SCHRODER CAPITAL FUNDS, POS AMI, 1996-08-09

SCHRODER CAPITAL FUNDS
POS AMI, 1996-08-09

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As filed with the Securities and Exchange Commission on August 9, 1996

File No. 811-9130
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 1

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SCHRODER CAPITAL FUNDS
(Exact Name of Registrant as Specified in its Charter)

Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: 207-879-1900
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Thomas G. Sheehan, Esq.
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
(Name and Address of Agent for Service)

Copies to:

R. Darrell Mounts, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
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EXPLANATORY NOTE

This Registration Statement is being filed by Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940, as amended.
Beneficial interests in the series of Registrant are not being registered
under the Securities Act of 1933, as amended, because such interests will
be issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of that act.
Investments in Registrant's series may only be made by certain
institutional investors, whether organized within or without the United
States (excluding individuals, S corporations, partnerships, and grantor
trusts beneficially owned by any individuals, S corporations, or
partnerships). This Registration Statement does not constitute an offer
to sell, or the solicitation of an offer to buy, any beneficial interests
in any series of Registrant.

THIS REGISTRATION STATEMENT IS INTENDED TO SUPPLEMENT THE PREVIOUSLY FILED
REGISTRATION STATEMENT OF THE SCHRODER CAPITAL FUNDS AND DOES NOT EFFECT
THE INTERNATIONAL EQUITY FUND AND SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO.
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PART A
(Prospectus)

Schroder Capital Funds
________

Schroder U.S. Smaller Companies Portfolio

Introduction

Schroder Capital Funds (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940
(the "1940 Act"). The Trust offers shares of beneficial interest in
multiple series, each of which has distinct investment objectives and
policies. The Trust currently comprises three series: Schroder U.S.
Smaller Companies Portfolio (the "Portfolio"), International Equity Fund
and Schroder Emerging Markets Fund Institutional Portfolio. This Part A
relates solely to the Portfolio.

The Trust does not offer its shares directly to the public; shares are
offered exclusively to various institutional investors (including other
investment companies) as described in Item 4 below. An investor that is
an investment company or other collective investment vehicle typically
will have investment objectives and polices substantially similar to those
of the series in which it invests and typically will seek to achieve its
investment objective by holding shares of a series, instead of separately
managing its own portfolio of investment securities and related assets.

Shares of the Trust are not offered publicly and, accordingly, are not
registered under the Securities Act of 1933 (the "1933 Act"). Due to
this, in accordance with paragraph 4 of Instruction F of the General
Instructions to Form N-1A adopted by the Securities and Exchange
Commission (the "Commission"), responses to Items 1, 2, 3 and 5A of this
Part A of the Trust's registration statement on Form N-1A have been
omitted.

Item 1. Cover Page.
------ -----------

Omitted. See "Introduction" above.

Item 2. Synopsis.
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Omitted. See "Introduction" above.

Item 3. Condensed Financial Information.
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Omitted. See "Introduction" above.
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Item 4. General Description of Registrant.
------ ---------------------------------

The Trust was organized as a business trust under the laws of the State of
Delaware pursuant to a Trust Instrument dated September 6, 1995. The
Trust has an unlimited number of authorized shares of beneficial interest.
Beneficial interests in the Trust are divided into three separate series,
the Portfolio, International Equity Fund and Schroder Emerging Markets
Fund Institutional Portfolio, each of which has distinct investment
objective and distinct investment policies. The assets of each series
belong only to that series, and the assets belonging to a series shall be
charged with the liabilities of that series and all expenses, costs,
charges and reserves attributable to that series. The Trust is empowered
to establish, without investor approval, additional series which may have
different investment objectives and policies.

The Portfolio is classified as a "diversified" investment company under
the 1940 Act and is expected to commence operations on or about August 15,
1996.

Beneficial interests in the Portfolio are offered solely in private
placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio
may only be made by certain institutional investors, whether organized
within or without the U.S. (excluding individuals, S corporations,
partnerships, and grantor trusts beneficially owned by any individuals, S
corporations, or partnerships). This registration statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.

Investment Objective

The investment objective of the Portfolio is capital appreciation.
Current income will be incidental to the objective of capital
appreciation. There can be no assurance that the Portfolio will achieve
its investment objective. The investment objective of the Portfolio may
not be changed without approval of the holders of a majority of the
outstanding voting interests (defined in the same manner as the phrase
"vote of a majority of the outstanding voting securities" is defined in
the 1940 Act) of the Portfolio.

Investment Policies

The Portfolio will seek to achieve its investment objective by investing,
under normal market conditions, at least 65% of its total assets in equity
securities of companies domiciled in the United States that, at the time
of purchase, have market capitalizations of $1.5 billion or less. Market
capitalization means the market value of a company's outstanding stock.

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In its investment approach, Schroder Capital Management International Inc.
("SCMI"), the Portfolio's Investment Adviser, will attempt to identify
securities of companies that it believes can generate above average
earnings growth, selling at favorable prices in relation to book values
and earnings. As part of the investment decision, SCMI's assessment of
the competency of an issuer's management will be an important
consideration. These criteria are not rigid, and other investments may be
included in the Portfolio if they may help the Portfolio to attain its
objective. These criteria can be changed by the Trust's Board of
Trustees, without shareholder approval.

The Portfolio will invest principally in equity securities (common stocks,
securities convertible into common stocks or, subject to special
limitations, rights or warrants to subscribe for or purchase common
stocks). The Portfolio may also invest to a limited degree in non-
convertible debt securities and preferred stocks when, in the opinion of
SCMI, such investments are warranted to achieve the Portfolio's investment
objective. A convertible security is a bond, debenture, note, preferred
stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within
a particular period of time at a specified price or formula.

The Portfolio may invest in securities of small, unseasoned companies
(which, together with any predecessors, have been in operation for less
than three years), as well as in securities of more established companies.
In view of the volatility of price movements of the former, as a non-
fundamental policy, the Portfolio currently intends to invest no more than
5% of its total assets in securities of small, unseasoned issuers.

Although there is no minimum rating for debt securities (convertible or
non-convertible) in which the Portfolio may invest, it is the present
intention of the Portfolio to invest no more than 5% of its net assets in
debt securities rated below Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Services ("S&P"), such
securities being commonly known as "high yield/high risk" securities or
"junk bonds," and it will not invest in debt securities that are in
default. High yield/high risk securities are predominantly speculative
with respect to the capacity to pay interest and repay principal and
generally involve a greater volatility of price than securities in higher
rated categories. It should be noted that even bonds rated Baa by Moody's
or BBB by S&P are described by those rating agencies as having speculative
characteristics and that changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of issuers of
such bonds to make principal and interest payments than is the case with
higher grade bonds. The Portfolio is not obligated to dispose of
securities due to changes by the rating agencies. See Part B for
information about the risks associated with investing in junk bonds.

For temporary defensive purposes, the Portfolio may invest without
limitation in (or enter into repurchase agreements maturing in seven days
or less with U.S. banks and broker-dealers with respect to) short-term
debt securities, including commercial paper, U.S. Treasury bills, other

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short-term U.S. Government securities, certificates of deposit and
bankers' acceptances of U.S. banks. The Portfolio also may hold cash and
time deposits in U.S. banks. See "Investment Policies" in Part B for
further information about these securities.

The investment policies of the Portfolio that are designated as
fundamental may not be changed without investor approval. Unless
otherwise indicated, all other investment policies are not fundamental and
may be changed by the Trust's Board of Trustees without prior investor
approval. Additional investment techniques, features and restrictions
(including a list of fundamental investment restrictions) concerning the
Portfolio's investment programs are described in Part B.

Investment Types

COMMON AND PREFERRED STOCK AND WARRANTS. The Portfolio may invest in
common and preferred stock. Common stockholders are the owners of the
company issuing the stock and, accordingly, vote on various corporate
governance matters such as mergers. They are not creditors of the
company, but rather, upon liquidation of the company, are entitled to
their pro rata share of the company's assets after creditors (including
fixed income security holders) and, if applicable, preferred stockholders
are paid. Preferred stock is a class of stock having a preference over
common stock as to dividends and, generally, as to the recovery of
investment. A preferred stockholder is a shareholder in a company and not
a creditor of the company, as is a holder of the company's fixed income
securities. Dividends paid to common and preferred stockholders are
distributions of the earnings of the company and not interest payments,
which are expenses of the company. Equity securities owned by the
Portfolio may be traded in the over-the counter market or on a securities
exchange but may not be traded every day or in the volume typical of
securities traded on a major U.S. national securities exchange. As a
result, disposition by the Portfolio of a security to meet redemptions by
interest holders or otherwise may require the Portfolio to sell these
securities at a discount from market prices, to sell during periods when
disposition is not desirable, or to make many small sales over a lengthy
period of time. The market value of all securities, including equity
securities, is based upon the market's perception of value and not
necessarily the book value of an issuer or other objective measure of a
company's worth. The Portfolio may also invest in warrants, which are
options to purchase an equity security at a specified price (usually
representing a premium over the applicable market value of the underlying
equity security at the time of the warrant's issuance) and usually during
a specified period of time.

REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase
agreements. A repurchase agreement is a means of investing monies for a
short period. In a repurchase agreement, a seller - a U.S. bank or
recognized broker-dealer - sells securities to the Portfolio and agrees to
repurchase the securities at the Portfolio's cost plus interest within a
specified period (normally one day). In these transactions, the values of

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the underlying securities purchased by the Portfolio are monitored at all
times by SCMI to insure that the total value of the securities equals or
exceeds the value of the repurchase agreement, and the Portfolio's
custodian bank holds the securities until they are repurchased. In the
event of default by the seller under the repurchase agreement, the
Portfolio may have difficulties in exercising its rights to the underlying
securities and may incur costs and experience time delays in disposing of
them. To evaluate potential risks, SCMI reviews the creditworthiness of
those banks and dealers with which the Portfolio enters into repurchase
agreements.

ILLIQUID AND RESTRICTED SECURITIES. As a non-fundamental policy, the
Portfolio will not purchase or otherwise acquire any security if, as a
result, more than 15% of its net assets (taken at current value) would be
invested in securities that are illiquid by virtue of the absence of a
readily available market or because of legal or contractual restrictions
on resale ("restricted securities"). There may be undesirable delays in
selling illiquid securities at prices representing their fair value. This
policy includes over-the-counter options held by the Portfolio and the "in
the money" portion of the assets used to cover such options. As stated
above, this policy also includes assets that are subject to material legal
restrictions on repatriation. The limitation on investing in restricted
securities does not include securities that may not be resold to the
general public but may be resold to qualified institutional purchasers
pursuant to Rule 144A under the Securities Act of 1933. If SCMI
determines that a "Rule 144A security" is liquid pursuant to guidelines
adopted by the Trusts's Board of Trustees it will not be deemed illiquid.
These guidelines take into account trading activity for the securities and
the availability of reliable pricing information, among other factors. If
there is a lack of trading interest in a particular Rule 144A security,
that security may become illiquid, which could affect the Portfolio's
liquidity. See Part B for further details.

LOANS OF PORTFOLIO SECURITIES. The Portfolio may lend portfolio
securities (other than in repurchase transactions) to brokers, dealers and
other financial institutions meeting specified credit conditions, if the
loan is collateralized in accordance with applicable regulatory
requirements and if, after any loan, the value of the securities loaned
does not exceed 25% of the value of the Portfolio's total assets. By so
doing, the Portfolio attempts to earn income through the receipt of
interest on the loan. In the event of the bankruptcy of the other party
to a securities loan, the Portfolio could experience delays in recovering
the securities it lent. To the extent that, in the meantime, the value of
the securities the Portfolio lent has increased, the Portfolio could
experience a loss.

The Portfolio may lend securities from its portfolio if liquid assets in
an amount at least equal to the current market value of the securities
loaned (including accrued interest thereon) plus the interest payable to
the Portfolio with respect to the loan is maintained as collateral by the
Portfolio in a segregated account. Any securities that the Portfolio may
receive as collateral will not become a part of its portfolio at the time

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of the loan, and, in the event of a default by the borrower, the Portfolio
will, if permitted by law, dispose of such collateral except for such part
thereof that is a security in which the Portfolio is permitted to invest.
During the time that the securities are on loan, the borrower will pay the
Portfolio any accrued income on those securities, and the Portfolio may
invest the cash collateral and earn income or receive an agreed-upon fee
from a borrower that has delivered cash equivalent collateral. Cash
collateral received by the Portfolio will be invested in U.S. Government
securities and liquid high-grade debt obligations. The value of
securities loaned will be marked to market daily. Portfolio securities
purchased with cash collateral are subject to possible depreciation.
Loans of securities by the Portfolio will be subject to termination at the
Portfolio's or the borrower's option. The Portfolio may pay reasonable
negotiated fees in connection with loaned securities, so long as such fees
are set forth in a written contract and approved by the Trust's Board of
Trustees.

OPTIONS AND FUTURES TRANSACTIONS. While the Portfolio does not presently
intend to do so, it may write covered call options and purchase certain
put and call options, stock index futures, and options on stock index
futures and broadly based stock indices, all of which are referred to as
"Hedging Instruments". In general, the Portfolio may use Hedging
Instruments (1) to attempt to protect against declines in the market value
of the Portfolio's securities and thus protect the Fund's net asset value
per share against downward market trends or (2) to establish a position in
the equity markets as a temporary substitute for purchasing particular
equity securities. The Portfolio will not use Hedging Instruments for
speculation. The Hedging Instruments that the Portfolio is authorized to
use have certain risks associated with them. Principal among such risks
are (a) the possible failure of such instruments as hedging techniques in
cases where the price movements of the securities underlying the options
or futures do not follow the price movements of the portfolio securities
subject to the hedge; (b) potentially unlimited loss associated with
futures transactions and the possible lack of a liquid secondary market
for closing out a futures position; and (c) possible losses resulting from
the inability of SCMI to correctly predict the direction of stock prices,
interests rates and other economic factors. The Hedging Instruments the
Portfolio may use and the risks associated with them are described in
greater detail under in Part B.

SHORT SALES AGAINST-THE-BOX. The Portfolio may not sell securities short
except in "short sales against-the-box". For federal income tax purposes,
short sales against-the-box may be made to defer recognition of gain or
loss on the sale of securities until the short position is closed out.
See "Short Sales Against-the-Box" in Part B for further details.

Risk Considerations

All investments involve certain risks. Investments in smaller
capitalization companies involve greater risks than those risks associated
with investments in larger capitalization companies. Smaller

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capitalization companies generally experience higher growth rates and
higher failure rates than do larger capitalization companies. The trading
volume of securities of smaller capitalization companies is normally less
than that of larger capitalization companies and, consequently, generally
has a disproportionate effect on their market price, tending to make them
rise more in response to buying demand and fall more in response to
selling pressure than is the case with larger capitalization companies.

Investments in small, unseasoned issuers generally involve greater risk
than is customarily associated with larger, more seasoned companies. Such
issuers often have products and management personnel that have not been
thoroughly tested by time or the marketplace, and their financial
resources may not be as substantial as those of more established
companies. Their securities, which the Portfolio may purchase when they
are offered to the public for the first time, may have a limited trading
market, which may adversely affect their sale by the Portfolio and may
result in such securities being priced lower than otherwise might be the
case. If other institutional investors engage in trading this type of
security, the Portfolio may be forced to dispose of its holdings at prices
lower than might otherwise be obtained.

Item 5. Management of the Trust.
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Trustees and Officers

The business and affairs of the Portfolio are managed under the direction
of the Board of Trustees. The Board of Trustees formulates the general
policies of the Portfolio and the Trust and meets periodically to review
the results of the Portfolio, monitor investment activities and practices
and discuss other matters affecting the Portfolio and the Trust.
Additional information regarding the Trustees and executive officers of
the Trust may be found in Part B.

Investment Adviser and Portfolio Managers

Schroder Capital Management International Inc. ("SCMI"), 787 Seventh
Avenue, New York, New York 10019, serves as Investment Adviser to the
Portfolio. SCMI manages the investment and reinvestment of the assets in
the Portfolio and continuously reviews, supervises and administers the
Portfolio's investments. In this regard, it is the responsibility of SCMI
to make decisions relating to the Portfolio's investments and to place
purchase and sale orders regarding investments with brokers or dealers
selected by it in its discretion. For its services with respect to the
Portfolio, SCMI receives a monthly advisory fee at the annual rate of
0.60% of the Portfolio's average daily net assets.

SCMI is a wholly owned U.S. subsidiary of Schroders Incorporated, the
wholly-owned U.S. subsidiary of Schroders plc, a publicly owned company
organized under the laws of England. Schroders plc is the holding company
parent of a large world-wide group of banks and financial services

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companies (referred to as the "Schroder Group"), with associated companies
and branch and representative offices located in eighteen countries world-
wide. The investment management subsidiaries of the Schroder Group had
assets under management of approximately $100 billion as of June 30, 1996.

The investment management team of Fariba Talebi, a Vice President of the
Trust and a Group Vice President of SCMI, and Ira Unschuld, a Vice
President of the Trust and of SCMI, with the assistance of an investment
committee, is primarily responsible for the day-to-day management of the
Portfolio's investments and has so managed the Portfolio since its
inception. Ms. Talebi and Mr. Unschuld have been employed by SCMI in the
investment research and portfolio management areas since 1987 and 1990,
respectively.

Administrative Services

Transfer Agent and Portfolio Accountant

Forum Financial Corp., P.O. Box 446, Portland, Maine 04112, acts as the
Portfolio's transfer agent and portfolio accountant.

Expenses

The Portfolio is obligated to pay all of its expenses. These expenses
include: governmental fees; interest charges; taxes; brokerage fees and
commissions; insurance premiums; investment advisory, custodial,
administrative and transfer agency and fund accounting fees, as described
above; compensation of certain of the Trust's Trustees, costs of
membership trade associations; fee and expenses of independent auditors
and legal counsel to the Trust; and expenses of calculating the net asset
value of and the net income of the Portfolio. The Portfolio's expenses
comprise Trust expenses attributable to the Portfolio, which are allocated
to the Portfolio, and expenses not attributable to the Portfolio, which
are allocated among the series in proportion to their average net assets
or as otherwise determined by the Board of Trustees.

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Portfolio Transactions

SCMI places orders for the purchase and sale of the Portfolio's
investments with brokers and dealers selected by SCMI in its discretion
and seeks "best execution" of such portfolio transactions. The Portfolio
may pay higher than the lowest available commission rates when SCMI
believes it is reasonable to do so in light of the value of the brokerage
and research services provided by the broker effecting the transaction.
SCMI may also consider sales of shares of the Fund or any other entity
that invests in the Portfolio as a factor in the selection of broker-
dealers to execute portfolio transactions for the Portfolio.

Subject to the Portfolio's policy of obtaining the best price consistent
with quality of execution on transactions, SCMI may employ (a) Schroder
Wertheim & Company, Incorporated and its affiliates ("Schroder Wertheim"),
affiliates of SCMI, to effect transactions of the Portfolio on the New
York Stock Exchange and (b) Schroder Securities Limited and its affiliates
("Schroder Securities"), affiliates of SCMI, to effect transactions of the
Portfolio, if any, on certain foreign securities exchanges. Because of the
affiliation between SCMI and Schroder Wertheim and Schroder Securities,
the Portfolio's payment of commissions to them is subject to procedures
adopted by the Trust's Board of Trustees designed to ensure that such
commissions will not exceed the usual and customary brokers' commissions.
No specific portion of the Portfolio's brokerage will be directed to
Schroder Wertheim or Schroder Securities, and in no event will either
receive any brokerage in recognition of research services.

Although the Portfolio does not currently engage in directed brokerage
arrangements to pay expenses, it may do so in the future. These
arrangements, whereby brokers executing the Portfolio's transactions would
agree to pay designated expenses of the Portfolio if brokerage commissions
generated by the Portfolio reached certain levels, might reduce the
Portfolio's expenses (and, indirectly, the Fund's expenses). As
anticipated, these arrangements would not materially increase the
brokerage commissions paid by the Portfolio. Brokerage commissions are
not deemed to be Fund expenses. In the Fund's fee table, per share table,
and financial highlights, however, directed brokerage arrangements might
cause Fund expenses to appear lower than actual expenses incurred.

Custodian

The Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York
11245, acts as custodian of the Portfolio's assets.

Item 5A. Management's Discussion of Fund Performance.
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Omitted. See "Introduction" above.

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Item 6. Capital Stock and Other Securities.
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The Trust was organized as a business trust under the laws of the State of
Delaware. Under the Trust Instrument, the Trustees are authorized to
issue beneficial interests in separate series of the Trust.

Each investor in the Portfolio is entitled to participate equally in the
Portfolio's earnings and assets and to a vote in proportion to the amount
of its investment in the Portfolio. Investments in the Portfolio may not
be transferred, but an investor may withdraw all or any portion of its
investment at any time at net asset value ("NAV").

Investments in the Portfolio have no preemptive or conversion rights and
are fully paid and non-assessable, except as set forth below. The Trust
is not required and has no current intention to hold annual meetings of
investors, but the Trust will hold special meetings of investors when in
the Trustees' judgment it is necessary or desirable to submit matters to
an investor vote. Generally, interests will be voted in the aggregate
without reference to a particular series, except if the matter affects
only one series or series voting is required, in which case interests will
be voted separately by series. Investors have the right to remove one or
more Trustees without a meeting by a declaration in writing by a specified
number of investors.

Each investor in the Portfolio will be liable for all obligations of the
Portfolio, but not any other series of the Trust. The risk to an investor
in the Portfolio of incurring financial loss on account of such liability,
however, would be limited to circumstances in which the Portfolio was
unable to meet its obligations. Upon liquidation of the Portfolio,
investors will be entitled to share pro rata in the net assets of the
Portfolio available for distribution to investors.

Under the Federal securities laws, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. The Trust, its Trustees and
certain of its officers are required to sign the registration statement of
certain publicly-offered investors in the Portfolio. In addition, under
the Federal securities laws, the Trust could be liable for misstatements
or omissions of a material fact in any proxy soliciting material of a
publicly-offered investor in the Trust. Under the Trust's Trust
Instrument, each investor in the Portfolio indemnifies the Trust and its
Trustees and officers (the "Trust Indemnitees") against certain claims.
Indemnified claims are those brought against Trust Indemnitees but based
on a misstatement or omission of a material fact in the investor's
registration statement or proxy materials, except to the extent such claim
is based on a misstatement or omission of a material fact relating to
information about the Trust in the investor's registration statement or
proxy materials that was supplied to the investor by the Trust.
Similarly, the Trust indemnifies each investor in the Portfolio for any
claims brought against the investor with respect to the investor's
registration statement or proxy materials, to the extent the claim is

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based on a misstatement or omission of a material fact relating to
information about a series of the registered investment company that did
not invest in the Trust. The purpose of these cross-indemnity provisions
is principally to limit the liability of the Trust to information that it
knows or should know and can control. With respect to other prospectuses
and other offering documents and proxy materials of investors in the
Trust, the Trust's liability is similarly limited to information about and
supplied by the Trust.

The Portfolio's net income consists of (1) all dividends, accrued interest
(including earned discount, both original issue and market discount), and
other income, including any net realized gains on the Portfolio's assets,
less (2) all actual and accrued expenses of the Portfolio, amortization of
any premium, and net realized losses on the Portfolio's assets, all as
determined in accordance with generally accepted accounting principles.
All of the Portfolio's net income is allocated pro rata among the
investors in the Portfolio. The Portfolio's net income generally is not
distributed to the investors in the Portfolio, except as determined by the
Trustees from time to time, but instead is included in the NAV of the
investors' respective beneficial interests in the Portfolio.

The Portfolio intends to comply with the provisions of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). As a regulated
investment company, the Portfolio intends to distribute substantially all
of its net investment income and its net realized long term capital gains
at least annually and therefore intends not to be subject to Federal
income tax to the extent it distributes such income and capital gains in
the manner required under the Code.

Under the anticipated method of the Portfolio's operations, it will not be
subject to any income tax. However, each investor in the Portfolio will be
taxed on its proportionate share (as determined in accordance with the
Trust's Trust Instrument and the Code) of the Portfolio's ordinary income
and capital gain, to the extent that the investor is subject to tax on its
income. It is intended that the Portfolio's assets, income, and
distributions will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of Subchapter M of the
Code, assuming that the investor invested all of its assets in the
Portfolio. The Trust will inform investors of the amount and nature of
such income or gain.

Item 7. Purchase of Securities.
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Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant" above. All investments in the Portfolio are made without a
sales load, at the NAV next determined after an order is received by the
Portfolio.

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The net asset value is calculated separately for each class of Shares of
the Fund at 4:00 p.m. (eastern time), Monday through Friday, each day that
the New York Stock Exchange is open for trading (a "Fund Business Day"),
which excludes the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Net asset value per Share is calculated by dividing
the aggregate value of the Portfolio's assets less all Portfolio
liabilities, if any, by the number of Shares of the Fund outstanding.

Securities held by the Portfolio that are listed on recognized stock
exchanges are valued at the last reported sale price, prior to the time
when the securities are valued, on the exchange on which the securities
are principally traded. Listed securities traded on recognized stock
exchanges where last sale prices are not available are valued at mid-
market prices. Securities traded in over-the-counter markets, or listed
securities for which no trade is reported on the valuation date, are
valued at the most recent reported mid-market price. Other securities and
assets for which market quotations are not readily available are valued at
fair value as determined in good faith using methods approved by the
Trust's Board of Trustees.

The Trust reserves the right to cease accepting investments in the
Portfolio at any time or to reject any investment order.

The exclusive placement agent for the Trust is Forum. Forum receives no
compensation for serving as the exclusive placement agent for the Trust.

Item 8. Redemption or Repurchase.
------ -------------------------

An investor in the Portfolio may withdraw all or any portion of its
investment in the Portfolio at the NAV next determined after a withdrawal
request in proper form is furnished by the investor to the Trust. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds
normally on the business day after the withdrawal is effected, but in any
event within seven days. Investments in the Portfolio may not be
transferred. The right of redemption may not be suspended nor the payment
dates postponed for more than seven days except when the New York Stock
Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings or under any
emergency or other circumstances as determined by the Commission.

Redemptions from the Portfolio may be made wholly or partially in
portfolio securities if the Board determines that payment in cash would be
detrimental to the best interests of the Portfolio. The Trust has filed an
election with the Commission pursuant to which the Portfolio will only
consider effecting a redemption in portfolio securities if the particular
interestholder is redeeming more than $250,000 or 1% of the Portfolio's
NAV, whichever is less, during any 90-day period.

- A-12 -
<PAGE>

Item 9. Pending Legal Proceedings.
------ --------------------------

Not applicable.

- A-13 -
<PAGE>

PART B
(Statement of Additional Information)

Schroder Capital Funds
________

Schroder U.S. Smaller Companies Portfolio

Item 10. Cover Page
-------- ----------

Not applicable.

Item 11. Table of Contents.
------- ------------------

General Information and History . . . . . . . . . . . . . . . . . . . B-1
Investment Objectives and Policies . . . . . . . . . . . . . . . . . B-1
Management of the Trust . . . . . . . . . . . . . . . . . . . . . . . B-13
Control Persons and Principal Holders of Securities . . . . . . . . . B-16
Investment Advisory and Other Services . . . . . . . . . . . . . . . B-17
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . B-19
Capital Stock and Other Securities . . . . . . . . . . . . . . . . . B-21
Purchase, Redemption and Pricing of Securities . . . . . . . . . . . B-22
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
Calculations of Performance Data . . . . . . . . . . . . . . . . . . B-24
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-24

Item 12. General Information and History.
-------- --------------------------------

Not applicable.

Item 13. Investment Objectives and Policies.
------- -----------------------------------

Investment Policies

Introduction

Part A contains information about the investment objective and policies of
the Schroder U.S. Smaller Companies Portfolio (the "Portfolio"), a series
of Schroder Capital Funds (the "Trust"). The following discussion is
intended to supplement the disclosure in Part A concerning the Portfolio's
investments, investment techniques and strategies and the risks associated
therewith. This Part B should be read only in conjunction with Part A.

Definitions

As used in Part B, the following terms shall have the meanings listed:

"Board" shall mean the Board of Trustees of the Trust.
<PAGE>

"1933 Act" shall mean the Securities Act of 1933, as amended.

"1940 Act" shall mean the Investment Company Act of 1940, as amended.

"Commission" shall mean the U.S. Securities and Exchange Commission.

U.S. Government Securities

The Portfolio may invest in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities that have remaining
maturities not exceeding one year. Agencies and instrumentalities that
issue or guarantee debt securities and that have been established or
sponsored by the U.S. Government include the Bank for Cooperatives, the
Export-Import Bank, the Federal Farm Credit System, the Federal Home Loan
Banks, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks, the Federal Land Banks, the Federal National
Mortgage Association, the Government National Mortgage Association and the
Student Loan Marketing Association. Except for obligations issued by the
U.S. Treasury and the Government National Mortgage Association, none of
the obligations of the other agencies or instrumentalities referred to
above is backed by the full faith and credit of the U.S. Government.

Bank Obligations

The Portfolio may invest in obligations of U.S. banks (including
certificates of deposit and bankers' acceptances) having total assets at
the time of purchase in excess of $1 billion. Such banks must be insured
by the Federal Deposit Insurance Corporation.

A certificate of deposit is an interest-bearing negotiable certificate
issued by a bank against funds deposited in the bank. A bankers'
acceptance is a short-term draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction.
Although the borrower is liable for payment of the draft, the bank
unconditionally guarantees to pay the draft at its face value on the
maturity date.

Short-Term Debt Securities

The Portfolio may invest in commercial paper, that is short-term unsecured
promissory notes issued in bearer form by bank holding companies,
corporations and finance companies. The commercial paper purchased by the
Portfolio for temporary defensive purposes consists of direct obligations
of domestic issuers that, at the time of investment, are rated "P-1" by
Moody's Investors Service, Inc. ("Moody's") or "A-1" by Standard & Poor's
Ratings Services ("S&P"), or securities that, if not rated, are issued by
companies having an outstanding debt issue currently rated Aa by Moody's
or AAA or AA by S&P. The rating "P-1" is the highest commercial paper
rating assigned by Moody's and the rating "A-1" is the highest commercial
paper rating assigned by S&P.

- B-2 -
<PAGE>

Repurchase Agreements

The Portfolio may enter into repurchase agreements with U.S. banks or
broker-dealers maturing in seven days or less. In a typical repurchase
agreement the seller of a security commits itself at the time of the sale
to repurchase that security from the buyer at a mutually agreed-upon time
and price. The repurchase price exceeds the sale price, reflecting an
agreed-upon interest rate effective for the period the buyer owns the
security subject to repurchase. The agreed-upon rate is unrelated to the
interest rate on that security. Schroder Capital Management Inc.
("SCMI"), the Portfolio's Investment Adviser, will monitor the value of
the underlying security at the time the transaction is entered into and at
all times during the term of the repurchase agreement to insure that the
value of the security always equals or exceeds the repurchase price. In
the event of default by the seller under the repurchase agreement, the
Portfolio may have difficulties in exercising its rights to the underlying
securities and may incur costs and experience time delays in connection
with the disposition of such securities. To evaluate potential risks,
SCMI reviews the creditworthiness of those banks and dealers with which
the Portfolio enters into repurchase agreements.

WARRANTS. The Portfolio may invest in warrants. Warrants are options to
purchase equity securities at specific prices valid for a specific period
of time. Their prices do not necessarily move parallel to the prices of
the underlying securities. Warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.
The Portfolio may not invest in warrants if, as a result, more than 5% of
its net assets would be so invested or if, more than 2% of its net assets
would be so invested in warrants that are not listed on the New York or
American Stock Exchanges.

High Yield/Junk Bonds

The Portfolio may invest up to 5% of its assets in bonds rated below Baa
by Moody's or BBB by S&P (commonly known as "high yield/high risk
securities" or "junk bonds"). Ratings of bonds represents the rating
agencies' opinion regarding their quality, are not a guarantee of quality
and may be reduced after the Portfolio has acquired the security. Credit
ratings attempt to evaluate the safety of principal and interest payments
and do not reflect an assessment of the volatility of the security's
market value or the liquidity of an investment in the security. In
addition, a rating agency may fail to make timely changes in credit
ratings in response to subsequent events, so that an issuer's financial
condition may be better or worse than the rating indicates.

Securities rated less than Baa by Moody's or BBB by S&P are classified as
non-investment grade securities and securities rated Baa and BB
respectively, are considered speculative by those rating agencies.
Changes in economic condition or other circumstances are more likely to
lead to a weakened capacity for such securities to make principal and
interest payments than is the case for higher grade debt securities. Debt
securities rated below investment grade are deemed by these agencies to be

- B-3 -
<PAGE>

predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal and may involve substantial risk exposure to
adverse conditions. Junk bonds includes securities that are in default or
face the risk of default with respect to the payment of principal or
interest. Such securities are generally unsecured and are often
subordinated to other creditors of the issuer. To the extent the
Portfolio is required to seek recovery upon a default in the payment of
principal or interest on its portfolio holdings, the Portfolio may incur
additional expenses and have limited legal recourse in the event of a
default.

Lower rated debt securities generally offer a higher current yield than
that available from higher grade issuers, but they involve higher risks,
in that they are especially subject to adverse changes in general economic
conditions and in the industries in which the issuers are engaged, to
changes in the financial condition of the issuers and to price
fluctuations in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged issuers may
experience financial stress, which could adversely effect their ability to
make payments of principal and interest and increase the possibility of
default. In addition, such issuers may not have more traditional methods
of financing available to them, and may be unable to repay debt at
maturity by refinancing. The risk of loss due to default by such issuers
is significantly greater because such securities frequently are unsecured
and subordinated to the prior payment of senior indebtedness.

The market for lower rated securities has expanded rapidly in recent
years, and its growth paralleled a long economic expansion. In the past,
the prices of many lower rated debt securities declined substantially,
reflecting an expectation that many issuers of such securities might
experience financial difficulties. As a result, the yields on lower rated
debt securities rose dramatically. However, such higher yields did not
reflect the value of the income stream that holders of such securities
could lose a substantial portion of their value as a result of the
issuers' financial restructuring or default. There can be no assurance
that such declines will not recur. The market for lower rated debt
securities generally is thinner and less active than that for higher
quality securities, which may limit the Portfolio's ability to sell such
securities at fair value in response to changes in the economy or the
financial markets. Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may also decrease the values and
liquidity of lower rated securities, especially in a thinly traded market.

Illiquid and Restricted Securities

"Illiquid and Restricted Securities" under Part A sets forth the
circumstances in which the Portfolio may invest in illiquid and restricted
securities. In connection with the Portfolio's original purchase of
restricted securities it may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the expenses of
registration of restricted securities that are illiquid may also be
negotiated by the Portfolio with the issuer at the time such securities

- B-4 -
<PAGE>

are purchased by the Portfolio. When registration is required, however, a
considerable period may elapse between a decision to sell the securities
and the time the Portfolio would be permitted to sell such securities. A
similar delay might be experienced in attempting to sell such securities
pursuant to an exemption from registration. Thus, the Portfolio may not
be able to obtain as favorable a price as that prevailing at the time of
the decision to sell.

Loans of Portfolio Securities

The Portfolio may lend its portfolio securities subject to the
restrictions stated in Part A. Under applicable regulatory requirements
(which are subject to change), the loan collateral must, on each business
day, at least equal the market value of the loaned securities and must
consist of cash, bank letters of credit, U.S. Government securities, or
other cash equivalents in which the Portfolio is permitted to invest. To
be acceptable as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Portfolio if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the
Portfolio. In a portfolio securities lending transaction, the Portfolio
receives from the borrower an amount equal to the interest paid or the
dividends declared on the loaned securities during the term of the loan as
well as the interest on the collateral securities, less any finders' or
administrative fees the Portfolio pays in arranging the loan. The
Portfolio may share the interest it receives on the collateral securities
with the borrower as long as it realizes at least a minimum amount of
interest required by the lending guidelines established by the Board. The
Portfolio will not lend its portfolio securities to any officer, director,
employee or affiliate of the Portfolio or SCMI. The terms of the
Portfolio's loans must meet certain tests under the Internal Revenue Code
of 1986, as amended (the "Code") and permit the Portfolio to reacquire
loaned securities on five business days' notice or in time to vote on any
important matter.

Covered Calls and Hedging

As described in Part A, the Portfolio may write covered calls on up to
100% of its total assets or employ one or more types of Hedging
Instruments (as defined in Part A). When hedging to attempt to protect
against declines in the market value of the Portfolio's securities, to
permit the Portfolio to retain unrealized gains in the value of portfolio
securities that have appreciated, or to facilitate selling securities for
investment reasons, the Portfolio would (i) sell Stock Index Futures (as
defined below), (ii) purchase puts on such futures or on securities, or
(iii) write covered calls on securities or such futures. When hedging to
establish a position in the equities markets as a temporary substitute for
purchasing particular equity securities (which the Portfolio will normally
purchase and then terminate the hedging position), the Portfolio would
(i) purchase Stock Index Futures or (ii) purchase calls on such futures or
on securities. The Portfolio's strategy of hedging with Stock Index
Futures and options on such futures will be incidental to the Portfolio's
activities in the underlying cash market.

- B-5 -
<PAGE>

WRITING COVERED CALL OPTIONS. The Portfolio may write (i.e., sell) call
options ("calls") if (i) the calls are listed on a domestic securities or
commodities exchange and (ii) the calls are "covered" (i.e., the Portfolio
owns the securities subject to the call or other securities acceptable for
applicable escrow arrangements) while the call is outstanding. A call
written on a Stock Index Future must be covered by deliverable securities
or segregated liquid assets. If a call written by the Portfolio is
exercised, the Portfolio forgoes any profit from any increase in the
market price above the call price of the underlying investment on which
the call was written.

When the Portfolio writes a call on a security, it receives a premium and
agrees to sell the underlying securities to a purchaser of a corresponding
call on the same security during the call period (usually not more than
nine months) at a fixed exercise price (which may differ from the market
price of the underlying security), regardless of market price changes
during the call period. The risk of loss will have been retained by the
Portfolio if the price of the underlying security should decline during
the call period, which may be offset to some extent by the premium.

To terminate its obligation on a call it has written, the Portfolio may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of option transaction costs and the premium previously received on
the call written was more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses unexercised
because the Portfolio retains the underlying security and the premium
received. If the Portfolio could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable securities until the call lapsed or was exercised.

The Portfolio may also write calls on Stock Index Futures without owning a
futures contract or a deliverable bond, provided that at the time the call
is written, the Portfolio covers the call by segregating in escrow an
equivalent dollar amount of liquid assets. The Portfolio will segregate
additional liquid assets if the value of the escrowed assets drops below
100% of the current value of the Stock Index Future. In no circumstances
would an exercise notice require the Portfolio to deliver a futures
contract; it would simply put the Portfolio in a short futures position,
which is permitted by the Portfolio's hedging policies.

PURCHASING CALLS AND PUTS. The Portfolio may purchase put options
("puts") that relate to (i) securities held by it, (ii) Stock Index
Futures (whether or not it holds such futures in its portfolio), or
(iii) broadly-based stock indices. The Portfolio may not sell puts other
than those it previously purchased nor purchase puts on securities it does
not hold. The Portfolio may purchase calls (i) as to securities, broadly
based stock indices or Stock Index Futures or (ii) to effect a "closing
purchase transaction" to terminate its obligation on a call it has
previously written. A call or put may be purchased only if, after such
purchase, the value of all put and call options held by the Portfolio
would not exceed 5% of its total assets.

- B-6 -
<PAGE>

When the Portfolio purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock indices,
has the right to buy the underlying investment from a seller of a
corresponding call on the same investment during the call period at a
fixed exercise price. The Portfolio benefits only if the call is sold at
a profit or if, during the call period, the market price of the underlying
investment is above the sum of the call price plus the transaction costs
and the premium paid for the call and the call is exercised. If the call
is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Portfolio will lose its premium
payments and the right to purchase the underlying investment. When the
Portfolio purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of an underlying investment.

When the Portfolio purchases a put, it pays a premium and, except as to
puts on stock indices, has the right to sell the underlying investment to
a seller of a corresponding put on the same investment during the put
period at a fixed exercise price. Buying a put on a security or Stock
Index Future the Portfolio owns enables it to attempt to protect itself
during the put period against a decline in the value of the underlying
investment below the exercise price by selling the underlying investment
at the exercise price to a seller of a corresponding put. If the market
price of the underlying investment is equal to or above the exercise price
and, as a result, the put is not exercised or resold, the put will become
worthless at its expiration date and the Portfolio will lose its premium
payment and the right to sell the underlying investment; the put may,
however, be sold prior to expiration (whether or not at a profit).

Purchasing a put on either a stock index or on a Stock Index Future not
held by the Portfolio permits it either to resell the put or to buy the
underlying investment and sell it at the exercise price. The resale price
of the put will vary inversely with the price of the underlying
investment. If the market price of the underlying investment is above the
exercise price and, as a result, the put is not exercised, the put will
become worthless on its expiration date. In the event of a decline in
price of the underlying investment, the Portfolio could exercise or sell
the put at a profit to attempt to offset some or all of its loss on its
portfolio securities. When the Portfolio purchases a put on a stock
index, or on a Stock Index Future not held by it, the put protects the
Portfolio to the extent that the index moves in a similar pattern to the
securities held. In the case of a put on a stock index or Stock Index
Future, settlement is in cash rather than by the Portfolio's delivery of
the underlying investment.

STOCK INDEX FUTURES. The Portfolio may buy and sell futures contracts
only if they relate to broadly based stock indices ("Stock Index
Futures"). A stock index is "broadly based" if it includes stocks that
are not limited to issuers in any particular industry or group of
industries. Stock Index Futures obligate the seller to deliver (and the
purchaser to take) cash to settle the futures transaction or to enter into
an offsetting contract. No physical delivery of the underlying stocks in
the index is made.

- B-7 -
<PAGE>

No price is paid or received upon the purchase or sale of a Stock Index
Future. Upon entering into a futures transaction, the Portfolio will be
required to deposit an initial margin payment in cash or U.S. Treasury
bills with a futures commission merchant (the "futures broker"). The
initial margin will be deposited with the Portfolio's custodian in an
account registered in the futures broker's name; however the futures
broker can gain access to that account only under specified conditions.
As the future is marked to market to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid to or by
the futures broker on a daily basis. Prior to expiration of the future,
if the Portfolio elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional
cash is required to be paid by or released to the Portfolio, and any loss
or gain is realized for tax purposes. Although Stock Index Futures by
their terms call for settlement by the delivery of cash, in most cases the
obligation is fulfilled without such delivery, by entering into an
offsetting transaction. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.

Puts and calls on broadly based stock indices or Stock Index Futures are
similar to puts and calls on securities or other futures contracts except
that all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock market
generally) rather than on price movements in individual securities or
futures contracts. When the Portfolio buys a call on a stock index or
Stock Index Future, it pays a premium. During the call period, upon
exercise of a call by the Portfolio, a seller of a corresponding call on
the same index will pay the Portfolio an amount of cash to settle the call
if the closing level of the stock index or Stock Index Future upon which
the call is based is greater than the exercise price of the call; that
cash payment is equal to the difference between the closing price of the
index and the exercise price of the call times a specified multiple (the
"multiplier") that determines the total dollar value for each point of
difference. When the Portfolio buys a put on a stock index or Stock Index
Future, it pays a premium and has the right during the put period to
require a seller of a corresponding put, upon the Portfolio's exercise of
its put, to deliver to the Portfolio an amount of cash to settle the put
if the closing level of the stock index or Stock Index Future upon which
the put is based is less than the exercise price of the put; that cash
payment is determined by the multiplier, in the same manner as described
above as to calls.

ADDITIONAL INFORMATION ABOUT HEDGING INSTRUMENTS AND THEIR USE. The
Portfolio's custodian, or a securities depository acting for the
custodian, will act as the Portfolio's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
securities on which the Portfolio has written options, or as to other
acceptable escrow securities, so that no margin will be required for such
transactions. OCC will release the securities on the expiration of the
option or upon the Portfolio's entering into a closing transaction. An
option position may be closed out only on a market that provides secondary

- B-8 -
<PAGE>

trading for options of the same series, and there is no assurance that a
liquid secondary market will exist for any particular option.

The Portfolio's option activities may affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Portfolio
may cause it to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond its control. The exercise by the
Portfolio of puts on securities or Stock Index Futures may cause the sale
of related investments, also increasing portfolio turnover. Although such
exercise is within the Portfolio's control, holding a put might cause the
Portfolio to sell the underlying investment for reasons that would not
exist in the absence of the put. The Portfolio will pay a brokerage
commission each time it buys or sells a call, a put or an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those that would apply to direct purchases
or sales of the underlying investments. Premiums paid for options are
small in relation to the market value of such investments, and,
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options could result in the Portfolio's net
asset value being more sensitive to changes in the value of the underlying
investments.

REGULATORY ASPECTS OF HEDGING INSTRUMENTS AND COVERED CALLS. The
Portfolio must operate within certain restrictions as to its long and
short positions in Stock Index Futures and options thereon under a rule
(the "CFTC Rule") adopted by the Commodity Futures Trading Commission (the
"CFTC") under the Commodity Exchange Act (the "CEA"), which excludes the
Portfolio from registration with the CFTC as a "commodity pool operator"
(as defined in the CEA) if it complies with the CFTC Rule. Under these
restrictions the Portfolio will not, as to any positions, whether short,
long or a combination thereof, enter into Stock Index Futures and options
thereon for which the aggregate initial margins and premiums exceed 5% of
the fair market value of its total assets, with certain exclusions as
defined in the CFTC Rule. Under the restrictions, the Portfolio also
must, as to its short positions, use Stock Index Futures and options
thereon solely for bona-fide hedging purposes within the meaning and
intent of the applicable provisions under the CEA.

Transactions in options by the Portfolio are subject to limitations
established by each of the exchanges governing the maximum number of
options that may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Portfolio may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same or an affiliated investment adviser. Position
limits also apply to Stock Index Futures. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions. Due to requirements under the 1940 Act,
as amended, when the Portfolio purchases a Stock Index Future, the
Portfolio will maintain, in a segregated account or accounts with its

- B-9 -
<PAGE>

custodian bank, cash or readily-marketable, short-term (maturing in one
year or less) debt instruments in an amount equal to the market value of
the securities underlying such Stock Index Future, less the margin deposit
applicable to it.

LIMITS ON USE OF HEDGING INSTRUMENTS. Due to the Short-Short Limitation
described under "Taxation," the Portfolio will limit the extent to which
it engages in the following activities but will not be precluded from
them: (i) selling investments, including Stock Index Futures, held for
less than three months, whether or not they were purchased on the exercise
of a call held by the Portfolio; (ii) purchasing calls or puts that expire
in less than three months; (iii) effecting closing transactions with
respect to calls or puts purchased less than three months previously; (iv)
exercising puts held for less than three months; and (v) writing calls on
investments held for less than three months.

POSSIBLE RISK FACTORS IN HEDGING. In addition to the risks discussed
above, there is a risk in using short hedging by selling Stock Index
Futures or purchasing puts on stock indices that the prices of the
applicable index (thus the prices of the Hedging Instruments) will
correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Portfolio's equity securities. The ordinary spreads between
prices in the cash and futures markets are subject to distortions due to
differences in the natures of those markets. First, all participants in
the futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions that
could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of speculators, the
deposit requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.

The risk of imperfect correlation increases as the composition of the
Portfolio diverges from the securities included in the applicable index.
To compensate for the imperfect correlation of movements in the price of
the equity securities being hedged and movements in the price of the
Hedging Instruments, the Portfolio may use Hedging Instruments in a
greater dollar amount than the dollar amount of equity securities being
hedged if the historical volatility of the prices of such equity
securities being hedged is more than the historical volatility of the
applicable index. It is also possible that where the Portfolio has used
Hedging Instruments in a short hedge, the market may advance and the value
of equity securities held in the Portfolio may decline. If this occurred,
the Portfolio would lose money on the Hedging Instruments and also
experience a decline in value in its equity securities. However, while
this could occur for a very brief period or to a very small degree, the

- B-10 -
<PAGE>

value of a diversified portfolio of equity securities will tend to move
over time in the same direction as the indices upon which the Hedging
Instruments are based.

If the Portfolio uses Hedging Instruments to establish a position in the
equities markets as a temporary substitute for the purchase of individual
equity securities (long hedging) by buying Stock Index Futures and/or
calls on such futures, on securities or on stock indices, it is possible
that the market may decline. If the Portfolio then concluded not to
invest in equity securities at that time because of concerns as to
possible further market decline or for other reasons, it would realize a
loss on the Hedging Instruments that is not offset by a reduction in the
price of the equity securities purchased.

Short Sales Against-the-Box

After the Portfolio makes a short sale against-the-box, while the short
position is open, it must own an equal amount of the securities sold short
or by virtue of ownership of securities have the right, without payment of
further consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer recognition of
gain or loss, for federal income tax purposes, on the sale of securities
"in the box" until the short position is closed out.

Investment Restrictions

The following investment restrictions, except where stated to be
fundamental policies, are non-fundamental policies of the Portfolio. The
policies defined as fundamental, together with the fundamental policies
and investment objective described in the Part A, cannot be changed
without the vote of a "majority" of the Portfolio's outstanding voting
interests. Under the 1940 Act, such a "majority" vote is defined as the
vote of the holders of the lesser of (i) 67% or more of the interests
present or represented by proxy at a meeting of interestholders, if the
holders of more than 50% of the outstanding interests are present, or (ii)
more than 50% of the outstanding interests.

The following investment restrictions of the Portfolio are fundamental
policies:

(a) With respect to 75% of its assets, the Portfolio may not
purchase a security other than a U.S. Government Security
if, as a result, more than 5% of its total assets would
be invested in the securities of a single issuer or it
would own more than 10% of the outstanding voting
securities of any single issuer.

(b) The Portfolio may not purchase securities if, immediately
after the purchase, 25% or more of the value of its total
assets would be invested in the securities of issuers
conducting their principal business activities in the

- B-11 -
<PAGE>

same industry; provided, however, that there is no limit
on investments in U.S. Government Securities.

(c) The Portfolio may borrow money from banks or by entering
into reverse repurchase agreements, provided that such
borrowings do not exceed 33 1/3% of the value of the
Portfolio's total assets (computed immediately after the
borrowing).

(d) The Portfolio may not issue senior securities except to
the extent permitted by the 1940 Act.

(e) The Portfolio may not underwrite securities of other
issuers, except to the extent that it may be considered
to be acting as an underwriter in connection with the
disposition of portfolio securities.

(f) The Portfolio may not make loans, except it may enter
into repurchase agreements, purchase debt securities that
are otherwise permitted investments and lend portfolio
securities.

(g) The Portfolio may not purchase or sell real estate or any
interest therein, except that it may invest in debt
obligations secured by real estate or interests therein
or securities issued by companies that invest in real
estate or interests therein.

(h) The Portfolio may not purchase or sell physical
commodities unless acquired as a result of owning
securities or other instruments, but it may purchase,
sell or enter into financial options and futures and
forward currency contracts and other financial contracts
or derivative instruments.

The following investment restrictions of the Portfolio are non-
fundamental policies:

(a) The Portfolio's borrowings for other than temporary or
emergency purposes or meeting redemption requests may not
exceed an amount equal to 5% of the value of its net
assets.

(b) The Portfolio may not acquire securities or invest in
repurchase agreements with respect to any securities if,
as a result, more than 15% of its net assets (taken at
current value) would be invested in repurchase agreements
not entitling the holder to payment of principal within
seven days and in securities that are not readily
marketable by virtue of restrictions on the sale of such

- B-12 -
<PAGE>

securities to the public without registration under the
1933 Act ("Restricted Securities").

(c) The Portfolio may not invest in securities of another
investment company, except to the extent permitted by the
1940 Act.

(d) The Portfolio may not purchase securities on margin, or
make short sales of securities (except short sales
against the box), except for the use of short-term credit
necessary for the clearance of purchases and sales of
portfolio securities. The Portfolio may make margin
deposits in connection with permitted transactions in
options, futures contracts and options on futures
contracts.

(e) The Portfolio may not invest in securities (other than
fully collateralized debt obligations) issued by
companies that have conducted continuous operations for
less than three years, including the operations of
predecessors, unless guaranteed as to principal and
interest by an issuer in whose securities the Portfolio
could invest, if, as a result, more than 5% of the value
of the Portfolio's total assets would be so invested.

(f) The Portfolio may not pledge, mortgage, hypothecate or
encumber any of its assets except to secure permitted
borrowings.

(g) The Portfolio may not invest in or hold securities of any
issuer if, to the Trust's knowledge, officers and
trustees of the Trust or officers and directors of the
Portfolio's investment adviser, individually owning
beneficially more than 1/2 of 1% of the securities of the
issuer, in the aggregate own more than 5% of the issuer's
securities.

(h) The Portfolio may not invest in interest in oil and gas
or interests in other mineral exploration or development
programs.

(i) The Portfolio may not lend portfolio securities if the
total value of all loaned securities would exceed 25% of
its total assets.

(j) The Portfolio may not purchase real estate limited
partnership interests.

(k) The Portfolio may not invest in warrants if, as a result,
more than 5% of its net assets would be so invested or
if, more than 2% of its net assets would be invested in

- B-13 -
<PAGE>

warrants that are not listed on the New York or American
Stock Exchanges.

Item 14. Management of the Trust.
------- ------------------------

The following information relates to the principal occupations of each
Trustee and executive officer of the Trust during the past five years.
Each of these individuals currently serves in the same capacity for
Schroder Capital Funds (Delaware), an investment company with a series
that intends to invests all of its assets in the Portfolio.

PETER E. GUERNSEY, age 75, Oyster Bay, New York - a Trustee of the Trust -
Insurance Consultant since August 1986; prior thereto Senior Vice
President, Marsh & McLennan, Inc., insurance brokers.

JOHN I. HOWELL, age 79, 7 Riverside Road, Greenwich, Connecticut - a
Trustee of the Trust - Private Consultant since February 1987; Director,
American International Group, Inc.; Director, American International Life
Assurance Company of New York.

LAURA E. LUCKYN-MALONE (a) (b) (c), age 43, 787 Seventh Avenue, New York,
New York - President and a Trustee of the Trust - Managing Director of
SCMI since October 1995; Director of SWIS since July 1995; prior thereto,
Director and Senior Vice President of SCMI since February 1990; Director
and President, Schroder Advisors.

CLARENCE F. MICHALIS, age 74, 44 East 64th Street, New York, New York - a
Trustee of the Trust - Chairman of the Board of Directors, Josiah Macy,
Jr. Foundation (charitable foundation).

HERMANN C. SCHWAB, age 76, 787 Seventh Avenue, New York, New York -
Chairman (Honorary) and a Trustee of the Trust - retired since March,
1988; prior thereto, consultant to SCMI since February 1, 1984.

MARK J. SMITH (a) (b), age 34, 33 Gutter Lane, London, England - a Vice
President and a Trustee of the Trust - First Vice President of SCMI since
April 1990; Director and Vice President, Schroder Advisors.

ROBERT G. DAVY, age 35, 787 Seventh Avenue, New York, New York - a Vice-
President of the Trust - Director of SCMI and Schroder Capital Management
International Ltd. since 1994; First Vice President of SCMI since July,
1992; prior thereto, employed by various affiliates of Schroders plc in
various positions in the investment research and portfolio management
areas since 1986.

RICHARD R. FOULKES, age 50, 787 Seventh Avenue, New York, New York - a
Vice President of the Trust; Deputy Chairman of SCMI since October 1995;
Director of SCMI since 1979, Director of Schroder Capital Management
International Ltd. since 1989, and Executive Vice President of both of
these entities.

- B-14 -
<PAGE>

JOHN Y. KEFFER, age 53, 2 Portland Square, Portland, Maine - a Vice
President of the Trust. President of Forum Financial Services, Inc., the
Fund's administrator, and Forum Financial Corp., a transfer and dividend
disbursing agent and fund accountant.

JANE P. LUCAS (c), age 34, 787 Seventh Avenue, New York, New York - Vice
President of the Trust - Director and Senior Vice President SCMI; Director
of SWIS since September 1995; Assistant Director Schroder Investment
Management Ltd. since June 1991.

CATHERINE A. MAZZA, age 36, 787 Seventh Avenue, New York, New York - a
Vice President of the Trust - Senior Vice President Schroder Advisors
since December 1995; Vice President of SCMI since October 1994; prior
thereto, held various marketing positions at Alliance Capital, an
investment adviser, since July 1985.

FARIBA TALEBI, age 35, 787 Seventh Avenue, New York, New York - a Vice
President of the Trust - Group Vice President of SCMI since April 1993,
employed in various positions in the investment research and portfolio
management areas since 1987.

JOHN A. TROIANO (b), age 37, 787 Seventh Avenue, New York, New York - a
Vice President of the Trust - Managing Director of SCMI since October
1995; Director of Schroder Advisors since October 1992, Director and
Senior Vice President of SCMI since 1991; prior thereto, employed by
various affiliates of SCMI in various positions in the investment research
and portfolio management areas since 1981.

IRA L. UNSCHULD, age 31, 787 Seventh Avenue, New York, New York - a Vice
President of the Trust - a Vice President of SCMI since April, 1993 and an
Associate from July, 1990 to April, 1993; prior to July, 1990, employed by
various financial institutions as a securities or financial analyst.

ROBERT JACKOWITZ (b) (c), age 29, 787 Seventh Avenue, New York, New York -
Treasurer of the Trust - Vice President of SWIS since September 1995;
Treasurer of SWIS and Schroder Advisers since July 1995; Vice President of
SCMI since June 1995; and Assistant Treasurer of Schroders Incorporated
since January 1993.

MARGARET H. DOUGLAS-HAMILTON (b) (c), age 55, 787 Seventh Avenue, New
York, New York - Secretary of the Trust - Secretary of SWIS since July
1995; Secretary of Schroder Advisers since April 1990; First Vice
President and General Counsel of Schroders Incorporated since May 1987;
prior thereto, partner of Sullivan & Worcester, a law firm.

DAVID I. GOLDSTEIN, age 34, 2 Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust - Counsel, Forum Financial
Services, Inc. Since 1991; prior thereto, associate at Kirkpatrick &
Lockhart LLP, Washington, D.C.

THOMAS G. SHEEHAN, age 42, 2 Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust - Counsel, Forum Financial

- B-15 -
<PAGE>

Services, Inc. since 1993; prior thereto, Special Counsel, U.S. Securities
and Exchange Commission, Division of Investment Management, Washington,
D.C.

BARBARA GOTTLIEB (c), age 42, 787 Seventh Avenue, New York, New York -
Assistant Secretary of the Trust - Assistant Vice President of SWIS since
July 1995 prior thereto held various positions with SWIS affiliates.

GERARDO MACHADO, age 58, 787 Seventh Avenue, New York, New York -
Assistant Secretary of the Trust - Associate, SCMI.

(a) Interested Trustee of the Trust within the meaning of the 1940
Act by virtue of positions with SCMI and its affiliates.

(b) Schroder Fund Advisors, Inc. ("Schroder Advisors") is a wholly
owned subsidiary of SCMI, which is a wholly owned subsidiary of Schroders
Incorporated, which in turn is an indirect, wholly owned U.S. subsidiary
of Schroders plc.

(c) Schroder Wertheim Investment Services, Inc. ("SWIS") is a wholly
owned subsidiary of Schroder Wertheim Holdings Incorporated which is a
wholly owned subsidiary of Schroders, Incorporated, which in turn is an
indirect wholly owned U.S. subsidiary of Schroders plc.

The following information relates to the principal occupations of each
Trustee and executive officer of the Trust during the past five years and
shows the nature of any affiliation with SCMI. Each of these individuals
currently serves in the same capacity for Schroder Capital Funds
(Delaware), an investment company with a series that intends to invest all
of its assets in the Portfolio.

The following table provides the estimated fees to be paid to each Trustee
of the Trust for the fiscal year ended October 31, 1996.

Pension or
Retirement Total
Benefits Accrued Compensation From
Aggregate As Part of Estimated Annual Trust And Fund
Compensation From Portfolio Benefits Upon Complex Paid To
Name of Trustee Trust Expenses Retirement Trustees*
--------------- ----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Mr. Guernsey $4,000 $0 $0 $17,500
Mr. Howell 4,000 0 0 26,500
Ms. Luckyn-Malone 0 0 0 0
Mr. Michalis 4,000 0 0 6,000
Mr. Schwab 7,000 0 0 10,500
Mr. Smith 0 0 0 0

- B-16 -
<PAGE>

</TABLE>

* In addition to the Trust, "Fund Complex" includes Schroder Capital
Funds, an open-end investment company for which SCMI serves as investment
adviser, Schroder Capital Funds (Delaware), an open-end investment company
for which SCMI serves as investment adviser, and Schroder Asian Growth
Fund, Inc., a closed-end investment company for which SCMI serves as
investment adviser.

As of August 1, 1996, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Trust's outstanding shares.

Although the Trust is a Delaware business trust, certain of its Trustees
or officers are residents of the United Kingdom and substantially all of
their assets may be located outside of the U.S. As a result, it may be
difficult for U.S. investors to effect service upon such persons within
the United States or to realize judgments of courts of the United States
predicated upon civil liabilities of such persons under the federal
securities laws. The Trust has been advised that there is substantial
doubt as to the enforceability in the United Kingdom of such civil
remedies and criminal penalties as are afforded by the federal securities
laws. Also it is unclear if extradition treaties now in effect between
the U.S. and the United Kingdom would subject such persons to effective
enforcement of criminal penalties.

Item 15. Control Persons and Principal Holders of Securities.
-------- ---------------------------------------------------

Prior to the Portfolio's commencement of operations, Forum Financial
Services, Inc. ("Forum") and Forum Advisors, Inc., as initial investors in
the Portfolio, will each own 50% of the value of the outstanding interests
in the Portfolio. It is expected that, at the time of the Portfolio's
commencement of operations, Schroder U.S. Smaller Companies Fund (the
"Fund"), a series of Schroder Capital Funds (Delaware), a Delaware
business trust registered with the SEC as an open-end management
investment company, will invest all of its investable assets in the
Portfolio and control the Portfolio.

Schroder Capital Funds (Delaware) has informed the Trust that whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund
will hold a meeting of its shareholders and will cast its vote as
instructed by its shareholders. This only applies to matters for which
the Fund would be required to have a shareholder meeting if it directly
held investment securities rather than invested in the Portfolio. It is
anticipated that any other registered investment company (or series
thereof) that may invest in the Portfolio will follow the same or a
similar practice.

- B-17 -
<PAGE>

Item 16. Investment Advisory and Other Services.
------- ---------------------------------------

Investment Advisory Services

Schroder Capital Management International Inc. ("SCMI"), 787 Seventh
Avenue, New York, New York 10019, serves as investment adviser to the
Portfolio pursuant to an Investment Advisory Contract. SCMI is a wholly
owned U.S. subsidiary of Schroders Incorporated, the wholly-owned United
States holding subsidiary of Schroders plc. Schroders plc is the holding
company parent of a large worldwide group of banks and financial service
companies (referred to as the "Schroder Group"), with associated companies
and branch and representative offices located in seventeen countries
worldwide. The Schroder Group specializes in providing investment
management services and had assets under management of approximately $100
billion as of June 30, 1996.

Pursuant to the Investment Advisory Contract, SCMI is responsible for
managing the investment and reinvestment of the Portfolio's assets and for
continuously reviewing, supervising and administering the Portfolio's
investments. In this regard, it is the responsibility of SCMI to make
decisions relating to the Portfolio's investments and to place purchase
and sale orders regarding such investments with brokers or dealers
selected by it in its discretion. SCMI also furnishes to the Board
periodic reports on the investment performance of the Portfolio.

Under the terms of the Investment Advisory Contract, SCMI is required to
manage the Portfolio's investment portfolio in accordance with applicable
laws and regulations. In making its investment decisions, SCMI does not
use material inside information that may be in its possession or in the
possession of its affiliates.

The Investment Advisory Contract will continue in effect provided such
continuance is approved annually (i) by the holders of a majority of the
outstanding voting securities of the Portfolio or by the Board and (ii) by
a majority of the Trustees who are not parties to such contract or
"interested persons" (as defined in the 1940 Act) of any such party. The
Investment Advisory Contract may be terminated without penalty by vote of
the Trustees or the shareholders of the Portfolio on 60 days' written
notice to SCMI, or by SCMI on 60 days' written notice to the Trust and it
will terminate automatically if assigned. The Investment Advisory
Contract also provides that, with respect to the Portfolio, neither SCMI
nor its personnel shall be liable for any error of judgment or mistake of
law or for any act or omission in the performance of its or their duties
to the Portfolio, except for willful misfeasance, bad faith or gross
negligence in the performance of the SCMI's or their duties or by reason
of reckless disregard of its or their obligations and duties under the
Investment Advisory Contract.

For its investment advisory services under the Investment Advisory
Contract with respect to the Portfolio, SCMI receives an annual advisory
fee of 0.60% of the Portfolio's average daily net assets.

- B-18 -
<PAGE>

Administrative Services

On behalf of the Portfolio, the Trust has entered into an administrative
services agreement with Schroder Fund Advisors Inc. ("Schroder Advisors"),
787 Seventh Avenue, New York, New York 10019. Schroder Advisors is a
wholly-owned subsidiary of SCMI. On behalf of the Portfolio, the Trust
has also entered into an administrative services agreement with Forum
Financial Services, Inc. ("Forum"), Two Portland Square, Portland, Maine
04101. Pursuant to these agreements, Schroder Advisors and Forum provide
certain management and administrative services necessary for the
Portfolio's operations, other than the investment management and
administrative services provided to the Portfolio by SCMI pursuant to the
investment advisory agreement, including among other things, (i)
preparation of shareholder reports and communications, (ii) regulatory
compliance, such as reports to and filings with the Commission and state
securities commissions, and (iii) general supervision of the operation of
the Portfolio, including coordination of the services performed by the
Portfolio's investment adviser, transfer agent, custodian, independent
accountants, legal counsel and others. Forum receives a monthly fee at
the annual rate of 0.075% of the Portfolio's average daily net assets.
Schroder Advisors receives no fee from the Portfolio for the
administrative services it provides the Portfolio.

The administrative services agreements are terminable with respect to the
Portfolio without penalty, at any time, by vote of a majority of the
Trustees of the Trust, upon not more than 60 days' written notice to
Schroder or Forum, or, upon 60 days' notice by Schroder or Forum. The
administrative services agreements will terminate automatically in the
event of their assignment.

Custodian

All securities and cash of the Portfolio are held by The Chase Manhattan
Bank, N.A., Chase MetroTech Center, Brooklyn, New York 11245.

Independent Auditors

Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, serves as independent accountants for the Trust.

Portfolio Accountant

On behalf of the Portfolio, the Trust has entered into a Transfer Agency
and Fund Accounting Agreement with Forum Financial Corp. ("FFC"), an
affiliate of Forum. Pursuant to this agreement, FFC performs transfer
agency and portfolio accounting services. FFC receives a base fee per
year, plus additional amounts depending upon the assets of the Portfolio,
the number and type of securities held by the Portfolio and the portfolio
turnover rate of the Portfolio.

- B-19 -
<PAGE>

Item 17. Brokerage Allocation and Other Practices.
------- ----------------------------------------

Investment Decisions

Investment decisions for the Portfolio and for the other investment
advisory clients of SCMI are made with a view to achieving their
respective investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular client
involved. Thus, a particular security may be bought or sold for certain
clients even though it could have been bought or sold for other clients at
the same time. Likewise, a particular security may be bought for one or
more clients when one or more clients are selling the security. In some
instances, one client may sell a particular security to another client.
It also sometimes happens that two or more clients simultaneously purchase
or sell the same security, in which event each day's transactions in such
security are, insofar as is possible, averaged as to price and allocated
between such clients in a manner which in SCMI's opinion is equitable to
each and in accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio securities
for one or more clients will have an adverse effect on other clients.

Brokerage and Research Services

Transactions on U.S. stock exchanges and other agency transactions involve
the payment by the Portfolio of negotiated brokerage commissions. Such
commissions vary among different brokers. Also, a particular broker may
charge different commissions according to such factors as the difficulty
and size of the transaction. Transactions in foreign securities generally
involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. Since most brokerage transactions
for the Portfolio will be placed with foreign broker-dealers, certain
portfolio transaction costs for the Portfolio may be higher than fees for
similar transactions executed on U.S. securities exchanges. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Portfolio usually
includes an undisclosed dealer commission or mark-up. In underwritten
offerings, the price paid by the Portfolio includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.

The Investment Advisory Contract authorizes and directs SCMI to place
orders for the purchase and sale of the Portfolio's investments with
brokers or dealers selected by SCMI in its discretion and to seek "best
execution" of such portfolio transactions. SCMI places all such orders
for the purchase and sale of portfolio securities and buys and sells
securities for the Portfolio through a substantial number of brokers and
dealers. In so doing, SCMI uses its best efforts to obtain for the
Portfolio the most favorable price and execution available. The Portfolio
may, however, pay higher than the lowest available commission rates when
SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the

- B-20 -
<PAGE>

transaction. In seeking the most favorable price and execution, SCMI,
having in mind the Portfolio's best interests, considers all factors it
deems relevant, including, by way of illustration, price, the size of the
transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market
prices and trends, the reputation, experience and financial stability of
the broker-dealers involved and the quality of service rendered by the
broker-dealers in other transactions.

It has for many years been a common practice in the investment advisory
business as conducted in certain countries, including the United States,
for advisers of investment companies and other institutional investors to
receive research services from broker-dealers which execute portfolio
transactions for the clients of such advisers. Consistent with this
practice, SCMI may receive research services from broker-dealers with
which SCMI places the Portfolio's portfolio transactions. These services,
which in some cases may also be purchased for cash, include such items as
general economic and security market reviews, industry and company
reviews, evaluations of securities and recommendations as to the purchase
and sale of securities. Some of these services are of value to SCMI in
advising various of its clients (including the Portfolio), although not
all of these services are necessarily useful and of value in managing the
Portfolio. The investment advisory fee paid by the Portfolio is not
reduced because SCMI and its affiliates receive such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"Act"), SCMI may cause the Portfolio to pay a broker-dealer which provides
"brokerage and research services" (as defined in the Act) to SCMI an
amount of disclosed commission for effecting a securities transaction for
the Portfolio in excess of the commission which another broker-dealer
would have charged for effecting that transaction.

Subject to the general policies regarding allocation of portfolio
brokerage as set forth above, the Board has authorized SCMI to employ
Schroder Wertheim & Company, Incorporated ("Schroder Wertheim") an
affiliate of SCMI, to effect securities transactions of the Portfolio, on
the New York Stock Exchange only, provided certain other conditions are
satisfied as described below.

Payment of brokerage commissions to Schroder Wertheim for effecting such
transactions is subject to Section 17(e) of the 1940 Act, which requires,
among other things, that commissions for transactions on a national
securities exchange paid by a registered investment company to a broker
which is an affiliated person of such investment company or an affiliated
person of another person so affiliated not exceed the usual and customary
broker's commissions for such transactions. It is the Portfolio's policy
that commissions paid to Schroder Wertheim will in the judgment of the
officers of the Trust responsible for making portfolio decisions and
selecting brokers, be (i) at least as favorable as commissions
contemporaneously charged by Schroder Wertheim on comparable transactions
for its most favored unaffiliated customers and (ii) at least as favorable
as those which would be charged on comparable transactions by other

- B-21 -
<PAGE>

qualified brokers having comparable execution capability. The Board,
including a majority of the non-interested Trustees, has adopted
procedures pursuant to Rule 17e-1 promulgated by the Securities and
Exchange Commission under Section 17(e) to ensure that commissions paid to
Schroder Wertheim by the Portfolio satisfy the foregoing standards. The
Board will review all transactions at least quarterly for compliance with
such procedures.

The Portfolio has no understanding or arrangement to direct any specific
portion of its brokerage to Schroder Wertheim and will not direct
brokerage to Schroder Wertheim in recognition of research services.

Item 18. Capital Stock and Other Securities.
------- -----------------------------------

Under the Trust Instrument, the Trustees are authorized to issue
beneficial interest in one or more separate and distinct series.
Investments in the Portfolio have no preference, preemptive, conversion or
similar rights and are fully paid and nonassessable, except as set forth
below. Each investor in the Portfolio is entitled to a vote in proportion
to the amount of its investment therein. Investors in the Portfolio and
other series (collectively, the "portfolios") of the Trust will all vote
together in certain circumstances (e.g., election of the Trustees and
ratification of auditors, as required by the 1940 Act and the rules
thereunder). One or more portfolios could control the outcome of these
votes. Investors do not have cumulative voting rights, and investors
holding more than 50% of the aggregate interests in the Trust or in the
Portfolio, as the case may be, may control the outcome of votes. The
Trust is not required and has no current intention to hold annual meetings
of investors, but the Trust will hold special meetings of investors when
(1) a majority of the Trustees determines to do so or (2) investors
holding at least 10% of the interests in the Trust (or the Portfolio)
request in writing a meeting of investors in the Trust (or Portfolio).
Except for certain matters specifically described in the Trust Instrument,
the Trustees may amend the Trust's Trust Instrument without the vote of
investors.

The Trust, with respect to the Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved
by the Trust's Board. The Portfolio may be terminated (1) upon
liquidation and distribution of its assets, if approved by the vote of a
majority of the Portfolio's outstanding voting securities (as defined in
the 1940 Act) or (2) by the Trustees on written notice to the Portfolio's
investors. Upon liquidation or dissolution of any Portfolio, the
investors therein would be entitled to share pro rata in its net assets
available for distribution to investors.

The Trust is organized as a business trust under the laws of the State of
Delaware. The Trust's interestholders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust
Act provides that an interestholder of a Delaware business trust shall be

- B-22 -
<PAGE>

entitled to the same limitation of liability extended to shareholders of
private corporations for profit. However, no similar statutory or other
authority limiting business trust interestholder liability exists in many
other states, including Texas. As a result, to the extent that the Trust
or an interestholder is subject to the jurisdiction of courts in those
states, the courts may not apply Delaware law, and may thereby subject the
Trust to liability. To guard against this risk, the Trust Instrument of
the Trust disclaims liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement,
obligation and instrument entered into by the Trust or its Trustees, and
provides for indemnification out of Trust property of any interestholder
held personally liable for the obligations of the Trust. Thus, the risk
of an interestholder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1)
a court refuses to apply Delaware law, (2) no contractual limitation of
liability is in effect, and (3) the Trust itself is unable to meet its
obligations. In light of Delaware law, the nature of the Trust's
business, and the nature of its assets, the Board believes that the risk
of personal liability to a Trust interestholder is remote.

Item 19. Purchase, Redemption and Pricing of Securities.
------- -----------------------------------------------

Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning
of section 4(2) of the 1933 Act. All investments in the Portfolio are
made and withdrawn at the net asset value ("NAV") next determined after an
order is received by the Portfolio. NAV per share is calculated by
dividing the aggregate value of the Portfolio's assets less all
liabilities by the number of shares of the Portfolio outstanding. See
Items 6, 7 and 8 in Part A.

Item 20. Tax Status.
------- -----------

The Portfolio will be classified for federal income tax purposes as a
partnership that will not be a "publicly traded partnership." As a
result, the Portfolio will not be subject to federal income tax; instead,
each investor in the Portfolio will be required to take into account in
determining its federal income tax liability its share of the Portfolio's
income, gains, losses, deductions, and credits, without regard to whether
it has received any cash distributions from the Portfolio. The Portfolio
also will not be subject to Delaware income or franchise tax.

Each investor in the Portfolio will be deemed to own a proportionate share
of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for, among other things, purposes of determining
whether the investor satisfies the requirements to qualify as a regulated
investment company ("RIC"). Accordingly, the Portfolio intends to conduct

- B-23 -
<PAGE>

its operations so that its investors that intend to qualify as RICs ("RIC
investors") will be able to satisfy all those requirements.

Distributions to an investor from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the
investor's recognition of any gain or loss for federal income tax
purposes, except that (1) gain will be recognized to the extent any cash
that is distributed exceeds the investor's basis for its interest in the
Portfolio before the distribution, (2) income or gain will be recognized
if the distribution is in liquidation of the investor's entire interest in
the Portfolio and includes a disproportionate share of any unrealized
receivables held by the Portfolio, (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized
receivables, and (4) gain or loss may be recognized on a distribution to
an investor that contributed property to the Portfolio. An investor's
basis for its interest in the Portfolio generally will equal the amount of
cash and the basis of any property it invests in the Portfolio, increased
by the investor's share of the Portfolio's net income and gains and
decreased by (a) the amount of cash and the basis of any property the
Portfolio distributes to the investor and (b) the investor's share of the
Portfolio's losses.

The Portfolio's use of hedging strategies, such as writing (selling) and
purchasing options and futures and entering into forward contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Portfolio
realizes in connection therewith. The Portfolio's income from foreign
currencies (except certain gains therefrom that may be excluded by future
regulations), and income from transactions in hedging instruments derived
by it with respect to its business of investing in securities or foreign
currencies, will qualify as permissible income for its RIC investors under
the requirement that at least 90% of a RIC's gross income each taxable
year consist of specified types of income. However, income from the
disposition by the Portfolio of hedging instruments (other than those on
foreign currencies) held for less than three months will be subject to the
requirement applicable to its RIC investors that less than 30% of a RIC's
gross income each taxable year consist of certain short-term gains
("Short-Short Limitation"). Income from the disposition of foreign
currencies, and hedging instruments on foreign currencies, that are not
directly related to the Portfolio's principal business of investing in
securities (or options and futures with respect thereto) also will be
subject to the Short-Short Limitation for its RIC investors if they are
held for less than three months.

If the Portfolio satisfies certain requirements, any increase in value of
a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether its RIC investors satisfy the Short-Short Limitation. Thus, only
the net gain (if any) from the designated hedge will be included in gross
income for purposes of that limitation. The Portfolio will consider
whether it should seek to qualify for this treatment for its hedging

- B-24 -
<PAGE>

transactions. To the extent the Portfolio does not so qualify, it may be
forced to defer the closing out of certain hedging instruments beyond the
time when it otherwise would be advantageous to do so, in order for its
RIC investors to qualify or continue to qualify as RICs.

Item 21. Underwriters.
------- -------------

Forum Financial Services, Inc., Two Portland Square, Portland, Maine
04101, the Portfolio's administrator, serves as the Trust's placement
agent. Forum receives no compensation for such placement agent services.

Item 22. Calculations of Performance Data.
------- --------------------------------

Not applicable.

Item 23. Financial Statements.
-------- ---------------------

Not applicable.

- B-25 -
<PAGE>

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.
------- ----------------------------------

(a) Financial Statements.

(1) Included in Part A

Not applicable

(2) Included in Part B

Not applicable

(b) Exhibits:

(1) Trust Instrument of Schroder Capital Funds (the "Trust")
(filed as Exhibit 1 to the Trust's Initial Registration
Statement and incorporated herein by reference).
(2) Not applicable.

(3) Not applicable.

(4) Not applicable.

(5) Form of Investment Advisory Agreement between the Trust
and Schroder Capital Management International Inc.
("SCMI") with respect to International Equity Fund,
Schroder Emerging Markets Fund Institutional Portfolio
and Schroder U.S. Smaller Companies Portfolio (filed
herewith).

(6) Not required.

(7) Not applicable.

(8) Form of Custodian Agreement between the Trust and The
Chase Manhattan Bank, N.A. with respect to International
Equity Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 8 to the
Trust's Initial Registration Statement and incorporated
herein by reference).

(9) (a) Form of Administration Agreement between the
Trust and Schroder Fund Advisors Inc. with
respect to International Equity Fund and Schroder
Emerging Markets Fund Institutional Portfolio
(filed as Exhibit 9(a) to the Trust's Initial
Registration Statement and incorporated herein by
reference).
<PAGE>

(b) Form of Sub-Administration Agreement between the
Trust and Forum Financial Services, Inc.
("Forum") with respect to International Equity
Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 9(b) to
the Trust's Initial Registration Statement and
incorporated herein by reference).

(c) Form of Administration Agreement between the
Trust and Forum with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).

(d) Form of Administration Agreement between the
Trust and SCMI with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).

(e) Form of Transfer Agency and Portfolio Accounting
Agreement between the Trust and Forum Financial
Corp. with respect to International Equity Fund
and Schroder Emerging Markets Fund Institutional
Portfolio (filed as Exhibit 9(c) to the Trust's
Initial Registration Statement and incorporated
herein by reference).

(f) Form of Placement Agent Agreement between the
Trust and Forum with respect to International
Equity Fund and Schroder Emerging Markets Fund
Institutional Portfolio (filed as Exhibit 9(d) to
the Trust's Initial Registration Statement and
incorporated herein by reference).

(10) Not required.

(11) Not required.

(12) Not required.

(13) Not applicable.

(14) Not applicable.

(15) Not applicable.

(16) Not applicable.

- C-2 -
<PAGE>

Item 25. Persons Controlled by or Under Common Control with Registrant.
-------- --------------------------------------------------------------

None

Item 26. Number of Holders of Securities as of July 31, 1996.
-------- ----------------------------------------------------
<TABLE>
<CAPTION>
Title of Class of Shares
of Beneficial Interest Number of Holders
------------------------ -----------------
<S> <C>
International Equity Fund 3
Schroder Emerging Markets Fund Institutional Portfolio 3
Schroder U.S. Smaller Companies Portfolio 0
</TABLE>

Item 27. Indemnification.
-------- ----------------

The Trust does not currently hold any directors' and officers' or
errors and omissions insurance policies. The Trust's trustees and
officers are insured under the Trust's fidelity bond purchased pursuant to
Rule 17j-1 under the Investment Company Act of 1940, as amended (the
"Act").

The general effect of Article 5 of Registrant's Trust Instrument
is to indemnify existing or former trustees and officers of the Trust to
the fullest extent permitted by law against liability and expenses. There
is no indemnification if, among other things, any such person is
adjudicated liable to the Registrant or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office. This description is
modified in its entirety by the provisions of Article 5 of Registrant's
Trust Instrument contained in this Registration Statement as Exhibit 1 and
incorporated herein by reference.

Provisions of Registrant's investment advisory agreements provide
that the respective investment adviser shall not be liable for any mistake
of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing shall be deemed to protect, or purport to protect,
the investment adviser against any liability to Registrant or to
Registrant's interestholders to which the investment adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the investment adviser's duties, or by
reason of the investment adviser's reckless disregard of its obligations
and duties hereunder. This description is modified in its entirety by the
provisions of Registrant's Investment Advisory Agreement contained in this
Registration Statement as Exhibit 5 and incorporated herein by reference.

- C-3 -
<PAGE>

Likewise, Registrant has agreed to indemnify (1) Forum Financial Services,
Inc. in the Administration and Sub-Administration Agreements, (2) Forum
Financial Corp. in the Transfer Agency and Fund Accounting Agreement, and
(3) Forum Financial Services, Inc. in the Placement Agent Agreement for
certain liabilities and expenses arising out of their acts or omissions
under the respective agreements.

Item 28. Business and Other Connections of Investment Advisers.
------- ------------------------------------------------------

The following are the directors and principal officers of SCMI,
including their business connections which are of a substantial nature.
The address of each company listed, unless otherwise noted, is 33 Gutter
Lane, London EC2V 8AS, United Kingdom. Schroder Capital Management
International Limited ("Schroder Ltd.") is a United Kingdom affiliate of
SCMI which provides investment management services international clients
located principally in the United States.

I. Peter Sedgwick, Chairman. Mr. Sedgwick is also Vice Chairman
of Schroders PLC, 120 Cheapside, London EC2V 6DS, United Kingdom,
the holding company of the various Schroder companies, Chairman
and Director of Schroder Ltd., Director and Chief Executive
Officer of Schroder Investment Management Limited, an investment
management company, Director of Schroder Investment Management
(UK) Limited, Schroder Personal Financial Management Limited,
Schroder Investment Management (Europe) Limited, Schroder
Investment Trust Management Limited and Church, Charity & Local
Authorities Fund Managers Limited, 2 Fore Street, London EC2Y
5AQ, United Kingdom, each an investment management company, and
Director, The Equitable Life Assurance Company, Walton Street,
Aylesbury, Bucks, United Kingdom, a life assurance company. Mr.
Sedgwick is also a director of various nominee companies and of
various unit trust companies, investment trusts and closed end
investment companies for which SCMI and/or its affiliates provide
investment services.

David M. Salisbury, Chief Executive Officer. Mr. Salisbury is
also the Joint Chief Executive Officer and Director of Schroder
Ltd. and Director of Dimensional Fund Advisors Inc., 1299 Ocean
Avenue, Santa Monica, California, an investment advisory company
and DFA Securities Inc., a broker dealer subsidiary of
Dimensional Fund Advisors Inc. located at the same address.
Until October 1992 Mr. Salisbury was Chairman of Schroder Fund
Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New
York, New York, a broker dealer. Mr. Salisbury is a director or
former director of various investment trust companies and closed
end investment companies for which SCMI and/or its affiliates
provide investment services.

John S. Ager, Director. Mr. Ager is also a Director of Schroder
Ltd.

- C-4 -
<PAGE>

Richard R. Foulkes, Director. Mr. Foulkes is also a Director of
Schroder Ltd.

David Gibson, Director. Mr. Gibson is also a Director of
Schroder Ltd. and Director of Schroder Investment Management
Limited.

C. John Govett, Director. Mr. Govett is also a Director of
Schroder Ltd., Schroder Investment Management Limited, Schroder
Personal Investment Management (investment adviser), Schroder
Ventures Limited (investment adviser) and Schroder Venture
International Holdings Limited (investment adviser). He is
Chairman and Director of Schroder Properties Limited. He is also
Director of several investment companies for which SCMI and/or
its affiliates provide investment services.

Sharon L. Haugh, Director. Ms. Haugh is also a Director of
Schroder Ltd. and Director of Schroder Advisors.

Laura E. Luckyn-Malone, Director. Ms. Luckyn-Malone is also a
Director of Schroder Ltd. and President and Director of a closed-
end investment company for which SCMI and/or its affiliates
provide investment services.

Gavin D.L. Ralston, Director. Mr. Ralston is also a Director of
Schroder Ltd.

Mark J. Smith, Director. Mr. Smith is also Director, Schroder
Ltd. and Schroder Investment Management (Guernsey) Limited, an
investment management company, and Director and Vice President of
Schroder Advisors. Mr. Smith is also a director of various
investment trusts and open end investment companies for which
SCMI and/or its affiliates provide investment services.

John A. Troiano, Director. Mr. Troiano is also a Director of
Schroder Ltd., Director of Schroder Advisors and President and
Director open end investment companies for which Schroder and/or
its affiliates provide investment services.

Andrew R. Barker, First Vice President. Mr. Barker is also First
Vice President of Schroder Ltd.

J. Ann Bonathan, First Vice President. Ms. Bonathan is also
First Vice President of Schroder Ltd. During the last two years,
Ms. Bonathan has been Deputy Head of Custody Operations of SG
Warburg, 1 Finsbury Avenue, London, merchant bankers.

John D. Burns, First Vice President. During the last two years,
Mr. Burns has been First Vice President of Schroder Ltd. and
Assistant Director of Morgan Grenfell Asset Management Ltd., 20
Finsbury Circus, London EC2M 1NB, an investment adviser.

- C-5 -
<PAGE>

Heather F. Crighton, Vice President. Ms. Crighton is also Vice
President of Schroder Ltd.

Louise Crouset, First Vice President. Mr. Crouset is also First
Vice President of Schroder Ltd. and, until October 1993, was Vice
President of Wellington Management, an investment adviser.

Robert C. Davy, First Vice President. Mr. Davy is also a
Director of Schroder Ltd. and an officer of open end investment
companies for which SCMI and/or its affiliates provide investment
services.

Margaret H. Douglas-Hamilton, Secretary. Ms. Douglas-Hamilton is
also First Vice President and General Counsel of Schroders
Incorporated, 787 Seventh Avenue, New York, New York, the holding
company for various United States based SCMI affiliates. Ms.
Douglas-Hamilton is also Secretary to various SCMI affiliates,
including Schroder Advisors.

Abdallah Nauphal, First Vice President.

Joshua Shapiro, First Vice President.

John Stainsby, First Vice President. Mr. Stainsby is also First
Vice President of Schroder Ltd.

Ellen B. Sullivan, First Vice President.

Fariba Talebi, Group Vice President. Ms. Talebi is also an
officer of various open end investment companies for which SCMI
and/or its affiliates provide investment services.

Jan Kees van Heusde, First Vice President. Mr. van Heusde is
also First Vice President of Schroder Ltd.

Patrick Vermeulen, Vice First President. Mr. Vermeulen is also
Vice First President of Schroder Ltd.

Kathleen Adams, Vice President. Ms. Adams is also Vice President
of Schroder Advisors.

Mark J. Astley, Vice President.

William H. Barnes, Vice President. During the last two years,
Mr. Barnes has been a marketer at Nomura Capital Management Ltd.,
180 Maiden Lane New York, NY 10038, and investment adviser.

Susan M. Belson, Vice President.

Alan Gilston, Vice President.

Robert A. Jackowitz, Vice President.

- C-6 -
<PAGE>

Clare L. Latham, Vice President. During the last two years, Ms.
Latham has been First Vice President of Schroder Ltd. and Analyst
at the Bank of England, Threadneedle Street, London EC2R 8AH.

Catherine A. Mazza, Vice President. During the last two years,
Ms. Mazza has been a Vice President of Alliance Capital, 1345
Sixth Avenue, New York, NY 10105, an investment adviser.

Robert J. Martorana, Vice President.

Thomas Melendez, Vice President. During the last two years, Mr.
Melendez has been a Vice President of Natwest Securities, 175
Water Street, New York, NY, an investment adviser.

Ira L. Unschuld, Vice President. Mr. Unschuld is also an officer
of various open end investment companies for which SCMI and/or
its affiliates provide investment services.

Dawn M. Vroegop, Vice President. During the last two years, Ms.
Vroegop has been an Associate of A.T. Keaney, Inc., 153 East 53rd
Street, New York, NY, management consultants.

Item 29. Principal Underwriters.
-------- -----------------------

(a) Not applicable.

(b) Not applicable.

Item 30. Location of Books and Records.
-------- ------------------------------

The majority of the accounts, books and other documents required
to be maintained by Section 31(a) of the Act and the Rules thereunder are
maintained at the offices of Forum Financial Services, Inc. and Forum
Financial Corp., Two Portland Square, Portland, Maine 04104. The records
required to be maintained under Rule 31a-1(b)(1) with respect to journals
of receipts and deliveries of securities and receipts and disbursements of
cash are maintained at the offices of the Registrant's custodian, which is
named under "Custodian" in Part B to this Registration Statement. The
records required to be maintained under Rule 31a-1(b)(5), (6) and (9) are
maintained at the offices of Registrant's investment adviser, which is
named in Item 28 hereof.

- C-7 -
<PAGE>

Item 31. Management Services.
-------- --------------------

Not applicable.

Item 32. Undertakings.
-------- ------------

Registrant undertakes to contain in its Trust Instrument
provisions for assisting shareholder communications and for the removal of
trustees substantially similar to those provided for in Section 16(c) of
the Act, except to the extent such provisions are mandatory or prohibited
under applicable Delaware law.

- C-8 -
<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the city of New
York and the State of New York on the 7th day of August, 1996.

SCHRODER CAPITAL FUNDS

By: /s/ Laura E. Luckyn-Malone
---------------------------
Laura E. Luckyn-Malone
President
<PAGE>

EXHIBIT INDEX

(a) Financial Statements.

(1) Included in Part A

Not applicable

(2) Included in Part B

Not applicable

(b) Exhibits:

(1) Trust Instrument of Schroder Capital Funds (the "Trust")
(filed as Exhibit 1 to the Trust's Initial Registration
Statement and incorporated herein by reference).
(2) Not applicable.

(3) Not applicable.

(4) Not applicable.

(6) Not required.

(7) Not applicable.

(b) Form of Sub-Administration Agreement between the
Trust and Forum Financial Services, Inc.
("Forum") with respect to International Equity
Fund and Schroder Emerging Markets Fund
<PAGE>

Institutional Portfolio (filed as Exhibit 9(b) to
the Trust's Initial Registration Statement and
incorporated herein by reference).

(c) Form of Administration Agreement between the
Trust and Forum with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).

(d) Form of Administration Agreement between the
Trust and SCMI with respect to the Schroder U.S.
Smaller Companies Portfolio (to be filed).

(10) Not required.

(11) Not required.

(12) Not required.

(13) Not applicable.

(14) Not applicable.

(15) Not applicable.

(16) Not applicable.

<PAGE>

EXHIBIT 99.B5

SCHRODER CAPITAL FUNDS
INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 13th day of September, 1995, between Schroder
Capital Funds (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at Two Portland
Square, Portland, Maine 04101, and Schroder Capital Management
International Inc. (the "Adviser"), a corporation organized under the laws
of the State of New York with its principal place of business at One State
Street, New York, New York.

WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended, (the "Act") as an open-end management investment
company and is authorized to issue interests (as defined in the Trust's
Trust Instrument) in separate series;

WHEREAS, the Adviser provides investment advice and is registered
with the Securities and Exchange Commission (the "SEC") as an investment
adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and is registered with the United Kingdom Investment
Management Regulatory Organization ("IMRO");

WHEREAS, the Trust desires that the Adviser perform investment
advisory services for each series listed in Appendix A (each a
"Portfolio," and collectively the "Portfolios"), and the Adviser is
willing to provide those services on the terms and conditions set forth in
this Agreement; and

WHEREAS, the Adviser is willing to render such investment
advisory services to the Portfolios;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting
its assets in securities of the type and in accordance with the
limitations specified in its Trust Instrument and Registration Statement
filed with the Securities and Exchange Commission (the "Commission") under
the Act, as may be supplemented from time to time, all in such manner and
to such extent as may from time to time be authorized by the Trust's Board
of Trustees (the "Board"). The Trust is currently authorized to issue two
series of interests, and the Trust is authorized to issue interests in any
number of additional series upon approval of the Board. The Trust has
delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish Adviser with any
amendments thereof.
<PAGE>

SECTION 2. INVESTMENT ADVISER; APPOINTMENT

The Trust hereby employs Adviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of the
assets in each Portfolio and, without limiting the generality of the
foregoing, to provide other services specified in Section 3 hereof.

SECTION 3. DUTIES OF THE ADVISER

(a) The Adviser shall make decisions with respect to all
purchases and sales of securities and other investment assets in the
Portfolios. To carry out such decisions, the Adviser is hereby
authorized, as agent and attorney-in-fact for the Trust, for the account
of, at the risk of and in the name of the Trust, to place orders and issue
instructions with respect to those transactions of the Portfolios. In all
purchases, sales and other transactions in securities for the Portfolios,
the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions.

(b) The Adviser will report to the Board at each meeting
thereof all changes in the Portfolios since the prior report, and will
also keep the Board informed of important developments affecting the
Trust, the Portfolios and the Adviser, and on its own initiative, will
furnish the Board from time to time with such information as the Adviser
may believe appropriate for this purpose, whether concerning the
individual companies whose securities are included in a Portfolio's
holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Portfolio
maintains investments. The Adviser will also furnish the Board with such
statistical and analytical information with respect to securities in the
Portfolios as the Adviser may believe appropriate or as the Board
reasonably may request. In making purchases and sales of securities for a
Portfolio, the Adviser will bear in mind the policies set from time to
time by the Board as well as the limitations imposed by the Trust's Trust
Instrument and Registration Statement under the Act, the limitations in
the Act and in the Internal Revenue Code of 1986, as amended, in respect
of regulated investment companies and the investment objectives, policies
and restrictions of the Portfolios.

(c) The Adviser will from time to time employ or associate
with such persons as the Adviser believes to be particularly fitted to
assist in the execution of the Adviser's duties hereunder, the cost of
performance of such duties to be borne and paid by the Adviser. No
obligation may be incurred on the Trust's behalf in any such respect.

(d) The Adviser shall maintain records for each Portfolio
relating to portfolio transactions and the placing and allocation of
brokerage orders as are required to be maintained by the Trust under the

- 2 -
<PAGE>

Act. The Adviser shall prepare and maintain, or cause to be prepared and
maintained, in such form, for such periods and in such locations as may be
required by applicable law, all documents and records relating to the
services provided by the Adviser pursuant to this Agreement required to be
prepared and maintained by the Trust pursuant to the rules and regulations
of any national, state, or local government entity with jurisdiction over
the Trust, including the Commission and the Internal Revenue Service. The
books and records pertaining to the Trust that are in possession of the
Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at
all times during the Adviser's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be
provided promptly by the Adviser to the Trust or the Trust's authorized
representatives.

SECTION 4. EXPENSES

The Trust hereby confirms that the Trust shall be responsible and
shall assume the obligation for payment of all the Trust's expenses,
including: interest charges, taxes, brokerage fees and commissions;
certain insurance premiums; fees, interest charges and expenses of the
Trust's custodian and transfer agent; telecommunications expenses;
auditing, legal and compliance expenses; costs of the Trust's formation
and maintaining its existence; costs of preparing the Trust's registration
statement, account application forms and interestholder reports and
delivering them to existing and prospective interestholders; costs of
maintaining books of original entry for portfolio and fund accounting and
other required books and accounts and of calculating the net asset value
of interests in the Trust; costs of reproduction, stationery and supplies;
compensation of the Trust's trustees, officers and employees and costs of
other personnel performing services for the Trust who are not officers of
the Adviser or of Schroder Fund Advisors Inc. or affiliated persons of
either; costs of Trust meetings; registration fees and related expenses
for registration with the Commission and the securities regulatory
authorities of other countries in which the Trust's interests are sold;
state securities law registration fees and related expenses; and fees and
out-of-pocket expenses payable to Schroder Fund Advisors Inc. under any
placement agent, management or similar agreement.

SECTION 5. STANDARD OF CARE

(a) The Trust shall expect of the Adviser, and the Adviser
will give the Trust the benefit of, the Adviser's best judgment and
efforts in rendering its services to the Trust, and as an inducement to
the Adviser's undertaking these services the Adviser shall not be liable
hereunder for any mistake of judgment or in any event whatsoever, except
for lack of good faith, provided that nothing herein shall be deemed to
protect, or purport to protect, the Adviser against any liability to the
Trust or to the Trust's interestholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties hereunder, or by
reason of the Adviser's reckless disregard of its obligations and duties

- 3 -
<PAGE>

hereunder. As used in this Section 5, the term "Adviser" shall include
any affiliates of the Adviser performing services for the Portfolios
contemplated hereby and directors, officers and employees of the Adviser
as well as the Adviser itself.

(b) The Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot, or
damage caused by nature or due to other events for which the Adviser is
not responsible (e.g., strike, lock-out or losses caused by the imposition
of foreign exchange controls, expropriation of assets or other acts of
domestic or foreign authorities) except under the circumstances provided
for in Section 5(a).

The presence of exculpatory language in this Agreement shall not
in any way limit or be deemed by anyone to limit the Trust, the
Trustees of the Trust, the Portfolios, the Adviser, or any other party
appointed pursuant to this Agreement, including without limitation any
custodian, as in any way limiting causes of action and remedies which may,
notwithstanding such language, be available to the Trust, the Trustees of
the Trust, Portfolios or any other party appointed pursuant to this
Agreement, either under co

mmon law or statutory law principles applicable to fiduciary relationships
or under the Federal securities laws.

SECTION 6. COMPENSATION

In consideration of the foregoing, the Trust shall pay the
Adviser, with respect to the average daily net assets of each of the
Portfolios, a fee at an annual rate as listed in Appendix A hereto. Such
fees shall be accrued by the Trust daily and shall be payable monthly in
arrears on the first day of each calendar month for services performed
hereunder during the prior calendar month.

SECTION 7. EFFECTIVENESS, DURATION, AND TERMINATION

(a) This Agreement shall become effective with respect to a
Portfolio immediately upon approval by a majority of the outstanding
voting interests of that Portfolio.

(b) This Agreement shall remain in effect with respect to a
Portfolio for a period of two years from the date of its effectiveness and
shall continue in effect for successive twelve-month periods (computed
from each anniversary date of the approval) with respect to the Portfolio;
provided that such continuance is specifically approved at least annually
(i) by the Board or by the vote of a majority of the outstanding voting
interests of the Portfolio, and, in either case, (ii) by a majority of the
Trust's trustees who are not parties to this Agreement or interested
persons of any such party (other than as trustees of the Trust); provided
further, however, that if this Agreement or the continuation of this
Agreement is not approved as to a Portfolio, the Adviser may continue to
render to that Portfolio the services described herein in the manner and

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<PAGE>

to the extent permitted by the Act and the rules and regulations
thereunder.

(c) This Agreement may be terminated with respect to a
Portfolio at any time, without the payment of any penalty, (i) by the
Board or by a vote of a majority of the outstanding voting interests of a
Portfolio on 60 days' written notice to the Adviser or (ii) by the Adviser
on 60 days' written notice to the Trust. This agreement shall terminate
upon assignment.

SECTION 8. ACTIVITIES OF THE ADVISER

Except to the extent necessary to perform its obligations
hereunder, nothing herein shall be deemed to limit or restrict the
Adviser's right, or the right of any of the Adviser's officers, directors
or employees who may also be a trustee, officer or employee of the Trust,
or persons otherwise affiliated persons of the Trust to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature,
or to render services of any kind to any other corporation, trust, firm,
individual or association. It is specifically understood that officers,
directors and employees of the Adviser and its affiliates may continue to
engage in providing portfolio management services and advice to other
investment companies, whether or not registered, and to other investment
advisory clients. When other clients of the Adviser desire to purchase or
sell a security at the same time such security is purchased or sold for
the Portfolios, such purchases and sales will, to the extent feasible, be
allocated among the Portfolios and such clients in a manner believed by
the Adviser to be equitable to the Portfolios and such clients.

SECTION 9. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY

The Trustees or officers of the Trust and the interestholders of
the Portfolios shall not be liable for any obligations of the Trust or of
the Portfolios under this Agreement, and the Adviser agrees that, in
asserting any rights or claims under this Agreement, it shall look only to
the assets and property of the Trust or the Portfolios to which the
Adviser's rights or claims relate in settlement of such rights or claims,
and not to the Trustees or officers of the Trust or the interestholders of
the Portfolios.

SECTION 10. NOTICE

Any notice or other communication required to be given pursuant
to this Agreement shall be in writing or by telex and shall be effective
upon receipt. Notices and communications shall be given, if to the Trust,
at:

Schroder Capital Funds
Two Portland Square
Portland, Maine 04101
Attention: Thomas G. Sheehan

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<PAGE>

and if to the Adviser, at:

Schroder Capital Management International Inc.
787 Seventh Avenue, 29th Floor
New York, New York 10019
Attention: Laura Luckyn-Malone

SECTION 11. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized
and executed by both parties hereto and, if required by the Act, by a vote
of a majority of the outstanding voting interests of the Portfolios
thereby affected. No amendment to this Agreement or the termination of
this Agreement with respect to a Portfolio shall effect this Agreement as
it pertains to any other Portfolio.

(b) If any part, term or provision of this Agreement is held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed
and enforced as if the Agreement did not contain the particular part, term
or provision held to be illegal or invalid.

(c) This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

(d) Section headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this
Agreement.

(e) This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Delaware.

(f) The Adviser confirms that each Portfolio is a "Non-
private Customer" as defined in the rules of IMRO.

(g) The terms "vote of a majority of the outstanding voting
interests," "interested person," "affiliated person" and "assignment"
shall have the meanings ascribed thereto in the Act to the terms "vote of
a majority of the outstanding voting securities," "interested person,"
"affiliated person" and "assignment," respectively.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed all as of the day and year first above written.

SCHRODER CAPITAL FUNDS

/s/ Laura E. Luckyn-Malone
__________________________
Laura E. Luckyn-Malone
President

SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.

/s/ Mark J.Smith
________________________
Mark J. Smith
Director

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<PAGE>

SCHRODER CAPITAL FUNDS
INVESTMENT ADVISORY AGREEMENT

Appendix A
<TABLE>
<CAPTION>
Annual Fee as a % of
the Average Daily
Portfolios of the Trust Net Assets of the Portfolio
----------------------- ---------------------------

<S> <C>

International Equity Fund 0.45%

Schroder Emerging Markets Fund Institutional Portfolio 1.00%

Schroder U.S. Smaller Companies Portfolio 0.60%

</TABLE>
<PAGE>