SCHRODER CAPITAL FUNDS II, POS AMI, 1999-02-26

SCHRODER CAPITAL FUNDS II
POS AMI, 1999-02-26

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As filed with the Securities and Exchange Commission on February 26, 1999

File No. 811-7993

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940

Amendment No. 3

SCHRODER CAPITAL FUNDS II

Two Portland Square
Portland, Maine 04101
207-879-1900

Dana A. Lukens, Esq.
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101

Copies to:

Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110

Carin Muhlbaum, Esq.
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019

- --------------------------------------------------------------------------------

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.
PART A

Schroder International Bond Portfolio

<PAGE>

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

SCHRODER CAPITAL FUNDS II

SCHRODER INTERNATIONAL BOND PORTFOLIO

MARCH 1, 1999

Schroder Capital Funds II (the "Trust"), acting through Forum Fund Services, LLC
(the "Placement Agent"), is making a private placement of shares of beneficial
interest ("Portfolio Interests") in Schroder International Bond Portfolio (the
"Portfolio"), a series of the Trust. The Trust is registered as an open-end
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Portfolio is described in this Confidential Private Placement
Memorandum (the "Memorandum").

Schroder Capital Management International Inc. ("Schroder") manages the
Portfolio. Portfolio Interests are offered by the Placement Agent solely in
private placement transactions to qualified investors subject to the terms
contained in this Memorandum.

THE PORTFOLIO INTERESTS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. ACCORDINGLY, THE PORTFOLIO INTERESTS MAY NOT BE
OFFERED, SOLD OR TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS THAT ARE EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT. THE PORTFOLIO INTERESTS ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS
<TABLE>
<S> <C> <C>

GENERAL CONSIDERATIONS
Offering to Accredited Investors...............................................1
Confidential Memorandum........................................................1
Private Placement in the United States.........................................1

SUMMARY INFORMATION.....................................................................2

OTHER INVESTMENT STRATEGIES AND RISKS
Risks of Investing in the Portfolio............................................4
Other Investment Strategies and Techniques and the Corresponding Risks.........5

MANAGEMENT OF THE PORTFOLIO.............................................................8

INTERESTHOLDER INFORMATION
How the Portfolio Interests are Priced.........................................9
Purchase of Portfolio Interests................................................9
Purchasing Interests in Exchange for Securities...............................10
Redemption of Portfolio Interests.............................................10
Taxes.........................................................................11

OTHER INFORMATION
Capital Structure.............................................................12
Restrictions on Transfer......................................................12
Statement of Additional Information...........................................12
Year 2000.....................................................................12
</TABLE>

<PAGE>

GENERAL CONSIDERATIONS

OFFERING TO ACCREDITED INVESTORS

The Trust, through the Placement Agent, is making a private placement of
Portfolio Interests in the Portfolio to a limited number of U.S. institutional
investors that are "accredited investors" within the meaning of Rule 501 of
Regulation D under the 1933 Act each, (each, an "Accredited Investor").

No sale of Portfolio Interests will be made in the United States or to any U.S.
Person (as such terms are defined in Regulation S under the 1933 Act) that does
not execute and deliver, for the benefit of the Trust and the Placement Agent, a
Subscription Agreement (the "Subscription Agreement") completed in a manner
acceptable to the Trust and the Placement Agent.

Portfolio Interests are being offered subject to prior sale and to withdrawal,
cancellation or modification of the offering. The Trust and the Placement Agent
reserve the right to accept or reject any offer to purchase Portfolio Interests
at any time prior to the termination of the offering.

CONFIDENTIAL MEMORANDUM

This Memorandum is confidential and has been prepared and submitted for use
solely in connection with the consideration of the purchase of Portfolio
Interests in the Portfolio by a limited group of sophisticated accredited
investors in a private placement. You should not use it for any other purpose,
and it should not be reproduced or transferred to any other person without the
consent of the Trust and the Placement Agent. By accepting delivery of this
Memorandum, you agree to return it and all related documents to the Placement
Agent in the event you do not purchase any Portfolio Interests in the Portfolio.

No person has been authorized to give any information or to make any
representations other than those contained in this Memorandum and the Trust's
Statement of Additional Information relating to the Portfolio (the "SAI"), which
is available from the Placement Agent and incorporated herein by reference, and
the Subscription Agreement in connection with the offering and sale of Portfolio
Interests. You should not rely upon any other information or representations as
having been authorized by the Trust or the Placement Agent. The information
contained in this Memorandum and the SAI is correct as of the date hereof, but
may change subsequent to the date hereof.

The contents of this Memorandum and the SAI should not be considered to be legal
or tax advice and you should consult with your own legal counsel and advisers as
to all matters concerning an investment in the Portfolio. You must rely on your
own evaluation of the investment and the terms of the offering, including the
merits and risks involved, in making an investment decision with respect to the
Portfolio.

PRIVATE PLACEMENT IN THE UNITED STATES

The Portfolio Interests are not being registered under the 1933 Act or under any
of the securities laws of any state or other political subdivision of the United
States in reliance upon the offering and sale being exempt from registration in
the United States as a private placement. Accordingly, the Portfolio Interests
are offered only to investors who have the qualifications necessary to permit
the Portfolio Interests to be sold in reliance upon the private placement
exemption. You and your advisors must have such knowledge and experience in
business and financial matters as will enable you to evaluate

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the merits and risks of a proposed investment in the Portfolio and to bear the
economic risk of the investment. In the Subscription Agreement, you must confirm
that you are purchasing the Portfolio Interests for investment purposes only and
not with a view to, or for resale in connection with, any distribution or other
disposition of the Portfolio Interests and you must represent that you are an
Accredited Investor.

Neither this Memorandum, the SAI nor the Subscription Agreement constitutes an
offer to sell or the solicitation of an offer to buy Portfolio Interests in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. In addition, this Memorandum constitutes an
offer only if a Memorandum Identification Number appears in red ink in the
appropriate space on the cover hereof.

SUMMARY INFORMATION

The following summary identifies the Portfolio's investment objective, principal
investment strategies, and principal risks. The investment objective of the
Portfolio may be changed only with approval of the Portfolio's investors
("Interestholders"). The policies of the Portfolio may, unless otherwise
specifically stated, be changed by the Trustees of the Trust without a vote of
the Interestholders.

There is no assurance that the Portfolio will achieve its stated objective.
Further information about the Portfolio is contained in the SAI.

SCHRODER INTERNATIONAL BOND PORTFOLIO

INVESTMENT OBJECTIVE. To seek a high rate of total return.

PRINCIPAL INVESTMENTS. The Portfolio normally invests substantially all of its
assets in debt securities and debt-related investments of companies domiciled
outside the United States. The Portfolio also may invest in debt securities of
foreign governments (including provinces and municipalities) and their agencies
and instrumentalities, debt securities of supranational organizations, and debt
securities of private issuers. The Portfolio normally invests in securities of
issuers in at least five countries other than the United States, although there
is no limit on the amount of the Portfolio's assets that may be invested in
securities of issuers domiciled in any one country.

INVESTMENT STRATEGIES. In seeking a high rate of total return, the Portfolio
invests in debt securities and debt-related investments. "Total return" consists
of current income, including interest payments and discount accruals, plus any
increases in the values of the Portfolio's investments, less any decreases in
the values of any of the Portfolio's investments. The bonds in which the
Portfolio invests may pay interest at fixed, variable, or floating rates. The
rate of return on some of the debt obligations in which the Portfolio invests
may be linked to indices or stock prices or indexed to the level of exchange
rates between the U.S. dollar and a foreign currency or currencies. The
Portfolio currently has invested approximately one-third of its assets in
securities of issuers domiciled in Germany. As a result, the Portfolio's
investment performance will be affected by economic, political, or other factors
affecting issuers and investments in that country more than if it had invested a
smaller portion of its assets in issuers domiciled in Germany. The Portfolio may
borrow money to make investments. Additionally, Schroder may engage in active
currency management through the foreign currency exchange strategies described
later in this Memorandum to try to increase total return or to reduce risk.

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The Portfolio also may do the following:

o Invest in securities of issuers domiciled or doing business in "emerging
market" countries.

o Invest in securities convertible into common or preferred stock, or traded
together with warrants for the purchase of common stock.

o Invest up to 10% of its assets in junk bonds, which entail certain risks.

o Sell securities short and then borrow those same securities from a broker
or other institution to complete the sale (a "short sale").

o Enter into interest rate swaps for hedging purposes or to realize a greater
current return.

o Engage in a variety of transactions involving the use of options and
futures contracts.

o Invest in closed-end funds that invest primarily in emerging markets
securities.

o Invest in derivative instruments, which are financial instruments whose
value depends upon, or is derived from, the value of an underlying asset,
such as a security, index or currency.

PRINCIPAL RISKS.

o DEBT SECURITIes. The Portfolio invests in debt securities, which are
subject to market risk (the fluctuation of market value in response to
changes in interest rates) and to credit risks (the risk that the issuer
may become unable or unwilling to make timely payments of principal and
interest).

o JUNK BONds. Securities rated below investment grade lack outstanding
investment characteristics and have speculative characteristics and are
subject to greater credit and market risks than higher-rated securities.
The ratings of junk bonds reflect a greater possibility that adverse
changes in the financial condition of the issuer or in general economic
conditions, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. If this
were to occur, the values of securities held by the Portfolio may become
more volatile.

o LEVERAGE. The Portfolio may borrow money by engaging in reverse repurchase
agreements to invest in additional securities. Reverse repurchase
agreements generally involve the sale by the Portfolio of securities held
by it and an agreement to repurchase the securities at an agreed-upon
price, date, and interest payment. The use of borrowed money, known as
leverage, increases the Portfolio's market exposure and risk and may result
in losses. The interest that the Portfolio must pay on borrowed money will
reduce its net investment income, and may also either offset any potential
capital gains or increase any losses. Leverage is a speculative technique
that makes the Portfolio's net asset value more volatile than it would
normally be.

o GEOGRAPHIC CONCENTRATION. There is no limit on the amount of the
Portfolio's assets that may be invested in securities of issuers domiciled
in any one country. To the extent that the Portfolio invests a substantial

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amount of its assets in one country, it will be more susceptible to the
political and economic developments and market fluctuations in that country
than if it invested in a more geographically diversified portfolio.

o NON-DIVERSIFIED MUTUAL FUND. The Portfolio is a "non-diversified" mutual
fund, and will invest its assets in a more limited number of issuers than
may diversified investment companies. To the extent the Portfolio focuses
on fewer issuers, its risk of loss increases if the market value of a
security declines or if an issuer is not able to meet its obligations.

OTHER INVESTMENT STRATEGIES AND RISKS

The Portfolio may not achieve its investment objective in all circumstances. The
following provides more detail about the Portfolio's principal risks and the
circumstances, which could adversely affect the value of Portfolio Interests or
their total return. You could lose money by investing.

RISKS OF INVESTING IN THE PORTFOLIO

DEBT SECURITIES. The Portfolio may invest in debt securities, which are subject
to the risk of fluctuation of market value in response to changes in interest
rates and the risk that the issuer may default on the timely payment of
principal and interest. Additionally, the Portfolio may invest in lower-quality,
high-yielding debt securities, commonly known as junk bonds. Lower-rated debt
securities are predominantly speculative and tend to be more susceptible than
other debt securities to adverse changes in the financial condition of the
issuer, general economic conditions, or an unanticipated rise in interest rates,
which may affect an issuer's ability to pay interest and principal. This would
likely make the values of the securities held by the Portfolio more volatile and
could limit the Portfolio's ability to liquidate its securities. Changes by
recognized rating services in their ratings of any fixed-income security and in
the perceived ability of an issuer to make payments of interest and principal
also may affect the value of these investments.

FOREIGN SECURITIES. Except as otherwise noted in this Memorandum, there is no
limit on the amount of the Portfolio's assets that may be invested in foreign
securities. Investments in foreign securities entail certain risks. There may be
a possibility of nationalization or expropriation of assets, confiscatory
taxation, political or financial instability, and diplomatic developments that
could affect the value of the Portfolio's investments in certain foreign
countries. Since foreign securities normally are denominated and traded in
foreign currencies, the values of the Portfolio's assets may be affected
favorably or unfavorably by currency exchange rates, currency exchange control
regulations, foreign withholding taxes, and restrictions or prohibitions on the
repatriation of foreign currencies. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign issuers
are not generally subject to accounting, auditing, and financial reporting
standards and practices comparable to those in the United States. The securities
of some foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage commissions and other
fees are also generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Portfolio's assets
held abroad) and expenses not present in the settlement of domestic investments.

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In addition, legal remedies available to investors in certain foreign countries
may be more limited than those available to investors in the United States or in
other foreign countries. The willingness and ability of foreign governmental
entities to pay principal and interest on government securities depends on
various economic factors, including the issuer's balance of payments, overall
debt level, and cash-flow considerations related to the availability of tax or
other revenues to satisfy the issuer's obligations. If a foreign governmental
entity is unable or unwilling to meet its obligations on the securities, the
Portfolio may have limited recourse available to it. The laws of some foreign
countries may limit the Portfolio's ability to invest in securities of certain
issuers located in those countries.

If the Portfolio purchases securities denominated in foreign currencies, a
change in the value of any such currency against the U.S. dollar will result in
a change in the U.S. dollar value of the Portfolio's assets and the Portfolio's
income available for distribution. In addition, although at times most of the
Portfolio's income may be received or realized in these currencies, the
Portfolio will be required to compute and distribute its income in U.S. dollars.
As a result, if the exchange rate for any such currency declines after the
Portfolio's income has been earned and translated into U.S. dollars but before
payment to Interestholders, the Portfolio could be required to liquidate
portfolio securities to make such distributions. Similarly, if the Portfolio
incurs an expense in U.S. dollars and the exchange rate declines before the
expense is paid, the Portfolio would have to convert a greater amount of U.S.
dollars to pay for the expense at that time than it would have had to convert at
the time the Portfolio incurred the expense. The Portfolio may buy or sell
foreign currencies and options and futures contracts on foreign currencies for
hedging purposes in connection with its foreign investments.

Special tax considerations apply to foreign securities. In determining whether
to invest in debt securities of foreign issuers, Schroder considers the likely
impact of foreign taxes on the net yield available to the Portfolio and its
Interestholders. Income received by the Portfolio from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by the Portfolio will reduce
its income available for distribution to Interestholders. In certain
circumstances, the Portfolio may be able to pass through to Interestholders
credits for foreign taxes paid.

OTHER INVESTMENT STRATEGIES AND TECHNIQUES AND THE CORRESPONDING RISKS

In addition to the principal investment strategies described in the Summary
Information section above, the Portfolio may at times use the strategies and
techniques described below, which involve certain special risks. This Memorandum
does not attempt to disclose all of the various investment techniques and types
of securities that Schroder might use in managing the Portfolio. As in any
mutual fund, investors must rely on the professional investment judgment and
skill of the Portfolio's adviser.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates will
affect the U.S. dollar value of Portfolio assets, including securities
denominated in foreign currencies. Exchange rates between the U.S. dollar and
other currencies fluctuate in response to forces of supply and demand in the
foreign exchange markets. These forces are affected by the international balance
of payments and other political, economic and financial conditions, which may be
difficult to predict. The Portfolio may engage in currency exchange transactions
to protect against unfavorable fluctuations in exchange rates. The Portfolio may
also enter into forward contracts to adjust the Portfolio's exposure to various
foreign currencies, either pending anticipated investments in securities
denominated in those currencies or as a hedge against anticipated market
changes.

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In particular, the Portfolio may enter into foreign currency exchange
transactions to protect against a change in exchange rates that may occur
between the date on which the Portfolio contracts to trade a security and the
settlement date ("transaction hedging") or in anticipation of placing a trade
("anticipatory hedging"); to "lock in" the U.S. dollar value of interest and
dividends to be paid in a foreign currency; or to hedge against the possibility
that a foreign currency in which portfolio securities are denominated or quoted
may suffer a decline against the U.S. dollar ("position hedging").

From time to time, the Portfolio's currency hedging transactions may call for
the delivery of one foreign currency in exchange for another foreign currency
and may at times involve currencies in which its portfolio securities are not
then denominated ("cross hedging"). The Portfolio may also engage in "proxy"
hedging, whereby the Portfolio would seek to hedge the value of portfolio
holdings denominated in one currency by entering into an exchange contract on a
second currency, the valuation of which Schroder believes correlates to the
value of the first currency.

Schroder may buy or sell currencies in "spot" or forward transactions. "Spot"
transactions are executed contemporaneously on a cash basis at the
then-prevailing market rate. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date (which may be any fixed
number of days from the date of the contract agreed upon by the parties) at a
price set at the time of the contract. Forward contracts do not eliminate
fluctuations in the underlying prices of securities and expose the Portfolio to
the risk that the counterparty is unable to perform. The Portfolio incurs
foreign exchange expenses in converting assets from one currency to another.

There is no limit on the amount of the Portfolio's assets that may be invested
in foreign currency exchange and foreign currency forward contracts. In
addition, the Portfolio may enter into foreign currency forward contracts for
non-hedging purposes. The Portfolio may, to a limited extent, purchase forward
contracts to increase exposure in foreign currencies that are expected to
appreciate and thereby increase total return. Suitable foreign currency hedging
transactions may not be available in all circumstances and there can be no
assurance that the Portfolio will utilize hedging transactions at any time.

SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Portfolio
may lend portfolio securities to broker-dealers up to one-third of the
Portfolio's total assets. The Portfolio may also enter into repurchase
agreements without limit. These transactions must be fully collateralized at all
times, but involve some risk to the Portfolio if the other party should default
on its obligation and the Portfolio is delayed or prevented from recovering the
collateral. The Portfolio may also enter into contracts to purchase securities
for a fixed price at a future date beyond customary settlement time, which may
increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.

SHORT SALES. When Schroder anticipates that the price of a security will
decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Portfolio may make a
profit or incur a loss depending upon whether the market price of the security
decreases or increases between the date of the short sale and the date on which
the Portfolio must replace the borrowed security. An increase in the value of a
security sold short by the Portfolio over the price at which it was sold short
will result in a loss to the Portfolio, and there can be no assurance that the
Portfolio will be able to close out the position at any particular time or at an
acceptable price.

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INVESTMENT IN OTHER INVESTMENT COMPANIES. The Portfolio may invest in other
investment companies or pooled vehicles, including closed-end funds that are
advised by Schroder or its affiliates or by unaffiliated parties. When investing
in another investment company, the Portfolio may pay a premium above such
investment company's net asset value per share. As a shareholder in an
investment company, the Portfolio would bear its ratable share of the investment
company's expenses, including advisory and administrative fees, and would at the
same time continue to pay its own fees and expenses.

DERIVATIVE INVESTMENTS. Instead of investing directly in the types of portfolio
securities described in the Summary Information, the Portfolio may buy or sell a
variety of "derivative" investments to gain exposure to particular securities or
markets, in connection with hedging transactions, and to increase total return.
These may include options, futures, and indices, for example. Derivatives
involve the risk that they may not work as intended due to unanticipated
developments in market conditions or other causes. Also, derivatives often
involve the risk that the other party to the transaction will be unable to meet
its obligations or that the Portfolio will be unable to close out the position
at any particular time or at an acceptable price.

ZERO-COUPON BONDS. The Portfolio may invest in zero-coupon bonds. Zero-coupon
bonds are issued at a significant discount from face value and pay interest only
at maturity rather than at intervals during the life of the security.
Zero-coupon bonds allow an issuer to avoid the need to generate cash to meet
current interest payments and, as a result, may involve greater credit risks
than bonds that pay interest currently.

INTEREST RATE SWAPS. The Portfolio may enter into interest rate swaps for
hedging purposes or to increase total return. Interest rate swaps involve the
exchange by the Portfolio with another party of different types of interest-rate
streams (for example, an exchange of floating rate payments for fixed rate
payments with respect to a notional amount of principal). The Portfolio's
ability to engage in certain interest rate transactions may be limited by tax
considerations. The use of interest rate swaps is a highly specialized activity
that involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. If Schroder is incorrect in its
forecasts of market values, interest rates, or other relevant factors, the
investment performance of the Portfolio would be less favorable than it would
have been if this investment technique were not used.

PORTFOLIO TURNOVER. The length of time the Portfolio has held a particular
security is not generally a consideration in investment decisions. The
investment policies of the Portfolio may lead to frequent changes in the
Portfolio's investments, particularly in periods of volatile market movements. A
change in the securities held by the Portfolio is known as "portfolio turnover."
Portfolio turnover generally involves some expense to the Portfolio, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. Such sales may increase the
amount of capital gains (and, in particular, short-term gains) realized by the
Portfolio, on which Interestholders pay tax.

TEMPORARY DEFENSIVE STRATEGIES. At times, Schroder may judge that conditions in
the securities markets make pursuing the Portfolio's basic investment strategy
inconsistent with the best interests of its Interestholders. At such times,
Schroder may temporarily use alternate investment strategies primarily designed
to reduce fluctuations in the value of the Portfolio's assets. In implementing
these "defensive" strategies, the Portfolio would invest in high-quality debt
securities, cash, or money market instruments to any extent Schroder considers
consistent with such defensive strategies. It is impossible to predict

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when, or for how long, the Portfolio will use these alternate strategies. One
risk of taking such temporary defensive positions is that the Portfolio may not
achieve its investment objective.

OTHER INVESTMENTS. The Portfolio may also invest in other types of securities
and utilize a variety of investment techniques and strategies that are not
described in this Memorandum. These securities and techniques may subject the
Portfolios to additional risks. Please see the SAI for additional discussion
about the securities and investment techniques described in this Memorandum and
about additional techniques and strategies that may be used by the Portfolio.

MANAGEMENT OF THE PORTFOLIO

A Board of Trustees governs the Trust, which has retained Schroder to manage the
investments the Portfolio. Subject to the control of the Trustees, Schroder also
manages the Portfolio's other affairs and business. Schroder has served as
investment adviser to the Portfolio since inception.

Schroder has been an investment manager since 1962 and serves as investment
adviser to a broad range of institutional investors. As of December 31, 1998,
Schroder, together with its United Kingdom affiliate, Schroder Capital
Management International Limited, had approximately $27.1 billion in assets
under management. Schroder's address is 787 Seventh Avenue, 34th floor, New
York, New York 10019, and its telephone number is (212) 641-3900.

INVESTMENT ADVISORY FEES PAID BY THE PORTFOLIO. For the fiscal year ended
December 31, 1998, the Portfolio paid investment advisory fees to Schroder at
the annual rate (based on the average net assets of the Portfolio) of 0.00%.

EXPENSE LIMITATIONS AND WAIVERS. In order to limit the Portfolio's expenses,
Schroder has voluntarily agreed to reduce its compensation (and, if necessary,
to pay certain other Portfolio expenses) to the extent that the Portfolio's
total operating expenses exceed the annual rate (based on the average net assets
of the Portfolio) of 0.75%.

PORTFOLIO MANAGERS. Schroder's investment decisions for the Portfolio are
generally made by an investment manager or an investment team, with the
assistance of an investment committee. The following portfolio managers have had
primary responsibility for making investment decisions for the Portfolio since
the years shown below. Their recent professional experience is also shown.
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Portfolio Manager Since Recent Professional Experience
- ----------------------------- ------------------------- ------------------------------------------- ----------
- ----------------------------- ------------------------- ------------------------------------------- ----------

Michael Perelstein Inception (1997) Employed as an investment professional at
Schroder since 1997. Mr. Perelstein is
also Vice President of the Trust and of
Schroder Capital Funds (Delaware) and
Schroder Capital Funds II, and a Director
and Senior Vice President of Schroder.
Prior to joining Schroder, Mr. Perelstein
was a Managing Director at MacKay-Shields
Financial Corp. from March 1993 to
November 1996.
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Mark Astley Inception (1997) Employed as an investment professional at
Schroder since 1986. Mr. Astley is a
Vice President of the Trust and of
Schroder Capital Funds (Delaware) and
Schroder Capital Funds II, and is a First
Vice President of Schroder.
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</TABLE>

INTERESTHOLDER INFORMATION

HOW PORTFOLIO INTERESTS ARE PRICED

The Portfolio calculates the net asset value of its Portfolio Interests by
dividing the total value of its assets less its liabilities by the number of
Portfolio Interests outstanding. Portfolio Interests are valued as of the close
of trading on the New York Stock Exchange (normally 4:00 p.m., Eastern Time)
each day the Exchange is open (a "Business Day"). The Trust expects that days,
other than weekend days, that the Exchange will not be open are New Years Day,
Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Portfolio
values its portfolio securities for which market quotations are readily
available at market value. Short-term investments that will mature in 60 days or
less are stated at amortized cost, which approximates market value. The
Portfolio values all other securities at amortized cost, which approximates
market value. The Portfolio values all other securities at their fair values as
determined in accordance with procedures adopted by the Board of Trustees. All
assets and liabilities of the Portfolio denominated in foreign currencies are
valued in U.S. dollars based on the exchange rate last quoted by a major bank
prior to the time when the net asset value of the Portfolio's Portfolio
Interests is calculated. Because certain of the securities in which the
Portfolio may invest may trade on days on which the Portfolio does not price its
Portfolio Interests, the net asset value of the Portfolio Interests may change
when Interestholders will not be able to purchase or redeem their Portfolio
Interests.

PURCHASE OF PORTFOLIO INTERESTS

Portfolio Interests 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. Portfolio Interests are sold at a Portfolio's net asset value next
determined after an order is received, without a sales load. The Placement Agent
receives no compensation for its services.

Registered investment companies are not subject to a minimum initial or
subsequent investment amount. For other qualified investors, the minimum initial
investment amount is $2 million, and there is no minimum subsequent investment
amount. Investments must be made in federal funds (I.E., monies credited to the
account of the Trust's custodian by a Federal Reserve Bank). Minimum investment
amounts may be waived at the discretion of Schroder.

If your completed Subscription Agreement has been accepted by the Placement
Agent, you may transmit purchase payments by Federal Reserve Bank wire directly
to the Portfolio as follows:

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The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account No.: 910-2-783645
Ref.: Schroder International Bond Portfolio
Account of: [Interestholder name]
Account Number: [Interestholder account number]

The wire order must specify the Portfolio's name, the account name and number,
address, confirmation number, amount to be wired, name of the wiring bank, and
name and telephone number of the person to be contacted in connection with the
order. If your initial investment is by wire, your completed Subscription
Agreement must be received and accepted by the Placement Agent, who will assign
you an Interestholder account number and activate your account. Wire orders
received prior to the close of trading of the New York Stock Exchange (normally
4:00 p.m., Eastern time) on each Business Day are processed at the net asset
value determined as of that day. Wire orders received after that time are
processed at the net asset value next determined thereafter. The Trust reserves
the right to cease accepting investments in the Portfolio at any time or to
reject any Subscription Agreement or investment order.

PURCHASING INTERESTS IN EXCHANGE FOR SECURITIES

Portfolio Interests may be purchased for cash or in exchange for securities held
by the investor, subject to the determination by Schroder that the securities
are acceptable. (For purposes of determining whether securities will be
acceptable, Schroder will consider, among other things, whether they are liquid
securities of a type consistent with the investment objectives and policies of
the Portfolio in question and have a readily ascertainable value.) If the
Portfolio receives securities from an investor in exchange for Portfolio
Interests, the Portfolio will under some circumstances have the same tax basis
in the securities as the investor had prior to the exchange (and the Portfolio's
gain for tax purposes would be calculated with regard to the investor's tax
basis). Any gain on the sale of those securities would be subject to
distribution as capital gain to all of the Portfolio's Interestholders. Schroder
reserves the right to reject any particular investment. Securities accepted by
Schroder will be valued in the same manner as are the Trust's portfolio
securities at the next determination of the Portfolio's net asset value. All
dividend, subscription, or other rights which are reflected in the market price
of accepted securities at the time of valuation become the property of the
relevant Portfolio and must be delivered to the Portfolio upon receipt by the
investor. Investors may realize a gain or loss upon the exchange for federal
income tax purposes. If you are interested in purchases through exchange, please
telephone the Trust at (800) 290-9826.

REDEMPTION OF PORTFOLIO INTERESTS

You may redeem all or any portion of your investment in the Portfolio at the net
asset value next determined after you deliver a redemption request in proper
form to the Trust. Redemption proceeds are normally paid by the Trust in federal
funds on the Business Day after the withdrawal is effected but, in any event,
within seven calendar days. Investments in the Portfolio may not be transferred.
The right of redemption may not be suspended nor may the payment dates be
postponed for more than seven days except when the New York Stock Exchange is
closed (or when trading on the New York Stock Exchange is restricted) for any
reason other than its customary weekend or holiday closings, or

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<PAGE>

under any emergency or other circumstances as determined by the Securities and
Exchange Commission.

Redemption requests may be made between 9:00 a.m. and 6:00 p.m. (Eastern time)
on each Business Day. Redemption requests that are received prior to the closing
of the New York Stock Exchange are processed at the net asset value next
determined on that day. Redemption requests that are received after the closing
of the Exchange are processed at the net asset value next determined. Redemption
requests must include the name of the Interestholder, the Portfolio's name, the
dollar amount or number of Portfolio Interests to be redeemed, Interestholder
account number, and the signature of the holder designated on the account.

Written redemption requests may be sent to the Trust at the following address:

Schroder International Bond Portfolio
P.O. Box 446
Portland, Maine 04112

Telephone redemption requests may be made by telephoning the Trust at (800)
344-8332. A telephone redemption may be made only if the telephone redemption
privilege option has been elected on the Subscription Agreement or otherwise in
writing, and the Interestholder has obtained a password from the Trust's
transfer agent. In an effort to prevent unauthorized or fraudulent redemption
requests by telephone, reasonable procedures will be followed by the Trust's
transfer agent to confirm that telephone instructions are genuine. The transfer
agent and the Trust generally will not be liable for any losses due to
unauthorized or fraudulent redemption requests, but either may be liable if it
does not follow these procedures. In times of drastic economic or market change
it may be difficult to make redemptions by telephone. If an Interestholder
cannot reach the transfer agent by telephone, redemption requests may be mailed
or hand-delivered to the transfer agent.

Redemption proceeds normally are paid in cash. If you paid for your Portfolio
Interests by check, you will not be sent redemption proceeds until the check you
used to pay for the Portfolio Interests has cleared, which may take up to 15
calendar days from the purchase date.

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

TAXES

The Portfolio is not required to pay federal income taxes on its ordinary income
and capital gain because it is treated as a partnership for federal income tax
purposes. All interest, dividends and gains and losses of the Portfolio are
deemed to "pass through" to its Interestholders, regardless of whether such
interest, dividends or gains are distributed by the Portfolio or the Portfolio's
realizes losses.

Under the Portfolio's operational method, it is not subject to any federal
income tax. However, each Interestholder in the Portfolio will be taxed on its
proportionate share (as determined in accordance

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<PAGE>

with the Trust's Trust Instrument and the Internal Revenue Code) of the
Portfolio's ordinary income and capital gain, to the extent that the
Interestholder is subject to tax on its income. The Trust will inform
Interestholders of the Portfolio of the amount and nature of such income or
gain.

The foregoing discussion relates only to federal income tax law. Income from the
Portfolio also may be subject to foreign, state and local taxes, and the
treatment under foreign, state and local income tax laws may differ from the
federal income tax treatment. Interestholders should consult their tax advisors
with respect to particular questions of federal, foreign, state and local
taxation.

OTHER INFORMATION

CAPITAL STRUCTURE

The Trust was organized as a business trust under the laws of the State of
Delaware on December 26, 1996. Under the Trust Instrument, the Trustees are
authorized to issue interests in separate series of the Trust. The Trust
currently has one series (the Portfolio described in this Memorandum). The Trust
reserves the right to create additional series.

Each Interestholder 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 have no preemptive or
conversion rights and are fully paid and non-assessable. Upon liquidation of the
Portfolio, Interestholders will be entitled to share pro rata in the Portfolio's
net assets available for distribution to Interestholders.

RESTRICTIONS ON TRANSFER

Transfers of Portfolio Interests will be subject to the restrictions set forth
in the Subscription Agreement and in the Trust Instrument. These provide that no
sale or other transfer of Portfolio Interests may be made by an Interestholder
unless such sale or other transfer is exempt from such registration under the
1933 Act and other applicable legislation, and that the consent of the other
Interestholders of the Portfolio will be required for any such sale or other
transfer of Portfolio Interest.

STATEMENT OF ADDITIONAL INFORMATION

Further information about the Portfolio is contained in the Trust's Statement of
Additional Information relating to the Portfolio, which is available from the
Placement Agent and is incorporated herein by reference.

YEAR 2000

Each of the Portfolios receives services from its investment adviser,
administrator, subadministrator, placement agent, transfer agent, custodian and
other providers that rely on the smooth functioning of their respective systems
and the systems of others to perform those services. It is generally recognized
that certain systems in use today may not perform their intended functions
adequately after the Year 1999. Schroder is taking steps that it believes are
reasonably designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by each of

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the Portfolios' other major service providers. There can be no assurance,
however, that these steps will be sufficient to avoid any adverse impact on the
Portfolios from this problem. In addition, there can be no assurance that the
Year 2000 problem will not have an adverse impact on companies and other issuers
in which the Portfolios invest or on the securities markets generally, which may
reduce the value of the Portfolios' investments.

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<PAGE>

<PAGE>

PART B

Schroder International Bond Portfolio

<PAGE>

FORM N-1A PART B

CONFIDENTIAL STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

SCHRODER CAPITAL FUNDS II

SCHRODER INTERNATIONAL BOND PORTFOLIO

MARCH 1, 1999

Schroder Capital Management International Inc. manages the Portfolio. Portfolio
Interests are offered by the Placement Agent solely in private placement
transactions to qualified investors subject to the terms contained in the
Trust's Confidential Private Placement Memorandum (the "Memorandum") dated March
1, 1999 relating to the Portfolio.

This SAI is not a Memorandum and is authorized for distribution only when
accompanied or preceded by the Memorandum. This SAI contains information that
may be useful to investors in the Portfolio ("Interestholders") but which is not
included in the Memorandum. You may obtain free copies of the Memorandum by
calling the Trust at (800) 730-2932 or the Placement Agent at (207) 879-1900.
For a free copy of the annual report, please call (800) 730-2932.

<PAGE>

TABLE OF CONTENTS

TRUST HISTORY...........................................................

PORTFOLIO CLASSIFICATION................................................

CAPITALSTOCK AND OTHER SECURITIES.......................................

MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS...............

INVESTMENT RESTRICTIONS.................................................

TRUSTEES AND OFFICERS...................................................

SCHRODER AND ITS AFFILIATES.............................................

INVESTMENT ADVISORY AGREEMENTS..........................................

ADMINISTRATIVE SERVICES.................................................

PLACEMENT AGENT.........................................................

PORTFOLIOACCOUNTING.....................................................

BROKERAGE ALLOCATION AND OTHER PRACTICES................................

DETERMINATION OF NET ASSET VALUE........................................

REDEMPTIONS IN KIND.....................................................

TAXES...................................................................

PRINCIPAL HOLDERS OF PORTFOLIO INTERESTS................................

PERFORMANCE INFORMATION.................................................

CUSTODIAN...............................................................

INDEPENDENT AUDITORS....................................................

LEGAL COUNSEL...........................................................

INTERESTHOLDER LIABILITY................................................

FINANCIAL STATEMENTS....................................................

APPENDIX A..............................................................

APPENDIX B..............................................................

APPENDIX C..............................................................
<PAGE>

SCHRODER CAPITAL FUNDS II
CONFIDENTIAL STATEMENT OF ADDITIONAL INFORMATION

TRUST HISTORY

The Trust was organized as a Delaware business trust on December 26, 1996.
The Trust's Trust Instrument, which is governed by Delaware law, is on file with
the Secretary of State of the State of Delaware.

PORTFOLIO CLASSIFICATION

The Portfolio described in and offered pursuant to the Memorandum and this SAI
has distinct investment objectives and policies. The Portfolio is a
"non-diversified" investment company under the 1940 Act, and therefore may
invest its assets in a more limited number of issuers than may diversified
investment companies. To the extent the Portfolio invests a significant portion
of its assets in the securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of the issuer's securities declines.

CAPITAL STOCK AND OTHER SECURITIES

Under the Trust Instrument of the Trust, the Trustees are authorized to issue
shares of beneficial interest in separate series of the Trust. The Trust
currently has one series (the Portfolio described in this SAI), and the Trust
reserves the right to create additional series.

Each Interestholder 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
without the unanimous consent of the other Interestholders in the Portfolio, but
an Interestholder may withdraw all or any portion of its investment at any time
at the next determined net asset value.

The Trust is not required, and has no current intention, to hold annual meetings
of Interestholders, but the Trust will hold special meetings of Interestholders
when in the Trustees' judgment it is necessary or desirable to submit matters
for an Interestholder vote or when it is otherwise required under state law or
the 1940 Act. Generally, portfolio interests are voted in the aggregate without
reference to a particular portfolio, unless the Trustees determine that the
matter affects only one portfolio or portfolio voting is required, in which case
portfolio interests are voted separately by each portfolio. Upon liquidation of
the Portfolio, Interestholders will be entitled to share pro rata in the
Portfolio's net assets available for distribution to Interestholders.

<PAGE>

MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS

In addition to the principal investment strategies and the principal risks of
the Portfolio described in the Memorandum, the Portfolio may employ other
investment practices and may be subject to additional risks, which are described
below.

CERTAIN DERIVATIVE INSTRUMENTS

Derivative instruments are financial instruments whose value depends upon, or is
derived from, the value of an underlying asset, such as a security, index or
currency. As described below, the Portfolio may engage in a variety of
transactions involving the use of derivative instruments, including options and
futures contracts on securities and securities indices and options on futures
contracts. These transactions may be used by the Portfolio for hedging purposes
or, to the extent permitted by applicable law, to increase its current return.
The Portfolio may also engage in derivative transactions involving foreign
currencies. See "Foreign Currency Transactions."

OPTIONS

The Portfolio may purchase and sell covered put and call options on its
portfolio securities to enhance investment performance and to protect against
changes in market prices.

COVERED CALL OPTIONS. The Portfolio may write covered call options on its
securities to realize a greater current return through the receipt of premiums
than it would realize on its securities alone. Such option transactions may also
be used as a limited form of hedging against a decline in the price of
securities owned by the Portfolio.

A call option gives the holder the right to purchase, and obligates the writer
to sell, a security at the exercise price at any time before the expiration
date. A call option is "covered" if the writer, at all times while obligated as
a writer, either owns the underlying securities (or comparable securities
satisfying the cover requirements of the securities exchanges), or has the right
to acquire such securities through immediate conversion of securities.

In return for the premium received when it writes a covered call option, the
Portfolio gives up some or all of the opportunity to profit from an increase in
the market price of the securities covering the call option during the life of
the option. The Portfolio retains the risk of loss should the price of such
securities decline. If the option expires unexercised, the Portfolio realizes a
gain equal to the premium, which may be offset by a decline in price of the
underlying security. If the option is exercised, the Portfolio realizes a gain
or loss equal to the difference between the Portfolio's cost for the underlying
security and the proceeds of the sale (exercise price minus commissions) plus
the amount of the premium.

The Portfolio may terminate a call option that it has written before it expires
by entering into a closing purchase transaction. The Portfolio may enter into
closing purchase transactions in order to free itself to sell the underlying

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<PAGE>

security or to write another call on the security, realize a profit on a
previously written call option, or protect a security from being called in an
unexpected market rise. Any profits from a closing purchase transaction may be
offset by a decline in the value of the underlying security. Conversely, because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from a
closing purchase transaction is likely to be offset in whole or in part by
unrealized appreciation of the underlying security owned by the Portfolio.

COVERED PUT OPTIONS. The Portfolio may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
Portfolio plans to purchase. A put option gives the holder the right to sell,
and obligates the writer to buy, a security at the exercise price at any time
before the expiration date. A put option is "covered" if the writer segregates
cash and high-grade short-term debt obligations or other permissible collateral
equal to the price to be paid if the option is exercised.

In addition to the receipt of premiums and the potential gains from terminating
such options in closing purchase transactions, the Portfolio also receives
interest on the cash and debt securities maintained to cover the exercise price
of the option. By writing a put option, the Portfolio assumes the risk that it
may be required to purchase the underlying security for an exercise price higher
than its then current market value, resulting in a potential capital loss unless
the security later appreciates in value.

The Portfolio may terminate a put option that it has written before it expires
by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated option.

PURCHASING PUT AND CALL OPTIONS. The Portfolio may also purchase put options to
protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Portfolio, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Portfolio
must pay. These costs will reduce any profit the Portfolio might have realized
had it sold the underlying security instead of buying the put option.

The Portfolio may purchase call options to hedge against an increase in the
price of securities that the Portfolio wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Portfolio,
as holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs. These costs will reduce any profit the Portfolio
might have realized had it bought the underlying security at the time it
purchased the call option.

The Portfolio may also purchase put and call options to enhance its current
return. The Portfolio may also buy and sell combinations of put and call options
on the same underlying security to earn additional income.

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<PAGE>

OPTIONS ON FOREIGN SECURITIES. The Portfolio may purchase and sell options on
foreign securities if in Schroder's opinion the investment characteristics of
such options, including the risks of investing in such options, are consistent
with the Portfolio's investment objectives. It is expected that risks related to
such options will not differ materially from risks related to options on U.S.
securities. However, position limits and other rules of foreign exchanges may
differ from those in the U.S. In addition, options markets in some countries,
many of which are relatively new, may be less liquid than comparable markets in
the U.S.

RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve certain
risks, including the risks that Schroder will not forecast interest rate or
market movements correctly, that the Portfolio may be unable at times to close
out such positions, or that hedging transactions may not accomplish their
purpose because of imperfect market correlations. The successful use of these
strategies depends on the ability of Schroder to forecast market and interest
rate movements correctly.

An exchange-listed option may be closed out only on an exchange that provides a
secondary market for an option of the same series. Although the Portfolio will
enter into an option position only if Schroder believes that a liquid secondary
market exists, there is no assurance that a liquid secondary market on an
exchange will exist for any particular option or at any particular time. If no
secondary market were to exist, it would be impossible to enter into a closing
transaction to close out an option position. As a result, the Portfolio may be
forced to continue to hold, or to purchase at a fixed price, a security on which
it has sold an option at a time when Schroder believes it is inadvisable to do
so.

Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict the Portfolio's
use of options. The exchanges have established limitations on the maximum number
of calls and puts of each class that may be held or written by an investor or
group of investors acting in concert. It is possible that the Portfolio and
other clients of Schroder may be considered such a group. These position limits
may restrict the Portfolio's ability to purchase or sell options on particular
securities.

As described below, the Portfolio generally expects that its options
transactions will be conducted on recognized exchanges. In certain instances,
however, the Portfolio may purchase and sell options in the over-the-counter
markets. Options which are not traded on national securities exchanges may be
closed out only with the other party to the option transaction. For that reason,
it may be more difficult to close out over-the-counter options than
exchange-traded options. Options in the over-the-counter market may also involve
the risk that securities dealers participating in such transactions would be
unable to meet their obligations to a Portfolio. Furthermore, over-the-counter
options are not subject to the protection afforded purchasers of exchange-traded
options by The Options Clearing Corporation. A Portfolio will, however, engage
in over-the-counter options transactions only when appropriate exchange-traded
options transactions are unavailable and when, in the opinion of Schroder, the
pricing mechanism and liquidity of the over-the-counter markets are satisfactory
and the participants are responsible parties likely to meet their contractual
obligations. A Portfolio will treat over-the-counter options (and, in the case
of options sold by the Portfolio, the underlying securities held by the
Portfolio) as illiquid investments as required by applicable law.

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<PAGE>

Government regulations, particularly the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code, may also
restrict the Trust's use of options.

FUTURES CONTRACTS

In order to hedge against the effects of adverse market changes, the Portfolio
that may invest in debt securities may buy and sell futures contracts on U.S.
Government securities and other debt securities in which the Portfolio may
invest, and on indices of debt securities. In addition, the Portfolio may
purchase and sell stock index futures to hedge against changes in stock market
prices. The Portfolio may also, to the extent permitted by applicable law, buy
and sell futures contracts and options on futures contracts to increase the
Portfolio's current return. All such futures and related options will, as may be
required by applicable law, be traded on exchanges that are licensed and
regulated by the Commodity Futures Trading Commission (the "CFTC"). Depending
upon the change in the value of the underlying security or index when the
Portfolio enters into or terminates a futures contract, the Portfolio may
realize a gain or loss.

FUTURES ON DEBT SECURITIES AND RELATED OPTIONS. A futures contract on a debt
security is a binding contractual commitment which, if held to maturity, will
result in an obligation to make or accept delivery, during a particular month,
of securities having a standardized face value and rate of return. By purchasing
futures on debt securities -- assuming a "long" position -- the Portfolio will
legally obligate itself to accept the future delivery of the underlying security
and pay the agreed price. By selling futures on debt securities - assuming a
"short" position - it will legally obligate itself to make the future delivery
of the security against payment of the agreed price. Open futures positions on
debt securities will be valued at the most recent settlement price, unless that
price does not, in the judgment of persons acting at the direction of the
Trustees as to the valuation of the Portfolio's assets, reflect the fair value
of the contract, in which case the positions will be valued by the Trustees or
such persons.

Positions taken in the futures markets are not normally held to maturity, but
are instead liquidated through offsetting transactions that may result in a
profit or a loss. While futures positions taken by the Portfolio will usually be
liquidated in this manner, the Portfolio may instead make or take delivery of
the underlying securities whenever it appears economically advantageous to the
Portfolio to do so. A clearing corporation associated with the exchange on which
futures are traded assumes responsibility for such closing transactions and
guarantees that the Portfolio's sale and purchase obligations under closed-out
positions will be performed at the termination of the contract.

Hedging by use of futures on debt securities seeks to establish more certainly
than would otherwise be possible the effective rate of return on portfolio
securities. The Portfolio may, for example, take a "short" position in the
futures market by selling contracts for the future delivery of debt securities
held by the Portfolio (or securities having characteristics similar to those
held by the Portfolio) in order to hedge against an anticipated rise in interest
rates that would adversely affect the value of the Portfolio's portfolio
securities. When hedging of this character is successful, any depreciation in
the value of portfolio securities may substantially be offset by appreciation in
the value of the futures position.

On other occasions, the Portfolio may take a "long" position by purchasing
futures on debt securities. This would be done, for example, when the Portfolio
expects to purchase particular securities when it has the necessary cash, but
expects the rate of return available in the securities markets at that time to

5
<PAGE>

be less favorable than rates currently available in the futures markets. If the
anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Portfolio of
purchasing the securities may be offset, at least to some extent, by the rise in
the value of the futures position taken in anticipation of the subsequent
securities purchase.

Successful use by the Portfolio of futures contracts on debt securities is
subject to Schroder's ability to predict correctly movements in the direction of
interest rates and other factors affecting markets for debt securities. For
example, if the Portfolio has hedged against the possibility of an increase in
interest rates that would adversely affect the market prices of debt securities
held by it and the prices of such securities increase instead, the Portfolio
will lose part or all of the benefit of the increased value of its securities
that it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Portfolio has insufficient
cash, it may have to sell securities to meet daily maintenance margin
requirements. The Portfolio may have to sell securities at a time when it may be
disadvantageous to do so.

The Portfolio may purchase and write put and call options on certain debt
futures contracts, as they become available. Such options are similar to options
on securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an option of the same series.
There is no guarantee that such closing transactions can be effected. The
Portfolio will be required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements, and, in addition, net option premiums received will be
included as initial margin deposits. See "Margin Payments" below. Compared to
the purchase or sale of futures contracts, the purchase of call or put options
on futures contracts involves less potential risk to the Portfolio because the
maximum amount at risk is the premium paid for the options plus transactions
costs. However, there may be circumstances when the purchase of call or put
options on a futures contract would result in a loss to the Portfolio when the
purchase or sale of the futures contracts would not, such as when there is no
movement in the prices of debt securities. The writing of a put or call option
on a futures contract involves risks similar to those risks relating to the
purchase or sale of futures contracts.

INDEX FUTURES CONTRACTS AND OPTIONS. The Portfolio may invest in debt index
futures contracts and stock index futures contracts, and in related options. A
debt index futures contract is a contract to buy or sell units of a specified
debt index at a specified future date at a price agreed upon when the contract
is made. A unit is the current value of the index. A stock index futures
contract is a contract to buy or sell units of a stock index at a specified
future date at a price agreed upon when the contract is made. A unit is the
current value of the stock index.

Depending on the change in the value of the index between the time when the
Portfolio enters into and terminates an index futures transaction, the Portfolio
may realize a gain or loss. The following example illustrates generally the
manner in which index futures contracts operate. The Standard & Poor's 100 Stock
Index is composed of 100 selected common stocks, most of which are listed on the
New York Stock Exchange. The S&P 100 Index assigns relative weightings to the
common stocks included in the Index, and the Index fluctuates with changes in
the market values of those common stocks. In the case of the S&P 100 Index,

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contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if the Portfolio enters into a futures contract to
buy 100 units of the S&P 100 Index at a specified future date at a contract
price of $180 and the S&P 100 Index is at $184 on that future date, the
Portfolio will gain $400 (100 units x gain of $4). If the Portfolio enters into
a futures contract to sell 100 units of the stock index at a specified future
date at a contract price of $180 and the S&P 100 Index is at $182 on that future
date, the Portfolio will lose $200 (100 units x loss of $2).

The Portfolio may purchase or sell futures contracts with respect to any
securities indices. Positions in index futures may be closed out only on an
exchange or board of trade that provides a secondary market for such futures.

In order to hedge the Portfolio's investments successfully using futures
contracts and related options, the Portfolio must invest in futures contracts
with respect to indices or sub-indices the movements of which will, in
Schroder's judgment, have a significant correlation with movements in the prices
of the Portfolio's securities.

Options on index futures contracts are similar to options on securities except
that options on index futures contracts give the purchaser the right, in return
for the premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the holder would assume the underlying futures position
and would receive a variation margin payment of cash or securities approximating
the increase in the value of the holder's option position. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash based on the difference between the
exercise price of the option and the closing level of the index on which the
futures contract is based on the expiration date. Purchasers of options who fail
to exercise their options prior to the exercise date suffer a loss of the
premium paid.

As an alternative to purchasing and selling call and put options on index
futures contracts, each of the Portfolio that may purchase and sell index
futures contracts may purchase and sell call and put options on the underlying
indices themselves to the extent that such options are traded on national
securities exchanges. Index options are similar to options on individual
securities in that the purchaser of an index option acquires the right to buy
(in the case of a call) or sell (in the case of a put), and the writer
undertakes the obligation to sell or buy (as the case may be), units of an index
at a stated exercise price during the term of the option. Instead of giving the
right to take or make actual delivery of securities, the holder of an index
option has the right to receive a cash "exercise settlement amount." This amount
is equal to the amount by which the fixed exercise price of the option exceeds
(in the case of a put) or is less than (in the case of a call) the closing value
of the underlying index on the date of the exercise, multiplied by a fixed
"index multiplier".

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The Portfolio may purchase or sell options on stock indices in order to close
out its outstanding positions in options on stock indices that it has purchased.
The Portfolio may also allow such options to expire unexercised.

Compared to the purchase or sale of futures contracts, the purchase of call or
put options on an index involves less potential risk to the Portfolio because
the maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar to
those risks relating to the purchase or sale of index futures contracts.

The Portfolio may also purchase warrants, issued by banks and other financial
institutions, whose values are based on the values from time to time of one or
more securities indices.

MARGIN PAYMENTS. When the Portfolio purchases or sells a futures contract, it is
required to deposit with its custodian an amount of cash, U.S. Treasury bills,
or other permissible collateral equal to a small percentage of the amount of the
futures contract. This amount is known as "initial margin." The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to the Portfolio upon termination of the contract, assuming the Portfolio
satisfies its contractual obligations.

Subsequent payments to and from the broker occur on a daily basis in a process
known as "marking to market." These payments are called "variation margin" and
are made as the value of the underlying futures contract fluctuates. For
example, when the Portfolio sells a futures contract and the price of the
underlying debt security rises above the delivery price, the Portfolio's
position declines in value. The Portfolio then pays the broker a variation
margin payment equal to the difference between the delivery price of the futures
contract and the market price of the securities underlying the futures contract.
Conversely, if the price of the underlying security falls below the delivery
price of the contract, the Portfolio's futures position increases in value. The
broker then must make a variation margin payment equal to the difference between
the delivery price of the futures contract and the market price of the
securities underlying the futures contract.

When the Portfolio terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Portfolio, and the Portfolio realizes a loss or a gain. Such closing
transactions involve additional commission costs.

SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS

LIQUIDITY RISKS. Positions in futures contracts may be closed out only on an
exchange or board of trade that provides a secondary market for such futures.
Although the Portfolio intends to purchase or sell futures only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a liquid secondary market on an exchange or board of trade
will exist for any particular contract or at any particular time. If there is
not a liquid secondary market at a particular time, it may not be possible to
close a futures position at such time and, in the event of adverse price
movements, the Portfolio would continue to be required to make daily cash
payments of variation margin. However, in the event financial futures are used
to hedge portfolio securities, such securities will not generally be sold until
the financial futures can be terminated. In such circumstances, an increase in
the price of the portfolio securities, if any, may partially or completely
offset losses on the financial futures.

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In addition to the risks that apply to all options transactions, there are
several special risks relating to options on futures contracts. The ability to
establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
such a market will develop. Although the Portfolio generally will purchase only
those options for which there appears to be an active secondary market, there is
no assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options with the result that the Portfolio would have to exercise the
options in order to realize any profit.

HEDGING RISKS. There are several risks in connection with the use by the
Portfolio of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or in the prices of the Portfolio's securities, which are the subject of a
hedge. Schroder will, however, attempt to reduce this risk by purchasing and
selling, to the extent possible, futures contracts and related options on
securities and indices the movements of which will, in its judgment, correlate
closely with movements in the prices of the underlying securities or index and
the Portfolio's investments sought to be hedged.

Successful use of futures contracts and options by the Portfolio for hedging
purposes is also subject to Schroder's ability to predict correctly movements in
the direction of the market. It is possible that, where the Portfolio has
purchased puts on futures contracts to hedge its portfolio against a decline in
the market, the securities or index on which the puts are purchased may increase
in value and the value of securities held in the portfolio may decline. If this
occurred, the Portfolio would lose money on the puts and also experience a
decline in the value of its portfolio securities. In addition, the prices of
futures, for a number of reasons, may not correlate perfectly with movements in
the underlying securities or index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit requirements.
Such requirements may cause investors to close futures contracts through
offsetting transactions that could distort the normal relationship between the
underlying security or index and futures markets. Second, the margin
requirements in the futures markets are less onerous than margin requirements in
the securities markets in general, and as a result the futures markets may
attract more speculators than the securities markets do. Increased participation
by speculators in the futures markets may also cause temporary price
distortions. Due to the possibility of price distortion, even a correct forecast
of general market trends by Schroder may still not result in a successful
hedging transaction over a very short time period.

LACK OF AVAILABILITY. Because the markets for certain options and futures
contracts and other derivative instruments in which the Portfolio may invest
(including markets located in foreign countries) are relatively new and still
developing and may be subject to regulatory restraints, the Portfolio's ability
to engage in transactions using such instruments may be limited. Suitable
derivative transactions may not be available in all circumstances and there is
no assurance that the Portfolio will engage in such transactions at any time or
from time to time. The Portfolio's ability to engage in hedging transactions may
also be limited by certain regulatory and tax considerations.

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OTHER RISKS. The Portfolio will incur brokerage fees in connection with its
futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while the Portfolio
may benefit from the use of futures and related options, unanticipated changes
in interest rates or stock price movements may result in a poorer overall
performance for the Portfolio than if it had not entered into any futures
contracts or options transactions. Moreover, in the event of an imperfect
correlation between the futures position and the portfolio position that is
intended to be protected, the desired protection may not be obtained and the
Portfolio may be exposed to risk of loss.

FORWARD COMMITMENTS

The Portfolio may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if the
Portfolio holds, and maintains until the settlement date in a segregated
account, cash or liquid securities in an amount sufficient to meet the purchase
price, or if the Portfolio enters into offsetting contracts for the forward sale
of other securities it owns. Forward commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in the value of the Portfolio's other assets. Where such
purchases are made through dealers, the Portfolio relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to the
Portfolio of an advantageous yield or price.

Although the Portfolio will generally enter into forward commitments with the
intention of acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, the Portfolio may dispose of a commitment
prior to settlement if Schroder deems it appropriate to do so. The Portfolio may
realize short-term profits or losses upon the sale of forward commitments.

REPURCHASE AGREEMENTS

The Portfolio may enter into repurchase agreements. A repurchase agreement is a
contract under which the Portfolio acquires a security for a relatively short
period (usually not more than one week) subject to the obligation of the seller
to repurchase and the Portfolio to resell such security at a fixed time and
price (representing the Portfolio's cost plus interest). It is the Trust's
present intention to enter into repurchase agreements only with member banks of
the Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition as established by the Trustees of the
Trust, and only with respect to obligations of the U.S. government or its
agencies or instrumentalities or other high quality short-term debt obligations.
Repurchase agreements may also be viewed as loans made by the Portfolio that are
collateralized by the securities subject to repurchase. Schroder will monitor
such transactions to ensure that the value of the underlying securities will be
at least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, the Portfolio could
realize a loss on the sale of the underlying security to the extent that the
proceeds of the sale, including accrued interest, are less than the resale price
provided in the agreement including interest. In addition, if the seller should
be involved in bankruptcy or insolvency proceedings, the Portfolio may incur
delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Portfolio is treated as an unsecured creditor and
required to return the underlying collateral to the seller's estate.

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WHEN-ISSUED SECURITIES

The Portfolio may from time to time purchase securities on a "when-issued"
basis. Debt securities are often issued on this basis. The price of such
securities, which may be expressed in yield terms, is fixed at the time a
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between purchase and
settlement, no payment is made by the Portfolio and no interest accrues to the
Portfolio. To the extent that assets of the Portfolio are held in cash pending
the settlement of a purchase of securities, the Portfolio would earn no income.
While the Portfolio may sell its right to acquire when-issued securities prior
to the settlement date, the Portfolio intends actually to acquire such
securities unless a sale prior to settlement appears desirable for investment
reasons. At the time the Portfolio makes the commitment to purchase a security
on a when-issued basis, it will record the transaction and reflect the amount
due and the value of the security in determining the Portfolio's net asset
value. The market value of the when-issued securities may be more or less than
the purchase price payable at the settlement date. The Portfolio will establish
a segregated account in which it will maintain cash and U.S. government
securities or other liquid securities at least equal in value to commitments for
when-issued securities. Such segregated securities either will mature or, if
necessary, be sold on or before the settlement date.

LOANS OF PORTFOLIO SECURITIES

The Portfolio may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Portfolio may at any
time call the loan and regain the securities loaned; (3) the Portfolio will
receive any interest or dividends paid on the loaned securities; and (4) the
aggregate market value of the Portfolio's portfolio securities loaned will not
at any time exceed one-third of the total assets of the Portfolio. In addition,
it is anticipated that the Portfolio may share with the borrower some of the
income received on the collateral for the loan or that it will be paid a premium
for the loan. Before the Portfolio enters into a loan, Schroder considers all
relevant facts and circumstances, including the creditworthiness of the
borrower. The risks in lending portfolio securities, as with other extensions of
credit, consist of possible delay in recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially. Although
voting rights or rights to consent with respect to the loaned securities pass to
the borrower, the Portfolio retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be voted
by the Portfolio if the holders of such securities are asked to vote upon or
consent to matters materially affecting the investment. The Portfolio will not
lend portfolio securities to borrowers affiliated with that Portfolio.

FOREIGN SECURITIES

The Portfolio may invest without limit in securities principally traded in
foreign markets. The Portfolio may also invest without limit in Eurodollar
certificates of deposit and other certificates of deposit issued by United
States branches of foreign banks and foreign branches of United States banks.

Investments in foreign securities may involve risks and considerations different
from or in addition to investments in domestic securities. There may be less
information publicly available about a foreign company than about an U.S.

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company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those in
the United States. The securities of some foreign companies are less liquid and
at times more volatile than securities of comparable U.S. companies. Foreign
brokerage commissions and other fees are also generally higher than in the
United States. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Portfolio's assets held abroad) and expenses not present in the
settlement of domestic investments. Also, because foreign securities are
normally denominated and traded in foreign currencies, the values of the
Portfolio's assets may be affected favorably or unfavorably by currency exchange
rates and exchange control regulations, and the Portfolio may incur costs in
connection with conversion between currencies.

In addition, with respect to certain foreign countries, there is a possibility
of nationalization or expropriation of assets, imposition of currency exchange
controls, adoption of foreign governmental restrictions affecting the payment of
principal and interest, imposition of withholding or confiscatory taxes,
political or financial instability, and adverse political, diplomatic or
economic developments which could affect the values of investments in those
countries. In certain countries, legal remedies available to investors may be
more limited than those available with respect to investments in the United
States or other countries and it may be more difficult to obtain and enforce a
judgment against a foreign issuer. Also, the laws of some foreign countries may
limit the Portfolio's ability to invest in securities of certain issuers located
in those countries.

Special tax considerations apply to foreign securities. In determining whether
to invest in securities of foreign issuers, Schroder will consider the likely
impact of foreign taxes on the net yield available to the Portfolio and its
Interestholders. Income received by the Portfolio from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. It is impossible to determine the effective rate
of foreign tax in advance since the amount of the Portfolio's assets to be
invested in various countries is not known, and tax laws and their
interpretations may change from time to time and may change without advance
notice. Any such taxes paid by the Portfolio will reduce its net income
available for distribution to Interestholders.

FOREIGN CURRENCY TRANSACTIONS

The Portfolio may engage in currency exchange transactions to protect against
uncertainty in the level of future foreign currency exchange rates and to
increase current return. The Portfolio may engage in both "transaction hedging"
and "position hedging."

When it engages in transaction hedging, the Portfolio enters into foreign
currency transactions with respect to specific receivables or payables of that
Portfolio generally arising in connection with the purchase or sale of its
portfolio securities. The Portfolio will engage in transaction hedging when it
desires to "lock in" the U.S. dollar price of a security it has agreed to
purchase or sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging, the Portfolio will
attempt to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the applicable foreign currency
during the period between the date on which the security is purchased or sold or
on which the dividend or interest payment is declared, and the date on which
such payments are made or received.

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<PAGE>

The Portfolio may purchase or sell a foreign currency on a spot (or cash) basis
at the prevailing spot rate in connection with transaction hedging. The
Portfolio may also enter into contracts to purchase or sell foreign currencies
at a future date ("forward contracts") and purchase and sell foreign currency
futures contracts.

For transaction hedging purposes, the Portfolio may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Portfolio the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Portfolio the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Portfolio the right to
assume a long position in the futures contract until the expiration of the
option. A call option on currency gives the Portfolio the right to purchase a
currency at the exercise price until the expiration of the option. The Portfolio
will engage in over-the-counter transactions only when appropriate
exchange-traded transactions are unavailable and when, in Schroder's opinion,
the pricing mechanism and liquidity are satisfactory and the participants are
responsible parties likely to meet their contractual obligations.

When it engages in position hedging, the Portfolio enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which securities held by the Portfolio are denominated or are
quoted in their principal trading markets or an increase in the value of
currency for securities which the Portfolio expects to purchase. In connection
with position hedging, the Portfolio may purchase put or call options on foreign
currency and foreign currency futures contracts and buy or sell forward
contracts and foreign currency futures contracts. The Portfolio may also
purchase or sell foreign currency on a spot basis.

The precise matching of the amounts of foreign currency exchange transactions
and the value of the portfolio securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the values of those securities
between the dates the currency exchange transactions are entered into and the
dates they mature.

It is impossible to forecast with precision the market value of the Portfolio's
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for the Portfolio to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Portfolio is obligated to deliver and if
a decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of the Portfolio if the market value of such security or securities
exceeds the amount of foreign currency the Portfolio is obligated to deliver.

To offset some of the costs to the Portfolio of hedging against fluctuations in
currency exchange rates, the Portfolio may write covered call options on those
currencies.

Transaction and position hedging do not eliminate fluctuations in the underlying
prices of the securities, which the Portfolio owns or intends to purchase or
sell. They simply establish a rate of exchange that one can achieve at some

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future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency. Also, suitable foreign currency hedging transactions may not be
available in all circumstances and there can be no assurance that the Portfolio
will utilize hedging transactions at any time or from time to time.

The Portfolio may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, and by purchasing and selling options
on foreign currencies and on foreign currency futures contracts, and by
purchasing and selling foreign currency forward contracts.

CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
as agreed by the parties, at a price set at the time of the contract. In the
case of a cancelable forward contract, the holder has the unilateral right to
cancel the contract at maturity by paying a specified fee. The contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized contract
for the future delivery of a specified amount of a foreign currency at a future
date at a price set at the time of the contract. Foreign currency futures
contracts traded in the United States are designed by and traded on exchanges
regulated by the CFTC, such as the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from foreign currency futures
contracts in certain respects. For example, the maturity date of a forward
contract may be any fixed number of days from the date of the contract agreed
upon by the parties, rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.

At the maturity of a forward or futures contract, the Portfolio may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.

Positions in foreign currency futures contracts and related options may be
closed out only on an exchange or board of trade, which provides a secondary
market in such contracts or options. Although the Portfolio will normally
purchase or sell foreign currency futures contracts and related options only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a secondary market on an exchange or board of
trade will exist for any particular contract or option or at any particular
time. In such event, it may not be possible to close a futures or related option
position and, in the event of adverse price movements, the Portfolio would
continue to be required to make daily cash payments of variation margin on its
futures positions.

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FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate similarly to
options on securities, and are traded primarily in the over-the-counter market,
although options on foreign currencies have recently been listed on several
exchanges. Such options will be purchased or written only when Schroder believes
that a liquid secondary market exists for such options. There can be no
assurance that a liquid secondary market will exist for a particular option at
any specific time. Options on foreign currencies are affected by all of those
factors that influence exchange rates and investments generally.

The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign currencies
and there is no regulatory requirement that quotations available through dealers
or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(less than $1 million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To the extent that
the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the U.S. options markets.

FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not charge a
fee for currency conversion, they do realize a profit based on the difference
(the "spread") between prices at which they buy and sell various currencies.
Thus, a dealer may offer to sell a foreign currency to the Portfolio at one
rate, while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.

ZERO-COUPON SECURITIES

Zero-coupon securities in which the Portfolio may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity.
Zero-coupon securities usually trade at a deep discount from their face or par
value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest. As a result, the net asset value of Portfolio
Interests of the Portfolio investing in zero-coupon securities may fluctuate
over a greater range than shares of other mutual funds investing in securities
making current distributions of interest and having similar maturities.

Zero-coupon securities may include U.S. Treasury bills issued directly by the
U.S. Treasury or other short-term debt obligations, and longer-term bonds or
notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on

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Treasuries ("CATS"). CATS and TIGRS are not considered U.S. government
securities. The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.

In addition, the Treasury has facilitated transfers of ownership of zero-coupon
securities by accounting separately for the beneficial ownership of particular
interest coupons and corpus payments on Treasury securities through the Federal
Reserve book-entry record-keeping system. The Federal Reserve program as
established by the Treasury Department is known as "STRIPS" or "Separate Trading
of Registered Interest and Principal of Securities." Under the STRIPS program,
the Portfolio will be able to have its beneficial ownership of U.S. Treasury
zero-coupon securities recorded directly in the book-entry record-keeping system
in lieu of having to hold certificates or other evidences of ownership of the
underlying U.S. Treasury securities.

When debt obligations have been stripped of their unmatured interest coupons by
the holder, the stripped coupons are sold separately. The principal or corpus is
sold at a deep discount because the buyer receives only the right to receive a
future fixed payment on the security and does not receive any rights to periodic
cash interest payments. Once stripped or separated, the corpus and coupons may
be sold separately. Typically, the coupons are sold separately or grouped with
other coupons with like maturity dates and sold in such bundled form. Purchasers
of stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero-coupon securities issued directly by the
obligor.

SHORT SALES

In a short sale, the Portfolio sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. The Portfolio also
may engage in short sales if, at the time of the short sale, it owns or has the
right to obtain, at no additional cost, an equal amount of the security being
sold short. This investment technique is known as a short sale
"against-the-box." In such a short sale, a seller does not immediately deliver
the securities sold and is said to have a short position in those securities
until delivery occurs. If the Portfolio engages in a short sale, the collateral
for the short position is maintained by the Portfolio's custodian or a qualified
sub-custodian. While the short sale is open, the Portfolio maintains in a
segregated account an amount of securities equal in kind and amount to the
securities sold short or securities convertible into or exchangeable for such
equivalent securities. These securities constitute the Portfolio's long
position. The Portfolio does not engage in short sales against-the-box for
speculative purposes but may, however, make a short sale as a hedge, when
Schroder believes that the price of a security may decline, causing a decline in
the value of a security owned by the Portfolio (or a security convertible or
exchangeable for such security). There are certain additional transaction costs
associated with short sales against-the-box, but Schroder endeavors to offset
these costs with the income from the investment of the cash proceeds of short
sales. Under the Taxpayer Relief Act of 1997, activities by the Portfolio which
lock-in gain on an appreciated financial instrument generally will be treated as
a "constructive sale" of such instrument which will trigger gain (but not loss)
for federal income tax purposes. Such activities may create taxable income in
excess of the cash they generate.

16
<PAGE>

ARBITRAGE

The Portfolio may sell a security in one market and simultaneously purchase the
same security in another market in order to take advantage of differences in the
price of the security in the different markets. The Portfolio does not actively
engage in arbitrage. Such transactions may be entered into only with respect to
debt securities and will occur only in a dealer's market where the buying and
selling dealers involved confirm their prices to the Portfolio at the time of
the transaction, thus eliminating any risk to the assets of the Portfolio.

SWAP AGREEMENTS

The Portfolio may enter into interest-rate, index and currency-exchange rate
swap agreements for purposes of attempting to obtain a particular desired return
at a lower cost to the Portfolio than if the Portfolio had invested directly in
an instrument that yielded such desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, two
parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments. The
gross returns to be exchanged or "swapped" between the parties are calculated
with respect to a "notional amount" (for example, the return on or increase in
value of a particular dollar amount invested at a particular interest rate, in a
particular foreign currency or in a "basket" of securities representing a
particular index). Commonly used swap agreements include interest-rate caps,
under which, in return for a premium, one party agrees to make payments to the
other to the extent that interest rates exceed a specified rate, or "cap";
interest-rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a
specified level, or "floor"; and interest-rate collars, under which a party
sells a cap and purchases a floor or vice versa in an attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels.

The "notional amount" of the swap agreement is only a fictive basis on which to
calculate the obligations that the parties to a swap agreement have agreed to
exchange. Most swap agreements entered into by the Portfolio would calculate the
obligations of the parties to an agreement on a "net" basis. Consequently, the
Portfolio's obligations (or rights) under a swap agreement are generally equal
only to the net amount to be paid or received under the agreement based on the
relative values of the positions held by each party to the agreement (the "net
amount"). The Portfolio's obligations under a swap agreement will be accrued
daily (offset against any amounts owing to the Portfolio) and any accrued but
unpaid net amounts owed to a swap counterparty will be covered by maintaining a
segregated account comprised of segregable assets to avoid any potential
leveraging of the Portfolio's investment portfolio. The Portfolio will not enter
into a swap agreement with any single party if the net amount owed or to be
received under existing contracts with that party would exceed 5% of the
Portfolio's assets.

Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act and, therefore, are not regulated as futures or commodity option
transactions under that Act. To qualify for this exemption, a swap agreement
must be entered into by "eligible participants," which includes the following,
provided the participants' total assets exceed established levels: a bank or
trust company, savings association or credit union, insurance company,
investment company subject to regulation under the 1940 Act, commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission

17
<PAGE>

merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employee benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost, or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through a
multilateral transaction execution facility.

This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the Commodity Exchange Act or its
regulations. The Policy Statement applies to swap transactions settled in cash
that: (1) have individually tailored terms; (2) lack exchange style offset and
the use of a clearing organization or margin system; (3) are undertaken in
connection with a line of business; and (4) are not marketed to the public.

TEMPORARY DEFENSIVE STRATEGIES

As described in the Memorandum, Schroder may at times judge that conditions in
the securities markets make pursuing the Portfolio's basic investment strategies
inconsistent with the best interests of its Interestholders and may temporarily
use alternate investment strategies primarily designed to reduce fluctuations in
the value of the Portfolio's assets. In implementing these "defensive"
strategies, the Portfolio would invest in high-quality debt securities, cash, or
money market instruments to any extent Schroder considers consistent with such
defensive strategies. It is impossible to predict when, or for how long, the
Portfolio will use these alternate strategies.

INVESTMENT RESTRICTIONS

The Trust has adopted the following fundamental and non-fundamental investment
restrictions for the Portfolio. The Portfolio's Fundamental investment
restrictions may not be changed without the affirmative vote of a "majority of
the outstanding voting securities" of the Portfolio, which is defined in the
1940 Act to mean the affirmative vote of the lesser of (1) more than 50% of the
outstanding Portfolio Interests and (2) 67% or more of the Portfolio Interests
present at a meeting if more than 50% of the outstanding Portfolio Interests are
represented at the meeting in person or by proxy. The non-fundamental investment
policies described in the Memorandum and this SAI may be changed by the Trustees
without Interestholder approval.

SCHRODER INTERNATIONAL BOND PORTFOLIO

Schroder International Bond Portfolio will not:

18
<PAGE>

FUNDAMENTAL POLICIES:

1. Concentrate investments in any particular industry; therefore, the
Portfolio will not purchase the securities of companies in any one
industry if, thereafter, 25% or more of the Portfolio's total assets
would consist of securities of companies in that industry. This
restriction does not apply to obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities (or repurchase
agreements with respect thereto). An investment of more than 25% of
the Portfolio's assets in the securities of issuers located in one
country does not contravene this policy.

2. Borrow money in excess of 33 1/3% of its total assets taken at market
value (including the amount borrowed) and then only from a bank as a
temporary measure for extraordinary or emergency purposes, including to
meet redemptions or to settle securities transactions that may
otherwise require untimely dispositions of portfolio securities.

3. Purchase or sell real estate, provided that the Portfolio may invest
in securities issued by companies that invest in real estate or
interests therein.

4. Make loans to other persons, provided that for purposes of this
restriction, entering into repurchase agreements or acquiring any
otherwise permissible debt securities including engaging in securities
lending shall not be deemed to be the making of a loan.

5. Invest in commodities or commodity contracts, except that, subject to
the restrictions described in the Memorandum and elsewhere in this SAI,
the Portfolio may: (1) enter into futures contracts and options on
futures contracts; (2) enter into forward foreign currency exchange
contracts and foreign currency options; (3) purchase or sell currencies
on a spot or forward basis; and (4) enter into futures contracts on
securities, currencies or on indices of such securities or currencies,
or any other financial instruments, and purchase and sell options on
such futures contracts.

6. Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments,
it may be deemed to be an underwriter under U.S. securities laws.

7. Issue senior securities except to the extent permitted by the 1940 Act.

19
<PAGE>

NON-FUNDAMENTAL POLICIES:

1. The Portfolio will 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
illiquid securities (securities that cannot be disposed of within seven
days at their then-current value), including repurchase agreements not
entitling the holder to payment of principal within seven days and
securities that are not readily marketable by virtue of restrictions on
the sale of such securities to the public without registration under
the Securities Act of 1933, as amended. Illiquid securities do not
include securities that can be sold to the public in foreign markets or
that may be eligible for resale to qualified institutional purchasers
pursuant to Rule 144A under the Securities Act of 1933 that are
determined to be liquid by the investment adviser pursuant to
guidelines adopted by the Trust's Board of Trustees.

2. The Portfolio will not make investments for the purpose of exercising
control or management, except in connection with a merger,
consolidation, acquisition, or reorganization with another investment
company or series thereof. (Investments by the Portfolio in wholly
owned investment entities created under the laws of certain foreign
countries will not be deemed the making of investments for the purpose
of exercising control or management.)

3. The Portfolio will not invest in interests in oil, gas or other mineral
exploration, resource, or lease transactions or development programs
but may purchase readily marketable securities of companies that
operate, invest in, or sponsor such programs.

The Portfolio may acquire or retain the securities of any other investment
company to the extent prohibited by the 1940 Act, including in
connection with a merger, consolidation, acquisition, or
reorganization.

-------------------

All percentage limitations on investments (other than limitations on borrowing
and illiquid securities) will apply at the time of investment and shall not be
considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of such investment.

TRUSTEES AND OFFICERS

The Trustees of the Trust are responsible for the general oversight of the
Trust's business. Subject to such policies as the Trustees may determine,
Schroder furnishes a continuing investment program for the Portfolio and makes
investment decisions on its behalf. Subject to the control of the Trustees,
Schroder also manages the Portfolio's' other affairs and business.

The Trustees and executive officers of the Trust and their principal occupations
during the last five years are set forth below.

20
<PAGE>

David N. Dinkins, Trustee. 71. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, and Schroder
Series Trust. Professor, Columbia University School of International and Public
Affairs. Director, American Stock Exchange, Carver Federal Savings Bank,
Transderm Laboratory Corporation, and The Cosmetics Center, Inc. Formerly,
Mayor, City of New York.

John I. Howell, Trustee. 82. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, Schroder
Series Trust, and Schroder Series Trust II. Director, American International
Life Assurance Company of New York. Private consultant since 1987.

Peter S. Knight, Trustee. 48. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, and Schroder
Series Trust. Partner, Wunder, Knight, Levine, Thelen & Forscey. Director,
Comsat Corp., Medicis Pharmaceutical Corp., and Whitman Education Group, Inc.
Formerly, Campaign Manager, Clinton/Gore `96.

Peter E. Guernsey, Trustee. 77. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, Schroder
Series Trust, and Schroder Series Trust II. Formerly, Senior Vice President,
Marsh & McLennan, Inc.

(*) Sharon L. Haugh, Trustee. 53. 787 Seventh Avenue, New York, New York.
Chairman, Schroder Capital Management Inc. Executive Vice President and
Executive Director, Schroder Capital Management International Inc. Chairman and
Director, Schroder Fund Advisors Inc. Trustee, Schroder Capital Funds
(Delaware), Schroder Capital Funds, and Schroder Series Trust.

William L. Means, Trustee. 59. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, and Schroder
Series Trust II. Formerly, Chief Investment Officer, Alaska Permanent Fund
Corporation.

Clarence F. Michalis, Trustee. 77. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, and Schroder
Series Trust. Chairman of the Board of Directors, Josiah Macy, Jr. Foundation.

Hermann C. Schwab, Trustee. 79. 787 Seventh Avenue, New York, New York.
Trustee, Schroder Capital Funds (Delaware), Schroder Capital Funds, and Schroder
Series Trust. Trustee, St. Luke's/Roosevelt Hospital Center. Formerly,
consultant to Schroder Capital Management International Inc.

(*) Mark J. Smith, President and Trustee of the Trust. 36. 787 Seventh
Avenue, New York, New York. Director and Senior Vice President, Schroder Capital
Management International Limited and Schroder Capital Management International
Inc. Director, Schroder Investment Management Ltd., Schroder Fund Advisors Inc.,
and Schroder Japanese Warrant Fund Ltd. Trustee, Schroder Capital Funds
(Delaware), Schroder Capital Funds, and Schroder Series Trust. Vice President,
Schroder Series Trust II.

- ---------------------
(*) Trustee who is an "interested person" (as defined in the 1940 Act) of the
Trust, Schroder, or Schroder Fund Advisors Inc.

21
<PAGE>

Mark Astley, Vice President of the Trust. 34. 787 Seventh Avenue, New York,
New York. First Vice President of Schroder Capital Management International Inc.
Formerly, employed by various affiliates of Schroder Capital Management
International Inc. in various positions in the investment research and portfolio
management areas since 1987.

Robert G. Davy, Vice President of the Trust. 37. 787 Seventh Avenue, New
York, New York. Director of Schroder Capital Management International Inc. and
Schroder Capital Management International Ltd. since 1994; First Vice President
of Schroder Capital Management International Inc. since July 1992. Formerly,
employed by various affiliates of Schroder Capital Management International Inc.
in various positions in the investment research and portfolio management areas
since 1986.

Margaret H. Douglas-Hamilton, Vice President of the Trust. 57. 787 Seventh
Avenue, New York, New York. Director and Secretary of Schroder Capital
Management Inc.

Richard R. Foulkes, Vice President of the Trust. 53. 787 Seventh Avenue,
New York, New York. Deputy Chairman of Schroder Capital Management International
Inc. since October 1995; Director and Executive Vice President of Schroder
Capital Management International Ltd. since 1989.

John Y. Keffer, Vice President of the Trust. 56. Two Portland Square,
Portland, Maine. President of Forum Fund Services, LLC, the Portfolio's
placement agent, and other affiliated entities including Forum Accounting
Services, LLC, Forum Administrative Services, LLC, and Forum Investment
Advisors, LLC.

Michael Perelstein, Vice President of the Trust. 43. 787 Seventh Avenue,
New York, New York. Director since May 1997 and Senior Vice President of
Schroder Capital Management International Inc. since January 1997. Formerly,
Managing Director of MacKay - Shields Financial Corp.

Catherine A. Mazza, Vice President of the Trust. 39. 787 Seventh Avenue,
New York, New York. First Vice President, Schroder Capital Management
International Inc. and Schroder Capital Management Inc. President, Schroder Fund
Advisors Inc. Vice President, Schroder Capital Funds (Delaware), Schroder
Capital Funds, and Schroder Series Trust. Formerly, Vice President, Alliance
Capital Management L.P.

Alexandra Poe, Secretary and Vice President of the Trust. 38. 787 Seventh
Avenue, New York, New York. Vice President, Schroder Capital Management
International Inc. Senior Vice President, Secretary, and General Counsel,
Schroder Fund Advisors Inc. Vice President and Secretary, Schroder Capital Funds
(Delaware), Schroder Capital Funds, and Schroder Series Trust. Assistant
Secretary, Schroder Series Trust II. Formerly, Attorney, Gordon, Altman,
Butowsky, Weitzen, Shalov & Wein; Vice President and Counsel, Citibank, N.A.

22
<PAGE>

Jane E. Lucas, Vice President of the Trust. 38. 787 Seventh Avenue, New
York, New York. Senior Vice President, Schroder Capital Management International
Inc.

Fergal Cassidy, Treasurer and Principal Financial and Accounting Officer of
the Trust. 29. 787 Seventh Avenue, New York, New York. Vice President and
Treasurer, Schroder Capital Management Inc. Vice President and Comptroller,
Schroder Capital Management International Inc. Treasurer and Chief Financial
Officer, Schroder Fund Advisors Inc. Assistant Treasurer, Schroder Series Trust.
Formerly, Senior Accountant, Concurrency Management Corp.

Alan Mandel, Assistant Treasurer of the Trust. 41. 787 Seventh Avenue, New
York, New York. First Vice President of Schroder Capital Management
International Inc. since September 1998. Formerly, Director of Mutual Fund
Administration for Salomon Brothers Asset Management; Chief Financial Officer
and Vice President of Mutual Capital Management.

Carin Muhlbaum, Assistant Secretary of the Trust. 36. Vice President of
Schroder Capital Management International Inc. since 1998. Formerly, an
investment management attorney with Seward & Kissel and prior thereto, with
Gordon Altman Butowsky Weitzen Shalov & Wein.

Nicholas Rossi, Assistant Secretary of the Trust. 35. 787 Seventh Avenue,
New York, New York. Associate of Schroder Capital Management International Inc.
since October 1997 and Assistant Vice President of Schroder Fund Advisors Inc.
since March 1998. Formerly, Mutual Fund Specialist, Willkie Farr & Gallagher;
Fund Administrator, Furman Selz LLC since 1992.

Thomas G. Sheehan, Assistant Treasurer and Assistant Secretary of the
Trust. 44. Two Portland Square, Portland, Maine. Relationship Manager and
Counsel, Forum Financial Services, Inc. since 1993. Formerly, Special Counsel,
U.S. Securities and Exchange Commission, Division of Investment Management,
Washington, D.C.

John A. Troiano, Vice President of the Trust. 38. 787 Seventh Avenue, New
York, New York. Director of Schroder Capital Management Inc. since April 1997;
Chief Executive Officer, since July 1, 1997, of Schroder Capital Management
International Inc. and Managing Director and Senior Vice President of Schroder
Capital Management International Inc. since October 1995. Formerly, employed by
various affiliates of Schroder Capital Management International Inc. in various
positions in the investment research and portfolio management areas since 1981.

Ira L. Unschuld, Vice President of the Trust. 33. 787 Seventh Avenue, New
York, New York. Group Vice President of Schroder Capital Management
International Inc. since April 1998 and an Associate from July 1990 to April
1993.

Except as otherwise noted, the principal occupations of the Trustees
and officers for the last five years have been with the employers shown above,
although in some cases they have held different positions with such employers or
their affiliates.

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<PAGE>

TRUSTEE COMPENSATION

Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust, Schroder, or Schroder Fund Advisors Inc. receive an annual
retainer of $11,000 for their services as Trustees of all open-end investment
companies distributed by Schroder Fund Advisors Inc. or Forum Fund Services, LLC
and $1,250 per meeting attended in person or $500 per meeting attended by
telephone. Members of an Audit Committee for one or more of such investment
companies receive an additional $1,000 per year. Payment of the annual retainer
is allocated among the various investment companies based on their relative net
assets. Payment of meeting fees is allocated only among those investment
companies to which the meeting relates.

The following table sets forth information regarding compensation paid
for the fiscal year ended October 31, 1998 to the disinterested Trustees.

COMPENSATION TABLE

- ------------------------------------------------------------------------------------------------------------
(2) (3)
AGGREGATE TOTAL COMPENSATION FROM TRUST AND
(1) COMPENSATION FUND COMPLEX PAID TO TRUSTEES*
NAME OF FROM TRUST
TRUSTEE
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

David N. Dinkins $120 $14,250
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

Peter E. Guernsey $136 $23,750
- -------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------------

John I. Howell $136 $25,000
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

Peter S. Knight $136 $15,500
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

William L. Means** $0 $9,500
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

Clarence F. Michalis $136 $14,250
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

Hermann C. Schwab $136 $14,250
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

* The Total Compensation listed in column (3) for each Trustee includes
compensation for services as a Trustee of the Trust, Schroder Capital
Funds ("SCF"), Schroder Capital Funds (Delaware) ("SCF(D)"), Schroder
Series Trust ("SST"), and Schroder Series Trust II (formerly Schroder
Asian Growth Fund, Inc., "SST II"). The Trust, SCF(D), SCF, SST, and SST
II are considered part of the same "Fund Complex" for these purposes.
** Mr. Means was elected Trustee of the Trust on December 15, 1998.

As of December 1, 1998, the Trustees of the Trust as a group owned less than 1%
of the Portfolio Interests.

24
<PAGE>

The Trust's Trust Instrument provides that the Trust will indemnify its Trustees
and officers against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, except if it is determined, in the manner specified in the Trust
Instrument, that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust or that such
indemnification would relieve any officer or Trustee of any liability to the
Trust or its Interestholders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties. The Trust, at its
expense, provides liability insurance for the benefit of its Trustees and
officers.

SCHRODER AND ITS AFFILIATES

Schroder has served as the investment adviser for each of the Portfolio since
their inception. Schroder is a wholly owned subsidiary of Schroder U.S. Holdings
Inc., which engages through its subsidiary firms in the investment banking,
asset management, and securities businesses. Affiliates of Schroder U.S.
Holdings Inc. (or their predecessors) have been investment managers since 1927.
Schroder itself has been an investment manager since 1962, and served as
investment manager for approximately $27.1 billion as of December 31, 1998.
Schroder U.S. Holdings Inc. is an indirect, wholly owned U.S. subsidiary of
Schroders plc, a publicly owned holding company organized under the laws of
England. Schroders plc and its affiliates engage in international merchant
banking and investment management businesses, and as of December 31, 1998, had
under management assets of approximately $195 billion.

INVESTMENT ADVISORY AGREEMENTS

Under Investment Advisory Agreements between the Trust and Schroder (the
"Advisory Agreements"), Schroder, at its expense, provides the Portfolio with
investment advisory services and advises and assists the officers of the Trust
in taking such steps as are necessary or appropriate to carry out the decisions
of its Trustees regarding the conduct of business of the Trust and the
Portfolio. The fees to be paid under the Advisory Agreements are set forth in
the Memorandum.

Under the Advisory Agreements, Schroder is required to regularly provide the
Portfolio with investment research, advice, and supervision and furnishes
continuously investment programs consistent with the investment objectives and
policies of the Portfolio. Schroder also determines, for the Portfolio, what
securities shall be purchased, what securities shall be held or sold, and what
portion of the Portfolio's assets shall be held uninvested, subject always to
the provisions of the Trust's Trust Instrument and By-laws, and the 1940 Act,
and to the Portfolio's investment objectives, policies, and restrictions, and
subject further to such policies and instructions as the Trustees may from time
to time establish.

Schroder makes available to the Trust, without additional expense to the Trust,
the services of such of its directors, officers, and employees as may duly be
elected Trustees or officers of the Trust, subject to their individual consent
to serve and to any limitations imposed by law. Schroder pays the compensation
and expenses of officers and executive employees of the Trust. Schroder also
provides investment advisory research and statistical facilities and all

25
<PAGE>

clerical services relating to such research, statistical, and investment work.
Schroder pays the Trust's office rent.

Under the Advisory Agreements, the Trust is responsible for all its other
expenses, including clerical salaries not related to investment activities; fees
and expenses incurred in connection with membership in investment company
organizations; brokers' commissions; payment for portfolio pricing services to a
pricing agent, if any; legal expenses; auditing expenses; accounting expenses;
taxes and governmental fees; fees and expenses of the placement agent of the
Trust; the cost of preparing subscription documents or any other expenses,
including clerical expenses, incurred in connection with the issue, sale,
underwriting, redemption, or repurchase of Portfolio Interests; the expenses of
and fees for registering or qualifying securities for exemptions from
registration requirements; the fees and expenses of the Trustees of the Trust
who are not affiliated with Schroder or Forum Fund Services, LLC, or their
respective affiliates; the cost of preparing and distributing reports and
notices to Interestholders; public and investor relations expenses; and fees and
disbursements of custodians of the Portfolio's' assets. The Trust is also
responsible for its expenses incurred in connection with litigation, legal
proceedings, and claims and the legal obligation it may have to indemnify its
officers and Trustees with respect thereto.

Schroder's compensation under the Advisory Agreements may be reduced in any year
if the Portfolio's expenses exceed the limits on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
Portfolio Interests are qualified for offer or sale.

The Advisory Agreements may be terminated without penalty by vote of the
Trustees as to the Portfolio, by the Interestholders of the Portfolio, or by
Schroder on 60 days' written notice. Each Advisory Agreement also terminates
without payment of any penalty in the event of its assignment. In addition, each
Advisory Agreement may be amended only by a vote of the Interestholders of the
affected Portfolio, and each Advisory Agreement provides that it will continue
in effect from year to year only so long as such continuance is approved at
least annually with respect to the Portfolio by vote of either the Trustees or
the Interestholders of the Portfolio, and, in either case, by a majority of the
Trustees who are not "interested persons" of Schroder. In each of the foregoing
cases, the vote of the Interestholders is the affirmative vote of a "majority of
the outstanding voting securities" as defined in the 1940 Act.

Forum Administrative Services, LLC ("FAdS") and Forum Accounting Services, LLC
("Forum Accounting") provide certain administrative, accounting, and other
services to the Trust. For these services, FAdS and Forum Accounting receive a
monthly fee at annual rates based on the Portfolio's average daily net assets,
as approved by the Trustees.

RECENT INVESTMENT ADVISORY FEES. The total investment advisory fees paid by the
Portfolio to Schroders during the three most recent fiscal years are set forth
in the following tables. The fees listed in the following tables reflect
reductions pursuant to expense limitations in effect during such periods.

26
<PAGE>

<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
INVESTMENT ADVISORY FEES INVESTMENT ADVISORY FEES INVESTMENT ADVISORY FEES
PAID FOR FISCAL YEAR ENDED PAID FOR FISCAL YEAR PAID FOR FISCAL YEAR ENDED
PORTFOLIO 12/31/98 ENDED 12/31/97 12/31/96
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------

Schroder International Bond $0 $0 N/A
Portfolio
- ------------------------------ ---------------------------- --------------------------- ----------------------------

FEE WAIVERS

Schroder voluntarily waived its fees during the three most recent fiscal years
pursuant to voluntary expense limitations and/or waivers in effect during such
periods. The tables below reflect the amount of the investment advisory fees
scheduled to be paid by each Portfolio that was waived by Schroder.

- ------------------------------ ---------------------------- --------------------------- ----------------------------
FEES WAIVED DURING FISCAL FEES WAIVED DURING FISCAL FEES WAIVED DURING FISCAL
YEAR ENDED 12/31/98 YEAR ENDED 12/31/97 YEAR ENDED 12/31/96
PORTFOLIO
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------

Schroder International Bond $70,984 $53,529 N/A
Portfolio
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

ADMINISTRATIVE SERVICES

On behalf of the Portfolio, the Trust has entered into an administration
agreement with Schroder Fund Advisors Inc., under which Schroder Fund Advisors
Inc. provides management and administrative services necessary for the operation
of the Portfolio, including: (1) preparation of Interestholder reports and
communications; (2) regulatory compliance, such as reports to and filings with
the SEC and state securities commissions; and (3) general supervision of the
operation of the Portfolio, including coordination of the services performed by
its investment adviser, transfer agent, custodian, independent accountants,
legal counsel and others. Schroder Fund Advisors Inc. is a wholly owned
subsidiary of Schroder and is a registered broker-dealer organized to act as
administrator and distributor of mutual funds.

For providing administrative services, Schroder Fund Advisors Inc. is entitled
to receive a monthly fee at the following annual rate (based upon the
Portfolio's average daily net assets) of 0.10% with respect to Schroder
International Bond Portfolio. The administration agreement is terminable with
respect to the Portfolio without penalty, at any time, by the Trustees upon 60
days' written notice to Schroder Fund Advisors Inc. or by Schroder Fund Advisors
Inc. upon 60 days' written notice to the Trust.

The Trust has entered into a subadministration agreement with FAdS. Under its
agreement, FAdS assists Schroder Fund Advisors Inc. with certain of its
responsibilities under the administration agreement, including Interestholder
reporting and regulatory compliance. For providing its services, FAdS is
entitled to receive a monthly fee from each of the Portfolio at the annual rate
of 0.075% (based upon the Portfolio's average daily net assets and subject to a
$25,000 minimum per Portfolio). The subadministration agreement is terminable

27
<PAGE>

with respect to the Portfolio without penalty, at any time, by the Trust upon 60
days' written notice to FAdS or by FAdS upon 60 days' written notice to the
Trust.

Schroder Fund Advisors Inc. has voluntarily waived a portion of its
administration fee and has assumed certain expenses of the Portfolio so that the
Portfolio's total expenses would not exceed the following rates (based on each
of the respective Portfolio's average daily net assets):

Schroder International Bond Portfolio 0.75%

This expense limitations cannot be modified or withdrawn except by a majority
vote of the Trustees of the Trust who are not affiliated persons (as defined in
the 1940 Act ) of the Trust.

During the three most recent fiscal years, the Portfolio paid the following fees
to Schroder Fund Advisors Inc. and FAdS pursuant to the administration agreement
and the subadministration agreements. The fees listed in the following tables
reflect reductions pursuant to fee waivers and expense

<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
ADMINISTRATION FEES PAID ADMINISTRATION FEES PAID ADMINISTRATION FEES PAID
FOR FISCAL YEAR ENDED FOR FISCAL YEAR ENDED FOR FISCAL YEAR ENDED
PORTFOLIO 12/31/98 12/31/97 12/31/96
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------

Schroder International Bond Schroder Fund Advisors Schroder Fund Advisors N/A
Portfolio Inc. $0 Inc. $0

FAdS $5,040 FadS $0 N/A
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

PLACEMENT AGENT

Forum Fund Services, LLC, Two Portland Square, Portland, Maine, 04101, serves as
the Trust's placement agent (underwriter). The Placement Agent receives no
compensation for its services.

PORTFOLIO ACCOUNTING

Forum Accounting, an affiliate of FAds, performs fund accounting services for
the Portfolio pursuant to an agreement with the Trust. Under the Transfer Agency
and Fund Accounting Agreement, Forum Accounting prepares and maintains the books
and records of the Portfolio that are required to be maintained under the 1940
Act, calculates the net asset value of the Portfolio, calculates the
distributive share of the Portfolio's income, expense, gain or loss allocable to
each Interestholder and prepares periodic reports to Interestholders and the
SEC.

28
<PAGE>

For its services to the Portfolio, Forum Accounting is entitled to receive from
the Trust a fee of $48,000 per year plus $24,000 per year for global and
international Portfolios, and an additional $12,000 per year with respect to
tax-free money market funds, Portfolios with more than 25% of their total assets
invested in asset-backed securities, Portfolios that have more than 100 security
positions, and Portfolios that have a monthly turnover rate of 10% or more.

The tables below show the amount of fees paid by the Portfolio to Forum
Accounting during the three most recent fiscal years (or such shorter time the
Portfolio has been operational). The fees listed in the tables below reflect
reductions pursuant to fee waivers during such periods.

29
<PAGE>

- ------------------------------ ---------------------------- --------------------------- ----------------------------
ACCOUNTING FEES PAID ACCOUNTING FEES PAID ACCOUNTING FEES PAID
DURING FISCAL YEAR ENDED DURING FISCAL YEAR ENDED DURING FISCAL YEAR ENDED
PORTFOLIO 12/31/98 12/31/97 12/31/96
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------

Schroder International Bond $11,809 N/A N/A
Portfolio
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

BROKERAGE ALLOCATION AND OTHER PRACTICES

Schroder may place portfolio transactions with broker-dealers which furnish,
without cost, certain research, statistical, and quotation services of value to
Schroder and its affiliates in advising the Trust and other clients, provided
that it shall always seek best price and execution with respect to transactions.
Certain investments may be appropriate for the Trust and for other clients
advised by Schroder. Investment decisions for the Trust and other clients are
made with a view to achieving their respective investment objectives and after
consideration of such factors as their current holdings, availability of cash
for investment, and the size of their investments generally. Frequently, a
particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients of Schroder on the same
day. In such event, such transactions will be allocated among the clients in a
manner believed by Schroder to be equitable to each. In some cases, this
procedure could have an adverse effect on the price or amount of the securities
purchased or sold by the Trust. Purchase and sale orders for the Trust may be
combined with those of other clients of Schroder in the interest of achieving
the most favorable net results for the Trust.

BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock exchanges and other
agency transactions involve the payment by the Trust 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 often
involve the payment of fixed brokerage commissions, which are generally higher
than those in the United States, and therefore certain portfolio transaction
costs may be higher than the costs 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
Trust usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Trust includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.

30
<PAGE>

Schroder places all orders for the purchase and sale of portfolio securities and
buys and sells securities through a substantial number of brokers and dealers.
In so doing, it uses its best efforts to obtain the best price and execution
available. In seeking the best price and execution, Schroder considers all
factors it deems relevant, including 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-dealer involved,
and the quality of service rendered by the broker-dealer in other transactions.

It has for many years been a common practice in the investment advisory business
for advisers of investment companies and other institutional investors to
receive research, statistical, and quotation services from broker-dealers that
execute portfolio transactions for the clients of such advisers. Consistent with
this practice, Schroder receives research, statistical, and quotation services
from many broker-dealers with which it places the Trust's portfolio
transactions. These services, which in some cases may also be purchased for
cash, include such matters 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
Schroder and its affiliates in advising various of their clients (including the
Trust or 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 Schroder and its affiliates receive such
services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and by the Advisory Agreements, Schroder may cause the Portfolio to pay
a broker that provides brokerage and research services to Schroder an amount of
disclosed commission for effecting a securities transaction for the Portfolio in
excess of the commission which another broker would have charged for effecting
that transaction. Schroder's authority to cause the Portfolio to pay any such
greater commissions is also subject to such policies as the Trustees may adopt
from time to time.

To the extent permitted by law, the Portfolio may engage in brokerage
transactions with Schroder & Co. Inc. ("Schroder & Co."), an affiliate of
Schroder, to effect securities transactions on the New York Stock Exchange only
or Schroder Securities Limited and its affiliates (collectively, "Schroder
Securities"), affiliates of Schroder, to effect securities transactions on
various foreign securities exchanges on which Schroder Securities has trading
privileges. Consistent with regulations under the 1940 Act, the Portfolio has
adopted procedures which are reasonably designed to provide that any commissions
or other remuneration the Portfolio pay to Schroder & Co. and Schroder
Securities do not exceed the usual and customary broker's commission. In
addition, the Portfolio will adhere to the rule, under the Securities Exchange
Act of 1934, governing floor trading. This rule permits the Portfolio to effect,
but not execute, exchange listed securities transactions with Schroder & Co.
Schroder & Co. pays a portion of the brokerage commissions it receives from the
Portfolio to the brokers executing the transactions. Also, due to securities law
limitations, the Portfolio may be required to limit purchases of securities in a
public offering if Schroder & Co. or Schroder Securities or one of their
affiliates is a member of the syndicate for that offering.

The Portfolio does not have any understanding or arrangement to direct any
specific portion of its brokerage to Schroder & Co. or Schroder Securities, and
it will not direct brokerage to Schroder & Co. or Schroder Securities in
recognition of research services.

31
<PAGE>

The following tables show the aggregate brokerage commissions paid for the three
most recent fiscal years with respect to the Portfolio.
<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
BROKERAGE COMMISSIONS PAID BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS PAID
DURING FISCAL YEAR ENDED PAID DURING FISCAL YEAR DURING FISCAL YEAR ENDED
PORTFOLIO 12/31/98 ENDED 12/31/97 12/31/96
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------

Schroder International Bond $223 $297 N/A
Portfolio
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

The following tables show the aggregate brokerage commissions paid to Schroder &
Co. and Schroder Securities for the three most recent fiscal years, as well as
the percentage such commissions represented of all transactions on which the
Portfolio paid brokerage commissions during such fiscal year.

<TABLE>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
BROKERAGE COMMISSIONS PAID BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS PAID
DURING FISCAL YEAR ENDED PAID DURING FISCAL YEAR DURING FISCAL YEAR ENDED
12/31/98 ENDED 12/31/97 12/31/96
PORTFOLIO
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------

Schroder International Bond Schroder & Co. $___ ___% Schroder & Co. $0 0% N/A
Portfolio Schroder Securities $___
___% Schroder Securities $___
---%
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

DETERMINATION OF NET ASSET VALUE

The net asset value per Portfolio Interest of the Portfolio is determined daily
as of the close of trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern Time) on each day the Exchange is open for trading. Any assets or
liabilities initially expressed in terms of foreign currencies are translated
into U.S. dollars at the prevailing market rates as quoted by one or more banks
or dealers on the afternoon of valuation. The New York Stock Exchange is
normally closed on the following national holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving, and Christmas.

The Trustees have established procedures for the valuation of the Portfolio's
securities, as follows:

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<PAGE>

Equities listed or traded on a domestic or foreign stock exchange are valued at
their latest sale prices on such exchange on that day prior to the time when the
assets are valued. In the absence of sales that day, such securities are valued
at the mid-market prices. (Where the securities are traded on more than one
exchange, they are valued on the exchange that Schroder designates as the
primary market.) Unlisted securities for which over-the-counter market
quotations are readily available are valued at the latest available mid-market
prices prior to the time of valuation. Securities that do not have readily
available market quotations are valued at fair value pursuant to procedures
established by the Trustees. Debt securities having a maturity of more than 60
days are valued at the mid-market prices determined by a portfolio pricing
service or obtained from active market makers on the basis of reasonable
inquiry. Short-term debt securities having a remaining maturity of 60 days or
less are valued at cost, adjusted for amortization of premiums and accretion of
discounts.

Reliable market quotations are not considered to be readily available for
long-term corporate bonds and notes, certain preferred stocks, tax-exempt
securities, or certain foreign securities. These investments are stated at fair
value on the basis of valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal, institutional-size trading
units of such securities using methods based on market transactions for
comparable securities and various relationships between securities which are
generally recognized by institutional traders.

If any securities held by the Portfolio are restricted as to resale, their fair
value is generally determined as the amount which the Trust could reasonably
expect to realize from an orderly disposition of such securities over a
reasonable period of time. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration is
generally given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by the Trust in connection with such disposition). In addition,
specific factors are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of the same class
(both at the time of purchase and at the time of valuation), the size of the
holding, the prices of any recent transactions or offers with respect to such
securities, and any available analysts' reports regarding the issuer.

Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the New
York Stock Exchange. The values of these securities used in determining the net
asset value of the Trust's Interests are computed as of such times. Also,
because of the amount of time required to collect and process trading
information as to large numbers of securities issues, the values of certain
securities (such as convertible bonds and U.S. Government Securities) are
determined based on market quotations collected earlier in the day at the latest
practicable time prior to the close of the New York Stock Exchange.
Occasionally, events affecting the value of such securities may occur between
such times and the close of the New York Stock Exchange that will not be
reflected in the computation of the Trust's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value, in the manner described
above.

The proceeds received by the Portfolio for each issue or sale of its Portfolio
Interests, and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, will be specifically allocated to the Portfolio, and

33
<PAGE>

constitute the underlying assets of that Portfolio. The underlying assets of the
Portfolio will be segregated on the Trust's books of account, and will be
charged with the liabilities in respect of such Portfolio and with a share of
the general liabilities of the Trust.

REDEMPTIONS IN KIND

In consideration of the best interests of the remaining Interestholders, the
Trust may pay certain redemption proceeds in whole or in part by a distribution
in kind of securities held by the Portfolio in lieu of cash. The Trust does not
expect to redeem Portfolio Interests in kind under normal circumstances. If your
Portfolio Interests are redeemed in kind, you should expect to incur transaction
costs upon the disposition of the securities received in the distribution.

TAXES

The Portfolio is classified for federal income tax purposes as a partnership
that is not a "publicly traded partnership." As a result, the Portfolio is not
subject to federal income tax; instead, each Interestholder in the Portfolio is
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 is not subject to Delaware income or franchise
tax.

Each Interestholder in the Portfolio is 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
Interestholder satisfies the requirements to qualify as a regulated investment
company ("RIC"). Accordingly, the Portfolio intends to conduct its operations so
that its Interestholders that invest substantially all of their assets in the
Portfolio and intend to qualify as RICs should be able to satisfy all those
requirements.

Distributions to an Interestholder from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the
Interestholder'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 Interestholder'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 Interestholder's entire interest in the
Portfolio and includes a disproportionate share of any unrealized receivables
held by the Portfolio; (3) loss will be recognized to the extent that a
liquidation distribution consisting solely of cash and/or unrealized receivables
is less than the Interestholder's basis for its interest in the Portfolio prior
to the distribution; and (4) gain or loss may be recognized on a distribution to
an Interestholder that contributed property to the Portfolio. An
Interestholder'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,

34
<PAGE>

increased by the Interestholder'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 Interestholder and (b) the Interestholder's share
of the Portfolio's losses.

INVESTMENTS IN FOREIGN SECURITIES

Dividends and interest received by the Portfolio may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the return on the security with respect to which the dividend
or interest is paid. Tax conventions between certain countries and the United
States may reduce or eliminate these foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If, however, more than 50% in value of the Portfolio's total
assets at the close of its taxable year consists of securities of foreign
corporations, the Portfolio will be eligible, and ordinarily expects to file an
election with the Internal Revenue Service ("IRS") pursuant to which
Interestholders of the Portfolio will be required to include their proportionate
share of such withholding taxes in their U.S. income tax returns as gross
income; treat such proportionate share as taxes paid by them; and, subject to
certain limitations (including a holding period requirement imposed at both the
Portfolio and Interestholder levels), deduct such proportionate share in
computing their taxable incomes or, alternatively, use them as foreign tax
credits against their U.S. income taxes. No deductions for foreign taxes,
however, may be claimed by noncorporate Interestholders who do not itemize
deductions. An Interestholder that is a nonresident alien individual or a
foreign corporation may be subject to U.S. withholding tax on the income
resulting from the Portfolio's election described in this paragraph but will not
be able to claim a credit or deduction against such U.S. tax for the foreign
taxes treated as having been paid by such Interestholder. The Portfolio will
report annually to its Interestholders their proportionate shares of such
withholding taxes.

The Portfolio may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive; or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, RICs and certain other
investors that hold stock of a PFIC indirectly, through an interest in the
Portfolio, will be subject to federal income tax on a portion of any "excess
distribution" received on the stock or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the RIC distributes
the PFIC income as a taxable dividend to its shareholders. The balance of the
PFIC income will be included in the RIC's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.

If the Portfolio invests in a PFIC and elects to mark such investment to market
annually or to treat the PFIC as a "qualified electing fund," then in lieu of
the foregoing tax and interest obligation, the Portfolio would be required to
include in income each year its pro rata share of the qualified electing fund's
annual ordinary earnings and net capital gain (the excess of net long-term
capital gain over net short-term capital loss) -- which most likely would have
to be distributed by the Portfolio's RIC investors to satisfy the distribution
requirements applicable to them -- even if those earnings and gain were not
received by the Portfolio. In most instances it will be very difficult, if not
impossible, to make this election because of certain requirements thereof.

35
<PAGE>

The Portfolio's transactions in foreign currencies, foreign currency-denominated
debt securities and certain foreign currency options, futures contracts and
forward contracts (and similar instruments) may give rise to ordinary income or
loss to the extent such income or loss results from fluctuations in the value of
the foreign currency concerned.

OTHER PORTFOLIO INVESTMENTS

If the Portfolio engages in hedging transactions, including hedging transactions
in options, futures contracts, and straddles, or other similar transactions, it
will be subject to special tax rules (including constructive sale,
mark-to-market, straddle, wash sale, and short sale rules), the effect of which
may be to accelerate income to the Portfolio, defer losses to the Portfolio,
cause adjustments in the holding periods of the Portfolio's securities, or
convert short-term capital losses into long-term capital losses. These rules
could, therefore, adversely affect the amount, timing and character of
Interestholder income. The Portfolio will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interests of the Portfolio.

"Constructive sale" provisions apply to activities by the Portfolio that lock-in
gain on an "appreciated financial position." Generally, a "position" is defined
to include stock, a debt instrument, or partnership interest, or an interest in
any of the foregoing, including through a swap contract, or a future or forward
contract. The entry into a swap contract or a future or forward contract
relating to an appreciated direct position in any stock or debt instrument, or
the acquisition of stock or debt instrument at a time when the Portfolio
occupies an offsetting (short) appreciated position in the stock or debt
instrument, is treated as a "constructive sale" that gives rise to the immediate
recognition of gain (but not loss). The application of these provisions may
cause the Portfolio to recognize taxable income from these offsetting
transactions in excess of the cash generated by such activities.

The Portfolio may write, purchase or sell options or futures contracts. Unless
the Portfolio is eligible to, and does, make a special election, such options
and futures contracts that are "Section 1256 contracts" will be "marked to
market" for federal income tax purposes at the end of each taxable year (I.E.,
each option or futures contract will be treated as sold for its fair market
value on the last day of the taxable year). In general, unless such special
election is made, gain or loss from transactions in options and futures
contracts will be 60% long-term and 40% short-term capital gain or loss.

Code Section 1092, which applies to certain "straddles," may affect the taxation
of a fund's transactions in options and futures contracts. Under Section 1092,
the Portfolio may be required to postpone recognition for tax purposes of losses
incurred in certain closing transactions in options and futures.

WITHHOLDING

Ordinary income paid to Interestholders who are nonresident aliens is subject to
a 30% U.S. withholding tax under existing provisions of the Code applicable to
foreign individuals and entities unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty law. Nonresident
Interestholders are urged to consult their own tax advisors concerning the
applicability of the U.S. withholding tax.

36
<PAGE>

The Trust is required to report to the IRS all distributions and gross proceeds
from the redemption of Portfolio Interests (except in the case of certain exempt
Interestholders). All such distributions and proceeds generally will be subject
to the withholding of federal income tax at a rate of 31% ("backup withholding")
in the case of non-exempt Interestholders if: (1) the Interestholder fails to
furnish the Trust with and to certify the Interestholder's correct taxpayer
identification number; (2) the IRS notifies the Trust that the Interestholder
has failed to report properly certain interest and dividend income to the IRS
and to respond to notices to that effect; or (3) when required to do so, the
Interestholder fails to certify that it is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions or proceeds
will be reduced by the amount required to be withheld. Any amounts withheld may
be credited against the Interestholder's federal income tax liability.

New federal tax regulations (effective for payments made on or after January 1,
1999, although transition rules apply) will increase the U.S. federal income
taxation of an Interestholder who, under the Code, is a non-resident alien
individual, a foreign trust or estate, foreign corporation or foreign
partnership ("non-U.S. Interestholder"), depending on whether the income from
the Portfolio is "effectively connected" with a U.S. trade or business carried
on by such Interestholder. Ordinarily, income from the Portfolio will not be
treated as so "effectively connected."

If the income from the Portfolio is not treated as "effectively connected" with
a U.S. trade or business carried on by the non-U.S. Interestholders, dividends
of net investment income (which includes short-term capital gains), whether
received in cash or reinvested in Portfolio Interests, will be subject to a U.S.
federal income tax of 30% (or lower treaty rate), which tax is generally
withheld from such dividends. Furthermore, such non-U.S. Interestholders may be
subject to U.S. federal income tax at the rate of 30% (or lower treaty rate) on
their income resulting from the Portfolio's election (described above) to "pass
through" the amount of non-U.S. taxes paid by the Portfolio, but may not be able
to claim a credit or deduction with respect to the non-U.S. income taxes treated
as having been paid by them.

A non-U.S. Interestholder whose income is not treated as "effectively connected"
with a U.S. trade or business generally will not be subject to U.S. federal
income taxation on distributions of net long-term capital gains and any gain
realized upon the sale of Portfolio Interests. If the non-U.S. Interestholder is
treated as a non-resident alien individual but is physically present in the
United States for more than 182 days during the taxable year, then in certain
circumstances such distributions of net long-term capital gains amounts retained
by the Portfolio which is designated as undistributed capital gains and gain
from the sale of the Portfolio shares will be subject to a U.S. federal income
tax of 30% (or lower treaty rate). In the case of a non-U.S. Interestholder who
is a non-resident alien individual, the Portfolio may be required to withhold
U.S. federal income tax at a rate of 31% of distributions (including
distributions of net long-term capital gains) unless IRS Form W-8 is provided.

If the income from the Portfolio is "effectively connected" with a U.S. trade or
business carried on by a non-U.S. Interestholder, then distributions of net
investment income (which includes short-term capital gains) whether received in
cash or reinvested in Portfolio Interests, net long-term capital gains and
amounts otherwise includable in income (such as amounts retained by the
Portfolio which are designated as undistributed capital gains and any gains

37
<PAGE>

realized upon the sale of Portfolio Interests of the Portfolio), will be subject
to U.S. federal income tax at the graduated rates applicable to U.S. taxpayers.
Non-U.S. Interestholders that are corporations may also be subject to the branch
profits tax.

Transfers of shares of the Portfolio by gift by a non-U.S. Interestholder will
generally not be subject to U.S. federal gift tax, but the value of shares of
the Portfolio held by such an Interestholder at death will be includable in the
Interestholder's gross estate for U.S. federal income tax purposes.

GENERAL

The income tax and estate tax consequences to a non-U.S. Interestholder entitled
to claim the benefits of an applicable tax treaty may be different from those
described herein. Non-U.S. Interestholders may be required to provide
appropriate documentation to establish their entitlement to the benefits of such
a treaty. Non-U.S. Interestholders are advised to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in the
Portfolio.

The foregoing discussion relates only to federal income tax law. Income from the
Portfolio also may be subject to foreign, state and local taxes, and their
treatment under foreign, state and local income tax laws may differ from the
federal income tax treatment. Interestholders should consult their tax advisors
with respect to particular questions of federal, foreign, state and local
taxation.

PRINCIPAL HOLDERS OF PORTFOLIO INTERESTS

As of February 1, 1999, the Trustees of the Trust and, except a noted
below, the officers of the Trust, as a group owned less than 1% of the
outstanding Portfolio Interests of either class of the Portfolio.

The table attached as Appendix A lists those Interestholders that owned 5% or
more of the Interests of the Portfolio as of February 1, 1999, and therefore are
controlling persons of the Portfolio. Because these Interestholders hold a
substantial number of Interests, they may be able to require that the Trust hold
special Interestholder meetings and may be able to determine the outcome of any
Interestholder vote.

PERFORMANCE INFORMATION

Average annual total return of the Portfolio for one-, five-, and ten-year
periods (or for such shorter periods as Portfolio Interests of the Portfolio
have been offered) is determined by calculating the actual dollar amount of
investment return on a $1,000 investment at the beginning of the period, and
then calculating the annual compounded rate of return which would produce that
amount. Total return for a period of one year or less is equal to the actual
return during that period. Total return calculations assume reinvestment of all
Portfolio distributions at net asset value on their respective reinvestment
dates. Total return may be presented for other periods.

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<PAGE>

ALL PERFORMANCE DATA IS BASED ON PAST INVESTMENT RESULTS AND DOES NOT PREDICT
FUTURE PERFORMANCE. Investment performance is based on many factors, including
market conditions, the composition of the Portfolio's investments, and the
Portfolio's operating expenses. Investment performance also often reflects the
risks associated with the Portfolio's investment objectives and policies.
Quotations of yield or total return for any period when an expense limitation is
in effect will be greater than if the limitation had not been in effect. These
factors should be considered when comparing the investment results of the
Portfolio to other mutual funds and other investment vehicles. Performance for
the Portfolio may be compared to various indices.

The tables below set forth the total return of the Portfolio for the one-year
period ended December 31, 1998 and for the period from the commencement of the
Portfolio's operations until December 31, 1998. [CHECK & FIX WORDING/TIME
PERIODS IF NECESSARY]

AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED DECEMBER 31, 1998
(FOR PORTFOLIO WITH DECEMBER 31 FISCAL YEAR END)

- ----------------------------- -------------------------- --------------------------- --------------------------
SINCE INCEPTION
OF PORTFOLIO INCEPTION DATE OF
PORTFOLIO 1 YEAR (ANNUALIZED) PORTFOLIO
- ----------------------------- -------------------------- --------------------------- --------------------------
- ----------------------------- -------------------------- --------------------------- --------------------------

Schroder International Bond 13.87% 9.94%
Portfolio*
- ----------------------------- -------------------------- --------------------------- --------------------------
</TABLE>

From time to time, Schroder, Schroder Fund Advisors Inc., Forum
Accounting or FAds may reduce its compensation or assume expenses of the
Portfolio in order to reduce the Portfolio's expenses, as described in the
current Memorandum. Any such waiver or assumption would increase the Portfolio's
yield or total return during the period of the waiver or assumption.

CUSTODIAN

The Chase Manhattan Bank, through its Global Custody Division located at 125
London Wall, London EC2Y 5AJ, United Kingdom, acts as custodian of the assets of
the Portfolio. The custodian's responsibilities include safeguarding and
controlling the Portfolio's cash and securities, handling the receipt and
delivery of securities, and collecting interest and dividends on the Portfolio's
investments. The custodian does not determine the investment policies of the
Portfolio or decide which securities the Portfolio will buy or sell.

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP, the Trust's independent auditors, provide
audit services, tax return preparation services, and assistance and consultation
in connection with the Trust's various Securities and Exchange Commission
filings. Their address is One Post Office Square, Boston, Massachusetts 02109.

39
<PAGE>

LEGAL COUNSEL

Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
serves as counsel to the Trust.

INTERESTHOLDER LIABILITY

Under Delaware law, Interestholders could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, the Trust's Trust
Instrument disclaims Interestholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the Trustees.
The Trust's Trust Instrument provides for indemnification out of the Portfolio's
property for all loss and expense of any Interestholder held personally liable
for the obligations of the Portfolio. Thus the risk of a Interestholder's
incurring financial loss on account of Interestholder liability is limited to
circumstances in which the Portfolio would be unable to meet its obligations.

FINANCIAL STATEMENTS

The fiscal year end of Schroder International Bond Portfolio is December 31. The
required Financial Statements for the Portfolio are attached as Appendix C.

40
<PAGE>

APPENDIX A

HOLDERS OF 5% OR MORE OF OUTSTANDING PORTFOLIO INTERESTS

As of February 1, 1999, the Interestholders listed below owned more than 5% of
the Portfolio as noted. Interestholders owning 25% or more of the interests of
the Portfolio's Interests or of the Trust as a whole may be deemed to be
controlling persons. By reason of their substantial holdings of interests, these
persons may be able to require the Trust to hold an Interestholder meeting to
vote on certain issues and may be able to determine the outcome of any
Interestholder vote. As noted, certain of these Interestholders are known to the
Trust to hold their Portfolio Interests of record only and have no beneficial
interest, including the right to vote the Portfolio Interests.

<TABLE>
<S> <C> <C> <C>
NUMBER OF UNITS % OF PORTFOLIO
OF BENEFICIAL INTERESTS
INTEREST OWNED
SCHRODER INTERNATIONAL BOND PORTFOLIO
- ----------------------------------------------------------------- ----------------- ----------------
Sealaska Corporation
One Sealaska Plaza, Suite 400
Juneau, AK 99801-1276 949,697 96.68%
</TABLE>

A-1
<PAGE>

APPENDIX B

RATINGS OF CORPORATE DEBT INSTRUMENTS

MOODY'S INVESTORS SERVICE INC. ("MOODY'S")

FIXED-INCOME SECURITY RATINGS

"Aaa" Fixed-income securities which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

"Aa" Fixed-income securities which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group they comprise what are
generally known as high grade fixed-income securities. They are rated lower than
the best fixed-income securities because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.

"A" Fixed-income securities which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.

"Baa" Fixed-income securities which are rated "Baa" are considered as medium
grade obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed-income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.

Fixed-income securities rated "Aaa", "Aa", "A" and "Baa" are considered
investment grade.

"Ba" Fixed-income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.

B-1
<PAGE>

"B" Fixed-income securities which are rated "B" generally lack characteristics
of the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.

"Ca" Fixed-income securities which are rated "Ca" present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

"C" Fixed-income securities which are rated "C" are the lowest rated class of
fixed-income securities, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.

Rating Refinements: Moody's may apply numerical modifiers, "1", "2",
and "3" in each generic rating classification from "Aa" through "B" in its
municipal fixed-income security rating system. The modifier "1" indicates that
the security ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and a modifier "3" indicates that
the issue ranks in the lower end of its generic rating category.

COMMERCIAL PAPER RATINGS

Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. The ratings apply to Municipal Commercial Paper as well as taxable
Commercial Paper. Moody's employs the following three designations, all judged
to be investment grade, to indicate the relative repayment capacity of rated
issuers: "Prime-1", "Prime-2", "Prime-3".

Issuers rated "Prime-1" have a superior capacity for repayment of
short-term promissory obligations. Issuers rated "Prime-2" have a strong
capacity for repayment of short-term promissory obligations; and Issuers rated
"Prime-3" have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.

STANDARD & POOR'S RATING GROUP("STANDARD & POOR'S")

FIXED-INCOME SECURITY RATINGS

A Standard & Poor's fixed-income security rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.

The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.

Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.

"AAA" Fixed-income securities rated "AAA" have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.

"AA" Fixed-income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the highest-rated issues only in
small degree.

"A" Fixed-income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed-income
securities in higher-rated categories.

B-2
<PAGE>

"BBB" Fixed-income securities rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for fixed-income securities in this category than for
fixed-income securities in higher-rated categories.

Fixed-income securities rated "AAA", "AA", "A" and "BBB" are considered
investment grade.

"BB" Fixed-income securities rated "BB" have less near-term vulnerability to
default than other speculative grade fixed-income securities. However, it faces
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity or willingness to
pay interest and repay principal.

"B" Fixed-income securities rated "B" have a greater vulnerability to default
but presently have the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions would likely
impair capacity or willingness to pay interest and repay principal.

"CCC" Fixed-income securities rated "CCC" have a current identifiable
vulnerability to default, and the obligor is dependent upon favorable business,
financial and economic conditions to meet timely payments of interest and
repayments of principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and repay
principal.

"CC" The rating "CC" is typically applied to fixed-income securities
subordinated to senior debt which is assigned an actual or implied "CCC" rating.

"C" The rating "C" is typically applied to fixed-income securities subordinated
to senior debt which is assigned an actual or implied "CCC-" rating.

"CI" The rating "CI" is reserved for fixed-income
securities on which no interest is being paid.

"NR" Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.

Fixed-income securities rated "BB", "B", "CCC", "CC" and "C" are
regarded as having predominantly speculative characteristics with respect to
capacity to pay interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such fixed-income
securities will likely have some quality and protective characteristics, these
are out-weighed by large uncertainties or major risk exposures to adverse
conditions.

Plus (+) or minus (-): The rating from "AA" TO "CCC" may be modified by
the addition of a plus or minus sign to show relative standing with the major
ratings categories.

COMMERCIAL PAPER RATINGS

Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into group
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.

Issues assigned "A" ratings are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation "1", "2", and "3" to indicate the relative degree of safety.

"A-1" Indicates that the degree of safety regarding timely payment is very
strong.

B-3
<PAGE>

"A-2" Indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".

"A-3" Indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.

B-4

<PAGE>

APPENDIX C

- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments

As of December 31, 1998

Fixed Income Investments - 94.0%
<S> <C> <C> <C>
Principal
Currency Amount Value (US$)

Austria - 3.6%
DEM 550,000 Republic of Austria, 6.88%, 4/3/00 $ 344,910

Belgium - 4.5%
BEF 13,250,000 Kingdom of Belgium, 9.00%, 6/27/01 437,582

Canada - 5.7%
GBP 120,000 Government of Canada, 6.25%, 11/26/04 215,154
DEM 500,000 Province of Ontario, 6.25%, 1/13/04 334,460
549,614

Denmark - 5.1%
DKK 1,500,000 Kingdom of Denmark, 7.00%, 11/10/24 302,546
DKK 1,100,000 Kingdom of Denmark, 8.00%, 11/15/01 191,895
494,441

France - 9.1%
FRF 2,000,000 Government of France, 4.75%, 3/12/02 373,896
FRF 2,500,000 Societe Nationale des Chemins de Fer,
7.75%, 3/1/02 503,517
877,413

Germany - 22.8%
DEM 1,920,000 Bundesobligation, 6.50%, 3/15/00 1,197,940
DEM 750,000 KFW International Finance, 6.25%, 10/15/03 502,890
DEM 660,000 Deutschland Republik, 6.50%, 7/4/27 495,373
2,196,203

Italy - 4.0%
ITL 570,000,000 Republic of Italy, 10.5%, 7/15/00 382,634

Netherlands - 3.5%
DEM 500,000 LKB Baden-Wuerttemberg Finance, 6.63%, 8/20/03 338,458

Spain - 4.1%
ESP 50,000,000 Government of Spain, 8.40%, 4/30/01 394,120

Supra-National - 15.9%
DEM 800,000 Asian Development Bank, 5.50%, 10/24/07 524,414
JPY 100,000,000 International Bank for Reconstruction &
Development, 5.25%, 3/20/02 1,008,385
1,532,799

Sweden - 5.8%
SEK 3,600,000 Government of Sweden, 10.25%, 5/5/03 558,607

</TABLE>

The accompanying notes are an integral part of the financial statements.

C-1
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------

Schedule of Investments (concluded)
As of December 31, 1998
<TABLE>
<S> <C> <C> <C>
Principal
Currency Amount Value (US$)

United Kingdom - 9.9%
GBP 420,000 United Kingdom Treasury, 9.00%, 10/13/08 $ 953,211

Total Investments - 94.0% (cost $8,473,848) 9,059,992
Other Assets Less Liabilities - 6.0% 573,506
Total Net Assets - 100.0% $ 9,633,498
</TABLE>

Forward Foreign Currency Contracts

Contracts to Sell
<TABLE>
<S> <C> <C> <C> <C>
Underlying Unrealized
Face Amount Appreciation/
Maturity Date Currency Units of Value (Depreciation)

1/20/99 AUD 206,677 $ 130,000 $ 3,212
1/20/99 CAD 470,000 304,296 (1,694)
1/20/99 DEM 8,813,066 5,245,936 (49,104)
1/20/99 GBP 585,183 975,913 2,700
1/20/99 SEK 4,500,000 563,415 8,065
$ 7,219,560 $ (36,821)

Contracts to Buy

Underlying Unrealized
Face Amount Appreciation/
Maturity Date Currency Units of Value (Depreciation)

1/20/99 AUD 205,242 $ 130,000 $ (4,093)
1/20/99 CAD 985,600 640,000 1,667
1/20/99 DEM 7,452,920 4,530,000 (52,158)
1/20/99 DKK 160,000 25,023 120
1/20/99 GBP 235,696 400,000 (8,016)
1/20/99 JPY 243,028,000 2,043,119 115,210
$ 7,768,142 $ 52,730
</TABLE>

Net Receivable for Forward Foreign
Currency Contracts (Note 2) $ 15,909
<TABLE>
<CAPTION>
CURRENCY ABBREVIATIONS
<S> <C>
AUD - Australian Dollar FRF - French Franc
BEF - Belgian Franc GBP - British Pound
CAD - Canadian Dollar ITL - Italian Lira
DEM - German Mark JPY - Japanese Yen
DKK - Danish Krone SEK - Swedish Krona
ESP - Spanish Peseta
</TABLE>

The accompanying notes are an integral part of the financial statements.

C-2
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------

Statement of Assets and Liabilities
December 31, 1998

<TABLE>
<S> <C>
Assets:
Investments (Note 2):
Investments at cost $ 8,473,848
Net unrealized appreciation (depreciation) 586,144
------------------
Total Investments at Value 9,059,992

Cash 292,438
Cash denominated in foreign currencies (cost $7,568) 7,443
Receivable for forward foreign currency contracts (Note 2) 15,909
Interest and other receivables 291,868
Organization costs, net of amortization (Note 2) 4,963
------------------

Total Assets 9,672,613
------------------

Liabilities:
Payable to subadministrator (Note 3) 1,071
Accrued expenses and other liabilities 38,044
------------------

Total Liabilities 39,115
------------------

Net Assets $ 9,633,498
==================
</TABLE>

The accompanying notes are an integral part of the financial statements.

C-3
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Statement of Operations
For the Year Ended December 31, 1998

Investment Income:
Interest income $ 857,701
------------------

Expenses:
Investment advisory (Note 3) 70,985
Administration (Note 3) 14,197
Subadministration (Note 3) 25,000
Interestholder recordkeeping (Note 3) 12,131
Custody 4,626
Accounting (Note 3) 67,000
Legal 2,764
Audit 27,278
Trustees 1,185
Amortization of organization costs (Note 2) 1,654
Miscellaneous 5,860
------------------
Total Expenses 232,680
Fees waived and expenses reimbursed (Note 6) (126,250)
------------------
Net Expenses 106,430
------------------

Net Investment Income (Loss) 751,271
------------------

Net Realized and Unrealized Gain (Loss) on Investments and Foreign
Currency Transactions:
Net realized gain (loss) on investments sold (20,937)
Net realized gain (loss) on foreign currency transactions (776,235)
------------------
Net realized gain (loss) on investments and foreign
currency transactions (797,172)
------------------

Net change in unrealized appreciation (depreciation) on investments 1,328,529
Net change in unrealized appreciation (depreciation) on foreign
currency transactions 33,915
------------------
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions 1,362,444
------------------
Net Realized and Unrealized Gain (Loss) on Investments and Foreign
Currency Transactions 565,272
------------------

Net Increase (Decrease) in Net Assets Resulting from Operations $ 1,316,543
==================

</TABLE>

The accompanying notes are an integral part of the financial statements.

C-4
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Statements of Changes in Net Assets
For the For the
Year Ended Year Ended
December 31, 1998 December 31, 1997

Net Assets, Beginning of Period $ 16,515,402 $ 3,000,100
------------------- ---------------------

Operations:
Net investment income (loss) 751,271 580,748
Net realized gain (loss) on investments and foreign currency (551,808)
transactions (797,172)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions 1,362,444 (752,540)
------------------- ---------------------
Net increase (decrease) in net assets resulting from operations 1,316,543 (723,600)
------------------- ---------------------

Transactions in Investors' Beneficial Interests:
Contributions 4,891,436 18,113,652
Withdrawals (13,089,883) (3,874,750)
------------------- ---------------------
Net increase (decrease) from transactions in investors'
beneficial interests (8,198,447) 14,238,902
------------------- ---------------------

Net increase (decrease) in net assets (6,881,904) 13,515,302
------------------- ---------------------

Net Assets, End of Period $ 9,633,498 $ 16,515,402
=================== =====================
</TABLE>

Financial Highlights
For the For the
Year Ended Year Ended
December 31, 1998 December 31, 1997

Net Assets at End of Period (in thousands) $9,633 $16,515

Ratios to Average Net Assets:
Expenses including reimbursement/waiver of fees 0.75% 0.75%
Expenses excluding reimbursement/waiver of fees 1.64% 1.99%
Net investment income (loss) including reimbursement/
waiver of fees 5.29% 5.42%

Portfolio Turnover Rate 140% 112%
</TABLE>

The accompanying notes are an integral part of the financial statements.

C-5
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

Schroder Capital Funds II ("Schroder Core") was organized as a Delaware
business trust on December 27, 1996. Schroder Core, which is registered as an
open-end management investment company under the Investment Company Act of 1940
(the "Act"), currently has one investment portfolio. Included in this report is
Schroder International Bond Portfolio ("Portfolio"), which is a non-diversified
portfolio that commenced operations on December 31, 1996. Under its Trust
Instrument, Schroder Core is authorized to issue an unlimited number of
interests without par value. Interests in the Portfolio are sold without any
sales charges in private placement transactions to qualified investors,
including open-end management investment companies.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of increase and decrease in net
assets from operations during the fiscal period. Actual results could differ
from those estimates.

The following represent the significant accounting policies of the
Portfolio:

INVESTMENT VALUATION

Portfolio securities listed on recognized stock exchanges are valued at
the last reported sales price on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges where
last sales prices are not available are valued at the last sale price on the
preceding day or at the mean of the closing bid and ask ("mid-market price").
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. Prices used for valuations generally are provided by
independent pricing services. Domestic short-term investments, having a maturity
of 60 days or less, are valued at amortized cost, which approximates market
value. Foreign short-term investments are valued at the current market price,
then marked to market to recognize any gain or loss on the transaction. 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
Schroder Core's Board of Trustees. As of December 31, 1998, the Portfolio did
not hold a position in any fair valued securities.

SECURITY TRANSACTIONS AND INVESTMENT INCOME

Investment transactions are accounted for on trade date. Interest income,
including accretion of discount, is recorded as earned. Identified cost of
investments sold is used to determine realized gain and loss for both financial
statement and federal income tax purposes. Foreign interest income amounts and
realized capital gain and loss are converted to U.S. dollar equivalents using
foreign exchange rates in effect at the date of the transactions.

Foreign currency amounts are translated into U.S. dollars at the mean of
the bid and asked prices of such currencies against U.S. dollars as follows: (i)
assets and liabilities at the rate of exchange at the end of the respective
period; and (ii) purchases and sales of securities and income and expenses at
the rate of exchange prevailing on the dates of such transactions. The portion
of the results of operations arising from changes in the

C-6
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

exchange rates and the portion due to fluctuations arising from changes in the
market prices of securities are not isolated. Such fluctuations are included
with the net realized and unrealized gain or loss on investments.

The Portfolio may enter into forward contracts to purchase or sell
foreign currencies to protect the U.S. dollar value of the underlying portfolio
of securities against the effect of possible adverse movements in foreign
exchange rates. Risks associated with such contracts include the movement in
value of the foreign currency relative to the U.S. dollar and the ability of the
counterparty to perform. Fluctuations in the value of such contracts are
recorded daily as unrealized gain or loss; realized gain or loss includes net
gain or loss on contracts that have terminated by settlement or by the Portfolio
entering into offsetting commitments.

ORGANIZATION COSTS

Costs incurred by the Portfolio in connection with its organization are
amortized on a straight line basis over a five-year period.

NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISER

Schroder Capital Management International Inc. ("SCMI") is the investment
adviser to the Portfolio. Pursuant to an Investment Advisory Agreement, SCMI is
entitled to receive compensation at an annual rate, payable monthly, of 0.50% of
the Portfolio's average daily net assets.

ADMINISTRATOR AND SUBADMINISTRATOR

The administrator of the Portfolio is Schroder Fund Advisors Inc.
("Schroder Advisors"). For its services, Schroder Advisors is entitled to
receive compensation at an annual rate, payable monthly, of 0.10% of the
Portfolio's average daily net assets. The subadministrator of the Portfolio is
Forum Administrative Services, LLC ("FAdS"). FAdS is entitled to receive
compensation at an annual rate, payable monthly, of 0.075% of the Portfolio's
average daily net assets, subject to an annual minimum of $25,000 for its
services.

OTHER SERVICE PROVIDERS

Forum Accounting Services, LLC ("FAcS") performs portfolio accounting
services for the Portfolio and is entitled to receive compensation for its
services in the amount of $60,000 per year, plus certain other charges, based
upon the number and types of portfolio transactions. FAcS also provides
interestholder recordkeeping services to the Portfolio for which it receives
$12,000 per year, plus certain other charges.

NOTE 4. PURCHASES AND SALES OF SECURITIES

The cost of securities purchased and the proceeds from sales of
securities (excluding short-term securities) for the period ended December 31,
1998, were $22,224,990 and $29,698,947, respectively.

For federal income tax purposes, the tax basis of investment securities
owned, the aggregate gross unrealized appreciation and the aggregate gross
unrealized depreciation as of December 31, 1998, were $8,493,563, $689,600, and
$123,171, respectively.

C-7
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

NOTE 5. FEDERAL TAXES

The Portfolio is not required to pay federal income tax on its net
investment income and net capital gain because it is treated as a partnership
for federal income tax purposes. All interest, dividends, gain and loss of the
Portfolio are deemed to have been "passed through" to the Portfolio's
interestholders in proportion to their holdings of the Portfolio, regardless of
whether such interest, dividends or gain have been distributed by the Portfolio.

NOTE 6. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES

SCMI, Schroder Advisors, FAdS and FAcS voluntarily waived a portion of
their fees and assumed certain expenses of the Portfolio so that the Portfolio's
total expenses would not exceed 0.75% of its average daily net assets. For the
period ended December 31, 1998, SCMI, Schroder Advisors, FAdS and FAcS waived
fees of $70,985, $14,197, $19,960 and $21,108, respectively.

NOTE 7. BENEFICIAL INTEREST

At December 31, 1998, there was one interestholder, otherwise
unaffiliated with the Portfolio, owning a 96.44% interest in the Portfolio.

NOTE 8. CONCENTRATION OF RISK

The Portfolio may invest more than 25% of its total assets in issuers
located in any one country. To the extent that it does so, the Portfolio is
susceptible to a range of factors that could adversely affect that country,
including political and economic developments and foreign exchange-rate
fluctuations. As a result of investing a substantial amount of its assets in a
single country, the value of the Portfolio's assets may fluctuate more widely
than the value of shares of a comparable fund with a lesser degree of geographic
concentration. The Portfolio also invests in countries with limited or
developing capital markets. Investments in such countries may involve greater
risks than investments in more developed markets.

C-8
<PAGE>
- --------------------------------------------------------------------------------
Schroder International Bond Portfolio
- --------------------------------------------------------------------------------

Report of Independent Accountants

To the Trustees of Schroder Capital Funds II and Investors of Schroder
International Bond Portfolio:

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Schroder International Bond
Portfolio (a portfolio of Schroder Capital Funds II) at December 31, 1998, and
the results of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

Boston, Massachusetts PricewaterhouseCoopers LLP
February 5, 1999

C-9
<PAGE>

<PAGE>

PART C
OTHER INFORMATION

ITEM 23. EXHIBITS
(a) Trust Instrument of Registrant dated as of December 26, 1996 (see Note
1).

(b) Not applicable.

(d) Investment Advisory Agreement between Registrant and Schroder Capital
Management International Inc. ("SCMI") relating to Schroder
International Bond Portfolio dated as of December 27, 1996 (see Note
1).

(e) Not required.

(f) Not applicable.

(g) Global Custody Agreement between Registrant and The Chase Manhattan
Bank relating to Schroder International Bond Portfolio dated as of
December 27, 1996 (see Note 1).

(h) (a) Administration Agreement between Registrant and Schroder Fund
Advisors Inc. Relating to Schroder International Bond Portfolio dated
as of December 27, 1996 (see Note 1).

(b) Sub-Administration Agreement between Registrant and Forum
Administrative Services LLC ("FadS") relating to Schroder International
Bond Portfolio dated as of December 27, 1996 (see Note 1).

(c) Transfer Agency and Fund Accounting Agreement between Registrant and
Forum Financial Corp. ("FFC") relating to Schroder International Bond
Portfolio dated as of December 27, 1996 (see Note 1).

(d) Placement Agent Agreement between the Trust and Forum Financial
Services, Inc. ("FFS") relating to Schroder International Bond
Portfolio dated as of December 27, 1996 (see Note 2).

(i) Not required

(j) Not required

(k) Not required.

(l) Not applicable.

(m) Not applicable.

(n) Financial Data Schedule (filed herewith).

(o) Not applicable.

- ---------------
Notes:
(1) Exhibit incorporated by reference as filed on Amendment No. 1 via
EDGAR on August 18, 1997, accession number 0001004402-97-000057.

(2) Exhibit incorporated by reference as filed on Amendment No. 2 via
EDGAR on April 30, 1998, accession number 0001004402-98-000276.

<PAGE>

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None.

ITEM 25. INDEMNIFICATION

Registrant currently holds a joint directors' and officers' errors and
omissions insurance policy pursuant to Rule 17d-1(d)(7). Additionally,
the Trust's trustees and officers are insured under a joint 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 (filed
as Exhibit (a) and incorporated herein by reference) 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 Agreement provide that
SCMI 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, SCMI against any liability
to Registrant or to Registrant's interestholders to which SCMI 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 SCMI's reckless disregard of its obligations and duties
thereunder. This description is modified in its entirety by the
provisions of Registrant's Investment Advisory Agreement contained in
this Registration Statement as Exhibit (d) and incorporated herein by
reference. Likewise, Registrant has agreed to indemnify (1) Forum
Administrative Services, LLC. in the Sub-Administration Agreement, (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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Schroder Capital Management International Inc.

The following is a description of any business, profession, vocation or
employment of a substantial nature in which the investment adviser of
the registrant, Schroder Capital Management International Inc.
("SCMI"), and each trustee or officer of the investment adviser is or
has been, at any time during the past two years, engaged for his or her
own account or in the capacity of trustee, officer or employee. The
address of each company listed, unless otherwise noted, is 787 Seventh
Avenue, 34th Floor, New York, NY 10019. Schroder Capital Management
International Limited ("Schroder Ltd."), a United Kingdom affiliate of
SCMI, provides investment management services to international clients
located principally in the United Kingdom.

<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connections
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
David M. Salisbury Chairman, Director SCMI

------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
Director Schroders plc.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>

------------------------------------ ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman, Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
David R. Robertson Group Vice President SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Fund Advisors Inc.
----------------------------------
------------------------------------
Director of Institutional Business Oppenheimer Funds, Inc.
resigned 2/98
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President, Director Schroders Ltd.*
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>

------------------------------------ ------------------------------------ ----------------------------------
Ellen B. Sullivan Group Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Catherine A. Mazza Group Vice President SCMI
------------------------------------ ----------------------------------
President, Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Heather F. Crighton First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Ira Unschuld Group Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Paul M. Morris Senior Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Susan B. Kenneally First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------

------------------------------------ ------------------------------------ ----------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>

*Schroder Ltd. and Schroders plc. are located at 31 Gresham St., London
EC2V 7QA, United Kingdom.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Forum Fund Services LLC is the Registrant's placement agent. Registrant has
no underwriters.

(b) Not applicable.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained at
the offices of SCMI (investment management records) and Schroder Fund
Advisors, Inc. (administrator records), 787 Seventh Avenue, New York, New
York, 10019, except that certain items are maintained at the following
locations:

(a) Forum Accounting Services, LLC, Two Portland Square, Portland, Maine 04101
(portfolio accounting records).

(b) Forum Administrative Services, LLC, Two Portland Square, Portland, Maine
04101 (corporate minutes and all other records required under the
Subadministration Agreement).

<PAGE>

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS

None.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, as amended,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, duly authorized in the City of New York, State of New
York on February 26, 1999.

SCHRODER CAPITAL FUNDS II

By: /s/ Catherine A. Mazza
--------------------------
Catherine A. Mazza
Vice President

<PAGE>

INDEX TO EXHIBITS

Exhibit

(n) Financial Data Schedule.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SCHRODER
INTERNATIONAL BOND FUND ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK>0001029803
<NAME> SCHRODER CAPITAL FUNDS II
<SERIES>
<NUMBER> 001
<NAME> INTERNATIONAL BOND PORTFOLIO

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 8,473,848
<INVESTMENTS-AT-VALUE> 9,059,992
<RECEIVABLES> 307,777
<ASSETS-OTHER> 299,881
<OTHER-ITEMS-ASSETS> 4,963
<TOTAL-ASSETS> 9,672,613
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,115
<TOTAL-LIABILITIES> 39,115
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 9,633,498
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 857,701
<OTHER-INCOME> 0
<EXPENSES-NET> 106,430
<NET-INVESTMENT-INCOME> 751,271
<REALIZED-GAINS-CURRENT> (797,172)
<APPREC-INCREASE-CURRENT> 1,362,444
<NET-CHANGE-FROM-OPS> 1,316,543
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (6,881,904)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70,985
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 232,680
<AVERAGE-NET-ASSETS> 14,196,779
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>