, 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 Schroder Small Capitalization
Value Fund (the "Fund"), a series of Schroder Series Trust (the "Trust"), on
_______, 2000 at 9:00 a.m. Eastern time, and any adjournments thereof, all of
the shares of the Fund which the undersigned would be entitled to vote if
personally present.
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.
-------------------------------------------------
Signature
-------------------------------------------------
Signature (if held jointly)
-------------------------------------------------
Date
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER SIGNING ABOVE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH PROPOSAL.
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
Proposals II.A, II.B, II.C, II.D, II.E, II.F., and II.G.
<PAGE>
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C> <C>
II.A. To eliminate the Fund's fundamental policy regarding short sales. / / / / / /
II.B. To revise the Fund's fundamental policy regarding borrowing. / / / / / /
II.C. To eliminate the Fund's fundamental policy regarding pledging / / / / / /
or otherwise encumbering assets.
II.D. To eliminate the Fund's fundamental policy regarding purchasing / / / / / /
securities which are also owned by officers and Trustees of the
Trust and its affiliates.
II.E. To eliminate the Fund's fundamental policy regarding buying or / / / / / /
selling oil, gas, or other mineral leases, rights or royalty contracts.
II.F. To eliminate the Fund's fundamental policy regarding investments / / / / / /
made for the purpose of gaining control of a company's management.
II.G. To revise the Fund's fundamental policy regarding limits on / / / / / /
acquiring the voting securities of any one issuer.
</TABLE>
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
[SCHRODER MIDCAP VALUE FUND]
SCHRODER SERIES TRUST
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR MEETING OF SHAREHOLDERS ON ________, 2000
The undersigned hereby appoints Alan M. Mandel, Alexandra Poe, and Carin
Muhlbaum, 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 Schroder MidCap Value Fund
(the "Fund"), a series of Schroder Series Trust (the "Trust"), on _______, 2000
at 9:00 a.m. Eastern time, and any adjournments thereof, all of the shares of
the Fund which the undersigned would be entitled to vote if personally present.
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.
-------------------------------------------------
Signature
-------------------------------------------------
Signature (if held jointly)
-------------------------------------------------
Date
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER SIGNING ABOVE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH PROPOSAL.
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
Proposals II.B and II.C.
<PAGE>
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C> <C>
II.B. To revise the Fund's fundamental policy regarding borrowing. / / / / / /
II.C. To eliminate the Fund's fundamental policy regarding pledging / / / / / /
or otherwise encumbering assets.
</TABLE>
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
